Registration No. 33-96716
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1 TO
Form S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
ESSEX HOSPITALITY ASSOCIATES IV L.P.
(Exact name of registrant as specified in charter)
New York 7011
(State or other jurisdiction of incorporation or organization) (Primary Standard
Industrial
Classification
Code No.)
16-148563 100 Corporate Woods
(IRS Employer ID No.) Rochester, New York 14623
(716) 272-2300
Address, including zip code, and telephone number, including area
code of registrant's principal executive offices)
Essex Partners Inc.
John E. Mooney, President
100 Corporate Woods
Rochester, New York 14623
(716) 272-2300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
with copies to:
Thomas E. Willett, Esq.
Harris Beach & Wilcox, LLP
130 East Main Street
Rochester, New York 14604
(716) 232-4440
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. __X__
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. ____.
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.________.
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. ____.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission acting pursuant to Section 8(a), may
determine.
Page 1 of 79 pages. Exhibit Index is on Page 75.
<PAGE> 1 Essex Hospitality Associates IV L.P.
Post-Effective Amendment No. 1 Dated
August 7, 1996 to Prospectus
Dated November 24, 1995
This Amendment is intended to modify, and must be used in
conjunction with, the Prospectus of Essex Hospitality Associates IV
L.P. (the "Partnership") dated November 24, 1995. The Prospectus
must be read in conjunction with this Amendment No. 1.
Management's Discussion and Analysis or Plan of Operation
The Partnership was formed on August 30, 1995. Since its formation, the
Partnership has been involved in raising capital, investing in another limited
partnership developing a hotel property, and in the acquisition and development
of properties.
The Partnership acquired a site in Warwick, Rhode Island in December, 1995 for
$516,608, including closing-related costs, upon which it intends to build an
80-room Homewood Suites hotel. See "THE PARTNERSHIP'S BUSINESS -- The Specified
Properties -- Warwick Property." The Partnership received a Commitment to Issue
a Homewood Suites License Agreement from Promus Hotel Corporation, the
Franchisor, for an 80-suite Homewood Suites. See "THE PARTNERSHIP'S BUSINESS --
Description of the Hotel Concepts." The General Partner currently is in the
process of selecting the general contractor and anticipates starting
construction by September, 1996. The total cost of the project is expected to
be approximately $7.5 million, including the cost of the land, construction and
furnishings, architectural and engineering costs, financing-related costs,
construction interest, insurance and pre-opening expenses. The General Partner
expects to secure first mortgage financing from institutional lenders or
affiliates of Franchisors ("External Financing"), however, no External Financing
source has issued a commitment to lend funds to the Partnership for construction
or permanent financing of the hotel. The hotel is expected to open in the
spring of 1997. With respect to the market, an 80-room Mainstay Suites hotel,
a mid-price extended stay hotel, is to begin construction later this summer in
Warwick near the Partnership's site, which will increase the number of
competitive rooms in the area to approximately 955. See "THE PARTNERSHIP'S
BUSINESS" AND "RISK FACTORS."
The Partnership acquired a site in Solon, Ohio in December, 1995 for $590,600,
including closing-related costs, upon which it intends to build a 100-room
Hampton Inn. See "THE PARTNERSHIP'S BUSINESS -- The Specified Properties --
Solon Property." The Partnership originally had intended to build a 100-room
Hampton Inn & Suites, however, after receiving bids from prospective general
contractors, the General Partner concluded that the construction cost of the
Hampton Inn & Suites was too high relative to the room rates which could be
charged in the Solon area. Based on its knowledge of the Solon market, the
General Partner believes a Hampton Inn can be built and operated more
successfully.
<PAGE> 2 The General Partner secured approval from the Promus Hotel
Corporation, the Franchisor, to change brand designations, and the Partnership
received a Commitment Agreement for a Hampton Inn franchise. The General
Partner expects to start construction in the fall of 1996 and open in the spring
of 1997. The total cost of the project is expected to be $6 million. The
General Partner expects to secure External Financing, however, no External
Financing source has issued a commitment to lend funds to the Partnership for
construction or permanent financing of the hotel. With respect to the market,
the General Partner has been advised that a new 170-suite Residence Inn hotel to
be located in the Beachwood area, six miles from the Partnership's site, is in
the planning stages. Because Residence Inn is an up-scale extended stay hotel,
this property is not expected to compete directly with the Partnership's hotel.
See "THE PARTNERSHIP'S BUSINESS" and "RISK FACTORS."
The Partnership acquired a partnership interest in Essex Glenmaura L.P. ("Essex
Glenmaura") in the first quarter of 1996. See "THE PARTNERSHIP'S BUSINESS --
The Specified Properties -- The Essex Glenmaura Investment." It acquired 12.5
units of limited partnership interest for $1,250,000 for a 54.3% ownership
interest. Essex Glenmaura is constructing a 120-room Courtyard by Marriott near
Scranton, Pennsylvania. The hotel is expected to open in August, 1996. The
total cost of the project is estimated to be approximately $8.3 million, which
is being funded by $2.3 million of partner equity, of which Essex Partners, also
the general partner of Essex Glenmaura, contributed $100,000, $1.5 million of
unsecured notes and a $4.5 million construction mortgage loan provided by a
bank. The construction loan, which bears interest at prime plus 0.75%, will be
replaced by a permanent mortgage loan to be provided by Marriott International
Capital Corporation. The permanent mortgage loan is expected to close in
October, 1996 and the key terms of the permanent loan include a five year term,
20-year amortization period, and interest either floating at 325 basis points
over 30-day LIBOR or fixed at 325 basis points over the five-year treasury
rates. With respect to the market, the General Partner is aware of the addition
of a new 101-room Comfort Suites hotel at the same exit as the Essex Glenmaura
hotel, which is expected to open sometime in 1997. See "THE PARTNERSHIP'S
BUSINESS" and "RISK FACTORS."
The General Partner is evaluating other potential sites to be acquired by the
Partnership, however, it has not identified any additional property for
acquisition. See"RISK FACTORS."
The Partnership currently is offering up to $6,000,000 of Subordinated Notes and
up to $5,000,000 of Limited Partnership Units ("Units") for sale to investors
pursuant to the Prospectus and, while the Partnership also may offer up to
$10,000,000 of Mortgage Notes, no Mortgage Notes have been offered or sold.
Through July 31, 1996, the Partnership had received gross offering proceeds of
approximately $6,733,000, including $4,905,000 from the sale of Subordinated
Notes and approximately $1,828,000 from the sale of Units. The Partnership
currently does not have sufficient funds to complete construction of the two
properties. Although additional funding is not assured, based on the rate funds
are being raised, the timing of construction, and the expected availability of
External Financing, the Partnership anticipates sufficient funds will be
available to pay for construction and for future property acquisitions when
required.
<PAGE> 3 Updated Franchisor Information
Courtyard by Marriott
Started in 1983, there currently are 271 Courtyard by Marriott hotels open and
operating. According to the Franchisor the average occupancy rate system-wide
was 79.6% in 1995 and the average daily rate was $72.56. These results compared
favorably to those experienced by the mid-price segment, which reported an
average occupancy rate of 65% and an average daily rate of $59 in 1995. See
"THE PARTNERSHIP'S BUSINESS -- Description of the Hotel Concepts --Courtyard by
Marriott."
For franchise applications submitted after June 30, 1996, the franchise
application fee was increased to the greater of $40,000 or $400 per room, the
royalty fee was increased to 5.5% of gross room revenues and a pre-opening fee
of up to $60,000 will be charged. See "THE PARTNERSHIP'S BUSINESS -- Franchise
Agreements."
Fairfield Inn by Marriott
Started in 1987, there currently are 265 Fairfield Inn hotels open and
operating. According to the Franchisor the average occupancy rate system-wide
was 77.1% in 1995 and the average daily rate was $48. These results compared
favorably to those experienced by the upper economy segment which reported an
average occupancy rate of 66% and an average daily rate of $47.50. See "THE
PARTNERSHIP'S BUSINESS -- Description of the Hotel Concepts -- Fairfield Inn
by Marriott."
For franchise applications submitted after June 30, 1996, a pre-opening fee of
up to $21,000 will be charged. See "THE PARTNERSHIP'S BUSINESS -- Franchise
Agreements."
Hampton Inn
Started in 1984, there were 563 Hampton Inns open and operating as of June 30,
1996. The Franchisor has advised the Partnership that system-wide occupancy
rates averaged 75.3% in 1995 with an average daily rate of $56.95. For 1995,
the midscale segment reported an average occupancy rate of 65% and an average
daily rate of $59, and the upper economy segment reported an average occupancy
rate of 66% and an average daily rate of $47.50. See "THE PARTNERSHIP'S
BUSINESS -- Description of the Hotel Concepts -- Hampton Inn."
Effective April 1, 1996, the franchise application fee was increased to the
greater of $45,000 or $45 per room. See "THE PARTNERSHIP'S BUSINESS-- Franchise
Agreements."
Homewood Suites
The first Homewood Suites hotel opened in 1989, and as of June 30, 1996 there
were 33 Homewood Suites open and operating. The Franchisor has advised the
Partnership that system-wide occupancy rates averaged 78.2% in 1995 at an
average daily rate of $81.82. This compared favorably to hotels in the lower
end of the upscale segment which reported an average occupancy rate of 73.8% in
1995 and an average daily rate of $78.66. The pure extended stay hotel segment
reported an average occupancy rate of 83.4% and an average daily rate of $81.44
for 1995. See "THE PARTNERSHIP'S BUSINESS -- Description of the Hotel Concepts
- -- Homewood Suites."
Effective April 1, 1996, the franchise application fee was increased to the
greater of $45,000 or $45 per room. See "THE PARTNERSHIP'S BUSINESS --
Franchise Agreements."
<PAGE> 4 Hampton Inn & Suites
Started in 1993, there were nine Hampton Inn & Suites open and operating as of
June 30, 1996. An insufficient number of properties were open for all of 1995
to provide meaningful operating results for the year. See "THE PARTNERSHIP'S
BUSINESS -- Description of the Hotel Concepts -- Hampton Inn & Suites."
Effective April 1, 1996, the franchise application fee was increased to the
greater of $45,000 or $45 per room. See "THE PARTNERSHIP'S BUSINESS --
Franchise Agreements."
Microtel Inn
The first Microtel Inn hotel opened in 1989, and there currently are 27 open and
operating. An additional 16 are scheduled to open in 1996. Microtels owned by
affiliates of the General Partner opened all year in 1995 had an average
occupancy rate of 69.6% and an average daily rate of $35.83. This compared
favorably to 1995 results for the economy sector which reported an average
occupancy rate of 61.6% and an average daily rate of $33.99. See "THE
PARTNERSHIP'S BUSINESS -- Description of the Hotel Concepts -- Microtel Hotel."
<PAGE> 5 Tax Status of the Partnership
On May 13, 1996, the IRS issued proposed regulations which
simplify the rules governing the tax status of the Partnership.
These proposed regulations have been generally referred to as the
"Check the Box" regulations and allow entities like the Partnership
to elect to be taxed either as a partnership or as a corporation.
The "Check the Box" regulations generally will be applicable
to taxpayers only after they are issued as final regulations. A
public hearing is scheduled for August 21, 1996 and it is not
possible to predict when this will occur. However, the proposed
regulations contain a "safe harbor" effective date which, in the
opinion of Harris Beach & Wilcox, LLP, provides that the
Partnership's right to be taxed as a partnership (and not as a
corporation) will not be challenged by the IRS. See "TAX
CONSIDERATIONS--Discussion of Tax Consequences of Owning Limited
Partnership Units--Tax Status of the Partnership."
Section 7704 of the Code, created by the Omnibus Budget
Reconciliation Act of 1987, provides that a "publicly traded
partnership" will be taxed as a corporation. In Notice 88-75,
1988-2C.B. 386, the IRS announced a number of positions it would
take in regulations issued with respect to Section 7704. Proposed
regulations were issued on May 2, 1995 and final regulations were
issued on November 29, 1995.
The final regulations made material and adverse changes to the
proposed regulations. However, a favorable change made by the
final regulations is that the Partnership will not be a "publicly
traded partnership" unless:
"(a) The partnership participates in the establishment of
the market or the inclusion of its interests thereon; or
(b) The partnership recognizes any transfers made on the
market by: (i) redeeming the transferor partner (in the
case of a redemption or repurchase by the Partnership);
or (ii) admitting the transferee as a partner or
otherwise recognizing any rights of the transferee, such
as a right of the transferee to receive partnership
distributions (directly or indirectly) or to acquire an
interest in the capital or profits of the partnership."
treas. reg. 1.7704-1(d)
The Partnership Agreement grants the General Partner broad
powers to prohibit the assignment of Units if the assignment would
risk the Partnership being a "publicly traded partnership." The
General Partner will not participate in the establishment of a
market (as that word is used in the final regulations) for the
Units or in the inclusion of Units on a market. In addition, the
General Partner will not recognize transfers made on the market.
Based on the General Partner's representations, Harris Beach &
Wilcox, LLP is of the opinion that the Partnership is not a
<PAGE> 6 "publicly traded partnership" as that phrase is used in Section
7704. See "TAX CONSIDERATIONS--Discussion of Tax Consequences of
Owning Limited Partnership Units--Tax Status of the Partnership."
At Risk Rules
The Partnership holds a 54.3% limited partner interest in
Essex Glenmaura. Essex Glenmaura in turn is constructing a 120-room Courtyard
by Marriott near Scranton, Pennsylvania. Essex Glenmaura borrowed $4.5 million
from a bank pursuant to a construction loan agreement and has an agreement with
Marriott International Capital Corporation to refinance the bank loan. The
refinancing is expected to close in October, 1996.
Because principals of the General Partner have guaranteed the
bank loan and are required to guarantee the Marriott loan, the
Limited Partners will not be "at risk" with respect to any amounts
borrowed by the Partnership under either loan. See "TAX
CONSIDERATIONS--Discussion of Tax Consequences of Owning Limited
Partnership Units--At Risk Rules."
EXPERTS
The financial statements of Essex Hospitality Associates IV L.P.
as of and for the period ending December 31, 1995 and the
financial statements of Essex Partners Inc. as of and for the years
ended December 31, 1995 and 1994 have been included herein in
reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, appearing elsewhere herein, and
upon the authority of said firm as experts in accounting and
auditing.
The financial statements of Essex Glenmaura L.P. as of and for
the period ending December 31, 1995 have been included herein in
reliance upon the report of Coopers & Lybrand, LLP, independent
certified public accountants, appearing elsewhere herein, and
upon the authority of said firm as experts in accounting and
auditing.
<PAGE> 7 INDEX TO FINANCIAL STATEMENTS
Financial Statements of the General Partner
- - Report of Independent Auditors - 1995 and 1994 F-1
- - Balance Sheets as of December 31, 1995 and 1994 F-2
- - Statements of Income and Changes in Retained Earnings for
the years ended December 31, 1995 and 1994 F-3
- - Statements of Cash Flows for years ended December 31, 1995 and 1994 F-4
- - Notes to Financial Statements F-6
Financial Statements of the Partnership
- - Report of Independent Auditors F-12
- - Balance Sheet as of December 31, 1995 F-13
- - Statement of Changes in Partners' Capital for
the period August 30, 1995 through December 31, 1995 F-14
- - Statement of Cash Flows for the period August 30, 1995 through
December 31, 1995 F-15
- - Notes to Financial Statements F-18
Financial Statements of Essex Glenmaura, LP
- - Report of Independent Auditors F-24
- - Balance Sheet as of December 31, 1995 F-25
- - Statement of Income the period May 18, 1995 through December 31, 1995 F-26
- - Statement of Changes in Partners' Capital for the period May 18, 1995
through December 31, 1995 F-27
- - Statement of Cash Flows for the period May 18, 1995 through
December 31, 1995 F-28
- - Notes to Financial Statements F-29
<PAGE> 8 ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of
Essex Investment Group, Inc.)
Financial Statements
December 31, 1995 and 1994
(With Independent Auditors Report Thereon)
<PAGE> 9 Independent Auditors Report
The Board of Directors of
Essex Partners Inc.:
We have audited the accompanying balance sheets of Essex Partners
Inc. (a wholly owned subsidiary of Essex Investment Group, Inc.)
as of December 31, 1995 and 1994, and the related statements of
income and changes in retained earnings and cash flows for the
years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Essex Partners Inc. as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting
principles.
February 23, 1996 /s/ KPMG Peat Marwick LLP
--------------------------
KPMG Peat Marwick LLP
<PAGE> 10 ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
<TABLE>
Balance Sheets
December 31, 1995 and 1994
<CAPTION>
Assets 1995 1994
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 915,433 517,381
Advances receivable from partnerships 355,546 434,901
Prepaid and other 33,391 8,471
--------- ---------
Total current assets 1,304,370 960,753
Noncurrent receivables from partnerships 210,927 169,935
Deferred tax asset 48,000 -
Due from parent - 87,038
Office furniture and equipment, less accumulated
depreciation of $49,162 in 1995 and $25,834 in 1994 100,466 98,278
Hotel franchise rights - 375,000
Investments in partnerships 415,257 328,117
----------- ---------
$ 2,079,020 2,019,121
============ ==========
Liabilities and Stockholder s Investment
Current liabilities:
Accounts payable and accrued expenses 185,380 18,484
Accrued partnership contributions - 11,000
-------- ---------
Total current liabilities 185,380 29,484
-------- ---------
Noncurrent accrued partnership contributions 163,542 161,568
Long-term debt, excluding current portion - 275,000
-------- --------
163,542 436,568
-------- ---------
Commitments and contingencies (note 7)
Stockholder's investment:
Common stock, par value $.01, authorized
2,000,000 shares;
100 shares issued and outstanding 1 1
Paid-in capital 999 999
Retained earnings 1,729,098 1,552,069
---------- ----------
Total stockholder's investment 1,730,098 1,553,069
---------- ---------
$ 2,079,020 2,019,121
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 11 ESSEX PARTNERS INC.
<TABLE> (A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
Statements of Income and Changes in Retained Earnings
For the years ended December 31, 1995 and 1994
<CAPTION>
1995 1994
<S> <C> <C>
Revenues:
Organization, property acquisition, disposition
and development fees $ 1,269,313 1,131,502
Management and administrative fees 995,237 758,249
Equity income of partnerships and other 29,752 305,742
---------- ----------
Total revenues 2,294,302 2,195,493
========== ==========
Operating expenses:
Personnel 1,192,018 1,037,386
Office operations 151,749 134,036
Occupancy 117,711 91,445
Sales and marketing 164,217 71,379
Professional fees 51,626 83,174
Provision for losses on investments in and
receivables from partnerships 155,212 135,140
--------- --------
Total operating expenses 1,832,533 1,552,560
========= =========
Income from operations 461,769 642,933
--------- ---------
Other income (expense):
Interest income 30,942 15,226
Interest expense (102,282) (82,532)
Loss on sale of hotel franchise rights (150,000) -
--------- ---------
(221,340) (67,306)
--------- ---------
Income before income taxes
and extraordinary item 240,429 575,627
Income taxes 111,000 245,000
-------- --------
Income before extraordinary item 129,429 330,627
Extraordinary item - gain on forgiveness of debt,
net of income tax expense of $40,000 60,000 -
-------- -------
Net income 189,429 330,627
Retained earnings, beginning of year 1,552,069 976,442
Adjustment pursuant to tax sharing arrangement 137,600 245,000
Dividend to parent (150,000) -
---------- --------
Retained earnings, end of year $ 1,729,098 1,552,069
============ ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 12 ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
<TABLE>
Statements of Cash Flows
For the years ended December 31, 1995 and 1994
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 189,429 330,627
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 23,328 11,670
Extraordinary gain on forgiveness of debt (100,000) -
Adjustment pursuant to tax sharing arrangement 137,600 245,000
Deferred income taxes (48,000) -
Equity income of partnerships (29,752) (352,952)
Provision for losses on investments in and
receivables from partnerships 155,212 135,140
Loss on sale of hotel franchise rights 150,000 -
Cash provided (used) by changes in:
Prepaid and other current assets (24,920) 979
Accounts payable and accrued expenses 166,896 (22,417)
--------- --------
Net cash provided by operating activities 619,793 348,047
--------- --------
Cash flows from investing activities:
Advances to partnerships, net (116,849) (29,897)
Distributions from partnerships 33,386 387,863
Investments in partnerships (99,800) (35,046)
Purchase of office furniture and equipment (25,516) (84,142)
Proceeds from sale of hotel franchise rights 225,000 (100,000)
Net payments received from parent 87,038 279,153
Net cash provided by investing activities 103,259 417,931
--------- ---------
Cash flows from financing activities:
Repayment of debt (175,000) (638,500)
Dividend to parent (150,000) -
---------- ----------
Net cash used in financing activities (325,000) (638,500)
---------- ----------
Net increase in cash and cash equivalents 398,052 127,478
Cash and cash equivalents, beginning of year 517,381 389,903
--------- ---------
Cash and cash equivalents, end of year $ 915,433 517,381
========== =========
</TABLE>
(Continued)
<PAGE> 13 ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
<TABLE>
Statements of Cash Flows, Continued
<CAPTION>
1995 1994
<S> <C> <C>
Supplemental disclosure of cash flow information:
Interest paid $ 102,282 82,532
========== ========
Supplemental schedule of noncash investing and
financing activities:
Note issued in connection with acquisition
of hotel franchise rights $ - 275,000
Accrued partnership contributions $ 12,419 36,560
========== ========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 14 ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
Notes to Financial Statements
December 31, 1995 and 1994
(1) Description of Business and Summary of Significant Accounting Policies
Essex Partners Inc. (the Company) is the managing general
partner of real estate partnerships. In addition to revenues
earned as an investor, the Company receives management,
administrative, development and other fees for services
rendered to the partnerships.
The Company s parent, Essex Investment Group, Inc. (Essex),
is an integrated financial services and real estate company
that develops and markets a broad range of investment and
insurance products and services for individuals, businesses
and individual pension accounts.
Cash Equivalents
Cash equivalents consist of money market accounts with an
initial term of three months or less.
Investments in Partnerships
Investments in partnerships are accounted for by the equity
method. Any initial partnership capital contribution
required by the Company which is payable out of future
distributions to the Company is accrued. Any residual
interest in partnership assets (which may range up to an
additional 20% interest) is not recorded until received.
Income Taxes
Income taxes are accounted for under the asset and liability
method whereby deferred tax assets and liabilities are
recognized for the estimated future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to
taxable income in the year in which those temporary
differences are expected to be recovered or settled. The
effect of deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period which
includes the enactment date.
The Company is included in the consolidated federal and
combined New York State income tax returns of Essex. Essex
allocates current federal and state income taxes on a prorata
basis to only its subsidiaries which have taxable income.
Any difference between current income taxes determined on a
separate company basis in accordance with the asset and
liability method and the amount allocated to the Company by
Essex is reflected as an adjustment of retained earnings.
<PAGE> 15 ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
Notes to Financial Statements
(1) Description of Business and Summary of Significant
Accounting Policies (continued)
Use of Estimates
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and
liabilities and the disclosure of contingent liabilities to
prepare these financial statements in conformity with
generally accepted accounting principles. Actual results
could differ from those estimates.
(2) Advances Receivable from Partnerships
The Company makes advances to partnerships in connection with
the acquisition and construction of real estate and operation
of certain partnerships. The Company also earns management
and administrative fees from the partnerships. Such
receivables, which are generally due on demand and unsecured
at December 31, 1995 and 1994, are summarized as follows:
<TABLE>
<CAPTION>
Partnership Advances 1995 1994
<S> <C> <C>
Essex-Ashford River Oaks L.P. $ 267,086 100,786
Essex Albion Credits L.P. 168,107 -
Essex Geneseo Associates L.P. 101,211 124,628
Essex Microtel LeRay L.P. - 140,015
Others 270,069 339,407
--------- --------
806,473 704,836
Allowance for uncollectible advances (240,000) (100,000)
---------- ---------
566,473 604,836
Less current portion (355,546) (434,901)
--------- ---------
$ 210,927 169,935
========== =========
</TABLE>
The carrying value of advances receivable from partnerships, net of the
allowance for uncollectible advances, approximates fair value using a discounted
cash flow analysis. The approximate fair value of accrued partnership
contributions was $100,500 at December 31, 1995 based on a discounted cash
flow analysis.<PAGE>
<PAGE> 16 ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
Notes to Financial Statements
(3) Hotel Franchise Rights
In 1994, the Company purchased rights to 15 Microtel hotel
franchises for $375,000 in exchange for cash of $100,000 and
a noninterest-bearing note payable for $275,000. During
1995, the Company sold one franchise right for $25,000 to an
affiliate and the remaining 14 rights were resold to the
franchisor for $200,000, resulting in a loss of $150,000.
The Company repaid $175,000 of the related noninterest-
bearing note payable and the remaining $100,000 was forgiven,
resulting in an extraordinary gain of $60,000, net of the
related income tax effect of $40,000.
(4) Investments in Partnerships
The Company is a general partner in partnerships which
primarily own and operate hotels, apartment buildings and
mobile home parks. The Company also earns fees in connection
with providing organization, financing, acquisition,
development, management, administration and due diligence
services to those partnerships. Such fees totaled $2,192,192
in 1995 and $1,688,995 in 1994. In addition, the Company
provides managerial and administrative services under
contracts with several other entities owned by officers of
Essex, earning fees of $72,358 in 1995 and $153,546 in 1994.
(5) Long-Term Debt
During 1995, the Company repaid $175,000 of the related
noninterest-bearing note payable, and the remaining
outstanding balance of $100,000 was forgiven. See note 3.
(6) Income Taxes
Total income taxes for the year ended December 31, 1995 and
1994 were allocated as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Income from operations $ 111,000 245,000
Extraordinary item 40,000 -
-------- -------
$ 151,000 245,000
========== =========
</TABLE>
<PAGE> 17 ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
Notes to Financial Statements
<TABLE>
<CAPTION>
(6) Income Taxes (continued)
The components of income tax expense attributable to income
from operations are as follows:
Current Deferred Total
<S> <C> <C> <C>
Year ended December 31, 1995:
Federal $ 119,800 (38,500) 81,300
State 39,200 (9,500) 29,700
--------- -------- ------
$ 159,000 (48,000) 111,000
========== ======== ========
Year ended December 31, 1994:
Federal 183,000 - 183,000
State 62,000 - 62,000
------- -------- -------
$ 245,000 - 245,000
========== ========= ========
</TABLE>
<TABLE>
Income tax expense differs from the amounts computed by
applying the U.S. Federal income tax rate of 34% to income
before income taxes and extraordinary item as follows:
<CAPTION>
1995 1994
<S> <C> <C>
Computed expected tax expense $ 82,000 196,000
Increase (decrease) resulting from:
State taxes, net of federal income tax benefit 19,600 40,900
Officers life insurance 8,600 5,400
Other 800 2,700
------ -------
$ 111,000 245,000
========== =======
</TABLE>
In 1995, Essex allocated $61,400 of consolidated current
income tax expense to the Company pursuant to the inter-
company tax sharing arrangement. In 1994, no expense or
benefit was allocated to the Company. The differences
between current income taxes allocated to the Company under
the tax sharing arrangement and the amounts reflected above
in accordance with the asset and liability method are
reflected in the accompanying statements of changes in
stockholder s equity as adjustments to retained earnings.
The deferred tax asset results from temporary differences
related to the allowance for uncollectible receivables from
partnerships and hotel franchise rights, less a valuation
allowance of $48,000 at both December 31, 1995 and 1994.
<PAGE> 18 ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
Notes to Financial Statements
(6) Income Taxes (continued)
In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that
some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during
the periods in which those temporary differences become
deductible. Management considers the projected future
taxable income and tax planning strategies in making this
assessment. Based on the level of historical taxable income
and estimates of future taxable income over the periods which
the deferred tax assets are deductible, management believes
it is more likely than not that the Company will realize the
benefits of these deductible differences, net of the existing
valuation allowance, at December 31, 1995.
(7) Commitments and Contingencies
As the Company is a general partner in several partnerships,
it may, subject to partnership agreement restrictions, be
held liable for all recourse debt and obligations of such
partnerships to the extent that the obligations are not
funded by the partnerships. The amounts of such contingent
liabilities include guarantees of the following partnership
obligations at December 31, 1995:
Essex Microtel Lehigh L.P.
Mortgage payable to bank, secured by a first
mortgage on the property $ 1,239,000
Essex Geneseo Associates L.P.
Mortgage payable to bank, secured by a first
mortgage on the property 2,164,000
Essex Real Estate Partnership Notes
Mortgage notes payable, secured by first
mortgage on certain properties 976,000
Essex-Ashford River Oaks L.P.
Mortgage payable to bank, secured by a first
mortgage on the property 500,000
<PAGE> 19 ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
Notes to Financial Statements
(7) Commitments and Contingencies (continued)
Although there is no current plan or intention to do so, the
capital of the Company is available for withdrawal by Essex.
Summarized consolidated financial information for Essex as of
and for the years ended December 31, 1995 and 1994 follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Assets $ 5,100,000 4,100,000
Liabilities 4,700,000 3,350,000
Minority interest - convertible preferred stock
of subsidiary of Essex - 701,000
Total stockholders equity 360,000 68,000
Revenue 9,200,000 7,650,000
Net income 300,000 228,000
</TABLE>
On behalf of Essex, the Company guarantees a term note payable to a bank of
$995,000 at December 31, 1995.
<PAGE> 20 ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Financial Statements
December 31, 1995
(With Independent Auditors Report Thereon)
<PAGE> 21 Independent Auditors Report
The Partners
Essex Hospitality Associates IV L.P.:
We have audited the accompanying balance sheet of Essex
Hospitality Associates IV L.P. (a New York limited partnership)
as of December 31, 1995, and the related statements of changes in
partners capital and cash flows for the period from August 30,
1995 (date of inception) through December 31, 1995. These
financial statements are the responsibility of the Partnership s
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Essex Hospitality Associates IV L.P. as of December 31, 1995
and its cash flows for the period from August 30, 1995 (date of
inception) through December 31, 1995 in conformity with generally
accepted accounting principles.
Rochester, New York /s/ KPMG Peat Marwick LLP
February 12, 1996 -------------------------
KPMG Peat Marwick LLP
<PAGE> 22 ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Balance Sheet
December 31, 1995
Assets
Investment in real estate, at cost:
Land $ 1,400,435
Construction in progress 26,250
---------
1,426,685
---------
Cash and cash equivalents 628,864
Prepaid expenses and other assets 5,153
Deferred costs:
Debt issuance 253,841
Franchise fees 80,000
-------
Total deferred costs 333,841
--------
$ 2,394,543
=========
Liabilities and Partners Capital
Liabilities:
Accounts payable and accrued expenses 155,400
Due to affiliate 64,495
Subordinated notes payable 1,744,000
---------
Total liabilities 1,963,895
---------
Commitments and contingencies (notes 4 and 5)
Partners capital 519,895
Less notes receivable from partners (89,247)
-------
Net partners capital 430,648
--------
$ 2,394,543
=========
See accompanying notes to financial statements.
<PAGE> 23 ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
<TABLE>
Statement of Changes in Partners' Capital
Period from August 30, 1995 (date of inception) through December 31, 1995
<CAPTION>
Net
Partners Capital Notes Partners
General Limited Total Receivab Capital
<S> <C> <C> <C> <C> <C>
Balance at August 30, 1995 $ - - - - -
Capital contributions 6,574 650,898 657,472 (89,247) 568,225
Syndication costs - (137,477)(137,477) - (137,477)
Return of original limited partner's
contribution - (100) (100) - (100)
----- ------- ------- ------- -------
Balance at December 31, 1995 $ 6,574 513,321 519,895 (89,247) 430,648
</TABLE> ====== ======= ======= ====== =======
See accompanying notes to financial statements.<PAGE>
<PAGE> 24 ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Statement of Cash Flows
Period from August 30, 1995 (date of inception) through December 31, 1995
Cash flows from investing activities:
Investment in real estate $(1,276,438)
Franchise fees paid (80,000)
------------
Net cash used in investing activities (1,356,438)
------------
Cash flows from financing activities:
Proceeds from issuance of subordinated notes payable 1,744,000
Debt issuance costs (192,737)
Proceeds from offering of limited partnership units 568,225
Syndication costs (134,086)
Return of original partner's contribution (100)
------------
Net cash provided by financing activities 1,985,302
------------
Net increase in cash and cash equivalents 628,864
Cash and cash equivalents - beginning of period -
------------
Cash and cash equivalents - end of period $ 628,864
=============
Supplemental schedule for noncash investing and financing activities:
Obligations incurred in connection with construction in progress 150,247
Debt issuance and syndication costs due to affiliate 64,495
Notes received from general and limited partners $ 89,247
=========
See accompanying notes to financial statements.
<PAGE> 25 ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Notes to Financial Statements
December 31, 1995
(1) Organization
Essex Hospitality Associates IV L.P. (the Partnership) is a
New York limited partnership formed on August 30, 1995 for
the purpose of acquiring land and constructing, owning and
operating a series of hotels. The Partnership will also
acquire a limited partnership interest in an affiliated
partnership, Essex Glenmaura L.P. (Glenmaura), which will
construct, own and operate a Courtyard by Marriott hotel
near Scranton, Pennsylvania (see note 6). The Partnership
may also lend funds to other partnerships that own hotels.
The Partnership is financing its activities through a public
offering of notes and limited partnership units.
The Partnership is in the development stage and is acquiring
land in order to construct and operate the hotels. In
December 1995, land was purchased in Solon, Ohio and
Warwick, Rhode Island in anticipation of the construction of
a Hampton Inn and Suites hotel and a Homewood Suites hotel,
respectively.
The Partnership's general partner is Essex Partners Inc.
(Essex Partners), a subsidiary of Essex Investment Group,
Inc. (Essex).
The following is a general description of the allocation of
income, loss, and distributions. For a more comprehensive
description see the Partnership Agreement:
Allocations of income from operations will be allocated
99% to the limited partners and 1% to the general
partner until the amount allocated to the limited
partners equals the cumulative annual return of 8% of
their contribution. Any remaining income from
operations is allocated 80% to the limited partners and
20% to the general partners. Income on the sale of any
or all of the hotels is allocated 99% to the limited
partners until each limited partner has been allocated
income in an amount equal to his or her pro rata share
of the nondeductible syndication expenses and sales
commissions and 1% to the general partners. Thereafter,
income on the sale of any or all the hotels is allocated
in the same manner as income from operations.
Allocations of losses from operations will be allocated
80% to the limited partners and 20% to the general
partner in the amounts sufficient to offset all income
which was allocated 80% to the limited partners.
Thereafter, operating losses are allocated 99% to the
limited partners and 1% to the general partner. Loss on
the sale of any or all of the hotels will be first
allocated in the same manner as losses from operations,
except that the allocation of such loss would be made
prior to allocations of income from operations. All
other losses are allocated 99% to the limited partners
and 1% to the general partners.
<PAGE> 26 ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Notes to Financial Statements
(1) Organization (continued)
Cash distributions will initially be made 99% to the
limited partners and 1% to the general partners. After
the limited partners have received a cumulative annual
return of 8% of their contribution, additional
distributions may then be made 80% to the limited
partners and 20% to the general partners. Distributions
of the net proceeds of sale or refinancing of any or all
hotels will be made 1% to the general partner and 99% to
the limited partners pro rata in accordance with the
number of units held by each limited partner until the
limited partners have received distributions from sale
or refinance of hotels equal to $1,000 per unit.
Thereafter, distributions shall next be made 1% to the
general partner and 99% to the limited partners until
each limited partner has received any unpaid cumulative
return accrued through the date of the distribution.
Additional distributions will then be made 20% to the
general partner and 80% to the limited partners.
Essex Partners and its affiliates are receiving substantial
fees in connection with the offering of notes and limited
partnership units. Additional fees will be paid to them in
connection with the acquisition, development and operation
of the hotels and management of the Partnership (see note
5).
(2) Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Partnership were prepared on
the accrual basis of accounting in conformity with generally
accepted accounting principles. As the Partnership has no
operating hotels, the accompanying financial statements do
not include a statement of operations.
Investments in Partnerships
Investments in Partnerships with a 50% or less ownership
interest will be accounted for by the equity method.
Ownership interests exceeding 50% will be accounted for
under the consolidated method.
Investment in Real Estate
Investment in real estate is stated at cost. Depreciation
will be calculated using the straight-line method over the
estimated useful lives of the assets as each hotel commences
operations.
<PAGE> 27 ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Notes to Financial Statements
(2) Summary of Significant Accounting Policies (continued)
Cash and Cash Equivalents
Cash investments with maturities of three months or less at
the time of purchase are considered to be cash equivalents.
Deferred Costs
Costs of issuing the subordinated notes payable will be
amortized on a straight-line basis over the term of the
notes.
Franchise fees paid for the right to own and operate the
hotels will be amortized on a straight-line basis over the
term of each franchise agreement, beginning when a hotel is
placed in service.
Syndication Costs
Selling commissions and legal, accounting, printing and
other filing costs totaling $137,477 related to the offering
of the limited partnership units were charged against the
proceeds of the public offering.
Income Taxes
No provision for income taxes has been provided since any
liability is the individual responsibility of the partners.
Use of Estimates
The preparation of the financial statements in conformity
with generally accepted accounting principles requires the
managing general partner to make estimates and assumptions
that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of
income and expenses during the reporting period. Actual
results could differ from those estimates.
(3) Subordinated Notes Payable
Subordinated notes payable bear interest at a rate of 10.5%
per annum, payable monthly, and mature December 31, 2001,
unless extended by the Partnership to December 31, 2002 upon
payment to holders of an extension fee equal to .5% of the
principal amount of the subordinated notes outstanding. The
notes are issued as unsecured obligations of the
Partnership.
<PAGE> 28 ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Notes to Financial Statements
(3) Subordinated Notes Payable (continued)
In accordance with the Partnership agreement, the ratio of
gross proceeds from the offering of limited partnership
units to total gross proceeds from the offering prior to the
termination of the offering may not be less than .15 to 1.
At December 31, 1995, that ratio was .27 to 1.
The carrying value of the mortgage notes payable
approximates the fair value based on a discounted cash flow
analysis using an interest rate currently being offered for
loans with similar terms and credit quality.
(4) Franchise Fees
In 1995, the Partnership entered into a license agreement
with Promus Corporation (Promus) to operate a Homewood
Suites hotel in Warwick, Rhode Island. An initial franchise
fee of $40,000 has been paid. In addition to the initial
fee, the Partnership will be required to pay to Promus a
monthly royalty fee of 4% of gross room revenues, a monthly
marketing/reservation fee of 4% of gross room revenue, an
initial software license fee of $3,000 plus $85 per guest
room with a monthly maintenance charge of $200 to $350 per
month, and a monthly amount equal to any sales tax or
similar tax imposed on Promus on payments received under the
license agreement.
In November 1995, the Partnership entered into a license
agreement with Promus to operate a Hampton Inn and Suites
hotel for the Solon, Ohio site. An initial franchise fee of
$40,000 was paid. In addition to the initial fee, the
Partnership will be required to pay to Promus a monthly
royalty fee of 4% of gross room revenues, a monthly
marketing/reservation fee of 4% of gross room revenue, an
initial software license fee of $3,000 plus $85 per guest
room with a monthly maintenance charge of $200 to $350 per
month, and a monthly amount equal to any sales tax or
similar tax imposed on Promus on payments received under the
license agreement.
Promus requires the Partnership to establish a capital
reserve escrow account based on a percentage of gross
revenues generated by each hotel which will be used for
product quality requirements of the hotel. Cumulative
funding of the reserve for the first five years increases
from 1% to 5% of gross revenues and stabilizes at 5% for the
term of the agreement.
The franchise agreements impose certain restrictions on the
transfer of limited partnership units. Promus restricts the
sale, pledge or transfer of units in excess of 25% without
their consent.
<PAGE> 29 ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Notes to Financial Statements
(5) Related Party Transactions
A summary of fees earned by Essex Partners or its affiliates
in 1995 under the terms of the Partnership agreement
follows:
Type of Fee Amount of Fee
Selling Commission Up to $80 per limited partnership
unit and $55 per $1,000 note sold $ 147,154
Organization and Offering 3.4% of the gross proceeds
Fee of the offering 81,423
Acquisition Fee $110,000 per hotel site 220,000
--------
$ 448,577
========
Organization and offering fees are allocated to syndication costs
and debt issuance costs based on the pro-rata share of limited partners
units and notes payable to the total offering.
The above fees are reflected in the accompanying financial statements as
follows:
Balance sheet:
Investment in real estate $ 220,000
Deferred debt issuance costs 155,216
Syndication costs, charged to partners capital 73,361
-----------
$ 448,577
===========
Under the terms of the Partnership agreement, Essex Partners
or its affiliates will also earn other fees as follows:
Type of Fee Amount of Fee
Investor Relations Fee .25% of the gross proceeds of the
offering payable annually in 1998
through 2001
Development Fee $160,000 per hotel, plus 5% of the
total cost of the hotel in excess of
$2.7 million (not to exceed $325,000
per hotel)
<PAGE> 30 ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Notes to Financial Statements
(5) Related Party Transactions (continued)
Type of Fee Amount of Fee
Property Management Fee 4.5% of gross operating revenues
from the hotels
Partnership Management Fee .75% of gross operating revenues from
the hotels
Accounting Fee $800 per month
Refinancing Fee 1% of the gross proceeds of re-financing
any or all of the hotels
Sales Fee 3% of the gross sale price of any
or all of the hotels
The Partnership will also be subject to a number of conflicts of interest
arising from its relationships with the general partner, its owners and
affiliates and due to other activities and entities in which the general
partner and its affiliates have or may have a direct or indirect financial
interest.
(6) Investment in Affiliate - Essex Glenmaura L.P.
In January 1996, the Partnership purchased nine limited partner units of
Glenmaura for $100,000 per unit, in exchange for $90,000 in cash and a
non-interest bearing demand note payable for the remaining $810,000. The
purchase resulted in a 46% equity interest.
As of December 31, 1995, Glenmaura is constructing a Courtyard by Marriott
hotel near Scranton, Pennsylvania, and has invested $2,243,000 into the land
acquisition and construction costs. The financing of the land acquisition,
construction costs and all related fees and expenses through December 31, 1995
for the hotel project has been funded by $1,500,000 in unsecured notes and
$1,050,000 from partner equity (prior to the Partnership s investment).
<PAGE> 31 ESSEX GLENMAURA L.P.
--------------------
Financial Statement
December 31, 1995
<PAGE> 32 Report of Independent Accountants
To the Partners
Essex Glenmaura L.P.
We have audited the accompanying balance sheet of Essex Glenmaura
L.P. as of December 31, 1995 and the related statements of income
and cash flows for the period from May 18, 1995 (date of
inception) through December 31, 1995. These financial statements
are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Essex Glenmaura L.P. as of December 31, 1995 and the results
of operations and cash flows for the period from May 18, 1995
(date of inception) through December 31, 1995, in conformity with
generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
----------------------------
Coopers & Lybrand L.L.P.
Rochester, New York
February 1, 1996
<PAGE> 33 Essex Glenmaura L.P.
Balance Sheet
December 31, 1995
Assets
Investments in real estate, at cost:
Land $1,223,636
Development 1,019,704
----------
Total investment in real estate 2,243,340
Current assets:
Cash and cash equivalents 248,522
Prepaid expenses 88
---------
Total current assets 248,610
Other assets:
Deposit 35,000
Intangible assets, net 161,161
---------
$2,688,111
==========
Liabilities and Partners' Capital
Notes payable $1,500,000
Current liabilities:
Accounts payable 480,372
Accrued interest 13,125
---------
Total current liabilities 493,497
Partners' capital:
General partner 99,945
Limited partners 917,170
Less, subscriptions receivable - limited
partners (322,500)
---------
Total partner's capital 694,615
---------
$2,688,111
===========
The accompanying notes are an integral part of the financial
statements.
<PAGE> 34 Essex Glenmaura L.P.
Statement of Income
For the period from May 18, 1995 (date of inception)through December 31, 1995
Interest income $2,381
------
Expenses:
Interest expense 5,482
Administrative expenses 1,026
Management expenses 861
Other fixed charges 500
-------
Total expenses 7,869
-------
Net loss $(5,488)
=======
The accompanying notes are an integral part of the financial
statements.
<PAGE> 35 Essex Glenmaura L.P.
Statement of Changes in Partners' Capital
For the Period from May 18, 1995 (date of inception) through December 31, 1995
<TABLE>
<CAPTION>
Partners' Capital
General Limited Sub-Total Subscriptions
ons Total
Receivable
<S> <C> <C> <C> <C> <C>
Balance at $ -- $ -- $ -- $ -- $ --
May 18, 1995
Capital 100,000 950,000 1,050,000 (322,500) 727,500
Contributions 0 0
Syndication -- (27,397) (27,397) -- (27,397)
cost
Net loss (55) (5,433) (5,488) -- (5,488)
-------- -------- -------- -------- --------
Balance at $99,945 $917,170 $1,017,115 $(322,500) $694,615
December 31, 1995 ======== ========= ======== ========= ========
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE> 36 Essex Glenmaura L.P.
Statement of Cash Flows
For the Period from May 18, 1995 (date of inception) through December 31, 1995
Cash flows from operating activities:
Cash paid to vendors and employees $(2,475)
Interest received 2,381
Interest paid (5,482)
--------
Net cash used in operating activities (5,576)
--------
Cash flows from investing activities:
Fixed asset additions (1,731,468)
Franchise fees (48,000)
Deposits (35,000)
----------
Net cash used in investing activities (1,814,468)
-----------
Cash flows from financing activities:
Partners' capital contributions 727,500
Syndication costs (27,397)
Proceeds from notes payable 1,500,000
Debt issuance costs (119,003)
Organization costs (12,534)
-----------
Net cash provided by financing activities 2,068,566
-----------
Net increase in cash 248,522
Cash and cash equivalents - beginning of period --
-----------
Cash and cash equivalents - end of period $248,522
===========
Reconciliation:
Net loss $(5,488)
Adjustments - change in prepaids (88)
----------
Net cash used in operating activities $(5,576)
The accompanying notes are an integral part of the financial statements.
<PAGE> 37 Essex Glenmaura L.P.
Notes to Financial Statements
December 31, 1995
1. Summary of Significant Accounting Policies
Scope of Business
The partnership is a New York Limited Partnership formed to
construct, own and operate a 120 room hotel, Courtyard by
Marriott, Southeast of Scranton, Pennsylvania under a
franchise agreement with Marriott International, Inc. (the
Project)
The Partnership was formed on May 18, 1995 and will
terminate on the earlier of December 31, 2045 or the date
the Partnership is terminated pursuant to the Partnership
agreement or by law.
Allocations of Income or Loss
The Partnership agreement provides that net losses of the
Partnership be first allocated among the Partners to the
extent of the positive balances in the Partners' capital
accounts, to make the respective balances equal to the
distributions that would have been made had the aggregate
balances in all Partners' capital accounts been distributed
in accordance with each Partner's pro rata share. Losses
are next allocated in accordance with each Partner's pro
rata share in an amount equal to the difference between
nonrecourse debt of the Partnership and the adjusted basis
of the Partnership property securing such nonrecourse debt.
All additional losses are allocated to the General Partner.
Net income is allocated first to the General Partner in an
amount equal to the loss allocated to the General Partner as
described above. Next, income is allocated in accordance
with each Partner's pro rata share in an amount equal to the
loss allocated to the Partners as described above. Income
is then allocated to those Partners with negative balances
in their capital accounts. All additional income is then
allocated in accordance with each Partner's pro rata share.
Cash and Cash Equivalents
For the purposes of the financial statements, cash and cash
equivalents include money market funds and commercial
savings accounts.
Method of Accounting
The Partnership has prepared its financial statements on the
accrual method of accounting.
<PAGE> 38 Essex Glenmaura L.P.
Notes to Financial Statements
December 31, 1995
1. Summary of Significant Accounting Policies - continued
Income Taxes
The taxable income or loss of the Partnership will be
included in the income tax returns of the individual
partners. Accordingly, the effect of income taxes has not
been included in the accompanying financial statements.
Organization Costs
Organization costs will be amortized on a straight-line
basis over a period of sixty months, beginning the first
month of operation.
Debt Acquisition Fees
Debt acquisition fees are being amortized over the three-year life of the
notes on a straight-line basis.
Distributions
Distributions shall be made in accordance with each
Partner's pro rata share at an amount and time determined by
the General Partner.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Disclosure about Fair Value of Financial Instruments
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments for
which it is practicable to estimate that value.
Current Assets and Liabilities - The carrying
amount cash and equivalents, other assets and
accrued liabilities approximate fair value because
of the short maturity of those instruments.
<PAGE> 39 Essex Glenmaura L.P.
Notes to Financial Statements
December 31, 1995
1. Summary of Significant Accounting Policies - continued
Long-Term Debt - The fair value of the
Partnership's long-term debt approximates fair
value based on the quoted market prices for
similar issues. See further discussion in Note 4.
2. Deposit
The Partnership has made a deposit of $35,000 pursuant to an
option to purchase a second parcel of land (the Second
Project) adjacent to the Project for purposes of contructing
a second hotel. If the parcel is acquired before May 31,
1996, the purchase price will be $613,000. If the parcel is
acquired after May 31, 1996, the option requires an
additional payment of $40,000 due and payable June 1, 1996.
Thereafter until August 31, 1997, the price is $665,000.
The deposit is non-refundable.
3. Intangible Assets
Intangible assets consist of the following as of December
31, 1995:
Organization costs $12,534
Franchise fee 48,000
Debt acquisition costs 119,003
--------
179,537
Less: Accumulated amortization (18,376)
--------
$161,161
========
4. Notes Payable
Notes payable consist of $1,500,000 of unsecured notes
requiring monthly installments of interest only at 10.5% per
annum. The notes mature on June 1, 1998 upon which all
principal will be due unless the Partnership exercises its
early repayment or note extension options. After June 30,
1996, the Partnership has the right to repay the notes at
face value. The Partnership also has the option to exercise
two one-year extensions at extension fees ranging from one-half to one
percent. Essex Partners Inc. guarantees payment of principal and
interest on the notes.
<PAGE> 40 Essex Glenmaura L.P.
Notes to Financial Statements
December 31, 1995
5. Offering of Limited Partnership Units
The Partnership intended to raise a minimum of $300,000 and
a maximum of $1,000,000 through the sale of not less than
three or more than ten Limited Partnership Units (the
"Units"). The purchase price is $100,000 per Unit. Essex
Partners Inc. (the General Partner) may at any time during
the offering period increase the size of the offering to the
Extended Maximum Offering of $2,500,000, or twenty five
Units and did so subsequent to year-end. Essex Capital
Markets Inc., an affiliate of the General Partner, will
receive a 2% fee in connection with the sale of these Units.
As of December 31, 1995, nine and one half Units had been
sold. An additional nine units were sold to Essex
Hospitality Associates IV L.P. in January 1996.
6. Subscriptions Receivable - Limited Partners
In connection with the sale of $950,000 of Limited
Partnership Units (net of syndication costs of $27,397),
$322,500 of non-interest bearing promissory notes are due on
demand as of December 31, 1995; of this amount, $267,500 was
paid and the remaining $55,000 was called subsequent to
year-end.
7. Related Party Transactions
For arranging the note financing, Essex Partners Inc.
received a financing fee of $10,000 and Essex Capital
Markets Inc. received selling commissions of $60,000 and due
diligence fees of $11,250.
Essex Partners Inc. shall receive an offering and
organization fee in the amount of $20,000 if the minimum
offering amount is raised, or up to $40,000 if the extended
maximum offering amount is raised, for services rendered and
expenses incurred in connection with the formation and
reorganization of the Partnership and the offering of Units.
This fee will be reduced by the amount of any fees paid to
Essex Capital Markets Inc. in connection with the placement
of Units. As of December 31, 1995, the General Partner has
received $8,000 and Essex Capital Markets has received
$12,000 in connection with the sale of these Units.
As compensation for its assignment of the purchase contract
for the land, the option contract and the franchise
agreement, Essex Partners Inc. received $225,000.
<PAGE> 41 Essex Glenmaura L.P.
Notes to Financial Statements
December 31, 1995
7. Related Party Transactions - continued
Essex Partners Inc. has contributed $100,000 to the
Partnership for its General Partner interest.
As compensation for services in development of the project,
Essex Partners Inc. will receive a development fee in the
amount of $285,000 payable in monthly installments of
$42,750. The balance will be due upon completion of
construction as indicated by issuance of the certificate of
occupancy. Of this amount, $171,000 was paid in 1995.
In the future, the Partnership will also pay the General
Partner, Essex Partners Inc., the following:
a) a property management fee equal to 4.5% of gross
operating revenue, a monthly accounting fee of $800,
and reimbursement of certain expenses incurred by Essex
Partners Inc. in connection with the management of the
project,
b) a Partnership management fee of .75% of gross operating
revenues,
c) a refinancing fee upon the closing of a refinancing of
the Project, in the aggregate amount of 1% of the gross
proceeds of the refinancing,
d) a sales fee upon the closing of a sale of the Project,
in the aggregate amount of 2.5% of the gross sales
prices, provided that the sum of such fee and any
competitive real estate commission paid by the
partnership with respect to such sale does not exceed
5% of the gross sale price, and that Essex Partners
Inc. renders substantial services in connection with
the sale,
e) in the event the General Partner elects to proceed with
the Second Project on behalf of the Partnership, Essex
Partners Inc. will receive additional compensation
related to the acquisition of the second parcel,
construction of the Second Project and securing
additional equity and debt financing to fund such
activities. Such compensation will include an
acquisition fee equal to $50,000 for its services
related to the acquisition of the second parcel and a
development fee up to $150,000 plus 3% of total
construction, site development and fixtures, furniture
and equipment costs, as compensation for its services
related to the development of the Second Project. In
addition, as compensation for arranging construction
and permanent financing for the Second Project, Essex
Partners Inc. may receive a financing fee equal to 1%
of the gross proceeds of the financing. Essex Partners
<PAGE> 42 Essex Glenmaura L.P.
Notes to Financial Statements
December 31, 1995
Inc. also will receive an additional property
management fee and partnership management fee
calculated as described in paragraphs (a) and (b) above
based on the gross operating revenues of the Second
Project. If the Second Project is sold and/or
refinanced, Essex Partners Inc. will receive additional
sales and/or refinancing fees calculated as described
in paragraphs (c) and (d) above based on the gross sales
and/or refinancing proceeds of the Second Project, and
f) Essex Partners Inc. and it affiliates also will receive
offering-related fees for services in connection with
(i) the offering of additional partnership interests
and/or notes, or (ii) the possible refinancing of the
Project or the Second Project to fund the acquisition
of the land and/or construction or one or both of those
projects. Essex Partners Inc. and its affiliates are
expressly authorized to receive from the Partnership
the fees and sales commissions customarily charged by
Essex Partners Inc. and its affiliates for rendering
comparable services on competitive terms.
8. Franchise Fees
The Partnership has entered into a franchise agreement with
Marriott International, Inc. Under the terms of the
agreement, the Partnership was required to pay an initial
franchise fee of $48,000. The term and amortization period
of the franchise agreement is twenty years, with an option
to renew for an additional ten-year period.
The Partnership is also required to pay a monthly royalty
fee in an amount equal to 4% of gross room rentals for the
first two years of operations and 5% during the remainder of
the term of the agreement, a marketing fee of 2-3% of gross
revenues, a reservation system fee and a property management
system fee.
9. Capitalized Interest
Interest capitalized during the development phase amounted
to $94,593 as of December 31, 1995.
10. Commitments
During 1995, the Partnership has entered into a construction
contract in the amount of $4,170,000.
<PAGE> 43 Essex Glenmaura L.P.
Notes to Financial Statements
December 31, 1995
11. Subsequent Events
On January 17, 1996, the Partnership sold an additional nine
units to Essex Hospitality Associates IV L.P. ($900,000
purchase price); $90,000 was paid upon subscription and
Essex Hospitality Associates IV L.P. executed a $810,000
non-interest bearing promissory note which is due on demand.
Of the $810,000, $225,000 has been paid as of February 1,
1996.
The Partnership has received a commitment for permanent
financing from Marriott Capital Corporation for the lessor
of $4,500,000 or 54.2% of the project acquisition and
construction cost. The term will be for five years and
monthly payments of interest only will accrue at 3.25% over
the LIBOR rate or a fixed rate of 3.25% over the U.S.
Treasury rate to be amortized over 20 years. Funding will
occur by January 31, 1997, if the improvements and site work
are fully completed; otherwise, the commitment expires.
The commitment fee is $45,000 (1% of the loan proceeds); 50%
of the commitment fee was paid in 1995, upon acceptance of
the commitment and is non-refundable. The additional 50% is
payable at closing. The loan will be collateralized by the
real and personal property, rental receipts and other
assets.
The Partnership received a commitment from Key Bank for
construction financing in the amount of $4,500,000. The
term will be for the earlier of twelve months or the
expiration of the commitment from Marriott Capital
Corporation. Monthly payments of interest only will be
required at a rate of 2.5% over the LIBOR rate and
associated fees are $22,500 (.5% of the loan amount). The
loan will be guaranteed by Essex Partners Inc. and
collateralized by the real and personal property, rental
receipts and other receivables. Additionally, an interest
reserve of $112,500 is required and restrictive covenants
will relate to minimum net worth that limits on
distributions.
<PAGE> 44 PRIOR PERFORMANCE TABLES
ESSEX PARTNERS INC. AND AFFILIATES
INTRODUCTION
Essex Partners Inc. has been a general partner in eleven real estate
syndications with investment objectives similar to the Partnership. The prior
partnerships were organized to provide capital appreciation and cash
distributions from investments in hotels. These syndications are:
Essex Microtel 1989 L.P.
Essex Microtel Associates L.P.
Essex Microtel Lehigh L.P.
Essex Microtel LeRay L.P.
Hagel-Essex Microtel L.P.
Essex Microtel Carrier Circle L.P.
Essex Charleston Associates L.P.
Essex Microtel Associates II L.P.
Essex Knoxville Associates L.P.
Essex Hospitality Associates III L.P.
Essex Glenmaura L.P.
Nine of the above partnerships involved construction of new facilities. Essex
Microtel Lehigh L.P. purchased a hotel that had been in operation for fifteen
months. Essex Microtel LeRay L.P. purchased a hotel after construction was
completed but before operations began.
This offering is the fourth publicly registered program sponsored by Essex
Partners Inc. or its affiliates.
<PAGE> 45 TABLE I
ESSEX AND AFFILIATES
EXPERIENCE IN RAISING AND INVESTING FUNDS
(Three Years Ending June 30, 1996)
Table I sets forth information with respect to the offerings of real
estate limited partnership interests with similar investment objectives as
the Partnership in which Essex Partners or affiliates acted as general
partners and which closed in the three year period ending June 30, 1996.
<PAGE> 46 TABLE I
ESSEX AND AFFILIATES
<TABLE>
EXPERIENCE IN RAISING AND INVESTING FUNDS
(Three Years Ending June 30, 1996)
<CAPTION>
Essex Essex Essex Hospitality
Glenmaura L.P (6) Glenmaura L.P.(6) Assoc. III L.P. (5)
<S> <C> <C> <C> <C> <C> <C>
Dollar amount offered 2,500,000 1,500,00 13,986,320
Dollar amount raised 2,200,000 88.0% 1,500,000 100.0% 13,986,320 100.0%
Less offering expenses:
Selling commissions paid
to affiliates 12,000 0.5% 60,000 4.0% 856,000 6.1%
Organizational and synd.
expenses (1) 15,400 0.7% 34,500 2.3% 767,000 5.5%
-------- ----- ------- ---- -------- -----
Available for investment $2,172,600 98.8% $1,405,500 93.7% $12,363,320 88.4%
Acquisition and Development costs:
Pre-paid items and fees related
to purchase of property - - - - - -
Cash downpayment (2) - - 1,033,600 68.9% 1,366,000 9.8%
Acquisition and Developer fees:
Paid to affiliates 256,500 11.7% 225,000 15.0% 870,000 6.2%
Paid to non-affiliates - - - - - -
Other acquisition and development
expenses (2) 1,909,100 86.8% 143,900 9.6% 9,442,000 67.5%
---------- ----- --------- ---- ----------- ----
Total acquisition cost $2,165,600 98.4% $1,402,500 93.5% $11,678,000 83.5%
Non-recurring management and
organ. fees to affiliates 7,000 0.3% - - - -
Other requirements (3) - - 3,000 0.2% 685,000 4.9%
--------- ---- -------- ----- --------- -----
Total $2,200,000 100.0% 1,500,000 100.0% $13,986,320 100.0%
Purchase price (including
brokerage fees) 8,088,000 8,088,000 11,679,000
Percent leverage (4) 74.2% 74.2% 85.6%
Date offering began 05/25/95 05/10/95 11/17/93
Length of offering (months) N/A 2 22
</TABLE>
<PAGE> 47 TABLE I
ESSEX AND AFFILIATES
<TABLE>
EXPERIENCE IN RAISING AND INVESTING FUNDS
(Three Years Ending June 30, 1996)
<CAPTION>
Essex Knoxville Essex Knoxville Essex Knoxville
Associates L.P. (7) Assoc. L.P. (7) Assoc. L.P. (7)
<S> <C> <C> <C> <C> <C> <C>
Dollar amount offered 1,000,000 2,000,000 500,000
Dollar amount raised 1,000,000 100.0% 2,000,000 100.0% 500,000 100.0%
Less offering expenses:
Selling commissions paid
to affiliates 20,000 2.0% 100,000 5.0% 27,500 5.5%
Organizational and syndication
expenses (1) 15,900 1.6% 39,800 2.0% 13,000 2.6%
-------- ------ -------- ----- ------- ----
Available for investment $964,100 96.4% $1,860,200 93.0% $459,500 91.9%
Acquisition and Development costs:
Pre-paid items and fees related
to purchase of property - - - - - -
Cash downpayment (2) 430,000 43.0% - - - -
Acquisition and Developer fees:
Paid to affiliates 200,000 20.0% - - - -
Paid to non-affiliates - - - - - -
Other acquisition and development
expenses (2) 304,100 30.4% 1,820,700 91.0% 396,600 79.3%
--------- ----- --------- ----- ------- ----
Total acquisition cost $934,100 93.4% $1,820,700 91.0% $396,600 79.3%
Non-recurring management and
Organ. fees to affiliates 30,000 3.0% 25,000 1.3% 25,000 5.0%
Other requirements (3) - - 14,500 0.7% 37,900 7.6%
-------- ---- ------- ---- ------- ---
Total $1,000,000 100.0% $2,000,000 100.0% $500,000 100.0%
Purchase price (including
brokerage fees) 3,118,000 3,118,000 3,118,000
Percent leverage (4) 80.2% 80.2% 80.2%
Date offering began 12/03/92 06/22/93 05/24/94
Length of offering (months) 13 6 2
</TABLE>
<PAGE> 48 TABLE I
ESSEX AND AFFILIATES
<TABLE>
EXPERIENCE IN RAISING AND INVESTING FUNDS
(Three Years Ending June 30, 1996)
<CAPTION>
Essex Real Estate Essex Microtel
Partnership Notes (8) Associates II L.P. (5)
<S> <C> <C> <C> <C>
Dollar amount offered $976,000 10,487,000
Dollar amount raised $976,000 100.0% 10,487,000 100.0%
Less offering expenses:
Selling commissions paid
to affiliates 48,800 5.0% 578,200 5.5%
Organizational and syndication
expenses (1) 27,200 2.8% 564,000 5.4%
-------- ----- -------- ----
Available for investment $900,000 92.2% $9,344,800 89.1%
Acquisition and Development costs:
Pre-paid items and fees related
to purchase of property - - - -
Cash downpayment (2) - - 1,493,000 14.2%
Acquisition and Developer fees:
Paid to affiliates - - 630,000 6.0%
Paid to non-affiliates - - - -
Other acquisition and development
expenses (2) 95,000 9.7% 6,476,000 61.8%
------- ----- --------- ---
Total acquisition cost $95,000 9.7% $8,599,000 82.0%
Non-recurring management and
organization fees to affiliates - - 90,000 0.9%
Other requirements (3) 805,000 82.5% 655,800 6.3%
-------- ----- ------- ---
Total $976,000 100.0% $10,487,000 100.0%
Purchase price (including
brokerage fees) - 8,688,000
Percent leverage (4) - 90.4%
Date offering began 03/01/95 11/18/92
Length of offering (months) 2 13
</TABLE>
<PAGE> 49 TABLE I
ESSEX AND AFFILIATES
EXPERIENCE IN RAISING AND INVESTING FUNDS
(Three Years Ending June 30, 1996)
NOTES
(1) Includes any legal, accounting, blue sky and publication costs as well as
other fees incurred with the offering.
(2) The cash downpayment represents the land cost. Proceeds used in property
construction are included in other acquisition and development expenses.
(3) Includes amounts of working capital reserves and other carrying costs.
(4) For each partnership, percent leverage equals: (i) the total amount of
mortgages and other financing outstanding on the property owned by the
partnership, divided by (ii) the purchase price.
(5) Both limited partnership interests and debt were included in the offerings
by Essex Charleston Associates L.P., Essex Microtel Associates II L.P. and
Essex Hospitality Associates III L.P..
(6) The Essex Glenmaura L.P. program is being financed through two offerings,
an equity offering of $2,500,000 and a note offering of $1,500,000.
The Essex Glenmaura L.P. equity offering is still in process.
The purchase price represents the estimated total costs to acquire
the land and construct the hotel. The percent leverage is the estimated
total debt divided by the purchase price. The actual purchase price and
percent leverage will not be known until the project is completed.
(7) The Essex Knoxville Associates program was financed through three offerings,
an equity offering of $1,000,000, a mortgage note offering of $2,000,000
and a note offering of $500,000. Each offering is presented separately in
Table I.
(8) The Essex Real Estate Partnership Notes offering raised debt financing for
three real estate partnerships, Essex Microtel Associates L.P. and
Essex Microtel LeRay L.P., which are included in these prior performance
tables and Essex Geneseo Associates, which owns non-hotel property. Of the
total amount raised, $434,000 was used for Essex Microtel Associates L.P.
to replace existing debt, $217,000 was used for Essex Microtel LeRay to
replace existing debt and provide working capital and $325,000 was for
Essex Geneseo Associates to replace existing debt and complete construction
of two buildings.
<PAGE> 50 TABLE II
ESSEX PARTNERS INC. AND AFFILIATES
COMPENSATION TO SPONSOR
(Three Years Ending December 31, 1995)
Table II provides information as to the cumulative compensation paid to
sponsors for a three year period ending December 31, 1995 (or from partnership
inception, if later) from both offering proceeds and property operations.
None of the programs for which information is presented in Table II has been
liquidated and there have been no sales or maturities of any of the program's
investments.
<PAGE> 51 TABLE II
ESSEX PARTNERS INC. AND AFFILIATES
COMPENSATION TO SPONSOR
(Cumulative Through December 31, 1995)
<TABLE>
<CAPTION>
Essex Hospitality Essex Knoxville Essex Micro.
Associates III Associates L.P. Assoc. II
L.P. (1) (2) L.P.
<S> <C> <C> <C>
Date offering commenced 11/17/93 var 11/18/92
Dollar amount raised 9,874,070 3,500,000 10,487,000
Amount paid to sponsor from proceeds of offering:
Underwriting fees 591,000 172,500 578,200
Acquisition and development fees
- real estate commissions - - -
- advisory fees 694,000 200,000 720,000
- other - - -
Organization fees 336,000 30,000 356,600
Other - 50,000 -
Dollar amount of cash generated from operations before
deducting payments to sponsor: (201,600) 211,700 384,500
Amount paid to sponsor from operations:
Property management fees 132,900 70,400 308,600
Partnership management fees 33,000 21,000 89,700
Reimbursements - - -
Leasing commissions - - -
Other - - -
Dollar amount of property sales and refinancing before
deducting payments to sponsor: - - -
- cash - - -
- notes - - -
Amount paid to sponsor from property sales
and refinancing: - - -
- Real estate commissions - - -
- Incentive fees - - -
- Other - - -
</TABLE>
<PAGE> 52 TABLE II
ESSEX PARTNERS INC. AND AFFILIATES
<TABLE>
COMPENSATION TO SPONSOR
(Cumulative Through December 31, 1995)
<CAPTION>
Essex Microtel
Essex Charleston Carrier Circle Essex Microtel
Associates L.P. L.P. (3) Assoc. L.P.
<S> <C> <C> <C>
Date offering commenced 8/27/92 var 06/19/90
Dollar amount raised 3,390,000 3,400,000 3,083,000
Amount paid to sponsor from proceeds of offering:
Underwriting fees 200,700 132,000 246,640
Acquisition and development fees
- real estate commissions - - -
- advisory fees 160,000 66,300 200,000
- other - - -
Organization fees 21,600 33,000 -
Other 41,400 50,780 -
Dollar amount of cash generated from operations before
deducting payments to sponsor: 322,100 339,900 789,200
Amount paid to sponsor from operations:
Property management fees 119,100 58,200 97,800
Partnership management fees 32,700 41,400 21,600
Reimbursements - - -
Leasing commissions - - -
Other - - -
Dollar amount of property sales and refinancing before
deducting payments to sponsor: - - -
- cash - - -
- notes - - -
Amount paid to sponsor from property sales
and refinancing: - - -
- Real estate commissions - - -
- Incentive fees - - -
- Other - - -
</TABLE>
<PAGE> 53 TABLE II
ESSEX PARTNERS INC. AND AFFILIATES
<TABLE>
COMPENSATION TO SPONSOR
(Cumulative Through December 31, 1995)
<CAPTION>
Essex Microtel Hagel-Essex Essex Microtel
LeRay L.P. L.P. Lehigh L.P. (4)
<S> <C> <C> <C>
Date offering commenced 10/19/90 03/29/91 var
Dollar amount raised 1,531,254 1,012,750 $3,161,480
Amount paid to sponsor from proceeds of offering:
Underwriting fees 91,769 - 77,400
Acquisition and development fees
- real estate commissions - - -
- advisory fees 69,000 100,000 -
- other - - -
Organization fees 40,000 - -
Other 22,759 - 45,300
Dollar amount of cash generated from operations before
deducting payments to sponsor: (74,055) 446,500 514,200
Amount paid to sponsor from operations:
Property management fees - - 69,000
Partnership management fees 21,845 34,800 36,600
Reimbursements - - -
Leasing commissions - - -
Other - - -
Dollar amount of property sales and refinancing before
deducting payments to sponsor: - - -
- cash - - 531,500
- notes - - -
Amount paid to sponsor from property sales
and refinancing: - - -
- Real estate commissions - - -
- Incentive fees - - 32,400
- Other - - 12,900
</TABLE>
<PAGE> 54 ESSEX PARTNERS INC. AND AFFILIATES
COMPENSATION TO SPONSOR
<TABLE>
(Cumulative Through December 31, 1995)
<CAPTION>
Essex Microtel Other
1989 L.P. (5) Programs (6)
<S> <C> <C>
Date offering commenced var
Dollar amount raised $2,687,000 5,742,460
Amount paid to sponsor from proceeds of offering:
Underwriting fees 60,000 469,335
Acquisition and development fees
- real estate commissions - -
- advisory fees - 299,250
- other - -
Organization fees - 72,825
Other 38,200 21,150
Dollar amount of cash generated from operations before
deducting payments to sponsor: 397,500 59,707
Amount paid to sponsor from operations:
Property management fees 82,000 25,844
Partnership management fees 36,600 5,198
Reimbursements - -
Leasing commissions - -
Other - -
Dollar amount of property sales and refinancing
before deducting payments to sponsor: - -
- cash 592,800 -
- notes - -
Amount paid to sponsor from property sales
and refinancing: - -
- Real estate commissions - -
- Incentive fees 28,200 -
- Other 10,000 -
</TABLE>
<PAGE> 55 TABLE II
ESSEX PARTNERS INC. AND AFFILIATES
COMPENSATION TO SPONSOR
(Cumulative Through December 31, 1995)
(1) Essex Hospitality Associates III opened one of its three properties in
September, 1994. The remaining properties opened in 1995.
(2) Essex Knoxville Associates had three offerings. The first commenced in
December, 1992 and raised $1,000,000 in equity financing. The second
commenced in June, 1993 and raised $2,000,000 in first mortgage financing.
The final offering commenced May, 1994 and raised $500,000 in unsecured
notes.
(3) Essex Microtel Carrier Circle was financed through two offerings, one which
raised $1,200,000 in equity financing and one which raised $2,200,000 in
first mortgage financing. The equity offering commenced in October, 1991,
and was completed in September, 1992. The offering of first mortgage notes
commenced in February, 1992 and was completed in April, 1992.
(4) Essex Microtel Lehigh raised $1,871,480 in equity financing through an
offering which commenced in June, 1990, and was completed in December,
1990. In addition, second mortgage financing totalling $1,290,000 was
raised through an offering which commenced in July, 1992 and was completed
in August, 1992.
(5) Essex Microtel 1989 raised $1,487,000 in equity financing through an
offering which commenced in December, 1989, and was completed in January,
1990. In addition, second mortgage financing of $1,200,000 was raised
through an offering which commenced in June, 1992 and was completed the
same month.
(6) This category includes all other programs syndicated by Essex Partners from
1993 through 1995.
<PAGE> 56 TABLE III
ESSEX PARTNERS AND AFFILIATES
OPERATING RESULTS OF PRIOR PROGRAMS (000)
(Through December 31, 1995)
Table III presents operating information from the opening of
the property through December 31, 1995 for the programs in which Essex
Partners or affiliates acted as general partners and which closed in
the five year period ending December 31, 1995.
<PAGE> 57 TABLE III
ESSEX PARTNERS AND AFFILIATES
OPERATING RESULTS OF PRIOR PROGRAMS (000)
(Through December 31, 1995)
<TABLE>
<CAPTION>
ESSEX MICROTEL ASSOCIATES II L.P.
1992 1993
(1) (3 MOS) 1994 1995
<S> <C> <C> <C> <C>
Gross Revenues - 272.7 2,570 2,925
Profit on sale of properties - - - -
Less: operating expenses 2.5 308.9 1,693.2 1,803.9
---- ----- ------- -------
Operating income (loss) (2.5) (36.2) 876.4 1,121.6
Less: interest expense - 372.7 785.8 785.8
depreciation - 255.1 676.1 687.0
----- ----- ------ ------
Net income (loss) (2.5) (664.0) (585.5) (351.2)
Cash generated from operations (0.4) (452.2) 135 378
Cash generated from sales - - - -
Cash generated from financing activities 3,707.6 5,304.0 (78) (313)
Plus:cash distributions - 100 274 315
------- -------- ------ -----
Cash generated operat., sales, financing 3,707.2 4,952.0 330.7 380.9
Less: cash distributions to investors
--from operating cash flow - - 135.2 315.5
--from sales and financing activities - 100.2 138.3 -
--from other - - - -
------ ------- ------ ------
Cash gen. (deficiency) after cash distrib. 3,707.2 4,851.8 57.2 65.4
Less: special items-capital improvements (1,051.5) (6,830.8) (422.4) (75.0)
--------- --------- ------- ------
Cash generated (deficiency) after cash 2,655.7 (1,979.0) (365.3) (9.6)
distributions and special items
Tax and distribution data per $1,000 invested
Fed. income tax results:
-- from operations (0.0) (0.3) (0.2) (0.1)
Ordinary income(loss) -- from recapture - - - -
Capital gain - - - -
Cash distributions to invest
Source: (on a GAAP basis)--investment income - - - -
-- return of capital - 0.0 0.1 0.1
Source: (on a cash basis) -- sales - - - -
-- fin. activities - 0.0 0.1 0.0
-- operations - - 0.1 0.1
-- other - - - -
</TABLE>
Amounts (in percentage terms) remaining invested in program
properties at the end of the last year reported in the table
(original total acquisition cost of properties retained divided
by original total acquisition cost of all properties in program). 100%
<PAGE> 58 TABLE III
ESSEX PARTNERS AND AFFILIATES
OPERATING RESULTS OF PRIOR PROGRAMS (000)
(Through December 31, 1995)
<TABLE>
<CAPTION>
ESSEX HOSPITALITY ASSC. III (2)
1993 1994
(1) (3 MOS) 1995
<S> <C> <C> <C>
Gross Revenues - 129 2,499
Profit on sale of properties - - -
Less: operating expenses - 167 1,849
----- ----- -------
Operating income (loss) - (38.4) 649.4
Less: interest expense - 242.4 750.4
depreciation - 151.3 483.4
----- ------- --------
Net income (loss) - (432.0) (584.5)
Cash generated from operations - (300) (68)
Cash generated from sales - - -
Cash generated from financing activities 1,593 7,026 3,259
Plus:cash distributions - 62 314
----- ------- ------
Cash generated from oper., sales, financing 1,593.0 6,788.8 3,505.2
Less: cash distributions to investors
--from operating cash flow - - -
--from sales and financing activities - 62.3 314.4
--from other - - -
------- ------- -------
Cash generated (deficiency) after cash distrib. 1,593.0 6,726.5 3,190.8
Less: special items - capital improvements (575.4) (5,195.2) (5,615.9)
-------- --------- --------
Cash generated (deficiency) after cash 1,017.6 1,531.3 (2,425.1)
distributions and special items
Tax and distribution data per $1,000 invested
Federal income tax results:
Ordinary income (loss) -- from operations - (0.2) (0.1)
-- from recapture - - -
Capital gain - - -
Cash distributions to investors
Source: (on a GAAP basis) -- Investment income - - -
-- return of capital - 0.03 0.08
Source: (on a cash basis) -- sales - - -
-- financing activities - 0.03 0.08
-- operations - - -
-- other - - -
</TABLE>
Amounts (in percentage terms) remaining invested in program
properties at the end of the last year reported in the table
(original total acquisition cost of properties retained divided
by original total acquisition cost of all properties in program). 100%
<PAGE> 59 TABLE III
ESSEX PARTNERS AND AFFILIATES
<TABLE>
OPERATING RESULTS OF PRIOR PROGRAMS (000)
(Through December 31, 1995)
<CAPTION>
ESSEX CHARLESTON ASSOCIATES L.P.
1992 1993
(1) (8 MOS) 1994 1995
<S> <C> <C> <C> <C>
Gross Revenues 13.3 483.2 829 866
Profit on sale of properties - - - -
Less: operating expenses 2.2 339.3 577.1 578.0
----- ----- ----- ------
Operating income (loss) 11.1 143.9 252.0 288.0
Less: interest expense - 116.7 175 175
depreciation 12.8 167.1 239 203
------ ----- ----- -----
Net income (loss) (1.7) (139.9) (162.1) (89.9)
Cash generated from operations 10.4 (5.4) 84 119
Cash generated from sales - - - -
Cash generated from financing activities 2,539.0 456.2 (68.0) (106.4)
Plus:cash distributions - 25 68 106
------- ------ ------ ------
Cash generated from oper., sales, financing 2,549.4 475.8 84.0 118.5
Less: cash distributions to investors
--from operating cash flow - - 68.0 106.4
--from sales and financing activities - 25.0 - -
--from other - - - -
------ ----- ----- -----
Cash generated (deficiency) after cash distrib. 2,549.4 450.8 16.0 12.1
Less: special items - capital improvements (901.0) (2,065.2) (16.3) (10.6)
-------- -------- ------ ------
Cash generated (deficiency) after cash 1,648.4 (1,614.4) (0.3) 1.5
distributions and special items
Tax and distribution data per $1,000 invested
Federal income tax results:
-- from operations (1.1) (84.9) (98.3) (54.6)
-- from recapture - - - -
Capital gain - - - -
Cash distributions to invest-- return of capital
Source: (on a GAAP basis) -- investment income - - - -
-- return of capital - 15.2 41.3 64.6
Source: (on a cash basis) -- sales - - - -
-- financing activities - 15.2 - -
-- operations - - 41.3 64.6
-- other - - - -
</TABLE>
Amounts (in percentage terms) remaining invested in program
properties at the end of the last year reported in the table
(original total acquisition cost of properties retained divided
by original total acquisition cost of all properties in program). 100%
<PAGE> 60 TABLE III
ESSEX PARTNERS AND AFFILIATES
OPERATING RESULTS OF PRIOR PROGRAMS (000)
<TABLE>
(Through December 31, 1995)
<CAPTION>
ESSEX KNOXVILLE ASSOCIATES L.P.
1993 1994
(1) (5 MOS) 1995
<S> <C> <C> <C>
Gross Revenues 9 351 1,054
Profit on sale of properties - - -
Less: operating expenses 0.5 237.1 658.9
----- ------ -------
Operating income (loss) 8.3 113.6 394.9
Less: interest expense - 137.5 270.0
depreciation 8.9 145.7 252.1
----- ------ -------
Net income (loss) (0.6) (169.5) (127.2)
Cash generated from operations 8 (28) 150
Cash generated from sales - - -
Cash generated from financing activities 2,757 398 (133)
Plus:cash distributions - 30 121
------- ------- -------
Cash generated from oper., sales, finncing 2,765.2 400.0 138.1
Less: cash distributions to investors
--from operating cash flow - - 121.0
--from sales and financing activities - 30.0 -
--from other - - -
------ ------ -----
Cash gen. (deficiency) after cash distrib. 2,765.2 370.0 17.1
Less: special items - capital improvements (763.2) (2,323.7) (1.7)
-------- --------- -----
Cash generated (deficiency) after cash 2,002.0 (1,953.6) 15.4
distributions and special items
Tax and distribution data per $1,000 invested
Federal income tax results:
Ordinary income (loss) -- from operations (0.1) (17.0) (12.7)
-- recapture - - -
Capital gain - - -
Cash distributions to investors
Source: (on a GAAP basis)-- investment income - - -
-- return of captital - 3.0 12.1
Source: (on a cash basis)-- sales - - -
-- fin. activities - 3.0 0.0
-- operations - - -
-- other - - -
</TABLE>
Amounts (in percentage terms) remaining invested in program
properties at the end of the last year reported in the table
(original total acquisition cost of properties retained divided
by original total acquisition cost of all properties in program). 100%
<PAGE> 61 TABLE III
ESSEX PARTNERS AND AFFILIATES
<TABLE>
OPERATING RESULTS OF PRIOR PROGRAMS (000)
(Through December 31, 1995)
<CAPTION>
ESSEX MICROTEL ASSOCIATES L.P.
1991
(1) 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
Gross Revenues 84.6 745.4 832.5 892 924
Profit on sale of properties - - - - -
Less: operating expenses - 564.1 599.9 603.6 616.5
----- ----- ----- ----- ----
Operating income (loss) 84.6 181.4 232.6 288.4 307.1
Less: interest expense 51.1 41.6 46.5 47 43
depreciation 5.0 155.4 145.4 125 116
---- ----- ----- ---- -----
Net income (loss) 28.5 (15.7) 40.8 115.9 148.1
Cash generated from operations 21.7 195.2 167.1 261 269
Cash generated from sales - - - - -
Cash generated from fin. activities 2,546.4 125.0 (226.3) (240.0) (256.3)
Plus:cash distributions - 406 227 240 252
------- ----- ------ ------ -----
Cash gen. from oper., sales, fin. 2,568.0 726.6 167.9 261.2 264.3
Less: cash distributions to investors
--from operating cash flow - 144.2 179.7 240.0 252.0
--from sales and fin. activities - 262.2 47.4 - -
--from other - - - - -
------ ------ ----- ----- -----
Cash generated (deficiency) -
after cash distributions. 2,568.0 320.2 (59.2) 21.2 12.3
Less: special items
- capital improvements (2,304.8) (463.4) (12.9) (5.3) (8.9)
-------- ------- ------ ----- ----
Cash generated (deficiency)-
after cash 263.2 (143.1) (72.2) 15.9 3.4
distributions and special items
Tax and distribution data per $1,000 invested
Federal income tax results:
Ordinary income(loss)--from oper. 9.8 (5.1) 13.2 37.6 48.0
-- from recapture - - - - -
Capital gain - - - - -
Cash distributions to investors
Source:(on a GAAP basis)
-investment income - - - - -
- return of capital - 131.8 73.7 77.9 81.7
Source: (on a cash basis)
-- sales - - - - -
-- financing activites - 85.0 15.4 0.0 0.0
-- operations - 46.8 58.3 77.9 81.7
-- other - - - - -
</TABLE>
Amounts (in percentage terms) remaining invested in program
properties at the end of the last year reported in the table
(original total acquisition cost of properties retained divided
by original total acquisition cost of all properties in program). 100%
<PAGE> 62 TABLE III
ESSEX PARTNERS AND AFFILIATES
OPERATING RESULTS OF PRIOR PROGRAMS (000)
<TABLE>
(Through December 31, 1995)
<CAPTION>
ESSEX MICROTEL CARRIER CIRCLE L.P.
1991 1992
(1) (2 MOS) 1993 1994 1995
<S> <C> <C> <C> <C> <C>
Gross Revenues 0.6 101.7 846.1 968 925
Profit on sale of properties - - (36.4) - -
Less: operating expenses 3.0 88.2 560.3 615.5 587.9
---- ----- ------ ----- -----
Operating income (loss) (2.4) 13.5 249.5 352.4 337.6
Less: interest expense - 37.0 225.5 226 226
depreciation 1.5 77.2 247.6 218 198
----- ------ ------ ------ -----
Net income (loss) (3.9) (100.6) (223.7 ) (91.3) (85.4)
Cash generated from operations (2.4) (13.9) 40.1 125.7 123.2
Cash generated from sales - - 66.0 - -
Cash generated from fin. activities68.8 3,153.5 (66.3) (105.0) (117.1)
Plus:cash distributions - - 66 105 117
------ ------- ------ ------- ------
Cash generated
from operations, sales, fin. 66.4 3,139.5 106.1 125.8 123.2
Less: cash distributions to investors
--from operating cash flow - - 40.1 67.0 117.1
--from sales and fin. activities - - 26.2 38.0 -
--from other - - - - -
------ ------- ------- ------ -----
Cash generated (deficiency)
after cash distributions 66.4 3,139.5 39.8 20.8 6.1
Less: special items -
capital improvements (56.6) (3,116.6) (2.2) (30.1) (16.9)
------- --------- ------- ------- ------
Cash generated
(deficiency) after cash 9.8 22.9 37.6 (9.3) (10.7)
distributions and special items
Tax and distribution data per $1,000 invested
Federal income tax results:
Ordinary income (loss)
-- from operations (5.0) (75.8) (168.5) (68.8) (64.4)
-- from recapture - - - - -
Capital gain - - - - -
Cash distributions to investors
Source: (on a GAAP basis)
-- investment income - - - - -
-- return of capital - - 50.0 79.1 88.2
Source: (on a cash basis)
-- sales - - 19.7 28.6 0.0
-- financing activites - - - - -
-- operations - - 30.2 50.5 88.2
-- other - - - - -
</TABLE>
Amounts (in percentage terms) remaining invested in program
properties at the end of the last year reported in the table
(original total acquisition cost of properties retained divided
by original total acquisition cost of all properties in program). 98%
<PAGE> 63 TABLE III
ESSEX PARTNERS AND AFFILIATES
<TABLE>
OPERATING RESULTS OF PRIOR PROGRAMS (000)
(Through December 31, 1995)
<CAPTURE>
HAGEL-ESSEX L.P.
1991 1992
(1) (7 MOS) 1993 1994 1995
<S> <C> <C> <C> <C> <C>
Gross Revenues 2.9 545.5 982.6 920 999
Profit on sale of properties - - - - -
Less: operating expenses - 363.7 698.0 647 664
---- ------ ----- --- ----
Operating income (loss) 2.9 181.8 284.6 272.9 335.5
Less: interest expense - 84.9 154.0 153 151
depreciation - 125.6 214.4 182 160
Net income (loss) 2.9 (28.8) (83.9) (62.4) 24.2
Cash generated from operations (3.4) 70.5 152.7 115 175
Cash generated from sales - - - - -
Cash gen. from fin. activit. 915.6 2,054.4 (123.6) (134.2) (145.5)
Plus:cash distributions - 293 109 110 119
------ ------- ------- ------ ------
Cash gen. from
operat., sales and financing 912.2 2,417.6 138.0 91.1 148.9
Less: cash distributions to investors
--from operating cash flow - 67.0 108.9 109.8 119.4
--from sales and fin. activities - 224.9 - - -
--from other - - - - -
----- ------- ----- ----- -----
Cash generated (deficiency)
after cash distributions 912.2 2,125.7 29.1 (18.7) 29.5
Less: special items
- capital improvements (800.7) (2,148.7) (9.3) (11.5) (10.7)
------ --------- ------ ------ ------
Cash generated
(deficiency) after cash 111.5 (23.0) 19.9 (30.2) 18.8
distributions and special items
Tax and distribution data per $1,000 invested
Federal income tax results:
Ordinary income (loss)
-- from operations 2.9 (28.4) (82.8) (61.6) 23.9
-- from recature - - - - -
Capital gain - - - - -
Cash distributions to investors
Source: (on a GAAP basis)
-- investment income - - - - -
-- return of capital - 288.3 107.5 108.4 117.9
Source: (on a cash basis)
-- sales - - - - -
-- financing activities - - - - -
-- operations - 66.2 107.5 108.4 117.9
-- other - - - - -
</TABLE>
Amounts (in percentage terms) remaining invested in program
properties at the end of the last year reported in the table
(original total acquisition cost of properties retained divided
by original total acquisition cost of all properties in program). 100%
<PAGE> 64 TABLE III
ESSEX PARTNERS AND AFFILIATES
<TABLE>
OPERATING RESULTS OF PRIOR PROGRAMS (000)
(Through December 31, 1994)
<CAPTURE>
ESSEX MICROTEL LeRAY L.P.
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
Gross Revenues 864.7 869.6 704.4 689 699
Profit on sale of properties - - - - -
Less: operating expenses 567.6 556.4 538.5 543.9 549.4
------ ----- ----- ----- -----
Operating income (loss) 297.1 313.2 165.9 145.4 149.9
Less: interest expense 221.3 179.9 180.0 175 157
depreciation 202.5 124.7 118.3 115 121
------ ----- ----- ----- -----
Net income (loss) (126.7) 8.6 (132.4) (144.2) (128.2)
Cash generated from operations 14.0 133.2 (21.3) (25) (3)
Cash generated from sales - - - - -
Cash generated from fin. activity 39.9 (108.9) 8.0 46 9
Plus:cash distributions 87 104 - - -
----- ------ ----- ----- -----
Cash generated from
operations, sales and financing 141.3 127.9 (13.2) 21.2 5.6
Less: cash distributions to investors
--from operating cash flow 55.2 103.6 - - -
--from sales and fin. activities 32.1 - - - -
--from other - - - - -
------ ------ ----- ----- -----
Cash generated (deficiency)
after cash distributions 54.0 24.3 (13.2) 21.2 5.6
Less: special items
- capital improvements (49.0) (9.5) (15.2) (18.4) (13.1)
------- ------ ------- ------ ------
Cash generated
(deficiency) after cash 4.9 14.8 (28.5) 2.8 (7.5)
distributions and special items
Tax and distribution data per $1,000 invested
Federal income tax results:
Ordinary income (loss)
-- from operations (82.7) 5.6 (86.4) (94.2) (83.7)
-- from recapture - - - - -
Capital gain - - - - -
Cash distributions to investors
Source: (on a GAAP basis)
-- investment income - - - - -
-- return of capital 57.0 67.7 0.0 0.0 0.0
Source: (on a cash basis)
-- sales - - - - -
-- financing activities 21.0 - - - -
-- operations 36.0 67.7 0.0 0.0 0.0
-- other - - - - -
</TABLE>
Amounts (in percentage terms) remaining invested in program
properties at the end of the last year reported in the table
(original total acquisition cost of properties retained divided
by original total acquisition cost of all properties in program). 100%
<PAGE> 65 TABLE III
ESSEX PARTNERS AND AFFILIATES
OPERATING RESULTS OF PRIOR PROGRAMS (000)
(Through December 31, 1995)
NOTES
(1) These partnerships participated in fundraising and construction activities
in the year indicated. The properties owned by the partnerships opened in
the following year. If the property operated for less than twelve months in
its first year of operations, the number of months the property was open is
noted.
(2) There are three properties in Essex Hospitality Associates III L.P.. The
first opened September, 1994, the second in April, 1995, and the third in
September, 1995. The first full year of operations for all properties will
be in 1996.
<PAGE> 66 TABLE IV
ESSEX PARTNERS INC. AND AFFILIATES
RESULTS OF COMPLETED PROGRAMS
Table IV presents a summary of operating and disposition results of the prior
partnerships sponsored by either Essex Partners or affiliates which have sold
all their properties as of June 30, 1996. Table IV presents tax, cash
distributions and holding period information with respect to the disposition of
such properties.
As of June 30, 1996, no hotel properties have been sold.
<PAGE> 67 TABLE V
ESSEX PARTNERS AND AFFILIATES
SALES AND DISPOSALS OF PROPERTIES
Table V presents information on the sales or dispositions of property for the
three years ending June 30, 1996 by programs in which Essex Partners or
affiliates acted as general partners and that have similiar investment
objectives to the Partnership.
As of June 30, 1996, no hotel properties have been sold or disposed of.
<PAGE> 68 TABLE VI
ESSEX AND AFFILIATES
ACQUISITIONS OF PROPERTIES BY PROGRAMS
Table VI presents information with respect to the acquisition and
development of properties during the three year period ending June 30, 1996
by programs in which Essex Partners or affiliates acted as general partners.
<PAGE> 69 TABLE 6
ESSEX AND AFFILIATES
<TABLE>
ACQUISITIONS OF PROPERTIES BY PROGRA
(Three Years Ending June 30, 1996)
<CAPTION>
Essex Hospitality Associates III L.P.
<S> <C> <C> <C>
Name Microtel Hampton Inn Microtel (1)
Location Birmingham, Rochester, Chattanooga,
AL NY TN
Type of property hotel hotel hotel
Number of units 102 118 100
Date of purchase 12/30/93 6/28/94 12/30/94
Debt financing 2,800,000 4,100,000 3,100,000
Cash downpayment 145,000 1,141,000 145,000
Contract purchase price plus
acquisition fee (2) 2,812,000 4,989,000 3,103,000
Other cash expenditures
expensed (3) 54,000 112,000 62,000
Other cash expenditures
capitalized (4) 133,000 252,000 142,000
Total acquisition cost 2,999,000 5,353,000 3,307,000
</TABLE>
<PAGE> 70 ESSEX AND AFFILIATES
ACQUISITIONS OF PROPERTIES BY PROGRAMS
(Three Years Ending June 30, 1996)
Essex Glenmaura
L.P. (1)
Name Courtyard
Location Scranton, PA
Type of property hotel
Number of units 120
Date of purchase 7/07/95
Debt financing 5,400,000
Cash downpayment 2,688,000
Contract purchase price plus
acquisition fee (2) 7,644,000
Other cash expenditures
expensed (3) 104,000
Other cash expenditures
capitalized (4) 340,000
Total acquisition cost 8,088,000
<PAGE> 71 TABLE VI
ESSEX AND AFFILIATES
ACQUISITIONS OF PROPERTIES BY PROGRAMS
(1) These properties are in the process of development. The date of
purchase represents the purchase date of the land. The amount of
mortgage financing is the amount required to complete the project. The
contract purchase price, cash expenditures expensed and cash
expenditures capitalized include the estimated costs to complete the
project.
(2) For projects involving construction of new facilities, the contract
purchase price includes the cost of the land, the building construction
cost, cost for furniture and fixtures, architectural and engineering
costs and the costs of any permits.
(3) For projects involving construction of new facilities, the other cash
expenditures expensed includes any operating supplies, utilities costs
and payroll costs incurred prior to the opening of the property.
(4) For projects involving construction of new facilities, the other cash
expenditures capitalized includes taxes, insurance and interest costs
during construction, opening linen inventory, any travel costs and the
initial franchise fee.
<PAGE> 72 PART II
Item 16. Exhibits and Financial Statments Schedules
(a) Furnish exhibits as required by item 601 of Regulation S-K.
23. Consents of experts.
(a) Consents of KPMG Peat Marwick, LLP.
(b) Consents of Coopers & Lybrand, LLP.
<PAGE> 73 SIGNATURES
Pursuant to the Securities Act of 1933, the Registrant has
duly caused this Post-Effective Amendment No. 1 to Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Rochester, State of New
York on August 7, 1996.
ESSEX HOSPITALITY ASSOCIATES IV L.P.
By: Essex Partners Inc.
Its: General Partner
By: /s/ John E. Mooney_____________
John E. Mooney
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment No. 1 to Registration Statement has
been signed by the following persons in the capacities and on the
dates indicated.
Principal Executive Officer of General
Partner:
Dated: August 7, 1996 /s/ John E. Mooney_____________________
John E. Mooney
President and Chief Executive Officer
Principal Financial and Accounting
Officer of General Partner:
Dated: August 7, 1996 /s/ Richard C. Brienzi_________________
Richard C. Brienzi
Vice President and Treasurer
Executive Vice President of General
Partner:
Dated: August 7, 1996 /s/ Jerald P. Eichelberger_____________
Jerald P. Eichelberger
Executive Vice President
<PAGE> 74 The Board of Directors of General
Partner:
Dated: August 7, 1996 /s/ John E. Mooney_____________________
John E. Mooney, Director
Dated: August 7, 1996 /s/ Jerald P. Eichelberger_____________
Jerald P. Eichelberger, Director
Dated: August 7, 1996 /s/ David J. Whitaker__________________
David J. Whitaker, Director
Dated: August 7, 1996 /s/ Barbara J. Purvis__________________
Barbara J. Purvis, Director
Dated: August 7, 1996 /s/ Thomas W. Blank____________________
Thomas W. Blank, Director
Dated: August 7, 1996 /s/ Richard C. Brienzi_________________
Richard C. Brienzi, Director
<PAGE> 75 Exhibit Number Exhibit
23. Consents of experts.
(a) Consents of KPMG Peat Marwick, LLP.
(b) Consent of Coopers & Lybrand, LLP.
<PAGE> 76 Exhibit 23(a)
Consent of KPMG Peat Marwick LLP
Accountant's Consent
The Partners
Essex Hospitality Associates IV L.P.
We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the registration statement (No. #33-96716).
/s/ KPMG Peat Marwick LLP
Rochester, New York
August 6, 1996
<PAGE> 77 Exhibit 23(a)
Consent of KPMG Peat Marwick LLP
Accountant's Consent
The Board of Directors of
Essex Partners Inc.
We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the registration statement (No. #33-96716).
/s/ KPMG Peat Marwick LLP
Rochester, New York
August 6, 1996
<PAGE> 78 Exhibit 23(b)
Consent of Coopers & Lybrand, LLP
We consent to the inclusion in Post Effective Amendment No. 1 to
this registration statement on Form S-1 (File No. 33-96716) of
our report dated February 1, 1996, on our audit of the financial
statements of Essex Glenmaura L.P. We also consent to the
reference to our firm under the caption "Experts".
/s/ Coopers & Lybrand, LLP
Rochester, New York
August 5, 1996
<PAGE> 79 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
27 FINANCIAL DATA SCHEDULE-ESSEX PARTNERS INC.
FINANCIAL DATA SCHEDULE-ESSEX HOSPITALTY
ASSOCIATES IV L.P.
FINANCIAL DATA SCHEDULE-ESSEX GLENMAURA L.P.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001000375
<NAME> LORRIE LOFASO
<MULTIPLIER> 1000
<S> <C><F1> <C><F2> <C><F3>
<PERIOD-TYPE> OTHER OTHER YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995 DEC-31-1995
<PERIOD-END> DEC-31-1995 DEC-31-1995 DEC-31-1995
<CASH> 629 249 915
<SECURITIES> 0 0 0
<RECEIVABLES> 0 0 567
<ALLOWANCES> 0 0 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 0<F4> 0<F4> 1304
<PP&E> 1427 2243 150
<DEPRECIATION> 0<F5> 0<F5> 49
<TOTAL-ASSETS> 2395 2688 2079
<CURRENT-LIABILITIES> 0 493 185
<BONDS> 1744 1500 0
0 0 0
0 0 0
<COMMON> 0 0 1
<OTHER-SE> 431<F6> 695<F6> 0
<TOTAL-LIABILITY-AND-EQUITY> 2395 2688 2079
<SALES> 0 0 0
<TOTAL-REVENUES> 0 2 2294
<CGS> 0 0 0
<TOTAL-COSTS> 0 0 0
<OTHER-EXPENSES> 0 2 1678
<LOSS-PROVISION> 0 0 155
<INTEREST-EXPENSE> 0 5 102
<INCOME-PRETAX> 0 (5) 240
<INCOME-TAX> 0 0 111
<INCOME-CONTINUING> 0 5 129
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 60
<CHANGES> 0 0 0
<NET-INCOME> 0 5 189
<EPS-PRIMARY> 0 0 0
<EPS-DILUTED> 0<F7> 0<F7> 0<F8>
<FN>
<F1>ESSEX HOSPITALITY ASSOCIATES IV L.P.
<F2>ESSEX GLENMAURA L.P.
<F3>ESSEX PARTNERS INC.
<F4>UNCLASSIFIED BALANCE USED
<F5>PROPERTY IS UNDER DEVELOPMENT, NOT IN USE
<F6>EQUITY IS PARTNERS' CAPITAL
<F7>ENTITY IS A PARTNERSHIP
<F8>ENTITY IS WHOLLY OWNED SUBSIDIARY
</FN>
</TABLE>
