<PAGE> 1
Registration No. 33-96716
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
POST-EFFECTIVE AMENDMENT NO. 2 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)
<TABLE>
<CAPTION>
<S> <C>
New York 7011
(State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code)
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<TABLE>
<CAPTION>
<S> <C>
16-1485632 100 Corporate Woods
- ---------------------------------------- Rochester, New York 14623
(IRS Employer ID No.) (716) 272-2300
-------------------------
(Address, including zip code, and telephone
number, including area code of registrant's
principal executive offices)
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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 [ ]
<PAGE> 2
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> 3
Essex Hospitality Associates IV L.P.
Post-Effective Amendment No. 2 Dated
April ,1997 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. 2.
This discussion contains forward-looking statements that involve substantial
risks and uncertainties. When used in the Prospectus, the words "anticipate",
"believe", "estimate", "expect" and similar expressions as they relate to the
Partnership or its management are intended to identify such forward-looking
statements. The Partnership's actual results, performance or achievements could
differ materially from those expressed in, or implied by, these forward-looking
statements as a results of, among other things, the factors set forth in the
section entitled "RISK FACTORS".
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 pursuant to the Public
Offering, and the acquisition and construction of properties. The Partnership is
currently offering up to $6,000,000 of Subordinated Notes and up to $5,000,000
of Units for sale to investors pursuant to the Prospectus and, while the
Partnership may also offer up to $10,000,000 of Mortgage Notes, no Mortgage
Notes have been offered or sold. Gross offering proceeds of up to $21,000,000
may be raised through the Public Offering. Through April 23, 1997, the
Partnership has received gross offering proceeds of $7,471,000, including
$5,200,000 from the sale of Subordinated Notes and $2,271,000 from the sale of
Units.
The Partnership acquired a site in Solon, Ohio in December, 1995 and began
construction of a 103-room Hampton Inn in the fall of 1996. The Solon property
is situated on approximately 2.28 acres, owned in fee by the Partnership with no
encumbrances. The Hampton Inn is expected to open by mid-summer, 1997. See "THE
PARTNERSHIP'S BUSINESS -- The Specified Properties -- Solon Property." The
Partnership had originally intended to build a Hampton Inn & Suites in Solon,
however, the construction cost of the Hampton Inn & Suites was too high relative
to the room rates that could be charged in the Solon area. Based on its
knowledge of the Solon market, the General Partner believed a Hampton Inn could
be built and operated more successfully. The General Partner secured approval
from the Hampton Inn franchisor to change brand designations. The Solon property
is expected to cost about $6,900,000, including the cost of the land, cost of
construction, cost of furnishings, construction period interest, financing costs
(debt and equity) and all soft costs such as architectural costs, engineering,
franchise fee and working capital. The General Partner is in the process of
securing External Financing for the Solon property. No External Financing source
has issued a commitment to lend funds to the Partnership for construction or
permanent financing of the hotel. The Partnership currently does not have
sufficient funds to complete construction of the Solon property. 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. See "THE
PARTNERSHIP'S BUSINESS" and "RISK FACTORS."
<PAGE> 4
The Partnership acquired a site in Warwick, Rhode Island in December, 1995, upon
which it intended to build a 80-92 room Homewood Suites hotel. The Warwick
property is situated on approximately 2.54 acres, owned in fee by the
Partnership with no encumbrances See "THE PARTNERSHIP'S BUSINESS -- The
Specified Properties -- Warwick Property." During 1996, the project was delayed.
The Partnership learned that additional new hotels are planned for the area of
the Partnership's site which would be directly competitive with the
Partnership's hotel. The Partnership is reviewing the market for the Warwick
area to determine if the demand exists to support the additional hotel rooms
before proceeding with construction. The Partnership expects to have the results
of the market study within the next two months, and will be determining whether
to proceed with the Warwick Homewood Suites by the end of the second quarter. If
the Partnership decides not to construct the Homewood Suites in Warwick, the
Partnership intends to sell the Warwick site and specify at least one more site
for development by the Partnership.
In 1996, the Partnership also purchased a 12.5 limited partnership units in
Essex Glenmaura for $1,250,000 ($100,000 per unit), for a limited partnership
equity interest of 54%. See "THE PARTNERSHIP'S BUSINESS -- The Specified
Properties -- The Essex Glenmaura Investment." Essex Glenmaura built a 120-room,
three story Courtyard by Marriott hotel outside of Scranton, Pennsylvania. The
Essex Glenmaura property opened in September, 1996. The total cost of the
project was $8.7 million, including the cost of the land, cost of construction,
cost of furnishings, construction period interest, financing costs (debt and
equity) and all soft costs such as architectural costs, engineering, franchise
fee and working capital. The project was funded with $2,300,000 of Partner
equity, $1,500,000 of unsecured notes and a $5,000,000 first mortgage loan from
GMAC Commercial Mortgage Corporation. The term of the first mortgage loan is for
four years with a one year extension available if the specified debt service
coverage is attained. Monthly payments of interest only accrue at 3% over the
LIBOR rate for the first year. Principal and interest payments are due
thereafter based on a twenty-five year loan amortization. Starting in the second
year of the loan, the Essex Glenmaura will be required to maintain a replacement
reserve escrow at 4% of room revenues.
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."
DESCRIPTION OF THE HOTEL CONCEPTS
Courtyard by Marriott
- ---------------------
There are currently 300 Courtyard by Marriott hotels open and operating.
According to the Franchisor the average occupancy rate system-wide was 78.1% and
the average daily room rate was $77.37 in 1996. These results compared favorably
to those experienced by the mid-price segment with food and beverage, which
reported an average occupancy rate of 63.7% and an average daily room rate of
$61.91 in 1996. 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."
<PAGE> 5
Fairfield Inn by Marriott
- -------------------------
There currently are 282 Fairfield Inn hotels open and operating. According to
the Franchisor the average occupancy rate system-wide was 73.0% and the average
daily room rate was $52.18 in 1996. These results compared favorably to those
experienced by the economy segment which reported an average occupancy rate of
62.6% and an average daily room rate of $51.01 in 1996. 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 620 Hampton Inns open and operating as of December
31, 1996. According to the Franchisor system-wide occupancy rates averaged 72.1%
and the average daily room rate was $60.84 in 1996. For 1996, the midscale hotel
segment not offering food and beverage reported an average occupancy rate of
68.5% and an average daily room rate of $56.67. 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
- ---------------
As of December 31, 1996 there were 37 Homewood Suites open and operating.
According to the Franchisor system-wide occupancy rates averaged 73.2% and the
average daily room rate was $90.40 in 1996. This compared to hotels in the
upscale hotel segment which reported an average occupancy rate of 68.4% and an
average daily room rate of $85.84 in 1996, and the upper tier of the extended
stay hotel segment which reported an average occupancy rate of 81.5% and an
average daily room rate of $88.95. 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."
Hampton Inn & Suites
- --------------------
There were 16 Hampton Inn & Suites open and operating as of December 31, 1996.
According to the Franchisor system wide occupancy rates averaged 63.9% and the
average daily room rate was $73.41 in 1996. For 1996, the midscale hotel segment
not offering food and beverage reported an average occupancy rate of 68.5% and
an average daily room rate of $56.67. 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
- ------------
There were 28 Microtel Inns open and operating as of December 31, 1996.
According to the Franchisor system wide occupancy rates averaged 68.6% and the
average daily room rate was $38.37 in 1996. This compared to 1996 results for
the budget hotel sector which reported an average occupancy rate of 61.7% and an
average daily room rate of $38.48. See "THE PARTNERSHIP'S BUSINESS --
Description of the Hotel Concepts -- Microtel Hotel."
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
The following discussion analyzes the consolidated financial statements of the
Partnership as of December 31, 1996, which are attached. Since the Partnership
owns greater than 50% of Essex Glenmaura L.P., the consolidated financial
statements include all of the assets, liabilities and operating results of Essex
Glenmaura L.P. as well as the assets, liabilities and operating results of the
Partnership.
In 1996, consolidated total assets of the Partnership increased $10,300,000. The
increase was caused by several factors. Net investment in real estate increased
$7,800,000, $7,500,000 of which was from the construction of the Courtyard by
Marriott hotel by Essex Glenmaura, and the additional $300,000 from development
activities by the Partnership. Cash and cash equivalents increased $1,900,000
from proceeds of the Partnership's offering of Subordinated Notes and Units.
Debt issuance costs increased $489,000, $295,000 from costs incurred in the
Partnership's offering of Subordinated Notes, and $194,000 of costs associated
with obtaining the financing for the Essex Glenmaura property. Partnership
consolidated liabilities increased $10,000,000, for several reasons.
Subordinated Notes payable increased $3,200,000 from the issuance of
Subordinated Notes payable in the Partnership's offering. Notes payable
increased $1,500,000, representing the notes payable issued by Essex Glenmaura.
The construction loan payable of $4,300,000 represents construction financing on
the Courtyard by Marriott hotel, which was replaced by the $5,000,000 of
permanent first mortgage financing from GMAC Commercial Mortgage Corporation in
February, 1997. Accounts payable increased $440,000, primarily from outstanding
construction invoices. Since most construction activities commenced in 1996, the
accounts payable at the end of 1995 was much smaller. As Essex Glenmaura is
consolidated with the Partnership, the $640,000 minority interest of Essex
Glenmaura is presented separately in the Partnership's balance sheet. Limited
partners' equity increased $287,000 in 1996 from proceeds of the Partnership's
public offering of the Units, net of syndication costs and Partners' Notes, and
from the consolidation of the Partnership's interest in Essex Glenmaura L.P. In
1996, $1,500,000 Units were issued, which was offset by a decrease of $70,000 in
Partners' Notes, syndication costs of $170,000 and $114,000 of Distributions to
Partners. The consolidated net loss for the Partnership for 1996 of $867,000
also decreased partners' equity.
The Partnership incurred a consolidated net loss of $867,000 in 1996. The
primary revenue source was room revenues of $394,000 from Essex Glenmaura, which
was the only hotel in operation in 1996. Expenses in 1996, before interest and
depreciation, totaled $886,000, for a loss from operations before interest,
depreciation and amortization of $403,000.
As a result of the two month delay in opening caused by unanticipated
construction delays, Essex Glenmaura incurred significant expenses prior to
opening the hotel. The hotel was originally anticipated to open in July, 1996.
Employees were hired and activities planned anticipating the opening in July.
With the two month delay in opening, payroll costs of over $140,000 were
incurred prior to opening. In total, costs of over $300,000 (including payroll,
pre-opening advertising, employee training and initial supplies purchases) were
incurred by Essex Glenmaura prior to opening the hotel in September.
The Partnership's consolidated interest expense, net of interest income was
$475,000, representing interest incurred by Essex Glenmaura after opening in
September, and interest on the proceeds from the Subordinated Notes which were
not used for construction in 1996. Interest on debt proceeds, primarily from the
construction loan used in construction in 1996 was capitalized. Depreciation and
amortization expenses totaled $346,000, for a net loss of $1,223,000 before
allocating $357,000 of the net loss to the minority interest in Essex Glenmaura.
The consolidated net loss for the Partnership was $867,000. With
<PAGE> 7
the Courtyard open for all of 1997, and the expected Solon Hampton Inn opening
around the middle of 1997, consolidated revenues for 1997 are expected to
increase by 500% over 1996. Significant cash flow from operations is expected to
be generated in 1997 as well.
EXPERTS
The consolidated financial statements of Essex Hospitality Associates IV L.P.
and subsidiary as of and for the year ended December 31, 1996 and as of and for
the period from August 30, 1995 (date of inception) through December 31, 1995
and the financial statements of Essex Partners Inc. as of and for the years
ended December 31, 1996 and 1995 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.
TAX CONSIDERATIONS
Discussion of Tax Consequences of Owning Limited Partnership Units
- ------------------------------------------------------------------
Tax Status of the Partnership
On December 18, 1996 the IRS revised and published in final form the "Check the
Box" regulations. Those regulations were issued in proposed form on May 13,
1996. See, generally, Treas. Reg. Sections 301.7701-1,-2 and -3. The "Check
the Box" regulations were effective as of January 1, 1997 and provide that an
entity shall be a partnership if it: (1) has at least two members; (2) is a
"business entity"; and (3) is not a "corporation."
As of January 1, 1997 the Partnership had more than two members.
A "business entity" is any recognized income tax entity that is not a trust
under Treas. Reg. Section 301.7701-4 and that is not otherwise subject to
special treatment under the Internal Revenue Code of 1986 ("Tax Code"). An
example of an entity subject to special treatment under the Tax Code is a real
estate mortgage investment conduit (or REMIC). Harris Beach & Wilcox, LLP is of
the opinion that the Partnership is a recognized income tax entity, is not
classified as a trust by Treas. Reg. Section 301.7701-4, and is not otherwise
subject to special treatment under the Tax Code. Accordingly, Harris Beach &
Wilcox, LLP is of the opinion that the Partnership is a "business entity."
A "corporation" is a business entity that meets at least one of eight criteria.
The only relevant criterion are: (1) a business entity organized under a State
law and described by the statute as incorporated, a corporation, a joint-stock
company, a joint-stock association, a body corporate, or a body politic; (2) a
business entity that is taxable as a corporation under a provision of the Tax
Code other than section 7701(a)(3); and (3) an "association" as defined in
Treas. Reg. Section 301.7701-3.
The Partnership was formed as a limited partnership under New York law.
Accordingly, it does not meet criteria (1) for treatment as a corporation.
Harris Beach & Wilcox, LLP is of the opinion that the Partnership is not taxable
as a corporation under a provision of the Tax Code other than section
7701(a)(3). Treas. Reg. Section 301.7701-3 provides that the Partnership can
elect (that is, check the box) to be taxed as a corporation but, in the absence
of an election, it shall be taxed as a partnership.
The General Partner has represented that it will not elect to have the
Partnership taxed as a corporation pursuant to Treas. Reg. Section 301-7701-3.
Based on the foregoing analysis and opinions, and the General Partner's
representation, Harris Beach & Wilcox, LLP is of the opinion that the
Partnership is properly classified as a partnership as of the taxable year
commencing January 1, 1997. See "TAX CONSIDERATIONS--Discussion of Tax
Consequences of Owning Limited Partnership Units--Tax Status of the
Partnership."
At Risk Rules
The Partnership's purchase of the Solon Property and the Warwick Property was
financed with funds raised from the sale of Units and Subordinated Notes, as was
the construction costs of the Hampton Inn being built on the Solon Property.
However, Essex Glenmaura L.P. financed the 120-room Courtyard by Marriott Hotel
with a $5,000,000 first mortgage loan from GMAC Commercial Mortgage Corporation
(the "Glenmaura GMAC Loan") and a $1,500,000 loan from approximately 45
investors (the "Glenmaura Subordinated Loan"). The terms of the Glenmaura
Subordinated Loan are similar to the terms of the Subordinated Notes. The
Glenmaura GMAC Loan allows the lender only limited recourse against the General
Partner and no recourse against the Limited Partners. The Glenmaura Subordinated
Loan is guaranteed by the General Partner.
The Partnership owns 54% of Essex Glenmaura L.P. Harris Beach & Wilcox, LLP is
of the opinion that the Glenmaura GMAC Loan, more likely than not, is without
recourse to the General Partner, that GMAC Commercial Mortgage Corporation is
actively engaged in the business of lending money and that each Partner may
deduct his or her pro-rata share of 54% of the Glenmaura GMAC Loan. See "TAX
CONSIDERATIONS--At Risk Rules."
Interest
Harris Beach & Wilcox, LLP is of the opinion that each Partner will be entitled
to deduct his or her pro-rata share of 54% of the interest accrued by Essex
Glenmaura L.P. with respect to the Glenmaura GMAC and Glenmaura Subordinated
Loans, subject to the passive loss limitation. See "TAX
CONSIDERATIONS--"Interest and The Passive Loss Rule."
<PAGE> 8
INDEX TO FINANCIAL STATEMENTS
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Financial Statements of the General Partner
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- - Independent Auditors' Report F-1
- - Balance Sheets as of December 31, 1996 and 1995 F-2
- - Statements of Income and Changes in Retained Earnings for
the years ended December 31, 1996 and 1995 F-3
- - Statements of Cash Flows for years ended December 31, 1996 and 1995 F-4
- - Notes to Financial Statements F-6
Financial Statements of the Partnership
- - Independent Auditors' Report F-13
- - Consolidated Balance Sheets as of December 31, 1996 and 1995 F-14
- - Consolidated Statements of Operations for the year ended December 31, 1996
and for the period August 30, 1995 (date of inception) through December 31, 1995 F-15
- - Consolidated Statements of Changes in Partners' Capital for the year ended
December 31, 1996 and for the period August 30, 1995 (date of inception)
through December 31, 1995 F-16
- - Consolidated Statements of Cash Flows for the year ended December 31, 1996 and for
the period August 30, 1995 (date of inception) through December 31, 1995 F-17
- - Notes to Consolidated Financial Statements F-19
</TABLE>
<PAGE> 9
ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of
Essex Investment Group, Inc.)
Financial Statements
December 31, 1996 and 1995
(With Independent Auditors' Report Thereon)
<PAGE> 10
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, 1996 and
1995, 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, 1996 and 1995, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
KPMG Peat Marwick, LLP
Rochester, New York
February 21, 1997
F-1
<PAGE> 11
ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
Balance Sheets
December 31, 1996 and 1995
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<CAPTION>
Assets 1996 1995
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Current assets:
Cash and cash equivalents $ 84,643 915,433
Advances receivable from partnerships 815,825 355,546
Prepaid and other 5,682 33,391
---------- ---------
Total current assets 906,150 1,304,370
Noncurrent receivables from partnerships 533,825 210,927
Investments in partnerships 506,224 415,257
Deferred tax asset 48,000 48,000
Office furniture and equipment, less accumulated
depreciation of $74,560 in 1996 and $49,162 in 1995 87,479 100,466
---------- ---------
$2,081,678 2,079,020
========== =========
Liabilities and Stockholder's Investment
Current liabilities:
Accounts payable and accrued expenses 40,504 185,380
Due to affiliates, net 216,006 -
---------- ---------
Total current liabilities 256,510 185,380
Accrued partnership contributions 91,770 163,542
---------- ---------
348,280 348,922
---------- ---------
Commitments and contingencies (note 6)
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 1,732,398 1,729,098
---------- ---------
Total stockholder's investment 1,733,398 1,730,098
---------- ---------
$2,081,678 2,079,020
========== =========
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE> 12
ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
Statements of Income and Changes in Retained Earnings
For the years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Revenues:
Organization, property acquisition, disposition
and development fees $ 652,156 1,269,313
Management and administrative fees 1,139,551 995,237
Equity income (loss) of partnerships (11,290) 29,752
----------- ---------
Total revenues 1,780,417 2,294,302
----------- ---------
Operating expenses:
Personnel 1,136,218 1,192,018
Office operations 170,883 151,749
Occupancy 143,666 117,711
Sales and marketing 51,280 164,217
Professional fees 57,594 51,626
Provision for losses on receivables from partnerships 210,653 155,212
----------- ---------
Total operating expenses 1,770,294 1,832,533
----------- ---------
Income from operations 10,123 461,769
----------- ---------
Other income (expense):
Interest income 75,920 30,942
Interest expense (80,743) (102,282)
Loss on sale of hotel franchise rights - (150,000)
----------- ---------
(4,823) (221,340)
----------- ---------
Income before income taxes
and extraordinary item 5,300 240,429
Income taxes 2,000 111,000
----------- ---------
Income before extraordinary item 3,300 129,429
Extraordinary item - gain on forgiveness of debt,
net of income tax expense of $40,000 - 60,000
----------- ---------
Net income 3,300 189,429
Retained earnings, beginning of year 1,729,098 1,552,069
Adjustment pursuant to tax sharing arrangement - 137,600
Dividend to parent - (150,000)
----------- ---------
Retained earnings, end of year $ 1,732,398 1,729,098
=========== =========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 13
ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
Statements of Cash Flows
For the years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,300 189,429
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity (income) loss of partnerships 11,290 (29,752)
Depreciation 25,397 23,328
Provision for losses on receivables from
partnerships 210,653 155,212
Loss on sale of hotel franchise rights - 150,000
Deferred income taxes - (48,000)
Adjustment pursuant to tax sharing arrangement - 137,600
Extraordinary gain on forgiveness of debt - (100,000)
Cash provided (used) by changes in:
Prepaid and other current assets 27,709 (24,920)
Accounts payable and accrued expenses (144,876) 166,896
Accrued partnership contributions (71,772) (9,026)
----------- -------
Net cash provided by operating activities 61,701 610,767
----------- -------
Cash flows from investing activities:
Advances to partnerships, net (993,830) (116,849)
Investments in partnerships (242,500) (112,219)
Distributions from partnerships 140,243 54,831
Purchase of office furniture and equipment (12,410) (25,516)
Proceeds from sale of hotel franchise rights - 225,000
----------- -------
Net cash provided by (used in)
investing activities (1,108,497) 25,247
----------- -------
Cash flows from financing activities:
Advances from affiliates, net 216,006 87,038
Repayment of debt - (175,000)
Dividend to parent - (150,000)
----------- -------
Net cash provided by (used in)
financing activities 216,006 (237,962)
----------- -------
Net increase (decrease) in cash and
cash equivalents (830,790) 398,052
Cash and cash equivalents, beginning of year 915,433 517,381
----------- -------
Cash and cash equivalents, end of year $ 84,643 915,433
=========== =======
</TABLE>
(Continued)
F-4
<PAGE> 14
ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
Statements of Cash Flows, Continued
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $86,859 102,282
======= =======
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 15
ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
Notes to Financial Statements
December 31, 1996 and 1995
(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.
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.
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.
F-6 (Continued)
<PAGE> 16
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) Partnership Investments and Advances Receivable
The Company is a general partner in partnerships which primarily own and
operate hotels, apartment buildings and manufactured home communities. 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 $1,726,426 in
1996 and $2,192,192 in 1995.
The Company makes operating advances to those partnerships as well as in
connection with the acquisition and construction of real estate. Such
receivables, which are generally due on demand and unsecured, are
summarized as follows at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
Partnership 1996 1995
----------- ---- ----
<S> <C> <C>
Essex - Ashford River Oaks L.P.:
Mortgage note $ 270,000 -
Advances 472,372 267,086
Essex Microtel LeRay L.P. 313,084 -
Essex Geneseo Associates L.P. 173,293 101,211
Essex Albion Credits L.P. - 168,107
Others 360,901 270,069
---------- -------
1,589,650 806,473
Less allowance for uncollectible advances 240,000 240,000
---------- -------
1,349,650 566,473
Less current portion 815,825 355,546
---------- -------
$ 533,825 210,927
========== =======
</TABLE>
F-7 (Continued)
<PAGE> 17
ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
Notes to Financial Statements
(2) Partnership Investments and Advances Receivable (continued)
Essex - Ashford River Oaks L.P. (River Oaks) owns and operates a 300-site
manufactured home community in Springfield, Illinois which the Company
began managing in September 1995. River Oaks has experienced deficit
operating cash flow. The Company has advanced $742,372 to fund operations,
debt service requirements and capital improvements. During 1996, the
Company secured $270,000 of the $742,372 advance with a second mortgage.
The mortgage is receivable on demand with interest only due monthly at
prime plus 1% per annum (9.25% at December 31, 1996). Although no repayment
terms have been set, management of the Company expects to receive repayment
of substantially all amounts in 1997 upon completion of a securitized debt
offering by River Oaks. Summarized financial information for River Oaks as
of and for the years ended December 31, 1996 and 1995 follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Assets $ 2,530,000 2,978,000
Liabilities 2,380,000 2,660,000
Partners capital 150,000 318,000
Revenue 370,000 389,000
Net loss (168,000) (157,000)
</TABLE>
The Company also guarantees certain indebtedness of River Oaks (see note
6).
Essex Microtel LeRay L.P. (LeRay) owns and operates a 100-room Microtel
hotel located in LeRay, New York. During 1996, the Company advanced
$313,084 to LeRay, primarily to reduce outstanding mortgage debt. No
repayment terms have been set and management of the Company does not expect
to receive repayment until ultimate disposition of the property. Summarized
financial information for LeRay as of and for the years ended December 31,
1996 and 1995 follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Assets $ 2,170,000 2,240,000
Liabilities 1,780,000 1,629,000
Partners capital 390,000 611,000
Revenue 577,000 698,000
Net loss (221,000) (128,000)
</TABLE>
(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
franchiser 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.
F-8 (Continued)
<PAGE> 18
ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
Notes to Financial Statements
(4) Related Party Transactions
The Company provides management and administrative services under contracts
with several other entities owned by officers of Essex, earning fees of
$65,281 in 1996 and $72,358 in 1995.
Essex allocated interest expense to the Company of $80,743 in 1996 and
$102,282 in 1995.
(5) Income Taxes
Total income taxes for 1996 and 1995 were allocated as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Income from operations $2,000 111,000
Extraordinary item - 40,000
------ -------
$2,000 151,000
====== =======
</TABLE>
The components of income tax expense attributable to income from operations
are as follows:
<TABLE>
<CAPTION>
Current Deferred Total
------- -------- -----
<S> <C> <C> <C>
1996:
Federal $ 1,500 - 1,500
State 500 - 500
-------- ------- -------
$ 2,000 - 2,000
======== ======= =======
1995:
Federal 119,800 (38,500) 81,300
State 39,200 (9,500) 29,700
-------- ------- -------
$159,000 (48,000) 111,000
======== ======= =======
</TABLE>
F-9 (Continued)
<PAGE> 19
ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
Notes to Financial Statements
(5) Income Taxes (continued)
The difference between income tax expense and the amounts computed by
applying the U.S. Federal income tax rate of 34% to income before income
taxes and extraordinary item is primarily attributable to state income
taxes.
In 1996 and 1995, Essex allocated $2,000 and $21,400 of consolidated
current income tax expense to the Company pursuant to the inter-company tax
sharing arrangement. The difference between current income taxes allocated
to the Company under the tax sharing arrangement in 1995 and the amount
reflected above in accordance with the asset and liability method is
reflected in the accompanying statement of changes in retained earnings as
adjustments to retained earnings.
At both December 31, 1996 and 1995 the deferred tax asset of $96,000
results from temporary differences related to the allowance for
uncollectible receivables from partnerships, less a valuation allowance of
$48,000. 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 valuation allowance at December
31, 1996.
F-10 (Continued)
<PAGE> 20
ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
Notes to Financial Statements
(6) Commitments and Contingencies
As the general partner in several partnerships, the Company 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 otherwise funded. The amounts of such contingent liabilities include
guarantees of the following partnership obligations at December 31, 1996:
<TABLE>
<S> <C>
Essex - Ashford River Oaks L.P.
Subordinated notes payable to private investors, secured by
a third mortgage on the property $1,000,000
Mortgage payable to bank, secured by a first mortgage on
the property 600,000
Essex Microtel Lehigh L.P.
Mortgage payable to bank, secured by a first mortgage on
the property 2,600,000
Essex Geneseo Associates L.P.
Mortgage payable to bank, secured by a first mortgage on
the property 2,983,350
Essex Real Estate Partnership Notes
Mortgage notes payable, secured by first mortgage on certain
properties 976,000
Essex Glenmaura L.P.
Subordinated notes payable to private investors, secured by
a second mortgage on the property 1,500,000
Essex Mobile Home Properties IX L.P.
Subordinated notes payable to private investors, secured by
a second mortgage on the property 1,200,000
Greenport L.L.C
Mortgage payable to bank, secured by a first mortgage on the property 135,000
</TABLE>
F-11 (Continued)
<PAGE> 21
ESSEX PARTNERS INC.
(A Wholly Owned Subsidiary of Essex Investment Group, Inc.)
Notes to Financial Statements
(6) Commitments and Contingencies (continued)
In February 1997, the Company guaranteed a $5,000,000 mortgage payable to a
bank for Essex Glenmaura L.P. The loan is secured by a first mortgage on
the property.
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,
1996 and 1995 follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Assets $ 6,400,000 5,100,000
Liabilities 5,200,000 4,700,000
Total stockholders' equity 1,200,000 400,000
Revenue 13,900,000 9,200,000
Net income 400,000 300,000
</TABLE>
The Company guarantees a term note payable of Essex to a bank of $645,000
at December 31, 1996.
F-12
<PAGE> 22
Independent Auditors' Report
The Partners
Essex Hospitality Associates IV L.P.:
We have audited the accompanying consolidated balance sheets of Essex
Hospitality Associates IV L.P. (a New York limited partnership) and subsidiary
as of December 31, 1996 and 1995, and the related consolidated statements of
operations, changes in partners' capital and cash flows for the year ended
December 31, 1996 and for the period from August 30, 1995 (date of inception)
through December 31, 1995. These consolidated financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Essex Hospitality
Associates IV L.P. and subsidiary as of December 31, 1996 and 1995, and the
results of their operations and their cash flows for the year ended December 31,
1996 and for the period from August 30, 1995 (date of inception) through
December 31, 1995, in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Rochester, New York
March 17, 1996
F-13
<PAGE> 23
ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Consolidated Balance Sheets
December 31, 1996 and 1995
<TABLE>
<CAPTION>
Assets 1996 1995
------ ---- ----
<S> <C> <C>
Investment in real estate, at cost:
Land $ 2,492,195 1,400,435
Land improvements 271,348 -
Buildings 4,961,102 -
Furniture, fixtures and equipment 1,280,352 -
Construction in progress 469,487 26,250
9,474,484 1,426,685
Less accumulated depreciation 231,420 -
----------- ---------
Net investment in real estate 9,243,064 1,426,685
Cash and cash equivalents 2,515,685 628,864
Due from affiliates 81,500 -
Other assets 147,512 5,153
----------- ---------
Deferred costs:
Debt issuance 743,075 253,841
Franchise fees 128,000 80,000
----------- ---------
871,075 333,841
Less accumulated amortization 191,324 -
----------- ---------
Net deferred costs 679,751 333,841
----------- ---------
$12,667,512 2,394,543
=========== =========
Liabilities and Partners' Capital
Liabilities:
Accounts payable - construction $ 335,914 155,400
Other accounts payable and accrued expenses 258,724 -
Due to affiliate - 64,495
Construction loan payable 4,294,243 -
Notes payable 1,500,000 -
Subordinated notes payable 4,920,000 1,744,000
---------- ---------
Total liabilities 11,950,249 1,963,895
---------- ---------
Minority interest in partnership 641,368 -
----------- ---------
Commitments and contingencies (notes 4 and 5)
Partners' capital 882,514 519,895
Less notes receivable from partners 165,251 89,247
----------- ---------
Net partners' capital 717,263 430,648
----------- ---------
$12,667,512 2,394,543
=========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-14
<PAGE> 24
ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Consolidated Statements of Operations
Year ended December 31, 1996 and
period from August 30, 1995 (date of inception) through December 31, 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Revenue:
Rooms $ 394,134 -
Food and beverage 54,048 -
Telephone and other commissions 34,880 -
----------- -------
483,062 -
----------- -------
Operating expenses:
Rooms 249,766 -
Administrative 155,429 -
Food and beverage 128,541 -
Marketing 89,240 -
Repairs and maintenance 82,573 -
Utilities 28,822 -
Management fees to affiliate 25,338 -
Telephone and other commissions 19,869 -
Royalty fees 15,766 -
Insurance 12,058 -
Property taxes 6,569 -
Miscellaneous 72,214 -
----------- -------
886,185 -
----------- -------
Loss from operations before interest, depreciation
and amortization (403,123) -
Interest:
Income 74,202 -
Expense (548,788) -
Depreciation and amortization (345,756)
----------- -------
Loss before minority interest in loss of
partnership (1,223,465) -
Minority interest in loss of partnership 356,524 -
----------- -------
Net loss $ (866,941) -
=========== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-15
<PAGE> 25
ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Consolidated Statements of Changes in Partners' Capital
Year Ended December 31, 1996 and Period for
August 30, 1995 (date of inception) through December 31, 1995
<TABLE>
<CAPTION>
Net
Partners' Capital Notes Partners'
General Limited Total Receivable Capital
------- ------- ----- ---------- ---------
<S> <C> <C> <C> <C> <C>
Balance at August 30, 1995
(date of inception) $ - - - - -
Capital contributions 6,574 650,898 657,472 (89,247) 568,225
Syndication costs - (137,477) (137,477) - (137,477)
Return of original limited
partners contribution - (100) (100) - (100)
---------- -------- ---------- -------- ----------
Balance at December 31, 1995 6,574 513,321 519,895 (89,247) 430,648
Capital contributions 15,120 1,496,830 1,511,950 (76,004) 1,435,946
Syndication costs - (168,799) (168,799) - (168,799)
Distributions to partners (1,136) (112,455) (113,591) - (113,591)
Net loss (8,669) (858,272) (866,941) - (866,941)
---------- -------- ---------- -------- ----------
Balance at December 31, 1996 $ 11,889 870,625 882,514 (165,251) 717,263
======== ========== ========== ======== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-16
<PAGE> 26
ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Consolidated Statements of Cash Flows
Year ended December 31, 1996 and
period from August 30, 1995 (date of inception) through December 31, 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from investing activities:
Cash received from customers $ 444,876 -
Cash paid to suppliers and employees (717,237) -
Interest received 55,016 -
Interest paid (519,717) -
----------- ----------
Net cash used in operating
activities (737,062)
----------- ----------
Cash flows used in investing activities:
Investment in real estate (6,094,996) (1,276,438)
Cash acquired with acquisition of controlling interest
in partnership 248,522 -
Other assets - deposits (34,528) -
Franchise fees paid - (80,000)
----------- ----------
Net cash used in investing activities (5,881,002) (1,356,438)
----------- ----------
Cash flows from financing activities:
Proceeds from construction loan 4,294,243 -
Proceeds from issuance of subordinated notes payable 3,176,000 1,744,000
Debt issuance costs (418,800) (192,737)
Proceeds from offering of limited partnership units 1,435,946 568,225
Proceeds from offering of subsidiary limited partnership
units, net 303,277 -
Syndication costs (172,190) (134,086)
Distributions to partners (113,591) -
Return of original partner's contribution - (100)
----------- ----------
Net cash provided by financing activities 8,504,885 1,985,302
----------- ----------
Net increase in cash and cash
equivalents 1,886,821 628,864
Cash and cash equivalents - beginning of period 628,864 -
----------- ----------
Cash and cash equivalents - end of period $ 2,515,685 628,864
=========== ==========
</TABLE>
(Continued)
F-17
<PAGE> 27
ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Consolidated Statements of Cash Flows (continued)
For the Years ended December 31, 1996 and period
from August 30, 1995 (date of inception) through December 31, 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Reconciliation of net income to net cash used in
operating activities:
Net loss $ (866,941) -
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 345,756 -
Minority interest in net loss of partnership (356,524) -
Change in:
Other assets (72,896) -
Accounts payable and accrued expenses 213,543 -
----------- -------
Net cash used in operating
activities $ (737,062) -
=========== =======
Supplemental schedule of noncash investing and financing
activities:
Net assets acquired with acquisition of controlling
interest in partnership:
Investment in real estate $ 2,243,340 -
Cash 1,498,522 -
Deferred costs and other assets 518,749 -
Debt (1,500,000) -
Other liabilities (493,497) -
Minority interest $(1,017,114) -
=========== =======
Obligations incurred in connection with construction
in progress $ 180,514 150,247
=========== =======
Debt issuance and syndication costs due to affiliate $ - 64,495
=========== =======
Notes received from general and limited partners $ 76,004 89,247
=========== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-18
<PAGE> 28
ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1996 and 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 may also invest in and 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's general
partner is Essex Partners Inc. (Essex Partners), a subsidiary of Essex
Investment Group, Inc. (Essex).
The Partnership has acquired land in order to construct and operate 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. Construction was delayed
at both sites as a result of higher than projected construction costs and
change in market conditions. The Solon site is now under construction for a
Hampton Inn hotel while plans for the Warwick site have not yet been
resolved.
In January 1996, the Partnership acquired a 54% limited partnership
interest in Essex Glenmaura L.P. (Glenmaura) through the purchase of 12.5
limited partnership units for $1,250,000. The purchase price was equal to
the prorata portion of the fair value of the net assets acquired. Glenmaura
owns and operates a Courtyard by Marriott hotel near Scranton,
Pennsylvania. Construction of the hotel was completed during 1996 and
operations began on September 4, 1996.
A general description of the allocation of Partnership income, loss, and
distributions follows. 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 partner.
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
partner. Thereafter, income on the sale of any or all the hotels is
allocated in the same manner as income from operations.
F-19 (Continued)
<PAGE> 29
ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Notes to Financial Statements
(1) Organization (continued)
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
partner.
Cash distributions will initially be made 99% to the limited partners
and 1% to the general partner. 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 partner. 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).
In accordance with the Partnership agreement, the ratio of gross proceeds
from the offering of limited partnership units to total gross proceeds from
the public offering of notes and limited partnership units prior to the
termination of the offering may not be less than .15 to 1. At December 31,
1996, that ratio was .31 to 1.
(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.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Partnership and Glenmaura. All significant intercompany transactions and
balances have been eliminated in consolidation.
F-20 (Continued)
<PAGE> 30
ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Notes to Financial Statements
(2) Summary of Significant Accounting Policies (continued)
Investment in Real Estate
Investment in real estate is stated at cost. Depreciation is calculated
using the straight-line method over the estimated useful lives of the
assets as each hotel commences operations.
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 are being 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, as each hotel commences operations.
Syndication Costs
Selling commissions and legal, accounting, printing and other filing costs
totaling $306,276 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) Debt
Construction Loan
Glenmaura received construction financing from a bank in the amount of
$4,500,000, of which $4,294,243 has been drawn as of December 31, 1996. The
term is for twelve months and requires monthly payments of interest only at
a rate of 2.5% over the LIBOR rate (7.875% at December 31, 1996). The loan
is guaranteed by Essex Partners and collateralized by the related hotel
property. Additionally, covenants require minimum net worth and limit
distributions.
F-21 (Continued)
<PAGE> 31
ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Notes to Financial Statements
(3) Debt (continued)
Construction Loan (continued)
On February 28, 1997, Glenmaura obtained permanent financing from GMAC
Corporation for $5,000,000, the proceeds of which were used to repay the
construction loan. The term of the loan will be for four years with a one
year extension available if certain debt service coverage is attained.
Monthly payments of interest only will be due at 3% over the LIBOR rate for
the first year. Principal and interest payments are due thereafter. The
commitment fee is $50,000 (1% of the loan proceeds) with 50% of the fee due
upon acceptance of the commitment. The additional 50% is payable at
closing. The loan will be collateralized by the real and personal property
and certain other assets.
Notes Payable
Glenmaura has $1,500,000 of unsecured notes requiring monthly payments of
interest only at 10.5% through June 1, 1998, at which time all principal
will be due unless Glenmaura exercises its two one-year extensions at
extension fees ranging from one-half to one percent. Glenmaura also has the
right to prepay the notes at face value. Essex Partners guarantees payment
of principal and interest on the notes.
Subordinated Notes Payable
Subordinated notes payable of the Partnership of $4,920,000 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
of an extension fee equal to .5% of the principal amount of the notes
outstanding. The notes are issued as unsecured obligations of the
Partnership.
In 1996, interest of $193,354, was capitalized in investments in real
estate as the notes were used to finance construction of the hotels. No
interest was capitalized in 1995.
F-22 (Continued)
<PAGE> 32
ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Notes to Financial Statements
(4) Franchise Fees
In 1995, the Partnership entered into license agreements with Promus
Corporation (Promus) to operate a Homewood Suites hotel in Warwick, Rhode
Island and a Hampton Inn and Suites hotel in Solon, Ohio site. An initial
franchise fee of $40,000 was paid for each hotel. In addition, for each
hotel, the Partnership will be required to pay Promus a monthly royalty fee
of 4% of gross rooms revenues, a monthly marketing/reservation fee of 4% of
gross rooms revenue, an initial software license fee of $3,000 plus $85 per
guest room with a monthly maintenance charge of $200 to $400 per month, and
a monthly amount equal to any sales tax or similar tax imposed on Promus on
payments received under the license agreement. During 1996 Promus approved
the conversion of the Solon, Ohio agreement to a Hampton_Inn.
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 Promus 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.
Glenmaura has a franchise agreement with Marriott International, Inc. Under
the terms of the agreement, Glenmaura paid an initial franchise fee of
$48,000 in 1995. The term and amortization period of the franchise
agreement is twenty years, with an option to renew for an additional
ten-year period. Glenmaura is 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% gross revenues, a reservation system fee and a
property management system fee. In 1996, fees totaled $15,766.
F-23 (Continued)
<PAGE> 33
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 from the
Partnership and Glenmaura in 1996 and 1995 follows:
<TABLE>
<CAPTION>
Type of Fee Amount of Fee 1996 1995
----------- ------------- ---- ----
<S> <C> <C> <C>
Selling Commission Up to $80 per limited partnership
unit and $55 per $1,000 note sold $ 289,063 147,154
Organization and 3.4% of the gross proceeds
Offering Fee of the offering 158,876 81,423
Offering and Up to $40,000 if proceeds of
Organization Fee the offering of limited partnership
- Glenmaura units is $4,000,000, reduced by
any selling commissions paid 16,000 -
Acquisition Fee $110,000 per hotel site - 220,000
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) 108,000 -
Development Fee $285,000 (less $171,000 paid prior
- Glenmaura to the Partnership's purchase of a
controlling interest of Glenmaura) 114,000 -
Property
Management Fee 4.5% of gross operating revenues
from the hotels 21,718 -
Partnership
Management Fee .75% to 1.25% of gross operating
revenues from the hotels 3,620 -
Accounting Fee $800 per month 3,200 -
----------- ---------
$ 714,477 448,577
=========== =========
</TABLE>
F-24 (Continued)
<PAGE> 34
ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Notes to Financial Statements
(5) Related Party Transactions (continued)
The above fees are reflected in the accompanying financial statements as
follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Balance sheets:
Investment in real estate $222,000 220,000
Deferred debt issuance costs 282,664 155,216
Partners' capital - syndication costs 165,275 73,361
-------- -------
$669,939 448,577
======== =======
Statements of operations:
Management fees to affiliate 25,338 -
Administrative expense 3,200 -
Miscellaneous expense 16,000 -
-------- -------
$ 44,538 -
======== =======
</TABLE>
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.
In 1995, the Partnership paid a $110,000 acquisition fee in connection with
the Warwick, Rhode Island site. As it is unlikely that a hotel will be
constructed on the Warwick site, the amount of the fee is included in due
from affiliates at December 31, 1996.
Under the terms of the Partnership agreement, Essex Partners or its
affiliates will also earn other fees as follows:
<TABLE>
<CAPTION>
Type of Fee Amount of Fee
----------- -------------
<S> <C>
Investor Relations Fee .25% of the gross proceeds of the offering payable
annually in 1998 through 2001
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
(excluding the Glenmaura hotel which is 2.5%)
</TABLE>
F-25 (Continued)
<PAGE> 35
ESSEX HOSPITALITY ASSOCIATES IV L.P.
(A New York Limited Partnership)
Notes to Financial Statements
(5) Related Party Transactions
Glenmaura has made a non-refundable deposit of $55,000 pursuant to an
option to purchase a second parcel of land (the Second Project) adjacent to
the Project for purposes of constructing a second hotel. The option
agreement expired in December of 1996 but is currently being renegotiated.
In the event that Essex Partners elects to proceed with the Second Project
on behalf of Glenmaura, Essex Partners 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. In addition, as
compensation for arranging construction and permanent financing, Essex
Partners may receive a financing fee equal to 1% of the gross proceeds of
the financing.
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.
F-26
<PAGE> 36
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> 37
TABLE I
ESSEX PARTNERS AND AFFILIATES
EXPERIENCE IN RAISING AND INVESTING FUNDS
(THREE YEARS ENDING DECEMBER 31, 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 December 31, 1996.
<PAGE> 38
TABLE I
ESSEX AND AFFILIATES
EXPERIENCE IN RAISING AND INVESTING FUNDS
(THREE YEARS ENDING DECEMBER 31, 1996)
<TABLE>
<CAPTION>
Essex Essex Essex Hospitality
Glenmaura L.P. (6) Glenmaura L.P. (6) Associates III L.P. (5)
------------------ ------------------ -----------------------
<S> <C> <C> <C> <C> <C> <C>
Dollar amount offered 2,500,000 1,500,000 13,986,320
Dollar amount raised 2,300,000 92.0% 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 syndication
expenses (1) 15,400 0.7% 34,500 2.3% 767,000 5.5%
---------- ----- ---------- ----- ----------- -----
Available for investment $2,272,600 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 11.2% 225,000 15.0% 870,000 6.2%
Paid to non-affiliates -- -- -- -- -- --
Other acquisition and development
expenses (2) 2,009,100 87.4% 143,900 9.6% 9,442,000 67.5%
---------- ----- ---------- ----- ----------- -----
Total acquisition cost $2,265,600 98.5% $1,402,500 93.5% $11,678,000 83.5%
Non-recurring management and
organization fees to affiliates 7,000 0.3% -- -- -- --
Other requirements (3) -- -- 3,000 0.2% 685,320 4.9%
---------- ----- ---------- ----- ----------- -----
Total $2,300,000 100.0% $1,500,000 100.0% $13,986,320 100.0%
Purchase price (including
brokerage fees) 8,381,000 8,381,000 11,679,000
Percent leverage (4) 77.6% 77.6% 85.6%
Date offering began 05/25/95 05/10/95 11/17/93
Length of offering (months) N/A 2 22
</TABLE>
<PAGE> 39
TABLE I
ESSEX AND AFFILIATES
EXPERIENCE IN RAISING AND INVESTING FUNDS
(THREE YEARS ENDING DECEMBER 31, 1996)
<TABLE>
<CAPTION>
Essex Knoxville Essex Knoxville Essex Knoxville
Associates L.P. (7) Associates L.P. (7) Associates 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
organization 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> 40
TABLE I
ESSEX AND AFFILIATES
EXPERIENCE IN RAISING AND INVESTING FUNDS
(THREE YEARS ENDING DECEMBER 31, 1996)
<TABLE>
<CAPTION>
Essex Real Estate
Partnership Notes (8)
-------------------------
<S> <C> <C>
Dollar amount offered 976,000
Dollar amount raised 976,000 100.0%
Less offering expenses:
Selling commissions paid
to affiliates 48,800 5.0%
Organizational and syndication
expenses (1) 27,200 2.8%
-------- -----
Available for investment $900,000 92.2%
Acquisition and Development costs:
Pre-paid items and fees related
to purchase of property -- --
Cash downpayment (2) -- --
Acquisition and Developer fees:
Paid to affiliates -- --
Paid to non-affiliates -- --
Other acquisition and development
expenses (2) 95,000 9.7%
-------- -----
Total acquisition cost $ 95,000 9.7%
Non-recurring management and
organization fees to affiliates -- --
Other requirements (3) 805,000 82.5%
-------- -----
Total $976,000 100.0%
Purchase price (including
brokerage fees) --
Percent leverage (4) --
Date offering began 03/01/95
Length of offering (months) 2
</TABLE>
<PAGE> 41
TABLE I
ESSEX PARTNERS AND AFFILIATES
EXPERIENCE IN RAISING AND INVESTING FUNDS
(THREE YEARS ENDING DECEMBER 31, 1996)
(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. and Essex Hospitality
Associates III L.P..
(6) Essex Glenmaura L.P. was financed through two offerings, an equity
offering of $2,500,000 and a note offering of $1,500,000. Each
offering is presented separately in Table I.
(7) Essex Knoxville L.P. 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 Notes offering raised debt financing for three
real estate partnerships, Essex Microtel Associates L.P. and Essex
Microtel LeRay, which own hotel properties 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
L.P. 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 apartment buildings.
<PAGE> 42
TABLE II
ESSEX PARTNERS INC. AND AFFILIATES
COMPENSATION TO SPONSOR
(THREE YEARS ENDING DECEMBER 31, 1996)
Table II provides information as to the cumulative compensation paid to
sponsors for a three year period ending December 31, 1996 (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> 43
TABLE II
ESSEX PARTNERS INC. AND AFFILIATES
COMPENSATION TO SPONSOR
(CUMULATIVE THROUGH DECEMBER 31, 1996)
<TABLE>
<CAPTION>
Essex Hospitality Essex Knoxville Essex Microtel
Essex Associates III Associates L.P. Associates II
Glenmaura L.P. L.P. (1) (2) L.P.
-------------- ----------------- ---------------- --------------
<S> <C> <C> <C> <C>
Date offering commenced var 11/17/93 var 11/18/92
Dollar amount raised 3,800,000 13,986,320 3,500,000 10,487,000
Amount paid to sponsor from proceeds of offering:
Underwriting fees 83,300 477,000 32,500 --
Acquisition and development fees
- real estate commissions -- -- -- --
- advisory fees 481,500 514,000 100,000 --
- other -- -- -- --
Organization fees 24,000 270,000 -- --
Other 10,000 -- 25,000 --
Dollar amount of cash generated from operations
before deducting payments to sponsor: (358,350) 223,800 379,800 800,800
Amount paid to sponsor from operations:
Property management fees 24,900 326,400 127,000 452,200
Partnership management fees 3,600 79,700 37,000 127,200
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> 44
TABLE II
ESSEX PARTNERS INC. AND AFFILIATES
COMPENSATION TO SPONSOR
(CUMULATIVE THROUGH DECEMBER 31, 1996)
<TABLE>
<CAPTION>
Essex Microtel
Essex Charleston Carrier Circle Essex Microtel
Associates L.P. L.P. Associates 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 -- -- --
Acquisition and development fees
- real estate commissions -- -- --
- advisory fees 10,000 -- --
- other -- -- --
Organization fees -- -- --
Other -- -- --
Dollar amount of cash generated from operations
before deducting payments to sponsor: 444,700 380,500 983,500
Amount paid to sponsor from operations:
Property management fees 141,700 109,000 148,500
Partnership management fees 39,300 44,100 26,600
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> 45
TABLE II
ESSEX PARTNERS INC. AND AFFILIATES
COMPENSATION TO SPONSOR
(CUMULATIVE THROUGH DECEMBER 31, 1996)
<TABLE>
<CAPTION>
Essex Microtel Hagel-Essex Essex Microtel
LeRay L.P. L.P. Lehigh L.P.
----------------- -------------- ---------------
<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 -- -- --
Acquisition and development fees
- real estate commissions -- -- --
- advisory fees -- -- --
- other -- -- --
Organization fees -- -- --
Other -- -- --
Dollar amount of cash generated from operations
before deducting payments to sponsor: (204,435) 409,200 550,300
Amount paid to sponsor from operations:
Property management fees -- -- 126,000
Partnership management fees 10,265 36,500 38,400
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> 46
TABLE II
ESSEX PARTNERS INC. AND AFFILIATES
COMPENSATION TO SPONSOR
(CUMULATIVE THROUGH DECEMBER 31, 1996)
<TABLE>
<CAPTION>
Essex Microtel Other
1989 L.P. Programs (3)
--------- ------------
<S> <C> <C>
Date offering commenced var
Dollar amount raised $2,687,000 7,346,460
Amount paid to sponsor from proceeds of offering:
Underwriting fees -- 512,100
Acquisition and development fees
- real estate commissions -- --
- advisory fees -- 285,000
- other -- --
Organization fees -- 107,200
Other -- 60,000
Dollar amount of cash generated from operations
before deducting payments to sponsor: 480,800 68,500
Amount paid to sponsor from operations:
Property management fees 137,700 9,000
Partnership management fees 38,400 900
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> 47
TABLE II
ESSEX PARTNERS INC. AND AFFILIATES
COMPENSATION TO SPONSOR
(CUMULATIVE THROUGH DECEMBER 31, 1996)
(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) This category includes all other programs syndicated by Essex
Partners from 1994 through 1996.
<PAGE> 48
TABLE III
ESSEX PARTNERS AND AFFILIATES
OPERATING RESULTS OF PRIOR PROGRAMS
(Through December 31, 1996)
Table III presents operating information from the opening of
the property through December 31, 1996 for the programs in which Essex
Partners or affiliates acted as general partners and which closed in
the five year period ending December 31, 1996.
<PAGE> 49
TABLE III
ESSEX PARTNERS AND AFFILIATES
OPERATING RESULTS OF PRIOR PROGRAMS (000)
(Through December 31, 1996)
<TABLE>
<CAPTION>
--------------------------------------------------------
ESSEX MICROTEL ASSOCIATES II L.P.
--------------------------------------------------------
1992 1993
(1) (3 MOS) 1994 1995 1996
<S> <C> <C> <C> <C> <C>
Gross Revenues -- 272.7 2,569.6 2,925.5 2,959.8
Profit on sale of properties -- -- -- -- --
Less: operating expenses 2.5 308.9 1,693.2 1,803.9 1,868.7
-------- -------- ------- ------- -------
Operating income (loss) (2.5) (36.2) 876.4 1,121.6 1,091.1
Less: interest expense -- 372.7 785.8 785.8 785.8
depreciation -- 255.1 676.1 687.0 690.0
-------- -------- ------- ------- -------
Net income (loss) (2.5) (664.0) (585.5) (351.2) (384.7)
Cash generated from operations (0.4) (452.2) 135.2 378.3 275.4
Cash generated from sales -- -- -- -- --
Cash generated from financing activities 3,707.6 5,304.0 (78.0) (312.9) (341.9)
Plus:cash distributions -- 100.2 273.5 315.5 341.9
--------------------------------------------------------
Cash generated from operations, sales and financing 3,707.2 4,952.0 330.7 380.9 275.4
Less: cash distributions to investors
--from operating cash flow -- -- 135.2 315.5 341.9
--from sales and financing activities -- 100.2 138.3 -- --
--from other -- -- -- -- --
--------------------------------------------------------
Cash generated (deficiency) after cash distributions 3,707.2 4,851.8 57.2 65.4 (66.5)
Less: special items - capital improvements (1,051.5) (6,830.8) (422.4) (75.0) (40.2)
--------------------------------------------------------
Cash generated (deficiency) after cash 2,655.7 (1,979.0) (365.3) (9.6) (106.6)
distributions and special items
Tax and distribution data per $1,000 invested
Federal income tax results:
Ordinary income (loss) -- from operation (0.9) (252.6) (222.7) (133.6) (146.3)
-- from recapture -- -- -- -- --
Capital gain -- -- -- -- --
Cash distributions to investors
Source: (on a GAAP basis) -- investment income -- -- -- -- --
-- return of capital -- -- 104.0 120.0 130.0
Source: (on a cash basis) -- sales -- -- -- -- --
-- financing activities -- -- 52.6 -- --
-- operations -- -- 51.4 120.0 130.0
-- other -- -- -- -- --
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%
--------------------------------------------------------
</TABLE>
<PAGE> 50
TABLE III
ESSEX PARTNERS AND AFFILIATES
OPERATING RESULTS OF PRIOR PROGRAMS (000)
(Through December 31, 1996)
<TABLE>
<CAPTION>
----------------------------------------------
ESSEX HOSPITALITY ASSOCIATES III (2)
----------------------------------------------
1993 1994
(1) (3 MOS) 1995 1996
----------------------------------------------
<S> <C> <C> <C> <C>
Gross Revenues -- 128.7 2,498.8 3,741.1
Profit on sale of properties -- -- -- (67.2)
Less: operating expenses -- 167.1 1,849.4 2,664.9
-------- ------- ------- -------
Operating income (loss) -- (38.4) 649.4 1,008.9
Less: interest expense -- 242.4 750.4 1,000.0
depreciation -- 151.3 483.4 667.1
-------- ------- ------- -------
Net income (loss) -- (432.0) (584.5) (658.1)
Cash generated from operations -- (299.6) (67.9) 239.6
Cash generated from sales --
Cash generated from financing activities 1,593.0 7,026.1 3,258.6 (281.2)
Plus:cash distributions -- 62.3 314.4 423.3
---------------------------------------------
Cash generated from operations, sales and financing 1,593.0 6,788.8 3,505.2 381.7
Less: cash distributions to investors
--from operating cash flow -- -- -- 239.6
--from sales and financing activities -- 62.3 314.4 183.7
--from other -- -- -- --
--------------------------------------------
Cash generated (deficiency) after cash distributions 1,593.0 6,726.5 3,190.8 (41.6)
Less: special items - capital improvements (575.4) (5,195.2) (5,615.9) (54.4)
--------------------------------------------
Cash generated (deficiency) after cash 1,017.6 1,531.3 (2,425.1) (96.0)
distributions and special items
Tax and distribution data per $1,000 invested
Federal income tax results:
Ordinary income (loss) -- from operations -- (202.4) (146.6) (165.1)
-- from recapture -- -- -- --
Capital gain -- -- -- --
Cash distributions to investors
Source: (on a GAAP basis) -- investment income -- -- --
-- return of capital -- 29.2 78.9 106.2
Source: (on a cash basis) -- sales -- -- -- --
-- financing activities -- 29.2 78.9 46.1
-- operations -- -- -- --
-- other -- -- -- --
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). 99%
--------------------------------------------
</TABLE>
<PAGE> 51
TABLE III
ESSEX PARTNERS AND AFFILIATES
OPERATING RESULTS OF PRIOR PROGRAMS (000)
(Through December 31, 1996)
<TABLE>
<CAPTION>
ESSEX KNOXVILLE ASSOCIATES L.P. ESSEX HOSPITALITY
------------------------------- ASSOCIATES IV L.P. (3)
----------------------
1993 1994
(1) (5 MOS) 1995 1996 1995 1996
------------------------------------------ ---------------------
<S> <C> <C> <C> <C> <C> <C>
Gross Revenues 8.8 350.7 1,053.8 1,078.2 -- 483
Profit on sale of properties -- -- -- -- -- --
Less: operating expenses 0.5 237.1 658.9 696.1 -- 886.2
------- -------- ------- -------- --------- --------
Operating income (loss) 8.3 113.6 394.9 382.1 -- (403.1)
Less: interest expense -- 137.5 270.0 270.0 -- 474.6
minority interest -- -- -- -- -- 356.5
depreciation 8.9 145.7 252.1 218.9 -- 345.8
------- -------- ------- -------- --------- --------
Net income (loss) (0.6) (169.5) (127.2) (106.8) -- (866.9)
Cash generated from operations 7.8 (27.7) 149.6 117.6 -- (737.1)
Cash generated from sales -- -- -- -- -- --
Cash generated from financing activities 2,757.4 397.7 (132.5) (122.0) 1,985.3 8,504.9
Plus:cash distributions -- 30.0 121.0 123.2 -- 113.6
---------------------------------------- ---------------------
Cash generated from operations, sales and financing 2,765.2 400.0 138.1 118.8 1,985.3 7,881.4
Less: cash distributions to investors
--from operating cash flow -- -- 121.0 123.2 -- --
--from sales and financing activities -- 30.0 -- -- -- 113.6
--from other -- -- -- -- -- --
---------------------------------------- ---------------------
Cash generated (deficiency) after cash distributions 2,765.2 370.0 17.1 (4.4) 1,985.3 7,767.8
Less: special items - capital improvements (763.2) (2,323.7) (1.7) (22.0) (1,356.4) (5,881.0)
---------------------------------------- ---------------------
Cash generated (deficiency) after cash 2,002.0 (1,953.6) 15.4 (26.5) 628.9 1,886.8
distributions and special items
Tax and distribution data per $1,000 invested
Federal income tax results:
Ordinary income (loss) -- from operations (0.6) (169.5) (127.2) (106.8) -- (403.7)
-- from recapture -- -- -- -- -- --
Capital gain -- -- -- -- -- --
Cash distributions to investors
Source: (on a GAAP basis) -- investment income -- -- -- -- -- --
-- return of capital -- 30.0 121.0 123.2 -- 52.9
Source: (on a cash basis) -- sales -- -- -- -- -- --
-- financing activities -- 30.0 -- -- -- 52.9
-- operations -- -- -- -- -- 0
-- other -- -- -- -- -- --
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% 100%
---------------------------------------- ---------------------
</TABLE>
<PAGE> 52
TABLE III
ESSEX PARTNERS AND AFFILIATES
OPERATING RESULTS OF PRIOR PROGRAMS (000)
(Through December 31, 1996)
<TABLE>
<CAPTION>
----------------------------------------------
ESSEX MICROTEL ASSOCIATES L.P.
----------------------------------------------
1992 1993 1994 1995 1996
----------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross Revenues 745.4 832.5 892.0 923.6 969.5
Profit on sale of properties -- -- -- -- --
Less: operating expenses 564.1 599.9 603.6 616.5 593.7
----- ------ ------ ------ ------
Operating income (loss) 181.4 232.6 288.4 307.1 375.8
Less: interest expense 41.6 46.5 47.2 43.3 44.4
depreciation 155.4 145.4 125.3 115.7 117.9
----- ------ ------ ------ ------
Net income (loss) (15.7) 40.8 115.9 148.1 213.4
Cash generated from operations 195.2 167.1 261.2 268.6 319.5
Cash generated from sales -- -- -- -- --
Cash generated from financing activities 125.0 (226.3) (240.0) (256.3) (266.5)
Plus:cash distributions 406.4 227.1 240.0 252.0 279.8
----------------------------------------------
Cash generated from operations, sales and financing 726.6 167.9 261.2 264.3 332.8
Less: cash distributions to investors
--from operating cash flow 144.2 179.7 240.0 252.0 279.8
--from sales and financing activities 262.2 47.4 -- -- --
--from other -- -- -- -- --
----------------------------------------------
Cash generated (deficiency) after cash distributions 320.2 (59.2) 21.2 24.3 53.0
Less: special items - capital improvements (463.4) (12.9) (5.3) (8.9) (26.7)
----------------------------------------------
Cash generated (deficiency) after cash (143.1) (72.2) 15.9 15.4 26.3
distributions and special items
Tax and distribution data per $1,000 invested
Federal income tax results:
Ordinary income (loss) -- from operations (5.1) 13.2 37.6 48.0 69.2
-- from recapture -- -- -- -- --
Capital gain -- -- -- -- --
Cash distributions to investors
Source: (on a GAAP basis) -- investment income -- -- -- -- --
-- return of capital 131.8 73.7 77.8 81.7 90.8
Source: (on a cash basis) -- sales -- -- -- -- --
-- financing activities 85.0 15.4 -- -- --
-- operations 46.8 58.3 77.8 81.7 90.8
-- other -- -- -- -- --
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%
----------------------------------------------
</TABLE>
<PAGE> 53
TABLE III
ESSEX PARTNERS AND AFFILIATES
OPERATING RESULTS OF PRIOR PROGRAMS (000)
(Through December 31, 1996)
<TABLE>
<CAPTION>
-----------------------------------------------------
ESSEX CHARLESTON ASSOCIATES L.P.
-----------------------------------------------------
1992 1993
(1) (8 MOS) 1994 1995 1996
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross Revenues 13.3 483.2 829.1 866.0 916.0
Profit on sale of properties -- -- -- -- --
Less: operating expenses 2.2 339.3 577.1 578.0 629.1
--------- -------- ------ ------- ------
Operating income (loss) 11.1 143.9 252.0 288.0 286.9
Less: interest expense -- 116.7 175.0 175.0 175.0
depreciation 12.8 167.1 239.1 202.9 177.6
--------- -------- ------ ------ ------
Net income (loss) (1.7) (139.9) (162.1) (89.9) (65.7)
Cash generated from operations 10.4 (5.4) 84 118.5 113.5
Cash generated from sales -- -- -- -- --
Cash generated from financing activities 2,539.0 456.2 (68.0) (106.4) (110.0)
Plus:cash distributions -- 25.0 68.0 106.4 111.1
----------------------------------------------------
Cash generated from operations, sales and financing 2,549.4 475.8 84.0 118.5 114.6
Less: cash distributions to investors
--from operating cash flow -- -- 68.0 106.4 111.1
--from sales and financing activities -- 25.0 -- -- --
--from other -- -- -- -- --
----------------------------------------------------
Cash generated (deficiency) after cash distributions 2,549.4 450.8 16.0 12.1 3.5
Less: special items - capital improvements (901.0) (2,065.2) (16.3) (10.6) (25.4)
----------------------------------------------------
Cash generated (deficiency) after cash 1,648.4 (1,614.4) (0.3) 1.5 (21.9)
distributions and special items
Tax and distribution data per $1,000 invested
Federal income tax results:
Ordinary income (loss) -- from operations (1.1) (84.9) (98.3) (54.6) (39.9)
-- from recapture -- -- -- -- --
Capital gain -- -- -- -- --
Cash distributions to investors
Source: (on a GAAP basis) -- investment income -- -- -- -- --
-- return of capital -- 15.2 41.3 64.6 67.4
Source: (on a cash basis) -- sales -- -- -- -- --
-- financing activities -- 15.2 -- -- --
-- operations -- -- 41.3 64.6 67.4
-- other -- -- -- -- --
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%
----------------------------------------------------
</TABLE>
<PAGE> 54
TABLE III
ESSEX PARTNERS AND AFFILIATES
OPERATING RESULTS OF PRIOR PROGRAMS (000)
(Through December 31, 1996)
<TABLE>
<CAPTION>
-------------------------------------------------
ESSEX MICROTEL CARRIER CIRCLE L.P.
-------------------------------------------------
1992
(2 MOS) 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C>
Gross Revenues 101.7 846.1 967.9 925.4 948.4
Profit on sale of properties -- (36.4) -- -- --
Less: operating expenses 88.2 560.3 615.5 587.9 634.1
---- ----- ----- ----- -----
Operating income (loss) 13.5 249.5 352.4 337.6 314.3
Less: interest expense 37.0 225.5 225.5 225.5 226.5
depreciation 77.2 247.6 218.2 197.5 187.5
---- ----- ----- ----- -----
Net income (loss) (100.6) (223.7) (91.3) (85.4) (99.7)
Cash generated from operations (13.9) 40.1 125.7 123.2 53.7
Cash generated from sales -- 66.0 -- -- --
Cash generated from financing activities 3,153.5 (66.3) (105.0) (117.1) (55.1)
Plus:cash distributions -- 66.3 105.0 117.1 91.5
--------------------------------------------------
Cash generated from operations, sales and financing 3,139.5 106.1 125.8 123.2 90.1
Less: cash distributions to investors
--from operating cash flow -- 40.1 67.0 117.1 91.5
--from sales and financing activities -- 26.2 38.0 -- --
--from other -- -- -- -- --
--------------------------------------------------
Cash generated (deficiency) after cash distributions 3,139.5 39.8 20.8 6.1 (1.4)
Less: special items - capital improvements (3,116.6) (2.2) (30.1) (16.9) (28.2)
--------------------------------------------------
Cash generated (deficiency) after cash 22.9 37.6 (9.3) (10.7) (29.6)
distributions and special items
Tax and distribution data per $1,000 invested
Federal income tax results:
Ordinary income (loss) -- from operations (75.8) (168.5) (68.8) (64.4) (75.1)
-- from recapture -- -- -- -- --
Capital gain -- -- -- -- --
Cash distributions to investors
Source: (on a GAAP basis) -- investment income -- -- -- --
-- return of capital -- 50.0 79.1 88.2 68.9
Source: (on a cash basis) -- sales -- 19.7 28.6 -- --
-- financing activities -- -- -- -- --
-- operations -- 30.2 50.5 88.2 68.9
-- other -- -- -- -- --
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%
--------------------------------------------------
</TABLE>
<PAGE> 55
TABLE III
ESSEX PARTNERS AND AFFILIATES
OPERATING RESULTS OF PRIOR PROGRAMS (000)
(Through December 31, 1996)
<TABLE>
<CAPTION>
--------------------------------------------------------
ESSEX MICROTEL 1989 L.P.
--------------------------------------------------------
1992 1993 1994 1995 1996
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross Revenues 1,148.2 1,105.3 1,036.0 1,025.0 1,058.9
Profit on sale of properties -- -- -- -- --
Less: operating expenses 644.6 660.3 634.5 636.4 625.3
----- ----- ----- ----- -----
Operating income (loss) 503.6 445.0 401.5 388.5 433.6
Less: interest expense 271.0 292.1 290.4 288.5 260.1
depreciation 172.5 190.7 192.2 168.7 152.7
----- ----- ----- ----- -----
Net income (loss) 60.1 (37.8) (81.1) (68.8) 20.8
Cash generated from operations 218.1 156.0 97.0 104.2 161.3
Cash generated from sales -- -- -- -- --
Cash generated from financing activities (253.9) (134.6) (112.7) (75.0) (106.5)
Plus:cash distributions 795.5 121.2 97.8 58.2 78.2
--------------------------------------------------------
Cash generated from operations, sales and financing 759.7 142.6 82.1 87.3 133.0
Less: cash distributions to investors
--from operating cash flow 253.9 121.2 97.8 58.2 78.2
--from sales and financing activities 541.6 -- -- -- --
--from other -- -- -- -- --
--------------------------------------------------------
Cash generated (deficiency) after cash distributions (35.8) 21.3 (15.7) 29.2 54.9
Less: special items - capital improvements (13.8) (8.6) (14.2) (10.3) (33.3)
--------------------------------------------------------
Cash generated (deficiency) after cash (49.6) 12.7 (29.8) 18.8 21.5
distributions and special items
Tax and distribution data per $1,000 invested
Federal income tax results:
Ordinary income (loss) -- from operations 40.1 (25.2) (54.1) (45.8) 13.9
-- from recapture -- -- -- -- --
Capital gain -- -- -- -- --
Cash distributions to investors
Source: (on a GAAP basis) -- investment income -- -- -- -- --
-- return of capital 530.3 80.8 65.2 38.8 52.1
Source: (on a cash basis) -- sales -- -- -- -- --
-- financing activities 361.1 -- -- -- --
-- operations 169.3 80.8 65.2 38.8 52.1
-- other -- -- -- -- --
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%
--------------------------------------------------------
</TABLE>
<PAGE> 56
TABLE III
ESSEX PARTNERS AND AFFILIATES
OPERATING RESULTS OF PRIOR PROGRAMS (000)
(Through December 31, 1996)
<TABLE>
<CAPTION>
---------------------------------------------------------
ESSEX MICROTEL LEHIGH L.P.
---------------------------------------------------------
1992 1993 1994 1995 1996
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross Revenues 1,144.7 1,164.8 1,121.6 1,105.5 1,074.3
Profit on sale of properties -- -- -- -- --
Less: operating expenses 690.4 716.6 707.3 683.1 698.6
------- ------- ------- ------- -------
Operating income (loss) 454.3 448.1 414.3 422.4 375.7
Less: interest expense 185.0 223.3 234.2 252.1 268.4
depreciation 162.1 176.0 166.2 169.5 193.4
------- ------- ------- ------ -------
Net income (loss) 107.2 48.9 13.9 0.7 (86.2)
Cash generated from operations 258.1 225.2 170.8 194.3 101.2
Cash generated from sales -- -- -- -- --
Cash generated from financing activities (233.8) (192.1) (189.9) (193.3) (72.1)
Plus:cash distributions 662.2 139.7 143.1 139.9 76.5
--------------------------------------------------------
Cash generated from operations, sales and financing 686.5 172.9 124.1 140.8 105.7
Less: cash distributions to investors
--from operating cash flow 233.8 139.7 143.1 139.9 76.5
--from sales and financing activities 428.4 -- -- -- --
--from other -- -- -- --
--------------------------------------------------------
Cash generated (deficiency) after cash distributions 24.3 33.1 (19.0) 1.0 29.2
Less: special items - capital improvements (21.0) (23.4) (15.8) (23.2) (41.5)
--------------------------------------------------------
Cash generated (deficiency) after cash 3.3 9.7 (34.8) (22.2) (12.3)
distributions and special items
Tax and distribution data per $1,000 invested
Federal income tax results:
Ordinary income (loss) -- from operations 57.2 26.1 7.4 0.4 (46.0)
-- from recapture -- -- -- -- --
Capital gain -- -- -- -- --
Cash distributions to investors
Source: (on a GAAP basis) -- investment income -- -- -- -- --
-- return of capital 353.2 74.5 76.3 74.6 40.8
Source: (on a cash basis) -- sales -- -- -- -- --
-- financing activities 228.5 -- -- -- --
-- operations 124.7 74.5 76.3 74.6 40.8
-- other -- -- -- -- --
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%
--------------------------------------------------------
</TABLE>
<PAGE> 57
TABLE III
ESSEX PARTNERS AND AFFILIATES
OPERATING RESULTS OF PRIOR PROGRAMS (000)
(Through December 31, 1996)
<TABLE>
<CAPTION>
ESSEX GLENMAURA L.P.
1995
(1) 1996
--- ----
<S> <C> <C>
Gross Revenues 2.4 486.3
Profit on sale of properties - -
Less: operating expenses 2.4 864.6
Operating income (loss) (0.0) (378.3)
Less: interest expense 5.5 162.8
depreciation - 273.5
Net income (loss) (5.5) (814.6)
Cash generated from operations (5.6) (381.3)
Cash generated from sales - -
Cash generated from financing activities 2068.6 5784.3
Plus:cash distributions - -
------ ------
Cash generated from operations, sales and financing 2063.0 5403.1
Less: cash distributions to investors
--from operating cash flow - -
--from sales and financing activities - -
--from other - -
------ ------
Cash generated (deficiency) after cash distributions 2063.0 5403.1
Less: special items - capital improvements (1814.5) (5623.4)
------ ------
Cash generated (deficiency) after cash 248.5 (220.4)
distributions and special items
Tax and distribution data per $1,000 invested
Federal income tax results:
Ordinary income (loss) -- from operations (5.8) (370.3)
-- from recapture - -
Capital gain - -
Cash distributions to investors
Source: (on a GAAP basis)-- investment income - -
-- return of capital 0.0 0.0
Source: (on a cash basis)-- sales - -
-- financing activities - -
-- operations 0.0 0.0
-- other - -
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). 100.0%
</TABLE>
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 in September, 1994, the second in April, 1995 and the
third in September, 1995. The first full year of operations for all
properties is 1996.
(3) Essex Hospitality Associates IV is still in the fund raising and
development stage. Only one property was open in 1996, and it was a
hotel which opened in September, 1996 owned by a partnership in which
Essex Hospitality Associates IV owns a majority interest.
<PAGE> 58
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 December 31, 1996. Table IV presents tax, cash
distributions and holding period information with respect to the disposition of
such properties.
As of December 31, 1996, no hotel properties have been sold.
<PAGE> 59
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 December 31, 1996 by programs in which Essex Partners or
affiliates acted as general partners and that have similar investment
objectives to the Partnership.
As of December 31, 1996, no hotel properties have been sold or disposed of.
<PAGE> 60
TABLE VI
ESSEX PARTNERS 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 December 31, 1996
by programs in which Essex Partners or affiliates acted as general partners.
<PAGE> 61
ESSEX PARTNERS AND AFFILIATES
ACQUISITIONS OF PROPERTIES BY PROGRAMS
(THREE YEARS ENDING DECEMBER 31, 1996)
<TABLE>
<CAPTION>
Essex Glenmaura
Essex Hospitality Associates III L.P. L.P.
------------------------------------- ----
Name Microtel Hampton Inn Microtel Courtyard
Location Birmingham, Rochester, Chattanooga, Scranton, PA
AL NY TN
<S> <C> <C> <C> <C>
Type of property hotel hotel hotel hotel
Number of units 102 118 100 120
Date of purchase 12/30/93 6/28/94 12/30/94 7/07/95
Debt financing 2,800,000 4,100,000 3,100,000 5,400,000
Cash downpayment 145,000 1,141,000 145,000 2,981,000
Contract purchase price plus
acquisition fee (1) 2,812,000 4,989,000 3,103,000 7,541,000
Other cash expenditures
expensed (2) 54,000 112,000 62,000 401,000
Other cash expenditures
capitalized (3) 133,000 252,000 142,000 439,000
Total acquisition cost 2,999,000 5,353,000 3,307,000 8,381,000
</TABLE>
<PAGE> 62
TABLE VI
ESSEX AND AFFILIATES
ACQUISITIONS OF PROPERTIES BY PROGRAMS
(1) 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.
(2) 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.
(3) 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> 63
Pursuant to the Securities Act of 1933, the Registrant has duly caused this
Post-Effective Amendment No. 2 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 April , 1997.
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. 2 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: April 24, 1997 /s/ John E. Mooney
------------------
John E. Mooney
President and Chief Executive Officer
Principal Financial and Accounting Officer of General
Partner:
Dated: April 24, 1997 /s/ Richard C. Brienzi
----------------------
Richard C. Brienzi
Vice President and Treasurer
Executive Vice President of General Partner:
Dated: April 24, 1997 /s/ Jerald P. Eichelberger
--------------------------
Jerald P. Eichelberger
Executive Vice President
<PAGE> 64
The Board of Directors of the General Partner:
Dated: April 24, 1997 /s/ John E. Mooney
------------------
John E. Mooney, Director
Dated: April 24, 1997 /s/ Jerald P. Eichelberger
--------------------------
Jerald P. Eichelberger, Director
Dated: April 24, 1997 /s/ David J. Whitaker
---------------------
David J. Whitaker, Director
Dated: April 24, 1997 /s/ Barbara J. Purvis
---------------------
Barbara J. Purvis, Director
Dated: April 24, 1997 /s/ Thomas W. Blank
-------------------
Thomas W. Blank, Director
Dated: April 24, 1997 /s/ Richard C. Brienzi
----------------------
Richard C. Brienzi, Director
<PAGE> 65
PART II
Information Not Required in Prospectus
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Furnish exhibits as required by Item 601 of Regulation S-K.
23. Consents of experts.
(a) Consents of KPMG Peat Marwick LLP.
<PAGE> 66
EXHIBIT NUMBER EXHIBIT
23. CONSENTS OF EXPERTS.
(a) CONSENTS OF KPMG PEAT MARWICK LLP.
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF KPMG PEAT MARWICK LLP
ACCOUNTANTS' 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
April 24, 1997
<PAGE> 2
EXHIBIT 23(a)
CONSENT OF KPMG PEAT MARWICK LLP
ACCOUNTANTS' 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
April 24, 1997
