SECURITIES and EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15 (d)
of The Securities Exchange Act of 1934
For the fiscal year ended Commission file number
December 31, 1998 0-7752
CONTINENTAL REAL ESTATE PARTNERS, LTD.
(Exact Name of Registrant as Specified in its
Certificate of Limited Partnership)
Massachusetts 04-2523977
(State of organization) (I.R.S. Employer Identification Number)
Wood Ridge Road
Glen Arbor, Michigan 49636
(Address of principal executive offices) (Zip code)
Formerly:
234 Congress Street
Boston, Massachusetts 02110
(Zip code)
Registrant's Telephone Number (616) 334-5000
Including Area Code
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests (Units)
$500 per Unit -- Minimum Purchase 5 Units
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
The number of limited partnership interests outstanding as of December 31,
1998:
Limited Partnership Units, $500 per unit - 30,004 units
Total Pages: 23
-1-
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Form 10-KSB Section Annual Report to Limited
Partners page number
Part I, Item 1 Pages 10 and 11
Part II, Item 5 Pages 7, 11 and 12
Part II, Item 6 Page 2
Part II, Item 7 Pages 3 - 15
Part III, Item 12 Pages 10, 12 and 13
-2-
<PAGE>
Part I
Item 1. Description of Business
The purpose of the business to be carried on by the Partnership is to
invest either solely or jointly with others in improved properties and
properties under development which have promise of generating cash flow
for the Limited Partnership, as well as capital growth through debt
reduction and appreciation in real estate values, and to do all things
reasonable incident thereto, including the following: acquire and
dispose of fee ownerships, leaseholds and legal equitable interests in
real estate of all types and descriptions; acquire properties subject
to outstanding leases, mortgages and other prior encumbrances and take
and give purchase money mortgages and other types of junior debt financing;
acquire and give options to purchase properties; purchase and sell real
estate at auction; purchase, sell and finance the purchase and sale of
furniture and equipment; and develop properties for its own account or
in combination with others, including site preparation, the construction
of improvements and other activities to the development process. The
Partnership may not engage in any other business without the prior written
consent of Limited Partners holding more than a majority of the units.
At December 31, 1998, the Registrant no longer held any interests in real
estate. See Notes D and E to the Financial Statements incorporated by
reference in Item 7, describing lease information and sale of the Lakeland
Mall.
During the fiscal year ended December 31, 1998, the Registrant sold its last
remaining property, a shopping center in Lakeland, Florida. The Registrant is
currently in the process of liquidating.
Item 2. Description of Property
None owned at December 31, 1998.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None
-3-
<PAGE>
Part II
Item 5. Market for Common Equity and Related Security Holder Matters
Since the Registrant is a Limited Partnership, it has no common stock
outstanding; instead, it has Limited Partnership interests (units). The
initial capital of the Registrant is comprised of: 1) 30,004 Limited
Partnership units representing a $500 investment, per unit; and 2) a $15,000
investment by the General Partner. At December 31, 1998, there were 1,298
Limited Partners of record.
Since the initial offering of the units, an established market for the
units has not existed. They are not listed or traded on any exchange.
Dividends are not paid on the Limited Partnership units. See "Statement
of Changes in Partners' Capital" and "Note F - Distribution to Partners"
in the Financial Statements incorporated by reference in Item 7, for
information regarding payment to Partners.
Item 6. Management's Discussion and Analysis of Results of Operations
A report of Management's Discussion and Analysis of Financial Condition
and Results of Operations at December 31, 1998, which appears on page 2 of
the Continental Real Estate Partners, Ltd. Annual Report to Partners for
1998 is incorporated by reference in this Form 10-KSB Annual Report.
Item 7. Financial Statement
The financial statements, together with the report thereon of Dennis,
Gartland & Niergarth, P.C. dated January 26, 1999, appearing on pages 3
through 15 of the Continental Real Estate Partners, Ltd. 1998 Annual
Report to Partners are incorporated by reference in this Form 10-KSB
Annual Report.
Item 8, Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
None
Part III
Item 9. Directors and Executive Officers of the Registrant
The Registrant has no executive officers. Listed below are the executive
officers of The Bayberry Group, Inc. formerly Continental Equities, Inc.,
General Partner of the Registrant. Such officers serve until the next
annual meeting of the Directors of the General Partner, or until their
successors are duly elected and qualified.
ROBERT A. KURAS (Age 56) is, and has been since January 1, 1975, Chairman
and President of the General Partner. Since 1967, Mr. Kuras has planned,
financed, developed, acquired, managed and sold a number of real estate
projects and has performed realty-related services for a variety of clients.
Mr. Kuras holds a Bachelor of Arts degree from the University of Notre Dame
and a Master of Business Administration degree from Harvard University.
-4-
<PAGE>
Item 9. Directors and Executive Officers of the Registrant - Continued
SHIRLEY K. DEBELACK (Age 55) has been employed by affiliates of The Bayberry
Group, Inc. since May of 1974 and was appointed Vice-President and Secretary
of the Corporation in November of 1982. Mrs. Debelack holds a Bachelor of
Arts degree from Michigan State University and has over 20 years experience
in real estate and resort development properties in Michigan.
There are no family relationships between any executive officer and
director of the General Partner of the Registrant listed above.
Item 10. Executive Compensation
The Registrant has no officers, directors, or subsidiaries. During
1998, the Registrant, paid $119,513 to the General Partner for expense
reimbursement, liquidation and property management fees. In addition,
$2,977,199 was paid to the General Partner in incentive fees from current and
prior years' sales of Partnership properties. The Registrant has no
directors, officers, or security holders who owns more than 5% of the
units. The Registrant also has no pension, retirement, savings, or
similar plan.
Item 11. Security Ownership of Certain Beneficial Owners and Management
(a) There is no person who owns of record or who is known by the Registrant
to own beneficially more than 5% of the outstanding units.
The item listed below represents a group of related mutual funds which own
partnership units in a fiduciary capacity for its investors, and is not a
beneficial owner of such units.
Title of Class Name and Address Amount of Ownership Percent of Class
Partnership Liquidity Fund 8,465 28.2%
Interests 1900 Powell Street
(Units) Suite 235
Emeryville, CA 94608
(b) The Registrant has no directors or officers and, accordingly, this item
is not applicable.
(c) The Registrant knows of no contractual arrangement by which a change in
control of the Registrant may result at a subsequent date.
Item 12. Certain Relationships and Related Transactions
(a) Transactions with management and others
Fees paid or accrued to the General Partner or affiliates of the General
Partner in accordance with the Partnership Agreement are discussed in Notes
C and F to the Financial Statements, which have been incorporated by
reference in Item 7. During 1998, the General Partner purchased 59 units
from the Limited Partners and owned a total of 1,040 Limited Partnership
units at December 31, 1998.
(b) Certain business relationships
The Registrant has no directors. Therefore, this is not applicable.
-5-
<PAGE>
Part IV
Item 13. Exhibits and Reports on Form 8-K
(a) The following documents are filed as part of this report:
Page in
Annual
1. Financial Statements - Report *
Statement of Assets, Liabilities and Partners'
Capital at December 31, 1998 4
Statements of Operations for each of the two years in the
period ended December 31, 1998 5
Statements of Cash Flows for each of the two years in the
period ended December 31, 1998 6
Statements of Changes in Partners' Capital for each
of the two years in the period ended December 31, 1998 7
Notes to Financial Statements 8 - 14
Report of Independent Certified Public Accountants 15
* Incorporated by reference from the indicated
pages of the 1998 Annual Report to Partners
2. Financial Statement Schedules
Not required by Regulation S-B.
(b)Reports on Form 8-K:
None
(c) Exhibits:
3. Articles of Limited Partnership of Continental Real Estate Partners,
Ltd. as amended-- previously filed with the Partnership's Registration
Statement on Form S-11, File No. 2-46282, effective date 2:00 p.m. E.D.S.T.
July 26, 1973 and incorporated herein by reference.
4. Same as Item 14(c)3.
13. Continental Real Estate Partners, Ltd. Annual Report to Partners for
the year ended December 31, 1998.
All other items under Regulation S-K Item 601 are not applicable to the
Registrant.
-6-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CONTINENTAL REAL ESTATE PARTNERS, LTD.
(Registrant)
By: Robert A. Kuras Date: April 26, 1999
Robert A. Kuras
President, Chairman of the Board
of Directors and Principal Accounting
Officer of The Bayberry Group, Inc.,
General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the Following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
By: Robert A. Kuras Date: April 26, 1999
Robert A. Kuras
President, Chairman of the Board
of Directors and Principal Accounting
Officer of The Bayberry Group, Inc.,
General Partner
-7-
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1998
CONTINENTAL REAL ESTATE PARTNERS, LTD.
(A Limited Partnership)
-8-
<PAGE>
The Bayberry Companies
April 1999
To Our Partners:
As shown on and discussed in the Annual Report, the Partnership sold its last
property, The Lakeland Mall, on May 29, 1998. A gain in the amount of
$6,088,713 was realized and a distribution in the amount of $199.23 per unit,
which will be the last distribution from the Partnership, was mailed on
June 30, 1998.
Since the time of sale, we have, in accord with the applicable agreement,
concentrated our efforts on locating Partners for whom we were holding
uncashed distribution checks and on the steps necessary to wind up the
Partnership's affairs.
Although time consuming, we have been successful in locating some 65 Partners
(or, their estates) and have distributed about 60% of the funds due to Partners
for whom we were holding distribution checks. Additionally, we have initiated
the steps necessary to wind up the Partnership and plan to complete that work
by the end of the third quarter of this year. We will send the final report
and final K-1 (Form 1065) during the fourth quarter. If you need assistance
after the third quarter, you may, nonetheless, contact us by phone
(616-334-5501) or fax (616-334-5120), as we will continue to provide services
until December 31, 1999.
As you may recall, the Partnership faced operating and financial challenges
which threatened its existence at the time we acquired the General Partner.
Although the resolution of those challenges took far longer and was far more
difficult than anticipated, we are pleased to have been able to resolve them
for you and to have returned $24,791,155 in cash and substantial tax benefits
to you over the years.
Once again, we thank those of you who have called or written to offer your
compliments. Your thoughtfulness is appreciated.
Sincerely,
Robert A. Kuras Shirley K. Debelack
President Vice President
-9-
<PAGE>
Exhibit 1
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Continental Real Estate Partners, Ltd., is a publicly owned limited
partnership engaged in the business of acquiring, owning, operating and
selling improved commercial real estate. The Partnership's sources of cash,
other than net proceeds from the sale or refinancing of partnership
properties, are the net cash flows generated by the properties and interest
earned on short-term investments.
Results of Operations
For the years ended December 31, 1998 and 1997:
The results from continuing operations of the Partnership were losses of
$155,796 and $250,780 for the years ended December 31, 1998 and 1997,
respectively. Operating revenues decreased $266,622 from 1997 to 1998 due to
the sale of the Lakeland Mall in May 1998.
Operating expenses decreased $405,415 from 1996 to 1997. There were no
significant variances in expenses on an annualized basis between 1998 and 1997.
As noted previously, the Partnership sold its remaining property, the Lakeland
Mall, in May 1998. This resulted in a gain of $5,239,082, net of the General
Partner incentive fee. Distributions of $5,977,697 were made to the limited
partners from the proceeds of the sale and available cash.
Since the last property has been sold, the Partnership is in the process of
liquidating. The Partnership has entered into an Administrative Services
Agreement with the General Partner, whereby the General Partner is compensated
at the rate of $13,158 per month through December 31, 1999 to cover the costs
of liquidation. It is anticipated the liquidation will be completed by that
date.
Liquidity and sources of Capital
The liquidity position of the Partnership decreased $874,057 for the year
ended December 31, 1998. The net decrease was due to distributions to both
the General and limited partners of their respective capital accounts. It is
anticipated the remaining assets of $178,002 will be applied toward the
liquidation costs of the Partnership. Accordingly, no further distributions
to partners will occur.
-10-
<PAGE>
Continental Real Estate Partners, Ltd.
FINANCIAL STATEMENTS
AND REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
December 31, 1998
-3-
-11-
<PAGE>
<TABLE>
Continental Real Estate Partners, Ltd.
STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL
December 31, 1998
<CAPTION>
ASSETS
<S> <C>
Cash $178,002
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
<S> <C>
Accounts payable and accrued expenses $26,738
PARTNERS' CAPITAL
General partner 8,675
Limited partners - 30,004 units of
limited partnership interest 142,589
151,264
$178,002
The accompanying notes are an integral part of these financial statements.
-4-
-12-
</TABLE>
<PAGE>
<TABLE>
Continental Real Estate Partners, Ltd.
STATEMENTS OF OPERATIONS
Years ended December 31,
<CAPTION>
1998 1997
<S> <C> <C>
Operating revenue
Rental income $201,454 $484,070
Other, principally operating
expense reimbursements 15,994 -
217,448 484,070
Operating expenses
Depreciation 162,088 406,368
Insurance 44,305 97,485
Real estate taxes 29,651 72,644
Contracted services 7,020 12,320
Repairs and maintenance 17,497 42,542
Professional services 60,803 35,548
Utilities 7,860 23,574
Property management fees 17,938 33,643
Commissions 5,045 12,108
Investor communications 4,680 4,320
Other 16,357 38,107
Total operating expenses 373,244 778,659
Operating loss (155,796) (294,589)
Gain on sale of Lakeland Mall 6,088,713 -
Incentive fee to general partner (849,631) -
Liquidation expense (92,105) -
Interest income 82,340 43,809
NET INCOME (LOSS) $5,073,521 $(250,780)
Net income (loss) allocated to:
General partner $253,676 $(12,539)
Limited partners - income of $160.64 and
loss of $(7.94) per unit of limited
partnership interest outstanding for
1998 and 1997, respectively 4,819,845 (238,241)
$5,073,521 $(250,780)
The accompanying notes are an integral part of these financial statements.
-5-
-13-
</TABLE>
<PAGE>
<TABLE>
Continental Real Estate Partners, Ltd.
STATEMENTS OF CASH FLOWS
Years ended December 31,
<CAPTION>
1998 1997
<S> <C> <C>
Cash flows from operating activities
Net gain (loss) $5,073,521 $(250,780)
Adjustment to reconcile net income to cash
provided by operating activities
Depreciation and amortization 162,088 406,368
Gain on sale of assets (5,239,082) -
(Increase) decrease in other assets 87,065 (2,794)
Increase (decrease) in accounts payable
and accrued expenses (36,976) 8,651
Net cash provided by operating activities 46,616 161,445
Cash flows from investing activities
Purchase of improvements - (5,038)
Proceeds from sale of fixed assets 7,646,679 -
Net cash flow provided (used) by
investing activities 7,646,679 (5,038)
Cash flows from financing activities
Unclaimed distribution checks 151,169 -
Accrued general partner incentive fees paid (2,127,568) -
Distributions to general partner (613,258) -
Distributions to limited partner (5,977,695) -
Net cash flow used by financing activities (8,567,352) -
NET INCREASE (DECREASE) IN CASH (874,057) 156,407
Balance of cash, beginning of year 1,052,059 895,652
Balance of cash, end of year $178,002 $1,052,059
A reconciliation of the ending balance of cash to the balance sheet is as
follows:
Cash $178,002 $1,222,223
Unclaimed distribution checks - (170,164)
$178,002 $1,052,059
The accompanying notes are an integral part of these financial statements.
-6-
-14-
</TABLE>
<PAGE>
<TABLE>
Continental Real Estate Partners, Ltd.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
Years ended December 31, 1998 and 1997
<CAPTION>
Limited Total
General Partners' Partners'
Partner Capital Capital
<S> <C> <C> <C>
Balance, December 31, 1996
($46.24 per unit of limited
partnership interest) $380,796 $1,387,511 $1,768,307
1997 net loss
($7.94 per unit of limited
partnership interest) (12,539) (238,241) (250,780)
Balance, December 31, 1997
($38.30 per unit of limited
partnership interest) 368,257 1,149,270 1,517,527
1998 income 253,676 4,819,845 5,073,521
Unclaimed distribution checks - 151,169 151,169
Partner distributions (613,258) (5,977,695) (6,590,953)
Balance, December 31, 1998
($4.75 per unit of limited
partnership interest) $8,675 $142,589 $151,264
The accompanying notes are an integral part of these financial statements.
-7-
-15-
</TABLE>
<PAGE>
Continental Real Estate Partners, Ltd.
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION AND OPERATIONS
Continental Real Estate Partners, Ltd. (the Partnership) was
organized as a limited partnership under the laws of the
Commonwealth of Massachusetts pursuant to a Partnership
Agreement dated November 9, 1972. Since 1989, the Partnership's
sole business was the ownership and operation of the Lakeland
Mall in Lakeland, Florida. In May 1998, the Lakeland Mall was
sold. The operations of the Partnership will cease upon the
final liquidation of the Partnership which is expected to occur
during the year ended December 31, 1999. The Bayberry Group,
Inc. is the general partner of the limited partnership and has
invested $15,000 for a 5% interest in the net profits or losses
of the Partnership. The remaining 95% of the net profits or
losses are allocated to the limited partners in proportion to
their share of ownership. As of December 31, 1998, the general
partner also owned 1,040 limited partnership units, or an
additional 3.3% interest in the Partnership.
NOTE B - SUMMARY OF ACCOUNTING POLICIES
A summary of the significant policies consistently applied in
the preparation of the accompanying financial statements
follows.
Basis of Accounting and Distribution
The accompanying financial statements have been prepared on the
accrual basis of accounting; however, distributions will be made
to the limited partners on the basis of cash available for
distribution, if any, as defined in the Partnership Agreement
and at the discretion of the general partner.
Lease Accounting
The Partnership used the operating method of accounting for its
tenant leases. Under this method of accounting, revenue from
lease transactions were recognized ratably over the lease period
and operations were charged with depreciation, maintenance costs
and other expenses.
Investments in Real Estate
The Partnership capitalized the initial purchase price of land,
land improvements, buildings and equipment. All expenditures
for improvements were added to the cost of the real estate.
Expenditures for maintenance and repairs after acquisition were
charged against income as incurred. Gains or losses on the sale
of any investment in real estate were reflected in operations in
the year of disposition and the cost and related accumulated
depreciation were removed from the accounts.
-8-
-16-
<PAGE>
NOTES TO FINANCIAL STATEMENTS - Continued
NOTE B - SUMMARY OF ACCOUNTING POLICIES - Continued
Depreciation
Depreciation of land improvements, buildings and equipment were
computed using straight-line and declining balance methods.
Assets depreciated on a declining balance method were normally
converted to the straight-line method at such point in their
life when the latter method would produce greater depreciation
charges. The range of useful lives over which depreciation was
provided was substantially as follows: land improvements - 10
to 15 years; buildings - 15 to 40 years; and equipment - 3 to 15
years.
Cash and Cash Equivalents
Cash and cash equivalents include savings and checking accounts.
Other Assets
Included in other assets was a leasing commission paid by the
Partnership at the inception of the Wal-Mart lease. The total
commission prepaid was $242,168 and was being amortized using
the straight-line method over the life of the lease (20 years).
Accumulated amortization at December 31, 1997 was $128,148.
Amortization expense for the year ended December 31, 1998 and
1997 was $5,045 and $12,108, respectively. The unamortized
leasing commission of $108,975 was written off upon the sale of
the mall.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual amounts could differ from those estimates.
Reporting Comprehensive Income
Net income is representative of comprehensive income. There
are no items of other comprehensive income requiring disclosure.
-9-
-17-
<PAGE>
NOTES TO FINANCIAL STATEMENTS - Continued
NOTE C - FEES TO AFFILIATES
Fees paid or accrued to the general partner or affiliates of
the general partner in accordance with the Property Management
Agreement, the Partnership Agreement and Administrative Services
Agreement (Liquidation Agreement) for the years ended December
31 were as follows:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Management fees $ 17,938 $33,641
Liquidation expense 92,105 -
Administrative cost reimbursement 7,670 18,408
Payroll, telephone and professional fee
reimbursement 1,800 4,320
$119,513 $56,369
</TABLE>
Liquidation Expense
Subsequent to the sale of the Lakeland Mall in 1998, the
General Partner had fulfilled its obligation under the
Partnership Agreement and no provisions existed for retaining
the General Partner or any other person to perform
administrative duties during the winding up of the Partnership
affairs. Therefore, effective June 1, 1998, the Partnership
entered into an agreement with the General Partner to conduct a
good faith search for partners to whom distribution check(s) had
been sent but appeared to be unclaimed and to perform other
steps necessary to properly wind up the Partnership affairs and
liquidate pursuant to the Partnership Agreement. The fee for
this agreement, which terminates December 31, 1999, is $250,000
paid in monthly installments. For the year ended December 31,
1998, $92,105 was paid to the General Partner for this
agreement. The remaining $157,895 is expected to be paid during
the year ended December 31, 1999.
NOTE D - SIGNIFICANT LEASES AND LEASE INFORMATION
The following table summarizes the more significant leases in
effect at Lakeland Mall during 1998:
Lease
Tenant Expiration Area in Square
Feet
Wal-Mart June, 2007 103,161
Net leasable area 370,000
Lease revenues of $182,084 and $436,283 from Wal-Mart
accounted for 90% of rental income at Lakeland Mall for each of
the years ended December 31, 1998 and 1997. During 1994, Wal-
Mart vacated its space. However, Wal-Mart was still bound by
terms of its lease agreement which expires June 2007. Lease
income ceased with the sale of the Lakeland Mall as the lease
transferred to the purchaser of the Lakeland Mall.
-10-
-18-
<PAGE>
NOTES TO FINANCIAL STATEMENTS - Continued
NOTE E - SALE OF LAKELAND MALL
During May 1998, the Partnership sold the Lakeland Mall and
recognized a gain on sale calculated as follows:
<TABLE>
<CAPTION>
<S> <C>
Sales price $8,600,000
Less: closing costs (103,690)
Net proceeds 8,496,310
Net book value of investment in real estate (2,230,319)
Unamortized prepaid leasing commission (108,975)
Prepaid expenses (68,303)
Gain on sale $6,088,713
</TABLE>
NOTE F - DISTRIBUTIONS TO PARTNERS
Cash Available for Distribution
Under the terms of the Partnership Agreement, as described in
Article XI(b), certain distributions shall be made to the
limited partners. Annually, the general partner must determine
Cash Available for Distribution, as defined in the agreement,
and make distributions of such cash. Presented below is the
determination of Cash Available for Distribution as of December
31:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Cash provided by operations
since inception $ 1,491,845 $ 1,445,229
Accounts payable and accrued expenses (26,738) (48,073)
Liabilities to general partner - (2,143,209)
Cumulative distributions of cash (4,421,212) (3,962,628)
Cash (deficiency) available for
distribution $(98.52)and $(156.94)
per unit as of December 31, 1998
and 1997, respectively $(2,956,105) $(4,708,681)
</TABLE>
Net Proceeds
In addition to the Cash Available for Distribution provision,
Article V(6) of the agreement provides for the distribution of
net proceeds arising from the sale of Partnership property. Net
proceeds shall be distributable to the limited partners as soon
as feasible unless the general partner determines that it would
be in the best interest of the limited partners to retain such
proceeds or a portion thereof to reduce outstanding mortgage
debt, to make capital improvements or to provide for
contingencies. Accumulated undistributed net proceeds of
$6,273,679 at December 31, 1998 have been retained to reduce
outstanding mortgages and other debts and make capital
improvements.
-11-
-19-
<PAGE>
NOTES TO FINANCIAL STATEMENTS - Continued
NOTE F - DISTRIBUTIONS TO PARTNERS - Continued
Liquidation
Upon liquidation of the Partnership, per Article XVII of the
Partnership Agreement, proceeds of liquidation are to be
distributed in the following order of priority:
1. Payment of debts and liabilities of the Partnership
(other than those to Partners) and the expenses of liquidation.
2. Setting up of such reserves as reasonably deemed
necessary for any contingent liabilities or obligations of the
Partnership.
3. Repayment of any advances made by any of the Partners to
the Partnership and to any unpaid fees, other than the incentive
fee.
4. Repayment of the Adjusted Capital Contributions of the
Limited Partners (this balance is zero due to previous
distributions to the Limited Partners).
5. Repayment of the General Partner capital account and
incentive fees.
6. Balance to the Limited Partners.
NOTE G - GENERAL PARTNER INCENTIVE FEES
Under the terms of the Partnership Agreement, as described in
Article XII(d)(4), the general partner is entitled to receive an
incentive fee equal to 10% of the net proceeds of any sales or
refinancing of a Partnership property. Except in liquidation,
payment of the incentive fee is postponed until the limited
partners receive cumulative distributions from any source equal
to 100% of their initial capital contribution plus an amount
equal to the sum of 7% (non-compounded) of their adjusted
capital contributions in each year in which the calculation
occurs. Adjusted capital contribution is defined as a limited
partner's initial capital contribution less the sum of the net
proceeds of sales and refinancings of properties distributed to
such limited partner.
Payment of the incentive fees had been suspended until such time
as the limited partners received additional cash distributions.
This obligation was satisfied upon the sale of the Lakeland
Mall. Distributions in excess of the limited partners' initial
capital contribution have been paid, thereby reducing the
limited partners' adjusted capital contributions to zero. From
the inception of the Partnership to December 31, 1998, the
limited partners have received cash distributions aggregating
$24,791,155.
-12-
-20-
<PAGE>
NOTES TO FINANCIAL STATEMENTS - Continued
NOTE G - GENERAL PARTNER INCENTIVE FEES - Continued
The incentive fees applicable to the sale of Partnership
properties were as follows:
<TABLE>
<CAPTION>
<S> <C>
Cedar Ridge - sold in 1979 $ 432,265
Oakland Hills - sold in 1979 127,240
Columbia - sold in 1981 152,593
Oaks II and III - sold in 1981 230,716
Portion of Lakeland property - sold in 1984 25,202
Karcher Mall - sold in 1986 504,768
Briarwood Apartments - sold in 1989 430,108
Interest in Lakeland Mall lease - sold in 1991 224,676
Incentive fees accrued at December 31, 1997 2,127,568
Lakeland Mall - sold in 1998 849,631
Incentive fees paid to General Partner in 1998 $2,977,199
</TABLE>
NOTE H - INCOME TAXES
The Partnership is not subject to Federal income taxes.
Instead, the partners of the Partnership must include in their
respective income tax returns their proportionate share of the
earnings or loss of the Partnership. Accordingly, no provision
or credit has been recognized in the accompanying financial
statements for Federal income taxes.
Following is a reconciliation between net loss and taxable loss
for the years ended December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Net income (loss) $5,073,521 $(250,780)
Tax depreciation under book depreciation 52,026 120,699
Excess of book gain over tax gain on
sale of assets (2,942,046) -
Other 979 4,255
Taxable gain (loss) - $69.16 and
$(3.98) per unit of limited
partnership interest for 1998
and 1997, respectively $2,184,480 $(125,826)
</TABLE>
The reported value of the Partnership's assets and liabilities
is less than their tax bases $24,000 and $2,914,419 at December
31, 1998 and 1997, respectively.
-13-
-21-
<PAGE>
NOTES TO FINANCIAL STATEMENTS - Continued
NOTE I - FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of the Partnership's financial
instruments as of December 31, 1998 are as follows:
<TABLE>
<CAPTION>
Carrying Fair
Amount Value
<S> <C> <C>
Assets
Cash $178,002 $178,002
</TABLE>
NOTE J - CONCENTRATIONS OF CREDIT RISK
The Partnership maintains cash balances at several financial
institutions. Accounts at each institution are insured by the
Federal Deposit Insurance Corporation up to the maximum amount
allowed. At December 31, 1998, the Partnership's uninsured cash
balances totaled $352,491. Uninsured balances may have been
higher during the year.
NOTE K - LIQUIDATION
During 1998, the General Partner commenced with liquidation
of the Partnership. It is anticipated the liquidation will be
completed during the year ended December 31, 1999.
-14-
-22-
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Bayberry Group, Inc.
Sole General Partner of
Continental Real Estate Partners, Ltd.
We have audited the statement of assets, liabilities and
partners' capital of Continental Real Estate Partners, Ltd. (a
Massachusetts limited partnership) as of December 31, 1998 and
the related statements of operations, cash flows and changes in
partners' capital for each of the years ended December 31, 1998
and 1997. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits 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 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 Continental Real Estate Partners, Ltd. as of December 31,
1998 and the results of its operations and cash flows for each
of the years ended December 31, 1998 and 1997 in conformity with
generally accepted accounting principles.
January 26, 1999
Traverse City, Michigan
-15-
-23-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000024148
<NAME> CONTINENTAL REAL ESTATE PARTNERS LTD
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 178,002
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 178,002
<CURRENT-LIABILITIES> 26,738
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 151,264
<TOTAL-LIABILITY-AND-EQUITY> 178,002
<SALES> 217,448
<TOTAL-REVENUES> 6,388,501
<CGS> 0
<TOTAL-COSTS> 373,244
<OTHER-EXPENSES> 941,736
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,073,521
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,073,521
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,073,521
<EPS-BASIC> 160.64
<EPS-DILUTED> 160.64
</TABLE>
