SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File
For the year ended December 31, 1995 No. 0-9224
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2654152
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One International Place, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (617)330-8600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10- K or any amendment to
this Form 10-K. [ X ]
No market for the Limited Partnership Units
exists and therefore, a market value for
such Units cannot be determined.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Part of the Documents
Form 10-K Incorporated by Reference
I, III The Prospectus of the Registrant dated April 10, 1979 (the
"Prospectus")
<PAGE>
Item 1. Business.
Winthrop Partners 79 Limited Partnership (the "Partnership"), was
organized under the Uniform Limited Partnership Act of the Commonwealth of
Massachusetts on November 30, 1978, for the purpose of owning and leasing
commercial and industrial real properties. The Partnership was initially
capitalized with contributions of $1,000 from each of the two General Partners
and $5,000 from the Initial Limited Partner. On December 14, 1978, the
Partnership filed a Registration Statement on Form S-11 with the Securities and
Exchange Commission (the "Commission") with respect to a public offering of
10,000 Units of limited partnership interest ("Units") at a purchase price of
$1,000 per Unit. The Registration Statement was declared effective on April 10,
1979. The offering terminated in April 1980, at which time all 10,000 Units,
representing capital contributions from Limited Partners of $10,000,000, had
been subscribed for.
The General Partners of the Partnership are One Winthrop Properties,
Inc., a Massachusetts corporation (the "Managing General Partner"), and
Linnaeus-Hampshire Realty Limited Partnership (formerly known as
Linnaeus-Hampshire Realty Company), a Massachusetts limited partnership (the
"Associate General Partner"). The Managing General Partner is a wholly-owned
subsidiary of First Winthrop Corporation ("First Winthrop"), a Delaware
corporation, which is wholly owned by Winthrop Financial Associates, A Limited
Partnership ("WFA"), a Maryland public limited partnership. See "Change in
Control".
The Partnership's only business is owning and leasing improved real
estate. The Partnership's investment objectives and policies are described on
pages 35-40 of its Prospectus dated April 10, 1979 (the "Prospectus") under the
caption "Investment Objectives and Policies," which description is incorporated
herein by this reference. The Prospectus was filed with the Commission pursuant
to Rule 424(b) on May 8, 1979.
The Partnership invested all of the net proceeds of the Limited
Partners' capital contributions, other than approximately $60,000 which were
originally set aside as reserves, in ten real properties. The funds set aside in
reserves were invested in money market instruments and applied, over time, to
repairs, improvements and other items associated with Partnership's obligations
in respect of the Properties. The reserve balance as
<PAGE>
of December 31, 1995 net of accounts payable, accrued expenses and distributions
payable to Partners was approximately $73,000. The Partnership's future cash
distributions will include ongoing distributions from rental income and one-time
distributions of sale proceeds. Rental income will be affected by the terms of
any new leases, any tenant improvement and leasing costs associated with
renewing leases with existing tenants or signing leases with new tenants, the
loss of rent during any period when a property is not under lease and the loss
of rent after a property is sold. Distributions of sale proceeds will be made as
a return of capital until investors have received their original Capital
Contribution. Pursuant to the Partnership's partnership agreement, sale proceeds
are distributed 100% to investors until they have received their $1,000 per unit
Capital Contribution. The general partners' 8% share of sale proceeds would be
paid subsequently. See Item 2, "Properties" for a description of Registrant's
remaining properties.
Each of the Partnership's properties are leased to a single tenant
other than its Hurst, Texas property, which has two tenants. The tenants under
all eleven leases have exclusive control over the day-to-day business operations
conducted at the Properties as well as decisions with respect to the initiation
of any development or renovations at the Properties. The Partnership has limited
approval rights over any such renovation programs proposed by the tenants. Seven
of the Properties are leased on a triple net basis. The Partnership has no
responsibility for any maintenance, repairs or improvements associated with
these Properties. In addition, the tenants at these properties are responsible
for all insurance requirements and the payment of real estate taxes directly to
the taxing authorities. The Partnership believes that each of the properties are
adequately insured. With respect to the lease with J.C. Penney Co., Inc.,
Batavia, NY, the Partnership is responsible for all structural and exterior
repairs, carrying insurance, paying all real estate taxes up to a specified
maximum amount, repainting, varnishing or otherwise redecorating certain
exterior portions of the building every three years and paying certain common
facility maintenance charges up to a fixed amount. The Partnership spent $7,810
for roof repairs at this property in 1995. With respect to the lease with
Walgreen Co., St. Louis, MO, the Partnership is responsible for maintenance of
the structural portions of the building, all repairs required by reason of dry
rot or termites and the first $750 per year of roof repairs. No funds were spent
by the Partnership on these items
<PAGE>
in 1995. With respect to the leases with Creative Paint & Wallpaper and B&G,
Inc., Hurst, TX, the Partnership is responsible for structural maintenance of
the premises. The Partnership spent $1,125 for these item in 1995. Under both
leases at this Property, the Partnership is required to administer the payment
of real estate taxes and to procure and maintain insurance for the Property. The
Partnership is fully reimbursed for real estate taxes and for annual insurance
premiums up to $1,000.
Each retail tenant is subject to competition from other companies
offering similar products in the locations of the property leased by such
tenant. In addition, the Partnership anticipates that it would be subject to
significant competition in attracting tenants upon the expiration or termination
of any of the leases of its properties. The Partnership has no control over the
tenants' responses to competitive conditions impacting the businesses operated
by the tenants at each of the properties.
Tenants with 1995 rental payments of 10% or more of the Partnership's
total annual revenue are as follows: Floors, Inc. and B & G, Inc., Hurst, Texas,
11%; J.W. Burress, Incorporated, Greenville County, South Carolina, 13.7%; Toys
"R" Us, Inc., San Antonio, Texas, 16.6%; Toys "R" Us, Inc., Ft. Worth, Texas,
16.3%; and Wal-Mart Stores, Mexia, Texas, 11.7%. The Partnership expects the
rental payments from the same tenants to amount to approximately the same
respective percentages of the Partnership's total income in 1996.
Property Matters
Floors, Inc. and B&G, Inc. (the "Tenants"), Hurst, Texas.
On August 31, 1995, Creative Paint assigned the lease to Floors,
Inc. In late 1993, the Partnership replaced the roof of the
property at a cost of $83,000. Approximately $10,000 of
insurance proceeds were used to offset the cost of the new roof.
J.C. Penney Co., Inc., Batavia, New York. The maturity date
of the loan encumbering this property was extended from July 1,
1995 to February 1, 1998.
Employees.
The Partnership does not have any employees. Services are
performed for the Partnership by the Managing General partner,
and agents retained by it, including an affiliate of the General
Partners, Winthrop Management.
Change in Control
Until December 22, 1994, the sole general partner of Linnaeus
Associates Limited Partnership ("Linnaeus"), the sole general partner of WFA,
and the sole general partner of the Associate General Partner was Arthur J.
Halleran, Jr. On December 22, 1994, pursuant to an Investment Agreement entered
into among Nomura Asset Capital Corporation ("NACC"), Mr. Halleran and certain
other individuals who comprised the senior management of WFA, the general
partnership interest in Linnaeus was transferred to W.L. Realty, L.P. ("W.L.
Realty"). W.L. Realty is a Delaware limited partnership, the general partner of
which was, until July 18, 1995, A.I. Realty Company, LLC ("Realtyco"), an entity
owned by certain employees of NACC. On July 18, 1995 Londonderry Acquisition II
Limited Partnership (Londonderry II"), a Delaware limited partnership, and
affiliate of Apollo Real Estate Advisors, L.P. ("Apollo"), acquired, among other
things, Realtyco's general partner interest in W.L. Realty and a sixty four
percent (64%) limited partnership interest in W.L. Realty, and WFA acquired the
sole general partner interest in the Associate General Partner.
As a result of the foregoing acquisitions, Londonderry II is the sole
general partner of W.L. Realty which is the sole general partner of Linnaeus,
and which in turn is the sole general partner of WFA. As a result of the
foregoing, effective July 18, 1995, Londonderry II, an affiliate of Apollo,
became the controlling entity of the Managing General Partner and the Associate
General Partner. In connection with the transfer of control, the officers and
directors of the Managing General Partner resigned and Londonderry II appointed
new officers and directors. See Item 10, "Directors and Executive Officers of
Registrant.
Subsequent Event
The Partnership has reached a tentative agreement with Piedmont
Clarklift, the tenant at the Greenville, South Carolina property, pursuant to
which Piedmont Clarklift will purchase the property for $1,525,000. The sale of
this property is contingent upon numerous conditions. It is anticipated that if
the property is sold, net proceeds will be distributed to limited partners.
<PAGE>
Item 2. Properties.
A description of the Partnership's remaining properties is as follows.
All of Registrant's remaining properties are owned in fee.
Total Cost Original Size
Tenant/ Date of of the Portfolio Building/Land
Location Purchase Property(1) Percentage(2) (Sq. ft.)
J.C. Penney
Batavia, NY 8/1/79 $ 1,092,598 8 38,720/38,720
Walgreen Co.
University 8/3/79 $ 901,294 6.6 15,500/39,200
City, MO
J.W. Burress,
Inc. (3)
Greenville 12/27/79 $ 1,555,899 11.4 36,000/185,105
County, SC
Toys "R" Us
San Antonio, TX 1/25/80 $ 1,987,129 14.6 45,000/195,970
Toys "R" Us
Fort Worth, TX 1/25/80 $ 1,873,769 13.7 43,000/185,105
Frank's Nursery
Sales, Inc.
Hillside, IL 1/30/80 $ 706,008 5.2 14,920/122,000
Lucky Stores,
Inc. (4)
Cedar Rapids, IA 6/2/80 $ 1,522,908 11.2 30,248/133,110
Creative Paint
& Wallpaper, Inc.
and B&G, Inc. dba
Splash Pools & Spas,
fka Handy Dan(5)
Hurst, TX 6/10/80 $ 1,645,692 12.1 37,000/180,000
Gordy's Food &
Liquor, Inc. (6)
Chippewa Falls, WI 6/17/80 $ 1,380,816 10.1 26,000/88,000
Wal-Mart Stores
Mexia, TX 10/31/80 $ 977,665 7.2 41,400/185,105
- -------------------------
(1) Includes acquisition fees and expenses.
<PAGE>
(2) Represents the percentage of original cash invested in the individual
property of the total cash invested in all properties.
(3) The Property is currently occupied by Piedmont Clarklift, Inc., which
was originally affiliated with Burress but now is independent. Burress
remains liable for all obligations under its lease agreement.
(4) During 1988, Lucky Stores, Inc. exercised its option to sublet the
premises to Graphics Division of Rockwell Collins International, an
avionics and defense communications company. Lucky Stores remains
liable for all obligations under its lease agreement.
(5) Due to default and bankruptcy of prior tenant Channel Homes, fka Handy
Dan, new leases with two new tenants (Creative Paint & Wallpaper, Inc.
and B & G, Inc.) were entered into as of February 1, 1991 for this
property. In 1995, Creative Paint & Wallpaper, Inc. sublet its space to
Floors, Inc.
(6) During the second quarter of 1983, National Supermarkets, Inc. assigned
its lease of the Chippewa Falls, Wisconsin store to Gateway Foods, Inc.,
which simultaneously subleased to Gordy's Food & Liquor, Inc. All
parties are jointly and severally responsible for the tenant's
obligations under the lease. The original lease terms were not modified
in any way in connection with the assignment and sublease.
The Partnership owns the fee interest in each of these properties. Six
of the properties are subject to first mortgages securing indebtedness which was
incurred or assumed by the Partnership in connection with the acquisition. All
of the properties are commercial in nature. Each of the Properties is net leased
to a single tenant unaffiliated with the Partnership (with the sole exception of
the Hurst, Texas property which is now leased to two tenants, Floors, Inc. and
B&G, Inc.). Each of the tenants, other than J. W. Burress Incorporated, Gordy's
Food & Liquor, Inc., Creative Paint and Wallpaper, Inc. and B&G, Inc., is a
public company or a subsidiary of a public company.
<PAGE>
The following table sets forth the tenant, business conducted by the
tenant, expiration date of the lease term, renewal options and the 1995 annual
base rent for the leases at the properties.
Tenant Business of Lease Renewal 1995 Annual
Property/Location Tenant Expiration Options(1) Base Rent
J.C. Penney
Batavia, NY Retail Dept. 2/1/98 5 - 5Yr. $116,160
Store
Walgreen Co.
University Retail 12/31/2008 (2) $ 75,525(3)
City, MO Drugstore
J.W. Burress,
Inc. (4)
Greenville Equipment 12/27/99 3 - 5Yr. $205,000
County, SC Dealership
Toys "R" Us
San Antonio, TX Toy Store 1/31/2000 6 - 5Yr. $248,191
Toys "R" Us
Fort Worth, TX Toy Store 1/31/2000 6 - 5Yr. $243,046
Frank's Nursery
Sales, Inc.
Hillside, IL Nursery and 12/31/2004 2 - 5Yr. $ 67,000
Crafts
Lucky Stores,
Inc. (5)
Cedar Rapids, IA Graphic Arts 6/2/2000 6 - 5Yr. $117,200
Creative Paint
& Wallpaper, Inc.
and B&G, Inc. dba
Splash Pools & Spas, Paint & 1/31/2001 1 - 7Yr. $165,852
fka Handy Dan(6) Wallpaper
Hurst, TX Store; Bath
& Spa Store
Gordy's Food &
Liquor, Inc. (7)
Chippewa Falls, WI Retail Food 6/17/2000 6 - 5Yr. $145,200
& Beverage
Store
Wal-Mart Stores
Mexia, TX Dept. Store 10/31/2000 5 - 5Yr. $111,206(8)
- -------------------------
<PAGE>
(1) The first number represents the number of renewal options. The second
number represents the length of each option.
(2) Tenant has the right to terminate the lease 8/99 and 8/2004.
(3) Tenant paid additional percentage rent of $62,111 in 1995.
(4) The Property is currently occupied by Piedmont Clarklift, Inc., which was
originally affiliated with Burress but now is independent. Burress remains
liable for all obligations under its lease agreement. See Item 1,
"Subsequent Events."
(5) During 1988, Lucky Stores, Inc. exercised its option to sublet the premises
to Graphics Division of Rockwell Collins International, an avionics and
defense communications company. The sublease is for a three-year term with
two three-year options to renew. Lucky Stores remains liable for all
obligations under its lease agreement.
(6) Due to default and bankruptcy of prior tenant Channel Homes, fka Handy Dan,
new leases with two new tenants were entered into as of February 1, 1991
for this property. In 1995, Creative Paint & Wallpaper, Inc. sublet its
space to Floors, Inc.
(7) During the second quarter of 1983, National Supermarkets, Inc. assigned its
lease of the Chippewa Falls, Wisconsin store to Gateway Foods, Inc., which
simultaneously subleased to Gordy's Food & Liquor, Inc. All parties are
jointly and severally responsible for the tenant's obligations under the
lease. The original lease terms were not modified in any way in connection
with the assignment and sublease.
(8) An additional percentage rent of $62,984 was paid in 1995.
Item 3. Legal Proceedings.
The Partnership is not a party, nor are any of its properties, subject to
any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
There is no established public market for the Units. Trading in the Units is
sporadic and occurs solely through private transactions.
As of March 14, 1996, there were 913 holders of Units.
The Partnership Agreement (which is incorporated herein by reference)
requires that any Cash Available for Distribution (as defined therein) be
distributed quarterly to the Partners in specified proportions and priorities.
There are no restrictions on the Partnership's present or future ability to make
distributions of Cash Available for Distribution. During the years ended
December 31, 1995 and 1994, Registrant has made the following cash distributions
with respect to the Units to holders thereof as of the dates set forth below in
the amounts set forth opposite such dates:
Distribution with Amount of Distribution
Respect to Quarter Ended Per Unit
1995 1994
---- ----
March 31 24.23 17.15
June 30 23.19 21.54
September 30 19.41 25.24
December 31 12.89 19.08
<PAGE>
Item 6. Selected Financial Data
The following represents selected financial data for Registrant for the
years ended December 31, 1995, 1994, 1993, 1992 and 1991. The data should be
read in conjunction with the financial statements included elsewhere herein.
This data is not covered by the independent auditors' report.
<TABLE>
For the Year Ended or as of December 31,
1995 1994 1993 1992 1991
-------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
Operating Revenues - rental &
interest income................. $1,398,388 $1,375,881 $ 1,381,866 $ 1,391,213 $ 1,370,243
Net Income........................ 806,049 733,877 773,561 575,682 394,500
Net Income per weighted average
Unit of Limited Partnership
Interest outstanding 74.12 67.48 71.13 52.94 36.30
Total Assets...................... $8,855,302 $9,234,737 $ 9,664,652 $ 9,839,239 $10,284,177
Mortgage Notes Payable 2,871,359 3,124,047 3,349,114 3,550,507 3,730,311
Total Cash Distributions per
Unit of Limited Partnership
Interest, including amounts
distributed after year end 79.72 83.01 74.62 76.57 56.39
.........-------------------------
</TABLE>
See Item 7 below for a discussion of the facts that may materially affect the
comparability between years of the above information.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The Partnership generates revenues from rental income paid pursuant to
leases with tenants at the Partnership's properties as its primary source of
liquidity. Pursuant to the terms of the leases, the tenants are responsible for
substantially all of the operating expenses with respect to the properties
including, maintenance, capital improvements, insurance and taxes. See "Item 2
Properties" for a description of these leases.
At December 31, 1995, the Partnership's had $244,593 in cash and cash
equivalents, which represents an increase of $51,369 from December 31, 1994.
This increase was due to an increase of cash from investing activities which was
partially offset by an increase in cash used in investing activities and cash
used in financing activities.
The Partnership requires cash to pay principal and interest on its
mortgage indebtedness, nominal operating expenses (discussed below), management
fees and general and administrative expenses. The Partnership's rental and
interest income was sufficient in 1995, and is expected to be sufficient in
future
<PAGE>
years, to pay all of these amounts as well as to provide for cash distributions
to the Partners from operations.
In addition to the base rent payments made by tenants, the Partnership
received two percentage rental payments in 1995 totaling $125,095. The
Partnership received percentage rent payments of $117,118 in 1993 and $116,785
in 1994. Base rent payments increased for the period ended December 31, 1995 as
compared to the periods ended December 31, 1994 and December 31, 1993 due to the
terms of the leases with tenants providing for an annual increase in rent
payments. Accordingly, the Partnership's operating results for the year ended
1995 improved as compared to the prior to calendar years.
Due to the net or modified net and long-term nature of all but one of the
leases of the Partnership's properties and the fixed terms of the Partnership's
permanent borrowings, the Partnership does not expect the results of its
operations in 1996 to vary significantly from those for prior years. However,
the if one or more of the following were to occur, the Partnership's results of
operations could be significantly impacted:
1. Increases in annual rental payments required by the terms
of the lease.
2. The increase or decrease of percentage rent payable, if any, under the
terms of the lease. The amounts, if any, of percentage rents which will be paid
to the Partnership in the future are dependent on future sales volumes of the
tenants occupying the Partnership's properties.
3. The Partnership's depreciation expense will decrease over time because
some of the Partnership's properties are depreciated under the component method
which results in some building components having shorter estimated useful lives
than others.
4. The lease of the Partnership's property in Batavia, New York, to J. C.
Penney Company, Inc., requires the Partnership to make all structural and
exterior repairs, carry insurance, pay all real estate taxes up to a maximum
amount, repaint, varnish or otherwise redecorate certain exterior portions of
the building every three years and pay certain common facility maintenance
charges up to a fixed amount. Both leases at the Hurst, Texas property require
the Partnership to make all structural and exterior repairs. In addition, the
lease of the Partnership's
<PAGE>
property in University City, Missouri, to Walgreen, Co. requires the Partnership
to pay for all repairs required by reason of dry rot or termites and the first
$750 per year of roof repairs. These expenditures vary from year to year
depending upon the circumstances of these three properties. During the period
ended December 31, 1995, the Partnership expended approximately $13,000 under
the terms of these leases for capital improvements.
5. Depending upon market conditions and restrictions contained in certain
of the instruments relating to the Partnership's borrowings, it is possible that
the Partnership will finance or refinance some or all of its properties in the
future, although the Partnership has no present plans to do so with the
exception of the J.C. Penney property; see "Item 2. Properties." Any such
financing or refinancing might affect the Partnership's interest expense and
cash available from operations, as well as provide the possibility of
distributions of loan proceeds to the partners.
6. In spite of the long-term nature of the leases, general economic
conditions are difficult for many businesses. If a lease is terminated due to a
tenant bankruptcy, the Partnership will have to seek a new tenant in very
competitive rental markets. There can be no assurance that the Partnership could
secure a tenant or obtain the same rental rates.
7. Upon the sale of a property, the Partnership's cash available from
future operations would decrease but revenues for the year in which a sale
occurs would increase.
The Partnership does not anticipate that it will have any
substantial requirements for capital resources until February 1,
1998, at which time a mortgage note secured by the J.C. Penney
property will have a balloon payment due.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
For the Year Ended December 31, 1995
Financial Statements:
Report of Independent Public Accountants
Statements of Income for the Years Ended
December 31, 1995, 1994 and 1994
Balance Sheets as of December 31, 1995 and 1994
Statements of Changes in Partners' Capital
for the Years Ended December 31, 1995, 1994 and 1993
Statements of Cash Flow for the Years Ended
December 31, 1995, 1994 and 1993
Notes to Financial Statements
Financial Statement Schedules:
III - Real Estate and Accumulated Depreciation of Property Held
by Local Limited Partnerships as of December 31, 1995
All schedules prescribed by Regulation S-X other than the one indicated above
have been omitted as the required information is inapplicable or the information
is presented elsewhere in the financial statements or related notes.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To WINTHROP PARTNERS 79 LIMITED PARTNERSHIP:
We have audited the accompanying balance sheets of WINTHROP PARTNERS 79 LIMITED
PARTNERSHIP (a Massachusetts limited partnership) as of December 31, 1995 and
1994, and the related statements of income, changes in partners' capital and
cash flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our 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 WINTHROP PARTNERS 79 LIMITED
PARTNERSHIP as of December 31, 1995 and 1994, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule III listed in Item 14(a)(2) is
the responsibility of Winthrop Partners 79 Limited Partnership management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not a required part of the basic financial statements
and, in our opinion, is fairly stated, in all material respects, the financial
data required to be set forth therein in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 31, 1996
(except for Note 9 for which
the date is March 4, 1996)
<PAGE>
<TABLE>
STATEMENTS OF INCOME
- ------------------------------------------------------------------------------------------------------------------------------------
For the Years Ended
December 31, 1995, 1994 and 1993 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
Rental income from real estate leases accounted
for under the operating method.............................................. $ 984,600 $ 940,291 $ 927,066
Interest on short-term investments............................................ 13,551 11,751 10,687
Interest income on real estate leases accounted
for under the financing method.............................................. 400,237 423,839 444,133
------- ------- -------
1,398,388 1,375,881 1,381,886
--------- --------- ---------
Expenses:
Interest.................................................................... 330,627 346,778 370,169
Depreciation and amortization............................................... 149,670 189,547 180,376
Management fees............................................................. 23,662 23,403 23,194
General and administrative.................................................. 88,380 82,276 34,586
------ ------ ------
592,339 642,004 608,325
------- ------- -------
Net income...................................................................... $ 806,049 $ 733,877 $ 773,561
= ======= = ======= = =======
Net income allocated to General Partners........................................ $ 64,484 $ 58,710 $ 61,885
= ====== = ====== = ======
Net income allocated to Limited Partners........................................ $ 741,565 $ 675,167 $ 711,676
= ======= = ======= = =======
Net income per Unit of Limited Partnership
Interest...................................................................... $ 74.12 $ 67.48 $ 71.13
= ===== = ===== = =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
BALANCE SHEETS
- --------------------------------------------------------------------------------------------------------------------------------
December 31, 1995 and 1994 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Real Estate Leased to Others:
Accounted for under the operating method, at cost, net of accumulated
depreciation of $3,208,557 and $3,068,851 as of December 31, 1995 and 1994,
respectively................................................................ $ 5,377,665 $ 5,504,371
Accounted for under the financing method...................................... 3,090,312 3,322,188
---------- ---------
8,467,977 8,826,559
Other Assets:
Cash and cash equivalents, at cost, which
approximates market value................................................... 244,593 193,224
Other, net of accumulated amortization of
$56,864 and $46,900 as of December 31, 1995 and
1994, respectively.......................................................... 142,732 214,954
-------- -------
$ 8,855,302 $ 9,234,737
= ========== = =========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage notes payable........................................................ $ 2,871,359 $ 3,124,047
Accounts payable and accrued expenses......................................... 30,179 28,956
Distributions payable to Partners............................................. 141,551 208,566
-------- -------
3,043,089 3,361,569
---------- ---------
Partners' Capital (Deficit):
Limited Partners -
Units of Limited Partnership Interest, $1,000 stated value per Unit;
authorized - 10,005 Units; issued
and outstanding - 10,005 Units............................................ 6,057,027 6,113,106
General Partners.............................................................. (244,814) (239,938)
--------- --------
5,812,213 5,873,168
$ 8,855,302 $ 9,234,737
= ========== = =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
- ------------------------------------------------------------------------------------------------------------------------------------
UNITS OF
LIMITED GENERAL LIMITED
For the Years Ended PARTNERSHIP PARTNERS' PARTNERS' TOTAL
December 31, 1995, 1994 and 1993 INTEREST DEFICIT CAPITAL CAPITAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1992..................... 10,005 $ (223,346) $ 6,303,864 $ 6,080,518
Cash distributions paid or
accrued....................................... (64,590) (747,086) (811,676)
Net income..................................... 61,885 711,676 773,561
---------- -------- ------- -------
Balance, December 31, 1993..................... 10,005 (226,051) 6,268,454 6,042,403
Cash distributions paid or
accrued....................................... (72,597) (830,515) (903,112)
Net income..................................... 58,710 675,167 733,877
---------- ------ ------- -------
Balance, December 31, 1994..................... 10,005 (239,938) 6,113,106 5,873,168
Cash distributions paid or
accrued....................................... (69,360) (797,644) (867,004)
Net income..................................... 64,484 741,565 806,049
---------- ------ ------- -------
Balance, December 31, 1995..................... 10,005 $ (244,814) $ 6,057,027 $ 5,812,213
====== = ======== = ========= = =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------------------------------------------------------------
For the Years Ended
December 31, 1995, 1994 and 1993 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income........................................................... $ 806,049 $ 733,877 $ 773,561
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization........................................ 149,670 189,547 180,376
Minimum lease payments received, net of
interest income earned, on leases accounted
for under the financing method..................................... 227,931 204,329 184,035
Changes in assets and liabilities:
Increase (decrease) in accounts payable and
accrued expenses................................................... 1,223 (73,102) 86,177
Decrease (increase) in other assets................................ 66,203 (71,554) (33,627)
------- -------- -------
Net cash provided by operating activities.......................... 1,251,076 983,097 1,190,522
---------- -------- ---------
Cash flows from investing activities:
Capital improvements................................................. (13,000) - (72,793)
-------- ----- -------
Net cash used by investing activities.............................. (13,000) - (72,793)
-------- ----- -------
Cash flows from financing activities:
Principal payments on mortgage notes................................. (252,688) (225,067) (201,393)
Cash distributions paid.............................................. (934,019) (865,623) (832,932)
--------- --------- --------
Net cash used by financing activities.............................. (1,186,707) (1,090,690) (1,034,325)
----------- ----------- ----------
Net increase (decrease) in cash and cash equivalents................... 51,369 (107,593) 83,404
Cash and cash equivalents, beginning of period......................... 193,224 300,817 217,413
-------- -------- -------
Cash and cash equivalents, end of period............................... $ 244,593 $ 193,224 $ 300,817
= ======== = ======== = =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. ORGANIZATION
Winthrop Partners 79 (the Partnership), a limited partnership, was
organized under the Uniform Limited Partnership Act of the Commonwealth
of Massachusetts on November 30, 1978 for the purpose of owning and
leasing commercial and industrial real properties. The Partnership will
terminate on December 31, 2008, or sooner, in accordance with the terms
of the Partnership Agreement.
2. SIGNIFICANT ACCOUNTING POLICIES
Financial Statements - The financial statements of the Partnership are
prepared on the accrual basis of accounting in accordance with generally
accepted accounting principles.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Income Taxes - No provision has been made for federal, state or local
income taxes in the financial statements of the Partnership. Partners
are required to report on their individual tax return their allocable
share of income, gains, losses, deductions and credits of the
Partnership. The Partnership files its tax returns on the accrual basis.
On June 15, 1979, the Internal Revenue Service issued a ruling that the
Partnership will be classified as a partnership for federal income tax
purposes.
Distributions to Partners - The cash distribution due Partners for the
three months ended December 31, 1995 is recorded in the accompanying
financial statements as a liability and a reduction of Partners'
capital. As provided in the Partnership Agreement, quarterly
distributions are payable to Partners within 60 days after the end of
the quarter.
Cash and Cash Equivalents - Cash and cash equivalents consist of a
mutual fund that invests in treasury bills and repurchase agreements
maturing in three months or less. Cash equivalents are valued at cost,
which approximates market value.
Percentage Rent - The Partnership has entered into several leases that
provide for a minimum annual rent plus additional rent based on
percentages of sales at the properties (percentage rent). These
percentage rents are recorded on a cash basis. For the years ended
December 31, 1995, 1994 and 1993, the Partnership received percentage
rent totaling approximately $125,095, $116,785 and $117,118,
respectively.
Leases - The Partnership leases its real properties and accounts for
such leases in accordance with the provisions of Statement of Financial
Accounting Standards No. 13, "Accounting for Leases," as amended. This
statement sets forth specific criteria for determining whether a lease
should be accounted for as a financing lease or an operating lease.
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(a) Financing Method
Under this method, minimum lease payments to be received plus the
estimated value of the property at the end of the lease are
considered to be the Partnership's gross investment in the lease.
Unearned income, representing the difference between gross
investment and actual cost of the leased property, is amortized
over the lease term using the interest rate implicit in the lease
to provide a level rate of return over the lease term.
(b) Operating Method
Under this method, revenue is recognized as rentals become due,
which does not materially differ from the straight-line method.
Expenses (including depreciation) are charged to operations as
incurred.
Depreciation - Component depreciation on real estate leased to others,
accounted for under the operating method, is computed using the
straight-line method over the estimated useful life of each class of
asset, which ranges from 5 to 40 years. The cost of the properties
represents the purchase price of the properties plus acquisition and
closing costs, or, to the extent that the property had previously been
accounted for under the financing method, the depreciable base is the
fair market value at the date of implementation of operating lease
accounting.
Certain amounts from prior years have been reclassified to remain
consistent with the current year's presentation.
3. TRANSACTIONS WITH RELATED PARTIES
One Winthrop Properties, Inc. (One Winthrop), the Managing General
Partner, Winthrop Securities Co., Inc. (Winthrop Securities), the
selling agent for the public offering and Winthrop Management, the
manager of the properties, are wholly owned subsidiaries of First
Winthrop Corporation, which in turn is wholly owned by Winthrop
Financial Associates, A Limited Partnership (WFA).
Winthrop Management, an affiliate of WFA, is entitled to annual property
management fees equal to 1.5% of the excess of cash receipts over cash
expenditures (excluding debt service, property management fees and
capital expenditures) from each property managed by it. For the years
ended December 31, 1995, 1994 and 1993, Winthrop Management earned
$23,662, $23,403 and $23,180, respectively, for managing the real
properties of the Partnership.
The General Partners are entitled to 8% of Cash Available for
Distribution, subordinated to a cumulative priority quarterly
distribution to the Limited Partners as provided in the Partnership
Agreement. For the years ended December 31, 1995, 1994 and 1993, the
Partnership has paid or accrued distributions from Cash Available for
Distributions, as defined in the Partnership Agreement, totaling
$69,360, $72,597 and $64,590, respectively, to the General Partners.
During the liquidation stage of the Partnership, the General Partners
and their affiliates are entitled to receive certain fees and
distributions, subordinated to specified minimum returns to the Limited
Partners as described in the Partnership Agreement.
<PAGE>
4. REAL ESTATE LEASED TO OTHERS ACCOUNTED FOR UNDER THE OPERATING METHOD
Real estate leased to others, at cost, accounted for under the operating
method as of December 31, 1995 and 1994 is summarized as follows:
<TABLE>
1995 1994
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Land........................................................ $ 3,826,072 $ 3,826,072
Commercial buildings........................................ 4,760,150 4,747,150
Less: Accumulated depreciation............................. (3,208,557) (3,068,851)
---------- ----------
$ 5,377,665 $ 5,504,371
= ========= = =========
</TABLE>
As of December 31, 1995 and 1994, properties (and related operating
leases) with a total original cost of $3,144,090 were pledged to
collateralize payment of mortgage notes payable.
The following is a summary of the minimum anticipated future rental
receipts, excluding percentage rents, by year, under the noncancelable
portion of the operating leases:
<TABLE>
<S> <C>
1996.............................................................. $ 874,000
1997.............................................................. 874,000
1998.............................................................. 874,000
1999.............................................................. 758,000
2000.............................................................. 357,000
Thereafter........................................................ 719,000
</TABLE>
5. REAL ESTATE LEASED TO OTHERS ACCOUNTED FOR UNDER THE FINANCING METHOD
Real estate leased to others, accounted for under the financing method
as of December 31, 1995 and 1994 is summarized as follows:
<TABLE>
--------------------------------------------------------------------------------------------------------------
1995 1994
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Minimum lease payments receivable........................... $ 3,076,358 $ 3,704,527
Unguaranteed residual value................................. 2,006,453 2,006,453
--------- ---------
5,082,811 5,710,980
Less: Unearned income...................................... (1,992,499) (2,388,792)
---------- ----------
$ 3,090,312 $ 3,322,188
= ========= = =========
</TABLE>
5. REAL ESTATE LEASED TO OTHERS ACCOUNTED FOR UNDER THE FINANCING METHOD
(Continued)
As of December 31, 1995 and 1994, respectively, real estate and the
related lease payments with a net investment in financing leases of
$1,547,000 and $1,687,000 were pledged to collateralize the payment of
mortgage notes payable.
The following is a summary of the approximate minimum anticipated future
rental receipts, excluding percentage rents, by year, under the
noncancelable portion of the financing leases:
<TABLE>
<S> <C>
1996.............................................................. $ 647,000
1997.............................................................. 647,000
1998.............................................................. 647,000
1999.............................................................. 647,000
2000.............................................................. 237,000
Thereafter........................................................ 169,000
</TABLE>
6. MORTGAGE NOTES PAYABLE
The mortgage notes payable by the Partnership at December 31, 1995 and
1994 are as follows:
<TABLE>
1995 1994
---- ----
<S> <C> <C>
Prime rate plus 1.5% mortgage note, due in monthly installments of
$1,442 for principal plus interest through July 1, 1995; and monthly
principle installments of $2,980 plus interest beginning on January 1,
1996 through February 1, 1998, at which time the remaining
principal and any unpaid interest is due........................................ $ 496,365 $ 520,800
9-5/8% mortgage note, due in quarterly
installments of $20,720 for principal and
interest with a final payment of $325,880
due at maturity on May 1, 1999.................................................. 477,420 512,227
10.115% mortgage note, due in monthly
installments of $2,730 for principal and
interest, maturing on December 1, 2004.......................................... 192,298 204,578
12% mortgage note, due in monthly
installments of $12,618 for principal
and interest, maturing on July 1, 2000.......................................... 524,531 607,516
12% mortgage note, due in monthly
installments of $11,892 for principal
and interest, maturing on July 1, 2000.......................................... 494,339 572,543
10-1/4% mortgage note, due in monthly
installments of $7,662 for principal
and interest, maturing on July 1, 2010.......................................... 686,406 706,383
------- -------
................................................................................ $ 2,871,359 $ 3,124,047
= ========= = =========
Based on the borrowing rates currently available to the Partnership for
mortgage notes with similar terms, the fair value of the Partnership's
aggregate mortgage note payable at December 31, 1995 is approximately
$2,930,000.
</TABLE>
6. MORTGAGE NOTES PAYABLE (Continued)
As of December 31, 1995, anticipated future principal payments by year
are as follows:
<TABLE>
<S> <C>
1996.............................................................. $ 292,000
1997.............................................................. 322,000
1998.............................................................. 746,000
1999.............................................................. 660,000
2000.............................................................. 196,000
Thereafter........................................................ 655,000
</TABLE>
7. TAXABLE INCOME
The Partnership's taxable income for 1995 differs from net income for
financial reporting purposes primarily due to the differences in the
methods used for the recognition of depreciation and the accounting for
certain real property leases under the financing method for financial
reporting purposes and the operating method for tax return purposes.
Taxable income for 1995 is as follows:
<TABLE>
<S> <C>
Net income for financial reporting purposes.................................................. $ 806,049
Plus: Minimum lease payments received, net of interest
income earned, on leases accounted for under
the financing method.......................................................... 227,931
Minus: Depreciation on leases accounted for under the
financing method and tax depreciation
adjustment.................................................................... (183,275)
---------
Taxable income............................................................................... $ 850,705
=========
</TABLE>
8. STATEMENT OF CASH FLOWS
In accordance with Statement of Financial Accounting Standards No. 95,
the following details supplemental cash flow information:
<TABLE>
1995 1994 1993
-------- -------- ------
<S> <C> <C> <C>
Cash paid for interest $331,185 $347,286 $370,631
======== ======== ========
</TABLE>
9. SUBSEQUENT EVENT
On March 4, 1996, the Partnership reached a tentative agreement with
Piedmont Clarklift, the tenant at the Greenville, South
Carolina property, pursuant to which Piedmont Clarklift will purchase
the property for $1,525,000. As of December 31, 1995, the net book
value of the property for financial reporting purposes was $526,550
and the property was encumbered by a mortgage note payable with a
balance of $477,420.
<PAGE>
SUPPLEMENTARY INFORMATION
REQUIRED PURSUANT TO SECTION 9.4 OF THE PARTNERSHIP AGREEMENT
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
December 31, 1995 Three Months Ended Year Ended
(Unaudited) December 31, 1995 December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
1. Statement of Cash Available for Distribution:
<S> <C> <C>
Net income........................................................... $ 146,848 $ 806,049
Add: Depreciation and amortization charges
to income not affecting Cash Available
for Distribution............................................. 37,417 149,670
Minimum lease payments received, net of
interest income earned, on leases
accounted for under the financing
method....................................................... 59,381 227,931
Rent Receivable............................................... 14,921 (22,885)
Prepaid mortgage ............................................. (22,467) (22,467)
Less: Mortgage principal payments................................... (95,899) (271,294)
------- --------
Cash Available for Distribution.............................................. $ 140,201 $ 867,004
- ------- - -------
Distributions allocated to General Partners.................................. $ 11,216 $ 69,360
- ------ - ------
Distributions allocated to Limited Partners.................................. $ 128,985 $ 797,644
- ------- - -------
</TABLE>
2. Fees and other compensation paid or accrued by the Partnership to the
General Partners or their affiliates during the three months ended
December 31, 1995:
<TABLE>
---------------------------------------------------------------------------------------------------------------------
Entity Receiving Form of (Unaudited)
Compensation Compensation Amount
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Winthrop Management Property management fees $ 5,805
General Partners Interest in Cash Available
for Distribution $ 11,216
WFC Realty Co., Inc. Interest in Cash Available
for Distribution $ 64
</TABLE>
All other information required pursuant to Section 9.4 of the Partnership
Agreement is set forth in the attached Financial Statements and related notes or
Annual Partnership Report.
WINTHROP PARTNERS 79
REAL ESTATE AND ACCUMULATED DEPRECIATION
(ACCOUNTED FOR UNDER THE OPERATING METHOD)
DECEMBER 31, 1995
SCHEDULE III
1 of 2
<TABLE>
Initial cost to Partnership & gross amount at
which carried as of Dec. 31, 1995 (A,B,&C) Accumulated Life on which
------------------------------------------
Depreciation Date of Depreciation
Encumbrance Buildings & as of Dec. 31, Construction Date Expense
Description (F) Land Improvements Total 1995 (D) Completion Acquired is Computed
- ----------- ---------- ---- ------------ ----- -------------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Land and retail
store,
Batavia, NY $ 496,365 $ 120,186 $ 972,412 $1,092,598 $ 721,101 1979 Aug. 1979 10-40 yrs.
Land and retail
drug store,
University City,
MO - 239,924 661,370 901,294 515,002 1979(E) Aug. 1979 12-35 yrs.
Land and equip-
ment dealer-
ship, Greenville
County, SC 477,420 144,699 1,411,200 1,555,899 1,029,349 1979 Dec. 1979 5-40 yrs.
Land, San
Antonio, TX (G) - 735,238 - 735,238 - - Jan. 1980 -
Land, Fort
Worth, TX (G) - 487,180 - 487,180 - - Jan. 1980 -
Land, Hillside,
IL (G) - 261,223 - 261,223 - - Jan. 1980 -
Land, Hurst, TX 686,406 1,537,585 - 1,537,585 - - June 1980 -
Retail Store,
Hurst, TX - - 492,297 492,297 114,465 1980 June 1980 7-40 yrs.
Land & super-
market, Cedar
Rapids, IA - 300,037 1,222,871 1,522,908 831,225 1980 June 1980 5-40 yrs.
---------- ---------- ---------- ---------- ----------
$1,660,191 $3,826,072 $4,760,150 $8,586,222 $3,208,557
========== ========== ========== ========== ==========
</TABLE>
(A) The cost of the properties represents the purchase price of the
properties plus miscellaneous acquisition and closing costs. Included in
the costs are property acquisition fees totaling $119,740 paid to the
Managing General partner (See Note 3 of Notes to Financial Statements).
Construction of the buildings and improvements was completed prior to
their acquisition by the Partnership.
(B) The cost of real estate owned at December 31, 1995 is the same for
financial statement and income tax reporting purposes.
(C) Reconciliation of real estate owned:
<TABLE>
<S> <C>
Balance as of December 31, 1994...................... $ 8,573,222
Additions during 1995................................ 13,000
-----------
Balance as of December 31, 1995...................... $ 8,586,222
===========
</TABLE>
(D) Reconciliation of accumulated depreciation:
<TABLE>
<S> <C>
Balance as of December 31, 1994...................... $ 3,068,851
Depreciation expense during 1995..................... 139,706
--------
Balance as of December 31, 1995...................... $ 3,208,557
===========
</TABLE>
(E) Building was originally constructed in mid-1950's. During 1979 the
building was substantially remodeled in order to adapt it for its
current rental use as a retail drug store.
(F) See Note 6 of Notes to Financial Statements for information regarding the
terms of the various encumbrances.
(G) The total encumbrance for these properties is disclosed on Schedule XI,
2 of 2 - Real estate and Interest Income Earned as the buildings
and improvements are accounted for under the financing method.
<PAGE>
REAL ESTATE AND ACCUMULATED DEPRECIATION
(ACCOUNTED FOR UNDER THE FINANCING METHOD)
DECEMBER 31, 1995
SCHEDULE III
2 of 2
<TABLE>
Minimum Lease
Net Investment payments received
in financing net of interest Length of lease
Encumbrance leases at point income earned at Date of Date on which interest
Description (A) of purchase (B) December 31, 1995 (C) Completion Acquired income is computed
- ----------- ----------- --------------- --------------------- ----------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Retail store,
San Antonio, TX $ 524,531 $1,251,891 $ 711,381 1980 Jan. 1980 20.5 years
Retail store,
Fort Worth, TX 494,339 1,386,589 754,406 1980 Jan. 1980 20.5 years
Retail nursery,
Hillside, IL 192,298 444,785 70,205 1980 Jan. 1980 25 years
Land and super-
market,
Chippewa Falls, WI - 1,380,816 406,618 1980 June 1980 20 years
Land and retail
store, Mexia, TX - 977,665 404,879 1980 Oct. 1980 20 years
---------- ---------- ----------
$1,211,168 $5,441,746 $2,347,489
========== ========== ==========
</TABLE>
(A) See Note 6 of Notes to Financial Statements for information regarding the
terms of the various encumbrances.
(B) The net investment in financing leases at the point of purchase reflects
the purchase price of the properties plus miscellaneous acquisition and
closing costs. Included in the costs are property acquisition fees
totaling $180,260 paid to the Managing General Partner (See Note 3 of
Notes to Financial Statement). The net investment at the point of
purchase is as follows:
<TABLE>
<S> <C>
Minimum lease payments receivable........... $ 14,266,894
Plus: Unguaranteed residual................ 2,006,453
Minus: Unearned income..................... (10,831,601)
------------
Net Investment.............................. $ 5,441,746
============
</TABLE>
(C) Reconciliation of minimum lease payments received net of interest income
earned:
<TABLE>
<S> <C>
Balance as of December 31, 1994............. $ 2,119,558
Minimum lease payments received net of
interest income earned during 1995......... 227,931
------------
Balance as of December 31, 1995............. $ 2,347,489
============
</TABLE>
Item 9. Changes in and Disagreements on Accounting and Financial
Disclosure.
None
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
(a) and (b) Identification of Directors and Executive Officers.
Registrant has no officers or directors. The Managing General Partner manages
and controls substantially all of Registrant's affairs and has general
responsibility and ultimate authority in all matters effective its business. As
of March 1, 1996, the names of the directors and executive officers of the
Managing General Partner and the position held by each of them, are as follows:
Has Served as
Position Held with the a Director or
Name and Age Managing General Partner Officer Since
Michael L. Ashner Chief Executive Officer 1-96
and Director
Ronald Kravit Director 7-95
W. Edward Scheetz Director 7-95
Richard J. McCready President and
Chief Operating Officer 7-95
Jeffrey Furber Executive Vice President 7-95
and Clerk
Anthony R. Page Chief Financial Officer 8-95
Vice President and
Treasurer
Peter Braverman Senior Vice President 1-96
(c) Identification of Certain Significant Employees. None.
(d) Family Relationships. None.
<PAGE>
(e) Business Experience. The Managing General Partner was
incorporated in Massachusetts in October 1978. The background
and experience of the executive officers and directors of the
Managing General Partner, described above in Items 10(a) and (b),
are as follows:
Michael L. Ashner, age 44, has been the Chief Executive Officer of Winthrop
Financial Associates, A Limited Partnership ("WFA") since January 15, 1996. From
June 1994 until January 1996, Mr. Ashner was a Director, President and
Co-chairman of National Property Investors, Inc., a real estate investment
company ("NPI"). Mr. Ashner was also a Director and executive officer of NPI
Property Management Corporation ("NPI Management") from April 1984 until January
1996. In addition, since 1981 Mr. Ashner has been President of Exeter Capital
Corporation, a firm which has organized and administered real estate limited
partnerships.
W. Edward Scheetz, age 31, has been a Director of WFA since July 1995. Mr.
Scheetz was a director of NPI from October 1994 until January 1996. Since May
1993, Mr. Scheetz has been a limited partner of Apollo Real Estate Advisors,
L.P. ("Apollo"), the managing general partner of Apollo Real Estate Investment
Fund, L.P., a private investment fund. Mr. Scheetz has also served as a Director
of Roland International, Inc., a real estate investment company since January
1994, and as a Director of Capital Apartment Properties, Inc., a multi-family
residential real estate investment trust, since January 1994. From 1989 to May
1993, Mr. Scheetz was a principal of Trammel Crow Ventures, a national real
estate investment firm.
Ronald Kravit, age 39, has been a Director of WFA since July 1995. Mr.
Kravit has been associated with Apollo since August 1995. From October 1993 to
August 1995, Mr. Kravit was a Senior Vice President with G. Soros Realty
Advisors/Reichman International. Mr. Kravit was a Vice President and Chief
Financial Officer of MAXXAM Property Company from July 1991 to October 1993. Mr.
Kravit received a Masters of Business Administration from The Wharton School and
a B.S. in Business Administration from Georgetown University
Richard J. McCready, age 37, is the President and Chief Operating Officer
of WFA and its subsidiaries. Mr. McCready previously served as a Managing
Director, Vice President and Clerk of WFA and a Director, Vice President and
Clerk of the Managing General Partner and all other subsidiaries of WFA. Mr.
McCready joined the Winthrop organization in 1990.
Jeffrey Furber, age 36, has been the Executive Vice President of WFA and
the President of Winthrop Management since January 1996. Mr. Furber served as a
Managing Director of WFA from January 1991 to December 1995 and as a Vice
President from June 1984 until December 1990.
Anthony R. Page, age 32, has been the Chief Financial Officer for WFA since
August 1995. From July, 1994 to August 1995, Mr. Page was a Vice President with
Victor Capital Group, L.P. and from 1990 to July 1994, Mr. Page was a Managing
Director with Principal Venture Group. Victor Capital and Principal Venture are
investment banks emphasizing on real estate securities, mergers and
acquisitions.
Peter Braverman, age 44, has been a Senior Vice President of WFA since
January 1996. From June 1995 until January 1996, Mr. Braverman was a Vice
President of NPI and NPI Management. From June 1991 until March 1994, Mr.
Braverman was President of the Braverman Group, a firm specializing in
management consulting for the real estate and construction industries. From 1988
to 1991, Mr. Braverman was a Vice President and Assistant Secretary of Fischbach
Corporation, a publicly traded, international real estate and construction firm.
One or more of the above persons are also directors or officers of a
general partner (or general partner of a general partner) of the following
limited partnerships which either have a class of securities registered pursuant
to Section 12(g) of the Securities and Exchange Act of 1934, or are subject to
the reporting requirements of Section 15(d) of such Act: Winthrop Partners 80
Limited Partnership; Winthrop Partners 81 Limited Partnership; Winthrop
Residential Associates I, A Limited Partnership; Winthrop Residential Associates
II, A Limited Partnership; Winthrop Residential Associates III, A Limited
Partnership; 1626 New York Associates Limited Partnership; 1999 Broadway
Associates Limited Partnership; Indian River Citrus Investors Limited
Partnership; Nantucket Island Associates Limited Partnership; One Financial
Place Limited Partnership; Presidential Associates I Limited Partnership;
Riverside Park Associates Limited Partnership; Sixty-Six Associates Limited
Partnership; Springhill Lake Investors Limited Partnership; Twelve AMH
Associates Limited Partnership; Winthrop California Investors Limited
Partnership; Winthrop Growth Investors I Limited Partnership; Winthrop Interim
Partners I, A Limited Partnership; Winthrop Financial Associates, A Limited
Partnership; Southeastern Income Properties Limited Partnership; Southeastern
Income Properties II Limited Partnership; Winthrop Miami Associates Limited
Partnership and Winthrop Apartment Investors Limited Partnership.
(f) Involvement in Certain Legal Proceedings. None.
Item 11. Executive Compensation.
Registrant is not required to and did not pay any compensation to the
officers or directors of the Managing General Partner. The Managing General
Partner does not presently pay any compensation to any of its officers or
directors. (See Item 13, "Certain Relationships and Related Transactions.")
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
(a) Security Ownership of Certain Beneficial Owners.
No person or group is known by the Partnership to be the beneficial owner
of more than 5% of the outstanding Units at March 1, 1996. Under the Partnership
Agreement (incorporated herein by reference), the voting rights of the Limited
Partners are limited and, in some circumstances, are subject to the prior
receipt of certain opinions of counsel or judicial decisions.
Under the Partnership Agreement, the right to manage the business of the
Partnership is vested in the General Partners and is generally to be exercised
only by the Managing General Partner, although the consent of the Associate
General Partner is required for all purchases, financings, refinancings and
sales or other dispositions of the Partnership's real properties and with
respect to certain other matters. See Item 1 above for a description of the
General Partners.
(b) Security Ownership of Management.
At March 1, 1996, the partners of WFA and the officers, directors and the
general partner of the General Partners owned as a group 5 Units representing
less than 1% of the total number of Units outstanding.
(c) Changes in Control.
There exists no arrangement known to the Partnership the operation of which
may at a subsequent date result in a change in control of the Partnership except
as follows.
In connection with its acquisition of control of Linnaeus, Londonderry
II issued NACC a $22 million non-recourse purchase money note due 1998 (the
"Purchase Money Note"), as set forth in a
loan agreement, dated as of July 14, 1995, by and between NACC and Londonderry
II. Initial security for the Purchase Money Note includes, among other things,
the partnership interests in W.L.
Realty acquired by Londonderry II and the W.L. Realty partnership interest in
Linnaeus. Accordingly, if Londonderry II does not satisfy its obligations under
the Purchase Money Note, NACC would have the right to foreclose upon this
security and, as result, would gain control of the Partnership.
Item 13. Certain Relationship and Related Transactions.
Under the Partnership Agreement, the General Partners and their
affiliates are entitled to receive various fees, commissions, cash
distributions, allocations of taxable income or loss and expense reimbursements
from the Partnership. Pursuant to Section 4.1 of the Partnership Agreement, the
General Partners are entitled to 8% of Cash Available for Distribution,
subordinated to a cumulative priority quarterly distribution to the Limited
Partners as provided in the Partnership Agreement. For the years ended December
31, 1995, 1994 and 1993, the Partnership has paid or accrued distributions from
Cash Available for Distributions, as defined in the Partnership Agreement,
totaling $69,360, $72,597 and $64,590, respectively, to the General Partners.
During the liquidation stage of the Partnership, the General Partners and
their affiliates are entitled to receive certain fees and distributions,
subordinated to specified minimum returns to the Limited Partners as described
in the Partnership Agreement.
WFC Realty Co., Inc. owns five $1,000 limited partnership units and
receives its proportionate share of Cash Available for Distribution, pursuant to
Section 4.1 of the Partnership Agreement.
Pursuant to Section 5.3A (iii) of the Partnership Agreement, Winthrop
Management receives a Property Management fee equal to 1.5% of cash receipts in
excess of cash expenditures other than expenditures for the management fee, debt
service payments and capital improvements. For the years ended December 31,
1995, 1994 and 1993, Winthrop Management earned $23,662, $23,403 and $23,180,
respectively, for managing the real properties of the Partnership
For the year ended December 31, 1995, the Partnership allocated $25,521
of taxable income to the Managing General Partner, $42,535 of taxable income to
the Associate General Partner and $391 of taxable income to the Initial Limited
Partner.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a)(1)(2) Financial Statements and Financial Statement Schedules:
See Item 8 of this Form 10-K for Financial Statements
of the Partnership, Notes thereto, and Financial
Statement Schedules. (A Table of Contents to
Financial Statements and Financial Statement
Schedules is included in Item 8 and incorporated
herein by reference.)
(a) (3) Exhibits:
The Exhibits listed on the accompanying Index to
Exhibits are filed as part of this Annual
Report and incorporated in this Annual Report as set forth in
said Index.
(b) Reports on Form 8-K - None
<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 this 27th day of March
1996.
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
By: ONE WINTHROP PROPERTIES, INC.
Managing General Partner
By: /s/ Michael L. Ashner
Michael L. Ashner
Chief Executive Officer
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.
Signature/Name Title Date
/s/ Michael Ashner Chief Executive March 27, 1996
- ------------------
Michael Ashner Officer and Director
/s/ Ronald Kravit Director March 27, 1996
Ronald Kravit
/s/ Anthony R. Page Chief Financial Officer March 27, 1996
Anthony R. Page
<PAGE>
INDEX TO EXHIBITS
Exhibit Page
3 Amended and Restated Agreement of Limited (a)
Partnership of Winthrop Partners 79 Limited
Partnership dated as of April 4, 1979
4(a) See Exhibit 3
4(b) Documents which define the rights of holders of long-term debt of the
Partnership are included in Exhibits 10(b), 10(h), 10(i), 10(j), 10(k)
and 10(l)
10(a) Property Management Agreement between (b)
Winthrop Partners 79 Limited Partnership
and WP Management Co., Inc. dated March 13,
1979
10(b) Property Management Subcontract between (b)
WP Management Co., Inc. dated August 1,
1979
10(c) Turnkey Agreement between McWethy Development (b)
Corporation and Winthrop Financial Co., Inc.
dated December 7, 1978 and related Conforming
Documents dated December 7, 1978, letter from
Winthrop Financial Co., Inc. dated December 7,
1978, and letter from Messrs. Dibble Koff
Lane Stern & Stern dated January 12, 1979
10(d) Contract of Sale between Hayden Cutler and (b)
Winthrop Financial Co., Inc. dated March 22,
1979
10(e) Property Management Subcontract between (b)
WP Management Co., Inc. and Winthrop/Dolben
Management Co., Inc. dated as of August 1, 1979
10(f) Amendment dated as of August 1, 1979 to (b)
Property Management Agreement between Winthrop Partners 79 Limited
Partnership and WP Management Co., Inc.
10(g) Documents relating to the J.C. Penney (c)
<PAGE>
Company, Inc. property in Batavia, New York
10(h) Documents relating to the Toys "R" Us, (d)
Inc. ("Toys") property in San Antonio, Texas
10(i) Documents relating to the Toys property in (d)
Fort Worth, Texas
10(j) Documents relating to the Frank's Nursery (d)
Sales, Inc. property in Hillside, Illinois
10(k) Documents relating to the Handy Dan (b)
Hardware, Inc. property in Hurst, Texas
10(l) Lease by and between the Partnership (e)
and Creative Paint and Wallpaper, Inc.
dated January 31, 1991
10(m) Lease by and between the Partnership and (e)
B & G, Inc., d/b/a Splash Pools and Spas,
dated January 17, 1991
10(n) Documents relating to the J.W. Burress, (b)
Incorporated property in Greenville County,
South Carolina
10(o) Agreement of Purchase and Sale between (b)
Lucky Stores, Inc. and Winthrop Financial
Co., Inc. dated November 16, 1979
10(p) Documents relating to the National (f)
Super Markets, Inc. store in Chippewa
Falls, Wisconsin
10(o) Documents relating to the Wal-Mart Stores, (g)
Inc. property in Mexia, Texas
10(p) Documents relating to the Walgreen Co. (h)
property in University City, Missouri
(a) Filed as an Exhibit to the Partnership's Annual Report on Form 10-K for the
year ended December 31 1994 and incorporated herein by reference.
<PAGE>
(b) Filed as an exhibit to the Partnership's Registration
Statement on Form S-11, File No. 2-63216, and incorporated herein
by reference.
(c) Filed as exhibits to the Partnership's Current Report on Form 8-K dated
September 12, 1979, and incorporated herein by reference.
(d) Filed as exhibits to the Partnership's Current Report on Form 8-K dated
January 25, 1980, and incorporated herein by reference.
(e) Filed as an exhibit to the Partnership's Annual Report on Form 10-K dated
March 31,1992 and incorporated herein by reference.
(f) Filed as exhibits to the Partnership's Current Report on Form 8-K dated May
30, 1980, and incorporated herein by reference.
(g) Filed as exhibits to the Partnership's Current Report on Form 8-K dated
November 14, 1980, and incorporated herein by reference.
(h) Filed as exhibits to the Partnership's Current Report on Form 8-K dated
September 12, 1979, and incorporated herein by reference.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial
information extracted from audited financial
statements for the one year period ending
December 31, 1995 and is qualified in its
entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000277886
<NAME> Winthrop Partners 79 Limited Partnership
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