<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
Commission File
For the year ended December 31, 1996 No. 0-9224
----------------- ---------
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
----------------------------------------------------------------
(Exact name of small business issuer 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-B 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-KSB or any amendment to
this Form 10-KSB. [ ]
Cover Page 1 of 2
<PAGE>
Cover Page 2 of 2
Registrant's revenues for its most recent fiscal year were $2,359,000
No market for the Limited Partnership Units exists and therefore, a market value
for such Units cannot be determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
Transitional Small Business Disclosure Format: Yes ___ No X
<PAGE>
PART I
Item 1. Description of 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 limited partnership. See "Change in Control".
The Partnership's only business is owning and leasing improved real
estate.
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 of December 31, 1996 net of
accounts payable, accrued expenses and distributions payable to Partners was
approximately $182,000. The Partnership's future cash distributions will include
ongoing
3
<PAGE>
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. The Partnership continues to make quarterly distributions from
operations equal to approximately 2% of the capital accounts of the limited
partners. Pursuant to the terms of the Partnership Agreement, so long as limited
partners have received aggregate distributions from inception equal to 8% of
their capital contributions on a cumulative basis, the general partner is
entitled to receive distributions in an amount equal to 8% of the total
distributions paid to the limited partners. See "Item 7 Financial Statements,
Note 2." Distributions of sale proceeds will be made as a return of capital
until investors have received a return of 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, "Description of Properties" for a description of
Registrant's remaining properties.
Property Matters
J.W. Burress, Incorporated, Greenville, South Carolina. On August 1,
1996, the Partnership consummated the sale of this property to an affiliate of
the tenant. The purchase price for the property was $1,525,000 with net
proceeds to the Partnership of approximately $1,040,000. The sale resulted in
a gain of $1,018,000. The net proceeds from the sale were distributed to the
limited partners in November, 1996.
Floors, Inc. and B&G, Inc., 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.
4
<PAGE>
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 9, "Directors, Executive Officers,
Promoters and Control Persons; Compliance With Section 16(a) of the Exchange
Act.
5
<PAGE>
Item 2. Description of Properties.
A description of the Partnership's properties at February 1, 1997 is as
follows. All of Registrant's remaining properties are owned in fee.
<TABLE>
<CAPTION>
Total Cost Original Size
Tenant/ Date of of the Portfolio Building/Land
Location Purchase Property(1) Percentage(2) (Sq. ft.)
- -------- -------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
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
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 45,000/185,105
Frank's Nursery
Sales, Inc.
Hillside, IL 1/30/80 $ 706,008 5.2 14,920/122,000
Lucky Stores,
Inc. (3)
Cedar Rapids, IA 6/2/80 $1,522,908 11.2 36,856/133,110
Creative Paint
& Wallpaper, Inc.
and B&G, Inc. dba
Splash Pools & Spas,
fka Handy Dan(4)
Hurst, TX 6/10/80 $1,645,692 12.1 36,000/180,000
Gordy's Food &
Liquor, Inc. (5)
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
</TABLE>
- -------------------------
(1) Includes acquisition fees and expenses.
(2) Represents the percentage of original cash invested in the individual
property of the total cash invested in all properties.
6
<PAGE>
(3) 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.
(4) 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.
(5) 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. Five
of the properties are subject to first mortgages securing indebtedness which was
incurred or assumed by the Partnership in connection with the acquisition. See
"Item 7, Financial Statements, Note - 6" for information relating to the
mortgages encumbering the Partnership's properties. 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 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.
The tenants under all ten 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. Six 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
7
<PAGE>
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 in 1996. 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 1996. 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 1996 rental payments of 10% or more of the Partnership's
total rental revenue are as follows: Floors, Inc. and B & G, Inc., Hurst, Texas,
12%; Toys "R" Us, Inc., San Antonio, Texas, 17%, Toys "R" Us, Inc., Ft. Worth,
Texas, 16% and Wal Mart, Mexia, Texas 11%. 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 1997.
8
<PAGE>
The following table sets forth the tenant, business conducted by the
tenant, expiration date of the lease term, renewal options and the 1996 annual
base rent for the leases at the properties:
1996
Tenant Business of Lease Renewal Annual
Property/Location Tenant Expiration Options(1) Rent
- ----------------- ----------- ---------- ---------- ------
J.C. Penney
Batavia, NY Retail Dept. 2/1/98 5 - 5Yr. $116,160
Store
Walgreen Co.
University Retail 12/31/2008 (2) $ 73,565(3)
City, MO Drugstore
Toys "R" Us
San Antonio, TX Toy Store 1/31/2000 6 - 5Yr. $262,532
Toys "R" Us
Fort Worth, TX Toy Store 1/31/2000 6 - 5Yr. $247,569
Frank's Nursery
Sales, Inc.
Hillside, IL Nursery and 12/31/2004 2 - 5Yr. $ 67,000
Crafts
Lucky Stores,
Inc. (4)
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. $184,280
fka Handy Dan(5) Wallpaper
Hurst, TX Store; Bath
& Spa Store
Gordy's Food &
Liquor, Inc. (6)
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(7)
- -------------------------
(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 $67,696 in 1996.
9
<PAGE>
(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. 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.
(5) 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.
(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.
(7) An additional percentage rent of $68,326 was paid in 1996.
Set forth below is a table showing the gross carrying value and
accumulated depreciation and federal tax basis of each of the Partnership's
properties as of December 31, 1996:
Gross
Carrying Accumulated Federal
Property Value(1) Depreciation(1) Rate Method Tax Basis
- -------- -------- ------------ ---- ------ ---------
Batavia, NY $1,092,598 $744,717 5/40 yr. S/L $ 347,881
University 901,294 530,911 5/40 yr. S/L 370,383
City, MO
San Antonio, TX 735,338 0 5/40 yr. S/L 1,215,771
Fort Worth, TX 487,180 0 5/40 yr. S/L 990,134
Hillside, IL 261,223 0 5/40 yr. S/L 357,602
Cedar Rapids, IA 1,522,908 866,093 5/40 yr. S/L 656,815
Hurst, TX 1,529,882 0 5/40 yr. S/L 895,207
Chippewa Falls, WI 0 0 5/40 yr. S/L 562,277
Mexia, TX 0 0 5/40 yr. S/L 302,917
- ----------
(1) As accounted for under Statement of Financial Accounting Standards No. 13.
Item 3. Legal Proceedings.
The Partnership is not a party, nor are any of its properties, subject
to any material pending legal proceedings.
10
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
11
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 February 1, 1997, there were 966 holders of 10,005 outstanding
Units.
The Partnership Agreement 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, 1996 and 1995, 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
------------------------ ----------------------
1996 1995
---- ----
March 31 28.64 24.23
June 30 19.62 23.19
September 30 109.28 19.41
December 31 18.87 12.89
12
Item 6. Management's Discussion and Analysis or Plan of
Operations.
Liquidity and Capital Resources
All of the Partnership's remaining nine properties are leased to one or
more tenants pursuant to net or modified net leases with remaining lease terms,
subject to extensions, ranging between approximately one and eleven years. The
Partnership receives rental income from its properties which is 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.
The level of liquidity based on cash and cash equivalents experienced a
$247,000 increase at December 31, 1996, as compared to December 31, 1995. The
Partnership's $942,000 of cash provided by operating activities along with
$1,799,000 of cash provided by investing activities which includes $1,525,000
from the sale of its Greenville, South Carolina property were only partially
offset by $729,000 of
cash used for mortgage payments and $1,765,000 of partner distributions
(financing activities). The Partnership invests its working capital reserves in
a money market mutual fund.
The Partnership requires cash primarily to pay principal and interest
on its mortgage indebtedness, management fees and general and administrative
expenses. Due to the net and long-term nature of the original leases, inflation
and changing prices have not significantly affected the Partnership's revenues
and net income. As tenant leases expire, the Partnership expects that inflation
and changing prices will affect the Partnership's revenues. The Partnership's
rental and interest income was sufficient for the year ended December 31, 1996,
and is expected to be sufficient in future periods, to pay the Partnership's
operating expenses and debt service. Upon expiration of tenant leases the
Partnership will be required to either sell the properties or procure new
tenants. The Partnership maintains cash reserves to enable it to make potential
capital improvements required in connection with the re-letting of the
properties.
The Partnership has continued to make quarterly distributions to its
partners from operating revenue since inception. Distributions in 1996 included
$1,040,000 of net proceeds from the aforementioned sale. The Managing General
Partner is evaluating
13
<PAGE>
the propriety of future cash distributions at their current level, or at all, in
light of the J.C. Penney lease expiration on February 1, 1998 and the related
$425,000 balloon payment due on such mortgage note secured by the J.C. Penney
property. If, at that time, the Partnership is unable to extend or refinance the
mortgage note or sell the property, the property could be lost through
foreclosure.
Results of Operations
Net income increased by $512,000 for the year ended December 31, 1996
as compared to 1995, due to the gain on sale of property of $1,018,000, which
was only partially offset by a $500,000 loss for impairment of value recorded in
June, 1996 on the Partnership's property located in Hurst, Texas. With respect
to the remaining properties, rental income remained relatively constant for the
year ended December 31, 1996 as compared to 1995. General and administrative
expenses increased for the year ended December 31, 1996, as compared to 1995,
due to an increase in professional fees and related costs. Interest expense
decreased for the year ended December 31, 1996 as compared to 1995 as a result
of the August 1, 1996 mortgage repayment related to the sale of the above
property. Depreciation expense also decreased as a result of such sale. Other
expenses remained relatively constant.
14
<PAGE>
Item 7. Financial Statements
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
INDEX
Page
----
Independent Auditors' Reports........................................... F - 2
Financial Statements:
Balance Sheets as of December 31, 1996 and 1995......................... F - 4
Statements of Income for the Years Ended
December 31, 1996 and 1995......................................... F - 5
Statements of Partners' Capital for the Years Ended
December 31, 1996 and 1995......................................... F - 6
Statements of Cash Flows for the Years Ended
December 31, 1996 and 1995........................................ F - 7
Notes to Financial Statements.......................................... F - 8
F - 1
<PAGE>
Independent Auditors' Report
To the Partners
Winthrop Partners 79 Limited Partnership
Boston, Massachusetts
We have audited the accompanying balance sheet of Winthrop Partners 79 Limited
Partnership (a Massachusetts limited partnership) as of December 31, 1996, and
the related statements of income, partners' capital and cash flows for the year
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Winthrop Partners 79 Limited
Partnership as of December 31, 1996 and the results of its operations and its
cash flows for the year then ended, in conformity with generally accepted
accounting principles.
/s/ Imowitz Koenig & Co., LLP
New York, New York
January 17, 1997
F - 2
<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
the related statements of income, changes in partners' capital and cash flows
for the year then ended. These financial statements are the responsibility of
Winthrop Partners 79 Limited 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 the results of its operations and its
cash flows for the year then ended, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 31, 1996
F - 3
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
BALANCE SHEETS
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------
1996 1995
--------------------- ---------------------
<S> <C> <C>
ASSETS
Real Estate Leased to Others:
Accounted for under the operating method,
at cost, net of accumulated depreciation of
$2,277 (1996) and $3,208 (1995) $ 4,253 $ 5,378
Accounted for under the financing method 2,816 3,090
-------------------- ---------------------
7,069 8,468
Other Assets:
Cash and cash equivalents 491 244
Other, net of accumulated amortization of
$69 (1996) and $57 (1995) 193 143
-------------------- ---------------------
Total Assets $ 7,753 $ 8,855
==================== =====================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage notes payable $ 2,142 $ 2,871
Accounts payable and accrued expenses 104 30
Distributions payable to partners 205 142
-------------------- ---------------------
Total Liabilities 2,451 3,043
-------------------- ---------------------
Partners' Capital:
Limited Partners -
Units of Limited Partnership Interest
$1,000 stated value per Unit; authorized
issued and outstanding - 10,005 Units 5,505 6,057
General Partners (Deficit) (203) (245)
-------------------- ---------------------
Total Partners' Capital 5,302 5,812
-------------------- ---------------------
Total Liabilities and Partners' Capital $ 7,753 $ 8,855
==================== =====================
</TABLE>
See notes to financial statements.
F - 4
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
STATEMENTS OF INCOME
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------
1996 1995
--------------------- ---------------------
<S> <C> <C>
Income:
Rental income from real estate leases accounted
for under the operating method $ 935 $ 985
Interest on short-term investments 33 14
Interest income on real estate leases accounted
for under the financing method 373 400
Gain on sale of property 1,018 -
--------------------- ---------------------
Total income 2,359 1,399
--------------------- ---------------------
Expenses:
Interest 282 331
Loss due to impairment of real estate 500 -
Depreciation and amortization 130 150
Management fees 23 24
General and administrative 106 88
--------------------- ---------------------
Total Expenses 1,041 593
--------------------- ---------------------
Net income $ 1,318 $ 806
===================== =====================
Net income allocated to general partners $ 105 $ 64
===================== =====================
Net income allocated to limited partners $ 1,213 $ 742
===================== =====================
Net income per Unit of Limited Partnership Interest $ 121.24 $ 74.16
===================== =====================
Distributions per Unit of Limited Partnership Interest $ 176.41 $ 79.76
===================== =====================
</TABLE>
See notes to financial statements.
F - 5
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1996 AND 1995
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
Units of
Limited General Limited
Partnership Partners' Partners' Total
Interest Deficit Capital Capital
----------- --------- --------- -------
<S> <C> <C> <C> <C>
Balance - January 1, 1995 10,005 $(240) $ 6,113 $ 5,873
Distributions (69) (798) (867)
Net income 64 742 806
------- ------ -------- --------
Balance - December 31, 1995 10,005 (245) 6,057 5,812
Distributions (63) (1,765) (1,828)
Net income 105 1,213 1,318
------- ------ -------- --------
Balance - December 31, 1996 10,005 $(203) $ 5,505 $ 5,302
======= ====== ======== ========
</TABLE>
See notes to financial statements.
F - 6
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------
1996 1995
-------------------- ---------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,318 $ 806
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 130 150
Loss due to impairment of real estate 500 -
Gain on sale of property (1,018) -
Changes in assets and liabilities:
(Increase) decrease in other assets (62) 66
Increase in accounts payable and accrued expenses 74 1
-------------------- ---------------------
Net cash provided by operating activities: 942 1,023
-------------------- ---------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Minimum lease payments received, net of interest income
earned, on leases accounted for under the financing method 274 228
Improvements to property - (13)
Proceeds from sale of property 1,525 -
-------------------- ---------------------
Cash provided by (used in) investing activities 1,799 215
-------------------- ---------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on mortgage notes (270) (253)
Repayment of mortgage note (459) -
Cash distributions (1,765) (934)
-------------------- ---------------------
Cash used in financing activities (2,494) (1,187)
-------------------- ---------------------
Net increase in cash and cash equivalents 247 51
Cash and Cash Equivalents, Beginning of Year 244 193
-------------------- ---------------------
Cash and Cash Equivalents, End of Year $ 491 $ 244
==================== =====================
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 282 $ 331
==================== =====================
Supplemental Disclosure of Non-cash Financing
Activities -
Distributions accrued and not paid as of December 31 $ 205 $ 142
==================== =====================
</TABLE>
See notes to financial statements.
F - 7
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
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 owns and leases
9 properties in various locations throughout the United States. With the
exception of one property, all are leased to one tenant.
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 amounts reported in the financial statements
and accompanying notes. Such estimates that are particularly susceptible to
change relate to the Partnership's estimate of the fair value of real
estate. Actual results could differ from those estimates.
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.
(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.
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, 1996 and 1995, the Partnership
received percentage rent totaling approximately $136,000 and $125,000,
respectively.
F - 8
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounting Change
On January 1, 1996, the Partnership adopted Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", which
requires impairment losses to be recognized for long-lived assets used in
operations when indicators of impairment are present and the undiscounted
cash flows are not sufficient to recover the asset's carrying amount. The
impairment loss is measured by comparing the fair value of the asset to its
carrying amount.
In June 1996, the Partnership determined that based upon current economic
conditions and projected operational cash flow the decline in value of the
Partnership's property located in Hurst, Texas was other than temporary and
that recovery of its carrying value was not likely. Accordingly, a loss for
impairment of value of $500,000 was recognized by the Partnership to reduce
the property's carrying value to an amount equal to its estimated fair
value.
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 residual value at the date of implementation of
operating lease accounting.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with an original
maturity of three months or less at the time of purchase to be cash
equivalents.
Distributions to Partners
The cash distribution due partners for the three months ended December 31,
1996 and 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.
Net Income Per Limited Partnership Unit
The net income per limited partnership unit is computed by dividing net
income allocated to the limited partners by the 10,005 units outstanding.
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax
returns of its partners. Accordingly, no provision for income taxes is made
in the financial statements of the Partnership.
F - 9
<PAGE>
WINTHROP PARTNER 79 LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentration of Credit Risk
Principally all of the Partnership's cash and cash equivalents consist of a
mutual fund that invests in U.S. treasury bills and repurchase agreements
with original maturity dates of three months or less.
Reclassification
Certain amounts from 1995 have been reclassified to conform to the 1996
presentation.
2. TRANSACTIONS WITH RELATED PARTIES
Winthrop Management, an affiliate of One Winthrop Properties, Inc. ("One
Winthrop"), the Managing General Partner of the Partnership, 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, 1996 and 1995 Winthrop Management earned
$23,000 and $63,000, respectively, for managing the 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. Such distributions
aggregated $63,000 and $69,000 for the years ended December 31, 1996 and
1995, respectively.
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.
3. REAL ESTATE LEASED TO OTHERS ACCOUNTED FOR UNDER THE OPERATING METHOD
Real estate leased to others, at cost, accounted for under the operating
method is summarized as follows:
December 31,
-----------------
1996 1995
---- ----
Land $ 3,300,000 $ 3,826,000
Commercial buildings 3,230,000 4,760,000
Accumulated depreciation (2,277,000) (3,208,000)
------------ ------------
$ 4,253,000 $ 5,378,000
============ ============
F - 10
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(continued)
3. REAL ESTATE LEASED TO OTHERS ACCOUNTED FOR UNDER THE OPERATING METHOD
(continued)
As of December 31, 1996 and 1995, properties (and related operating leases)
with a carrying value of $1,740,000 and $2,813,000 were pledged to
collateralize payment of mortgage notes payable.
Depreciation expense charged to operations was $118,000 and $140,000 for
the years ended December 31, 1996 and 1995, respectively. The cost of real
estate in 1996 has been adjusted to reflect a $500,000 impairment loss (see
Note 1).
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:
1997....................................... $ 679,000
1998....................................... 573,000
1999....................................... 563,000
2000....................................... 357,000
2001....................................... 116,000
Thereafter................................. 603,000
----------
Total...................................... $2,891,000
==========
4. REAL ESTATE LEASED TO OTHERS ACCOUNTED FOR UNDER THE FINANCING METHOD
Real estate leased to others, accounted for under the financing method, is
summarized as follows:
December 31,
-----------------
1996 1995
---- ----
Minimum lease payments receivable $ 2,429,000 $ 3,076,000
Unguaranteed residual value 2,006,000 2,006,000
------------ ------------
4,435,000 5,082,000
Less: Unearned income (1,619,000) (1,992,000)
------------ ------------
$ 2,816,000 $ 3,090,000
============ ============
As of December 31, 1996 and 1995, respectively, real estate and the related
lease payments with a net investment in financing leases of $1,370,000 and
$1,547,000 were pledged to collateralize the payment of mortgage notes
payable.
F-11
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(continued)
4. REAL ESTATE LEASED TO OTHERS ACCOUNTED FOR UNDER THE FINANCING METHOD
(Continued)
The following is a summary of the minimum anticipated future rental
receipts, excluding percentage rents, by year, under the financing leases:
1997....................................... $ 647,000
1998....................................... 647,000
1999....................................... 647,000
2000....................................... 237,000
2001....................................... 42,000
Thereafter................................. 209,000
----------
Total...................................... $2,429,000
==========
5. SIGNIFICANT TENANTS
For the year ended December 31, 1996 approximately 48% of revenue from
rental operations was from four tenants. For the year ended December 31,
1995 the same four tenants plus another comprised approximately 60% of the
Partnership's rental revenue.
6. MORTGAGE NOTES PAYABLE
The mortgage notes payable by the Partnership are summarized as follows:
December 31,
-------------------
1996 1995
---- ----
Prime rate plus 1.5% mortgage note (9.75% at December
31, 1996), due in monthly installments of $1,442 for
principal plus interest through November 1, 1995
(date of modification and extension); and monthly
principal 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 $ 461,000 $ 496,000
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.
This mortgage was satisfied in August 1996
(see Note 7). - 478,000
10.115% mortgage note, due in monthly installments
of $2,730 for principal and interest, maturing on
December 1, 2004 179,000 192,000
12% mortgage note, due in monthly installments of
$12,618 for principal and interest, maturing on
July 1, 2000 431,000 525,000
12% mortgage note, due in monthly installments
of $11,892 for principal and interest, maturing
on July 1, 2000 406,000 494,000
10-1/4% mortgage note, due in monthly installments
of $7,622 for principal and interest, maturing on
July 1, 2010 665,000 686,000
---------- ----------
$2,142,000 $2,871,000
========== ==========
F-12
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(continued)
6. MORTGAGE NOTES PAYABLE (continued)
As of December 31, 1996 principal payments are required as follows:
1997....................................... $ 280,000
1998....................................... 700,000
1999....................................... 309,000
2000....................................... 196,000
2001....................................... 60,000
Thereafter................................. 597,000
----------
Total...................................... $2,142,000
==========
7. SALE OF PROPERTY
The Partnership sold its property located in Greenville, South Carolina to
an affiliate of the tenant of the property in August, 1996 for $1,525,000,
resulting in a gain of $1,018,000. Net proceeds from such sale aggregated
$1,040,000.
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents approximates its fair
value due to the short term nature of such instruments. The carrying amount
of the Partnership's mortgage notes based on the borrowing rates available
to the Partnership for mortgage notes with similar terms, was approximately
$2,200,000 and $2,930,000 at December 31, 1996 and 1995, respectively.
9. TAXABLE INCOME
The Partnership's taxable income for 1996 and 1995 differs from net income
for financial reporting purposes as follows:
<TABLE>
<CAPTION>
1996 1995
----- -----
<S> <C> <C>
Net income for financial reporting purposes $1,318,000 $ 806,000
Plus: Minimum lease payments received, net of interest
income earned, on leases accounted for under the
financing method 274,000 228,000
Loss due to impairment of real estate 500,000
Minus: Depreciation on leases accounted for under the
financing method and tax depreciation adjustment (162,000) (183,000)
----------- ----------
Taxable income $1,930,000 $ 851,000
=========== ==========
</TABLE>
F-13
<PAGE>
Item 8. Changes in and Disagreements on Accounting and
Financial Disclosure.
Effective September 19, 1996, the Partnership dismissed its prior
Independent Auditors, Arthur Andersen LLP ("Arthur Andersen") and retained as
its new Independent Auditors, Imowitz Koenig & Co., LLP ("Imowitz Koenig").
Arthur Andersen's Independent Auditors' Report on the Partnership's financial
statements for calendar year ended December 31, 1995, did not contain an adverse
opinion or a disclaimer of opinion, and were not qualified or modified as to
uncertainty, audit scope or accounting principles. The decision to change
Independent Auditors was approved by the Managing General Partner's directors.
During calendar year ended 1995 and through September 19, 1996, there were no
disagreements between the Partnership and Arthur Andersen on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope of procedure which disagreements if not resolved to the satisfaction of
Arthur Andersen, would have caused it to make reference to the subject matter of
the disagreements in connection with its reports.
Effective September 19, 1996, the Partnership engaged Imowitz Koenig as
its Independent Auditors. The Partnership did not consult Imowitz Koenig
regarding any of the matters or events set forth in Item 304(a)(2) of Regulation
S-B prior to September 19, 1996.
15
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act.
The Partnership 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 February 1, 1997, 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 Managing General Partner Officer Since
- ---- ------------------------ -------------
Michael L. Ashner Chief Executive Officer 1-96
and Director
Richard J. McCready President and
Chief Operating Officer 7-95
Jeffrey Furber Executive Vice President 7-95
and Clerk
Edward Williams Chief Financial Officer 4-96
Vice President and
Treasurer
Peter Braverman Senior Vice President 1-96
Michael L. Ashner, age 45, 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.
16
<PAGE>
Richard J. McCready, age 38, 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 37, 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.
Edward V. Williams, age 56, has been the Chief Financial Officer of WFA
since April 1996. From June 1991 through March 1996, Mr. Williams was Controller
of NPI and NPI Management. Prior to 1991, Mr. Williams held other real estate
related positions including Treasurer of Johnstown American Companies and Senior
Manager at Price Waterhouse.
Peter Braverman, age 45, 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
17
<PAGE>
Associates Limited Partnership; Springhill Lake Investors Limited Partnership;
Twelve AMH Associates Limited Partnership; Winthrop California Investors
Limited Partnership; Winthrop Growth Investors 1 Limited Partnership; Winthrop
Interim Partners I, 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.
Except as indicated above, neither the Partnership nor the Managing
General Partner has any significant employees within the meaning of Item 401(b)
of Regulation S-B. There are no family relationships among the officers and
directors of the Managing General Partner.
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Partnership under Rule 16a-3(e) during the Partnership's most
recent fiscal year and Forms 5 and amendments thereto furnished to the
Partnership with respect to its most recent fiscal year, the Partnership is not
aware of any director, officer or beneficial owner of more than ten percent of
the units of limited partnership interest in the Partnership that failed to file
on a timely basis, as disclosed in the above Forms, reports required by section
16(a) of the Exchange Act during the most recent fiscal year or prior fiscal
years.
Item 10. 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 12, "Certain Relationships and Related Transactions.")
Item 11. 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 February 1, 1997. Under the
Partnership Agreement (incorporated herein by reference), the voting rights of
the Limited Partners
18
<PAGE>
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.
(b) Security Ownership of Management.
At February 1, 1997, 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.
Item 12. 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, 1996 and 1995, the Partnership has paid or accrued distributions from Cash
Available for Distributions, as defined in the Partnership Agreement, totaling
$62,955 and $69,360, 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.
19
<PAGE>
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, 1996
and 1995, Winthrop Management earned approximately $23,000 and $24,000,
respectively, for managing the real properties of the Partnership
20
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8-K.
(a) 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
21
<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 28th day of March
1997.
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
By: ONE WINTHROP PROPERTIES, INC.
Managing General Partner
By: /s/ Michael L. Ashner
---------------------
Michael 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 28, 1997
- ------------------ Officer and Director
Michael Ashner
/s/ Edward Williams Chief Financial Officer March 28, 1997
- -------------------
Edward Williams
22
<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.
23
<PAGE>
10(g) Documents relating to the J.C. Penney (c)
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) Agreement of Purchase and Sale between (b)
Lucky Stores, Inc. and Winthrop Financial
Co., Inc. dated November 16, 1979
10(o) Documents relating to the National (f)
Super Markets, Inc. store in Chippewa
Falls, Wisconsin
10(p) Documents relating to the Wal-Mart Stores, (g)
Inc. property in Mexia, Texas
10(q) Documents relating to the Walgreen Co. (h)
property in University City, Missouri
16. Letter from Arthur Andersen LLP dated September (i)
19, 1996.
99. Supplementary Information required pursuant
to Section 9.4 of the Partnership Agreement
24
<PAGE>
(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.
(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.
(i) Incorporated by reference to the Partnership's Current Report on Form 8-K
dated September 23, 1996.
25
<PAGE>
Exhibit 99
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Supplementary Information Required Pursuant to Section 9.4 of the Partnership
Agreement (Unaudited)
Year Ended Three Months Ended
December 31, 1996 December 31, 1996
<S> <C> <C>
1. Statement of Cash Available for Distribution:
Net Income $1,318,000 $ 150,000
Add: Depreciation and amortization charged to income
not affecting cash available for distribution 130,000 26,000
Loss due to impairment of real estate 500,000 -
Minimum lease payments received, net of interest
income earned, on leases accounted for under the
financing method 274,000 71,000
Net proceeds from sale of property 1,040,000 -
Other 19,000 16,000
Less: Mortgage principal payments (244,000) (64,000)
Rent Receivable/Prepaid rent (15,000) 6,000
Gain on sale of property (1,018,000) -
Cash to Reserves (176,000) -
---------- --------
Cash Available for Distribution $1,828,000 $205,000
========== =========
Distributions allocated to General Partners $ 63,000 $ 17,000
========== =========
Distributions allocated to Limited Partners $1,765,000 $ 188,000
========== =========
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, 1996:
Entity Receiving Form of
Compensation Compensation Amount
---------------- ------------ ------
Winthrop
Management Property Management Fees $ 5,000
General Partners Interest in Cash Available
for Distribution $17,000
WFC Realty Co., Inc.
(Initial Limited Partner) Interest in Cash Available
for Distribution $ 95
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Winthrop
Partners 79 Limited Partnership and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 491,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 9,346,000
<DEPRECIATION> 2,277,000
<TOTAL-ASSETS> 7,753,000
<CURRENT-LIABILITIES> 0
<BONDS> 2,142,000
<COMMON> 0
0
0
<OTHER-SE> 5,302,000
<TOTAL-LIABILITY-AND-EQUITY> 7,753,000
<SALES> 0
<TOTAL-REVENUES> 2,326,000 <F1>
<CGS> 0
<TOTAL-COSTS> 653,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 282,000
<INCOME-PRETAX> 1,318,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,318,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,318,000
<EPS-PRIMARY> 121.24
<EPS-DILUTED> 121.24
<FN>
<F1> Includes 1,018,000 gain on sale of property.
</TABLE>
