<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, 1999 No. 0-9224
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WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
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(Exact name of small business issuer as specified in its charter)
Massachusetts 04-2654152
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Cambridge Center, Cambridge, Massachusetts 02142
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (617) 234-3000
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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
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(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. [ ]
Registrant's revenues for its most recent fiscal year were $1,124,000.
No market for the Limited Partnership Units exists and therefore, a market value
for such Units cannot be determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
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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 offered and sold
pursuant to a Registration Statement filed with the Securities and Exchange
Commission 10,000 Units of limited partnership interest ("Units") at a purchase
price of $1,000 per Unit for total capital contributions from Limited Partners
of $10,000,000.
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.
The Partnership's only business is owning and leasing improved real
estate.
The Partnership originally 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 Partnership
has sold two of these properties and has a third property under contract for
sale. See Item 2, "Description of Properties" for a description of Registrant's
remaining 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, 1999 net of accounts payable, accrued
expenses and distributions payable to Partners was approximately $1,101,000.
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. Pursuant to the terms of the Partnership Agreement, so long as limited
partners have received aggregate distributions from inception equal to 6% of
their adjusted 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
2
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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. At December 31, 1999, Limited Partners had received
a return of capital equal to $146.60.
Property Matters
Toys "R" US, Fort Worth and San Antonio, Texas. In May 1999, Toys "R"
Us notified the Partnership that they have elected to exercise their options to
extend their leases for five additional years commencing August 1, 2000 on the
properties located in Fort Worth and San Antonio, Texas, at the same annual
rent.
Gordy's Food & Liquor Inc., Chippewa Falls, Wisconsin. On August 7,
1998, the Partnership sold this property to the tenant for $964,000 (net of
closing costs of $11,000), resulting in a gain of $138,000 for financial
reporting purposes. The net proceeds of $964,000 ($96.35 per unit) were
distributed to limited partners during the fourth quarter of 1998.
J.C. Penney Co., Inc., Batavia, New York. The mortgage note encumbering
this property matured on February 1, 1998, with a balloon payment of $419,000.
On February 1, 1998, the Partnership obtained an extension on the mortgage until
May 1, 1998, which was further extended until May 15, 1998. On May 29, 1998, the
Partnership renewed the note at a lower interest rate of 8.32%. The note
requires monthly payments of $5,000 and is being amortized over 10 years. The
note matured on August 31, 1999 (the original expiration date of the tenant's
lease) at which time a balloon payment of approximately $376,000 was paid and
the loan satisfied. In February 1999, the tenant elected to exercise its option
to extend the lease term to August 31, 2004.
Walgreen Co., University City, Missouri. On May 13, 1998, the tenant at
this property, Walgreen Co. ("Walgreens"), exercised their right to cancel the
lease effective February 28, 1999. Walgreens, however, requested that they
remain as a holdover tenant for a period of three months at increased monthly
rent of $18,550. The extension expired on May 31, 1999, was not extended and
Walgreens vacated the property. On February 19, 1999, the Partnership entered
into a Purchase Agreement to sell this property to an unaffiliated third party
for $600,000. However, upon completion of its due diligence review the Purchaser
elected not to consummate the sale. After continuing
3
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to market the property for sale, the Partnership entered into a new purchase
agreement on February 14, 2000 with an unaffiliated third party to sell the
Property for $525,000. The Purchase Agreement, as with the prior purchase
agreement, is subject to the Purchaser's due diligence review as well as other
customary closing conditions. It is expected that this sale will occur, if at
all, during the second or third quarter of 2000.
Wal-Mart, Mexia, TX. Wal-Mart recently gave notice to the Partnership
that it will not be renewing its leases at the expiration of its current term
(October 31, 2000). The Partnership is currently seeking a new tenant as well as
marketing the property for sale
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.
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Item 2. Description of Properties.
A description of the Partnership's properties at February 1, 2000 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.(3)
University 8/3/79 $ 901,294 6.6 15,500/39,200
City, MO
Toys "R" Us
San Antonio, TX 1/25/80 $ 1,987,366 14.6 45,000/195,970
Toys "R" Us
Fort Worth, TX 1/25/80 $ 1,873,532 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. (4)
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(5)
Hurst, TX 6/10/80 $ 1,636,061 12.1 36,000/180,000
Wal-Mart Stores
Mexia, TX 10/31/80 $ 977,665 7.2 41,400/185,105
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(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.
(3) Property is currently under contract for sale. See "Item 1, Business -
Property Matters."
(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.
5
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The Partnership owns the fee interest in each of these properties. Four
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 Creative Paint and Wallpaper, Inc. and B&G, Inc., is
a public company or a subsidiary of a public company.
The tenants under the 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. The San Antonio, Fort Worth, Hillside, Cedar Rapids and
Mexia Properties are triple net leased to the tenants. As a result, the
Partnership has no responsibility for any maintenance, repairs or improvements
associated with the 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
$26,245 and $21,889 for roof and HVAC repairs at this property in 1999 and 1998,
respectively. 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 1998 or 1999. 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 no amounts for
these items in 1999 or 1998 respectively. 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.
6
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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 1999 rental payments of 10% or more of the Partnership's
total rental revenue are as follows: Toys "R" Us, Inc., San Antonio, Texas, 19%,
Toys "R" Us, Inc., Ft. Worth, Texas, 18%; Wal-Mart, Mexia, Texas 15%; and
Walgreen Co., University City, Missouri 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 2000 other than with respect to
the Walgreen Co., University City, Missouri which is currently under contract
for sale.
7
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The following table sets forth the tenant, business conducted by the
tenant, expiration date of the lease term, renewal options and the 1999 annual
base rent for the leases at the properties:
1999
Tenant Business of Lease Renewal Annual
Property/Location Tenant Expiration Options(1) Rent
- ----------------- ------ ---------- ---------- ----
J.C. Penney
Batavia, NY Retail Dept. 8/31/04 4 - 5Yr. $116,160
Store
Walgreen Co.
University Retail 5/31/99 (3) $ 68,238(4)
City, MO(2) Drugstore
Toys "R" Us
San Antonio, TX Toy Store 7/31/2005 5 - 5Yr. $262,532
Toys "R" Us
Fort Worth, TX Toy Store 7/31/2005 5 - 5Yr. $247,569
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. $184,280
fka Handy Dan(6) Wallpaper
Hurst, TX Store; Bath
& Spa Store
Wal-Mart Stores
Mexia, TX Dept. Store 10/31/2000 5 - 5Yr.(7) $111,206(8)
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(1) The first number represents the number of renewal options. The second
number represents the length of each option.
(2) Property is currently under contract for sale.
(3) Tenant has exercised its right to terminate this lease.
(4) Tenant paid additional percentage rent of $82,414 in 1999.
(5) During 1999, 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) Tenant has notified the Partnership that it will not be renewing its lease
at the expiration of the current term.
8
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(8) An additional percentage rent of $94,910 was paid in 1999.
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, 1999:
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value(1) Depreciation(1) Rate Method Tax Basis
- -------- ----- ------------ ---- ------ ---------
<S> <C> <C> <C> <C> <C>
Batavia, NY $1,092,598 $809,184 7/40 yr. S/L $ 283,414
University City, MO 901,294 557,499 7/40 yr. S/L 334,019
San Antonio, TX 735,238 - - - 1,107,798
Fort Worth, TX 487,180 - - - 858,062
Hillside, IL 261,223 - - - 309,934
Cedar Rapids, IA 1,522,908 980,744 7/40 yr. S/L 542,164
Hurst, TX 1,551,060 148,775 7/40 yr. S/L 771,293
Mexia, TX - - - - 278,722
</TABLE>
(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.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
9
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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, 2000, there were 655 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, 1999 and 1998, 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:
Amount of
Distribution
Distribution with Per Unit
Respect to --------
Quarter Ended 1999 1998
------------- ---- ----
March 31 $24.22 -
June 30 16.67 -
September 30 14.00 $96.31
December 31 13.92 16.67
On October 26, 1999, an affiliate of the General Partner commenced a
tender offer to purchase up to 3,305 of the outstanding units of limited
partnership interest in the Partnership for a purchase price of $500 per Unit,
pursuant to the terms and conditions of an Offer to Purchase dated October 26,
1999. Upon expiration of the offer, the affiliate of the General Partner
acquired 2,114.58 Units (21.14%).
Over the past few years many companies have begun making "mini-tenders"
(offers to purchase an aggregate of less than 5% of the total outstanding units)
for limited partnership interests in the Partnership. Pursuant to the rules of
the Securities and Exchange Commission, when a tender offer is commenced for
Units the Partnership is required to provide limited partners with a statement
setting forth whether it believes limited partners should tender or whether it
is remaining neutral with respect to the offer. Unfortunately, the rules of the
Securities and Exchange Commission do not require that the bidders in certain
tender offers provide the Partnership with a copy of their offer.
10
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As a result, the Managing General Partner often does not become aware of such
offers until shortly before they are scheduled to expire or even after they have
expired. Accordingly, the Managing General Partner does not have sufficient time
to advise you of its position on the tender. In this regard, please be advised
that pursuant to the discretionary right granted to the Managing General Partner
of your partnership in the Partnership Agreement to reject any transfers of
units, the Managing General Partner will not permit the transfer of any Unit in
connection with a tender offer unless: (i) the Partnership is provided with a
copy of the bidder's offering materials, including amendments thereto,
simultaneously with their distribution to the limited partners; (ii) the offer
provides for withdrawal rights at any time prior to the expiration date of the
offer and, if payment is not made by the bidder within 60 days of the date of
the offer, after such 60 day period; and (iii) the offer must be open for at
least 20 business days and, if a material change is made to the offer, for at
least 10 business days following such change.
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Item 6. Management's Discussion and Analysis or Plan of Operations.
The matters discussed in this Form 10-KSB contain certain
forward-looking statements and involve risks and uncertainties (including
changing market conditions, competitive and regulatory matters, etc.) detailed
in the disclosure contained in this Form 10-KSB and the other filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussion of the Partnership's liquidity, capital resources and results of
operations, including forward-looking statements pertaining to such matters,
does not take into account the effects of any changes to the Partnership's
operations. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
Liquidity and Capital Resources
Of the Partnership's remaining eight properties, seven are leased to
one or more tenants pursuant to net or modified net leases with remaining lease
terms, subject to extensions, ranging between a few months and six years. Three
of these properties, however, have lease terms that expire by January 31, 2001.
The eighth property was vacated when the tenant's lease expired on May 31, 1999
and is currently under contract for sale. 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. With respect to the vacated property, the
Partnership is now responsible for all operating expenses. On October 29, 1999,
the Partnership received a notice from Wal-Mart Stores that it has elected not
to exercise its option to extend its lease at the Partnership's Mexia, Texas
property. Accordingly, the lease will expire in accordance with its terms
effective October 31, 2000. If the Partnership cannot sell the property or find
a new tenant prior to such date, the Partnership will be responsible for all
costs associated with the property.
The level of liquidity based on cash and cash equivalents experienced a
$438,000 decrease at December 31, 1999, as compared to December 31, 1998. The
Partnership's $812,000 of cash provided by operating activities and $308,000 of
lease payments received under financing leases (net of interest income) were
more than offset by $1,558,000 of financing activities. Financing activities
consisted of $376,000 for the repayment of a mortgage note, $330,000 of mortgage
principal payments, and $852,000 of partner distributions. At December 31, 1999,
the Partnership had
12
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approximately $1,275,000 in cash and cash equivalents which has been invested
primarily in money market mutual funds. At December 31, 1999, the Partnership
recorded an accrued distribution of $152,000, which consisted of distributions
of $13,000 to the general partners and $139,000 to the limited partners. In
addition, the Partnership made distributions of $685,000 during the year ended
December 31, 1999, which consisted of distributions of $136,000 to the general
partners and $549,000 to the limited partners. The $136,000 of distributions to
the general partners included previously unpaid distributions that were
subordinated to a cumulative priority distribution to the limited partners in
accordance with the partnership agreement.
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, 1999,
and is expected to be sufficient until the current leases expire, to pay the
Partnership's operating expenses and debt service. Upon expiration of tenant
leases, the Partnership will be required to either extend the leases, 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.
In February 1999, J.C. Penney notified the Partnership that they have
elected to exercise their option to extend the term of their lease for five
additional years commencing September 1, 1999. The mortgage note secured by the
J.C. Penney property (Batavia, NY), matured on August 31, 1999, with a balloon
payment of approximately $376,000. The Partnership satisfied this balloon
payment from cash reserves.
In May 1999, Toys "R" Us notified the Partnership that they have
elected to exercise their options to extend their leases for five additional
years commencing August 1, 2000 on the properties located in Fort Worth and San
Antonio, Texas, at the same annual rent.
On May 13, 1998, Walgreen Co. ("Walgreens") which occupied the
Partnership's University City, Missouri property exercised its right to cancel
the lease effective February 28, 1999. Walgreens signed a three month extension
to their lease at $18,550 per month. The extension expired on May 31, 1999, was
not extended and Walgreens vacated the property. The Partnership
13
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entered into a purchase agreement on February 14, 2000 with an unaffiliated
third party to sell the Property for $525,000. The Purchase Agreement is subject
to the Purchaser's due diligence review as well as other customary closing
conditions. It is expected that this sale will occur, if at all, during the
second or third quarter of 2000. If the sale is consummated, the Partnership
will recognize a gain for financial reporting purposes.
During 1999, an affiliate of the general partner acquired, for a
purchase price of $500 per unit, approximately 21% of the total limited
partnership units of the Partnership (2,114.58 units).
Results of Operations
The Registrants net income decreased by $130,000 for the year ended
December 31, 1999, as compared to 1998, due to a decrease in income of $205,000
which was partially offset by a decrease in expenses of $75,000.
The decrease in income was due to a decrease in interest income on
leases accounted for under the financing method of $81,000 which was partially
offset by an increase in rental income of $11,000. The decrease in income is
also attributable to a gain on sale of the Chippewa Falls, WI property in the
comparative period in 1998 of $138,000. Rental income increased primarily due to
the receipt of $177,000 of percentage rents in 1999, as compared to $159,000 in
1998. Interest income on leases accounted for under the financing method
decreased by $81,000 partly due to the sale of the Chippewa Falls, WI property
in 1998 and partly due to the amortization of the other leases accounted for
under the financing method. Expenses declined by $75,000 primarily due to a
reduction in interest expense of $53,000, due to a lower interest rate from the
renewal of the mortgage note payable on the J.C. Penney property, the
satisfaction of this note during 1999 and the amortization of principal
balances. Expenses also decreased by $25,000 due to lower depreciation and
amortization expense. All other items of income and expense remained relatively
constant.
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Item 7. Financial Statements
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 and 1998
INDEX
Page
Independent Auditors' Report...............................................F - 2
Financial Statements:
Balance Sheets as of December 31, 1999 and 1998............................F - 3
Statements of Income for the Years Ended
December 31, 1999 and 1998............................................F - 4
Statements of Partners' Capital for the Years Ended
December 31, 1999 and 1998............................................F - 5
Statements of Cash Flows for the Years Ended
December 31, 1999 and 1998............................................F - 6
Notes to Financial Statements..............................................F - 7
F-1
<PAGE>
Independent Auditors' Report
To the Partners
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, 1999 and
1998, and the related statements of income, partners' capital and cash flows for
the years 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 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, 1999 and 1998, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.
/s/ Imowitz Koenig & Co., LLP
New York, New York
February 29, 2000
F-2
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
BALANCE SHEETS
(In Thousands, Except Unit Data)
DECEMBER 31,
----------------------
1999 1998
---- ----
ASSETS
Real Estate Leased to Others:
Accounted for under the operating method,
at cost, net of accumulated depreciation of
$1,939 (1999) and $1,874 (1998) $ 3,711 $ 3,776
Accounted for under the operating method,
and held for sale, net of accumulated
depreciation of $557 344 344
Accounted for under the financing method 1,542 1,850
------- -------
5,597 5,970
Other Assets:
Cash and cash equivalents 1,275 1,713
Other assets 113 94
------- -------
Total Assets $ 6,985 $ 7,777
======= =======
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage notes payable $ 853 $ 1,559
Accounts payable and accrued expenses 22 23
Distributions payable to partners 152 167
------- -------
Total Liabilities 1,027 1,749
------- -------
Partners' Capital:
Limited Partners -
Units of Limited Partnership Interest,
$1,000 stated value per Unit; authorized,
issued and outstanding - 10,005 Units 6,075 6,057
General Partners Deficit (117) (29)
------- -------
Total Partners' Capital 5,958 6,028
------- -------
Total Liabilities and Partners' Capital $ 6,985 $ 7,777
======= =======
See notes to financial statements.
F-3
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
STATEMENTS OF INCOME
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1999 1998
---- ----
<S> <C> <C>
Income:
Rental income from real estate leases accounted
for under the operating method $ 850 $ 839
Interest on short-term investments 76 77
Interest income on real estate leases accounted
for under the financing method 194 275
Gain on sale of property - 138
Other Income 4 -
------ -------
Total income 1,124 1,329
------ -------
Expenses:
Operating 53 49
Interest 132 185
Depreciation and amortization 83 108
Management fees 20 21
General and administrative 69 69
------ -------
Total expenses 357 432
------ -------
Net income $ 767 $ 897
====== =======
Net income allocated to general partners $ 61 $ 72
====== =======
Net income allocated to limited partners $ 706 $ 825
====== =======
Net income per Unit of Limited Partnership Interest $70.56 $ 82.46
====== =======
Distributions per Unit of Limited Partnership Interest $68.77 $112.94
====== =======
</TABLE>
See notes to financial statements.
F-4
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1999 AND 1998
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
Units of
Limited General Limited Total
Partnership Partners' Partners' Partners'
Interest Deficit Capital Capital
----------- --------- --------- ----------
<S> <C> <C> <C> <C>
Balance - January 1, 1998 10,005 $ (101) $ 6,362 $ 6,261
Net income 72 825 897
Distributions - (1,130) (1,130)
------- ------- ------- -------
Balance - December 31, 1998 10,005 (29) 6,057 6,028
Net income 61 706 767
Distributions (149) (688) (837)
------- ------- ------- -------
Balance - December 31, 1999 10,005 $ (117) $ 6,075 $ 5,958
======= ======= ======= =======
</TABLE>
See notes to financial statements.
F-5
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 767 $ 897
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 65 92
Amortization 18 16
Gain on sale of property - (138)
Changes in assets and liabilities:
(Increase) decrease in other assets (37) 76
Increase (decrease) in accounts payable and
accrued expenses (1) 1
------- -------
Net cash provided by operating activities 812 944
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Minimum lease payments received, net of interest income
earned, on leases accounted for under the financing method 308 314
Proceeds from sale of property - 964
------- -------
Cash provided by investing activities 308 1,278
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of mortgage note (376) -
Principal payments on mortgage notes (330) (303)
Cash distributions (852) (964)
Loan costs - (11)
------- -------
Cash used in financing activities (1,558) (1,278)
------- -------
Net (decrease) increase in cash and cash equivalents (438) 944
Cash and Cash Equivalents, Beginning of Year 1,713 769
------- -------
Cash and Cash Equivalents, End of Year $ 1,275 $ 1,713
======= =======
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 134 $ 182
======= =======
Supplemental Disclosure of Non-cash Financing
Activities -
Distributions accrued to partners $ 152 $ 167
======= =======
</TABLE>
See notes to financial statements.
F-6
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
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
seven properties, four of which are located in Texas and one each in Iowa,
Illinois and New York. With the exception of one property, all are leased
to single tenants under triple net lease agreements. The Partnership also
owns an eighth property which is vacant and is currently under contract for
sale.
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, 1999 and 1998, the Partnership
received percentage rent totaling approximately $177,000 and $159,000,
respectively.
F-7
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
(Continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Real Estate
Real estate is carried at cost, adjusted for depreciation and impairment of
value. The Partnership records impairment losses 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.
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 7 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.
Deferred Costs
At December 31, 1999 and 1998, deferred costs of $108,000 and $125,000
respectively, consist of financing and leasing costs and are included in
other assets in the accompanying balance sheet. Deferred costs are being
amortized on a straight-line basis over the term of the respective
agreements. At December 31, 1999 and 1998, accumulated amortization totaled
$98,000 and $97,000, respectively.
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
Distributions for 1999 and 1998 totaled $837,000 and $1,130,000
respectively. At December 31, 1999, $152,000 of the $837,000 distributions
for 1999 are recorded as a liability in the accompanying financial
statements.
Net Income Per Limited Partnership Unit
Net income per limited partnership unit is computed by dividing net income
allocated to the limited partners by the 10,005 units outstanding.
F-8
<PAGE>
WINTHROP PARTNER 79 LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
(Continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
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.
Segment Reporting
The Partnership has one reportable segment, net leased commercial real
estate. The Partnership evaluates performance based on net operating
income, which is income before depreciation, amortization, interest and
non-operating items.
2. TRANSACTIONS WITH RELATED PARTIES
One Winthrop Properties, Inc. ("One Winthrop") and Linnaeus-Hampshire
Realty Limited Partnership are the general partners of the Partnership.
Winthrop Management LLC, an affiliate of One Winthrop, 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, 1999 and 1998, Winthrop Management earned
$20,000 and $21,000, respectively, for managing the properties of the
Partnership.
As provided in the partnership agreement, the general partners are entitled
to 8% of Cash Available for Distribution (as defined in the partnership
agreement), subordinated to a cumulative priority quarterly distribution to
the limited partners. The general partners may also be entitled to a
percentage of sale or refinancing proceeds (as defined in the partnership
agreement), which are subordinated to certain priority distributions to the
limited partners. Such distributions aggregated $149,000 for the year ended
December 31, 1999, which included previously unpaid distributions that were
subordinated to a cumulative priority distribution to the limited partners
in accordance with the partnership agreement. There were no amounts due to
the general partners for the year ended December 31, 1998. Profits or
losses are allocated 8% to the general partners and 92% to the limited
partners.
F-9
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
(Continued)
2. TRANSACTIONS WITH RELATED PARTIES (Continued)
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.
During 1999, an affiliate of the general partner acquired, for a purchase
price of $500 per unit, approximately 21% of the total limited partnership
units of the Partnership (2,114.58 units).
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,
-------------------------------
1999 1998
---- ----
Land $ 3,303,000 $ 3,303,000
Commercial buildings 3,248,000 3,248,000
Accumulated depreciation (2,496,000) (2,431,000)
----------- -----------
$ 4,055,000 $ 4,120,000
=========== ===========
During 1998, one of the Partnership's tenants exercised their right to
cancel their lease effective February 28, 1999. The tenant had requested
that they be allowed to hold over on a month to month basis. As per the
terms of the extended lease, the tenant paid a fixed rent of $18,550 per
month for a period of three months. The extension expired on May 31, 1999
and the tenant vacated the property. The Partnership is currently marketing
this property for sale and has therefore classified real estate of $344,000
as held for sale as of December 31, 1999, (see Note 10).
As of December 31, 1999 and 1998, properties (and related operating leases)
with a carrying value of $2,886,000 and $3,202,000, respectively, were
pledged to collateralize payment of mortgage notes payable.
The following is a summary of the minimum anticipated future rental
receipts, excluding percentage rents, by year, under the noncancelable
portion of the operating leases:
2000.........................................$ 545,000
2001......................................... 318,000
2002......................................... 303,000
2003......................................... 303,000
2004......................................... 263,000
Thereafter................................... 94,000
-----------
Total........................................$ 1,826,000
===========
F-10
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
(Continued)
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,
--------------------------------
1999 1998
---- ----
Minimum lease payments receivable $ 2,250,000 $ 917,000
Unguaranteed residual value 1,316,000 1,316,000
----------- -----------
3,566,000 2,233,000
Less: Unearned income (2,024,000) (383,000)
----------- -----------
$ 1,542,000 $ 1,850,000
=========== ===========
As of December 31, 1999 and 1998, respectively, real estate and the related
lease payments with a net investment in financing leases of $1,095,000 and
$1,342,000 were pledged to collateralize the payment of mortgage notes
payable.
The following is a summary of the minimum anticipated future rental
receipts, excluding percentage rents, by year, under the financing leases:
2000.........................................$ 483,000
2001......................................... 391,000
2002......................................... 391,000
2003......................................... 391,000
2004......................................... 391,000
Thereafter................................... 203,000
-----------
Total........................................$ 2,250,000
===========
5. SIGNIFICANT TENANTS
For the years ended December 31, 1999 and 1998 approximately 78% and 75% of
revenue from rental operations was from six tenants, respectively.
F-11
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
(Continued)
6. MORTGAGE NOTES PAYABLE
The mortgage notes payable by the Partnership are summarized as follows:
December 31,
--------------------------
1999 1998
---- ----
8.32% mortgage note required monthly
installments of $5,000 and was being
amortized over 10 years. The note matured on
August 31, 1999 with a balloon payment of
approximately $376,000, and was satisfied in
full $ - $ 398,000
10.115% mortgage note, due in monthly
installments of $2,730 for principal and
interest, maturing on December 1, 2004 127,000 146,000
12% mortgage note, due in monthly
installments of $12,618 for principal and
interest, maturing on July 1, 2000 73,000 207,000
12% mortgage note, due in monthly
installments of $11,892 for principal
and interest, maturing on July 1, 2010 69,000 195,000
10.25% mortgage note, due in monthly
installments of $7,622 for principal and
interest, maturing on July 1, 2010 584,000 613,000
---------- ----------
$ 853,000 $1,559,000
========== ==========
As of December 31, 1999 principal payments are required as follows:
2000........................................$ 196,000
2001........................................ 60,000
2002........................................ 67,000
2003........................................ 74,000
2004........................................ 79,000
Thereafter.................................. 377,000
-----------
Total.......................................$ 853,000
===========
7. SALE OF PROPERTY
On August 7, 1998, the Partnership sold its Chippewa Falls, WI property to
the tenant of the property for $964,000 (net of closing costs of $11,000),
resulting in a gain of $138,000 for financial reporting purposes. The net
proceeds of $964,000 ($96.35 per unit) were distributed to the limited
partners during the fourth quarter of 1998.
F-12
<PAGE>
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
(Continued)
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
$937,000 and $1,665,000 at December 31, 1999 and 1998, respectively.
9. TAXABLE INCOME
The Partnership's taxable income for 1999 and 1998 differs from net income
for financial reporting purposes as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Net income for financial reporting purposes $ 767,000 $ 897,000
Plus: Minimum lease payments received, net of interest
income earned, on leases accounted for under the
financing method 308,000 314,000
Gain on sale of property - 325,000
Minus: Depreciation on leases accounted for under the
financing method and tax depreciation adjustment (143,000) (151,000)
----------- -----------
Taxable income $ 932,000 $ 1,385,000
=========== ===========
Taxable income per Unit of Limited Partnership Interest $ 85.68 $ 127.34
=========== ===========
</TABLE>
10. SUBSEQUENT EVENT - SALES CONTRACT
On February 14, 2000, the Partnership entered into an agreement to sell the
University City, Missouri property to an unaffiliated third party for
approximately $525,000. There is no debt outstanding associated with this
property. If the sale is consummated, the Partnership will recognize a gain
for financial reporting purposes.
F-13
<PAGE>
Item 8. Changes in and Disagreements on Accounting and Financial Disclosure.
There were no disagreements with Imowitz Koenig & Co., LLP regarding
the 1999 or 1998 audits of the Partnership's financial statements.
28
<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 affecting its
business. As of March 1, 2000, 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
Thomas C. Staples Chief Financial Officer 1-99
Peter Braverman Executive Vice President 1-96
and Director
Carolyn Tiffany Chief Operating Officer 10-95
and Clerk
Michael L. Ashner, age 47, has been the Chief Executive Officer of
Winthrop Financial Associates, A Limited Partnership ("WFA") and the Managing
General Partner 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.
Thomas C. Staples, age 44, has been the Chief Financial Officer of WFA
since January 1, 1999. From March 1996 through December 1998, Mr. Staples was
Vice President/Corporate Controller of WFA. From May 1994 through February 1996,
Mr. Staples was the Controller of the Residential Division of Winthrop
Management.
Peter Braverman, age 48, has been a Vice President of WFA and the
Managing General Partner since January 1996. From June 1995 until January 1996,
Mr. Braverman was a Vice President of
29
<PAGE>
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.
Carolyn Tiffany, age 33, has been employed with WFA since January 1993.
From 1993 to September 1995, Ms. Tiffany was a Senior Analyst and Associate in
WFA's accounting and asset management departments. Ms. Tiffany was a Vice
President in the asset management and investor relations departments of WFA from
October 1995 to December 1997, at which time she became the Chief Operating
Officer of WFA.
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 Residential Associates I, A Limited Partnership;
Winthrop Residential Associates II, A Limited Partnership; Winthrop Residential
Associates III, A Limited Partnership; 1999 Broadway Associates Limited
Partnership; Nantucket Island Associates Limited Partnership; Presidential
Associates I Limited Partnership; Riverside Park Associates Limited Partnership;
Springhill Lake Investors Limited Partnership; Twelve AMH Associates Limited
Partnership; Winthrop California Investors Limited Partnership; and Winthrop
Growth Investors 1 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.
30
<PAGE>
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 March 1, 2000 except
Quadrangle Associates I L.L.C., an affiliate of the Managing General Partner,
which acquired 2,114.58 Units (21.14%) pursuant to its tender offer commenced
October 26, 1999. The principal office of Quadrangle Associates I L.L.C. is
located at 5 Cambridge Center, Cambridge, Massachusetts 02142.
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.
(b) Security Ownership of Management.
At March 1, 2000, 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.
On October 26, 1999, an affiliate of the General Partner commenced a
tender offer to purchase up to 3,305 of the outstanding units of limited
partnership interest in the Partnership for a purchase price of $500 per Unit,
pursuant to the terms and conditions of an Offer to Purchase dated October 26,
1999. Upon expiration of the offer, the affiliate of the General Partner
acquired 2,114.58 Units (21.14%).
31
<PAGE>
(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 year ended December
31, 1999, the Partnership paid or accrued Distributions from Cash Available from
Distributions to the General Partner totaling approximately $149,000 and for the
year ended December 31, 1998, the Partnership did not pay or accrue any
distributions to the General Partners from Cash Available for Distributions, as
defined in the Partnership Agreement.
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 limited partnership units and Quadrangle
Associates I L.L.C. owns 2,114.58 units. Each of WFC Realty Co., Inc. and
Quadrangle Associates I L.L.C. 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, 1999
and 1998, Winthrop Management earned approximately $20,000 and $21,000,
respectively, for managing the real properties of the Partnership
32
<PAGE>
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
33
<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 29th day of March
2000.
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 29, 2000
- ------------------ Officer and Director
Michael Ashner
/s/ Thomas Staples Chief Financial Officer March 29, 2000
- ------------------
Thomas Staples
34
<PAGE>
INDEX TO EXHIBITS
Exhibit Page
3 Amended and Restated Agreement of Limited Partnership (a)
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 Winthrop Partners (b)
79 Limited Partnership and WP Management Co., Inc.
dated March 13, 1979
10(b) Property Management Subcontract between WP Management (b)
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 Winthrop (b)
Financial Co., Inc. dated March 22, 1979
10(e) Property Management Subcontract between WP Management (b)
Co., Inc. and Winthrop/Dolben Management Co., Inc.
dated as of August 1, 1979
10(f) Amendment dated as of August 1, 1979 to Property (b)
Management Agreement between Winthrop Partners 79
Limited Partnership and WP Management Co., Inc.
10(g) Documents relating to the J.C. Penney Company, Inc. (c)
property in Batavia, New York
10(h) Documents relating to the Toys "R" Us, Inc. ("Toys") (d)
property in San Antonio, Texas
35
<PAGE>
10(i) Documents relating to the Toys property in Fort Worth, (d)
Texas
10(j) Documents relating to the Frank's Nursery Sales, Inc. (d)
property in Hillside, Illinois
10(k) Documents relating to the Handy Dan Hardware, Inc. (b)
property in Hurst, Texas
10(l) Lease by and between the Partnership and Creative Paint (e)
and Wallpaper, Inc. dated January 31, 1991
10(m) Lease by and between the Partnership and B & G, Inc., (e)
d/b/a Splash Pools and Spas, dated January 17, 1991
10(n) Agreement of Purchase and Sale between Lucky Stores, (b)
Inc. and Winthrop Financial Co., Inc. dated November
16, 1979
10(o) Documents relating to the Wal-Mart Stores, Inc. (g)
property in Mexia, Texas
10(p) Documents relating to the Walgreen Co. property in (h)
University City, Missouri
16. Letter from Arthur Andersen LLP dated September 19, (i)
1996.
27. Financial Data Schedule 38
99. Supplementary Information required pursuant to Section 39
9.4 of the Partnership Agreement
(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.
36
<PAGE>
(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.
37
<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>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,275,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 8,093,000
<DEPRECIATION> (2,496,000)
<TOTAL-ASSETS> 6,985,000
<CURRENT-LIABILITIES> 0
<BONDS> 853,000
0
0
<COMMON> 0
<OTHER-SE> 5,958,000
<TOTAL-LIABILITY-AND-EQUITY> 6,985,000
<SALES> 0
<TOTAL-REVENUES> 1,048,000
<CGS> 0
<TOTAL-COSTS> 156,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 132,000
<INCOME-PRETAX> 767,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 767,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 767,000
<EPS-BASIC> 70.56
<EPS-DILUTED> 70.56
</TABLE>
<PAGE>
Exhibit 99
WINTHROP PARTNERS 79 LIMITED PARTNERSHIP
DECEMBER 31, 1999
Supplementary Information Required Pursuant to Section 9.4 of the Partnership
Agreement (Unaudited)
1. Statement of Cash Available for Distribution:
<TABLE>
<CAPTION>
Year Ended Three Months Ended
December 31, 1999 December 31, 1999
----------------- -------------------
<S> <C> <C>
Net Income $ 767,000 $ 131,000
Add: Depreciation and amortization charged to income not
affecting cash available distribution 83,000 18,000
Minimum lease payments received, net of interest
income earned, on leases accounted for under the
financing method 308,000 80,000
Cash from Reserves 385,000 4,000
Less: Mortgage principal payments (330,000) (81,000)
Repayment of Mortgage Note (376,000) -
----------- -----------
Cash Available for Distribution $ 837,000 $ 152,000
=========== ===========
Distributions allocated to General Partners $ 149,000 $ 13,000
=========== ===========
Distributions allocated to Limited Partners $ 688,000 $ 139,000
=========== ===========
</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, 1999:
<TABLE>
<CAPTION>
Entity Receiving Form of
Compensation Compensation Amount
------------------------------ ------------------------------------------- ------
<S> <C> <C>
Winthrop Management LLC Property Management Fees $ 4,000
WFC Realty Co., Inc.
(Initial Limited Partner) Interest in Cash Available for Distribution $ 70
One Winthrop Properties, Inc.
(General Partner) Interest in Cash Available for Distribution $ 5,000
Linnaeus - Hampshire Realty
Limited Partnership
(General Partner) Interest in Cash Available for Distribution $ 7,000
</TABLE>
29
