<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number: 0-8901
CASA MUNRAS HOTEL PARTNERS, L.P.
(Name of small business issuer in its charter)
California 95-3235634
- ------------------------------ --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5525 Oakdale Avenue, Suite 300, Woodland Hills, California 91364
-------------------------------------------------------------
(Address of principal executive offices, including zip code)
(818) 888-6500
--------------------------------------------
(Issuer's telephone number, including area code)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Units
(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will 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. [X]
State issuer's revenues for its most recent fiscal year: $3,991,382
The aggregate market value of the voting securities held by non-affiliates is
not determinable as there is no trading market for the Issuer's limited
partnership units and the securities have only limited transfer rights.
<PAGE> 2
PART I.
Items 1. Description of Business.
Casa Munras Hotel Partners, L.P. (the "Registrant"), a California
limited partnership, was organized on March 31, 1978, following the completion
of a public offering of 4,455 limited partnership units (the "Units") at a
public offering price of $1,000 per Unit and a capital contribution to the
Registrant of an aggregate of $45,000 by its two general partners, John F.
Rothman and Ronald A. Young (the "General Partners"). The owners of the Units
are hereinafter referred to as the "Limited Partners," and the Limited Partners
and the General Partners collectively are hereinafter referred to as the
"Partners". The Registrant's principal executive offices are located at 5525
Oakdale Avenue, Suite 300, Woodland Hills, California 91364. Its telephone
number is (818) 888-6500.
The Registrant owns a hotel that contains restaurant, bar, and
banquet facilities and several leased retail stores in Monterey, California,
known as the Casa Munras Garden Hotel. For additional information about this
property, see Item 2 of this Report. Unless the context indicates otherwise,
references herein to the "Hotel" are to the entire hotel, restaurant, bar,
banquet and retail complex. The Registrant acquired and began operating the
Hotel on May 1, 1978.
The General Partners believe that the operations of the lodging,
restaurant and bar, banquet and retail facilities of the Hotel are
interdependent and therefore do not constitute separate business segments. Of
the total revenues of $3,991,382, $3,862,735 and $3,305,500 generated at the
Hotel for the years ended December 31, 1997, 1996 and 1995, approximately 80%,
77% and 76% represented room sales, 16%, 18% and 19% food and beverage sales and
2%, 2% and 3% lease revenues, respectively. The balance represented telephone
revenues, interest and other income, including income from retail operations.
The business of the Registrant is to hold the Hotel and any
additional hotels, when and if acquired, for long-term investment. The principal
objectives of the Registrant are to generate cash flow for periodic
distributions to its Partners and to realize capital growth and appreciation in
the underlying value of the Registrant's assets, the achievement of neither of
which objectives can be assured.
The Registrant has a management contract ("Contract") with
Westland Hotel Corporation ("Westland") to manage the operations of the Casa
Munras which expires in April of 2014. For additional information concerning
Westland and the relationship of the General Partners to Westland, see Item 9
and Item 12 of this report.
Westland has the exclusive right and obligation to manage all
operations of the Hotel (including the Hotel's restaurant, bar and banquet
facilities unless they are leased by the Registrant to another operator), to
handle all collections and disbursements of funds and to maintain the books and
records of the Hotel. Westland is responsible for, among other things,
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making all necessary repairs to the Hotel (at the Registrant's expense), billing
and providing credit services to customers and guests of the Hotel, obtaining
insurance for the Hotel and administering Hotel working capital and operating
funds. The Registrant is required to make available sufficient working capital
to permit Westland to operate the Hotel, pay all expenses when due and purchase
supplies and inventory. For information with respect to the amounts payable to
Westland pursuant to the Contract, see Item 12 of this Report.
Westland also is responsible for hiring, training and supervising
the staff of the hotel portion of the Hotel. Since January 1, 1993, the services
of a general manager and a restaurant manager have been provided to the
Registrant by Westland. Costs of these employees are paid by Westland and
reimbursed by the Registrant to Westland. All other employees of the Hotel are
employees of the Registrant and not Westland.
Inasmuch as one of the General Partners controlled Westland at
the time the Contract was entered into, the compensation paid to Westland and
the other terms and conditions of such agreement cannot be deemed to have been
negotiated or established at arm's length, and the relationship between the
General Partners and Westland was not at arm's length and may have resulted in
certain conflicts of interest. However, the Partnership feels that the
relationship is reasonably equivalent to that of an arm's length relationship.
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<PAGE> 4
The following table summarizes room sales, food and beverage
sales, total revenues, hotel occupancy and average room rates at the Hotel for
calendar quarters of the years ended December 31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
For the Three Months Ended
-----------------------------------------------------------
March 31 June 30 September 30 December 31 Total
-------- ------- ------------ ----------- -----
<S> <C> <C> <C> <C> <C>
Room Sales
1997 $535,847 $835,189 $1,174,146 $649,665 $3,194,847
1996 499,073 837,485 1,111,146 536,228 2,983,932
1995 377,769 620,185 1,009,249 514,412 2,521,615
Food &
Beverage
Sales
1997 $121,843 $175,898 $173,823 $158,764 $630,328
1996 150,908 192,122 206,280 159,426 708,736
1995 108,998 170,309 196,286 143,931 619,524
Total
Revenues
1997 $695,679 $1,049,660 $1,392,537 $853,506 $3,991,382
1996 682,264 1,073,777 1,370,350 736,344 3,862,735
1995 524,389 828,853 1,252,326 699,932 3,305,500
Hotel
Occupancy
1997 51% 72% 85% 59% 67%
1996 55% 76% 82% 51% 66%
1995 41% 64% 90% 53% 62%
Average
Room Rate
1997 $77.22 $84.12 $98.49 $79.24 $86.38
1996 66.16 79.29 97.04 74.74 81.24
1995 67.79 70.60 80.53 69.42 73.52
</TABLE>
The Hotel operates 24 hours a day every day of the year. The
Registrant currently employs approximately 70 full-time employees and
approximately five part-time employees, none of whom is covered by a collective
bargaining agreement. Employees are entitled to paid
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vacations, participation in health and life insurance programs, and other fringe
benefits comparable to those generally available to hotel employees in the area.
The General Partners believe that employee relations are satisfactory.
The Hotel is subject to licensing and regulation by alcoholic
beverage control, health, sanitation, safety and fire agencies and to the Fair
Labor Standards Act, which governs such matters as minimum wages, overtime and
other working conditions. The Hotel also is subject to Federal and California
environmental regulations. Compliance with these regulations has not had, and is
not expected to have, a material impact on the Registrant's business.
Competition and Seasonality
The Hotel faces competition on the Monterey Peninsula from
approximately 48 hotels with approximately 3,900 rooms of varying quality and
size operated by individuals and corporations, some with greater financial
resources than the Registrant or with more experience than the General Partners
or Westland. The impact of this competition on the operations of the Hotel is
difficult to evaluate, but competition is based on price, service, amenities and
location. However, the General Partners believe that the occupancy levels of the
Hotel are comparable to other similar hotels and motels on the Monterey
Peninsula.
The hotel and motel industry on the Monterey Peninsula
historically has been seasonal and tourist-oriented. However, with the
development of major hotel facilities which can accommodate large numbers of
guests and provide meeting and banquet facilities for conventions and groups,
the construction of the Monterey Conference Center, and extensive year-round
promotional efforts by local business associations, the hotel market has changed
and is no longer strictly seasonal. The summer months continue to produce the
highest occupancy and average room rates at the Hotel, but substantial levels of
business activity are being generated in the fall, part of the winter and the
spring.
The General Partners believe that the Las Vegas hotel market is
the principal competition for the Monterey leisure market, and that such
competition will continue and is likely to increase in the future.
Borrowings
In March 1994, an affiliate of one of the General Partners
advanced $250,000 to the Registrant and the Registrant executed an unsecured
promissory note in favor of such affiliate. Interest accrues on the unpaid
principal balance at the rate of 10% per annum. The note provides that principal
and all accrued and unpaid interest are payable on demand. For the years ended
December 31, 1997 and 1996, $34,713 and $31,421, respectively, of accrued but
unpaid interest were added to principal. The proceeds of the advance were used
by the Registrant to purchase property and equipment in connection with the
renovation of the Hotel.
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On October 1, 1996, the Registrant's $900,000 line of credit with
a bank expired, and the Registrant converted the balance outstanding under that
facility into long-term borrowings by executing an unsecured promissory note
(the "Promissory Note") payable to the bank in the original principal amount of
$394,500. The Promissory Note is payable over 48 months beginning November 1,
1996, in monthly installments of $8,219 principal amount plus accrued interest
and with a final payment of the then remaining principal plus accrued and unpaid
interest due on October 1, 2000. The outstanding principal amount of the
Promissory Note bears interest at the bank's prime rate from time to time plus
1.5%, based upon a 360-day year. As of December 31, 1997, $271,219 in principal
was outstanding under the Promissory Note.
The Promissory Note includes covenants requiring the submission
of certain accounting information by specified times, an annual requirement that
the Partnership have a cash flow ratio before distribution to partners, as
defined in the Promissory Note, equal to 1.25 to 1 and a provision requiring
that the Registrant indemnify against certain environmental liabilities.
In January 1998, the partnership obtained a Term Loan Commitment
for up to $7,00,000 at 7.7% interest, secured by the Casa Munras, with a ten
year term; subject to certain conditions, the principal may be amortizable for
25 years. The commitment expires on March 31, 1998 unless mutually extended. The
terms and conditions of the loan include the requirement that certain amounts be
held in escrow for repairs.
Item 2. Properties.
The Hotel is located at the southwest corner of Munras and
Fremont Streets in Monterey, California, on an irregularly shaped parcel of land
(the "Site") of approximately 3.5 acres. Fremont is the principal east-west
business thoroughfare into downtown Monterey from U.S. Highway 1. Highway 1 is
approximately one and one-half miles east of the Hotel and provides access
between San Francisco and Los Angeles. Munras Street is a principal north-south
street from the downtown area, providing access from Highway 1 to the
communities of Pebble Beach and Carmel. The Site is within walking distance of
the downtown area, and is located approximately six blocks from the Monterey
Conference Center. Fisherman's Wharf and Cannery Row are within a few minutes
driving time of the Hotel. The Site is serviced by all public utilities,
including sewer, electricity, gas and water.
While portions of the main Hotel building are more than 150 years
old, most of the guest rooms were constructed and placed in operation 30 to 35
years ago. There are 152 guest rooms located in 10 one- and two-story buildings,
most of which are oriented toward a central courtyard, garden area and swimming
pool. In addition, there is a main building containing the lobby area, the
restaurant, bar and banquet facility, several offices and meeting rooms capable
of accommodating groups from 10 to 200. Located on the perimeter of the Site on
Fremont and Munras are a number of business offices and retail commercial
spaces, all of which are leased to tenants. There is adequate on and off-street
parking to serve the Hotel, with access from Fremont Street along Munras Avenue.
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The Hotel is of historic Monterey or Spanish-type architectural
design, and the buildings are wood frame and stucco, concrete or concrete block
construction with wood shake or tile roofs. The guest rooms can accommodate one
to four occupants and contain closet space, dressing area and bathroom, as well
as sleeping areas and informal sitting space. All guest rooms, restaurant
facilities and public areas are fully decorated and completely furnished and
equipped. There is no air conditioning in the Hotel. The entire Site around the
building areas is paved for parking and the grounds are well landscaped and
fully lighted.
The General Partners sought and obtained approval of the limited
partners for construction by the Partnership of 14 additional guest rooms on a
small undeveloped portion of the Hotel property. Construction of the additional
rooms will be financed with additional long-term borrowings. For additional
information with respect to the potential new loan facility for construction of
the 14 additional guest rooms, see the section of Item 1 of this Report
captioned "Borrowings", which section is incorporated in this Item by reference.
In 1995, 1996 and 1997, the Hotel undertook a substantial capital
refurbishment program. The Registrant expended $327,019 in 1997 (including
$143,435 of construction in progress with respect to the construction of 14 new
guest rooms), $370,109 in 1996 and $314,067 in 1995 for capital additions and
improvements to the Hotel, which expenditures were funded with borrowings and
from working capital. The general condition of all of the buildings and other
facilities of the Hotel is good.
It is expected the Partnership will have minimal capital
expenditures, other than with respect to the construction of the new guest
rooms, in 1998. These capital expenditures (other than for the new rooms) are
expected to be funded from cash provided by operations.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
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PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
The approximate number of holders of the Units (the Registrant's
only class of equity securities) as of March 16, 1998, was 614. No public
trading market exists for the Units.
The following cash distributions were paid to the Registrant's
Partners during 1996, 1997 and through March 16, 1998:
<TABLE>
<CAPTION>
Distribution Aggregate Amount
Date of Distribution Per Unit(*) of Distribution(*)
- -------------------- ------------ ------------------
<S> <C> <C>
January 31, 1996 $ 20.00 $ 90,000
April 30, 1996 10.00 45,000
July 31, 1996 20.00 90,000
October 31, 1996 70.00 315,000
January 31, 1997 38.00 171,000
April 30, 1997 10.00 45,000
July 31, 1997 20.00 90,000
October 31, 1997 70.00 315,000
January 31, 1998 20.00 90,000
</TABLE>
- ------------
(*) For the purpose of distributions, the General Partners' $45,000 capital
contribution is considered the equivalent of 45 Units.
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Item 6. Management's Discussion and Analysis or Plan of Operation.
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $3,991,382 $3,862,735 $3,305,500 $3,157,302 $3,478,747
Net Income $ 595,573 $ 447,254 $ 286,698 $ 289,986 $ 577,456
Income Per
Unit $ 132.35 $ 99.39 $ 63.71 $ 64.44 $ 128.32
Cash Distri-
butions
Per Unit(*) $ 120.00 $ 138.00 $ 100.00 $ 90.00 $ 120.00
Total Assets
at December
31, $3,990,305 $4,039,085 $3,691,851 $3,800,801 $3,667,232
Long-Term Obli-
gations at
December 31,
(including
current portion) $ 271,219 $ 369,844 $ -0- $ -0- $ -0-
</TABLE>
- ----------
(*) Distributions made in January each year are treated as distributions for the
immediately preceding year.
Year ended December 31, 1997 as compared to year ended December 31, 1996
An increase in the occupancy rate at the Hotel from 66% to 67%
and an increase in the average room rate at the Hotel from $81.24 to $86.38 for
1997 as compared to 1996, respectively, resulted in an increase of room revenues
of $210,915 to $3,194,847. The increases in occupancy and room rates are
attributed to the capital improvement program at the Hotel and to the continued
increase in leisure travel in the Monterey area, together with the reduction in
new construction of hotels in the Monterey area.
Food and beverage revenue totaled $630,328 in 1997, a $78,408, or
approximate 11% decrease over 1996 comparable revenue. The decrease is
principally attributed to reduced tour group business, which business generated
significant food and beverage revenue, in 1997 as compared to 1996.
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Operating expenses totaled $3,395,809 or 85% of revenues, in 1997
as compared to $3,415,481, or 88% of revenues, in 1996, respectively. The
decrease in operating expenses as a percentage of revenue is principally
attributed to increased revenues as a result of increased occupancy and average
room rates, as compared to 1996. Many operating expenses are fixed in nature and
do not increase at the same rate as revenues increase. In addition, repairs and
maintenance were down $65,345 or approximately 21% to $243,087 in 1997 as
compared to 1996. The decrease is primarily a result of the expanded capital
improvement program to existing rooms in 1996 for which there were increased
expenses.
Year ended December 31, 1996 as compared to year ended December 31, 1995
Between 1995 and 1996, occupancy rates at the Hotel increased to
66% from 62% and average room rates increased to $81.24 from $73.52, resulting
in 1996 room revenues of $2,983,932. The increases in occupancy and room rates
are attributed to the capital improvement program at the Hotel and to the
continued increase in leisure travel in the Monterey area, together with the
reduction in new construction of hotels in the Monterey area.
Food and beverage revenues increased during 1996 by $89,212, or
approximately 14%, to $708,736. The increase is principally attributed to
increased hotel occupancy, as hotel patrons remain the largest source of guests
for the restaurant and lounge.
Operating expenses totaled $3,415,481 or 88% of revenues, in 1996
as compared to $3,018,802, or 91% of revenues, in 1995, respectively. The
decrease in operating expenses as a percentage of revenue is principally
attributed to increased revenues as a result of increased occupancy room rates,
thus the resulting increase in the number of guest patrons in the restaurant and
lounge facilities. Many operating expenses are fixed in nature and do not
increase at the same rate as revenues increase.
Year ended December 31, 1995 as compared to year ended December 31, 1994
An increase in occupancy rates, 62% versus 58%, partially offset
by a reduction in average room rate, $73.52 versus $74.66, resulted in an
increase in room revenue to $2,521,615 from $2,404,792 for 1995 as compared to
1994. This increase in occupancy factors was attributed to increased pleasure
travel during the 1995 summer tourist season as compared to the similar period
in 1994.
Food and beverage revenues totaled $619,524 for 1995 as compared
to $613,758 for 1994. The slight increase in these revenues was attributed to
increased hotel occupancy, as most guests for the restaurant and lounge are
hotel patrons.
Operating expenses totaled $3,018,802 and $2,867,316, or
approximately 91% of revenue, in calendar 1995 and 1994, respectively.
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Liquidity and Capital Resources
The Registrant's primary source of cash is from the operation and
leasing of the Hotel.
During 1997, the Registrant generated $982,554 in net cash
provided by operating activities. Distributions to Partners totaled $621,000,
equal to 14% of original invested capital. Principal reductions of $98,625 were
made on the Promissory Note during 1997. For additional information with respect
to the credit facility and the term loan, see the section of Item 1 of this
Report captioned "Borrowings".
Capital expenditures, which were paid for from cash generated
from operations, totaled $327,019 in 1997. It is expected that in 1998 the
Partnership will have minimal capital expenditures, other than the new guest
rooms described below. These capital expenditures, other than for the new rooms,
are expected to be funded from cash provided by operations.
The General Partners sought and obtained approval of the limited
partners for construction by the Partnership of 14 additional guest rooms on a
small undeveloped portion of the Hotel property. The majority of the
construction of the additional rooms will be financed with additional long-term
borrowings. For additional information with respect to the potential new loan
facility for construction of the 14 additional guest rooms, see the section of
Item 1 of this Report captioned "Borrowings", which section is incorporated in
this Item by reference.
The General Partners intend, to the extent cash from operations
is available and such distributions are permitted under the Promissory Note, to
continue making cash distributions to the Partners at amounts approximating the
Registrant's net income.
Year 2000 Compliance
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields containing a 2
digit year is commonly referred to as the Year 2000 Compliance issue. As the
year 2000 approaches, such systems may be unable to accurately process certain
date-based information.
The Partnership has communicated with others with whom it does significant
business to determine their Year 2000 Compliance readiness and the extent to
which the Partnership is vulnerable to any third party Year 2000 issues.
However, there can be no guarantee that the systems of other companies on which
the Partnership's systems rely will be timely converted, or that a failure to
convert by another company, or a conversion that is incompatible with the
Partnership's systems, would not have a material adverse effect on the
Partnership.
The total cost to the Partnership of these Year 2000 Compliance activities has
not been and is not anticipated to be material to its financial position or
results of operations in any given year.
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Item 7. Financial Statements.
The following are included in this Report in response to this
Item immediately prior to the signature page:
Independent Auditors' Report.
Balance Sheets at December 31, 1997 and 1996.
Statements of Operations for the years ended December 31, 1997, 1996
and 1995.
Statements of Changes in Partners' Equity for the years ended December
31, 1997, 1996 and 1995.
Statements of Cash Flows for the years ended December 31, 1997, 1996
and 1995.
Notes to Financial Statements for the years ended December 31, 1997,
1996 and 1995.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
The Registrant has no directors or executive officers. The
General Partners of the Registrant are Messrs. Rothman and Young. Mr. Rothman,
age 63, and Mr. Young, age 70, have been the General Partners of the Registrant
since its formation, and are named as the General Partners by the Certificate
and Agreement of Limited Partnership of Casa Munras Hotel Partners, L.P. (the
"Partnership Agreement").
Since March 1990, Mr. Rothman has been an independent real estate
investor. Mr. Rothman is also currently a consultant to Westland and the sole
shareholder of The Northstar Group, a corporation leasing and operating a
hotel/casino in Las Vegas, Nevada. Since December 1992, Mr. Young has been the
president and chief executive officer and the sole stockholder of Westland.
Item 10. Executive Compensation.
The General Partners do not receive any compensation from the
Registrant for serving as the Registrant's general partners.
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Set forth below is a summary of all compensation which may be
payable to the General Partners pursuant to the Partnership Agreement. All such
fees and amounts are payable one-half to each of the General Partners.
(1) Acquisitions. In the event the Registrant purchases
additional hotels, the General Partners are entitled to an acquisition fee of
$20,000 per hotel.
(2) Operations. The General Partners are entitled to a
transfer fee of up to $50 per transfer of Units.
(3) Disposition of Borrowing. Upon the sale or refinancing of
the Hotel, the General Partners are entitled to 25% of the net cash proceeds
subordinated to (i) a 12% per annum cumulative return on the capital
contributions of the Partners, and (ii) the return of such capital contributions
to the Partners, to the extent such proceeds are distributed to the Partners.
(4) Removal of General Partners. The Partnership Agreement
provides that if either or both of Messrs. Rothman and Young should be removed
as General Partner(s) of the Registrant by vote or written consent of the
holders of a majority of the Units then held by Limited Partners entitled to
vote, the Registrant will have the right, but not the obligation, to terminate a
removed General Partner's interest in the compensation owed to such General
Partner upon the sale or refinancing of the Hotel upon payment to such General
Partner of an amount equal to the value of his interest in such compensation on
the date of his removal, based upon the market value of the assets of the
Registrant on and as if such assets were sold on the date of his removal. If the
removed General Partner and the Registrant cannot mutually agree upon such value
within 30 days following the election by the Registrant to so terminate the
General Partner's interest, such value will be determined by arbitration.
Payment to a removed General Partner of the value of his interest at the option
of the Registrant will be made either (i) in a lump sum within 30 days following
determination of the value thereof, or (ii) in equal installments of principal
and interest at 7% per annum over a period of 60 months.
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Item 11. Security Ownership of Certain Beneficial Owners and Management.
(a)Security ownership of certain beneficial owners.
Except as set forth below, there is no person known to the
Registrant to be the beneficial owner of more than 5% of the Units. The
following information is based upon Amendment No. 1 to Schedule 13D filed with
the Securities and Exchange Commission dated May 5, 1988, and as updated by the
records of the Registrant.
<TABLE>
<CAPTION>
Number of
Units and
Nature of
Beneficial
Name and Address of Ownership at Percent
Title of Class Beneficial Owner March 16, 1998 of Class
- -------------- ------------------- -------------- --------
<S> <C> <C> <C>
Limited Partner- Liquidity Fund XI 7 (*) .157
ship Units Liquidity Fund XIII 11 (*) .247
Liquidity Fund XIV 117 (*) 2.626
Liquidity Fund XV 3 (*) .067
Liquidity Income/
Growth Fund 85 48 (*) 1.077
Liquidity Fund High
Yield Institutional
Investors 8 (*) .180
Liquidity Fund Tax-
Exempt Partners 28 (*) .629
Liquidity Fund Tax-
Exempt Partners II 72 (*) 1.616
LF 73 30 (*) .673
LF 74 46 (*) 1.033
Liquidity Financial Grp. L.P. 9 (*) .202
Liquidity Fund General Ptrs. II 1 (*) .022
Liquidity Fund General Ptrs. II
FBO Sean S. Subas 1 (*) .022
LFG Liquidating Interest, L.P. 5 (*) .112
LF 31 47 (*) 1.055
2200 Powell Street
Emeryville, CA 94608
</TABLE>
- ------------
(*) Each of such funds (the "Funds") owns such Units directly. Each of such
funds has sole voting and disposition power with respect to such Units,
which powers are exercised on behalf of such Fund by its general
partner(s). Liquidity Fund General Partners ("LFGP")
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<PAGE> 15
is the sole general partner of Liquidity Fund XI, Liquidity Fund XII,
Liquidity Fund XIII, Liquidity Fund XIV, Liquidity Fund XV and Liquidity
Income/Growth Fund 85. The general partners of Liquidity Fund IX are
Liquidity Fund Management, Inc. ("LFMI") and Messrs. Richard G. Wollack,
Bryson S. Randolph and Brent R. Donaldson. The general partners of
Liquidity Fund High Yield Institutional Investors are LFGP and Liquidity
Fund Associates II ("LFA"). The general partners of LFGP are Messrs.
Wollack, Randolph, Donaldson and Sean S. Subas. The officers and directors
of LFMI are Messrs. Wollack, Donaldson and Subas. The general partner of
LFA is LFGP. The general partners of Liquidity Fund Tax-Exempt Partners and
Liquidity Fund Tax- Exempt Partners II are Liquidity Fund General Partners
II ("LFGPII") and Liquidity Fund Partners ("LFP"). The general partners of
LFGPII are Messrs. Wollack, Donaldson, Subas and Robert S. Condon. The
general partner of LFP is LFGPII.
(b) Security ownership of management.
<TABLE>
<CAPTION>
Number of Units and
Nature of Beneficial
Name of Ownership as of Percent
Beneficial Close of Business on of
Title of Class Owner March 16, 1998 Class
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Limited John F. Rothman 32 Units* .471
Partnership Ronald A. Young 44 Units* .741
Units
</TABLE>
- ------------
(*) Owned directly.
In addition, each General Partner owns a .5% interest in the
equity, profits and losses of the Registrant by virtue of his $22,500 capital
contribution to the Registrant upon its formation.
Item 12. Certain Relationships and Related Transactions.
As described in Item 9, all of the outstanding stock of Westland
is owned by Mr. Young, and Mr. Rothman is a consultant to Westland. Messrs.
Young and Rothman have agreed that a portion of Westland's net income (based
upon a predetermined formula) will be paid to Mr. Rothman for his consulting
services.
Pursuant to the Contract, Westland is entitled to receive from
the Registrant for Westland's services in managing the Hotel: (a) a minimum
management fee equal to 4% of room revenues and food and beverage sales ("Hotel
Revenues"), payable monthly and adjusted at year-end, and (b) an incentive
management fee, calculated and paid annually, equal to the lesser of
15
<PAGE> 16
(1) 12% of profits before debt service and depreciation, as defined, and (2) the
excess of the Registrant's cash flow over an amount equal to 12% of the
Partners' then-invested capital, as defined. Proceeds of any sale or refinancing
of the Hotel are not considered in computing the incentive management fee.
During 1997, Westland made available to the Registrant various
services in connection with the acquisition of furniture, fixtures, equipment
and supplies for the Hotel, the procurement of insurance for the Hotel, and
other administrative matters. Such services or goods were purchased by the
Registrant from Westland at its cost. For 1997 and 1996, $607,662 and $572,541,
respectively, were paid or payable to Westland as reimbursement for such
purchases. Westland made available to the Registrant all trade discounts offered
by vendors for early payment.
During 1997, Westland provided bookkeeping services to the
Registrant. The fee paid by the Registrant to Westland for these services is
computed by Westland by taking the total of all direct labor costs of providing
bookkeeping services to the hotels it manages and allocating to the Registrant a
pro rata portion of such costs based on the ratio of the number of rooms in the
Hotel to the number of rooms in all hotels managed by Westland. Westland also is
entitled to reimbursement by the Registrant of certain payroll related costs,
administration expenses and professional fees, when incurred. The bookkeeping
service fee and other reimbursable costs, expenses and fees paid or payable to
Westland for 1997 and 1996 totaled $26,592 for each year.
In the event the Registrant purchases one or more additional
hotels, Westland will be entitled to an initial management fee in the amount of
$20,000 per hotel for services to be rendered in connection with taking over and
reorganizing such hotel. In addition, Westland will be entitled to receive 5% of
the direct costs of (a) any capital improvement or refurbishment program costing
in excess of $75,000 implemented in connection with the acquisition of any
additional hotel, and (b) the construction of any additional rooms or real
property improvements, including the construction of additional rooms at such
hotel.
See also Item 10 for a description of the compensation that may
be payable to the General Partners under the circumstances described therein.
16
<PAGE> 17
PART IV
Item 13. Exhibits, List and Reports on Form 8-K.
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
3.1 Certificate and Agreement of Limited Partnership of Casa
Munras Hotel Partners, L.P. (formerly Western Host
Monterey Partners), dated March 31, 1978 and filed April
19, 1978 (incorporated by reference to Exhibit 1 to the
Registrant's Registration of the Units on Form 10).*
3.2 Amendment to Agreement of Limited Partnership of Casa
Munras Hotel Partners, L.P. (formerly Western Host
Monterey Partners) dated as of August 30, 1994
(incorporated by reference to Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1994).
10.1 Unsecured Demand Promissory Note dated March 21, 1994, in
the principal amount of $250,000 executed by Casa Munras
Hotel Partners, L.P. (formerly Western Host Monterey
Partners) in favor of the Maxine Fulton Retirement Trust
dated 4/21/82 (incorporated by reference to Exhibit 10.4
of the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993).
10.2 Settlement and Release Agreement dated as of April 15,
1994 by and among John F. Rothman, Ronald A. Young, Hotel
Investors Corporation, Hotel Investors Trust and Western
Host, Inc. (incorporated by reference to Exhibit 10.2 to
the Registrant's Quarterly Report on Form 10-QSB for the
quarter ended June 30, 1994).
10.3 Termination of Management Contracts Agreement dated as of
April 15, 1994 by and among Western Host, Inc., John F.
Rothman, Ronald A. Young, Westland Hotel Corporation,
Western Host Fresno Partners, Western Host Stockton
Partners, Western Host Bakersfield Partners, Western Host
Properties, Western Host Monterey Partners, Western Host
Pasadena Partners, Western Host San Francisco Partners,
Hotel Investors Corporation and Hotel Investors Trust
(incorporated by reference to Exhibit 10.3 to the
Registrant's Quarterly Report on Form 10-QSB for the
quarter ended June 30, 1994).
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
<S> <C>
10.4 Management Contract dated as of April 15, 1994 by and
between Casa Munras Hotel Partners, L.P. (formerly Western
Host Monterey Partners) and Westland Hotel Corporation
(incorporated by reference to Exhibit 10.4 to the
Registrant's Quarterly Report on Form 10-QSB for the
quarter ended June 30, 1994).
10.5 Multiple Disbursement Note dated as of September 29, 1995
by and between Casa Munras Hotel Partners, L.P. (formerly
known as Western Host Monterey Partners) and City National
Bank (incorporated by reference to Exhibit 10.4 to the
Registrant's Quarterly Report on Form 10- QSB for the
quarter ended September 30, 1995).
10.6 Promissory Note dated as of October 1, 1996, executed by
Casa Munras Hotel Partners in favor of City National Bank
(incorporated by reference to Exhibit 10.6 of the
Registrant's Annual Report on Form 10-KSB for the year
ended December 31, 1996).
10.7 Supplemental Terms Letter dated October 1, 1996, executed
by Casa Munras Hotel Partners, L.P. and City National Bank
(incorporated by reference to Exhibit 10.7 of the
Registrant's Annual Report on Form 10- KSB for the year
ended December 31, 1996).
10.8 Term Loan Commitment dated January 9, 1998, executed by
Casa Munras Hotel Partners, L.P. and Amresco Capital,
L.P..
27.1 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter of
the period covered by this Report.
</TABLE>
* Copies of Amendments to the Certificate and Agreement of Limited
Partnership of Casa Munras Hotel Partners, L.P. executed to reflect the
admission to the Registrant of substituted Limited Partners will be
furnished on request.
18
<PAGE> 19
SIGNATURES
In accordance with to the requirements of Section 13 or 15(d) of
the Exchange Act, the Registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
CASA MUNRAS HOTEL PARTNERS, L.P.
By: John F. Rothman Date: March 26, 1998
--------------------------------------
John F. Rothman
General Partner
By: Ronald A. Young Date: March 26, 1998
--------------------------------------
Ronald A. Young
General Partner
19
<PAGE> 20
INDEPENDENT AUDITORS' REPORT
To the Partners of
Casa Munras Hotel Partners, L.P.:
We have audited the accompanying balance sheets of Casa Munras Hotel Partners,
L.P., a Limited Partnership (the "Partnership"), as of December 31, 1997 and
1996, and the related statements of operations, changes in partners' equity, and
cash flows for each of the three years in the period ended December 31, 1997.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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, such financial statements present fairly, in all material
respects, the financial position of the Partnership at December 31, 1997 and
1996, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1997 in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
March 17, 1998
<PAGE> 21
CASA MUNRAS HOTEL PARTNERS, L.P.
(A Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
1997 1996
- ----------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $367,327 $569,371
Accounts receivable 55,151 50,233
Food and beverage inventories 15,908 20,798
Prepaid expenses 33,566 38,458
------------ ------------
Total current assets 471,952 678,860
------------ ------------
LAND, PROPERTY AND EQUIPMENT - at cost:
Building and improvements 4,793,731 4,691,279
Hotel furnishings and equipment 1,480,980 1,403,594
Restaurant furnishings and equipment 37,479 33,733
Construction in progress 143,435
Less accumulated depreciation (3,849,939) (3,508,381)
------------ ------------
2,605,686 2,620,225
Land 700,000 700,000
------------ ------------
Land, property and equipment - net 3,305,686 3,320,225
------------ ------------
OTHER ASSETS:
Liquor license 40,000 40,000
Deposits 172,667
------------ ------------
Total other assets 212,667 40,000
------------ ------------
TOTAL $3,990,305 $4,039,085
============ ============
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $58,592 $49,379
Accounts payable - related parties 34,712 16,235
Accrued incentive management fees - related parties 144,190 121,929
Accrued salaries and wages 45,923 59,008
Accrued room and sales tax 32,937 29,244
Distributions payable 90,000 171,000
Current portion of long-term debt 98,625 98,625
Note payable to affiliate 366,210 331,497
------------ ------------
Total current liabilities 871,189 876,917
LONG-TERM DEBT 172,594 271,219
------------ ------------
Total liabilities 1,043,783 1,148,136
------------ ------------
COMMITMENTS (Note 5)
PARTNERS' EQUITY:
General Partners (45 units issued and outstanding) 29,467 28,911
Limited Partners (4,455 units issued and outstanding) 2,917,055 2,862,038
------------ ------------
Total partners' equity 2,946,522 2,890,949
------------ ------------
TOTAL $3,990,305 $4,039,085
============ ============
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
2
<PAGE> 22
CASA MUNRAS HOTEL PARTNERS, L.P.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
1997 1996 1995
- ----------------------------------------------------------------------------------------
REVENUES:
<S> <C> <C> <C>
Room $3,194,847 $2,983,932 $2,521,615
Food and beverage 630,328 708,736 619,524
Lease 87,072 87,509 84,022
Telephone 43,112 52,324 56,770
Other 36,023 30,234 23,569
------------ ------------ ------------
Total 3,991,382 3,862,735 3,305,500
------------ ------------ ------------
OPERATING EXPENSES:
Rooms 890,228 857,605 744,945
Food and beverage 575,019 631,409 531,258
Depreciation and amortization 341,558 344,180 345,254
Administrative and general 352,925 323,730 349,517
Repairs and maintenance 243,087 308,432 190,234
Management fees 301,133 273,902 225,452
Marketing 265,033 262,688 238,810
Energy cost 153,543 158,422 170,478
Interest 67,403 66,317 28,542
Property taxes 65,084 62,936 63,235
Insurance 48,298 52,419 48,506
Partnership administration and
professional fees 67,858 51,396 58,496
Telephone 24,640 22,045 24,075
------------ ------------ ------------
Total (includes reimbursed costs and payments
for services to related parties of $773,608,
$619,324 and $426,680 during 1997, 1996
and 1995, respectively) 3,395,809 3,415,481 3,018,802
------------ ------------ ------------
NET INCOME $595,573 $447,254 $286,698
============ ============ ============
ALLOCATION OF NET INCOME:
General Partners $5,956 $4,473 $2,867
Limited Partners ($132.35 per Unit
in 1997, $99.39 per Unit in 1996
and $63.71 per Unit in 1995,
based upon 4,455 Limited Partnership
Units) 589,617 442,781 283,831
------------ ------------ ------------
Total $595,573 $447,254 $286,698
============ ============ ============
CASH DISTRIBUTION
PER LIMITED PARTNERSHIP UNIT
(based upon 4,455 Units outstanding):
Ordinary income $120.00 $99.39 $63.71
Return of capital - 38.61 36.29
------------ ------------ ------------
$120.00 $138.00 $100.00
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
3
<PAGE> 23
CASA MUNRAS HOTEL PARTNERS, L.P.
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
GENERAL LIMITED
PARTNERS' PARTNERS'
EQUITY EQUITY TOTAL
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE, JANUARY 1, 1995 $32,281 $3,195,716 $3,227,997
NET INCOME 2,867 283,831 286,698
DISTRIBUTIONS TO PARTNERS (4,500) (445,500) (450,000)
------------ ------------ ------------
BALANCE, DECEMBER 31, 1995 30,648 3,034,047 3,064,695
NET INCOME 4,473 442,781 447,254
DISTRIBUTIONS TO PARTNERS (6,210) (614,790) (621,000)
------------ ------------ ------------
BALANCE, DECEMBER 31, 1996 28,911 2,862,038 2,890,949
NET INCOME 5,956 589,617 595,573
DISTRIBUTIONS TO PARTNERS (5,400) (534,600) (540,000)
------------ ------------ ------------
BALANCE, DECEMBER 31, 1997 $29,467 $2,917,055 $2,946,522
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
4
<PAGE> 24
CASA MUNRAS HOTEL PARTNERS, L.P.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
1997 1996 1995
- ----------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $595,573 $447,254 $286,698
Adjustments to reconcile net
income to net cash provided by
\ operating activities:
Depreciation and amortization 341,558 344,180 345,254
Change in assets and liabilities:
Accounts receivable (4,918) 54,506 (15,291)
Food and beverage inventories 4,890 (2,583) (1,875)
Prepaid expenses 4,892 (17,107) 24,772
Accounts payable and accrued expenses (179) 19,581 (11,323)
Accounts payable and accrued expenses -
related parties 40,738 23,634 32,731
------------ ------------ ------------
Net cash provided by
operating activities 982,554 869,465 660,966
------------ ------------ ------------
INVESTING ACTIVITIES:
Acquisition of property and equipment (327,019) (370,109) (314,067)
------------ ------------ ------------
FINANCING ACTIVITIES:
Borrowings from affiliate 34,713 31,421 28,444
Short and long-term borrowing 390,000 4,500
Payment of long-term debt (98,625) (24,656) -
Deposits and loan commitment fees (172,667) - (4,500)
Distributions paid to Partners (621,000) (540,000) (450,000)
------------ ------------ ------------
Cash used for financing activities (857,579) (143,235) (421,556)
------------ ------------ ------------
NET (DECREASE) INCREASE IN CASH (202,044) 356,121 (74,657)
CASH AT BEGINNING OF YEAR 569,371 213,250 287,907
------------ ------------ ------------
CASH AT END OF YEAR $367,327 $569,371 $213,250
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION -
Cash paid during the year for interest $32,690 $34,895 $ -
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
5
<PAGE> 25
CASA MUNRAS HOTEL PARTNERS, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
1. GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
General Information:
General - Casa Munras Hotel Partners, L.P. (the "Partnership") was formed on
March 31, 1978 for the purpose of acquiring, holding for investment and
operating motor hotels and related facilities. On May 1, 1978, the
Partnership acquired the Casa Munras Garden Hotel ("the Casa Munras")
located in Monterey, California. The Casa Munras has 152 guest rooms, a
restaurant, bar and banquet facilities, and several retail stores.
The General Partners of the Partnership, Ronald A. Young and John F.
Rothman, each purchased a 0.5% interest in the Partnership. The remaining
99% interest is owned collectively by the Limited Partners. The General
Partners are entitled to receive a $20,000 acquisition fee for each motor
hotel and related facilities subsequently acquired by the Partnership.
Allocations - Net profits, losses and cash flows from operations are to be
allocated among the Partners in proportion to their respective Partnership
interests. The net profits from the sale of all or substantially all of the
assets of the Casa Munras, or any future properties to be acquired by the
Partnership, and the cash flow resulting therefrom, are to be allocated in
accordance with the predetermined formula outlined in the Partnership
Agreement.
Summary of Significant Accounting Policies:
Fair Value of Financial Instruments and Concentrations of Credit Risk - The
following disclosure of estimated fair value was determined by available
market information and appropriate valuation methodologies. However,
considerable judgment is necessary to interpret market data and develop the
related estimates of fair value. Accordingly, the estimates presented herein
are not necessarily indicative of the amounts that could be realized upon
disposition of the financial instruments. The use of different market
assumptions and/or estimation methodologies may have a material effect on
the estimated fair value amounts.
Cash, accounts receivable, food and beverage inventories, prepaid expenses,
accounts payable, accrued expenses and distributions payable carrying cost
which reasonably approximates their fair value because of the short
maturities of these instruments.
6
<PAGE> 26
Other assets are carried at cost which, in management's opinion, is less
than fair value.
The carrying value of short-term debt and the note payable to affiliate
approximates fair value at December 31, 1997, as the related interest rates
are either variable or in line with market rates.
Inventories - Food and Beverage inventories are stated at the lower of cost
(first-in, first-out method) or market.
Property and Depreciation - Buildings and improvements are being depreciated
over useful lives ranging from 15 to 39 years using the straight-line
method. Hotel furnishings and equipment and restaurant furnishings and
equipment are being depreciated using primarily accelerated methods over
useful lives ranging from five to seven years.
Income Taxes - In accordance with the provisions of the Internal Revenue
Code, the Partnership is not subject to the payment of income taxes, and no
provision, therefore, is required to be made herein. At December 31, 1997,
the Partnership's net assets and net income for financial reporting purposes
approximated the net assets and net income for Federal tax reporting
purposes.
Revenues - Revenues are recognized as earned. Earned is generally defined as
the date upon which a guest occupies a room and/or utilizes the hotel's
services. Ongoing credit evaluations are performed and potential credit
losses are expensed at the time the account receivable is estimated to be
uncollectible. Historically, credit losses have not been material to the
hotel's results of operations.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Impairment of Long-Lived Assets - Effective January 1, 1996, the Partnership
implemented Financial Accounting Standards Board issued 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 that long-lived assets to be held and used by an entity be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Measurement of
an impairment loss for long-lived assets that an entity expects to hold and
use should be based on the fair value of the asset. Based on an evaluation
of existing long-lived assets performed in accordance with SFAS 121, the
Partnership has determined that no impairment has occurred for the years
ended December 31, 1997 and 1996.
7
<PAGE> 27
2. NOTE PAYABLE TO AFFILIATE
On March 21, 1994, an affiliate of one of the General Partners advanced
$250,000 and issued an unsecured 10% demand note to the Partnership. Under
the terms of the demand note, accrued monthly interest is added to the then
outstanding principal balance upon which cumulative interest is accrued for
the subsequent month. For the years ended December 31, 1997, 1996 and 1995,
$34,712, $31,421 and $28,444, respectively, of accrued and unpaid interest
has been added to principal.
3. SHORT AND LONG-TERM DEBT
On October 1, 1996 the Partnership converted borrowings under a Multiple
Disbursement Note to long-term borrowings under an unsecured Promissory Note
(the "Promissory Note") in the amount of $394,500. The Promissory Note is
payable over 48 months with monthly principal payments of $8,219 plus
interest beginning November 1, 1996. The Promissory Note bears interest at
the banks prime interest rate (8.5% at December 31, 1997) plus 1.5%, based
upon a 360-day year, with a final payment due in October 1, 2000 equal to
the remaining principal owed plus unpaid interest (see also Note 7).
The Promissory Note covenants include the annual requirement that the
Partnership have a cash flow ratio before distribution to partners, as
defined in the note, equal to 1.25 to 1 and provision of an environmental
indemnification by the Partnership to the bank.
Principal payments required for the years ending December 31, are as
follows:
<TABLE>
<S> <C>
1998 $98,625
1999 98,625
2000 73,969
---------
Total $ 271,219
=========
</TABLE>
4. LEASE REVENUE
The retail stores are leased to other business establishments. These leases
range from one to two years and provide annual rents of approximately
$87,072.
5. MANAGEMENT AND RELATED PARTIES
The Partnership has a management contract (the "Contract") with Westland
Hotel Corporation ("Westland") to manage the operations of the Casa Munras
and any additional projects. The Contract has an expiration date in 2014.
8
<PAGE> 28
Westland receives a minimum management fee equal to 4% of revenues, as
defined, and an incentive management fee equal to the lesser of 12% of
profits before debt service and depreciation, or the excess of cash flow
over an amount equal to 12% of the Partners' then invested capital, as
defined. Minimum management fees for 1997, 1996 and 1995 were $156,943,
$151,973 and $129,839, respectively. Incentive management fees for 1997,
1996 and 1995 were $144,190, $121,929 and $95,613, respectively.
Ronald A. Young, a General Partner, is the president and sole shareholder of
Westland, and John F. Rothman, the other General Partner, is a consultant to
Westland.
The Partnership has reimbursed or accrued as payable to Westland (based on
actual costs incurred) for certain costs paid on behalf of the Partnership.
These costs include bookkeeping services, reimbursement of on-site
management payroll and payroll benefits, insurance and worker's compensation
premiums, various hotel operating supplies and furnishings and other
administrative expenses. The total of such costs reimbursed in 1997, 1996
and 1995 were $634,254, $599,133 and $495,075, respectively.
Accounts payable and accrued expenses as of December 31, 1997 and 1996
include $178,902 and $138,164, respectively, in amounts due Westland.
The Westland management agreement provides that the partnership shall set
aside an amount equal to $100 per annum for each guest room as a reserve for
replacements. This amount is to be adjusted based upon actual expenditures.
In 1997, 1996 and 1995, such reserves were not required, as the
Partnership's expenditures for replacements exceeded the reserve called for
in the contract.
6. DISTRIBUTION TO PARTNERS
The following table summarized the distributions accrued and paid to
Partners for 1997, 1996 and 1995:
<TABLE>
<CAPTION>
Per Unit Total
--------- ---------
<S> <C> <C>
Distributions during 1995:
Distributions accrued in 1994, paid in 1995 $ 20.00 $ 90,000
--------- ---------
Distributions accrued and paid in 1995:
July 31, 1995 30.00 135,000
October 31, 1995 50.00 225,000
--------- ---------
Total paid in 1995 $ 100.00 $ 450,000
========= =========
Total accrued and paid in 1995 $ 80.00 $ 360,000
Distributions accrued in 1995, paid in 1996 20.00 90,000
--------- ---------
Total distributions for 1995 $ 100.00 $ 450,000
========= =========
</TABLE>
9
<PAGE> 29
<TABLE>
<CAPTION>
Distributions during 1996:
<S> <C> <C>
Distributions accrued in 1995, paid in 1996 $ 20.00 $ 90,000
--------- ----------
Distributions accrued and paid in 1996:
April 30, 1996 10.00 45,000
July 31, 1996 20.00 90,000
October 31, 1996 70.00 315,000
---------- ------------
Total paid in 1996 $ 120.00 $ 540,000
========== ===========
Total accrued and paid in 1996 $ 100.00 $ 450,000
Distributions accrued in 1996, paid in 1997 38.00 171,000
----------- -----------
Total distributions for 1996 $ 138.00 $ 621,000
========== ===========
Distributions during 1997:
Distributions accrued in 1996, paid in 1997 $ 38.00 $ 171,000
---------- ---------
Distributions accrued and paid in 1997:
April 30, 1997 10.00 45,000
July 31, 1997 20.00 90,000
October 31, 1997 70.00 315,000
----------- ----------
Total paid in 1997 $ 138.00 $ 621,000
========== =========
Total accrued and paid in 1997 100.00 450,000
Distributions accrued in 1997, paid in 1998 20.00 90,000
---------- -----------
Total distributions for 1997 $ 120.00 $ 540,000
========== =========
</TABLE>
7. COMMITMENT AND SUBSEQUENT EVENT
The Partnership has obtained the approval of the Limited Partners to
complete construction of the 14 additional guest rooms at an approximate
cost of $1,000,000. At December 31, 1997 the Partnership has contractual
commitments of $840,013 related to this construction.
In January 1998, the partnership obtained a Term Loan Commitment for up to
$7,00,000 at 7.7% interest, secured by the Casa Munras, with a ten year
term; subject to certain conditions, the principal may be amortizable for 25
years. The commitment expires on March 31, 1998 unless mutually extended.
The terms and conditions of the loan include the requirement that certain
amounts be held in escrow for repairs.
10
<PAGE> 1
Exhibit 10.8
AMRESCO
January 9, 1998
Casa Munras Hotel Partners, L.P.
c/o Mr. Gary Braun
Churchill Mortgage Company
5959 West Century Boulevard, Suite 1400
Los Angeles, California 90045
RE: TERM LOAN COMMITMENT - CASA MUNRAS HOTEL
Gentlemen:
This letter (including all attachments hereto, the "Commitment") confirms that
AMRESCO CAPITAL, L.P. (together with its successors and assigns, "Lender") will
lend up to the principal amount set forth below (the "Loan") to Borrower (as
defined below), subject to the terms and conditions contained herein. This
Commitment is conditioned on and subject to, among other things, the completion
of Lender's underwriting process and verification to Lender's satisfaction of
all of the following:
BORROWER: The first addressee of this Commitment or an entity to be formed
thereby, subject in any event to approval by Lender and its legal
counsel of the borrowing entity as provided herein.
PROPERTY: That certain 152-room hotel known as Casa Munras Garden and
located on a 4.014 acre tract of land at 700 Munras Avenue in
Monterey, Monterey County, California, the legal description of
which tract must be confirmed by a current survey acceptable to
Lender. The Property is owned by Borrower and being refinanced
with the proceeds of the Loan.
LOAN
AMOUNT: $6,830,000, with a possible increase up to an amount not to
exceed $7,000,000, provided that at such increased Loan Amount a
minimum debt service coverage ratio of 1.40 to 1.00 is attained.
TERM: Ten years.
INTEREST
RATE: The Interest rate has been locked at 7.70% per annum and will
remained locked at such rate through the Closing Date specified
below since Borrower has posted with Lender an additional Rate
Lock Deposit (herein so called) equal to 1% of the proposed Loan
Amount, which deposit shall be refundable to Borrower on the same
terms and conditions as the Deposit provided for below.
AMRESCO CAPITAL, L.P.
700 North Pearl Street - Suite 2400 - LB 342 - Dallas, Texas 75201-7424
214-953-7700 - Fax 214-953-7977
<PAGE> 2
Exhibit 10.8
AMORTIZATION
OF PRINCIPAL: Based on 25 years, subject to confirmation from the
third-party reports required by Lender that all improvements on
the Property have a remaining economic, useful life of at least
seven years beyond such amortization period, with the
understanding that the Loan is payable in full at the end of the
Term first stated above.
MAXIMUM
LTV RATIO: A third-party MAI appraisal ("Appraisal") acceptable to
and addressed to Lender must show sufficient value so that the
Loan Amount does not exceed 70.0% of the value of the Property at
the time of closing. The Appraisal must also address, to Lender's
satisfaction, market rents, vacancy and tenant improvement and
leasing commission costs, all of which will be among the items
used by Lender in determining cash flow available for debt
service.
MINIMUM
DSC RATIO: The current and historical statements of Property income and
expenses and rent roll submitted and to be submitted by Borrower
must be verified by Lender. At the time of closing, the annual
cash flow from the Property available for debt service, divided
by the annual amount of principal and interest payments on the
Loan, must result in a debt service coverage ratio of at least
1.40 to 1.00. Cash flow available for debt service will be the
sum of all income collected from the Property, based on the
12-month period ending December 31, 1997 in form acceptable to
Lender at the time of such review; plus potential income
recognized by Lender from laundry, telephone and restaurant
operations substantiated by Borrower and recognized by Lender
from laundry, telephone and restaurant operations substantiated
by Borrower and recognized by Lender as stable and continuing
throughout the term of the Loan; less all operating and other
expenses for the Property during such 12-month period. In
determining cash flow available for debt service, and in addition
to making any other adjustments to income and expenses provided
for in Lender's written underwriting guidelines, Lender will do
the following: deduct the annual amounts of all on-going escrows
and reserves (the adequacy of which, together with the estimated
cost of deferred maintenance and repairs, must be verified
pursuant to Lender's site inspection and third-party reports and
the full amounts of which will be deducted from income hereunder,
even if Lender has agreed in this Commitment to suspend or
otherwise modify Borrower's obligation to make deposits with
Lender for such purposes), including the amounts of all insurance
premiums and taxes (as determined by Lender), the general
replacement reserve, and all other on-going escrows and reserves
provided for in this Commitment not otherwise deducted hereunder;
limit recognition of rents to the lesser of contractual rents or
market rents (as reflected in the Appraisal); reduce all room
revenues by a combined market franchise fee and sales and
marketing expense factor of not less that 11.0%. In addition to
its other underwriting criteria in determining cash flow
available for debt service, Lender must be satisfied with its
verification of average daily rates in the market and at the
subject Property, occupancy levels in the market, a sustainable
occupancy
-2-
<PAGE> 3
Exhibit 10.8
level of at least 64.0% for the Property, market expenses and
other market data relative to the Property. At the present time,
annual cash flow available for debt service is estimated to be
$870,753 and principal and interest payments are estimated to be
$616,379 per year. It is understood that a reduction in the
amount of cash flow available for debt service as finally
underwritten by Lender by the time of closing to less that
$862,931 may result in a reduction of the Loan Amount in order to
attain the minimum debt service coverage ratio.
RETURN
DATE: Duplicates of this Commitment, executed by Borrower and Key
Principals identified below, must be received by Lender within
one week after the date of this Commitment, or Lender may at its
option withdraw the same and reject any tender by Borrower of
this Commitment and the Deposit.
CLOSING
DATE: March 31, 1998 (unless extended in writing by Lender), by which
date the Loan must have been closed and funded or this Commitment
will have expired.
FUNDING: Loan funding shall occur as soon as practical after delivery of
executed Loan Documents (as hereinafter defined) and satisfaction
of all closing requirements.
LENDER'S FEES:
PROCESSING
FEE: $5,000, previously paid by Borrower, earned by Lender and non-
refundable in any event.
DEPOSIT: $68,300 (1.0% of the proposed Loan Amount), previously paid by
Borrower. If the Loan is not closed for reasons other than a
Borrower Default (as defined in the "CONDITIONS FOR PARTIAL
REFUND" paragraph below), the balance of the Deposit in excess of
the sum of Lender's Loan Expenses (hereinafter defined) will be
refunded, as will the Rate Lock Deposit provided for above. If
Lender determines at any time prior to closing that its Loan
Expenses are exceeding the balance of the Deposit, then Lender
may request, and Borrower will pay within three days, an
additional amount determined by Lender to be sufficient to cover
such expenses.
CORRESPONDENT
FEE: Any compensation for Churchill Mortgage Company ("Correspondent")
or any other broker shall be the sole responsibility of Borrower
and Key Principals. Without liability for failure to do so,
Lender will use reasonable efforts (but only upon the closing of
the Loan) to honor Borrower's written request that Correspondent
be paid out of the proceeds of the Loan the fee agreed to by said
Correspondent be paid out of the proceeds o the Loan the fee
agreed to by said parties.
-3-
<PAGE> 4
Exhibit 10.8
OTHER LOAN TERMS:
LIMITED
RECOURSE: No deficiency or other judgment for repayment of principal and
interest on the Loan will be entered by lender against Borrower
or Key Principals identified below following an event of default
except in the event of fraud or material misrepresentation by
Borrower or Key Principals in connection with the Loan (including
but not limited to the failure to pay the first full monthly
payment of principal and interest when due). In addition,
Borrower and Key Principals will be liable for certain recourse
obligations as more particularly provided in Lender's standard
promissory note form and described in paragraph 23 of the Summary
of Standard Terms and Conditions attached hereto.
CARVE-OUTS: Ronald A. Young and John F. Rothman ("Key Principals", whether
one or more) will each execute a guaranty with respect to the
limited recourse carve-out provisions described above.
SECURITY: The Loan shall be secured by a first and prior mortgage or deed
of trust on the Property, and a perfected first security interest
in all leases, rents, income and profits, and all other personal
property, rights and interest owned by Borrower and related or
appurtenant to the Property.
REPAYMENT
TERMS: If funding of the Loan does not occur on the first day of a
calendar month, Borrower will pay interest accruing up to the
first day of the next calendar month, in advance at closing.
Thereafter, principal and interest (payable in arrears) shall be
due in monthly installments until maturity. Interest shall be
computed and payable in arrears on a monthly basis assuming a
360-day year consisting of 12 months of 30 days each, except that
interest due and payable for a period less than a full month
shall be calculated by multiplying the actual number of days
elapsed in such period by a daily rate based on said 360-day
year. As more particularly provided in the Loan Documents, the
Interest Rate will be subject to increase if the Loan is not paid
in full at the end of the term stated above or if there is an
event of default, and interest on the Loan, including all fees
and charges treated as such under applicable law, shall be
limited so as never to exceed the highest rate allowed by such
law.
PREPAYMENT: Except in the case of casualty or condemnation proceeds actually
applied to the Loan balance, the Loan may not be prepaid before
the expiration of 120 months after the due date of the first
constant payment under the promissory note evidencing the Loan
("Note"). After this lockout period,. the Loan may be prepaid
only in accordance with the defeasance provisions of the Note, as
more particularly described in paragraph 5 of the Summary of
Standard Terms and Conditions. Borrower has the right to prepay
the Loan in full at par on any scheduled payment date during the
last six months.
-4-
<PAGE> 5
Exhibit 10.8
DUE ON SALE: Subject to Borrower's satisfaction of certain conditions as
provided in the Loan Documents (including payment of a 1.0% fee),
Borrower has a one-time right to transfer title to a third party
acceptable to Lender who assumes the Loan. Any sale, transfer or
conveyance of all or any part of the Property without Lender's
prior written consent shall give Lender the right to declare the
balance of the Loan immediately due and payable. In addition,
neither subordinate financing (whether or not secured by a lien
on the Property or any other assets of Borrower) nor any
indebtedness other than the Loan and trade and operational debt
incurred in the ordinary course of business for the Property
shall be allowed.
REPORTS: During the first 12 months after the closing of the Loan, monthly
occupancy (including rent roll, if applicable) reports and
financial statements (including month-by-month and year-to-date
operating results) the Property are required to be provided
within 20 days after the close of each calendar month.
Thereafter, quarterly occupancy (including rent roll, if
applicable) reports and financial statements (including
month-by-month and year-to-date operating results) for the
Property are required to be provided within 45 days after the
close of each calendar quarter, in addition to all franchise
inspection reports and certain annual and other reports required
under the Loan Documents. If so required by any national rating
agency or otherwise in Lender's reasonable discretion, such
financial statements, together with those to be furnished in
underwriting the Loan, must be prepared and/or audited by a
certified public accountant. In addition, the Loan Documents
provide for audits in certain events of default.
ESCROWS AND RESERVES:
TAXES AND
INSURANCE: Escrows shall be maintained by a monthly deposit by Borrower of
1/12 of the annual taxes and insurance premiums as estimated by
Lender. At closing, the escrow will be funded in an amount which,
when the required monthly payments are added thereto, will be
sufficient to pay such charges when due.
GENERAL: A general replacement reserve of 5.0% of gross revenues from the
Property will be funded through monthly deposits by Borrower.
Monies deposited will be released to Borrower for reimbursement
of hotel case goods and soft goods, carpeting and other interior,
exterior, structural HVAC and mechanical improvements and repairs
in accordance with the terms of the applicable Loan Documents.
This reserve may be adjusted upward after Lender's evaluation of
the Engineering Report (hereinafter defined).
REPAIRS: 125.0% of the estimated cost of any needed maintenance and
repairs as determined by lender's evaluation of the Engineering
Report will be deposited at closing. These monies will be
released to Borrower for reimbursement of costs of such
maintenance and repairs, which must be completed within the time
period established by Lender in accordance with the terms of the
applicable Loan Documents.
-5-
<PAGE> 6
Exhibit 10.8
OTHER: Any additional funding of the foregoing required at closing and
any escrow for debt service or other purposes as may be provided
in the Special Conditions Supplement, all of which shall be
pursuant to escrow agreements acceptable to Lender and executed
by Borrower at closing.
LOAN CLOSING CONDITIONS:
Closing the Loan is conditioned upon certain additional requirements, including
(i) the Property, Borrower and Key Principals being as represented and meeting
Lender's underwriting criteria, (ii) execution and delivery by Borrower of all
Loan Documents, attorney's opinions, evidence of corporate authority, and other
matters required by lender, and (iii) Borrower's prior delivery of and Lender's
satisfaction (in its sole discretion) with the following:
TITLE INSURANCE AND CURRENT SURVEY acceptable to Lender, to be provided not less
than 60 days before closing.
UCC/LITIGATION/TAX LIEN SEARCH acceptable to lender, to be provided not less
than 60 days before closing.
EVIDENCE OF PROPER ZONING AND PERMITTING acceptable to Lender, including without
limitation all licenses required for all existing and contemplated uses of the
Property, the adequacy of the amount of and all legal arrangements for parking,
as well as the compliance thereof with all legal requirements, and the
rebuildability of existing improvements in the event of any destruction thereof,
to be provided not less than 30 days before closing.
MANAGEMENT of the Property shall be conducted by an entity acceptable to Lender.
Any management contract or agreement shall be subordinate to the Lender's
mortgage, shall be assigned to Lender and shall be subject to termination in
event of default; evidence of same to be provided not less than 30 days before
closing.
FIRE & HAZARD INSURANCE coverage, rent loss and business interruption,
comprehensive general liability and such other insurance (including law and
ordinance, flood and/or earthquake, if applicable) as Lender may require in a
form and for an amount acceptable to Lender, issued by a company satisfactory to
Lender and fully paid by time of closing, to be provided not less than 30 days
before closing.
UNPAID TAXES AND ASSESSMENTS due at the time of closing are to be paid prior to
disbursement of the Loan.
OPINION OF BORROWER'S COUNSEL in Lender's standard form with assumptions and
limitations acceptable to Lender, addressing, without limitation, the validity
and enforceability of the Loan Documents, the compliance by the Property with
all applicable zoning, building and other laws and the valid existence of the
borrowing entity, to be provided not less than 15 days before closing.
THIRD-PARTY MAI APPRAISAL acceptable to Lender and supporting the maximum
loan-to-value
-6-
<PAGE> 7
Exhibit 10.8
ration and market rent and vacancy factor described above, to be dated not more
than 90 days before closing.
THIRD-PARTY ENGINEERING REPORT to be ordered by Lender ("Engineering Report")
and dated not more than 60 days before closing, showing that all improvements
are in good and workable condition and comply with all applicable regulations
(including ADA) or, if not, an estimate of the cost and description of any
deferred maintenance and repairs.
THIRD-PARTY ENVIRONMENTAL SITE ASSESSMENT to be ordered by Lender
("Environmental Report") and dated not more than 60 days before closing, showing
that there is no toxic substance, hazardous waste or other adverse environmental
condition affecting the Property and confirming the matters stated in the
attached Environmental Questionnaire and Certificate, which is a part of this
Commitment and must be completed and signed by Borrower and Key Principals and
submitted herewith. Borrower and Key Principals will execute an environmental
indemnity agreement with respect to the existence of hazardous or toxic
substances or the failure of the Property to comply with environmental laws, and
Borrower and Key Principals hereby represent to Lender that they are not aware
of any asbestos-containing materials, storage tanks, lead-based paint, toxic
substance, hazardous waste or other adverse environmental condition affecting
the Property, either now or in the past, except as follows:
- --------------------------------------------------------------------------------
INCOME AND EXPENSE STATEMENTS acceptable to Lender and supporting the minimum
debt service coverage ratio above.
FINANCIAL STATEMENTS, CREDIT REPORTS AND REFERENCES on Borrower and Key
Principals, supporting a current financial condition of such parties
satisfactory to lender, together with current rent rolls and historical
financial information on the Property.
COSTS AND EXPENSES: Borrower shall pay all costs and expenses incurred in
connection with underwriting, preparing for and closing the Loan ("Loan
Expenses") and the Processing Fee (which is included in Loan Expenses unless
such fee is paid separately from the Deposit ), whether or not the Loan is
closed. It is understood that Loan Expenses include, but are not limited to, the
following: (a) the cost of all third-party reports described above and any
third-party reviews of such reports, all inspection fees, credit report fees,
insurance policy review fees, title insurance report fees, surveyor's fees,
zoning and surveyor consultant's fees, legal fees and disbursements (including
fees and disbursements of lender's counsel, as well as local counsel selected by
Lender) and fees for all title, UCC, litigation and tax lien searches; and (b)
all note taxes, intangibles taxes, transfer taxes, documentary stamp taxes, all
taxes, costs and fees for recording and filing the mortgage and other Loan
Documents, all license and permit fees, fees in connection with the preparation
and premiums for title and other insurance, escrow and disbursement fees and
other closing costs, This paragraph shall survive the termination of this
Commitment, and if Borrower fails to pay all Loan Expenses, then Key Principals
shall each be responsible for the payment of same.
INSPECTION of the Property and approval thereof by Lender is required.
-7-
<PAGE> 8
Exhibit 10.8
ADVERSE CHANGE or deterioration in the financial condition of the Property,
Borrower or any Key Principals after issuance of this Commitment, but prior to
closing, may result in a termination of this Commitment and all obligations of
Lender thereunder.
LOAN DOCUMENTS executed by Borrower at closing on Lender's standard forms
without material change and in form and substance satisfactory to Lender in its
sole discretion. Attached hereto is a Summary of Standard Terms and Conditions
that will be found in the Loan Documents or are required by Lender in connection
with its review of the Loan, as well as certain representations and warranties
of Borrower and Key Principals made in connection with this Commitment. It is
understood that negotiations as to any of such terms and conditions will result
in increased legal fees to be paid to Borrower.
SPECIAL PURPOSE/BANKRUPTCY REMOTE BORROWING ENTITY acceptable to Lender, with
entity documents acceptable to Lender, as provided in the Special Conditions
Supplement described below.
MISCELLANEOUS: Such other evidence, documents, subordinations, estoppel
certificates, searches and items required by Lender that are customarily
provided in loan transactions of this type or otherwise reasonably required in
connection with Lender's underwriting of the Loan. As of the date of closing,
all representations, warranties and certifications made by Borrower and Key
Principals to Lender shall be true and correct and there must exist no event of
default (or event with which notice or lapse of time or both could constitute an
event of default) under the Loan Documents.
SPECIAL CONDITIONS SUPPLEMENT: Special provisions of this Commitment are set
forth in this Special Conditions Supplement attached and incorporated by
reference. If any such special provision is in conflict with another term or
condition of this Commitment, the special provisions shall control.
ADDITIONAL INFORMATION: Borrower and Key Principals agree to timely furnish
Lender the information outlined in the attached Borrower Documentation List and
any additional information or documentation that shall be required by Lender to
process this Commitment.
OTHER MATTERS
CONDITIONS FOR PARTIAL REFUND: If the Loan is not closed, Borrower will be
entitled to a refund of the Rate Lock Deposit and that portion of the Deposit
which is in excess of the sum of all of Lender's Loan Expenses unless this
Commitment expires or is terminated by Lender because Borrower, its Key
Principals or agents (a) make a material misrepresentation, (b) fail to furnish
information required under this Commitment or to comply with a condition
precedent within their control (including without limitation the failure to
complete any construction or meet any leasing requirements provided for in this
Commitment), or (c) terminate negotiations prior to the execution of the Loan
Documents or otherwise fail or refuse to close the Loan. In any of the events
described in clauses (a), (b) or (c)of the foregoing sentence (collectively,
"Borrower Default"), Lender will be entitled, as compensation for its services,
to retain all funds paid and draw on any letter of credit posted for the Rate
Lock Deposit and the Deposit, and Lender may
-8-
<PAGE> 9
Exhibit 10.8
also, at its option, recover from Borrower and Key Principals the sum of all of
Lender's Loan Expenses in addition to being entitled to the Rate Loan Deposit
and the Deposit. In any such event Borrower will also be directly responsible
for the payment of any fee or commission earned by the Correspondent (if any) or
any other broker used in this transaction. Borrower agrees with Lender that this
paragraph will survive the expiration or termination of this Commitment and
acknowledges that Lender is issuing this Commitment and agreeing to underwrite
the Loan based upon Borrower's agreements in the "BORROWER COOPERATION"
paragraph below.
BORROWER COOPERATION: Borrower is being provided with the attached Borrower
Documentation List and will be provided by lender with a detailed Due Diligence
and Legal Checklist, including the dates by which such information must be
furnished. Borrower agrees to provide Lender and agents in a timely fashion all
of such information and such other items as Lender may request in order to
underwrite and close the Loan. Borrower acknowledges that Lender is issuing this
Commitment and underwriting the Loan based upon such agreement and in reliance
on the representations by Borrower, its Key Principals and agents concerning the
property and the financial and other condition of Borrower and Key Principals
and that the failure to furnish complete and accurate information in a timely
manner and otherwise to cooperate in underwriting and closing the Loan may cause
this Commitment to expire and/or entitle Lender to terminate this Commitment on
account of such Borrower Default, and Lender will be entitled to compensation as
provided in the "CONDITIONS FOR PARTIAL REFUND" paragraph above.
INDEMNITY FOR BROKER CLAIMS: Borrower agrees to pay the commission of the
Correspondent (if any) identified in the "CORRESPONDENT FEE" paragraph of this
Commitment and of any other broker used in this transaction, and Borrower and
Key Principals agree to hold harmless and defend the Lender (and Correspondent,
if any) from and against any and all claims for brokers' or finders' fees and
commissions in connection with the transaction. This indemnification paragraph
shall survive the termination of this Commitment.
ROLE OF CORRESPONDENT: Borrower understands that Correspondent (if any) does not
have the authority to and cannot bind Lender in any respect, including without
limitation, the authority to waive any conditions or make any changes to this
Commitment.
FINANCIAL DEALINGS: Except as set forth in detail in a separate written
explanation attached to and made a part of this Commitment, or previously
delivered to Lender, neither Borrower, its Principal Owners (being defined as
any person or entity directly or indirectly owning or controlling 25.0% or more
of an ownership interest in Borrower or having the power to direct the
management and polies of Borrower, whether by contract, through an ownership
interest, or otherwise) nor any Key Principals: (i) during the past seven years,
has had any judgment remain unsatisfied more than 30 days; (ii) during the past
seven years, has transferred its right, title, and interest in a property
through a deed-in-lieu or foreclosure action, or has filed or has had filed
against it any action under the bankruptcy laws of the United States, (iii) is
currently a co-maker; endorser or guarantor on or of any note (except as
disclosed to Lender in writing as provided above); (iv) is currently a party to
any lawsuit; (v) has received notice of, or is otherwise aware of, any
bankruptcy, insolvency or comparable proceedings, condemnation, litigation, or
any other action against or affecting the Property, Borrower or any Key
Principals or contemplates filing
-9-
<PAGE> 10
Exhibit 10.8
any such proceedings; or (vi) has ever been convicted of a felony. Any such
exception must be acceptable to Lender. Neither Borrower, its Principal Owners,
nor any Key Principals has any other loan closed or pending with Lender, and
this Loan is not related to any other loan or proposed loan from Lender except
as follows:
- --------------------------------------------------------------------------------
ADDITIONAL CERTIFICATIONS: Borrower and all of its Principal Owners are domestic
United States entities or individuals, and neither Borrower nor any of its
Principal Owners is a pension, retirement, welfare, benefit or other "employee
benefit plan" as defined in applicable provisions of the Employee Retirement
Income Security Act of 1974 (as amended from time to time and including the
regulations promulgated thereunder, "ERISA") or owns "plan assets" as defined in
ERISA, and no employee benefit plan owns or controls, directly or indirectly,
any interests in Borrower or any of its Principal owners. The provisions of this
paragraph shall survive the termination of this Commitment, and Borrower and Key
Principals warrant that the representations made in this paragraph shall
continue to be true and correct until all sums owed under the Loan Documents to
Lender or other holder of the Note have been paid in full.
LENDER AUTHORIZED: Borrower agrees Lender and its agents are authorized to enter
the property for any purpose related to this Commitment during normal business
hours with reasonable notice to Borrower. Lender is further authorized to obtain
credit reports on Borrower and its Key Principals as well as verification of
statements made in his Commitment and any attachments hereto.
INFORMATION COMPLETE: Borrower and Key Principals each certify that all
information, representations, exhibits and other material submitted to Lender
by, or to be submitted by, Borrower and Key Principals are and will be true,
correct and complete.
SECONDARY MARKET: Borrower acknowledges that Lender intends to sell the proposed
Loan, if closed and funded. Lender has the right to disclose such information
concerning the proposed Loan, Borrower, Key Principals and the Property as
Lender deems necessary in connection with any such sale, and such assignee shall
have the benefit of any warranty, indemnity or other covenant by Borrower or Key
Principals under this Commitment which survives the closing of the Loan.
NO ASSIGNMENT OR THIRD-PARTY RELIANCE: Borrower's rights under this Commitment
may not be assigned to, or relied on by, any person or entity who is not a party
hereto other than any borrowing entity to be formed in accordance with the
requirements of this Commitment and approved in writing by Lender.
PUBLIC ANNOUNCEMENT: Upon closing of the Loan, Lender is authorized in its
discretion to issue news releases and at its own expense to publish "tombstone
ads" and other announcements in newspapers, trade journals and other appropriate
media, containing information about the Loan as may be deemed noteworthy by
Lender, including without limitation the legal and trade name (and if such
information is public, the ownership affiliation) of Borrower, the term and
amount of
-10-
<PAGE> 11
Exhibit 10.8
the Loan, the Interest Rate, the name, nature and location of the Property and,
at Lender's expense, to have prepared and distributed to persons involved in the
Loan acrylic "cubes" containing all or part of such information.
TITLE COMPANY SELECTION: Borrower acknowledges that it has designated the
approved title company agent and underwriter in the section following Borrower's
signature below, which section is part of this Commitment. If Borrower fails to
make such selection, Lender is authorized to designate such agent and
underwriter. Upon receipt of the Deposit, Lender's loan closer will contact
Borrower to coordinate the placement of Borrower's order for the commitment for
title insurance, which is to be provided by Borrower within 20 days after
submission of this Commitment.
GOVERNING LAWS: THIS COMMITMENT SHALL BE DEEMED TO BE EXECUTED IN AND
PERFORMABLE I, AND GOVERNED BY THE SUBSTANTIVE LAWS OF, THE STATE OF TEXAS
(WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES). UPON THE CLOSING OF THE
LOAN, THE LOAN DOCUMENTS WILL BE GOVERNED BY THE LAWS OF THE STATE IN WHICH THE
PROPERTY IS LOCATED (EXCEPT AS LENDER MAY DETERMINE OTHERWISE ON ACCOUNT OF
USURY OR OTHER PECULIAR LAWS IN SUCH STATE) AND BY APPLICABLE LAWS OF THE UNITED
STATES OF AMERICA.
WAIVER OF JURY TRIAL; LIMITATIONS ON DAMAGES: BORROWER, KEY PRINCIPALS AND
LENDER EACH AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY
JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH
RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS COMMITMENT OR THE OTHER
LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. IN NO EVENT SHALL LENDER OR ANY ASSIGNEE OF THE LOAN BE LIABLE FOR
ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES WHATSOEVER (INCLUDING
WITH LIMITATION LOSS OF BUSINESS PROFITS OR OPPORTUNITY) AND BY THEIR EXECUTION
OF THIS COMMITMENT, BORROWER AND KEY PRINCIPALS EACH WAIVE ANY RIGHT TO CLAIM OR
SEEK ANY SUCH DAMAGES. LENDER'S LIABILITY FOR ANY DAMAGES CLAIMED BY BORROWER OR
ANY KEY PRINCIPALS FOR ANY CAUSE WHATSOEVER ARISING OUT OF, OR IN ANY WAY
RELATED TO, THIS COMMITMENT SHALL BE LIMITED TO THE LESSER OF ACTUAL DAMAGES OR
THE FEES ACTUALLY PAID HEREUNDER. THIS PARAGRAPH SHALL SURVIVE THE TERMINATION
OF THIS COMMITMENT.
(Signatures on next page)
-11-
<PAGE> 12
Exhibit 10.8
THIS COMMITMENT, AND THE OTHER LOAN DOCUMENTS REFERRED TO OR CONTEMPLATED
HEREIN, REPRESENT OR WILL REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
Lender: AMRESCO CAPITAL, L.P.,
a Delaware limited partnership
By: AMRESCO Mortgage Capital, Inc.,
a Delaware corporation, its sole General Partner
By: LEONARD R. SIMPSON, JR.
-----------------------------------
Name: Leonard R. Simpson, Jr.
-----------------------------------
Title: Senior Investment Officer
-----------------------------------
ACCEPTED AND AGREED by the undersigned on January 9, 1998.
Borrower: CASA MUNRAS HOTEL PARTNERS, L.P.
By: JOHN F. ROTHMAN
-----------------------------------
Name: John R. Rothman
-----------------------------------
Title: General Partner
-----------------------------------
Tax I.D.No.: 95-3235634
-----------------------------------
Key Principals:
RONALD A. YOUNG
-----------------------------------
Name: RONALD A. YOUNG
S.S.No.: ###-##-####
-----------------------------------
JOHN F. ROTHMAN
-----------------------------------
Name: JOHN F. ROTHMAN
S.S.No.: ###-##-####
NOTE: Borrower's Title Company Selection is immediately following, and if
Borrower fails to make such selection, Lender is authorized to do so.
-12-
<PAGE> 13
Exhibit 10.8
TITLE COMPANY SELECTION
Pursuant to Paragraph 16 of the Summary of Standard Terms and Conditions,
Borrower selects the following approved title company agent to issue the
commitment for mortgagee title insurance on behalf of the following designated
underwriter:
<TABLE>
<CAPTION>
<S> <C>
(CHECK ONE) Approved Title Company Agent: For Approved Underwriter: (CHECK ONE)
American Title Company Chicago Title Ins. Co.
6029 Belt Line Road, Suite 250 Commonwealth Land Title Ins. Co.
Dallas, Texas 75204 Fidelity National Title Ins. Co.
(972) 789-8400 Lawyers Title Ins. Co.
Contact: Carole Badgett Old Republic Nat. Title Ins. Co.
Stewart Title Ins. Co.
TICOR Title Ins. Co.
TransAmerica Title Ins. Co.
Commercial Title Group, Ltd. Chicago Title Ins. Co.
8605 Westwood Center Drive Commonwealth Land Title Ins. Co.
Suite 401 First American Title Ins. Co.
Vienna, Virginia 22182 Lawyers Title Ins. Co.
(703) 506-1520 Stewart Title Ins. Co.
Contact: Barbara Blitz TICOR Title Ins. Co.
Fidelity Nat. Title Agency, Inc. Fidelity National Title Ins. Co.
(See address and contact below) Lawyers Title Ins. Co.
Or:
TICOR Land Title Company Chicago Title Ins. Co.
1717 Main Street, Suite 4250 TICOR Title Ins. Co.
Dallas, Texas 75201
(214) 761-4716 Contact: Thomas Hillsman, Esq.
Partners Title Company Chicago Title Ins. Co.
712 Main Street, Suite 4250 Commonwealth Land Title Ins. Co.
Texas Commerce Bank Bldg. Fidelity National Title Ins. Co.
Houston, Texas 77002-3218 Security Union Title Ins. Co.
(713) 229-8484 TICOR Title Ins. Co.
Contact: Mari Maher TransAmerica Title Ins. Co.
[X] Republic Title of Texas, Inc. Chicago Title Ins. Co. [X]
300 Crescent Court, Suite 100 Commonwealth Land Title Ins. Co.
Dallas, Texas 75201 First American Title Ins. Co.
(214) 855-8888 Lawyers Title Ins. Co.
Contact: Janie Barber (Texas) Old Republic Nat. Title Ins. Co.
Janell Davidson (all other states) TICOR Title Ins. Co.
</TABLE>
-13-
<PAGE> 14
Exhibit 10.8
If a local agent for the Approved Underwriter designated above has previously
obtained the underlaying title information on the Property in connection either
with a prior financing for Borrower or with Borrower's acquisition of the
Property, Borrower requests that the Approved Title Company Agent (herein so
called) first indicated above cooperate with such local agent indicated as
follows (whom Borrower represents is an authorized agent for such Approved
Underwriter) in obtaining such title work in order for the Approved Title
Company Agent designated above to issue the title commitment and policy:
Name: ------------------------------------
Address: ------------------------------------
City, State ZIP: ------------------------------------
Phone/Fax: ------------------------------------
Borrower understands that the Approved Title Company Agent first designated
above (rather than the local agent) will handle all funds, escrow functions and
related aspects of closing the Loan for the full portion of the title insurance
premium as the Approved Title Company Agent may receive in accordance with
applicable law, provided that the Approved Title Company Agent's compensation to
be paid by Borrower shall in no event be less than its customary escrow fee and
reimbursement of out-of-pocket expenses.
ACKNOWLEDGMENT OF RECEIPT
Lender acknowledges receipt of a Deposit, subject to the terms of the foregoing
Commitment, in the amount of $_______, on ______, 1998.
Lender: AMRESCO CAPITAL, L.P.
a Delaware limited partnership
By: AMRESCO Mortgage Capital, Inc.,
a Delaware corporation, its sole General Partner
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Attachments: Special Conditions Supplement
ECOA Notice and Disclosure
Borrower Documentation List
Environmental Questionnaire and Certificate
Summary of Standard Terms and Conditions
-14-
<PAGE> 15
Exhibit 10.8
SPECIAL CONDITIONS SUPPLEMENT
Prior to closing the Loan, the following conditions must have been
fulfilled to Lender's satisfaction:
1. Borrower must be a domestic entity acceptable to Lender, typically a
special-purpose, bankruptcy-remote entity such as a limited partnership with its
general partner being a single-purpose corporation. Some of the requirements in
such connection are described in paragraph 10 of the Summary. If Lender, in its
discretion, waives any of such requirements it will require additional
information to assess Borrower' potential for a bankruptcy filing as a result of
activities other than the ownership and operation of the Property, and Lender
must in any event by fully satisfied that such potential is negligible;
provided, however, that if the amount of the Loan (together with any loans which
are made to any related entities and which may be included in the same
securitization pool as this Loan) is $15,000,000 or more, then in addition to
the typical special-purpose, bankruptcy-remote entity requirements described
above Lender will also require that the board of Borrower's general partner (or
of Borrower itself, if a corporation) have an independent director and that
Borrower furnish a non-consolidation opinion of counsel acceptable to Lender.
Borrower should submit its financial statements and existing or proposed
organizational and governing documents to Lender as soon as possible. Following
Lender's review of such documents, Lender will advise Borrower what changes, if
any, will be required. In addition, Lender must review and be satisfied with the
identity and financial condition of the Key Principals.
2. Borrower acknowledges that both the Correspondent and its individual
broker who is sponsoring this Loan are real estate brokers licensed by the State
of California. Correspondent and its sponsoring broker have reviewed this
Commitment and made all required disclosures to Borrower, and have participated
and will participate on behalf of Borrower in the negotiation and preparation of
the terms reflected in this Commitment and to be reflected in the Loan
Documents, as well as the negotiation, preparation and, if the Loan is approved
by Lender, consummation of the Loan, including without limitation the
structuring of the principal terms of the Loan and the Loan Documents, the term
of the Loan provisions relating to the prepayment of the Loan and the Interest
Rate provisions. Borrower acknowledges that this transaction is being entered
into in express reliance upon the Borrower's representations set forth above and
with the parties' intent and expectation that the Loan will be exempt from the
restrictions on interest rates contained in Article XV, Section 1 of the
California Constitution as a Loan "made or arranged by" a real estate broker
duly licensed in the State of California. Borrower acknowledges that the Loan
would not have been consummated but for this certification and the Lender's
reliance on the Loan being exempt as a loan "made or arranged by" a real estate
broker duly licensed by the State of California. In addition to Lender, any
subsequent holder of the note evidencing the Loan is entitled to rely on the
foregoing warranty, representation and certification.
3. The third-party reports referred to above will include a
collapsibility study and a seismic assessment of the Property meeting the
Lender's requirements and rendering an opinion of the aggregate probable maximum
loss ("PML") as a percentage of the replacement cost of each building now
situated on the property as a result of an earthquake, together with a
description of the anticipated damage to each such building. The results of such
assessment must
-15-
<PAGE> 16
Exhibit 10.8
be acceptable to lender, and if the PML is more than 20.0%, such report must
include recommendations for mitigating structural deficiencies and cost
estimates for the recommended work, and earthquake insurance will be required by
Lender until the PML is reduced to not more than 20.0%. The premium cost for
such insurance will be among the expense items used in calculating cash flow
available for debt service.
4. The Loan Documents will provide for a lockbox arrangement, as
described in this paragraph and also referred to in paragraph 24 of the Summary
of Standard Terms and Conditions, TO TAKE EFFECT IF, AND ONLY IF, THE LOAN IS
NOT PAID IN FULL ON THE DATE OF EXPIRATION OF THE TERM FIRST STATED ABOVE IN
THIS COMMITMENT. It is understood that such non-payment will be an Event of
Default under the Loan Documents, that the Loan will be fully matured on such
date ("Maturity Date"), and that Lender may at any time thereafter foreclose on
the Property and/or exercise any of its other rights and remedies under the Loan
Documents and applicable law. In order to institute such arrangement, Lender or
its servicer may at any time within 12 months prior to the Maturity Date require
Borrower to execute documentation (including without limitation a tolling or
similar agreement if recommended by Lender's legal counsel) and furnish an
operating budget acceptable to Lender for the property. The lockbox arrangement
will be in effect during a period ("Lockbox Period") beginning on the Maturity
Date if the Loan is not paid in full at such time and will continue until the
Loan is paid in full, including Additional Interest (herein so called), being
interest accrued on the Loan at a rate at least 2.0% per annum higher than the
interest rate ("Initial Interest Rate") in effect during the Term of the Loan;
provided, however, that the entire Loan and all accrued but unpaid Additional
Interest thereon shall be payable in full upon the earlier of (i) the expiration
of two years (or such other maximum Lockbox period as may be determined by
Lender, but in no event beyond the original amortization period) or (ii) demand
by lender at any time on or after the Maturity Date. Upon such expiration or
demand or in the event that Borrower fails to comply with any of its other
obligations under the lockbox arrangement, interest shall accrue on the entire
Loan at the Default Interest Rate (herein so called) as provided in the Note,
being at least 5.0% per annum high than the Initial Interest Rate. During the
Lockbox Period all rental and other income from the Property will be paid
directly into a Lockbox Account (herein so called) under the control of lender
(or its designee), and applied as follows:
(a) first by Lender, in the priority determined by Lender or as provided
in the Loan Documents, to the payment of all amounts required to be paid
thereunder, including the continued payment of installments of principal
and interest (based on the Initial Interest Rate and amortization
schedule or, at Lender's option, as re-amortized based on the Additional
Interest Rate), the payment of taxes and insurance and funding of all
other escrows and reserves provided for in the Loan Documents (even if
Lender had agreed to suspend or otherwise modify Borrower's obligation
to make deposits with Lender for such purposes during the Term of the
Loan), and the payment of capital expenditures an other operating
expenses to third parities not affiliated with Borrower or Key
Principals (all of which expenditures which must be pursuant to a budget
or otherwise approved by Lender in writing), and
(b) then by Lender, in the priority determined by Lender or as provided
in the Loan Documents, to the payment of principal and Additional
Interest not previously paid and
-16-
<PAGE> 17
Exhibit 10.8
applied in accordance with (a) above.
All costs of maintaining the Lockbox Account will be borne by Borrower, and if
there are insufficient funds to pay all debt service, taxes, insurance, escrows,
expenses and other amounts described in item (a) above, then Borrower's failure
upon demand by Lender or its servicer to deposit the deficiency into the Lockbox
Account shall constitute an Event of Default and interest will accrue at the
Default Interest Rate. Lender may defer payments to third parties affiliated
with Borrower or Key Principals until all amounts described in (a) and (b) above
have been paid. In connection with the institution of the lockbox arrangement
Lender may also require Borrower and Key Principals to obtain at their expense
such (x) title policy endorsements as Lender or its legal counsel may deem
necessary to reflect any tolling or extension of the applicable statute of
limitations during the Lockbox Period described above or otherwise to effectuate
the arrangement described in this paragraph and (y) additional Engineering
Report as Lender may deem necessary to confirm the adequacy of the capital
expenditure budget during such period. Anything herein above to the contrary
notwithstanding, it is understood that the existence or continuation of such
lockbox arrangement shall constitute neither a waiver of any of Lender's rights
and remedies under the Loan Documents (including without limitation foreclosure
on the Property) and applicable law (including without limitation the
appointment of a receiver) nor a limitation on the exercise thereof by Lender or
its designee at any time on or after the Maturity Date first defined above.
5. A prior Phase I Environmental Site Assessment conducted on the
Property indicated the presence of certain asbestos-containing material ("ACM")
in certain locations throughout the Property. Such Phase I Report recommended
the removal and/or enclosure of the ACM and managing certain other asbestos
related materials under an operations and maintenance program. Such report
estimated the total costs for removal of all ACM to be between $50,000 and
$60,000. As a condition to closing, Lender will require that Borrower escrow
125% of the estimated cost to remove the ACM (as identified in the Phase I
Report), which funds shall be maintained the Lender in an escrow account and
pursuant to an escrow agreement acceptable to Lender and its counsel. Such
monies shall be released to Borrower when Lender has received satisfactory
evidence that the ACM has been removed in accordance of the recommendations
contained in the above-described Phase I Report and otherwise in compliance with
all applicable environmental laws. In addition, Lender must be satisfied that an
acceptable operations and maintenance plan is instituted prior to closing in
order to address the spray-on material located on the Casa bar ceiling.
6. Subject to Lender's review of monthly operating statements from the
Property, Lender reserves the right to institute a debt service escrow mechanism
to ensure that adequate funds are available for debt service during those months
during the year when occupancy levels are historically at a level insufficient
to support the projected debt service on the Loan. Such debt service escrow
mechanism must be acceptable to Lender and shall be evidenced by an escrow
agreement satisfactory to Lender and its counsel.
NOTE: With respect to paragraph 5 herein above, it is understood and agreed that
Borrower will obtain three bids for the work and, subject to the approval
of Lender, will select one such bidder to complete the work. As a
condition to closing, provided
-17-
<PAGE> 18
Exhibit 10.8
Borrower does not complete the work prior to closing, Lender will
escrow 125% of the estimated cost of the work to be released to
Borrower when Lender has received satisfactory evidence the work
has been completed.
-18-
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<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 367,327
<SECURITIES> 0
<RECEIVABLES> 55,155
<ALLOWANCES> 0
<INVENTORY> 15,908
<CURRENT-ASSETS> 471,952
<PP&E> 3,305,686
<DEPRECIATION> 3,849,939
<TOTAL-ASSETS> 3,990,305
<CURRENT-LIABILITIES> 1,043,785
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,946,522
<TOTAL-LIABILITY-AND-EQUITY> 3,990,305
<SALES> 3,991,382
<TOTAL-REVENUES> 3,991,382
<CGS> 0
<TOTAL-COSTS> 3,395,809
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 67,403
<INCOME-PRETAX> 595,573
<INCOME-TAX> 0
<INCOME-CONTINUING> 595,573
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 595,573
<EPS-PRIMARY> 120.00
<EPS-DILUTED> 0
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