<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, 1999
[ ] 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)
<TABLE>
<S> <C>
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)
</TABLE>
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: $4,790,180
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 John F. Rothman and Ronald A. Young
(the "Initial General Partners"). On June 8, 1998, the Initial General Partners
of the Partnership were replaced by Casa Munras GP, LLC, a California limited
liability company (the "General Partner"), upon approval by the Limited
Partners. The General Partner is equally owned by the Initial General Partners.
The change in the General Partner resulted from the placement of a new First
Mortgage (the "First Mortgage") on the Hotel (see "Borrowings" described below).
The owners of the Units are hereinafter referred to as the "Limited Partners,"
and the Limited Partners and the General Partner 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 Partner believes 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 $4,790,180 and $4,273,340 generated at the Hotel for the
years ended December 31, 1999 and 1998, approximately 80% represented room
sales, 16% and 15% food and beverage sales and 2% 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 Partner to Westland, see Item 9 and
Item 12 of this report.
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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, 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 Initial 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 Initial 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, 1999 and 1998:
<TABLE>
<CAPTION>
For the Three Months Ended
--------------------------------------------------------------
March 31 June 30 September 30 December 31 Total
---------- ---------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
Room Sales
1999 $ 689,257 $ 993,626 $1,443,984 $ 689,934 $3,816,801
1998 544,843 925,229 1,302,842 655,115 3,428,029
1997 535,847 835,189 1,174,146 649,665 3,194,847
Food &
Beverage
Sales
1999 $ 161,631 $ 211,615 $ 199,949 $ 192,778 $ 765,973
1998 126,492 180,816 180,250 170,554 658,112
1997 121,843 175,898 173,823 158,764 630,328
Total
Revenues
1999 $ 902,285 $1,257,051 $1,696,781 $ 934,063 $4,790,180
1998 709,885 1,146,221 1,542,912 874,322 4,273,340
1997 695,679 1,049,660 1,392,537 853,506 3,991,382
Hotel
Occupancy
1999 54% 72% 82% 51% 65%
1998 50% 75% 83% 52% 65%
1997 51% 72% 85% 59% 67%
Average
Room Rate
1999 $ 84.76 $ 91.21 $ 115.68 $ 88.52 $ 97.11
1998 79.82 88.37 103.38 81.82 90.43
1997 77.22 84.12 98.49 79.24 86.38
</TABLE>
The Hotel operates 24 hours a day every day of the year. The
Registrant currently employs approximately 85 full-time employees and
approximately 13 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 Partner believes 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 Partner
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 Partner believes 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 Partner believes 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 June 1998, principal and accrued interest of $384,130 on the
unsecured promissory note due to an affiliate of the Initial General Partners
was repaid.
In June 1998, principal and accrued interest of $231,979 on the
unsecured promissory note payable to a bank was repaid.
On April 6, 1998, one of the Initial General Partners advanced
$200,000 and
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issued an unsecured 10% demand note to the Partnership; the funds were used to
finish construction of the additional guest rooms. In June 1998, principal and
accrued interest of $204,290 was repaid.
On May 6, 1998, the Registrant entered into an unsecured 10%
promissory note payable to a bank in the original principal amount of $250,000.
The principal amount plus unpaid interest was due on July 1, 1998. In June 1998,
principal and accrued interest of $252,014 was repaid.
On June 12, 1998, the Registrant obtained the First Mortgage on
the Hotel in the amount of $7,000,000. The First Mortgage requires monthly
principal and interest payments of $52,643, with interest fixed at 7.7% per
annum (the "Initial Interest Rate") until July 1, 2008, when the First Mortgage
is scheduled to mature. On July 1, 2008, subject to certain conditions, the
principal may be amortizable for two additional years. During this period, the
Initial Interest Rate will change to the lesser of the maximum rate permitted by
law or the greater of 2% above the Initial Interest Rate or 2% plus Treasury
Rate, as defined in the First Mortgage. Monthly impound payments are required
under the First Mortgage for property taxes, insurance, replacements and for any
incentive management fees due Westland under the Contract. For information
concerning Westland and the Contract, see Items 9 and 12 of this report.
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. The Initial 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 was completed in June 1998. There are 166 guest rooms located
in 11 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
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tenants. There is adequate on and off-street parking to serve the Hotel, with
access from Fremont Street along Munras Avenue.
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.
In 1997, the Hotel undertook a substantial capital refurbishment
program which was completed in 1998. The Registrant expended $1,096,553 and
$327,019 in 1998 and 1997 (including $1,005,282 and $143,435, respectively, for
construction of 14 new guest rooms), 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 capital expenditures in
2000 totaling approximately $800,000. The capital improvements will continue to
upgrade the Registrant's Hotel facility. These capital expenditures are expected
to be funded from cash reserves remaining from the First Mortgage obtained in
June 1998 and cash provided by operations.
The Partnership has obtained property and liability insurance
coverage for the Hotel Facility which it believes is adequate. The Partnership
has not obtained earthquake insurance coverage due to the cost of the premiums.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
A solicitation of consent of the Limited Partners was made on May
15, 1998. The solicitation sought the Limited Partners approval of Amendment No.
21 to the Partnership Agreement which was required by the lender. The amendment
included the following:
1. removal of the Initial General Partners as the General
Partners of the Partnership and the appointment of an
"entity" in the form of a Limited Liability Company (owned
by Rothman and Young) as the replacement General Partner;
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2. adoption of language in the Partnership Agreement
prohibiting the Partnership from investing in any property
other than the Casa Munras Hotel;
3. assignment of the interest in the Partnership held by the
Initial General Partners to the Limited Liability Company
being appointed as the new General Partner of the
Partnership; and,
4. updating certain tax provisions of the Partnership Agreement
as follows:
a. that capital accounts will be maintained in
accordance with the revised Internal Revenue
Service Regulations;
b. qualified income offset and minimum gain
chargeback provisions; and,
c. provision for allocation of excess non-recourse
liabilities.
The Limited Partners voted 2,264 for, 27 against/withheld and there were 2,164
abstentions.
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 17, 2000, was 583. No public
trading market exists for the Units.
The following cash distributions were paid to the Registrant's
Partners during 1998, 1999 and through March 31, 2000:
<TABLE>
<CAPTION>
Distribution Aggregate Amount
Date of Distribution Per Unit(*) of Distribution(*)
- -------------------- ------------ ------------------
<S> <C> <C>
January 31, 1998 $ 20.00 $ 90,000
June 19, 1998 1,039.00 4,675,500
April 30, 1999 15.00 67,500
July 31, 1999 15.00 67,500
October 31, 1999 15.00 67,500
January 31, 2000 15.00 67,500
</TABLE>
In addition, a special distribution totaling $215,664 of refinance proceeds from
the First Mortgage was paid to the General Partner on June 30, 1998. For
information with respect to the special distribution paid to the General
Partner, see Items 6 and 10.
- ----------
(*) For the purpose of distributions, the Initial General Partners' $45,000
capital contribution is
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considered the equivalent of 45 Units.
Item 6. Management's Discussion and Analysis or Plan of Operation.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenues $4,790,180 $4,273,340 $3,991,382 $3,862,735 $3,305,500
Net Income $ 291,922 $ 339,169 $ 595,573 $ 447,254 $ 286,698
Income Per
Unit $ 64.87 $ 75.37 $ 132.35 $ 99.39 $ 63.71
Distributions
Declared
Per Unit $ 60.00 $ 1,039.00 $ 120.00 $ 138.00 $ 100.00
Total Assets
at December
31, $6,016,546 $5,721,774 $3,990,305 $4,039,085 $3,691,851
Long-Term Obli-
gations at
December 31,
(including
current portion) $6,853,066 $6,952,889 $ 271,219 $ 369,844 $ -0-
</TABLE>
Year ended December 31, 1999 as compared to year ended December 31, 1998
Occupancy at the Hotel totaled 65% in calendar 1999 and 1998. On June
22, 1998, the construction of 14 new guest rooms, increasing the Hotels
available guest rooms to 166, was completed. The average room rate at the Hotel
increased to $97.11 in 1999 as compared to $90.43 in 1998. The increase in the
number of rooms rented and average daily room rate, principally the result of
increased leisure travel in the Monterey Bay peninsula area of California,
resulted in an increase in room revenues from $3,428,029 in 1998 to $3,816,801
in 1999.
In 1999, food and beverage revenues increased $107,861 or 16% to
$765,973 over 1998 comparable revenue. The increase in food and beverage
revenues is attributed to greater numbers of hotel guest patrons in the
restaurant and lounge due to additional rooms rented
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resulting from the new rooms added in 1999 as compared to 1998 and increases in
menu food prices in December 1998.
Expenses totaled $4,498,258 or 94% of revenue, in 1999 as compared to
$3,934,171 or 92% of revenues in 1998. The increase in expenses as a percentage
of revenue is principally attributed to the $196,069, or 4% of 1999 revenues,
increase in interest expense, as a result of the new First Mortgage entered into
in June 1998 for a full year in calendar 1999 to $531,898 from $335,829 in 1998,
offset by improved profit margins due to increased average daily room rates in
1999 over 1998.
Year ended December 31, 1998 as compared to year ended December 31, 1997
A decrease in hotel occupancy from 67% to 65% offset by an increase in
the average room rate at the Hotel from $86.38 to $90.43 for 1997 as compared to
1998, respectively plus the addition of 14 new guest rooms available after June
21, 1998, resulted in an increase in room revenue from $3,194,847 to $3,428,029.
The increase in number of rooms rented and in average room rates in 1998 and a
full years impact of the 1997 capital improvement program are the principal
reason room revenue increased in 1998 as compared to 1997.
Food and beverage revenues increased $27,784 or 4% to $658,112 over
1997 comparable revenue. The increase in food and beverage revenues is
attributed to greater numbers of hotel guest patrons in the restaurant and
lounge due to additional rooms rented resulting from the new rooms added in 1998
as compared to 1997.
Expenses totaled $3,934,171 or 92% of revenue, in 1998 as compared to
$3,395,809 or 85% of revenues in 1997. The increase in the expense as a
percentage of revenue is principally attributed to the increased interest
expense as a result of the new First Mortgage totaling $297,197 or 7%.
Liquidity and Capital Resources
The Registrant's primary source of cash is from the operation and
leasing of the Hotel. During 1999, the Registrant generated $879,132 in net cash
provided by operating activities.
In June 1998, the Partnership obtained a First Mortgage payable for
$7,000,000 at 7.7% interest, secured by the Hotel, with a ten year term; subject
to certain conditions, the principal may be amortizable for two additional
years. Monthly principal and interest payments totaling $52,643 were due
beginning August 1, 1998. The terms and conditions of the loan also require that
certain amounts be deposited monthly and held in escrow for property taxes,
insurance, repairs and possible incentive management fees due Westland under the
Contract. For additional information with respect to the First Mortgage, see the
section of Item 1 of this Report captioned "Borrowings". Payments on long-term
debt totaled $99,823 and increases in impound
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escrow accounts totaled $20,364 in calendar 1999.
Capital expenditures, totaled $368,549 in 1999. It is expected the
Partnership will have capital expenditures in 1999 totaling approximately
$800,000. The capital improvements will continue to upgrade the Registrant's
Hotel facility. These capital expenditures are expected to be funded from cash
reserves remaining from the First Mortgage obtained in June 1998 and from cash
provided by operations.
Distributions declared to partners totaled $270,000 in calendar 1999.
The General Partner intends, to the extent cash from operations is
available and such distributions are permitted under the First Mortgage, to
continue making cash distributions to the Partners at amounts approximating the
Registrant's net income.
Item 7. Financial Statements.
The following are included in this Report in response to this
Item immediately subsequent to the signature page:
Independent Auditors' Report.
Balance Sheets at December 31, 1999 and 1998.
Statements of Operations for the years ended December 31, 1999 and
1998.
Statements of Changes in Partners' (Deficit) Equity for the years
ended December 31, 1999 and 1998.
Statements of Cash Flows for the years ended December 31, 1999 and
1998.
Notes to Financial Statements for the years ended December 31, 1999
and 1998.
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 Partner is Casa
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Munras GP, LLC, a California limited liability company, which replaced the
Initial General Partners. The General Partner of the Registrant is equally owned
by Messrs. Rothman and Young. Mr. Rothman, age 65, and Mr. Young, age 72, were
the Initial General Partners of the Registrant since its formation, and were
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 Partner does not receive any compensation from the
Registrant for serving as the Registrant's general partner.
Set forth below is a summary of all compensation which may be
payable to the General Partner pursuant to the Partnership Agreement.
(1) Acquisitions. In the event the Registrant purchases
additional hotels, the General Partner is entitled to an acquisition fee of
$20,000 per hotel.
(2) Operations. The General Partner is 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 Partner is 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 the General Partner. The Partnership Agreement
provides that if the General Partner of the Registrant should be removed 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 the 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
its interest in such compensation on the date of its removal, based upon the
market value of the assets of the Registrant on and as if such assets were sold
on the date of its 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 the removed General Partner of the
value of its interest at
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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.
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. 21 filed with the State of
California dated October 1, 1998, 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 17, 2000 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>
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- ----------
(*) 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") 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 17, 2000 Class
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Limited John F. Rothman 0 Units* .0
Partnership Ronald A. Young 93 Units* 2.088
Units
</TABLE>
- ----------
(*) Owned directly.
In addition, the General Partner owns a 1% interest in the
equity, profits and losses of the Registrant by virtue of the $22,500 capital
contribution to the Registrant by the Initial General Partners 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.
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<PAGE> 15
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 (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 1999 and 1998, 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 1999 and 1998, $742,526 and
$858,079, 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 1999 and 1998, 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 1999 and 1998 totaled $29,400 and $28,932, respectively.
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 Partner under the circumstances described therein.
15
<PAGE> 16
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).
3.3 Amendment No. 21 to Certificate and Agreement of Limited
Partnership of Casa Munras Hotel Partners, L.P., dated June 8,
1998.
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
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C>
Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-QSB
for the quarter ended June 30, 1994).
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).
10.6 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).
10.9 Fixed Rate Note dated June 12, 1998, executed by Casa Munras
Hotel Partners, L.P. and Amresco Capital, L.P. (incorporated by
reference to 10.9 of the Registrant's Quarterly Report on Form
10-QSB for the quarterly period ended June 30, 1998).
10.10 Unsecured Demand Note dated April 6, 1998, in the principal
amount of $200,000, executed by Casa Munras Hotel Partners, L.P.
in favor of Ronald A. Young.
10.11 Promissory Note dated as of May 6, 1998, in the principal amount
of $250,000, executed by Casa Munras Hotel Partners in favor of
City National Bank.
27 Financial Data Schedule
</TABLE>
(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.
* 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.
17
<PAGE> 18
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.
CASA MUNRAS GP, LLC
General Partner
By: /s/ John F. Rothman Date: March 29, 2000
-------------------------------------------
John F. Rothman, Managing Member
<PAGE> 19
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, 1999 and
1998, and the related statements of operations, changes in partners' (deficit)
equity, and cash flows for each of the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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, 1999 and
1998, and the results of its operations and its cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.
DELOITTE & TOUCHE LLP
San Diego, California
March 23, 2000
<PAGE> 20
CASA MUNRAS HOTEL PARTNERS, L.P.
(A Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
1999 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 1,265,796 $ 1,077,900
Accounts receivable 155,355 42,219
Food and beverage inventories 14,986 17,834
Prepaid expenses 84,719 69,931
----------- -----------
Total current assets 1,520,856 1,207,884
----------- -----------
LAND, PROPERTY AND EQUIPMENT - at cost:
Building and improvements 5,927,577 5,802,211
Hotel furnishings and equipment 1,860,239 1,697,701
Restaurant furnishings and equipment 58,638 52,266
Less accumulated depreciation (4,596,597) (4,212,919)
----------- -----------
3,249,857 3,339,259
Land 700,000 700,000
Construction in progress 74,273 --
----------- -----------
Land, property and equipment - net 4,024,130 4,039,259
----------- -----------
OTHER ASSETS:
Liquor license 40,000 40,000
Loan commitment fees - net 199,254 222,689
Escrow impound accounts 232,306 211,942
----------- -----------
Total other assets 471,560 474,631
----------- -----------
TOTAL $ 6,016,546 $ 5,721,774
=========== ===========
LIABILITIES AND PARTNERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable - trade $53,637 $66,260
Accounts payable - related parties 29,868 55,707
Accrued incentive management fees - related parties 170,219 151,812
Accrued salaries and wages 76,453 58,667
Accrued room tax 32,961 32,671
Accrued other 8,117 9,241
Advance deposits 308,276 --
Distributions payable 67,500 --
Current portion of long-term debt 107,786 99,823
----------- -----------
Total current liabilities 854,817 474,181
LONG-TERM DEBT 6,745,280 6,853,066
----------- -----------
Total liabilities 7,600,097 7,327,247
----------- -----------
PARTNERS' DEFICIT
General Partners (45 units issued and outstanding) (229,341) (229,560)
Limited Partners (4,455 units issued and outstanding) (1,354,210) (1,375,913)
----------- -----------
Total partners' deficit (1,583,551) (1,605,473)
----------- -----------
TOTAL $ 6,016,546 $ 5,721,774
=========== ===========
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
2
<PAGE> 21
CASA MUNRAS HOTEL PARTNERS, L.P.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
1999 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C>
REVENUES:
Room $3,816,801 $3,428,029
Food and beverage 765,973 658,112
Lease 94,556 91,991
Telephone 50,891 46,711
Other 61,959 48,497
---------- ----------
Total 4,790,180 4,273,340
---------- ----------
EXPENSES:
Rooms 1,096,659 973,070
Food and beverage 631,427 600,527
Interest 531,898 335,829
Administrative and general 414,655 387,139
Depreciation and amortization 407,114 374,698
Management fees 358,043 319,379
Repairs and maintenance 344,713 259,641
Marketing 340,441 304,599
Energy cost 187,311 169,041
Property taxes 73,278 67,736
Partnership administration and professional fees 57,376 88,395
Insurance 35,609 31,610
Telephone 19,734 22,507
---------- ----------
Total (includes reimbursed costs and payments
for services to related parties of $870,516 and
$957,153 during 1999 and 1998, respectively) 4,498,258 3,934,171
---------- ----------
NET INCOME $ 291,922 $ 339,169
========== ==========
ALLOCATION OF NET INCOME:
General Partners $2,919 $3,392
Limited Partners ($64.87 per Unit in 1999 and
$75.37 per Unit in 1998, based upon
4,455 Limited Partnership Units) 289,003 335,777
---------- ----------
Total $ 291,922 $ 339,169
========== ==========
DISTRIBUTIONS DECLARED PER LIMITED PARTNERSHIP
UNIT (based upon 4,500 Total Units outstanding):
Ordinary income $ 60.00 $ 75.37
Return of capital -- 963.63
---------- ----------
$ 60.00 $ 1,039.00
========== ==========
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
3
<PAGE> 22
CASA MUNRAS HOTEL PARTNERS, L.P.
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) EQUITY
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
EQUITY, JANUARY 1, 1998 $ 29,467 $ 2,917,055 $ 2,946,522
NET INCOME 3,392 335,777 339,169
DISTRIBUTIONS TO PARTNERS (262,419) (4,628,745) (4,891,164)
----------- ----------- -----------
DEFICIT, DECEMBER 31, 1998 (229,560) (1,375,913) (1,605,473)
NET INCOME 2,919 289,003 291,922
DISTRIBUTIONS TO PARTNERS (2,700) (267,300) (270,000)
----------- ----------- -----------
DEFICIT, DECEMBER 31, 1999 $( 229,341) $(1,354,210) $(1,583,551)
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
4
<PAGE> 23
CASA MUNRAS HOTEL PARTNERS, L.P.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
1999 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 291,922 $ 339,169
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 407,113 374,698
Change in assets and liabilities:
Accounts receivable (113,136) 12,932
Food and beverage inventories 2,848 (1,926)
Prepaid expenses (14,788) (36,365)
Accounts payable and accrued expenses 4,329 29,387
Accounts payable and accrued expenses -
related parties (7,432) 28,617
Advance deposits 308,276 --
----------- -----------
Net cash provided by operating activities 879,132 746,512
----------- -----------
INVESTING ACTIVITIES:
Acquisition of property and equipment (368,549) (1,096,553)
----------- -----------
FINANCING ACTIVITIES:
Distributions paid to Partners (202,500) (4,981,164)
Payment of long-term debt (99,823) (318,330)
Impound escrow accounts (20,364) (211,942)
Borrowings from affiliates -- 222,210
Payments on notes from affiliates -- (588,420)
Borrowings on note payable -- 250,000
Payment on note payable -- (250,000)
Long-term borrowings -- 7,000,000
Loan commitment fees -- (61,740)
----------- -----------
Cash (used for) provided by financing activities (322,687) 1,060,614
----------- -----------
NET INCREASE IN CASH 187,896 710,573
CASH AT BEGINNING OF YEAR 1,077,900 367,327
----------- -----------
CASH AT END OF YEAR $ 1,265,796 $ 1,077,900
=========== ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION -
Cash paid during the year for interest $ 531,898 $ 335,829
=========== ===========
Cash paid during the year for taxes $ 1,600 $ 800
=========== ===========
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
5
<PAGE> 24
CASA MUNRAS HOTEL PARTNERS, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
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 166 guest rooms, a
restaurant, bar and banquet facilities, and several retail stores.
The Initial General Partners of the Partnership were Ronald A. Young and
John F. Rothman (the "Initial General Partners") who each purchased a 0.5%
interest in the Partnership. On June 8, 1998, the Initial General Partners
of the Partnership were replaced by Casa Munras GP, LLC, a California
limited liability company (the "General Partner") upon approval by the
Limited Partners. The General Partner is equally owned by the Initial
General Partners. The change in the General Partner resulted from the
placement of a new First Mortgage (the "First Mortgage") on the Hotel (see
Note 4). The General Partner has no commitment, intent or implication to
fund future cash flow deficits or furnish other direct or indirect financial
assistance to the Partnership. The remaining 99% interest is owned
collectively by the Limited Partners. The General Partner is 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
6
<PAGE> 25
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.
Other assets are carried at cost which, in management's opinion, is less
than fair value.
The carrying value of long-term debt approximates fair value at December 31,
1999, as the related interest rate is 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.
Loan Commitment Fee - The loan commitment fee is net of accumulated
amortization of $35,154 and $11,718 in 1999 and 1998, respectively. The loan
commitment fee on the First Mortgage is amortized over the ten year term of
the loan using the straight-line method which approximates the effective
interest rate method (see Note 4).
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, 1999,
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 - Based on an evaluation of existing
long-lived assets performed in accordance with Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived
7
<PAGE> 26
Assets and for Long-Lived Assets to be Disposed Of", including a review of a
decrease in market value below book value, the extent and manner for which
the long-lived assets are used, a review of legal factors and business
climate, a review of the costs of new construction and cash flows generated
by the Partnership in calendars 1999 and 1998, the Partnership has
determined that no impairment has occurred for the years ended December 31,
1999 and 1998.
2. NOTES PAYABLE TO AFFILIATES
In June 1998, principal and accrued interest of $384,130 on the unsecured
promissory note due to an affiliate of the Initial General Partners was
repaid.
On April 6, 1998, one of the Initial General Partners advanced $200,000 and
issued an unsecured 10% demand note to the Partnership; the funds were used
to finish construction of the additional guest rooms. In June 1998,
principal and accrued interest of $204,290 was repaid.
3. NOTE PAYABLE
On May 6, 1998, the Registrant entered into an unsecured 10% promissory note
payable to a bank in the original principal amount of $250,000. The
principal amount plus unpaid interest was due on July 1, 1998. In June 1998,
principal and accrued interest of $252,014 was repaid.
4. LONG-TERM DEBT
Long-term debt as of December 31 consisted of the following:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
First Mortgage payable -
monthly principal and interest (7.7%)
payments of $52,643 through June 2008;
beginning July 2008, interest rate equals
the lesser of the maximum rate permitted
by law or the greater of 2% above the
initial interest rate or 2% plus the treasury
rate, as defined in the Agreement; due
July 2010; impounds required for property
taxes, insurance, replacements and
incentive management fees due Westland
under the Contract (see note 5), payable
monthly; certain additional restrictions
apply regarding payment of
Partnership distributions $6,853,066 $6,952,889
</TABLE>
8
<PAGE> 27
<TABLE>
<S> <C> <C>
Less current portion 107,786 99,823
---------- ----------
Long-term debt $6,745,280 $6,853,066
========== ==========
</TABLE>
Principal payments required for the years ending December 31, are as follows:
<TABLE>
<S> <C>
2000 $ 107,786
2001 116,385
2002 125,670
2003 135,696
2004 146,521
Thereafter 6,221,008
-----------
Total $ 6,853,066
===========
</TABLE>
Substantially all of the assets of the Partnership are pledged as security
for the above debt.
5. LEASE REVENUE
The retail stores are leased to other business establishments. These leases
range from one to two years and provided annual rents of $94,556 and $91,991
for 1999 and 1998, respectively.
6. 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.
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 1999 and 1998 were $187,824 and
$167,567, respectively. Incentive management fees for 1999 and 1998 were
$170,219 and $151,812, respectively.
Ronald A. Young, an Initial General Partner, is the president and sole
shareholder of Westland, and John F. Rothman, the other Initial General
Partner, is a consultant to Westland.
9
<PAGE> 28
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 1999 and 1998
were $771,926 and $887,011, respectively.
Accounts payable and accrued expenses as of December 31, 1999 and 1998
include $200,087 and $207,519, 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 1999 and 1998 such reserves were not required, as the Partnership's
expenditures for replacements exceeded the reserve called for in the
contract.
7. DISTRIBUTIONS TO PARTNERS
The following table summarized the distributions accrued and paid to
Partners for 1999 and 1998:
<TABLE>
<CAPTION>
Per Unit Total
---------- ----------
<S> <C> <C>
Distributions during 1998:
Distributions accrued in 1997, paid in 1998 $ 20.00 $ 90,000
Distributions accrued and paid in 1998:
June 19, 1998 $ 1,039.00 $4,675,500
---------- ----------
Total paid in 1998 $ 1,059.00 $4,765,500
========== ==========
Distributions during 1999:
Distributions accrued and paid in 1999:
April 30, 1999 15.00 67,500
July 31, 1999 15.00 67,500
October 31, 1999 15.00 67,500
---------- ----------
Total paid in 1999 $ 45.00 $ 202,500
========== ==========
Distributions accrued in 1999, paid in 2000 15.00 67,500
---------- ----------
Total distributions for 1999 $ 60.00 $ 270,000
========== ==========
</TABLE>
In addition, a Special Distribution totaling $215,664 of refinance proceeds
from the First Mortgage was paid to the General Partner on June 30, 1998
(the "Special Distribution"). The Special Distribution is the General
Partner's 25% share of the refinancing proceeds in excess
10
<PAGE> 29
of the return to the General and Limited Partners of their original
investment plus a 12% per year return from the Partnership's inception
(partial years prorated) less previous distributions from the Partnership's
inception paid to date.
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,265,796
<SECURITIES> 0
<RECEIVABLES> 155,355
<ALLOWANCES> 0
<INVENTORY> 14,986
<CURRENT-ASSETS> 1,520,856
<PP&E> 4,024,130
<DEPRECIATION> (4,596,597)
<TOTAL-ASSETS> 6,016,546
<CURRENT-LIABILITIES> 854,817
<BONDS> 6,745,280
0
0
<COMMON> 0
<OTHER-SE> (1,583,551)
<TOTAL-LIABILITY-AND-EQUITY> 6,016,546
<SALES> 4,790,180
<TOTAL-REVENUES> 4,790,180
<CGS> 0
<TOTAL-COSTS> 4,498,258
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 555,334
<INCOME-PRETAX> 291,922
<INCOME-TAX> 0
<INCOME-CONTINUING> 291,922
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 291,922
<EPS-BASIC> 64.87
<EPS-DILUTED> 64.87
</TABLE>
