UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period _____ to _____
Commission file number: 0-10223
HUTTON/CONAM REALTY INVESTORS 81
Exact name of Registrant as specified in its charter
California 13-3069026
State or other jurisdiction of
incorporation or organization I.R.S. Employer Identification No.
Attention: Andre Anderson
3 World Financial Center, 29th Floor, New York, New York 10285
Address of principal executive offices zip code
Registrant's telephone number, including area code: (212) 526-3237
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
Title of Class
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (X)
Documents Incorporated by Reference:
Portions of Prospectus of the Registrant dated June 24, 1981 (included in
Amendment No. 2 to Registrant's Registration Statement No. 2-70331, filed June
24, 1981 and in Amendment No. 1 to Registrant's Registration Statement No.
2-73558, filed August 20, 1981) are incorporated by reference into Part III of
this report.
Portions of Parts I, II, III and IV are incorporated by reference to the
Partnership's Annual Report to Unitholders for the year ended December 31,
1995.
PART I
Item 1. Business
General Development of Business
Hutton/ConAm Realty Investors 81 (the "Registrant" or the "Partnership") is a
California limited partnership formed on April 30, 1981, of which RI 81 Real
Estate Services Inc. ("RI 81 Services", formerly Hutton Real Estate Services
III, Inc.) a Delaware corporation, and ConAm Property Services, Ltd., a
California limited partnership ("ConAm Services"), are the general partners
(together, the "General Partners").
Commencing June 24, 1981, the Registrant began offering through E.F. Hutton &
Company Inc., an affiliate of the Registrant ("Hutton"), up to a maximum of
55,000 units of limited partnership interest (the "Units") at $500 per Unit.
Investors who purchased the Units (the "Limited Partners") are not required to
make any additional capital contributions. The Units were registered under the
Securities Act of 1933, as amended (the "Act"), under Registration Statement
No. 2-70331, which Registration Statement was declared effective on June 24,
1981. On August 6, 1981, the Registrant filed under the Act its Registration
Statement No. 2-73558 covering an additional 25,000 Units. The offering of
Units was terminated on October 1, 1981. Upon termination of the offering, the
Registrant had accepted subscriptions for 78,290 Units, including 200 Units
purchased by the General Partners for an aggregate of $39,145,000. All unsold
Units, aggregating $855,000, were de-registered pursuant to Post-Effective
Amendment No. 1 to Registrant's Registration Statement No. 2-73558, filed
November 5, 1981.
Narrative Description of Business
The Registrant is engaged in the business of acquiring, operating and holding
for investment multi-family residential properties, which by virtue of their
location and design and the nature of the local real estate market have
potential for capital appreciation and generation of current income. All of
the proceeds available for investment in real estate were invested in two joint
ventures and three limited partnerships, each owning a single property. Funds
held as a working capital reserve are invested in unaffiliated money market
funds or other highly liquid short-term investments where there is appropriate
safety of principal in accordance with the Registrant's investment objectives
and policies.
The Registrant's principal investment objectives with respect to its interests
in real property are:
(1) capital appreciation;
(2) distributions of net cash from operations attributable to rental
income; and
(3) preservation and protection of capital.
Distributions of net cash from operations will be the Registrant's objective
during its operational phase, while preservation and appreciation of capital
continues to be the Registrant's longer term objectives. The attainment of the
Registrant's objectives will depend on many factors, including future economic
conditions in the United States as a whole and, in particular, in the
localities in which the Registrant's properties are located, especially with
regard to achievement of capital appreciation.
From time to time the Registrant expects to sell its real property interests
taking into consideration such factors as the amount of appreciation in value,
if any, to be realized and the possible risks of continued ownership. In
consideration of these factors and improving market conditions, the General
Partners have commenced marketing certain of the properties for sale. No
property will be sold, financed or refinanced by the Registrant without the
agreement of both General Partners. Proceeds from any future sale, financing
or refinancing of properties will not be reinvested and may be distributed to
the General Partners and Limited Partners (sometimes referred to together
herein as the "Partners"), so that the Registrant will, in effect, be
self-liquidating. If deemed necessary, the Registrant may retain a portion of
the proceeds from any sale, financing or refinancing as capital reserves. As
partial payment for properties sold, the Registrant may receive purchase money
obligations secured by mortgages or deeds of trust. In such cases, the amount
of such obligations will not be included in Net Proceeds From Sale or
Refinancing (distributable to the Partners) until and only to the extent the
obligations are realized in cash, sold or otherwise liquidated.
Originally, the Registrant acquired five residential apartment complexes
(collectively, the "Properties") either directly or through investments in
joint ventures. Two of these, Cedar Bay Village and Kingston Village, were
sold on July 20, 1995. As of December 31, 1995, the Registrant had interests
in the Properties as follows: (1) Las Colinas Apartments I and II, a 300-unit
apartment complex located in Scottsdale, Arizona; (2) Ridge Park Apartments, a
100-unit apartment complex located in Tulsa, Oklahoma; and (3) Tierra Catalina,
a 120-unit apartment complex located in Tucson, Arizona. For further
information on each of the Properties, see Item 2 of this report, and Note 4 to
the Consolidated Financial Statements incorporated herein by reference to the
Partnership's Annual Report to Unitholders for the year ended December 31,
1995, which is included as an exhibit under Item 14. Reference is made to Item
7 of this report for a more detailed discussion of the Cedar Bay Village and
Kingston Village sales.
Competition
The Registrant's real property investments are subject to competition from
similar types of properties in the vicinities in which they are located and
such competition has increased since the Registrant's investment in the
Properties due principally to the addition of newly constructed apartment
complexes offering increased residential and recreational amenities. The
Properties have also been subject to competition from condominiums and
single-family properties, especially during periods of low mortgage interest
rates. The Registrant competes with other real estate owners and developers in
the rental and leasing of its Properties by offering competitive rental rates
and, if necessary, leasing incentives. Such competition may affect the
occupancy levels and revenues of the Properties. The occupancy levels at the
Properties in Arizona reflect some seasonality, which is also reflected in the
markets. In some cases, the Registrant may compete with other partnerships
affiliated with either General Partner of the Registrant.
For a discussion of current market conditions in each of the areas where the
Partnership's Properties are located, see Item 2 below.
Employees
The Registrant has no employees. General services are performed by RI 81
Services, ConAm Services, ConAm Management Corporation ("ConAm Management"), an
affiliate of ConAm Services, as well as Service Data Corporation and First Data
Investor Services Group, both unaffiliated companies. The Registrant has
entered into management agreements pursuant to which ConAm Management provides
management services with respect to the Properties. First Data Investor
Services Group has been retained by the Registrant to provide all accounting
and investor communication functions, while Service Data Corporation provides
transfer agent services. See Item 13 for a further description of the service
and management agreements between the Registrant and affiliated entities.
Item 2. Properties
Below is a description of the Properties and a discussion of current market
conditions in each of the areas where the Properties are located. For
information on the purchase of the Properties, reference is made to Note 4 to
the Consolidated Financial Statements in the Partnership's Annual Report to
Unitholders for the year ended December 31, 1995, which is filed as an exhibit
under Item 14. Average occupancy rates and appraised values of the
Partnership's real estate investments are incorporated by reference to the
Partnership's Annual Report to Unitholders, which is included as an exhibit
under Item 14.
Las Colinas I & II - Scottsdale, Arizona
This 300-unit apartment community is located in a suburban setting
approximately eight miles northwest of downtown Phoenix. The Scottsdale
apartment market evidenced strong competition during 1995, reflecting
increasing construction in the area and notable competition from condominiums
and single family houses as affordable prices and low mortgage rates entice
renters to buy. Average vacancy in the Scottsdale submarket increased from
4.6% as of June 30, 1994 to 5.6% at June 30, 1995, reflecting the addition of
recently completed units in the area. Following a two year lull, construction
of new units picked up pace beginning in 1993 with 1,058 units opened in 1993,
1,533 units opened in 1994 and 2,240 new units within the submarket either
under construction or permitted as of June 30, 1995. While the area's strong
population and job growth are likely to absorb this new supply, competition for
tenants is expected to remain strong, affecting area occupancies and limiting
rental rate increases in the coming year.
Ridge Park - Tulsa, Oklahoma
This 100-unit complex is situated in South Tulsa, approximately eight miles
from downtown Tulsa. The Tulsa apartment market is one of the strongest in all
of Tulsa's real estate sectors. As of September 30, 1995, occupancy rates rose
to 94% compared to 92% at September 30, 1994. The South Zone submarket, where
Ridge Park is located, paralleled the 94% occupancy level seen in the overall
Tulsa market. Construction of 288 new units in the South Zone submarket was
completed during 1995, with another 588 units either announced or under
construction. With demand expected to increase over the next year, the
addition of newly constructed units is expected to have minimal impact on the
market. Tulsa rental rates are at their highest level, per square foot, in
more than five years. Rental rates as of September 30, 1995 for the South Zone
submarket were slightly higher than the level recorded in the overall Tulsa
market. Given favorable market conditions, particularly in the Tulsa,
Oklahoma area, the General Partners intend to begin marketing Ridge Park
Apartments for sale. There can be no assurances that a sale will be completed
or that any particular price for the property can be obtained.
Tierra Catalina - Tucson, Arizona
This 120-unit apartment community is situated in the "foothills" section of
northeast Tucson. Tierra Catalina competes with a number of apartment
complexes and condominium developments within the Tucson area. Tucson's
economy began to weaken as population and job growth slowed during 1995.
Despite the economic slowdown, construction of multifamily properties has
increased significantly. As of the third quarter of 1995, 1,123 units were
under construction in the Catalina Foothills submarket with an additional 656
units not yet begun. These units are being added to the 7,226 completed units
in the market. There are an additional seven projects planned for the Catalina
Foothills market although all of these projects may not proceed to
constructions. In addition, the multifamily market has been unfavorably
impacted by a decline in interest rates which has made home ownership a viable
alternative for renters. As a result, vacancy rates are beginning to rise and
increases in rental rates are moderating. A local survey of metropolitan
Tucson conducted in the fourth quarter of fiscal 1995 showed an average
occupancy rate of 92% among multifamily properties with five or more units,
down from 96% at the same period in 1994.
All of the Partnership's properties, except Las Colinas II, are encumbered by
mortgage loans. See Note 5 to the Consolidated Financial Statements for a
description of such mortgage financing.
Item 3. Legal Proceedings
An offer dated August 3, 1995, was sent by Everest Investors, LLC and W. Robert
Kohorst (collectively, "Everest") to limited partners of the Partnership to
purchase up to 4.9% of their limited partnership interests for $70 per unit
less any distributions paid prior to the expiration of the offer on September
8, 1995.
On August 16, 1995, the General Partners of the Partnership sent a letter to
limited partners recommending against the offer because the price was
inadequate especially in view of the Net Asset Value of the units and the
capital return that was to be made from the July 20, 1995 sale of two of its
properties.
On August 29, 1995, the Partnership filed a complaint with the United States
District Court, Central District of California (the "Court") that Everest's
solicitation letter constituted a tender offer which violated Section 14(e) of
the Securities Exchange Act of 1934, which prohibits false or misleading
statements of material fact in connection with any tender offer.
Additionally, the Partnership requested a Temporary Restraining Order against
Everest until Everest issues a disclosure that complies with Section 14(e) of
the Securities Exchange Act of 1934 and offers rescission to any limited
partners that have tendered their limited partnership interests.
On August 31, 1995, the Court dismissed the Partnership's request for a
Temporary Restraining Order. As a result, the Partnership dropped its
complaint.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of the year ended December 31, 1995, no matter was
submitted to a vote of security holders through the solicitation of proxies or
otherwise.
PART II
Item 5. Market for the Registrant's Limited Partnership Units and Related
Security Holder Matters
As of December 31, 1995, the number of Unitholders of record was 3,635.
No established public trading market exists for the Units and it is not
anticipated that a market will develop in the future.
Distributions of Net Cash Flow From Operations, when made, are paid on a
quarterly basis, with distributions generally occurring approximately 45 days
after the end of each quarter. Such distributions have been made primarily
from net operating income with respect to the Registrant's investment in the
Properties and from interest on short-term investments, and partially from
excess cash reserves. Information on cash distributions paid by the
Partnership for the past two years is incorporated by reference to the
Partnership's Annual Report to Unitholders for the year ended December 31,
1995, which is filed as an exhibit under Item 14. The level of future
distributions will be evaluated on a quarterly basis and will depend on the
Partnership's operating results and future cash needs. Reference is made to
Item 7 for a discussion of the General Partners' expectations for future cash
distributions.
Item 6. Selected Financial Data
Incorporated by reference to the Partnership's Annual Report to Unitholders for
the year ended December 31, 1995, which is filed as an exhibit under Item 14.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
At December 31, 1995, the Partnership had cash and cash equivalents of
$1,499,119, which were invested in unaffiliated money market funds. The
Partnership also maintains a restricted cash balance, which totaled $394,147 at
December 31, 1995, composed of escrows required by the lender for property
improvements, real estate taxes, and insurance. Pursuant to the terms of the
loans, as costs are incurred for property improvements or when real estate
taxes and insurance are due, reimbursements are made from the escrow accounts
maintained by the lender to the Partnership. The decrease in restricted cash
from 1994 to 1995 is attributable to the sale of Cedar Bay Village and Kingston
Village on July 20, 1995. The General Partners expect sufficient cash to be
generated from operations to meet its current operating expenses.
On July 20, 1995, Kingston Village and Cedar Bay Village were sold for
$5,370,000 and $1,410,000, respectively, to an institutional buyer, which is
unaffiliated with the Partnership. The Partnership received net proceeds of
$6,555,332 from the transaction of which $3,541,400, representing outstanding
principal and interest, was used to fully satisfy the Partnership's mortgage
obligations on the Properties. On August 17, 1995, the Partnership paid a
special cash distribution of $3,170,745, or $40.50 per Unit, to the limited
partners. The special distribution was comprised of the net proceeds from the
sale of the properties and Partnership cash reserves. The sales account for
the reductions in investments in real estate, mortgages payable and security
deposits from December 31, 1994 to December 31, 1995.
During 1995, the Partnership paid cash distributions totaling $48.50 per Unit,
including the 1995 fourth quarter distribution of $2.00 per Unit, which was
paid to limited partners on February 7, 1996. Future distributions, if any,
will be determined on a quarterly basis and will be based on cash flow
generated by the Partnership.
During the remainder of 1996, the General Partners intend to implement an
extensive improvement program at Tierra Catalina and Las Colinas I and II to
upgrade the properties. This program is intended to maintain the properties'
position within their respective markets, which are growing increasingly
competitive with the addition of new apartment properties. This is
particularly true in the Tucson and Scottsdale markets where Tierra Catalina
and Las Colinas I and II, respectively, are located. It is also hoped that
these improvements will allow for greater increases in rental rates, thereby
improving each properties' revenue and value and making them better positioned
for eventual sale. It is possible that cash from reserves may be required to
fund a portion of distributions during 1996 as a result of the capital
expenditures required.
Given favorable market conditions, particularly in the Tulsa, Oklahoma area,
the General Partners intend to begin marketing Ridge Park Apartments for sale.
There can be no assurances that a sale will be completed or that any particular
price for the property can be obtained.
On March 15, 1996, based upon, among other things, the advice of Partnership
counsel, Skadden, Arps, Slate, Meagher & Flom, the General Partners adopted a
resolution that states, among other things, if a Change of Control (as defined
below) occurs, the General Partners may distribute the Partnership's cash
balances not required for its ordinary course day-to-day operations. "Change
of Control" means any purchase or offer to purchase more than 10% of the Units
that is not approved in advance by the General Partners. In determining the
amount of the distribution, the General Partners may take into account all
material factors. In addition, the Partnership will not be obligated to make
any distribution to any partner and no partner will be entitled to receive any
distribution until the General Partners have declared the distribution and
established a record date and distribution date for the distribution. The
Partnership filed a Form 8-K disclosing this resolution on March 21, 1996.
Results of Operations
1995 versus 1994
Partnership operations for the year ended December 31, 1995 resulted in net
income of $1,141,669, compared with a net loss of $252,627 in 1994. The change
from net loss in 1994 to net income in 1995 is primarily due to the gain on the
sale of Cedar Bay Village and Kingston Village, partially offset by the
resulting decrease in rental income. Excluding the gain recognized on the sale
of the properties, the loss from operations in 1995 increased from 1994 as a
result of the sale, higher repairs and maintenance expenses and legal expenses
associated with the offer for the limited partnership units.
Rental income for the year ended December 31, 1995, was $4,313,044 compared
with $4,702,059 for 1994. The decrease reflects the sale of Cedar Bay Village
and Kingston Village in July 1995, partially offset by increases in rental
income at the three remaining properties, particularly Las Colinas, due to
increased rental rates. Interest income totaled $102,535 in 1995 compared with
$58,009 in 1994. The increase was due to the Partnership's increased cash
balance and higher interest rates in 1995.
Total expenses for the year ended December 31, 1995 were $4,759,031 compared
with $5,012,695 for 1994. Property operating expenses decreased from
$2,301,465 in 1994 to $2,261,179 in 1995, reflecting decreases in operating
expenses at Cedar Bay Village and Kingston Village due to their sales, offset
by higher repairs and maintenance expenses at Tierra Catalina and Las Colinas.
Interest expense and depreciation and amortization also decreased from 1994 to
1995 due to the sales of Cedar Bay Village and Kingston Village. General and
administrative expenses increased from 1994 to 1995 reflecting legal expenses
due to the Partnership's response to the offer for the limited partnership
units in the third quarter of 1995. (See Item 3)
1994 versus 1993
Partnership operations for the year ended December 31, 1994 resulted in a net
loss of $252,627, compared with a net loss of $617,882 in 1993. The lower net
loss in 1994 is primarily attributable to an increase in rental income and a
reduction in operating expenses.
Rental income for the year ended December 31, 1994, was $4,702,059 compared
with $4,444,950 for 1993. The increase in 1994 reflects higher rental income
at all the Partnership's properties, particularly at the Las Colinas property,
due primarily to rental rate increases implemented over the year. Interest
income totaled $58,009 in 1994 compared with $39,735 in 1993. The increase was
due to the Partnership's increased cash balance and higher interest rates in
1994.
Total expenses for the year ended December 31, 1994 were $5,012,695, compared
with $5,102,567 for 1993. Property operating expenses decreased from
$2,376,972 in 1993 to $2,301,465 in 1994, reflecting lower repairs and
maintenance expense at the Cedar Bay and Kingston Village properties. All
other expense components remained in line with 1993 levels.
The average occupancy levels at each of the Properties for the years ended
December 31, 1995, 1994 and 1993 were as follows:
Twelve Months Ended December 31,
Property 1995 1994 1993
Las Colinas I & II 93% 96% 96%
Tierra Catalina 93% 96% 96%
Ridge Park 95% 96% 96%
Item 8. Financial Statements and Supplementary Data
The Financial Statements are Incorporated by reference to the Partnership's
Annual Report to Unitholders for the year ended December 31, 1995, which is
filed as an exhibit under Item 14. Supplementary Data is incorporated by
reference to pages F-1 to F-4 of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The Registrant has no officers or directors. RI 81 Services and ConAm
Services, the co-General Partners of the Registrant, jointly manage and control
the affairs of the Registrant and have general responsibility and authority in
all matters affecting its business.
RI 81 Services
RI 81 Services (formerly Hutton Real Estate Services III, Inc.) is a Delaware
corporation formed on October 30, 1980, an affiliate of Lehman Brothers Inc.
See the section captioned "Certain Matters Involving Affiliates of RI 81
Services" below for a description of the Hutton Group's acquisition by Shearson
Lehman Brothers, Inc. ("Shearson") and the subsequent sale of certain of
Shearson's domestic retail brokerage and asset management businesses to Smith
Barney, Harris Upham & Co. Incorporated ("Smith Barney"), which was followed by
a change in the general partner's name.
Certain officers and directors of RI 81 Services are now serving (or in the
past have served) as officers or directors of entities which act as general
partners of a number of real estate limited partnerships which have sought
protection under the provisions of the Federal Bankruptcy Code. The
partnerships which have filed bankruptcy petitions own real estate which has
been adversely affected by the economic conditions in the markets in which the
real estate is located and, consequently, the partnerships sought the
protection of the bankruptcy laws to protect the partnerships' assets from loss
through foreclosure.
The names and positions held by the directors and executive officers of RI 81
Services are set forth below. There are no family relationships between any
executive officers or directors.
Name Office
Paul L. Abbott Director, President, Chief Financial
Officer and Chief Executive Officer
Donald E. Petrow Vice President
Kate D. Hobson Vice President
Paul L. Abbott, 50, is a Managing Director of Lehman Brothers. Mr. Abbott
joined Lehman Brothers in August 1988, and is responsible for investment
management of residential, commercial and retail real estate. Prior to joining
Lehman Brothers, Mr. Abbott was a real estate consultant and a senior officer
of a privately held company specializing in the syndication of private real
estate limited partnerships. From 1974 through 1983, Mr. Abbott was an officer
of two life insurance companies and a director of an insurance agency
subsidiary. Mr. Abbott received his formal education in the undergraduate and
graduate schools of Washington University in St. Louis.
Donald E. Petrow, 39, is a First Vice President of Lehman Brothers Inc. Since
March 1989, he has been responsible for the investment management and
restructuring of various investment portfolios, including but not limited to,
federal insured mortgages, tax exempt bonds, multifamily and commercial real
estate. From November 1981 to February 1989, Mr. Petrow, as Vice President of
Lehman, was involved in investment banking activities relating to partnership
finance and acquisitions. Prior to joining Lehman, Mr. Petrow was employed in
accounting and equipment leasing firms. Mr. Petrow holds a B.S. Degree in
accounting from Saint Peters College and an M.B.A in Finance from Pace
University.
Kate D. Hobson, 29, is an Assistant Vice President of Lehman Brothers and has
been a member of the Diversified Asset Group since 1992. Prior to joining
Lehman Brothers, Ms. Hobson was associated with Cushman & Wakefield serving as
a real estate accountant from 1990 to 1992. Prior to that, Ms. Hobson was
employed by Cambridge Systematics, Inc. as a junior land planner. Ms. Hobson
received a B.A. degree in sociology from Boston University in 1988.
ConAm Services
ConAm Services is a California limited partnership organized on December 11,
1980. The sole general partner of ConAm Services is Continental American
Development, Inc. ("ConAm Development"). The names and positions held by the
directors and executive officers of ConAm Development are set forth below.
There are no family relationships between any executive officers or directors.
Name Office
Daniel J. Epstein President and Director
E. Scott Dupree Vice President/Director
Robert J. Svatos Vice President/Director
Ralph W. Tilley Vice President
J. Bradley Forrester Vice President
Daniel J. Epstein, 56, has been the President and a Director of ConAm
Development and ConAm Management (or its predecessor firm) and a general
partner of Continental American Properties, Ltd. ("ConAm"), an affiliate of
ConAm Services, since their inception. Prior to that time Mr. Epstein was Vice
President and a Director of American Housing Guild, which he joined in 1969.
At American Housing Guild, he was responsible for the formation of the
Multi-Family Division and directed its development and property management
activities. Mr. Epstein holds a Bachelor of Science degree in Engineering from
the University of Southern California.
E. Scott Dupree, 45, is a Vice President and general counsel of ConAm
Management responsible for negotiation, documentation, review and closing of
acquisition, sale and financing proposals. Mr. Dupree also acts as principal
legal advisor on general legal matters ranging from issues and contracts
involving the management company to supervision of litigation and employment
issues. Prior to joining ConAm Management in 1985, he was corporate counsel to
Trusthouse Forte, Inc., a major international hotel and restaurant corporation.
Mr. Dupree holds a B.A. from United States International University and a Juris
Doctorate degree from the University of San Diego.
Robert J. Svatos, 37, is a Vice President and Chief Financial Officer of ConAm
Management, and has been with the company since 1988. His responsibilities
include the accounting, treasury and data processing functions of the
organization. Mr. Svatos is part of the firm's due diligence team, analyzing a
broad range of projects for ConAm Management's fee client base. Prior to
joining ConAm Management, he was the Chief Financial Officer for AmeriStar
Financial Corporation, a nationwide mortgage banking firm. Mr. Svatos holds an
M.B.A. in Finance from the University of San Diego and a Bachelor's of Science
degree in Accounting from the University of Illinois. Mr. Svatos is a
Certified Public Accountant.
Ralph W. Tilley, 41, is a Vice President and Treasurer of ConAm Management. He
is responsible for the financial aspects of syndications and acquisitions, the
company's asset management portfolio and risk management activities. Prior to
joining ConAm Management in 1980, he was a senior accountant with KPMG Peat
Marwick, specializing in real estate. He holds a Bachelor's of Science degree
in Accounting from San Diego State University and is a Certified Public
Accountant.
J. Bradley Forrester, 38, currently serves as a Senior Vice President of ConAm
Management Corporation. He is responsible for property acquisition and
disposition on a nationwide basis. Additionally, he is involved with the
company's real estate development activities. Prior to joining ConAm, Mr.
Forrester served as Senior Vice President - Commercial Real Estate for First
Nationwide Bank in San Francisco, where he was responsible for a $2 billion
problem asset portfolio including bank-owned real estate and non-performing
commercial real estate loans. His past experience includes significant
involvement in real estate development and finance, property acquisitions and
dispositions and owner's representation matters. Prior to entering the real
estate profession, he worked for KPMG Peat Marwick in Dallas, Texas. Mr.
Forrester holds a Bachelor of Science degree in Accounting from Louisiana State
University. He received his CPA certification in the State of Texas.
Certain Matters Involving Affiliates of RI 81 Services
On July 31, 1993, Shearson sold certain of its domestic retail brokerage and
asset management businesses to Smith Barney, Harris Upham and Co. Incorporated.
Subsequent to the sale, Shearson changed its name to "Lehman Brothers Inc."
The transaction did not affect the ownership of the Partnership's General
Partners. However, the assets acquired by Smith Barney included the name
"Hutton." Consequently, the Hutton Real Estate Services III, Inc. general
partner changed its name to "RI 81 Real Estate Services Inc.," and the Hutton
Group changed its name to "LB I Group Inc." to delete any reference to
"Hutton."
Item 11. Executive Compensation
Neither of the General Partners nor any of their directors or executive
officers received any compensation from the Registrant. See Item 13 of this
report for a description of certain transactions of the General Partners or
their affiliates with the Registrant.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of December 31, 1995, no person was known by the Registrant to be the
beneficial owner of more than five percent of the Units of the Registrant. The
General Partners own 200 Units (134 owned by RI 81 Services and 66 owned by
ConAm Services), as required by the terms of the offering described in the
Prospectus of Registrant dated June 24, 1981 (the "Prospectus"), contained in
Amendment No. 2 to Registrant's Registration Statement No. 2-70331, filed June
24, 1981 and in Amendment No. 1 to Registrant's Registration Statement, No.
2-73558, filed August 20, 1981.
Daniel J. Epstein, President and Director of ConAm Services, owned twenty Units
as of December 31, 1995. No other directors or executive officers of the
General Partners own any Units.
Item 13. Certain Relationships and Related Transactions
RI 81 Services and ConAm Services each received $60,694.50 as its allocable
share of Net Cash from Operations with respect to the year ended December 31,
1995, pursuant to the Amended and Restated Certificate and Agreement of Limited
Partnership of the Registrant. Pursuant to the Amended and Restated
Certificate and Agreement of Limited Partnership of the Registrant, for the
year ended December 31, 1995, $1,250,091 of Registrant's net income was
allocated to the General Partners ($624,474 to RI 81 Services and $625,617 to
ConAm Services). For a description of the share of net cash from operations
and the allocation of income and loss to which the General Partners are
entitled, reference is made to the material contained on pages 72-74 of the
Prospectus, under the section captioned "Profit and Losses and Cash
Distributions," which section is incorporated herein by reference thereto.
The Registrant has entered into property management agreements with ConAm
Management pursuant to which ConAm Management has assumed direct responsibility
for day-to-day management of the Properties. It is the responsibility of ConAm
Management to select resident managers and monitor their performance. ConAm
Management's services also include the supervision of leasing, rent collection,
maintenance, budgeting, employment of personnel, payment of operating expenses
and related services. For such services, ConAm Management is entitled to
receive a management fee as described under the sections captioned "Investment
Objectives and Policies--Management of Properties" on pages 32 through 33 of
the Prospectus, which section is incorporated herein by reference thereto. A
summary of property management fees earned by ConAm Management during the past
three years is incorporated by reference to Note 6 to the Consolidated
Financial Statements, incorporated herein by reference to the Partnership's
Annual Report to Unitholders for the year ended December 31, 1995, which is
filed as an exhibit under item 14.
Pursuant to Section 12(g) of the Registrant's Amended and Restated Certificate
and Agreement of Limited Partnership, the General Partners and their affiliates
may be reimbursed by the Registrant for certain of their costs as described on
page 16 of the Prospectus, which description is incorporated herein by
reference. First Data Investor Services Group provides partnership accounting
and investor relations services for the Registrant. Prior to May 1993, these
services were provided by an affiliate of a general partner. The Registrant's
transfer agent and certain tax reporting services are provided by Service Data
Corporation. Both First Data Investor Services Group and Service Data
Corporation are unaffiliated companies. A summary of amounts paid to the
General Partners or their affiliates during the past three years is
incorporated by reference to Note 6 to the Consolidated Financial Statements,
included in the Partnership's Annual Report to Unitholders for the fiscal year
ended December 31, 1995, which is filed as an exhibit under Item 14.
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K
Page
(a) (1) Financial Statements:
Number
Consolidated Balance Sheets - December 31, 1995 and 1994 (1)
Consolidated Statements of Partners' Capital (Deficit) -
For the years ended December 31, 1995, 1994 and 1993. . . . (1)
Consolidated Statements of Operations -
For the years ended December 31, 1995, 1994 and 1993 (1)
Consolidated Statements of Cash Flows -
For the years ended December 31, 1995, 1994 and 1993 (1)
Notes to the Consolidated Financial Statements (1)
Report of Independent Accountants (1)
(a)(3) Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation F-1
Report of Independent Accountants F-4
(1) Incorporated by reference to the Partnership's Annual Report to
Unitholders for the year ended December 31, 1995, filed as exhibit 13 under
Item 14.
(a)(3) Exhibits:
(3) (A) Amended and Restated Certificate and Agreement of
Limited Partnership (included as, and incorporated herein by reference
to, Exhibit A to the Prospectus of Registrant dated June 24, 1981 (the
"Prospectus"), contained in Amendment No. 2 to Registration Statement,
No. 2-70331, of Registrant filed June 24, 1981, (the "Registration
Statement"), and in Amendment No. 1 to Registration Statement, No.
2-73558, of Registrant filed August 20, 1981).
(B) Subscription Agreement and Signature Page (included as,
and incorporated herein by reference to, Exhibit B to the
Prospectus).
(10) (A) Financing Documents relating to Las Colinas I and II
(Promissory Note, Deed of Trust, Assignment of Rents and Leases)
(included as, and incorporated herein by reference to, Exhibit 10-I to
the Registrant's Annual Report on Form 10-K for the year ended December
31, 1992 (Commission file No. 0-10223)).
(B) Financing Documents relating to Ridge Park (Promissory
Note, Deed of Trust, Assignment of Rents and Leases) (included
as, and incorporated herein by reference to, Exhibit 10-J to
the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992 (Commission file No. 0-10223)).
(C) Financing Documents relating to Tierra Catalina
(Promissory Note, Deed of Trust, Assignment of Rents and
Leases) (included as, and incorporated herein by reference to,
Exhibit 10-K to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1992 (Commission file No.
0-10223)).
(D) Settlement Agreement by and among the Managing Joint
Venturers and the Epoch Joint Venturers dated July 1, 1992
(included as, and incorporated herein by reference to, Exhibit
10.I to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1992 (Commission file No.
0-10223)).
(E) Agreement of Limited Partnership of RI-81 Las Colinas
Limited Partnership dated as of July 1, 1992 (included as, and
incorporated herein by reference to, Exhibit 10.2 to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1992 (Commission file No. 0-10223)).
(F) Agreement of Limited Partnership of RI-81 Tierra
Catalina Limited Partnership dated as of July 1, 1992 (included
as, and incorporated herein by reference to, Exhibit 10.3 to
the Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1992 (Commission file No. 0-10223)).
(G) Amended and Restated Agreement of Limited Partnership
of Ridge Park Associates Limited Partnership dated as of April
23, 1992 (included as, and incorporated herein by reference to,
Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1992 (Commission file No.
0-10223)).
(H) Property Management Agreement between Hutton/ConAm
Realty Investors 81 and ConAm Management Corp. for the Las
Colinas I & II properties (included as, and incorporated herein
by reference to Exhibit 10-L to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1993 (Commission
file No. 0-10223)).
(I) Property Management Agreement between Hutton/ConAm
Realty Investors 81 and ConAm Management Corp. for the Tierra
Catalina property (included as, and incorporated herein by
reference to Exhibit 10-M to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1993 (Commission file
No. 0-10223)).
(J) Property Management Agreement between Hutton/ConAm
Realty Investors 81 and ConAm Management Corp. for the Ridge
Park property (included as, and incorporated herein by
reference to Exhibit 10-N to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1993 (Commission file
No. 0-10223)).
(13) Annual Report to Unitholders for the year ended December 31,
1995.
(21) List of Subsidiaries - Joint Ventures (included as, and
incorporated herein by reference to Exhibit 22 to the Registrant's 1991
Annual Report on Form 10-K for the year ended December 31,
1991(Commission file No. 0-10223)).
(27) Financial Data Schedule
(99) Portions of the Prospectus of Registrant dated June 24, 1981
(included as, and incorporated herein by reference to Exhibit 28 to the
Registrant's 1988 Annual Report on Form 10-K for the year ended
December 31, 1988 (Commission file No. 0-10223)).
(b) Reports on Form 8-K:
No reports on Form 8-K were filed in the fourth quarter of
1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: March 27, 1996
HUTTON/CONAM REALTY INVESTORS 81
BY: RI 81 Real Estate Services Inc.
General Partner
BY: /S/Paul L. Abbott
Name: Paul L. Abbott
Title: Director, President,
Chief Executive Officer
and Chief Financial Officer
BY: ConAm Property Services, Ltd.
General Partner
BY: Continental American Development, Inc.
General Partner
BY: /S/Daniel J. Epstein
Name: Daniel J. Epstein
Title: President, Director and
Principal Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capabilities and on the dates indicated.
RI 81 REAL ESTATE SERVICES INC.
A General Partner
Date: March 27, 1996
BY: /S/Paul L. Abbott
Paul L. Abbott
Director, President,
Chief Executive Officer
and Chief Financial Officer
Date: March 27, 1996
BY: /S/Donald Petrow
Donald Petrow
Vice President
Date: March 27, 1996
BY: /S/Kate Hobson
Kate Hobson
Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
CONAM PROPERTY SERVICES, LTD.
A General Partner
By: Continental American Development, Inc.
General Partner
Date: March 27, 1996
BY: /S/Daniel J. Epstein
Daniel J. Epstein
Director and President
Date: March 27, 1996
BY: /S/E. Scott Dupree
E. Scott Dupree
Vice President/Director
Date: March 27, 1996
BY: /S/Robert J. Svatos
Robert J. Svatos
Vice President/Director
Date: March 27, 1996
BY: /S/Ralph W. Tilley
Ralph W. Tilley
Vice President
Date: March 27, 1996
BY: /S/J. Bradley Forrester
J. Bradley Forrester
Vice President
Hutton/ConAm Realty Investors 81
Exhibit 13
Hutton/ConAm Realty Investors 81
1995 Annual Report
Hutton/ConAm Realty Investors 81 is a California limited partnership formed in
1981 to acquire, operate and hold for investment multifamily housing
properties. At December 31, 1995, the Partnership's portfolio consisted of
three apartment properties located in Arizona and Oklahoma. Provided below is
a comparison of average occupancy levels for the years ended December 31, 1995
and 1994.
Average Occupancy
Property Location 1995 1994
_________________________________________________________________
Las Colinas I & II Scottsdale, Arizona 93% 96%
Ridge Park Tulsa, Oklahoma 95% 96%
Tierra Catalina Tucson, Arizona 93% 96%
_________________________________________________________________
Administrative Inquiries Performance Inquiries/Form 10-Ks
Address Changes/Transfers First Data Investor Services Group
Service Data Corporation P.O.Box 1527
2424 South 130th Circle Boston, Massachusetts 02104-1527
Omaha, Nebraska 68144-2596 Attn: Financial Communications
800-223-3464 (select option 1) 800-223-3464 (select option 2)
Contents
1 Message to Investors
2 Performance Summary
3 Financial Highlights
4 Consolidated Financial Statements
7 Notes to the Consolidated Financial Statements
13 Report of Independent Accountants
14 Net Asset Valuation
Message to Investors
Presented for your review is the 1995 Annual Report for Hutton/ConAm Realty
Investors 81. In this report, we review Partnership operations and discuss
general market conditions affecting the Partnership's properties. We have also
included a performance summary which addresses operating results at each of the
properties and financial highlights for the year.
Cedar Bay Village and Kingston Village Sales
The most significant event during 1995 was the sale of Cedar Bay Village and
Kingston Village on July 20, 1995 to an unaffiliated institutional buyer. The
Partnership received net sales proceeds of $6,555,332 and recorded a gain of
$1,485,121 on the sale. The Partnership utilized $3,541,400 of the sales
proceeds to pre-pay the outstanding principal and interest balances on the
mortgages secured by the properties.
Cash Distributions
The Partnership paid cash distributions totaling $48.50 per Unit for the year
ended December 31, 1995, including the fourth quarter distribution of $2.00 per
Unit, which was credited to your brokerage account or sent directly to you on
February 7, 1996. This amount also includes a special return of capital
distribution of $40.50 per Unit which was paid on August 17, 1995 and resulted
primarily from the sale of Cedar Bay Village and Kingston Village. Since
inception, the Partnership has paid cumulative distributions totaling $417.65
per original $500 Unit, including $238 per Unit in return of capital payments.
The level of future distributions will be evaluated on a quarterly basis and
will depend on the Partnership's operating results and future cash needs. It
is anticipated that cash from reserves may be required to fund a portion of
distributions during 1996 as a result of the expenditures for improvements
required at two of the Partnership's properties which are discussed in this
report.
Operations Overview
The solid recovery of multifamily housing in most regions of the country began
to level off during 1995. New construction intensified competition in many
areas with building permits for multifamily units up almost 22% in 1995
compared to 1994 levels. In addition, falling interest rates induced many
renters to purchase homes. Despite these trends, strong population and job
growth in the areas where the Partnership's properties are located helped
strengthen the demand for multifamily housing, and brought about improved
performance at the Partnership's properties. All three properties sustained
average occupancy rates for the year at or above 93% and recorded higher
average rental income from the prior year.
During 1996, we intend to implement an extensive improvement program to upgrade
the properties. This program, which includes landscaping work at Tierra
Catalina and roof repairs at Las Colinas plus improvements to the units'
interiors at both of these properties, is intended to maintain the properties'
position within their respective markets, which are growing increasingly
competitive with the addition of new apartment properties. This is
particularly true in the Tucson and Scottsdale markets where Tierra Catalina
and Las Colinas, respectively, are located. It is also hoped that these
improvements will allow for greater increases in rental rates, thereby
improving each property's revenue and ultimately their sales value. Updates on
the improvements at each property will be included in future correspondence.
Summary
Given favorable market conditions, particularly in Tulsa, Oklahoma, the General
Partners will begin marketing Ridge Park over the next several months. There
can be no assurances that a sale will be completed or that any particular price
for the property can be obtained. In addition, we will continue to seek to
maintain high occupancy levels, implement rental rate increases as conditions
permit, and make property improvements to upgrade the properties. We will keep
you apprised of significant developments affecting your investment in future
reports.
Very truly yours,
/s/Paul L. Abbott /s/Daniel J. Epstein
Paul L. Abbott Daniel J. Epstein
President President
RI 81 Real Estate Services Inc. ConAm Development Corp.
General Partner of ConAm Property
Services, Ltd.
March 27, 1996
Performance Summary
Las Colinas I & II, Scottsdale, Arizona
This 300-unit complex, located approximately eight miles northwest of Phoenix,
achieved average occupancy of 93% in 1995, compared with 96% in 1994. Despite
the decline in average occupancy, the property was able to achieve an increase
in rental income as a result of rate increases instituted during the year. The
lower average occupancy reflects a number of tenants not renewing leases to
purchase condominiums and single family homes thus increasing competition for
tenants. While population and job growth remain strong in the Phoenix area,
construction of new apartment projects has picked up in recent years and a
number of new units are planned or under construction in the
Scottsdale/Paradise Valley submarket. The addition of new apartment units
resulted in a decrease in the market's average occupancy to 94% at the end of
the second quarter of 1995. Given increased construction and continued strong
competition from condominiums and single family housing, competition for
tenants is likely to increase in the coming year. Property improvements during
1995 included carpet and appliance replacement in renewal units.
Ridge Park, Tulsa, Oklahoma
Ridge Park contains 100-units and maintained an average occupancy level of 95%
during 1995. The property's average occupancy rate has remained consistently
at or above 95% for the past four years. Rental rate increases during 1995 on
renewal units led to a modest rise in rental income. Occupancy in the
submarket where Ridge Park is located posted an occupancy rate of 94% as of the
third quarter of 1995. Construction of 288 new apartment units in the Ridge
Park area was completed during 1995, with another 588 units either announced or
under construction. With demand expected to increase over the next year, the
addition of newly constructed units is expected to have minimal impact on the
market. Property improvements during the year consisted primarily of repairs
to the parking lot. Given favorable market conditions the General Partners
will begin marketing Ridge Park over the next several months. There can be no
assurances that a sale will be completed or that any particular price for the
property can be obtained.
Tierra Catalina, Tucson, Arizona
Tierra Catalina is a 120-unit apartment community, located in the Foothills
region, overlooking Tucson. Occupancy at this property averaged 93% in 1995
compared with 96% in 1994. Rental income increased slightly from 1994,
reflecting rental rate increases on renewals and move-outs during the year.
Property improvements during 1995 were minimal and consisted primarily of
carpet replacement in selected units and renovations to the clubhouse. The
property continued to perform well despite intensifying competition in the
metro Tucson area brought on by new construction. Competition for tenants is
expected to increase further as renters continue to take advantage of low
interest rates on mortgages and opt to purchase condominiums or single family
homes. Evidence of the intensifying competition can be seen in the area's
vacancy rate which has reached 8%, its highest level since 1990.
Financial Highlights
Selected Financial Data
For the Periods Ended December 31,
(dollars in thousands, except per Unit data)
1995 1994 1993 1992 1991
Total Revenue $ 4,416 $ 4,760 $ 4,485 $ 4,284 $ 4,026
Gain on Sale of Properties 1,485 - - - -
Net Income (loss) 1,142 (253) (618) (465) (719)
Net Cash Provided by
(Used for) Operating Activities 974 949 1,020 (362) 288
Long-term Obligations
at Year End 11,954 15,601 15,736 15,861 15,403
Total Assets at Year End 16,022 22,497 23,565 24,518 24,434
Net Loss per
Limited Partnership Unit* (1.38) (3.19) (7.81) (5.88) (9.10)
Distributions per Limited
Partnership Unit* 8.00 8.00 3.50 - -
Special Distributions per
Limited Partnership Unit* 40.50 - - - -
*78,290 Units outstanding
- - The decrease in total revenue from 1994 to 1995 is primarily
attributable to the July 1995 sale of Cedar Bay Village and Kingston Village.
This was partially offset by increased rental income at the three remaining
properties and higher interest income.
- - The change from net loss in 1994 to net income in 1995 is primarily due
to the gain on the sale of Cedar Bay Village and Kingston Village, partially
offset by the resulting decrease in rental income. The sales also resulted in
decreases in nearly all major expense categories.
Quarterly Cash Distributions
Per Limited Partnership Unit
1995 1994
Special Distribution* $ 40.50 $ -
First Quarter 2.00 2.00
Second Quarter 2.00 2.00
Third Quarter 2.00 2.00
Fourth Quarter 2.00 2.00
Total $ 48.50 $ 8.00
* On August 17, 1995, the Partnership paid a special cash distribution
totaling $40.50 per Unit, reflecting net proceeds received from the sale of
Cedar Bay Village and Kingston Village of $38.00 per Unit and excess cash
reserves.
Consolidated Balance Sheets
December 31, 1995 and 1994
Assets 1995 1994
Investments in real estate:
Land $ 3,944,195 $ 5,255,820
Buildings and improvements 21,299,382 28,473,477
25,243,577 33,729,297
Less accumulated depreciation (11,370,295) (13,875,550)
13,873,282 19,853,747
Cash and cash equivalents 1,499,119 1,535,391
Restricted cash 394,147 659,076
Mortgage fees, net of
accumulated amortization
of $209,153 in 1995 and
$202,797 in 1994 230,519 408,014
Other assets 24,946 41,055
Total Assets $ 16,022,013 $ 22,497,283
Liabilities and Partners' Capital
Liabilities:
Mortgages payable $ 11,954,188 $ 15,601,031
Distribution payable 173,978 173,978
Accounts payable and
accrued expenses 210,876 183,869
Security deposits 77,433 141,408
Due to general partners
and affiliates 30,138 44,814
Total Liabilities 12,446,613 16,145,100
Partners' Capital (Deficit):
General Partners (188,213) (1,316,915)
Limited Partners 3,763,613 7,669,098
Total Partners' Capital 3,575,400 6,352,183
Total Liabilities and
Partners' Capital $ 16,022,013 $ 22,497,283
Consolidated Statements of Partners' Capital (Deficit)
For the years ended December 31, 1995, 1994 and 1993
General Limited
Partners Partners Total
Balance at January 1, 1993 $(1,208,173) $ 9,431,237 $ 8,223,064
Net loss (6,179) (611,703) (617,882)
Cash distributions (30,446) (274,015) (304,461)
Balance at December 31, 1993 (1,244,798) 8,545,519 7,300,721
Net loss (2,526) (250,101) (252,627)
Cash distributions (69,591) (626,320) (695,911)
Balance at December 31, 1994 (1,316,915) 7,669,098 6,352,183
Net income (loss) 1,250,091 (108,422) 1,141,669
Cash distributions (121,389) (3,797,063) (3,918,452)
Balance at December 31, 1995 $ (188,213) $ 3,763,613 $ 3,575,400
Consolidated Statements of Operations
For the years ended December 31, 1995, 1994 and 1993
Income 1995 1994 1993
Rental $4,313,044 $4,702,059 $4,444,950
Interest 102,535 58,009 39,735
Total Income 4,415,579 4,760,068 4,484,685
Expenses
Property operating 2,261,179 2,301,465 2,376,972
Interest 1,191,397 1,327,560 1,338,514
Depreciation and amortization 1,087,749 1,227,183 1,228,641
General and administrative 218,706 156,487 158,440
Total Expenses 4,759,031 5,012,695 5,102,567
Loss from operations (343,452) (252,627) (617,882)
Gain on sale of properties 1,485,121 - -
Net Income (Loss) $1,141,669 $ (252,627) $ (617,882)
Net Income (Loss) Allocated:
To the General Partners $1,250,091 $ (2,526) $ (6,179)
To the Limited Partners (108,422) (250,101) (611,703)
$1,141,669 $ (252,627) $ (617,882)
Per Limited Partnership Unit:
(78,290 outstanding)
Loss from operations $ (4.34) $ (3.19) $ (7.81)
Gain on sale of properties 2.96 - -
Net loss $ (1.38) $ (3.19) $ (7.81)
Consolidated Statements of Cash Flows
For the years ended December 31, 1995, 1994 and 1993
Cash Flows from Operating Activities:
1995 1994 1993
Net income (loss) $ 1,141,669 $ (252,627) $ (617,882)
Adjustments to reconcile
net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 1,087,749 1,227,183 1,228,641
Gain on sale of properties (1,485,121) - -
Increase (decrease) in
cash arising from changes
in operating assets
and liabilities:
Fundings to restricted cash (536,471) (581,675) (532,805)
Release of restricted cash
to property operations 801,400 543,194 950,922
Other assets 16,109 (3,609) 71,790
Accounts payable and
accrued expenses 27,007 (4,516) (73,125)
Security deposits (63,975) 11,700 6,904
Due to general partners
and affiliates (14,676) 8,963 (14,271)
Net cash provided by operating activities 973,691 948,613 1,020,174
Cash Flows From Investing Activities:
Net proceeds from sale of properties 6,555,332 - -
Net cash provided by
investing activities 6,555,332 - -
Cash Flows from Financing Activities:
Distributions (3,918,452) (695,911) (130,483)
Mortgage principal payments (3,646,843) (135,365) (124,412)
Net cash used for financing activities (7,565,295) (831,276) (254,895)
Net increase (decrease) in
cash and cash equivalents (36,272) 117,337 765,279
Cash and cash equivalents
at beginning of year 1,535,391 1,418,054 652,775
Cash and cash equivalents
at end of year $ 1,499,119 $ 1,535,391 $1,418,054
Supplemental Disclosure of Cash Flow Information:
Cash paid during the
period for interest $ 1,191,397 $ 1,327,560 $1,338,514
Supplemental Disclosure of Cash and Non-Cash Investing and Financing
Activities:
During the year ended December 31, 1993, the Partnership reclassified $7,500 of
commitment fees related to the September 1, 1992 mortgage loans for all five
properties from other assets to mortgage fees.
Notes to the Consolidated Financial Statements
For the years ended December 31, 1995, 1994 and 1993
1. Organization
Hutton/ConAm Realty Investors 81 (the "Partnership") was organized as a limited
partnership under the laws of the State of California pursuant to a Certificate
and Agreement of Limited Partnership (the "Partnership Agreement") dated April
30, 1981, as amended and restated August 31, 1981. The Partnership was formed
for the purpose of acquiring and operating certain types of residential real
estate. The general partners of the Partnership are RI 81 Real Estate Services
Inc., an affiliate of Lehman Brothers (see below), and ConAm Property Services,
Ltd., an affiliate of Continental American Properties, Ltd (the "General
Partners"). The Partnership will continue until December 31, 2010 unless
sooner terminated pursuant to the terms of the Partnership Agreement.
On July 31, 1993, Shearson Lehman Brothers Inc. sold certain of its domestic
retail brokerage and asset management businesses to Smith Barney, Harris Upham
& Co. Incorporated ("Smith Barney"). Subsequent to the sale, Shearson Lehman
Brothers Inc. changed its name to Lehman Brothers Inc. ("Lehman Brothers").
The transaction did not affect the ownership of the General Partners. However,
the assets acquired by Smith Barney included the name "Hutton." Consequently,
effective October 29, 1993, the Hutton Real Estate Services III, Inc. General
Partner changed its name to RI 81 Real Estate Services Inc.
On March 15, 1996, based upon, among other things, the advice of Partnership
counsel, Skadden, Arps, Slate, Meagher & Flom, the General Partners adopted a
resolution that states, among other things, if a Change of Control (as defined
below) occurs, the General Partners may distribute the Partnership's cash
balances not required for its ordinary course day-to-day operations. "Change
of Control" means any purchase or offer to purchase more than 10% of the Units
that is not approved in advance by the General Partners. In determining the
amount of the distribution, the General Partners may take into account all
material factors. In addition, the Partnership will not be obligated to make
any distribution to any partner and no partner will be entitled to receive any
distribution until the General Partners have declared the distribution and
established a record date and distribution date for the distribution. The
Partnership filed a Form 8-K disclosing this resolution on March 21, 1996.
2. Significant Accounting Policies
Financial Statements. The consolidated financial statements include the
accounts of the Partnership and its affiliated ventures. The effect of
transactions between the Partnership and its ventures has been eliminated in
consolidation.
Real Estate. Investments Real estate investments are recorded at cost less
accumulated depreciation which includes the initial purchase price of the
property, legal fees, capitalized interest, acquisition and closing costs.
Leases are accounted for under the operating method. Under this method,
revenue is recognized as rentals are earned and expenses (including
depreciation) are charged to operations when incurred. Leases are generally
for terms of one year or less.
Depreciation is computed using the straight-line method based upon the
estimated useful lives of the properties. Maintenance and repairs are charged
to operations as incurred. Significant betterments and improvements are
capitalized and depreciated over their estimated useful lives.
For assets sold or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is
reflected in income for the period.
Accounting for Impairment. In March 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of" ("FAS 121"), which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. FAS 121 also addresses the accounting
for long-lived assets that are expected to be disposed of. The Partnership has
adopted FAS 121 in the fourth quarter of 1995. Based on current circumstances,
the adoption had no impact on the financial statements.
Fair Value of Financial Instruments. Statements of Financial Accounting
Standards No. 107, "Disclosures about Fair Value of Financial Instruments"
("FAS 107"), requires that the Partnership disclose the estimated fair values
of its financial instruments. Fair values generally represent estimates of
amounts at which a financial instrument could be exchanged between willing
parties in a current transaction other than in forced liquidation.
Fair value estimates are subjective and are dependent on a number of
significant assumptions based on management's judgement regarding future
expected loss experience, current economic conditions, risk characteristics of
various financial instruments, and other factors. In addition, FAS 107 allows
a wide range of valuation techniques, therefore, comparisons between entities,
however similar, may be difficult.
Mortgage Fees. Included in mortgage fees are deferred mortgage costs incurred
in connection with obtaining financing on the Partnership's properties. Such
costs are amortized over the 7-year term of the applicable loans.
Offering Costs. Costs relating to the sale of limited partnership units were
deferred during the offering period and charged to the limited partners'
capital accounts upon the consummation of the public offering.
Income Taxes. No provision for income taxes has been made in the financial
statements since income, losses and tax credits are passed through to the
individual partners.
Cash and Cash Equivalents. Cash equivalents consist of short-term highly liquid
investments which have maturities of three months or less from the date of
issuance. The carrying amount approximates fair value because of the short
maturity of these instruments. Cash and cash equivalents include security
deposits of $17,670 and $69,364 for December 31, 1995 and 1994, respectively,
restricted under certain state statutes.
Restricted Cash. Consists of escrows for betterments and improvements, real
estate taxes, and casualty insurance as required by the first mortgage lender.
Concentration of Credit Risk. Financial instruments which potentially subject
the Partnership to a concentration of credit risk principally consist of cash
and cash equivalents in excess of the financial institutions' insurance limits.
The Partnership invests available cash with high credit quality financial
institutions.
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.
3. The Partnership Agreement
The Partnership Agreement provides that net cash from operations, as defined,
will be distributed quarterly, 90% to the limited partners and 10% to the
General Partners.
Net loss for any year will be allocated 99% to the limited partners and 1% to
the General Partners. Net income will generally be allocated in accordance
with the distribution of net cash from operations.
Net proceeds from sales or refinancing will be distributed 99% to the limited
partners and 1% to the General Partners until each limited partner has received
an amount equal to his adjusted capital value (as defined) and an annual,
cumulative 7% return thereon, and until the General Partners have received 15%
of the aggregate distributions of net proceeds. The balance, if any, will be
distributed 85% to the limited partners and 15% to the General Partners. Gain
from sales will be allocated to each partner having a negative capital account
balance, pro rata, to the extent of such negative balance. Thereafter, such
gain will be allocated in accordance with the distribution of net proceeds from
sale or refinancing, with the balance allocated to the limited partners.
4. Real Estate Investments
Real estate investments consist of four residential apartment complexes
acquired either directly or through investments in joint ventures as follows:
Apartment Date Purchase
Property Name Units Location Acquired Price
Las Colinas I 226 Scottsdale, AZ 5/20/81 $9,266,864
Las Colinas II 74 Scottsdale, AZ 9/23/82 3,564,919
Ridge Park 100 Tulsa, OK 7/19/82 3,326,004
Tierra Catalina 120 Tucson, AZ 3/9/84 7,012,650
Cedar Bay Village, Ridge Park, Kingston Village and Tierra Catalina were
originally acquired through joint ventures with unaffiliated developers. On
March 30, 1984, the co-venturer's interest with respect to Tierra Catalina was
acquired for $400,000. To each venture, the Partnership contributed the
apartment projects as its initial capital contribution.
On July 20, 1995, the Partnership sold Kingston Village and Cedar Bay Village
(the "Properties") to an institutional buyer (the "Buyer"), which is
unaffiliated with the Partnership. The selling price was determined by arm's
length negotiations between the Partnership and the Buyer. Kingston Village
and Cedar Bay Village were sold for $5,370,000 and $1,410,000, respectively.
The Partnership received net proceeds of $6,555,332 from the transaction of
which $3,541,400, representing outstanding principal and interest, was used to
fully satisfy the Partnership's mortgage obligations on the Properties. The
transaction resulted in a gain on sale of $1,485,121 which included the
recognition of mortgage prepayment penalties of $120,926 and a $101,146
write-off of the unamortized portion of mortgage fees. The gain was allocated
in accordance with the Partnership Agreement.
On August 17, 1995, the Partnership paid a special distribution of $3,170,745
or $40.50 per Unit to the limited partners. The special distribution was
comprised of the net proceeds from the sale of the Properties and Partnership
cash reserves.
The initial joint venture agreements of Cedar Bay Village, Kingston Village and
Ridge Park Associates substantially provide that:
a. Net cash from operations will be distributed 100% to the
Partnership until it has received an annual, non-cumulative 12% return
on its adjusted capital contribution. Any remaining balance will be
distributed 60% to the Partnership and 40% to the co-venturer.
b. Net income of the joint ventures and gain from sale will be
allocated basically in accordance with the distribution of net cash
from operations and net proceeds from sales, respectively. All losses
will be allocated 99% to the Partnership and 1% to the co-venturer.
c. Net proceeds from a sale or refinancing will be distributed
100% to the Partnership until it has received an amount equal to 120%
of its adjusted capital contribution and an annual, cumulative 12%
return on its adjusted capital contribution. Thereafter, the
Partnership will receive approximately 50% to 75% of the balance
depending on the joint venture agreement.
The amended joint venture and limited partnership agreements for Cedar Bay
Village, Kingston Village, Ridge Park Associates, Tierra Catalina and Las
Colinas substantially provide that:
a. Available cash from operations will be distributed 100% to the
Partnership until it has received an annual, non-cumulative preferred
return, as defined. Any remaining balance will be distributed 99% to
the Partnership and 1% to the corporate General Partners.
b. Net income will be allocated first, proportionately to partners
with negative capital accounts, as defined, until such capital
accounts, as defined, have been increased to zero. Then, to the
Partnership up to the amount of any payments made on account of its
preferred return; thereafter, 99% to the Partnership and 1% to the
corporate General Partners. All losses will be allocated first, to the
partners with positive capital accounts, as defined, until such
accounts have been reduced to zero. Then 99% to the Partnership and 1%
to the corporate General Partners.
c. Income from a sale will be allocated first, to the Partnership
until the Partnership's capital accounts, as defined, are equal to the
fair market value of the ventures' assets at the date of the
amendments. Then, any remaining balance will be allocated 99% to the
Partnership and 1% to the corporate General Partners. Net proceeds
from a sale or refinancing will be distributed first to the partners
with the positive capital account balance, as defined; thereafter, 99%
to the Partnership and 1% to the corporate General Partners.
5. Mortgages Payable
Mortgages payable, at December 31, 1995, consist of the following first
mortgage loans:
Interest Date of
Property Name Principal Rate Loan Term
Las Colinas I and II $6,391,557 8.50% 9/1/92 7 years
Tierra Catalina 3,655,095 8.50% 9/1/92 7 years
Ridge Park 1,907,536 8.25% 9/1/92 7 years
On August 27, 1992, the Partnership obtained new first mortgage
loans on all five of its properties from Washington Mortgage
Financial Group, an unaffiliated party. Total proceeds of
$15,900,000 were received and collateralized by deeds of trust
and assignments of rents as security encumbering the
properties. Additionally, these mortgages contain provisions
for prepayment penalties if the mortgages are repaid prior to
their maturity date of September 1, 1999.
On July 20, 1995, Kingston Village and Cedar Bay Village were sold. A portion
of the sales proceeds, in the amount of $3,662,325, representing outstanding
principal, interest and pre-payment penalties, was used to fully satisfy the
Partnership's mortgage obligations on the Properties.
Annual maturities of mortgage notes principal over the next four years
are as follows:
Year Amount
1996 124,158
1997 135,077
1998 146,957
1999 11,547,996
$11,954,188
Based on borrowing rates currently available to the Partnership for mortgage
loans with similar terms and average maturities, the fair value of long-term
debt approximates carrying value.
6. Transactions with Related Parties
The following is a summary of fees earned and reimbursable expenses for the
years ended December 31, 1995, 1994 and 1993, and the unpaid portion at
December 31, 1995:
Unpaid at
December 31, -------Earned--------
1995 1995 1994 1993
Reimbursement of:
Administrative salaries
and expenses $14,875 $ 57,966 $ 48,473 $ 50,927
Out-of-pocket expenses 2,244 1,132 1,310
Property operating
salaries - 394,663 418,143 430,901
Property management fees 15,263 217,706 234,723 221,613
$30,138 $672,579 $702,471 $704,751
The above amounts have been paid and/or accrued to the General Partners and
affiliates as follows:
Unpaid at
December 31, -------Earned---------
1995 1995 1994 1993
RI 81 Real Estate Services, Inc.
and affiliates $ 14,875 $ 60,210 $ 49,605 $ 52,237
ConAm and affiliates 15,263 612,369 652,866 652,514
$30,138 $672,579 $702,471 $704,751
7. Reconciliation of Financial Statement and Tax Information
The following is a reconciliation of the net loss for financial statement
purposes to net loss for federal income tax purposes for the years ended
December 31, 1995, 1994 and 1993:
1995 1994 1993
Net income (loss) per
financial statements $ 1,141,669 $ (252,627) $ (617,882)
Tax basis joint venture net
loss in excess of GAAP
basis joint venture net loss (443,083) (253,640) (252,182)
Gain on sale of property for
tax purposes in excess of
gain per financial statements 2,755,883 - -
Other 1,000 1,050 2,701
Taxable net income (loss) $ 3,455,469 $ (505,217) $ (867,363)
The following is a reconciliation of partners' capital for financial statement
purposes to partners' capital (deficit) for federal income tax purposes as of
December 31, 1995, 1994 and 1993:
1995 1994 1993
Partners' capital per
financial statements $ 3,575,400 $ 6,352,183 $ 7,300,721
Adjustment for
cumulative difference
between tax
basis net loss
and net loss
per financial
statements (4,276,947) (6,590,747) (6,338,157)
Partners' capital
(deficit) per tax
return $ (701,547) $ (238,564) $ 962,564
8. Distributions Paid
Cash distributions, per the consolidated statements of partners' capital, are
recorded on the accrual basis, which recognizes specific record dates for
payments within each calendar year. The consolidated statements of cash flows
recognize actual cash distributions paid during the calendar year. The
following table discloses the annual differences as presented on the
consolidated financial statements:
Distributions Distributions
Payable Distributions Distributions Payable
Beginning of Year Declared Paid December 31
1995 $173,978 $3,918,452 $3,918,452 $173,978
1994 173,978 695,911 695,911 173,978
1993 - 304,461 130,483 173,978
To the Partners of
Hutton/ConAm Realty Investors 81:
We have audited the consolidated balance sheets of Hutton/ConAm Realty
Investors 81, a California limited partnership, and Consolidated Ventures as of
December 31, 1995 and 1994, and the related consolidated statements of
operations, partners' capital (deficit) and cash flows for each of the three
years in the period ended December 31, 1995. These consolidated financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Hutton/ConAm Realty Investors 81, a California limited partnership, and
Consolidated Ventures as of December 31, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
February 1, 1996
Comparison of Acquisition Costs to Appraised Value and Determination of
Net Asset Value Per $262 Unit at December 31, 1995 (Unaudited)
Acquisition Cost
(Purchase Price Partnership's
Plus General Share of
Partners' December 31,
Acquisition 1995 Appraised
Property Date of Acquisition Fees) Value (1)
Las Colinas
I & II 05-20-81
and
09-23-82 $13,326,613 $ 14,000,000
Ridge Park 07-19-82 3,468,089 3,200,000
Tierra Catalina 03-09-84 7,759,670 6,300,000
$24,554,372 $ 23,500,000
Cash and cash equivalents 1,893,266
Other assets 24,946
25,418,212
Less:
Total liabilities (12,446,613)
Partnership Net Asset Value (2) $ 12,971,599
Net Asset Value Allocated:
Limited Partners $ 12,713,562
General Partners 258,037
12,971,599
Net Asset Value Per Unit (78,290 units outstanding) $162.39
(1) This represents the Partnership's share of the December 31, 1995
Appraised Values which were determined by an independent property appraisal
firm.
(2) The Net Asset Value assumes a hypothetical sale at December 31, 1995 of
all the Partnership's properties at a price based upon their value as a rental
property as determined by an independent property appraisal firm, and the
distribution of the proceeds of such sale, combined with the Partnership's cash
after liquidation of the Partnership's liabilities, to the Partners.
Limited Partners should note that appraisals are only estimates of current
value and actual values realizable upon sale may be significantly different. A
significant factor in establishing an appraised value is the actual selling
price for properties which the appraiser believes are comparable. In addition,
the appraised value does not reflect the actual costs which would be incurred
in selling the properties. As a result of these factors and the illiquid
nature of an investment in Units of the Partnership, the variation between the
appraised value of the Partnership's properties and the price at which Units of
the Partnership could be sold may be significant. Fiduciaries of Limited
Partners which are subject to ERISA or other provisions of law requiring
valuations of Units should consider all relevant factors, including, but not
limited to Net Asset Value per Unit, in determining the fair market value of
the investment in the Partnership for such purposes.
HUTTON/CONAM REALTY INVESTORS 81 and Consolidated Ventures
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1995
Cost Capitalized
Subsequent
Initial Cost to To Acquisition
---Partnership-------- ---------------
Land
Buildings and Buildings and
Description Encumbrances Land Improvements Improvements
Residential Property:
Consolidated Ventures:
Las Colinas Apts I
Scottsdale, AZ $ 6,391,557 $1,582,000 $ 8,268,721 $ 29,123
Las Colinas Apts II
Scottsdale, AZ - 514,564 3,268,996 8,494
Tierra Catalina
Tucson, AZ 3,655,095 1,497,150 6,403,622 32,772
Ridge Park Apts.
Tulsa, OK 1,907,536 312,891 3,283,553 41,691
$11,954,188 $3,906,605 $21,224,892 $112,080
(CONT.) ------------------------------------------------------------------
Gross Amount at Which Carried
at Close of Period-------------------------
Buildings and Accumulated
Description Land Improvements Total Depreciation
Residential Property:
Consolidated Ventures:
Las Colinas Apts I
Scottsdale, AZ $1,611,123 $ 8,268,721 $ 9,879,844 $ 4,795,817
Las Colinas Apts II
Scottsdale, AZ 515,719 3,276,335 3,792,054 1,746,952
Tierra Catalina
Tucson, AZ 1,503,333 6,430,211 7,933,544 3,041,602
Ridge Park Apts.
Tulsa, OK 314,020 3,324,115 3,638,135 1,785,924
$3,944,195 $21,299,382 $25,243,577 $11,370,295
(1) (2)
(CONT.) ---------------------------------------------------------------------
Life on which
Depreciation
in Latest
Date of Date Income Statements
Description Construction Acquired is Computed
Residential Property:
Consolidated Ventures:
Las Colinas Apts I
Scottsdale, AZ 1981 5/20/81 (3)
Las Colinas Apts II
Scottsdale, AZ 1982 9/23/82 (3)
Tierra Catalina
Tucson, AZ 1983,1984 3/9/84 (3)
Ridge Park Apts.
Tulsa, OK 1982 7/19/82 (3)
(1) Represents aggregate cost for both financial reporting and Federal income
tax purposes.
(2) The amount of accumulated depreciation for Federal income tax purposes is
$19,471,459.
(3) Buildings and improvements - 25 years; personal property - 10 years.
A reconciliation of the carrying amount of real estate and accumulated
depreciation for the years ended December 31, 1995, 1994 and 1993:
Real Estate investments: 1995 1994 1993
Beginning of year $33,729,297 $33,729,297 $33,729,297
Sale (8,485,720) - -
End of year $25,243,577 $33,729,297 $33,729,297
Accumulated Depreciation:
Beginning of year $13,875,550 $12,735,626 $11,594,244
Sale (3,516,655) - -
Depreciation expense 1,011,400 1,139,924 1,141,382
End of year $11,370,295 $13,875,550 $12,735,626
Report of Independent Accountants
Our report on the consolidated financial statements of Hutton/ConAm Realty
Investors 81, a California limited partnership, and Consolidated Ventures has
been incorporated by reference in this Form 10-K from the Annual Report to
unitholders of Hutton/ConAm Realty Investors 81 for the year ended December 31,
1995. In connection with our audits of such financial statements, we have also
audited the related financial statement schedule listed in the index of this
Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
February 1, 1996
</TEXT
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,499,119
<SECURITIES> 000
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 25,243,577
<DEPRECIATION> 11,370,295
<TOTAL-ASSETS> 16,022,013
<CURRENT-LIABILITIES> 000
<BONDS> 11,954,188
<COMMON> 000
000
000
<OTHER-SE> 3,575,400
<TOTAL-LIABILITY-AND-EQUITY> 16,022,013
<SALES> 4,313,044
<TOTAL-REVENUES> 4,415,579
<CGS> 000
<TOTAL-COSTS> 2,261,179
<OTHER-EXPENSES> 1,306,455
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 1,191,397
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 1,141,669
<EPS-PRIMARY> (1.38)
<EPS-DILUTED> (1.38)
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