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
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number: 0-11085
HUTTON/CONAM REALTY INVESTORS 2
Exact name of Registrant as specified in its charter
California 13-3100545
State or other jurisdiction of incorporatio I.R.S. Employer Identification No.
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 Registrant dated July 9, 1982 (included in Amendment
No. 1 to Registration Statement, No. 2-75519, of Registrant filed July 9, 1982)
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,
1994.
PART I
Item 1. Business
General Development of Business
Hutton/ConAm Realty Investors 2 (the "Registrant" or the "Partnership") is a
California limited partnership in which RI 2 Real Estate Services Inc. ("RI 2
Services", formerly Hutton Real Estate Services V, Inc.), a Delaware
corporation, and ConAm Property Services II, Ltd., a California limited
partnership ("ConAm Services"), are the general partners (together, the
"General Partners").
Commencing July 9, 1982, the Registrant began offering through E.F. Hutton &
Company Inc., of the Registrant, up to a maximum of 80,000 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. 2-75519, which
Registration Statement was declared effective on July 9, 1982. The offering of
Units was terminated on October 8, 1982. Upon termination of the offering, the
Registrant had accepted subscriptions for 80,000 Units for an aggregate of
$40,000,000.
Narrative Description of Business
The Registrant is engaged in the business of acquiring, operating and holding
for investment multifamily residential properties, which by virtue of their
location and design and the nature of the local real estate market have the
potential for capital appreciation and generation of current income. As of
December 31, 1994, all of the proceeds available for investment in real estate
were invested in four joint ventures and one limited partnership, each of which
owns a specified 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 in 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
will be the Registrant's long-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 investments
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 begun marketing certain of the properties and recently entered
into preliminary negotiations with an institutional buyer to sell Country Place
Village I. There is no assurance that a sale will be completed or that any
particular price for the properties can be obtained. 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 the
properties will not be reinvested and may be distributed to the Limited
Partners and General Partners (sometimes referred to herein as the "Partners"),
so that the Registrant will, in effect, be self-liquidating. If deemed ne
cessary, 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.
Since inception, the Registrant has acquired five residential apartment
complexes (collectively, the "Properties") through investments in joint
ventures and one limited partnership. As of December 31, 1994, the Registrant
had interests in the Properties as follows: (1) Creekside Oaks, a 120-unit
apartment complex located in Jacksonville, Florida; (2) Ponte Vedra Beach
Village I, a 122-unit apartment complex located in Ponte Vedra Beach, Florida;
(3) Rancho Antigua, a 220-unit apartment complex located in the McCormick
Ranch area of Scottsdale, Arizona; (4) Country Place Village I, an 88-unit
apartment complex located in Clearwater, Florida; and (5) Village at the
Foothills I, a 60-unit apartment complex located in Tucson, Arizona. 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, 1994, which is filed as an exhibit
under Item 14, for a further description of the Properties.
The acquisitions of the Properties were originally made on an all-cash basis,
without the use of mortgage financing. During the second quarter of 1985, the
Registrant obtained mortgage financing on all of the Properties with the
exception of Village at the Foothills I. The resulting net proceeds from such
financing were distributed to the Partners during the second quarter of 1985.
See Note 5 to the Consolidated Financial Statements for additional information
concerning the Registrant's current indebtedness.
Each of the Registrant's four mortgage loans matured and were refinanced in
1993. See Item 7 of this report for a discussion of the loan refinancing.
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 and Florida reflect some seasonality, which is also
reflected in the markets. In some cases, the Registrant may compete with other
partnerships affil iated 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 2
Services, ConAm Services, ConAm Management Corporation ("ConAm Management"), an
affiliate of ConAm Services, as well as Service Data Corporation and The
Shareholder 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. The Shareholder 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 on page 7 of the Partnership's Annual
Report to Unitholders for the year ended December 31, 1994, which is filed as
an exhibit under Item 14. Appraised values of the Partnership's real estate
investments are incorporated by reference to page 14 of the Partnership's
Annual Report to Unitholders. Average occupancy rates at each property are
incorporated by reference to page 2 of the Partnership's Annual Report to
Unitholders.
Country Place Village I - Clearwater, Florida
This 88-unit apartment complex is situated in northeastern Clearwater, on the
Gulf Coast west of Tampa. The Clearwater apartment market remains strong, with
an overall average occupancy of 95% during the fourth quarter of 1994. High
occupancy has permitted increases in rental rates at many complexes, and the
limited availability of vacant land for new construction has constrained new
development in the area.
Creekside Oaks - Jacksonville, Florida
This 120-unit apartment complex is situated ten miles west of the Intracoastal
Waterway in the Baymeadows/Deerwood section of southeast Jacksonville.
Significant prior period overbuilding has left the Baymeadows/Deerwood area
highly competitive for rental properties. Although market conditions have
improved steadily over the past two years, many complexes continue to offer
rental concessions to attract tenants. A survey of the Baymeadows/Deerwood
submarket indicated average occupancy of area apartments has climbed to 93% as
of the second quarter of 1994, and average rental rates had increased
approximately 5% from a year earlier. Average occupancy is rising in the
Jacksonville area, with the market in a recovery stage which is steady albeit
slow. New construction, however, has remained limited, with no new permits
issued in 1992 or 1993, and only 370 units permitted in 1994.
Ponte Vedra Beach Village I - Ponte Vedra Beach, Florida
Ponte Vedra Beach, an oceanfront community in southeast Jacksonville, is the
location of this 122-unit apartment complex. The Ponte Vedra Beach area has
experienced notable population growth and limited new construction in recent
years, resulting in strong occupancy for area apartment complexes. A local
survey of the Ponte Vedra Beach area reported an average apartment occupancy
rate of 95% in the fourth quarter of fiscal 1994. Construction of new
apartments has been limited in recent years; however, two residential projects
are planned which would add approximately 120 new units in the area. The
completion date of these projects remains uncertain and land available for
further apartment development is limited.
Rancho Antigua - Scottsdale, Arizona
This 220-unit apartment community is located eight miles northeast of Phoenix
in southwest Scottsdale. Strong population and job growth have characterized
Phoenix in recent years, bringing about favorable market conditions for
apartment complexes in the area. A survey of the Scottsdale/Paradise Valley
submarket reported average occupancy of 96% as of the third quarter of 1994,
and most area complexes have instituted rent increases in 1994. Construction,
while limited in recent years, picked up in 1994 and eight projects in the
Scottsdale/Paradise Valley submarket were in the planning or construction phase
as of the third quarter of 1994. The new supply is likely to limit rental
rate increases in the coming year, however, the area's strong population and
job growth are expected to keep pace with new supply.
Village at the Foothills I - Tucson, Arizona
This 60-unit apartment community is situated in the "foothills" section of
Tucson. Tucson continues to experience brisk population and job growth, which
have fueled strong demand for apartment housing in recent years. A local
survey of metropolitan Tucson conducted in the fourth quarter of fiscal 1994
showed an average occupancy rate of 96% among multifamily properties with five
or more units. While construction of new units has been minimal during the
past four years, eight new complexes commenced construction in 1994. When
completed, these projects can be expected to compete with Village at the
Foothills I.
Four of the Partnership's five properties are encumbered by mortgage loans.
See Note 5 to the Consolidated Financial Statements for a description of such
mortgage financing.
Item 3. Legal Proceedings
The Registrant is not a party to, nor are any of the Properties the subject of,
any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of the year ended December 31, 1994, 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, 1994, the number of Unitholders of record was 4,264.
No established public trading market exists for the Units, and it is not
anticipated that such 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. For a full accounting of the cash distributions paid to
the Limited Partners during the past two years, reference is made to page 3 of
the Partnership's Annual Report to Unitholders for the year ended December 31,
1994, which is filed as an exhibit under Item 14.
Cash distributions to the Limited Partners were suspended from the first
quarter of 1992 through the second quarter of 1994 in consideration of the
costs related to the refinancing of the Partnership's four mortgage loans.
Although the loans were refinanced in October 1993, the amount of such
refinancing proceeds was less than outstanding amounts due under the maturing
loans. Partnership cash reserves were used to meet this shortfall and to pay
mortgage fees and establish escrows required under the new loans. As these
payments substantially depleted the Partnership's cash reserve, cash
distributions remained suspended until the third quarter of 1994 at which time
the General Partners determined that the cash reserve had increased to a level
considered adequate to meet anticipated funding needs. Accordingly, cash
distributions to investors were reinstated commencing with the third quarter
1994 distribution in the quarterly amount of $2.75 per Unit. The level of
future distributions will be evaluated on a quarterly basis.
Item 6. Selected Financial Data
Incorporated by reference to page 3 of the Partnership's Annual Report to
Unitholders for the year ended December 31, 1994, 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, 1994, the Partnership had cash and cash equivalents of
$1,183,787 which was invested in unaffiliated money market funds, compared with
$558,731 at December 31, 1993. The increase is primarily attributable to net
cash from operations exceeding cash used for distributions, mortgage principal
payments, building improvements and mortgage fees. The Partnership also
maintained a restricted cash balance of $779,328 at December 31, 1994, compared
with $781,463 at December 31, 1993. The restricted cash balance represents
escrows for required insurance deductibles, real estate taxes, and property
replacements and repairs, required under the terms of the current mortgage
loans. The General Partners expect sufficient cash flow to be generated from
operations to meet its current operating expenses and debt service
requirements.
In light of improving market conditions in certain of the areas where the
Partnership's properties are located, the General Partners have begun marketing
some of the properties and recently entered into preliminary negotiations with
an institutional buyer to sell Country Place Village I. There is no assurance
that a sale will be completed or that any particular price for the property can
be obtained. In the event that a sale is completed, the General Partners
intend to distribute the net proceeds following a review of the Partnership's
cash reserve requirements.
On October 28, 1993, the General Partners obtained replacement financing on the
Partnership's mortgages secured by Creekside Oaks, Ponte Vedra Beach Village I,
Country Place Village I and Rancho Antigua. Since the proceeds of the current
mortgage loans were significantly less than the amounts due on the prior
mortgages, the Partnership used cash reserves of approximately $1.1 million to
pay down principal balances. Additionally, $491,095 of Partnership cash
reserves was used to pay refinancing expenses, and $995,372 was used to fund
various escrows required by the new lender. See Note 5 to the Consolidated
Financial Statements for additional information concerning the terms of the
replacement financing.
Cash distributions to the limited partners were suspended from the first
quarter of 1992 through the second quarter of 1994 in consideration of the
costs related to the refinancing of the Partnership's four mortgage loans.
Although the loans were refinanced in October 1993, cash outlays associated
with the refinancing discussed above substantially depleted the Partnership's
cash reserve, and cash distributions remained suspended until the third quarter
of 1994, at which time the General Partners determined that the cash reserve
had increased to a level considered adequate to meet anticipated funding needs.
Accordingly, quarterly cash distributions to investors were reinstated
commencing with the third quarter 1994 distribution in the amount of $2.75 per
Unit. The level of future distributions will be evaluated on a quarterly
basis.
Results of Operations
1994 versus 1993
Partnership operations for the year ended December 31, 1994 resulted in net
income of $37,325, compared with a net loss of $527,539 in 1993. After adding
back depreciation and amortization, both non-cash expenses, and subtracting
mortgage amortization, operations generated cash flow of $1,001,258 for the
year ended December 31, 1994, compared with cash flow of $494,769 in 1993. The
increase in cash flow and change from net loss to net income in 1994 is
primarily the result of increased rental income and lower interest expense.
Rental income totaled $4,669,676 for the year ended December 31, 1994 compared
with $4,429,975 in 1993. The increase in 1994 reflects higher rental income at
all the properties, primarily due to rental rate increases instituted over the
past year.
Property operating expenses totaled $2,262,915 for the year ended December 31,
1994, compared with $2,069,986 in 1993. The increase primarily reflects higher
expenses at Rancho Antigua as repair and maintenance expense increased due to
carpet replacement, asphalt resealing and general repairs, while rental
administration expenses increased primarily due to higher utilities expense.
Interest expense totaled $1,110,434 for the year ended December 31, 1994,
compared with $1,686,402 in 1993. The decrease is due to lower interest rates
and the reduction of approximately $1.1 million of the principal balances as a
result of the replacement financing secured in late 1993. General and
administrative expenses totaled $144,052 for the year ended December 31, 1994,
compared with $153,236 in 1993. The decrease primarily reflects one-time
expenses incurred in 1993 relating to the attempt at securing a loan for the
Village at the Foothills I.
1993 versus 1992
Partnership operations for the year ended December 31, 1993 resulted in a net
loss of $527,539 compared with a net loss of $408,905 in 1992. After adding
back depreciation and amortization, non-cash expenses, and subtracting mortgage
amortization, operations generated cash flow of $494,769 in 1993 compared with
cash flow of $560,889 in 1992. The reduced cash flow and larger net loss in
1993 are primarily a result of higher property operating costs and, to a lesser
extent, higher interest expense, which more than offset increased rental
income.
Rental income for the year ended December 31, 1993 was $4,429,975 compared with
$4,251,122 in 1992. The approximate 4% increase in 1993 is primarily the
result of higher rental income from the Rancho Antigua property, reflecting
higher average occupancy during 1993.
Property operating expenses were $2,069,986 for the year ended December 31,
1993, compared with $1,829,468 for 1992. The increase primarily reflects
higher repair and maintenance expenses at Creekside Oaks, Rancho Antigua and
Country Place Village I. Interest expense totalled $1,686,402 for the year
ended December 31, 1993, compared with $1,632,135 for the year ended December
31, 1992. The increase reflects the higher default interest rates which were
applied to the Partnership's loans beginning at the time of their maturity in
May 1993 through the closing of the refinancing in October. General and
administrative expenses totalled $153,236 for the year ended December 31, 1993,
compared with $179,752 for 1992. The decrease is primarily attributable to
reduced legal fees and lower postage costs for investor reports.
The average occupancy levels at each of the Properties for the years ended
December 31, 1994, 1993 and 1992, were as follows:
Twelve Months Ended December 31,
Property 1994 1993 1992
Creekside Oaks 96% 94% 94%
Ponte Vedra Beach Village I 96% 96% 96%
Rancho Antigua 95% 95% 91%
Country Place Village I 97% 95% 97%
Village at the Foothills I 96% 96% 97%
Item 8. Financial Statements and Supplementary Data
The financial statements are incorporated by reference to pages 4 - 13 of the
Partnership's Annual Report to Unitholders for the year ended December 31,
1994, which is filed as an exhibit under Item 14. Supplementary Data is
incorporated by reference to page F - 1 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 2 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 2 Services
RI 2 Services (formerly Hutton Real Estate Services V, Inc.) is a Delaware
Corporation, formed on October 30, 1980, and is an affiliate of Lehman
Brothers, Inc. See the section captioned "Certain Matters Involving Affiliates
of RI 2 Services" 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 2 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 ages of, as well as the positions held by, the directors and
executive officers of RI 2 Services are set forth below. There are no family
relationships between any executive officers or directors.
Name Age Office
Paul L. Abbott 49 Director, President, Chief Financial
Officer and Chief Executive Officer
Janet M. Hoynes 30 Vice President
Kate D. Hobson 28 Vice President
Paul L. Abbott 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.
Janet M. Hoynes is a Vice President at Lehman Brothers in the Diversified Asset
Group and is responsible for asset management of residential real estate.
Prior to joining Shearson in July 1989, she was employed as an analyst in a
public real estate investment trust based in California. Ms. Hoynes received a
B.A. in Economics from the State University of New York at Stony Brook in 1986.
Kate D. Hobson 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 August 30,
1982. The sole general partner of ConAm Services is Continental American
Development, Inc. ("ConAm Development"). The names and ages of, as well as the
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 Age Office
Daniel J. Epstein 55 President and Director
Nancie Larimore 55 Secretary/Treasurer and Director
E. Scott Dupree 44 Vice President
Robert J. Svatos 36 Vice President
Ralph W. Tilley 40 Vice President
Daniel J. Epstein 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.
Nancie Larimore has been employed by ConAm Management or its affiliates since
1976 and has been a Vice President of ConAm Management (or its predecessor
firm) and the Secretary/Treasurer and a Director of ConAm Development since
their inception. Ms. Larimore's responsibilities include leasing, consumer
relations, advertising and promotion. From 1972 to 1975, she held a similar
position with American Housing Guild. From 1969 to 1972, she was Director of
Property Management for Larwin Group, Inc. Ms. Larimore is a graduate of the
University of California at Los Angeles, and holds a Master's of Business
Administration degree from the University of California at Los Angeles.
E. Scott Dupree 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 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 of Science
degree in Accounting from the University of Illinois. Mr. Svatos is a
Certified Public Accountant.
Ralph W. Tilley is a Vice President and Treasurer of ConAm Management. He is
responsible for the financial aspects of syndications and acquisitions, ConAm
Management'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 of Science degree in
Accounting from San Diego State University and is a Certified Public
Accountant.
Certain Matters Involving Affiliates of RI 2 Services
On January 13, 1988, SLBP Acquisition Corp. (the "Purchaser"), a wholly-owned
subsidiary of Shearson Lehman Brothers Holding Inc., acquired the right to
purchase 29,610,000 shares of stock of the Hutton Group pursuant to a cash
tender offer commenced on December 7, 1987. On January 21, 1988, the Purchaser
assigned its right to purchase the shares so accepted to Shearson. Shearson
purchased the 29,610,000 shares which constituted approximately 90% of the
outstanding shares of the Hutton Group. Shearson subsequently acquired the
remaining shares of the Hutton Group. Thus, the Hutton Group became a
wholly-owned subsidiary of Shearson.
On July 31, 1993, Shearson sold certain of its domestic retail brokerage and
asset management businesses to Smith Barney. 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 general partner changed its name to "RI 2 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 below with
respect to a description of certain transactions between the General Partners
or their affiliates and the Registrant.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of December 31, 1994, no person was known by the Registrant to be the
beneficial owner of more than five percent of the Units of the Registrant.
Nancie Larimore, Secretary/Treasurer and a Director of ConAm Development, owned
four Units as of December 31, 1994. No other directors or executive officers
of the General Partners own any Units.
Item 13. Certain Relationships and Related Transactions
Pursuant to the Amended and Restated Certificate and Agreement of Limited
Partnership of the Registrant, for the year ended December 31, 1994, $3,732 of
Registrant's net income was allocated to the General Partners ($2,488 to RI 2
Services and $1,244 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 78
through 80 of the Prospectus of the Registrant dated July 9, 1982 ( the
"Prospectus"), contained in Amendment No. 1 to Registrant's Registration
Statement No. 2-75519, filed July 9, 1982, 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 local property managers, where
appropriate, 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 on pages 33 and 34 of the Prospectus under the caption "Investment
Objectives and Policies - Management of Properties," which description is
herein incorporated by reference. A summary of property management fees earned
by ConAm Management during the past three fiscal years is incorporated by
reference to Note 6 to the Consolidated Financial Statements included in the
Partnership's Annual Report to Unitholders for the year ended December 31,
1994, which is filed as an exhibit under Item 14.
Pursuant to Section 12(g) of Registrant's Certificate and Agreement of Limited
Partnership, the General Partners 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. The Shareholder 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, an unaffiliated company. 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, 1994, which is filed as an
exhibit under Item 14.
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K
(a)(1) Financial Statements:
Page
Consolidated Balance Sheets - December 31, 1994 and 1993 (1)
Consolidated Statements of Partners' Capital (Deficit) - For the
years ended December 31, 1994, 1993 and 1992 (1)
Consolidated Statements of Operations - For the years ended
December 31, 1994, 1993 and 1992 (1)
Consolidated Statements of Cash Flows - For the years ended
December 31, 1994, 1993 and 1992 (1)
Notes to the Consolidated Financial Statements (1)
Report of Independent Accountants (1)
(a)(2) Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation F-1
Report of Independent Accountants F-2
(1) Incorporated by reference to the Partnership's Annual Report to Unitholders
for the year ended December 31, 1994 filed as an exhibit 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 July 9, 1982 (the
"Prospectus"), contained in Amendment No. 1 to Registration
Statement, No. 2-75519, of Registrant filed July 9, 1982).
(B) Subscription Agreement and Signature Page (included as,
and incorporated herein by reference to, Exhibit B to the
Prospectus).
(10)(A) 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 10.1 to the
Registrant's Quarterly Report on Form 10-Q (Commission File No.
0-11085)).
(B) Amended and Restated Agreement of General Partnership of
Country Place Village I Joint Venture 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
(Commission File No. 0-11085)).
(C) Amended and Restated Agreement of General Partnership of
Creekside Oaks Joint Venture 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 (Commission File No.
0-11085)).
(D) Amended and Restated Agreement of General Partnership of
Ponte Vedra Beach Village I dated July 1, 1992 (included as, and
incorporated herein by reference to Exhibit 10.4 of the
Registrant's Quarterly Report on Form 10-Q (Commission File No.
0-11085)).
(E) Joint Venture Agreement of Rancho Antigua (included as, and
incorporated herein by reference to Exhibit 10(M) to the
Registrant's 1991 Annual Report on Form 10-K for the year ended
December 31, 1991 (Commission File No. 0-11085)).
(F) Amended and Restated Agreement of General Partnership of
Village at the Foothills I Joint Venture Limited Partnership
dated July 1, 1992 (included as, and incorporated herein by
reference to Exhibit 10.5 to the Registrant's Quarterly Report
on Form 10-Q (Commission File No. 0-11085)).
(G) Property Management Agreement between Creekside Oaks Joint
Venture and ConAm Management Corporation for the Creekside Oaks
property (included as, and incorporated herein by reference to
Exhibit 10-G to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1993 (Commission File No. 0-11085)).
(H) Property Management Agreement between Ponte Vedra Beach
Joint Venture and ConAm Management Corporation for the Ponte
Vedra Beach Village I property (included as, and incorporated
herein by reference to Exhibit 10-H to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993
(Commission File No. 0-11085)).
(I) Property Management Agreement between Rancho Antigua Joint
Venture and ConAm Management Corporation for the Rancho Antigua
property (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, 1993 (Commission File No. 0-11085)).
(J) Property Management Agreement between Country Place Village
I Joint Venture and ConAm Management Corporation for the Country
Place Village I property (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, 1993 (Commission
File No. 0-11085)).
(K) Property Management Agreement between Village at the
Foothills I Joint Venture and ConAm Management for the Village
at the Foothills I property (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, 1993
(Commission File No. 0-11085)).
(L) Loan Documents: Mortgage and Security Agreement,
Promissory Note and Assignment of Rents and Leases with respect
to the refinancing of Country Place Village I, between
Registrant and The Penn Mutual Insurance Company (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. 0-11085)).
(M) Loan Documents: Mortgage and Security Agreement,
Promissory Note and Assignment of Rents and Leases with respect
to the refinancing of Creekside Oaks, between Registrant and The
Penn Mutual Insurance Company (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. 0-11085)).
(N) Loan Documents: Mortgage and Security Agreement,
Promissory Note and Assignment of Rents and Leases with respect
to the refinancing of Ponte Vedra Beach Village I, between
Registrant and The Penn Mutual Insurance Company (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. 0-11085)).
(O) Loan Documents: Deed of Trust and Assignment of Rents with
Security Agreement and Financing Statement with respect to the
refinancing of Rancho Antigua, between Registrant and The Penn
Mutual Insurance Company (included as, and incorporated herein
by reference to Exhibit 10-O to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1993 (Commission
File No. 0-11085)).
(13) Annual Report to Unitholders for the year ended December
31, 1994.
(21) List of Subsidiaries - Joint Ventures (included as, and
incorporated herein by reference to Exhibit 22 to the
Registrant's Annual Report for the year ended December 31, 1994,
on Form 10-K (Commission File No. 0-11085)).
(99) Portions of Prospectus of Registrant dated July 9, 1983
(included as, and incorporated herein by reference to Exhibit 28
of the Registrant's 1988 Annual Report filed on Form 10-K for the
fiscal year ended December 31, 1988 (Commission File No.
0-11085)).
(b)(3) Reports on Form 8-K:
No reports on Form 8-K were filed in the fourth quarter of
1994.
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 28, 1995
HUTTON/CONAM REALTY INVESTORS 2
BY: RI 2 Real Estate Services Inc.
General Partner
BY: /S/ Paul L. Abbot
Name: Paul L. Abbott
Title: Director, President,
Chief Executive Officer
and Chief Financial Officer
BY: ConAm Property Services II, 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 2 REAL ESTATE SERVICES INC.
A General Partner
BY: Continental American Development, Inc.
General Partner
Date: March 28, 1995
BY: /S/ Paul L. Abbott
Paul L. Abbott
Director, President,
Chief Executive Officer
and Chief Financial Officer
Date: March 28, 1995
BY: /S/ Janet Hoynes
Janet Hoynes
Vice President
Date: March 28, 1995
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 II, LTD.
A General Partner
By: Continental American Development, Inc.
General Partner
Date: March 28, 1995
BY: /S/ Daniel J. Epstein
Daniel J. Epstein
Director and President
Date: March 28, 1995
BY: /S/ Nancie Larimore
Nancie Larimore
Secretary/Treasurer
and Director
Date: March 28, 1995
BY: /S/ E. Scott Dupree
E. Scott Dupree
Vice President
Date: March 28, 1995
BY: /S/ Robert J. Svatos
Robert J. Svatos
Vice President
Date: March 28, 1995
BY: /S/ Ralph W. Tilley
Ralph W. Tilley
Vice President
Hutton/ConAm Realty Investors 2
Exhibit 13
Hutton/ConAm Realty Investors 2
Annual Report 1994
Hutton/ConAm Realty Investors 2 is a California limited partnership
formed in 1982 to acquire, operate and hold for investment
multifamily housing properties. At December 31, 1994, the
Partnership's portfolio consisted of five apartment properties
located in Arizona and Florida.
Average Occupancy
Property Location 1994 1993
_________________________________________________________________________
Country Place Village I Clearwater, Florida 97% 95%
Creekside Oaks Jacksonville, Florida 96% 94%
Ponta Vedra Beach Village I Ponte Vedra Beach, Florida 96% 96%
Rancho Antigua Scottsdale, Arizona 95% 95%
Village at the Foothills I Tucson, Arizona 96% 96%
_________________________________________________________________________
Administrative Inquires Performance Inquires/Form 10-Ks
Address Changes/Transfers The Shareholder Services Group
Service Data Corporation P.O.Box 1527
2424 South 130th Circle Boston, Massachusetts 02104-1527
Omaha, Nebraska 68144 Attn: Financial Communications
(800) 223-3464 (800) 223-3464
Contents
1 Message to Investors
2 Performance Summary
3 Financial Highlights
4 Consolidated Financial Statements
6 Notes to Consolidated Financial Statements
13 Report of Independent Accountants
14 Net Asset Valuation
Presented for your review is the 1994 Annual Report for Hutton/ConAm Realty
Investors 2. 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.
Cash Distributions
Following an evaluation of the Partnership's cash reserves, anticipated cash
flow and funding needs, the General Partners reinstated cash distributions to
investors commencing with the 1994 third quarter distribution. A fourth
quarter distribution, in the amount of $2.75 per Unit, was credited to your
brokerage account or sent directly to you on February 6, 1995. Since
inception, the Partnership has paid distributions totalling $299.19 per
original $500 Unit, including $200 per Unit in return of capital payments. The
level of future distributions will be evaluated on a quarterly basis and will
be based on cash flow generated by the Partnership. Please see page 3 of this
report for a summary of cash distributions paid for the past eight quarters.
Operations Overview
The past year has witnessed a solid recovery of multifamily housing in most
regions of the country. The improving economy and limited new construction in
most areas have boosted occupancy levels and rental rates, while rising
mortgage rates have curtailed renters from purchasing condominiums and single
family homes. These favorable conditions are especially prevalent in the
sunbelt states, which continue to benefit from long-term population growth.
Operating results at the Partnership's properties reflect these strengthening
market conditions. Occupancy rates at each of the properties remained
competitive with local averages during 1994, and all of the properties
instituted rental rate increases on lease renewals resulting in a 5% increase
in rental income. While construction of new units has picked up in several
areas, positive demographic trends, especially in the Florida markets, are
expected to keep pace with new supply. The General Partners intend to closely
monitor these conditions and will continue to make select property improvements
and age-related repairs to keep the Partnership's properties competitive with
newer units.
Summary
The healthy market conditions and strong performance of the Partnership's
properties during 1994 bode well for their eventual sale. In light of these
improving conditions the General Partners have begun marketing some of the
properties and recently entered into preliminary negotiations with an
institutional buyer to sell Country Place Village I. There can be no assurance
that a sale will be completed or that any particular price for the property can
be obtained. In the interim, the General Partners will continue to effectively
manage the Partnership's properties by seeking to maintain high occupancy
levels and implementing rental rate increases as conditions permit. We will
keep you updated on developments affecting your investment in future reports.
Very truly yours,
Paul L. Abbott Daniel J. Epstein
President President
RI 2 Real Estate Services, Inc. Continental American Development Inc.
General Partner of ConAm Property
March 28, 1995 Services IV, Ltd.
Performance Summary
Country Place Village I, Clearwater, Florida.
Located in the northeastern section of Clearwater, this 88-unit apartment
complex boasted a 97% average occupancy rate in 1994, up two percent from 1993.
The higher occupancy reflects an aggressive marketing campaign as well as
strong market conditions in Clearwater. Average occupancy in the Clearwater
area stood at 95% in the fourth quarter of 1994 and many area complexes,
including Country Place Village I, have increased rents. Rental income at
Country Place increased 8% over the previous year. Capital improvements during
the year included carpet replacement and roof repairs.
Creekside Oaks, Jacksonville, Florida
Creekside Oaks, a 120-unit apartment community, is situated in the
Baymeadows-Deerwood neighborhood of southeast Jacksonville. Average occupancy
levels at Creekside Oaks increased to 96% during 1994, resulting in a 5%
increase in rental income from 1993. While rental rate increases are being
implemented on renewals, market conditions in the Baymeadows-Deerwood area
remain highly competitive as a result of significant prior-period overbuilding.
Property improvements included roof replacement and related repairs, as well as
selected exterior painting.
Ponte Vedra Beach Village I, Ponte Vedra Beach, Florida
This 122-unit property is located in an oceanside residential area south of
Jacksonville. Ponte Vedra Beach Village I reported stable occupancy of 96%
during 1994, unchanged from 1993. Rental income increased 3%, reflecting rate
increases on most units during the year. While the local rental market remains
strong, planned construction of two residential projects will add approximately
120 new units in the area that are likely to compete with the Partnership's
property. The completion date of these projects remains uncertain. Capital
improvements during the year were minor and included the replacement of porches
on select units.
Rancho Antigua, Scottsdale, Arizona
Located approximately eight miles northeast of Phoenix, this 220-unit complex
achieved average occupancy of 95% in 1994, unchanged from the prior year. The
healthy local economy and strong market conditions for rental properties have
permitted rental increases, resulting in a 6% increase in rental income from
1993. Construction, while limited in recent years, picked up in 1994 and eight
new projects in the Scottsdale/Paradise Valley submarket were in the process of
planning or construction as of the third quarter of 1994, according to an area
survey. Capital improvements included carpet and tile upgrades and the
replacement of aging appliances in certain units.
Village at the Foothills I, Tucson, Arizona
This 60-unit apartment and townhouse community is located in the rugged
Catalina Foothills, overlooking Tucson. Occupancy rates at this property
remained steady in 1994, at 96%, and rental income increased 7% from 1993 as a
result of rental increases instituted on all turnovers and renewals. While
market conditions have improved notably in Tucson in recent years, eight new
apartment complexes in the Foothills region recently commenced construction
which are likely to provide strong competition when completed. Property
improvements included carpet replacement in selected units, roof repairs and
landscape upgrades.
Selected Financial Data
For the Periods Ended December 31,
(dollars in thousands, except per Unit data)
1994 1993 1992 1991 1990
Total Income $4,718 $ 4,479 $ 4,316 $ 4,263 $ 4,182
Net Income (Loss) 37 (528) (409) (513) (523)
Net Cash Provided by
(used for)Operating
Activities 1,150 (180) 680 380 642
Long-term
Obligations 14,219 14,418 15,636 15,750 15,853
Total Assets
at Year End 24,772 25,237 26,946 27,579 28,807
Net Income (Loss)
per Limited Partnership
Unit
80,000 Units) .42 (6.53) (5.06) (6.34) (6.47)
Distributions per
Limited Partnership
Unit (80,000 Units) 5.50 - - 5.20 2.20
Total income increased 5% from 1993 to 1994, primarily due to higher
rental income at all of the Partnership's properties due to rental rate
increases implemented during 1994.
The increase in net income and net cash provided by operating
activities is attributable to the increase in rental income, as well as a
decrease in interest expense due to a lower interest rate and a $1.1 million
reduction of the Partnership's outstanding principal balance as a result of the
replacement financing secured in late 1993. This decrease was partly offset by
a 9% increase in property operating expense, reflecting higher repair and
maintenance expenses and rental administration expense at Rancho Antigua.
Quarterly Cash Distributions
Per Limited Partnership Unit
1994 1993
First Quarter $ - $ -
Second Quarter - -
Third Quarter 2.75 -
Fourth Quarter 2.75 -
Total 5.50 0
Consolidated Balance Sheets
December 31, 1994 and 1993
Assets 1994 1993
Investments in real estate:
Land $6,797,328 $6,797,328
Buildings and improvements 27,258,895 27,144,828
34,056,223 33,942,156
Less- accumulated depreciation (11,699,378) (10,612,843)
22,356,845 23,329,313
Cash and cash equivalents 1,183,787 558,731
Restricted cash 779,328 781,463
Other assets, net of accumulated
amortization of $88,397 in 1994
and $11,693 in 1993 452,164 567,953
Total Assets $24,772,124 $25,237,460
Liabilities and Partners' Capital
Liabilities:
Mortgages payable $14,218,948 $14,418,254
Accounts payable
and accrued expenses 106,337 165,903
Due to general partners
and affiliates 40,523 36,907
Security deposits 133,210 136,171
Distribution payable 244,445 -
Total Liabilities 14,743,463 14,757,235
Partners' Capital (Deficit):
General Partners (618,500) (573,343)
Limited Partners 10,647,161 11,053,568
Total Partners' Capital 10,028,661 10,480,225
Total Liabilities and
Partners' Capital $24,772,124 $25,237,460
Consolidated Statements of Partners' Capital (Deficit)
For the years ended December 31, 1994, 1993 and 1992
General Limited Total
Partners' Partners' Partners'
Balance at January 1, 1992 $(563,979) $11,980,648 $11,416,669
Net loss (4,089) (404,816) (408,905)
Balance at December 31, 1992 (568,068) 11,575,832 11,007,764
Net loss (5,275) (522,264) (527,539)
Balance at December 31, 1993 (573,343) 11,053,568 10,480,225
Net income 3,732 33,593 37,325
Distributions (48,889) (440,000) (488,889)
Balance at December 31, 1994 $(618,500) $10,647,161 $10,028,661
See accompanying notes to the consolidated financial statements.
Consolidated Statements of Operations
For the years ended December 31, 1994, 1993 and 1992
Income 1994 1993 1992
Rental $4,669,676 $4,429,975 $4,251,122
Interest 48,289 48,981 65,327
Total Income 4,717,965 4,478,956 4,316,449
Expenses
Property operating 2,262,915 2,069,986 1,829,468
Depreciation and amortization 1,163,239 1,096,871 1,083,999
Interest 1,110,434 1,686,402 1,632,135
General and administrative 144,052 153,236 179,752
Total Expenses 4,680,640 5,006,495 4,725,354
Net income (loss) $37,325 $(527,539) $(408,905)
Net Income (Loss) Allocated:
To the General Partners $3,732 $(5,275) $(4,089)
To the Limited Partners 33,593 (522,264) (404,816)
Net income (loss) $37,325 $(527,539) $(408,905)
Per limited partnership unit
(80,000 outstanding) $.42 $(6.53) $(5.06)
See accompanying notes to the consolidated financial statements.
Consolidated Statements of Cash Flows
For the years ended December 31, 1994, 1993 and 1992
Cash Flows from
Operating Activities: 1994 1993 1992
Net income (loss) $37,325 $(527,539) $(408,905)
Adjustments to reconcile
net income (loss) to net cash
provided by (used for)
operating activities:
Depreciation and
amortization 1,163,239 1,096,871 1,083,999
Increase (decrease)
in cash arising from
changes in operating
assets and liabilities:
Fundings to
restricted cash (407,336) (1,057,502) -
Release of
restricted cash 409,471 276,039 -
Other assets 6,310 (5,317) (658)
Accounts payable and
accrued expenses (59,566) 40,477 6,034
Due to general partners
and affiliates 3,616 (11,199) 13,071
Security deposits (2,961) 7,848 (13,968)
Net cash provided by (used for)
operating activities 1,150,098 (180,322) 679,573
Cash Flows from Investing Activities:
Additions to real estate (114,067) (34,711) -
Acquisition of joint
venture partner interests - - (36,764)
Net cash used for
investing activities (114,067) (34,711) (36,764)
Cash Flows from Financing Activities:
Distributions (244,444) - (115,556)
Mortgage principal payments (199,306) (15,667,949) (114,205)
Receipt (payment) of deposit
on mortgage refinancing 72,058 (74,631) -
Mortgage fees (39,283) (491,095) -
Mortgage proceeds - 14,450,000 -
Net cash used for
financing activities (410,975) (1,783,675) (229,761)
Net increase (decrease) in
cash and cash equivalents 625,056 (1,998,708) 413,048
Cash and cash equivalents
at beginning of year 558,731 2,557,439 2,144,391
Cash and cash equivalents
at end of year $1,183,787 $558,731 $2,557,439
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year
for interest $1,110,434 $1,686,402 $1,632,135
Supplemental Disclosure of Cash and Non-Cash Investing Activities:
During the year ended December 31, 1992, the Partnership purchased the Joint
Venture Partner interest of the co-venturers to Country Place Village I Joint
Venture, Creekside Oaks Joint Venture, Ponte Vedra Beach Village I Joint
Venture, and Village at the Foothills I Joint Venture. The Creekside Oaks
Joint Venture included a minority interest of $10,500. Total consideration of
$35,000 was paid for the purchase of such interest. In addition, $12,264 of
legal costs were incurred as a result of this transaction, resulting in a net
building basis adjustment of $36,764.
See accompanying notes to the consolidated financial statements.
Notes to the Consolidated Financial Statements
For the years ended December 31, 1994, 1993 and 1992
1. Organization
Hutton/ConAm Realty Investors 2 (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
December 17, 1981, as amended and restated October 8, 1982. 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 2 Real
Estate Services Inc., an affiliate of Lehman Brothers Inc. (see below), and
ConAm Property Services II, Ltd. ("ConAm"), 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 business 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 January 13, 1994, the Hutton Real Estate Services V, Inc. general
partner changed its name to "RI 2 Real Estate Services, Inc."
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 have been eliminated in
consolidation.
Real Estate Investments Real estate investments are recorded at the lower of
cost or net realizable value which includes the initial purchase price of the
property, legal fees, 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.
Other Assets Included in other assets are deferred mortgage costs incurred in
connection with obtaining financing on four of the Partnership's properties.
Such costs are amortized over the term of the 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 consists of short-term highly
liquid investments which have maturities of three months or less from date of
issuance. Cash and cash equivalents include security deposits of $106,213 and
$104,508 at December 31, 1994 and 1993, respectively, restricted under certain
state statutes.
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.
Restricted Cash Consists of escrows for real estate taxes, casualty insurance,
and replacement reserves as required by the first mortgage lender.
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 and all depreciation 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. 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 five residential apartment complexes
acquired through investments in joint ventures as follows:
Apartment Date Purchase
Property Name Units Location Acquired Price
Creekside Oaks 120 Jacksonville, FL 11/18/83 $5,960,045
Ponte Vedra
Beach Village I 122 Ponte Vedra Beach, FL 2/10/84 6,804,000
Rancho Antigua 220 Scottsdale, AZ 3/8/84 10,873,757
Country Place
Village I 88 Clearwater, FL 4/13/84 4,732,000
Village at the
Foothills I 60 Tucson, AZ 2/27/85 3,623,741
To each venture, the Partnership contributed the apartment projects as its
initial capital contribution.
On July 1, 1992, a Settlement Agreement was executed by and among the
Partnership, Hutton/ConAm Realty Investors 81, Hutton/ConAm Realty Investors 3,
Hutton/ConAm Realty Investors 4, Hutton/ConAm Realty Investors 5, as Managing
Joint Venturers, and Epoch Properties, Inc., James H. Pugh, Jr. and John
McClintock, Jr., as the Epoch Joint Venturers (the Epoch Joint Venturers being
collectively referred to herein as "Epoch"), the Partnership's partners and
co-venturers in Country Place Village I, Creekside Oaks, Ponte Vedra Beach
Village I, and Village at the Foothills I.
Pursuant to the Settlement Agreement, the Partnership paid $35,000 to Epoch.
Epoch withdrew as a partner in the respective Joint Ventures which owned
Country Place Village I, Creekside Oaks, Ponte Vedra Beach Village I, and
Village at the Foothills I. General Releases were executed between the
Partnership, the Joint Ventures, Epoch and Epoch Management Corporation. While
the title to these properties continues to be held by the respective Joint
Ventures and limited partnership, the Partnership and its General Partners are
the sole co-venturers and partners.
In the cases of Country Place Village I, Creekside Oaks, and Ponte Vedra Beach
Village I, the Joint Venture form was retained. The Partnership has entered
into amended and restated Agreements of General Partnership, dated as of July
1, 1992 with its two corporate General Partners, RI 2 Real Estate Services,
Inc. and ConAm Property Services II, Ltd. In the case of Village at the
Foothills I, the joint venture has been converted to a limited partnership.
The Partnership has entered into an amended and restated Agreement of Limited
Partnership, dated as of July 1, 1992 with its two corporate General Partners,
RI 2 Real Estate Services, Inc. and ConAm Property Services II, Ltd., as
General Partners and the Partnership as the sole limited partner. There has
been no interruption in either management or operating activities of the
Partnership as a result of this Agreement.
The initial joint venture agreements of Country Place Village I, Creekside
Oaks, Ponte Vedra Beach Village I, Village at the Foothills and Rancho Antigua
substantially provide that:
a. Net cash from operations will be distributed 100% to the
Partnership until it has received an annual, noncumulative 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 venture and gain from sale will be
allocated basically in accordance with the distribution of net cash
from operations, as defined, and net proceeds from sales, respectively.
All net losses will be allocated 98% to 100% to the Partnership
depending on the joint venture agreement.
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 agreements and limited partnership agreements of
Country Place Village I, Creekside Oaks, Ponte Vedra Beach Village I and
Village at the Foothills I 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 a positive capital account balance, as defined; thereafter, 99% to
the Partnership and 1% to the corporate General Partners.
5. Mortgages Payable
On October 28, 1993, the extended maturity date, the Partnership obtained
replacement financing on its Creekside Oaks, Ponte Vedra Beach I, Rancho
Antigua and Country Place Village I properties from The Penn Mutual Life
Insurance Company and a subsidiary, both unaffiliated parties. Total proceeds
of $14,450,000 were received and collateralized by Mortgages and Security
Agreements and Assignments of Rents and Leases Agreements encumbering the
respective properties. Each of the loans is a non-recourse loan with periodic
payments of principal and interest based on a twenty-five year amortization
schedule with the balance of the principal due at maturity. Mortgages payable,
at December 31, 1994, consist of the following first mortgage loans:
Interest Maturity
Property Principal Rate Date
Creekside Oaks $2,607,627 7.75% 11/01/2000
Ponte Vedra Beach Village I $3,936,041 7.75% 11/01/2000
Rancho Antigua $5,608,858 7.75% 11/01/2000
Country Place Village I $2,066,422 7.75% 11/01/2000
The proceeds of this financing along with Partnership cash reserves were used
to repay the outstanding amounts due Aetna Life Insurance Company on the
Partnership's four prior mortgages.
Original
Interest Maturity
Property Principal Rate Date
Creekside Oaks $2,921,071 10.50% 05/01/93
Ponte Vedra Beach Village I $3,115,809 10.50% 05/01/93
Rancho Antigua $7,024,911 10.27% 05/20/93
Country Place Village I $2,531,595 10.50% 05/01/93
Partnership cash reserves were also used to pay refinancing expenses of
$491,095 and fund escrows of $995,372. The escrowed funds are applied to the
payment of taxes, insurance and repairs and improvements.
Annual maturities of mortgage notes principal over the next five years are as
follows:
Year Amount
1995 $215,313
1996 232,605
1997 251,287
1998 271,468
1999 293,272
Thereafter 12,955,003
$14,218,948
6. Transactions with related Parties
The following is a summary of fees earned and reimbursable expenses for the
years ended December 31, 1994, 1993, and 1992, and the unpaid portion at
December 31, 1994:
Unpaid at
December 31, Earned
1994 1994 1993 1992
Reimbursement of:
Out-of-pocket expenses $ - $1,390 $82 $1,918
Administrative salaries
and expenses 20,612 46,124 38,103 43,632
Property operating salaries - 345,626 340,913 321,580
Property management fees 19,911 233,152 221,231 213,597
$40,523 $626,292 $600,329 $580,727
The above amounts have been paid and/or accrued to the General Partners and
affiliates as follows:
Unpaid at
December 31, Earned
1994 1994 1993 1992
RI 2 Real Estate
Services, Inc. $20,612 $47,514 $38,185 $45,550
ConAm and affiliates 19,911 578,778 562,144 535,177
$40,523 $626,292 $600,329 $580,727
7. Reconciliation of Financial Statement and Tax Information
The following is a reconciliation of the net income (loss) for financial
statement purposes to net loss for federal income tax purposes for the years
ended December 31, 1994, 1993 and 1992:
1994 1993 1992
Net income (loss) per
financial statements $37,325 $(527,539) $(408,905)
Tax basis joint venture net
loss in excess of GAAP basis
joint venture net income (loss) (241,789) (339,161) (474,069)
Other (1,438) (5,603) 10,172
Taxable net loss $(205,902) $(872,303) $(872,802)
The following is a reconciliation of partners' capital for financial statement
purposes to partners' capital for federal income tax purposes as of December
31, 1994, 1993 and 1992:
1994 1993 1992
Partners' capital per
financial statements $10,028,661 $10,480,225 $11,007,764
Adjustment for cumulative
difference between tax basis
loss and income (loss) per financial
statements (6,062,177) (5,818,950) (5,474,186)
Partners' capital per tax return $3,966,484 $4,661,275 $5,533,578
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
1994 $- $488,889 $244,444 $244,445
1993 - - - -
1992 115,556 - 115,556 -
9. Supplementary Information
Maintenance and repairs, advertising costs, and real estate taxes included in
property operating expenses for the years ended December 31, 1994, 1993 and
1992 are as follows:
1994 1993 1992
Maintenance and repairs $857,988 $734,408 $588,786
Advertising costs 53,878 52,017 49,607
Real estate taxes 403,670 395,830 370,950
Report of Independent Accountants
To the Partners of
Hutton/ConAm Realty Investors 2:
We have audited the consolidated balance sheets of Hutton/ConAm Realty
Investors 2, a California limited partnership, and Consolidated Ventures, as of
December 31, 1994 and 1993, 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, 1994. 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 2, a California limited partnership, and
Consolidated Ventures as of December 31, 1994 and 1993, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1994, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
March 9, 1995
Comparison of Acquisition Costs to Appraised Value and Determination of
Net Asset Value Per $300 Unit at December 31, 1994 (Unaudited)
Acquisition Cost
(Purchase Price Partnership's
Plus General Share of
Partners' December 31,
Acquisition 1994 Appraised
Property Date of Acquisition Fees) Value (1)
Creekside Oaks 11-18-83 $6,238,445 $5,200,000
Ponte Vedra Beach Village I 02-10-84 7,123,950 7,150,000
Rancho Antigua 03-08-84 11,446,176 11,200,000
Country Place Village I 04-13-84 4,968,222 3,800,000
Village at the Foothills I 02-27-85 3,756,741 2,400,000
$33,533,534 $29,750,000
Cash and cash equivalents 1,963,115
Other assets 10,183
31,723,298
Less:
Total liabilities (14,743,463)
Partnership Net Asset Value (2) $16,979,835
Net Asset Value Allocated:
Limited Partners $16,810,037
General Partners 169,798
$16,979,835
Net Asset Value Per Unit
(80,000 units outstanding) $210.13
(1) This represents the Partnership's share of the December 31, 1994
Appraised Values which were determined by an independent property appraisal
firm.
(2) The Net Asset Value assumes a hypothetical sale at December 31, 1994 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 2
and Consolidated Ventures
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1994
Cost Capitalized
Subsequent
Initial Cost to Partnership To Acquisition
Buildings and Buildings and
Description Encumbrances Land Improvements Improvements
Residential Property:
Consolidated Ventures:
Creekside Oaks
Jacksonville, FL $2,607,627 $400,317 $5,854,636 $72,152
Ponte Vedra Beach
Village I
Ponte Vedra Beach, FL 3,936,041 1,015,028 6,181,290 105,430
Rancho Antigua
Scottsdale, AZ 5,608,858 3,490,498 7,975,346 77,283
Country Village Place I
Clearwater, FL 2,066,422 1,049,122 3,955,178 64,025
Village at the Foothills I
Tucson, AZ - 798,822 3,005,280 11,816
$14,218,948 $6,753,787 $26,971,730 $330,706
F-1
HUTTON/CONAM REALTY INVESTORS 2
and Consolidated Ventures
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1994
Gross Amount at Which Carried at Close of Period
Buildings and Accumulated
Description Land Improvements Total Depreciation
Residential Property:
Consolidated Ventures:
Creekside Oaks
Jacksonville, FL $403,193 $5,923,912 $6,327,105 $2,633,273
Ponte Vedra Beach
Village I
Ponte Vedra Beach, FL 1,045,472 6,256,276 7,301,748 2,702,791
Rancho Antigua
Scottsdale, AZ 3,497,484 8,045,643 11,543,127 3,471,611
Country Village Place I
Clearwater, FL 1,052,357 4,015,968 5,068,325 1,707,965
Village at the Foothills I
Tucson, AZ 798,822 3,017,096 3,815,918 1,183,738
$6,797,328 $27,258,895 $34,056,223 $11,699,378
(1) (2)
F-2
HUTTON/CONAM REALTY INVESTORS 2
and Consolidated Ventures
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1994
Life on which
Depreciation
in Latest
Date of Date Income Statements
Description Construction Acquired is Computed
Residential Property:
Consolidated Ventures:
Creekside Oaks
Jacksonville, FL 1982 11/18/83 (3)
Ponte Vedra Beach
Village I
Ponte Vedra Beach, FL 1983 02/10/84 (3)
Rancho Antigua
Scottsdale, AZ 1984 03/08/84 (3)
Country Place Village I
Clearwater, FL 1984 04/13/84 (3)
Village at the Foothills
Tucson, AZ 1984 02/27/85 (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 $21,675,619.
(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, 1994, 1993 and 1992:
Real Estate investments: 1994 1993 1992
Beginning of year $33,942,156 $33,907,445 $33,870,681
Additions 114,067 34,711 36,764
End of year $34,056,223 $33,942,156 $33,907,445
Accumulated Depreciation:
Beginning of year $10,612,843 $9,527,665 $8,443,666
Depreciation expense 1,086,535 1,085,178 1,083,999
End of year $11,699,378 10,612,843 $9,527,665
F-3
Report of Independent Accountants
Our report on the consolidated financial statements of Hutton/ConAm Realty
Investors 2, 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 2 for the year ended December 31,
1994. 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
March 9, 1995
F-4
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 1,963,115
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 34,056,223
<DEPRECIATION> 11,699,378
<TOTAL-ASSETS> 24,772,124
<CURRENT-LIABILITIES> 0
<BONDS> 14,218,948
<COMMON> 0
0
0
<OTHER-SE> 10,028,661
<TOTAL-LIABILITY-AND-EQUITY> 24,772,124
<SALES> 4,669,676
<TOTAL-REVENUES> 4,717,965
<CGS> 0
<TOTAL-COSTS> 2,262,915
<OTHER-EXPENSES> 1,307,291
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,110,434
<INCOME-PRETAX> 37,325
<INCOME-TAX> 0
<INCOME-CONTINUING> 37,325
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,325
<EPS-PRIMARY> $.42
<EPS-DILUTED> $.42
</TABLE>
