<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1995
[ ] For the transition period from _______________ to _______________
Commission file number 0-10468
SACRAMENTO HOTEL PARTNERS, L.P.
(Exact name of small business issuer as specified in its charter)
<TABLE>
<S> <C>
California 95-3592946
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
5525 Oakdale Avenue, Suite 300, Woodland Hills, California 91364
(Address of principal executive office)
(818) 888-6500
(Registrant's telephone number, including Area Code)
Check whether the registrant: (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months, and
(2) has been subject to such filing requirements for the past 90 days.
Yes x No
----- -----
Transitional Small Business Disclosure Format: Yes No x
----- -----
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited financial statements of Sacramento
Hotel Partners, L.P. (formerly Western Host Sacramento Partners) have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB.
Accordingly, these statements do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the General Partners of the
Registrant, all adjustments necessary for a fair presentation have been
included. The financial statements presented herein have been prepared in
accordance with the accounting policies described in the Registrant's Annual
Report on Form 10-KSB for the year ended December 31, 1994 and should be read
in connection therewith.
1
<PAGE> 3
SACRAMENTO HOTEL PARTNERS, L.P.
(A Limited Partnership)
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---------- ------------
<S> <C> <C>
ASSETS
CASH $ 96,705 $ 82,030
INTEREST RECEIVABLE 31,056 20,667
NOTE RECEIVABLE - NET 1,941,586 1,891,691
---------- ----------
TOTAL $2,069,347 $1,994,388
========== ==========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Accounts payable and accrued liabilities $ 1,845 $ 2,614
Accounts payable - related parties 4,500 500
Debt 222,222 305,556
---------- ----------
Total liabilities 228,567 308,670
---------- ----------
PARTNERS' EQUITY:
General Partners (40 units issued and outstanding) 18,473 16,917
Limited Partners (3,946 units issued and outstanding) 1,822,307 1,668,801
---------- ----------
Total Partners' equity 1,840,780 1,685,718
---------- ----------
TOTAL $2,069,347 $1,994,388
========== ==========
</TABLE>
2
<PAGE> 4
SACRAMENTO HOTEL PARTNERS, L.P.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
1995 1994 1995 1994
------- ------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Interest (includes amortization of
discount of note receivable of
$20,220 and $27,032, and
$49,895 and $53,237 for the
three and six months ended
June 30, 1995 and 1994,
respectively) $93,362 $89,336 $185,310 $177,799
------- ------- -------- --------
EXPENSES:
Interest 6,936 9,458 14,737 18,598
Partnership administration
and professional fees 11,604 4,044 15,511 17,017
------- ------- -------- --------
Total 18,540 13,502 30,248 35,615
------- ------- -------- --------
NET INCOME $74,822 $75,834 $155,062 $142,184
======= ======= ======== ========
ALLOCATION OF NET INCOME:
General Partners $ 751 $ 761 $ 1,556 $ 1,427
Limited Partners (3,946 Limited
Partnership units outstanding) 74,071 75,073 153,506 140,757
------- ------- -------- --------
Total $74,822 $75,834 $155,062 $142,184
======= ======= ======== ========
PER UNIT INFORMATION:
(based upon 3,986 total
Units outstanding): $18.77 $19.03 $38.90 $35.67
======= ======= ======== ========
</TABLE>
3
<PAGE> 5
SACRAMENTO HOTEL PARTNERS, L.P.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
1995 1994
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $155,062 $142,184
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of discount on note receivable (49,895) (53,237)
Change in assets and liabilities:
Interest receivable (10,389)
Accounts payable and accrued liabilities 3,231 7,906
-------- --------
Net cash provided by operating activities 98,009 96,853
FINANCING ACTIVITIES:
Repayment of debt (83,334) (83,333)
-------- --------
NET INCREASE IN CASH 14,675 13,520
CASH AT BEGINNING OF PERIOD 82,030 44,658
-------- --------
CASH AT END OF PERIOD $ 96,705 $ 58,178
======== ========
</TABLE>
4
<PAGE> 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
On April 20, 1990, the Partnership sold substantially all of
its assets to Fred C. Sands. The sale price was approximately $3.6 million,
consisting of approximately $500,000 in cash and a promissory note in the
amount of $3.7 million (the "Sands Note").
The Sands Note is due and payable on April 1, 1997 and
provides for payments of interest at the rate of 8% through April 1, 1995, and
at the rate of 10% per year from April 1, 1995 until paid. However, in April
1995 the Partnership entered into a Forbearance Agreement with Mr. Sands which
provides that through the earlier of April 1, 1997 or the occurrence of any
default under the Sands Note, Mr. Sands may continue to pay the Partnership
interest at the rate of 8% per annum, subject to the condition that additional
interest on unpaid principal accruing monthly at the rate of 2% per annum be
paid, together with interest on such deferred monthly amounts at the rate of
10% per annum, on April 1, 1997. The amount of such deferred interest,
together with the interest it will earn between April 1, 1995 and April 1,
1997, is $137,781.
As of July 14, 1995 the Partnership owed $222,000 to City
National Bank, which obligation is evidenced by a promissory note dated
September 7, 1993, as amended by the Loan Revision Agreement dated July 27,
1994. On July 14, 1995, the Partnership and City National Bank entered into a
second Loan Revision Agreement extending the maturity date of this obligation
from August 3, 1995 to October 3, 1996, and providing for payments of principal
of $13,890 per month plus interest on unpaid principal at the prime rate plus
2.5%
Interest income received from the note receivable is expected
to be sufficient to pay the Partnership's ongoing expenses and to repay the
Partnership's debt.
1995 as compared to 1994
Interest income from the note receivable generated adequate
cash to meet the obligations of the Partnership.
5
<PAGE> 7
PART II - OTHER INFORMATION
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
10.1 Promissory Note, dated April 19, 1990, made
by Fred C. Sands in favor of Sacramento Hotel
Partners, L.P.
10.2 Forbearance Agreement, dated April 30, 1995,
between Fred C. Sands and Sacramento Hotel
Partners, L.P.
10.3 Loan Revision Agreement, dated July 14, 1995,
between City National Bank and Sacramento
Hotel Partners, L.P.
27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
6
<PAGE> 8
SIGNATURE
Pursuant to the requirements 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.
SACRAMENTO HOTEL PARTNERS, L.P.
By /s/ John F. Rothman
---------------------------------
John F. Rothman
General Partner
Dated: August 10, 1995
7
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER Description PAGE
------ ----------- ------------
<S> <C> <C>
10.1 Promissory Note, dated April 19, 1990, made by Fred C. Sands in favor of
Sacramento Hotel Partners, L.P.
10.2 Forbearance Agreement, dated April 30, 1995, between Fred C. Sands and
Sacramento Hotel Partners, L.P.
10.3 Loan Revision Agreement, dated July 14, 1995, between City National
Bank and Sacramento Hotel Partners, L.P.
27 Financial Data Schedule
</TABLE>
8
<PAGE> 1
EXHIBIT 10.1
PROMISSORY NOTE
$3,100,000 April 19, 1990
FOR VALUE RECEIVED, the undersigned, FRED C. SANDS, an individual
having an address at 11611 San Vincente Boulevard, Los Angeles, California
90049 (the "Maker"), promises to pay to the order of Western Host Sacramento
Partners, a California Limited Partnership, and its successors and assigns (the
"Payee"), at 21031 Ventura Boulevard, Suite 315, Woodland Hills, California
91364, or at such other place as the holder hereof may from time to time
designate in writing, the principal amount of Three Million One Hundred
Thousand and No/100 Dollars ($3,100,000.00), together with interest thereon
from the date hereof (i) at the rate of Eight Percent (8%) per annum from the
date hereof through the last day of March, 1995, and (ii) at the rate of Ten
Percent (10%) per annum from April 1, 1995, to the maturity date of this Note.
Payments under this Note shall be made, without setoff, deduction or
counterclaim, as follows:
(i) On May 1, 1990, the undersigned shall pay to the
Payee a payment of interest only in the amount of Eight Thousand One Hundred
Fifty-Three and Forty-Two Cents Dollars ($8,153.42).
(ii) Commencing on June 1, 1990, and on the first of each
and every succeeding month through and including April 1, 1995, the undersigned
shall pay to the holder hereof equal monthly installments of interest only in
the amount of Twenty Thousand Six Hundred Sixty-Six Dollars and Sixty-Six Cents
($20,666.66).
(iii) Commencing on May 1, 1995, and on the first day of
each succeeding month through and including April 1, 1997, the undersigned
shall pay to the holder hereof equal monthly installments of interest only in
the amount of Twenty-Five Thousand Eight Hundred Thirty-Three Dollars and
Thirty-Three Cents ($25,833.33).
(iv) On April 1, 1997, the entire outstanding principal
balance of this Note, together with all accrued and unpaid interest shall be
due and payable.
The undersigned may at any time and from time to time prepay the whole
or any part of this principal amount hereof, without premium or penalty of any
kind whatsoever, provided that (i) on each prepayment date, all interest
accrued on the principal so prepaid to the date of such prepayment shall be
paid, and (ii) partial prepayments shall be applied to the installments of
accrued interest and then to principal.
All payments hereunder shall be applied first to interest and then to
reduction of principal.
THIS PROMISSORY NOTE IS SUBJECT TO THE TERMS OF CERTAIN NEGATIVE
COVENANTS FOR THE BENEFIT OF WELLS FARGO BANK, N.A., PURSUANT TO THE
TERM LOAN AGREEMENT DATED AS OF MAY 22, 1990.
<PAGE> 2
This Note is secured by a certain Security Agreement and a certain
Deed of Trust and Security Agreement, each of even date herewith, encumbering
certain real and personal property located in the County of Sacramento, State
of California, and by any other instruments, now or hereafter executed by the
undersigned in favor of the holder hereof, which in any manner constitute
additional security for this Note (all of which are hereinafter called the
"Security Documents").
The occurrence of any of the following events shall constitute a
default under this Note:
(a) the failure of Maker to make any payment of interest
or principal due under this Note within five (5) days after the same becomes
due and payable; or
(b) the occurrence of a default under any of the Security
Documents.
Upon the occurrence of a default, as defined above, the holder of this
Note shall have, at its option, the right, without further notice or demand, to
declare the unpaid principal, plus all accrued and unpaid interest thereon,
immediately due and payable, and exercise any of the remedies granted hereunder
or under any of the Security Documents. Upon the occurrence of a default
under this Note, the principal indebtedness evidenced by this Note shall bear
interest at the lesser of Thirteen Percent (13%) per annum, or the maximum
amount permitted by laws (the "Default Rate"). The Default Rate shall continue
in effect until the payment in full of the entire indebtedness evidenced by
this Note. Failure by the holder of this Note to exercise the foregoing option
shall not constitute a waiver of the right to exercise such option at any
subsequent time in respect to the same event or any other event of default.
The undersigned, and each and every endorser of this Note, waives
notice of acceptance, presentment for payment, demand, notice of demand and of
nonpayment, protest and notice of protest or dishonor, and diligence in
bringing suit. The undersigned agrees that any extension of time of payment of
all or any part of the amount due hereunder or any variation, modification or
waiver of any term or condition thereof at any time or times shall not affect
its liabilities hereunder. Any forbearance of the holder of this Note in
exercising any right or remedy hereunder or under the Security Documents, or
otherwise afforded by applicable law, shall not constitute a waiver by the
holder of this Note of any right to declare default hereunder or to pursue any
remedy available at law or in equity.
In the event the undersigned fails to make payment within five (5)
days after the date any amount hereunder is due and payable, by reason of
acceleration or otherwise, and the holder hereof places this Note in the hands
of an attorney for collection (which term shall include collection in
connection with any bankruptcy or insolvency proceedings), then the undersigned
promises to pay the reasonable fees and expenses of such attorney in addition
to the full amount due hereunder (whether or not litigation shall be commenced
in aid thereof).
The undersigned shall have no personal liability for (i) repayment of
the principal and interest on the loan evidenced by this Note or (ii) the other
monetary obligations under this Note or under the Security Documents, and no
person shall be entitled to bring or maintain any suit,
<PAGE> 3
action, or other proceeding for personal judgment against the undersigned
therefor, it being understood that the holder hereof will look, insofar as the
undersigned is concerned, solely to the property and collateral which is the
subject of the Security Documents for the satisfaction of such obligations and
no other property of the undersigned shall be subject to levy, execution or
other enforcement procedure for the satisfaction of such obligations and no
suit, action or other proceeding seeking payment for any deficiency upon a
foreclosure or other sale of the real estate of other collateral described in
the Security Documents shall be sought.
If the undersigned shall, directly or indirectly, sell, enter into a
contract of sale, convey, whether voluntarily or involuntarily, or lease with
an option to purchase any of the property described in any of the Security
Documents, or any interest therein, other than personal property sold in the
ordinary course of business and replaced by personal property of equal or
better quality, and of similar function, Beneficiary may then, or at any time
thereafter, declare the entire principal balance of this Note and all accrued
but unpaid interest immediately due and payable. Notwithstanding anything to
the contrary, Maker may sell or otherwise transfer the Premises to an entity
which is at least eighty percent (80%) owned and controlled by Maker; provided,
however, that any such sale or transfer shall not relieve Maker of his
obligations hereunder.
All notices and other communications hereunder shall be given to the
undersigned and to Payee at the addresses of such parties set forth in the
first paragraph of this Note. All such notices an communications shall be in
writing and shall be deemed to have been given and made upon the date of
delivery (if delivered personally or by facsimile transmission), or if mailed
and sent by registered or certified mail, return receipt requested, postage
prepaid and addressed as specified in this paragraph, on the third (3rd)
business day after deposit in a regularly maintained receptacle for the deposit
of United States mail. Any party may change its address by written notice in
accordance with this paragraph. A copy of any notice to Payee shall be sent by
regular first class mail, postage prepaid, to Jeffrey C. Lapin, Esq., 21031
Ventura Boulevard, Suite 315, Woodland Hills, California 91364.
The undersigned has executed this Note in the State of California, and
its laws shall govern and control the construction, enforceability, validity
and interpretation of this Note.
In the event that any term or provision of this Note is determined by
a court of competent jurisdiction to be illegal, invalid or unenforceable for
any reason whatsoever, such illegality, invalidity or unenforceability shall
not affect the balance of the terms and provisions of this Note, which shall
remain in full force and effect.
This Note shall bind the successors and assigns of the undersigned,
and shall inure to the benefit of the successors and assigns of the Payee
hereof.
This Note is fully negotiable by payee or any other holder of this
Note, and any negotiation or transfer hereof shall not affect the rights and
duties pertaining hereto. If Payee shall receive a written offer to purchase
this Note, which offer is acceptable to Payee in Payee's sole discretion, Payee
shall give the undersigned written notice of such offer and all of the terms of
such offer. The undersigned shall have a right of first refusal to purchase
the Note on all of the terms set forth in such offer, such right to be
exercised, if at all, by the delivery to Payee
<PAGE> 4
within three (3) business days following the date Payee gives the undersigned
notice of such offer, of written notice exercising such right of first refusal
together with all sums and documents required pursuant to the terms of the
offer. The undersigned's right of first refusal shall extend only to the
negotiation by Payee of this Note and shall not apply to the negotiation of the
Note by any other holder hereof.
FRED C. SANDS
-----------------------------------
Fred C. Sands
<PAGE> 1
EXHIBIT 10.2
FORBEARANCE AGREEMENT
FRED C. SANDS, an individual having an address at 1611 San
Vincente Boulevard, Los Angeles, California 90049 ("Maker"), and SACRAMENTO
HOTEL PARTNERS, L.P. (formerly known as Western Host Sacramento Partners), a
California limited partnership having an address at 5525 Oakdale Avenue, suite
310, Woodland Hills, CA 91364 ("Payee"), hereby agree as follows with respect
to the Promissory Note dated April 19, 1990 (the "Note") made by Maker in favor
of Payee in the principal amount of $3,100,000 (the "Principal"):
1. Maker and Payee agree that Maker has failed to pay
interest from and after April 1, 1995 at the rate of Ten Percent (10%) per
annum, as specified in the Note (the "Interest"), and instead has continued to
pay interest at the rate of Eight Percent (8%) per annum (the "Default").
2. Payee hereby agrees to forebear during the
"Forbearance Period" from enforcing its right to declare the Principal to all
be due and payable, as a result of the Default, on the condition that:
(a) Eighty Percent (80%) of the Interest accruing
from and after April 1, 1995 (i.e. interest accruing at the rate of
8%) be due and payable commencing on May 1, 1995 and on the first day
of each succeeding calendar month until all of the Principal is paid;
and
(b) Payment of the remaining Twenty Percent (20%)
of Interest accruing from and after April 1, 1995 be deferred and be
payable, together with interest on each installment of deferred
Interest from the date on which such installment would otherwise have
been payable and until actually paid, at the rate of Ten Percent (10%)
per annum, on April 1, 1997. Thus, if all amounts payable under this
Paragraph 2(b) are paid on April 1, 1997, such amount will be
$137,781.17;
and Maker hereby agrees to make such payments on such terms.
3. The "Forbearance Period" shall mean the period
commencing on the date hereof and ending on the earlier of (i) April 1, 1997,
or (ii) the occurrence of any default under the Note other than the Default.
Payee is not waiving any of its rights or remedies arising as a result of any
other such default.
4. Maker confirms that the Note is in full force and
effect and is enforceable against Maker in accordance with its terms and that
the Principal amount outstanding on the date hereof is $3,100,000. This
Forbearance Agreement supersedes all prior discussions and agreements between
Maker and Payee with respect to the modification of the terms of the Notes,
including without limitation the letter agreement dated April 26, 1995 between
Maker and Western Capital Resources and the schedule attached thereto.
Date: April 30, 1995
SACRAMENTO HOTEL PARTNERS, L.P.
<TABLE>
<S> <C>
JOHN F. ROTHMAN FRED SANDS
---------------------------------- --------------------------------
John F. Rothman, General Partner Fred Sands
</TABLE>
<PAGE> 1
EXHIBIT 10.3
CITY NATIONAL BANK
LOAN REVISION AGREEMENT
(Unsecured or Secured by Personal Property Only)
Note No. 496-948/# 17182
This Loan Revision Agreement ("Agreement") refers to the loan evidenced by a
promissory note ("Note") dated September 7, 1993, as previously revised by that
certain Loan Revision Agreement dated July 27, 1994, in favor of City National
Bank, a national banking association ("CNB") executed by Western Host
Sacramento Partners, a California limited partnership ("Borrower") in the
original principal amount of $500,000.00, payable in full on August 3, 1995,
subject to any installment maturities in the Note.
The principal balance of the Note as of July 14, 1995, is $208,333.31, on which
interest is paid to July 3, 1995.
Each Borrower hereby requests that CNB revise the terms of the Note and that
CNB accept payment of the Note at the time, or times, and in the manner
following:
Principal shall hereinafter be payable on the third day of each month in
fourteen (14) equal, successive installments of $13,888.89 each plus interest,
payable with each instalment of principal, commencing August 3, 1995, and
continuing up to and including September 3, 1996, with a final installment of
$13,888.85 plus unpaid interest due and payable in full on October 3, 1996.
In consideration of CNB's acceptance of the revision of the Note, including the
time for payment thereof, all as set forth above, each Borrower does hereby
acknowledge and admit to such indebtedness, and further does unconditionally
agree to pay such indebtedness together with interest thereon within the time
and in the manner as revised in accordance with this Agreement.
This Agreement is a revision of the terms of repayment only, and not a
novation; and except as herein provided, all of the terms and conditions of the
Note shall remain unchanged and in full force and effect.
When more than one Borrower signs this Agreement, all agree:
a. That breach of any covenant by any Borrower may, at CNB's
option, be treated as a breach by all Borrowers; and
b. That the liability and obligations of each Borrower are joint
and several.
Dated at Encino, California, this 14th day of July, 1995.
WESTERN HOST SACRAMENTO PARTNERS,
a California limited partnership
By: RONALD A. YOUNG
---------------------------------
Ronald A. Young, General Partner
By: JOHN F. ROTHMAN
---------------------------------
John F. Rothman, General Partner
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 96,705
<SECURITIES> 0
<RECEIVABLES> 1,972,642
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,069,347
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,069,347
<CURRENT-LIABILITIES> 6,345
<BONDS> 222,222
<COMMON> 0
0
0
<OTHER-SE> 1,840,780
<TOTAL-LIABILITY-AND-EQUITY> 2,069,347
<SALES> 0
<TOTAL-REVENUES> 93,362
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,604
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,936
<INCOME-PRETAX> 74,822
<INCOME-TAX> 0
<INCOME-CONTINUING> 74,822
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 74,822
<EPS-PRIMARY> 18.77
<EPS-DILUTED> 0
</TABLE>
