<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------- ---------
Commission file number 0-10468
SACRAMENTO HOTEL PARTNERS, L.P.
-------------------------------
(Name of small business issuer as specified in its charter)
California 95-3592946
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5525 Oakdale Avenue, Suite 300, Woodland Hills, California 91364
----------------------------------------------------------------
(Address of principal executive offices, including zip code)
(818) 888-6500
------------------------------------------------
(Issuer's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the
Exchange Act: Limited Partnership Units
(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. / X /
State Issuer's revenues for its most recent fiscal year: $375,000
The aggregate market value of the voting securities held by non-affiliates is
not determinable as there is no trading market for the Issuer's limited
partnership units and the securities have only limited voting rights.
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PART I.
Items 1 and 2. Business and Properties.
Effective as of August 30, 1994, Sacramento Hotel Partners,
L.P. (the "Registrant"), a California limited partnership, changed its name from
Western Host Sacramento Partners to its current name.
Sale of Hotel; Terms of Sale Agreement
Prior to April 20, 1990, the Registrant owned a 152-room
hotel, restaurant, bar, banquet facility and conference center in Sacramento,
California, which operated under the trade name "Ramada Inn" (the "Hotel").
On April 20, 1990, the Registrant sold substantially all of
its assets (including the Hotel, the liquor license and its interest in certain
leased and owned real property on which part of the Hotel is located) to Fred C.
Sands ("Sands") for approximately $3,600,000 (the "Purchase Price"), pursuant to
a Real Estate Purchase and Sale Agreement, dated October 6, 1989, between the
Registrant and Sands (the "Sale Agreement").
At the Sale closing (the "Closing"), Sands paid $500,000 of
the Purchase Price in cash to the Registrant, less amounts for certain credits
given to Sands pursuant to the Sale Agreement (the "Down Payment"); the balance
of the Purchase Price of $3,100,000 is evidenced by a promissory note from Sands
to the Registrant (the "Note"). The Note has a term of seven years and bears
interest at a rate of 8% per annum during the first five years and 10% per annum
during the last two years. Under the terms of the Note, interest is payable
monthly and the entire principal balance, with all accrued and unpaid interest,
is due at the end of the seventh year. 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. Deferred interest
outstanding as of December 31, 1995 totalled $42,900.
The Note is secured by a first deed of trust on the real
property sold to Sands (including the interest in the real property leased by
the Registrant) and a security agreement covering the personal property and
liquor license sold to Sands.
Pursuant to the terms of the Sale Agreement, Sands assumed
certain obligations of the Registrant under non-cancelable operating leases
related to the Hotel, and the Registrant agreed to indemnify Sands and Sands'
employees, agents and other affiliates from and against any and all liabilities
and expenses arising out of the use, generation, storage or disposal of
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hazardous material by the Registrant or any other person on the site of the
Hotel during the time the Registrant owned the Hotel. Such obligation survived
the Closing.
On or immediately following the date of the Closing, the
limited partners and the general partners of the Registrant (the "Limited
Partners" and the "General Partners", respectively) received a distribution in
the aggregate amount of $199,300 from the proceeds of the Down Payment, and the
balance of the Down Payment was used to pay expenses related to the Sale and
reduce certain indebtedness of the Registrant. For a description of the
indebtedness, see "Borrowings" below. The Limited Partners and the General
Partners are sometimes collectively referred to herein as the "Partners".
For additional information concerning the Sale or the Sale
Agreement, reference is made to the Registrant's proxy statement, dated January
2, 1990, attached as Exhibit 28.1 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1989. As a result of the sale, the Registrant's
business consists solely of collecting payments due under the Note.
Borrowings
Between March 1986 and October 1988, the Registrant had a
revolving credit facility with Wells Fargo Bank, N.A. ("Wells Fargo"). The
majority of funds borrowed from Wells Fargo were used for the construction of
the Hotel's conference center and the balance was used for working capital. On
October 28, 1988, the credit facility borrowings were repaid with funds borrowed
by the Registrant from R.J. Investors, a partnership of the General Partners
(the "GP Loan"). The GP Loan bore interest at a rate equal to one percent above
the prime rate of interest of Wells Fargo Bank, with interest payable monthly.
At the Closing, $139,700 of the Down Payment was used to pay down the GP Loan.
In October 1993, the remaining balance owed under the GP Loan was paid in full.
In connection with the Sale, the Registrant entered into a
term loan agreement with Wells Fargo (the "Wells Fargo Loan"), pursuant to which
the Registrant borrowed $680,000. The Wells Fargo Loan was a five year loan and
bore interest at the rate of 11.5% per annum. It was repayable in equal
quarterly principal and interest installments of approximately $45,200
commencing in August 1990. In October 1993 the remaining balance of $286,400
owed under the Wells Fargo Loan was repaid with proceeds obtained under a
$500,000 installment note with City National Bank (the "Note"). The Note bears
interest at City National Bank's prime rate plus 2.5% per annum and is payable
in monthly principal installments of $13,890 plus accrued interest. The entire
remaining principal balance of the Note plus accrued and unpaid interest, was
due and payable on August 3, 1995, which was extended in July 1995 to October 3,
1996. The Note is expected to be fully repaid as of October 3, 1996. As of
December 31, 1995, the remaining principal balance of the Note is $138,889.
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Dissolution
Pursuant to the Restated Certificate and Agreement of Limited
Partnership (the "Partnership Agreement"), the Registrant will automatically
dissolve and terminate upon the date of receipt in cash of the entire proceeds
due under the Note (including all accrued and unpaid interest). At the time such
proceeds are received, a final cash distribution will be made to the Partners
(the "Final Distribution"), expected to occur in or about May, 1997. The Final
Distribution is expected to be in the principal amount of the Note ($3,100,000)
less any costs associated with winding up and terminating the business and
affairs of the Registrant and less any then remaining debt or other obligations
outstanding. If Sands repays the Note prior to maturity, the time of the Final
Distribution and the dissolution of the Registrant will be correspondingly
accelerated. To the extent that the Final Distribution (or any other
distribution by the Registrant) constitutes a return of a Limited Partner's
capital contribution to the Registrant, such Limited Partner will be liable to
the Registrant for any amount (not to exceed such return with interest)
necessary to discharge the Registrant's liabilities to all creditors who
extended credit or where claims arose before such return.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II.
Item 5. Market for Common Equity and Related Stockholder Matters.
The approximate number of holders of the Units (the
Registrant's only class of equity securities) as of March 28, 1996 was 503. No
trading market exists for the Units.
As a result of the Sale in 1990, the Partners received a
distribution of $199,300 or $50 per Unit. No other distributions have been paid
to the Partners since 1986. The only future distributions the Registrant
anticipates making to the Partners will be in connection with the Final
Distribution. See Items 1 and 2 of this Report.
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Item 6. Management's Discussion and Analysis or Plan of Operations.
Year ended December 31, 1995 as compared to year ended December 31, 1994
Interest income from the note receivable (the "Sands Note") generated adequate
cash to meet the obligations of the Partnership.
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.
Deferred interest outstanding as of December 31, 1995 totalled $42,900.
As of July 14, 1995 the Partnership owed $222,000 to City
National Bank, which 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%.
Year ended December 31, 1994 as compared to year ended December 31, 1993
Interest income from the note receivable generated adequate
cash to meet the obligations of the Partnership. Certain costs totalling $12,300
were incurred in 1993 to comply with the terms of the Wells Fargo Loan and to
obtain the City National Bank installment note.
Liquidity and Capital Resources
As a result of the Sale, the only remaining assets of the
Registrant are cash on hand and the Note. Interest income from such Note is
expected to be sufficient for payment of remaining debts and expenses of the
Registrant.
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Item 7. Financial Statements.
The following financial statements are included in this Report
in response to this Item immediately prior to the signature page:
Independent Auditors' Report.
Balance Sheets at December 31, 1995 and 1994.
Statements of Operations for the years ended December
31, 1995, 1994 and 1993.
Statements of Changes in Partners' Equity for the
years ended December 31, 1995, 1994 and 1993.
Statements of Cash Flows for the years ended December
31, 1995, 1994 and 1993.
Notes to Financial Statements for the years ended
December 31, 1995, 1994 and 1993.
Item 8. Changes and Disagreements with Accountants on Accounting and Financial
Disclosure.
None.
PART III.
Item 9. Directors, Executive Officers, Promoters and Central Persons;
Compliance with Section 16(a) of the Exchange Act.
The Registrant has no directors or executive officers. The
General Partners of the Registrant are Messrs. Rothman and Young. Mr. Rothman,
age 61, and Mr. Young, age 68, have been the General Partners of the Registrant
since its formation on March 17, 1981, and are named as the General Partners by
the Certificate and Agreement of Limited Partnership of Sacramento Hotel
Partners, L.P. (the "Partnership Agreement"), which was entered into by and
among the General Partners and the Limited Partners.
Prior to December 1992, Mr. Young was the president and chief
executive officer of Hotel Investors Corporation, a publicly traded hotel
management company that was the sole stockholder of Western Host. Since December
1992, Mr. Young has been the president and chief executive officer and the sole
stockholder of Westland Hotel Corporation ("Westland"). Westland
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is a hotel management company formed by Mr. Young to provide management services
to various hotels.
Since March 1990, Mr. Rothman has been an independent real
estate investor. Mr. Rothman is also currently a consultant to Westland and the
sole shareholder of The Northstar Group, a corporation leasing and operating a
casino in Las Vegas, Nevada.
Messrs. Young and Rothman are the general partners of Casa
Munras Hotel Partners, L.P. ("CMHP"), which is a California limited partnership.
CMHP owns a hotel in Monterey, California.
Item 10. Executive Compensation.
(a) Compensation of General Partners. The General Partners do
not receive any current compensation for serving as the Registrant's general
partners.
(b) Removal of General Partners. The Partnership Agreement
provides that if either or both of Messrs. Rothman and Young are removed as
General Partner(s) by vote or written consent of the holders of a majority of
the Units then held by Limited Partners entitled to vote, each such removed
General Partner will have the right, but not the obligation, at any time after
such removal, to demand payment by the Registrant of an amount equal to such
General Partners' interest in cash distributions by the Registrant. Such
interest is to be computed based upon the fair market value of the Registrant's
assets on, and as if such assets were sold for cash on, the date of such demand
and the proceeds immediately distributed. If the removed General Partner and the
Registrant are unable to agree upon such value within 30 days following such
demand, such value will be determined by appraisal, with the removed General
Partner and the Registrant dividing such costs. Payment by the Registrant, at
the option of the Registrant, may be made either (i) in a lump sum within 30
days following the termination of the value of the removed General Partner's
interest, or (ii) in equal installments of principal and interest (at the prime
rate of Bank of America in effect at the time) over a period of 36 months. The
removed General Partner will have the rights described in this paragraph
notwithstanding the assignment, sale, pledge, encumbrance or other disposition
of his interest in distributions by the Registrant, and notwithstanding that the
payment to be made by the Registrant may be payable to a person or entity other
than the removed General Partner.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
(a) Security Ownership of Certain Beneficial Owners.
There is no person known to the Registrant to be the
beneficial owner of more than 5% of the Units.
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(b) Security Ownership of Management.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Ownership as
of Close of
Title of Name of Business on Percent
Class Beneficial Owner March 28, 1996 of Class
----- ---------------- -------------- --------
<S> <C> <C> <C>
Limited Partner- John F. Rothman 14 Units* .355
ship Units
Limited Partner- Ronald A. Young 13 Units* .329
ship Units
</TABLE>
- ------------------------------
*Owned directly.
The General Partners together own an approximately 1% interest
in the equity of the Registrant by virtue of their $40,000 capital contribution.
Item 12. Certain Relationships and Related Transactions.
For information concerning the former GP Loan and the other
relationships among the General Partners and the Registrant, see Items 1, 2, 10
and 11 of this Report. The General Partner loan was paid in full in 1993.
Interest expense related to the loans from the General
Partners totaled approximately $12,400 for the year ended December 31, 1993.
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PART IV
Item 13. Exhibits, List and Reports on Form 8-K.
(a) Exhibits:
Exhibit
Number Description
- ------ -----------
2.1 Real Estate Purchase and Sale Agreement and Escrow
Instructions, dated October 6, 1989, between Fred C. Sands
and Western Host Sacramento Partners (incorporated by
reference from Annex I to Exhibit 28.1 to the Registrant's
Annual Report on Form 10-K for the year ended December 31,
1989).
3.1 Restated Certificate and Agreement of Limited Partnership
of Western Host Sacramento Partners dated August 28, 1981
(incorporated by reference to Exhibit 4.1 to Western Host
Sacramento Partners' Registration of Units on
Form 10*).
10.1 Installment Note dated September 7, 1993 between Western
Host Sacramento Partners and City National Bank
(incorporated by reference to the Exhibit 10.3 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994).
10.2 Loan Revision Agreement dated July 27, 1995 to the
Installment Note dated September 7, 1993, between
Sacramento Hotel Partners and City National Bank
(incorporated by reference to Exhibit 10.3 to the
Registrant's Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1994).
10.3 Forbearance Agreement, dated April 30, 1995, between Fred
C. Sands and Sacramento Hotel Partners, L.P. (incorporated
by reference to Exhibit 10.3 to the Registrant's Quarterly
Report on Form 10-QSB for the quarter ended June 30, 1995).
(iv) Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter of the
period covered by this Report.
* Copies of Amendments to the Restated Certificate of Agreement of
Limited Partnership of Sacramento Hotel Partners, L.P. executed to
reflect the admission to the Registrant of substituted Limited Partners
will be furnished on request.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SACRAMENTO HOTEL PARTNERS, L.P.
By: /s/ John F. Rothman Date: March 28, 1996
-----------------------------------------
John F. Rothman
General Partner
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
By: /s/ John F. Rothman Date: March 28, 1996
-----------------------------------------
John F. Rothman
General Partner
By: /s/ Ronald A. Young Date: March 28, 1996
----------------------------------------
Ronald A. Young
General Partner
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INDEPENDENT AUDITORS' REPORT
To the Partners
Sacramento Hotel Partners, L.P.:
We have audited the accompanying balance sheets of Sacramento Hotel Partners,
L.P. (formerly Western Host Sacramento Partners, a Limited Partnership) as of
December 31, 1995 and 1994, and the related statements of operations, changes in
partners' equity, and cash flows for each of the three years in the period ended
December 31, 1995. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership at December 31, 1995 and
1994, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE, LLP
March 13, 1996
<PAGE> 12
SACRAMENTO HOTEL PARTNERS, L.P.
(A Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
1995 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CASH $ 121,765 $ 82,030
INTEREST RECEIVABLE 63,567 20,667
NOTE RECEIVABLE - NET 1,973,251 1,891,691
---------- ----------
TOTAL $2,158,583 $1,994,388
========== ==========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Accounts payable and accrued liabilities $ 1,172 $ 2,614
Accounts payable - related parties 7,049 500
Debt 138,889 305,556
---------- ----------
Total liabilities 147,110 308,670
---------- ----------
PARTNERS' EQUITY:
General Partners (40 units issued and outstanding) 20,186 16,917
Limited Partners (3,946 units issued and outstanding) 1,991,287 1,668,801
---------- ----------
Total partners' equity 2,011,473 1,685,718
---------- ----------
TOTAL $2,158,583 $1,994,388
========== ==========
</TABLE>
See accompanying notes to financial statements.
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SACRAMENTO HOTEL PARTNERS, L.P.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Interest (includes amortization of discount
on note receivable of $81,560, $109,889,
and $97,039 during 1995, 1994 and 1993) $375,000 $359,157 $346,455
-------- -------- --------
EXPENSES:
Interest 24,857 36,484 52,760
Partnership administration and professional fees 24,388 23,179 31,682
-------- -------- --------
Total expenses (includes reimbursed costs
and payments for services to related parties
of $11,424, $9,061 and $17,026 during 1995,
1994 and 1993, respectively) 49,245 59,663 84,442
-------- -------- --------
NET INCOME $325,755 $299,494 $262,013
======== ======== ========
ALLOCATION OF NET INCOME:
General Partners $ 3,269 $ 3,005 $ 2,629
Limited Partners ($81.72 per Unit in 1995,
$75.14 per Unit in 1994 and $65.73 per Unit in
1993 based on 3,946 Limited Partnership Units) 322,486 296,489 259,384
-------- -------- --------
Total $325,755 $299,494 $262,013
======== ======== ========
</TABLE>
See accompanying notes to financial statements.
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SACRAMENTO HOTEL PARTNERS, L.P.
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNERS' PARTNERS'
EQUITY EQUITY TOTAL
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1993 $11,283 $1,112,928 $1,124,211
NET INCOME 2,629 259,384 262,013
------- ---------- ----------
BALANCE, DECEMBER 31, 1993 13,912 1,372,312 1,386,224
NET INCOME 3,005 296,489 299,494
------- ---------- ----------
BALANCE, DECEMBER 31, 1994 16,917 1,668,801 1,685,718
NET INCOME 3,269 322,486 325,755
------- ---------- ----------
BALANCE, DECEMBER 31, 1995 $20,186 $1,991,287 $2,011,473
======= ========== ==========
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
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SACRAMENTO HOTEL PARTNERS, L.P.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 325,755 $ 299,494 $ 262,013
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of discount on note receivable (81,560) (109,889) (97,039)
Change in assets and liabilities:
Interest receivable (42,900)
Accounts payable and accrued liabilities (1,442) 882 (15,614)
Accounts payable - related parties 6,549 (338) 358
--------- --------- ---------
Net cash provided by
operating activities 206,402 190,149 149,718
--------- --------- ---------
FINANCING ACTIVITIES:
Repayment of debt (166,667) (152,777) (432,435)
Proceeds from debt 500,000
Proceeds from notes payable to affiliates 200,000
Repayment of note payable to affiliates (450,000)
--------- --------- ---------
Net cash used in financing activities (166,667) (152,777) (182,435)
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH 39,735 37,372 (32,717)
CASH AT BEGINNING OF YEAR 82,030 44,658 77,375
--------- --------- ---------
CASH AT END OF YEAR $ 121,765 $ 82,030 $ 44,658
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION - Cash paid
during the year for interest $ 26,299 $ 35,602 $ 56,380
========= ========= =========
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
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SACRAMENTO HOTEL PARTNERS, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL
INFORMATION
General - Effective as of August 30, 1994, Sacramento Hotel Partners,
L.P. (the "Partnership"), a California limited partnership, changed its
name from Western Host Sacramento Partners. The Partnership was formed
on March 17, 1981 (amended and restated on August 28, 1981) for the
purposes of acquiring, holding for investment, and operating or leasing
a 152-room motor hotel and related restaurant, cocktail lounge and
banquet facilities located in Sacramento, California ("the Ramada"). On
April 20, 1990, substantially all the assets of the partnership were
sold (see Note 2).
The General Partners, Ronald A. Young and John F. Rothman, have each
purchased an approximate one-half percent interest in the Partnership.
The remaining 99% interest is owned collectively by the Limited
Partners. The General Partners have the sole and exclusive control of
the management of the business and affairs of the Partnership. The term
of the Partnership is 50 years, although it may be terminated sooner by
the occurrence of certain events as set forth in the Partnership
Agreement.
Allocations - Net profits from continuing operations are to be
allocated among the Partners in proportion to their respective capital
interests, except that to the extent the capital accounts of the
General Partners are negative, such profits shall first be allocated
solely to the General Partners until their capital accounts are raised
to zero. The losses of the Partnership from all sources and activities
shall be borne by the Partners in proportion to their respective
capital interests until the capital accounts of the Limited Partners
are reduced to zero, and thereafter solely by the General Partners.
Distributions of cash or other assets generated by continuing
operations shall be made to the Partners in proportion to their
respective capital interests. Net profits from the sale or other
disposition of the property, or refinancing, and the cash flow
resulting therefrom, are to be distributed in accordance with the
predetermined formula outlined in the Partnership Agreement.
Income Taxes - In accordance with the provisions of the Internal
Revenue Code, the Partnership is not subject to the payment of income
taxes and no provision, therefore, is required to be made herein.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
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and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. SALE OF ASSETS
On April 20, 1990, the Partnership sold substantially all of its assets
for approximately $3,600,000 consisting of $500,000 in cash, less
certain credits, and a $3,100,000 note receivable. The buyer also
assumed certain obligations under non-cancelable operating leases.
The sale has been accounted for under the installment method in
accordance with Statement of Financial Accounting Standards No. 66
"Accounting for Sales of Real Estate". The deferred gain of $1,032,010
will be recognized upon collection of the note receivable (see Note 3).
3. NOTE RECEIVABLE
The note receivable has a term of seven years with interest only
payments at a rate of eight percent for the first five years and ten
percent for the last two years. The entire principal balance with all
accrued and unpaid interest is due and payable on April 1, 1997. The
note has been discounted to reflect an annualized interest rate of
12.5% and is secured by a first deed of trust and a security agreement
covering the personal property and liquor license sold pursuant to the
sale agreement. In the event of default, as defined in the agreement,
the Partnership has the option to declare the note and all accrued and
unpaid interest due and payable. Upon exercise of such option, all
outstanding balances will bear interest at a rate of 13% 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. Deferred interest outstanding as of December 31,
1995 totalled $42,900. At December 31, 1995 and 1994, the net note
receivable is summarized as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Note receivable - principal $ 3,100,000 $ 3,100,000
Less unamortized discount (94,739) (176,299)
Less deferred gain on sale of assets (1,032,010) (1,032,010)
----------- -----------
Note receivable - net $ 1,973,251 $ 1,891,691
=========== ===========
</TABLE>
7
<PAGE> 18
4. DEBT
Debt at December 31, 1995 and 1994 consisted of a $500,000 installment
note (balance at December 31, 1995 is $138,889) that bears interest at
the bank's prime interest rate plus 2.5% with monthly principal
payments due of $13,890 plus interest until October 3, 1996, at which
time the remaining principal balance is due. The installment note
agreement prohibits the sale or transfer of all or a substantial or
material part of the Partnership's assets without the bank's consent.
5. RELATED PARTY TRANSACTIONS
During 1995 and 1994, the Partnership reimbursed Westland Hotel
Corporation ("Westland") (based on actual costs incurred by Westland)
for certain costs paid on behalf of the Partnership in managing the
Hotel. The sole shareholder and officer of Westland is one of the
General Partners of the Partnership.
During calendar year 1993, the Partnership repaid a demand borrowing
from R.J. Investors, a partnership of the General Partner, in the
amount of $250,000. In addition, interest expense under the affiliated
borrowing totalled approximately $12,400 for the year ended December
31, 1993.
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-31-1995
<CASH> 121765
<SECURITIES> 0
<RECEIVABLES> 2036818
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2158583
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2158583
<CURRENT-LIABILITIES> 8221
<BONDS> 138889
0
0
<COMMON> 0
<OTHER-SE> 2011473
<TOTAL-LIABILITY-AND-EQUITY> 2158583
<SALES> 0
<TOTAL-REVENUES> 375000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 24388
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24857
<INCOME-PRETAX> 325755
<INCOME-TAX> 0
<INCOME-CONTINUING> 325755
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 325755
<EPS-PRIMARY> $81.72
<EPS-DILUTED> 0
</TABLE>
