UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-11890
VISTA PROPERTIES
(Exact name of registrant as specified in its charter)
California 13-3179078
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
411 West Putnam Avenue, Greenwich, CT 06830
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 203-862-7444
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on which
Title of each class registered
------------------- ----------
None None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest, $500 Per Unit
(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 [ ]
<PAGE>
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 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 ]
There is no public market for the Limited Partnership Units.
Accordingly, information with respect to the aggregate market value of Limited
Partnership Units held by nonaffiliates of Registrant has not been supplied.
<PAGE>
PART I
Item 1. Business
General Development of Business
Vista Properties (the "Registrant") is a California limited partnership engaged
in the business of investing in, holding and managing commercial properties.
Registrant was formed on March 14, 1983, with IR Vista Realty Corp. (the
"Management General Partner"), IR Acquisition Corp. (the "Acquisitions General
Partner") and Asta Associates Limited Partnership ("Asta" or the "Associate
General Partner") as its general partners (collectively, the "General
Partners"). The Management General Partner and the Acquisitions General Partner
are wholly-owned subsidiaries of Presidio Capital Corp. ("Presidio"). IR Vista
Realty Corp. and IR Acquisition Corp. were until November 3, 1994 wholly-owned
subsidiaries of Integrated Resources, Inc. ("Integrated "). On November 3, 1994,
Integrated consummated a plan of reorganization under Chapter 11 of the United
States Bankruptcy Code, at which time, pursuant to such plan of reorganization,
the newly formed Presidio purchased substantially all of Integrated's assets.
See the Prospectus, dated September 2, 1983 (the "Prospectus") and the
Supplements thereto dated October 17, 1983, November 11, 1983, November 29,
1983, January 25, 1984, March 2, 1984, July 9, 1984, August 8, 1984 and
September 14, 1984 (collectively, the "Supplements").
On August 28, 1997, an affiliate of NorthStar Capital Partners ("NorthStar")
acquired all of the Class B shares of Presidio. This acquisition, when
aggregated with previous acquisitions, caused NorthStar to acquire indirect
control of the Management General Partner and the Acquisitions General Partner.
Effective with the consummation of Integrated's plan of reorganization, Presidio
entered into an Administrative Services Agreement with Concurrency Management
Corp. ("Concurrency"). Effective January 1, 1996, Wexford Management Corp.
(formerly Concurrency) assigned this agreement to Wexford Management LLC
("Wexford").
On November 2, 1997, the Administrative Services Agreement with Wexford expired.
Pursuant to that agreement, Wexford had authority to designate directors of the
Management and Acquisitions General Partners. Effective November 3, 1997,
Wexford and Presidio entered into a new Administrative Services Agreement (the
"ASA"), which expires on May 3, 1998. Under the terms of the ASA, Wexford will
provide consulting and administrative services to Presidio and its affiliates,
including the Management and Acquisitions General Partners and the Partnership.
Presidio also entered into a management agreement with NorthStar Presidio
Management Company, LLC ("NorthStar Presidio"). Under the terms of the
management agreement, NorthStar Presidio will provide day-to-day management of
Presidio and its direct and indirect subsidiaries and affiliates. NorthStar
Presidio is engaged to perform similar services for other entities which may be
in competition with Registrant.
Effective November 3, 1997, the officers and employees of Wexford that had
served as officers and/or directors of the Management and Acquisitions General
Partners resigned and were replaced by new individuals appointed by an affiliate
of NorthStar.
Presidio is a liquidating company. Although it has no immediate plans to do so,
it will ultimately seek to dispose of the interests it acquired from Integrated
through liquidation, however, there can be no assurance of the timing of such
transaction or the effect it may have on Registrant.
<PAGE>
Registrant presently owns property in Irving, Texas (the "Texas Property"), and
at 250 Park Avenue, New York City, New York (the " New York Property"). The
Texas Property and New York Property were acquired on December 15, 1983 and
January 4, 1984, respectively. Each property consists of improvements in which
Registrant owns a fee simple interest, and underlying land Registrant leases
pursuant to long-term leases. The Texas Property is net-leased by Registrant to
a commercial tenant; the New York Property is operated by the Receiver (as
hereinafter defined). Registrant net-leases the Texas Property to one tenant,
but has several tenants in the New York Property. See Item 2 below.
The mortgage loan on the New York Property (the "New York Mortgage") permits
Registrant to defer payment of some or all of the interest accrued on the New
York Mortgage, provided, among other things, that Registrant does not defer
interest in an amount that at any time exceeds the aggregate debt service that
would have been due for the immediately preceding 84-month period. In August
1996, Registrant received notice from the holder of the New York Mortgage that
the interest deferred on the New York Mortgage exceeded the permitted deferral
and that the full debt service payment for interest accrued during August 1996
(in the amount of $1,239,700) would be due and payable on September 1, 1996 and
that, if such payment was not received, the New York Lender would be entitled to
accelerate the indebtedness secured by the New York Mortgage and exercise all
available remedies (including the commencement of a foreclosure action against
the New York Property). Registrant did not have sufficient funds to make the
payment on September 1, 1996, and, in October 1996, the New York Lender declared
the entire outstanding principal balance of $90,160,000, together with all
accrued and unpaid interest of approximately $104,882,000, immediately due and
payable, and thereafter commenced an action to foreclose upon the New York
Property (the "Foreclosure Proceeding"). At such time, the total outstanding
indebtedness significantly exceeded the estimated fair market value of the New
York Property.
Registrant was notified on or about November 12, 1996 that on November 7, 1996
the Supreme Court of the State of New York in the County of New York appointed
Darrell Paster, of Ferrer, Paster & Enriquez (the "Receiver") as a receiver of
all earnings, revenues, rents, issues, profits and income with respect to the
New York Property during the pendency of the foreclosure action. On May 9, 1997
the lender moved for summary judgement on the foreclosure issue.
A foreclosure of the New York Property would result in adverse tax consequences
to limited partners. If the New York Property is foreclosed upon, Registrant
estimates that, as required by generally accepted accounting principles, it will
recognize a gain of approximately $112,000,000 ($1,199 per Unit of limited
partnership interest). Registrant estimates that each limited partner would
recognize a taxable gain of approximately $1,454 per Unit, with no cash
available for distribution to the partners. Any such foreclosure also would have
a significant impact on future operating revenues and expenses and cash flow
from operations would be significantly reduced.
The mortgage loan on the Texas Property (the "Texas PM Note") permits Registrant
to defer payment of some or all of the interest accrued on the Texas PM Note,
provided, among other things, that Registrant does not defer interest in an
amount that at any time exceeds $8,500,000. Registrant does not expect to exceed
that maximum deferral amount prior to the maturity date in December 1998. At
that time, unless Registrant is able to refinance the Texas Mortgage or agree
with the holder of the Texas Mortgage (the "Texas Lender") on a restructuring of
<PAGE>
the Texas Mortgage, the Texas Lender may accelerate the indebtedness secured by
the Texas Mortgage and exercise all available remedies (including the
commencement of a foreclosure against the Texas Property). A foreclosure of the
Texas Mortgage would have significant adverse tax consequences to the limited
partners of Registrant with no cash available for distribution to the limited
partners.
On June 19, 1997, Registrant filed a voluntary petition for reorganization under
Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the
Northern District of California. The filing of this petition acts as a stay of
the New York Property foreclosure proceeding. This bankruptcy petition was filed
to enable Registrant to reorganize its affairs under the protection of Chapter
11 and to propose and confirm a plan of reorganization. At a hearing held before
the Bankruptcy Court on July 29, 1997, the Bankruptcy Court denied Registrant's
request to permit Registrant to collect and use the rents and other income of
the New York Property and approved the request of the New York Lender that the
Receiver remain in place and continue to collect the rents and income and to
manage, maintain and operate the New York Property.
On October 10, 1997, Registrant filed with the Bankruptcy Court its Plan of
Reorganization (the "Chapter 11 Plan") and Disclosure Statement (the "Disclosure
Statement"). At a hearing held on November 13, 1997, the Bankruptcy Court
approved the Disclosure Statement as providing adequate information to the
holders of claims or interests in the reorganization case to make an informed
judgment concerning the Chapter 11 Plan. In February 1998, the Bankruptcy Court
denied confirmation of the Chapter 11 Plan. Registrant has filed a notice of
appeal to the District Court for the Northern District of California, and also
has filed a motion for permission to file an interlocutory appeal.
In June 1997, Registrant and the Texas Lender entered into an agreement,
pursuant to which, among other things, Registrant and the Texas Lender agreed to
the terms and conditions with respect to the treatment of the claim of the Texas
Lender against Registrant in the reorganization proceeding under a plan of
reorganization and to support the confirmation and vote in favor of a plan of
reorganization proposed by Registrant containing the agreed upon terms and
conditions. Additionally, under the agreement, the Texas Lender agreed to
consent to Registrant's use of the rent and other income of the Texas Property
to the extent necessary to make payment of the ground rent and partial interest
payments on a monthly basis during the pendency of the reorganization case and
Registrant agreed to grant the Texas Lender adequate protection for Registrant's
use of such cash upon customary terms and conditions. The Bankruptcy Court
approved the foregoing arrangement pursuant to an order dated October 6, 1997.
In light of the Bankruptcy Court's denial of confirmation of Registrant's
Chapter 11 Plan of Reorganization, there can be no assurance that Registrant's
Chapter 11 case will not be dismissed, that the New York Property and the Texas
Property will not be foreclosed, or that a secured creditor or other party will
not obtain a Bankruptcy Court order confirming an alternate Plan of
Reorganization. A foreclosure (as well as certain types of Plans of
Reorganizations) would have material and adverse tax and other consequences for
the limited partners.
For the year ended December 31, 1997, Registrant's revenues from (i) Showbiz
Pizza Time, Inc., which net-leases the Texas Property, and (ii) the tenants of
the New York Property accounted for 2% and 98%, respectively, of the gross
revenues of Registrant from its real estate operations.
<PAGE>
The real estate business is highly competitive, and, as discussed more
particularly below, the properties owned by Registrant may have active
competition from similar properties in the vicinity. Registrant's primary asset,
the New York Property, which is an office building leased to approximately 30
tenants, is located in midtown Manhattan. Leasing of office buildings in the
area is highly competitive. The building is currently 99% occupied.
Registrant does not have any employees. NorthStar Presidio currently performs
accounting, secretarial, transfer and administrative services for Registrant.
NorthStar Presidio also performs similar services for other affiliates of the
Management and Acquisitions General Partners. In addition, Registrant has
retained Vista Management to provide certain management services regarding the
properties owned by Registrant. See Item 13 below for further information
regarding Vista Management. Aside from these personnel, and the directors and
officers of the General Partners discussed below in Item 10, Registrant has no
employees.
<PAGE>
Item 2. Properties
The following table sets forth information regarding the properties presently
owned by Registrant.
<TABLE>
<CAPTION>
Name of Property Location Date of Purchase Type of Property
---------------- -------- ---------------- ----------------
<S> <C> <C> <C>
Texas Property Irving, Texas 12/15/83 Office Building
New York Property 250 Park Avenue 1/04/84 Office Building
New York, NY
</TABLE>
In the case of both properties, Registrant has fee simple title to the
improvements and leases the land underlying the improvements on a long-term
basis. The Texas Property is subject to a net lease; the New York Property is
operated by the Receiver.
Item 3. Legal Proceedings
See Item 1 above.
Item 4. Submission of Matters to a Vote of Security Holders
None.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
There is no established public trading market for the Units of Registrant.
As of March 1, 1998, there were approximately 4,200 record holders of Units,
holding an aggregate of 92,810 Units
in Registrant.
It is not presently anticipated that Registrant will make any cash distributions
to investors.
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
-------------- --------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Total revenues $ 20,161,659 $ 21,267,482 $ 25,455,013 $ 25,931,770 $ 24,327,320
Net Income (loss) (4,801,154) $ 4,782,912 (A) $ (11,140,689) $ (12,282,498) $ (13,517,328)
Net Income (loss) per
limited partnership unit (51.21) $ 51.02 (A) $ (118.84) $ (131.02) $ (144.19)
Total assets 110,037,937 $ 107,163,265 $ 128,006,273 $ 131,277,049 $ 131,541,536
Mortgages Payable 99,160,000 $ 99,160,000 $ 120,520,000 $ 120,520,000 $ 120,520,000
Deferred Interest
Payable 122,538,704 $ 115,022,636 $ 119,017,721 $ 111,924,239 $ 100,155,363
</TABLE>
(A) Includes gain on foreclosure of Registrant's Florida property in the amount
of $19,429,198, or $207.25 per Unit.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
All cash flow from properties is currently applied to debt service. Registrant
uses working capital reserves to pay administrative expenses. As of December 31,
1997, such reserves aggregated $37,296. Reserves, which were initially provided
from the net proceeds of Registrant's initial public offering, increased during
1996 as a result of the receipt of payments aggregating approximately $579,000
in connection with the foreclosure of Registrant's Florida property and the
settlement of a claim against a former affiliate.
Registrant suspended payment of property management fees to an affiliate of the
Management General Partner in 1991 in order to slow the depletion of
Registrant's working capital reserve balance. For 1997, $199,162 of fees were
deferred due to the suspension of property management fee payments as described
above.
With the exception of Registrant's working capital reserves of $37,296, cash and
cash equivalents for the year ended December 31, 1997 are being held by the
managing agent appointed by the Receiver prior to being applied to the
operations of, and Registrant's mortgage obligation on, the New York Property.
Registrant presently owns the Texas Property, which is net leased to Showbiz
Pizza Time, Inc., and the New York Property, which is leased to approximately 30
tenants. Occupancy rates at Registrant's properties are 100% and 99% for the
Texas Property and New York Property, respectively. The net lease of the Texas
Property expires in 1998. At the New York Property, one tenant occupies 17% of
the total square footage and this lease expires in 1997. The Receiver and
Registrant have agreed in principle on the terms of the renewal of such tenant's
lease through the year 2007. Substantially all of the tenants at each property
are meeting their obligations and the expiring leases are subject to
renegotiation.
There is no assurance that Registrant will be able to successfully avoid a
foreclosure of the New York Property, or refinance or restructure the Texas
Mortgage prior to maturity. If both the New York Property and the Texas Property
are foreclosed, Registrant would lose all sources of revenue and would be forced
to dissolve. In addition, a foreclosure of the New York Property would result in
material and adverse tax and other consequences to limited partners. If the New
York Property is foreclosed upon, Registrant estimates that as required by
generally accepted accounting principles, it will recognize a gain of
approximately $112,000,000 ($1,199 per Unit of limited partnership interest). In
addition, Registrant estimates that each limited partner would recognize a
taxable gain of approximately $1,454 per Unit, with no cash available for
distribution to the partners. Any such foreclosure also would materially and
adversely affect future operating revenues and expenses and cash flow from
operations would be significantly reduced. See Item 1 above regarding the Texas
Mortgage, the New York Mortgage and the pending reorganization proceeding.
<PAGE>
The General Partners hold a 1% equity interest in Registrant. However, at the
inception of Registrant, the General Partners' equity account was credited with
only the actual capital contributed in cash, $39,700. Registrant's management
determined that this accounting does not appropriately reflect the Limited
Partners' and the General Partners' relative participations in Registrant's net
assets, since it does not reflect the General Partners' 1% equity interest in
Registrant. Thus, Registrant has restated its financial statements to reallocate
$464,050 (1% of the gross proceeds raised at Registrant's formation) of the
partners' equity to the General Partners' equity account. This reallocation was
made as of the inception of Registrant and all periods presented in the
financial statements have been restated to reflect the reallocation. The
reallocation has no impact on Registrant's financial position, results of
operations, cash flows, distributions to partners, or the partners' tax basis
capital accounts.
Year 2000
Costs associated with the year conversion are not expected to have any impact on
the operations of the Registrant.
RESULTS OF OPERATIONS
1997 vs 1996
Registrant experienced a net loss of $4,801,154 for the year ended December 31,
1997 compared to net income of $4,782,912 for the year ended December 31, 1996,
primarily due to a gain on disposition from its Florida property of $19,429,198
recorded in 1996, which was partially offset by lower mortgage loan interest
expense incurred during 1997, as discussed below.
Revenues decreased $1,165,823 for the year ended December 31, 1997 when compared
with the prior year, primarily due to lower rental revenue at the New York
Property and $272,605 of other income relating to a claim settlement against a
former affiliate.
Costs and expenses decreased $11,895,544 for the year ended December 31, 1997
when compared with the prior year, primarily due to the Partnership ceasing to
accrue interest on the Texas and New York mortgages during 1997 and a one time
write-off in 1996 of approximately $3.0 million of tenant improvements and lease
commissions for vacated tenants at the New York Property.
1996 vs 1995
Registrant experienced net income of $4,782,912 for the year ended December 31,
1996 compared to a net loss of $11,140,689 for the year ended December 31, 1995
primarily due to a gain on disposition from its Florida property that was
foreclosed upon in February 1996. The foreclosure resulted in a gain of
$19,429,198 and a decrease in revenues and expenses from the loss of this
property.
Revenues decreased $4,187,531 for the year ended December 31, 1996 when compared
with the prior year primarily as a result of the disposition of the Florida
property, which resulted in the loss of approximately $3.6 million of rental
income and a decrease of revenue of approximately $837,000 at the New York
Property primarily as a result of a lease termination agreement with one tenant
in 1996. This was partially offset by other income of $272,605 relating to a
claim settlement against a former affiliate.
<PAGE>
Expenses decreased $681,934 for the year ended December 31, 1996 when compared
with the prior year due to a decrease in mortgage loan interest expense of
approximately $2.4 million and a decrease in ground rent expense of
approximately $1.3 million, both primarily from the disposition of the Florida
property. This was offset by an increase in depreciation and amortization
expense of approximately $3.0 million due to a one time write off of tenant
improvements and lease commissions for vacated tenants at the New York Property
of approximately $3.6 million which was offset by a depreciation savings of
approximately $600,000 from the disposition of the Florida property.
<PAGE>
Item 8. Financial Statements and Supplementary Data
VISTA PROPERTIES
(Debtor-in-possession)
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 and 1995
INDEX
Independent Auditor's report
Financial Statements - years ended
December 31, 1997, 1996, and 1995
Balance sheets
Statements of operations
Statement of partners' deficit
Statements of cash flows
Notes to financial statements
Schedule III:
Real Estate and Accumulated Depreciation
All other schedules have been omitted because they are not applicable or the
required information is included in the financial statements and the notes
thereto.
<PAGE>
To the Partners of
Vista Properties
Greenwich, Connecticut
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of Vista Properties (a limited
partnership) (Debtor-in possession) as of December 31, 1997 and 1996, and the
related statements of operations, partners' deficit and cash flows for each of
the three years in the period ended December 31, 1997. Our audit also included
the financial statement schedule listed in the Index at Item 14(a)2. These
financial statements and the financial statement schedule are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
the financial statements and financial statement schedule 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 financial statements referred to above present fairly, in
all material respects, the financial position of Vista Properties (Debtor-in
possession) as of December 31, 1997 and 1996, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1997, in conformity with generally accepted accounting principles. Also, in our
opinion, such financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 3 to the
financial statements, the Partnership had received notice from one of its
mortgage lenders regarding a possible foreclosure of the New York Property. On
June 19, 1997, the Partnership filed a voluntary petition for reorganization
under Chapter 11 of the United States Bankruptcy Code. On October 10, 1997, the
Partnership filed with the Bankruptcy Court its Plan of Reorganization (the
"Chapter 11 Plan") and Disclosure Statement (the "Disclosure Statement"). At a
hearing held on November 13, 1997, the Bankruptcy Court approved the Disclosure
Statement as providing adequate information to the holders of claims or
interests in the reorganization case to make an informed judgment concerning the
Chapter 11 Plan. In February 1998, the Bankruptcy Court denied confirmation of
the Chapter 11 Plan. The Partnership has filed a notice of appeal to the
District Court for the Northern District of California and also has filed a
motion for permission to file an interlocutory appeal. The Partnership does not
have, and is not anticipated to have, sufficient funds or liquidity to satisfy
this mortgage which raises substantial doubt about its ability to continue as a
going concern. Management's plans in regard to this matter are also described in
Note 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/Hays & Company
- -----------------
Hays & Company
March 9, 1998
New York, New York
<PAGE>
<TABLE>
<CAPTION>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
BALANCE SHEETS
December 31,
--------------------------------
1997 1996
------------- -------------
ASSETS
<S> <C> <C>
Real estate, net ....................................... $ 90,292,630 $ 93,890,271
Cash and cash equivalents .............................. 8,569,410 3,121,247
Receivables and other assets ........................... 11,175,897 10,151,747
------------- -------------
$ 110,037,937 $ 107,163,265
============= =============
LIABILITIES AND PARTNERS' DEFICIT
Liabilities not subject to compromise
Accounts payable and accrued expenses .................. $ 484,985 $ 544,797
Prepaid rents .......................................... -- 209,927
------------- -------------
Total liabilities not subject to compromise ........ 484,985 754,724
------------- -------------
Liabilities subject to compromise
Deferred interest payable .............................. 122,538,704 115,022,636
Mortgage loans payable ................................. 99,160,000 99,160,000
Due to affiliates ...................................... 2,088,670 1,889,508
Accounts payable and accrued expenses .................. 230,335 --
------------- -------------
Total liabilities subject to compromise ............ 224,017,709 216,072,144
------------- -------------
Total liabilities ........................................... 224,502,694 216,826,868
------------- -------------
Commitments and contingencies (Notes 3, 4, 5, 7, 8, 9 and 12)
Partners' deficit
Limited partners' deficit (as restated) (92,810
units issued and outstanding) ...................... (112,259,669) (107,506,527)
General partners' deficit (as restated) ................. (2,205,088) (2,157,076)
------------- -------------
Total partners' deficit ............................ (114,464,757) (109,663,603)
------------- -------------
$ 110,037,937 $ 107,163,265
============= =============
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
STATEMENTS OF OPERATIONS
Year ended December 31,
------------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Revenues
Rental income .............................. $ 20,050,916 $ 20,924,317 $ 25,327,463
Other income ............................... 200 273,676 1,450
Interest income ............................ 50,543 69,489 126,100
------------ ------------ ------------
20,101,659 21,267,482 25,455,013
------------ ------------ ------------
Costs and expenses
Mortgage loan interest expense ............. 9,416,735 17,661,137 20,093,060
($18,044,975 contractual for 1997)
Operating expenses ......................... 7,915,817 8,219,918 8,096,151
Depreciation and amortization .............. 5,243,315 8,589,852 5,606,268
Ground rent ................................ 700,000 700,000 2,031,159
Property management fees ................... 590,901 587,941 611,599
Administrative expenses .................... 151,456 154,920 157,465
------------ ------------ ------------
24,018,224 35,913,768 36,595,702
------------ ------------ ------------
Loss before gain on foreclosure of property
and reorganization items ................... (3,916,565) (14,646,286) (11,140,689)
Gain on foreclosure of property (Note 5) ... -- 19,429,198 --
------------ ------------ ------------
(Loss) income before reorganization items ....... (3,916,565) 4,782,912 (11,140,689)
Reorganization items
Professional fees .......................... (944,589) -- --
Interest income ............................ 60,000 -- --
------------ ------------ ------------
(884,589) -- --
------------ ------------ ------------
Net (loss) income ............................... $ (4,801,154) $ 4,782,912 $(11,140,689)
============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
STATEMENTS OF OPERATIONS
Year ended December 31,
------------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net (loss) income attributable to
Limited partners ........................... $ (4,753,142) $ 4,735,083 $(11,029,282)
General partners ........................... (48,012) 47,829 (111,407)
------------ ------------ ------------
$ (4,801,154) $ 4,782,912 $(11,140,689)
============ ============ ============
Net (loss) income per unit of limited partnership
interest (92,810 units outstanding) ........ $ (51.21) $ 51.02 $ (118.84)
============ ============ ============
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
STATEMENT OF PARTNERS' DEFICIT
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
General Limited Total
Partners' Partners' Partners'
Deficit Deficit Deficit
------------- ------------- -------------
<S> <C> <C> <C>
Balance, January 1, 1995 ................. $ (2,557,548) $(100,748,278) $(103,305,826)
Reallocation of partners' equity (Note 11) 464,050 (464,050) --
------------- ------------- -------------
Balance, January 1, 1995 (as restated) ... (2,093,498) (101,212,328) (103,305,826)
Net loss - 1995 .......................... (111,407) (11,029,282) (11,140,689)
------------- ------------- -------------
Balance, December 31, 1995 (as restated) . (2,204,905) (112,241,610) (114,446,515)
Net income - 1996 ........................ 47,829 4,735,083 4,782,912
------------- ------------- -------------
Balance, December 31, 1996 (as restated) . (2,157,076) (107,506,527) (109,663,603)
Net loss - 1997 .......................... (48,012) (4,753,142) (4,801,154)
------------- ------------- -------------
Balance, December 31, 1997 ............... $ (2,205,088) $(112,259,669) $(114,464,757)
============= ============= =============
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
STATEMENT OF CASH FLOWS
Year ended December 31,
------------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
Cash flows from operating activities
Net (loss) income ................................ $ (4,801,154) $ 4,782,912 $(11,140,689)
Adjustments to reconcile net (loss) income to net
cash provided by operating activities
Deferred mortgage loan interest .............. 7,516,068 10,458,973 7,093,482
Depreciation and amortization .................... 5,243,315 8,589,852 5,606,268
Straight-line adjustment for stepped
lease rentals .............................. (39,089) (360,901) (1,182,902)
Gain on foreclosure of property .............. -- (19,429,198) --
Changes in assets and liabilities
Receivable and other assets, net ............... (1,367,365) (960,398) (262,918)
Due to affiliates .............................. 199,162 171,934 329,619
Accounts payable and accrued expenses .......... 170,523 (147,032) 234,892
Prepaid rents .................................. (209,927) (295,737) 211,920
------------ ------------ ------------
Net cash provided by operating activities .. 6,711,533 2,810,405 889,672
------------ ------------ ------------
Cash flows from investing activities
Additions to real estate ......................... (1,263,370) (2,399,849) (1,294,819)
Cash received from foreclosure of property ....... -- 306,572 --
------------ ------------ ------------
Net cash used in investing activities ...... (1,263,370) (2,093,277) (1,294,819)
------------ ------------ ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
STATEMENT OF CASH FLOWS
Year ended December 31,
------------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net increase (decrease) in cash and cash
equivalents ...................................... 5,448,163 717,128 (405,147)
Cash and cash equivalents, beginning of year ........ 3,121,247 2,404,119 2,809,266
------------ ------------ ------------
Cash and cash equivalents, end of year .............. $ 8,569,410 $ 3,121,247 $ 2,404,119
============ ============ ============
Supplemental disclosure of cash flow information
Interest paid .................................... $ 1,900,667 $ 7,202,164 $ 12,999,578
============ ============ ============
</TABLE>
Net cash provided by operating activities for the year ended December 31,
1997 includes $944,589 of professional fees paid and $60,000 of interest
earned resulting from the Partnership's Chapter 11 filing.
See notes to financial statements.
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1 ORGANIZATION
Vista Properties (Debtor-in possession) (the "Partnership"), a limited
partnership, was formed in March, 1983, under the Uniform Limited
Partnership Laws of the State of California for the purpose of
investing in and operating real estate. The Partnership's properties
were originally located in New York, Texas and Florida. During 1996,
the Partnership's Florida Property was foreclosed upon by its mortgage
lender (Note 4). As discussed in Note 3, the Partnership received
notice from the New York Property mortgage lender (Note 7) regarding a
possible foreclosure and on June 19, 1997, the Partnership filed for
reorganization under Chapter 11 of the United States Bankruptcy Court.
The Partnership will terminate on December 31, 2080 or sooner, in
accordance with the terms of the Agreement of Limited Partnership (the
"Limited Partnership Agreement").
Units of limited partnership interest were issued at a stated value of
$500 per unit. A total of 92,810 units of limited partnership interest,
including units to the initial limited partner, have been issued for
aggregate capital contributions of $46,405,000. In addition, the
general partners contributed a total of $39,700, to the capital of the
Partnership.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Leases
The Partnership accounts for all of its leases under the operating
method. Under this method, revenue is recognized as rentals become due,
except for stepped leases where revenue is recognized on a
straight-line basis over the life of the lease.
Depreciation
Depreciation is computed using the straight-line method over the useful
life of the property, which is estimated to be 40 years for buildings
and 20 years for improvements. The cost of the buildings represents the
initial cost of the buildings to the Partnership plus acquisition and
closing costs. Repairs and maintenance are charged to operations as
incurred.
Write-down for impairment
A write-down for impairment is established based upon a quarterly
review of each of the properties in the Partnership's portfolio. Real
estate property is carried at the lower of depreciated cost or
estimated fair value. In performing this review, management considers
the estimated fair value of the property based upon the undiscounted
future cash flows, as well as other factors such as the current
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
occupancy, the prospects for the property and the economic situation in
the region where the property is located. Because this determination of
estimated fair value is based upon future economic events, the amounts
ultimately realized upon a disposition may differ materially from the
carrying value.
A write-down is inherently subjective and is based upon management's
best estimate of current conditions and assumptions about expected
future conditions. The Partnership may provide for losses in the future
and such provisions could be material.
Financial statements
The financial statements include only those assets, liabilities and
results of operations which relate to the business of the Partnership.
Cash and cash equivalents
For purposes of the statements of cash flows, the Partnership considers
all short-term investments which have original maturities of three
months or less to be cash equivalents.
Principally all of the Partnership's cash and cash equivalents are held
at two separate financial institutions.
Fair value of financial instruments
The fair value of financial instruments is determined by reference to
market data and other valuation techniques as appropriate. The
Partnership's financial instruments include cash and cash equivalents
and mortgage loans payable. Unless otherwise disclosed, the fair value
of financial instruments approximates their recorded values. With
respect to the Partnership's mortgage loans, and the pending bankruptcy
filing, management is unable to determine the fair value of its
mortgage loans at December 31, 1997.
Net income (loss) per unit of limited partnership interest
Net income (loss) per unit of limited partnership interest is computed
based upon the number of units outstanding (92,810) during the year.
Income taxes
No provisions have been made for federal, state and local income taxes,
since they are the personal responsibility of the partners.
The income tax returns of the Partnership are subject to examination by
federal, state and local taxing authorities. Such examinations could
result in adjustments to Partnership income or losses, which changes
could affect the income tax liability of the individual partners.
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recently issued accounting pronouncements
The Financial Accounting Standards Board has recently issued several
new accounting pronouncements. Statement No. 128, "Earnings Per Share"
established standards for computing and presenting earnings per share,
and became effective for financial statements for both interim and
annual periods ending after December 15, 1997. Statement No. 129,
"Disclosure of Information about Capital Structure" established
standards for disclosing information about an entity's capital
structure, and became effective for financial statements for periods
ending after December 15, 1997. Statement No. 130, "Reporting
Comprehensive Income" establishes standards for reporting and display
of comprehensive income and its components, and is effective for fiscal
years beginning after December 15, 1997. Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information"
establishes standards for the way that public business enterprises
report information about operating segments in annual financial
statements and requires that those enterprises report selected
information about operating segments in interim financial reports
issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas, and major
customers, and is effective for financial statements for periods
beginning after December 15, 1997.
Management of the Company does not believe that these new standards
have, or will have a material effect on the Company's reported
operating results, per unit amounts, financial position or cash flows.
Reclassifications
Certain reclassifications have been made to the financial statements
shown for the prior years in order to conform to the current year's
classifications.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
3 PETITION FOR RELIEF UNDER CHAPTER 11
On June 19, 1997, the Partnership filed a voluntary petition for
reorganization under Chapter 11 of the Bankruptcy Code in the United
States Bankruptcy Court for the Northern District of California. The
filing of this petition acts as a stay of the foreclosure proceeding on
the New York Property (Note 7). Under Chapter 11, certain claims
against the Partnership in existence prior to the filing are stayed
while the Partnership continues business operations as
Debtor-in-possession. These claims are reflected in the 1997 balance
sheet as "liabilities subject to compromise." The Partnership's secured
claims (mortgages and deferred interest payable) are also stayed,
although the holders of such claims have the right to move the
Bankruptcy Court for relief from the stay.
The bankruptcy petition was filed to enable the Partnership to
reorganize its affairs under the protection of Chapter 11 and to
propose and confirm a plan of reorganization. The Bankruptcy Court has
entered orders approving the retention by the Partnership of
reorganization counsel and accountants. Pursuant to the order of the
Bankruptcy Court dated June 26, 1997, the President of the management
general partner of the Partnership has been designated as the
individual responsible for the duties and obligations of the
Partnership, as debtor and debtor-in-possession in the reorganization
proceeding.
On October 10, 1997, the Partnership filed with the Bankruptcy Court
its Plan of Reorganization (the "Chapter 11 Plan") and Disclosure
Statement (the "Disclosure Statement"). At a hearing held on November
13, 1997, the Bankruptcy Court approved the Disclosure Statement as
providing adequate information to the holders of claims or interests in
the reorganization case to make an informed judgment concerning the
Chapter 11 Plan. In February 1998, the Bankruptcy Court denied
confirmation of the Chapter 11 Plan. The Partnership has filed a notice
of appeal to the District Court for the Northern District of
California, and also has filed a motion for permission to file an
interlocutory appeal.
In light of the Bankruptcy Court's denial of confirmation of the
Partnership's Chapter 11 Plan of Reorganization, there can be no
assurance that the Partnership's Chapter 11 case will not be dismissed,
that the New York Property and the Texas Property will not be
foreclosed, or that a secured creditor or other party will not obtain a
Bankruptcy Court order confirming an alternate Plan of Reorganization.
A foreclosure (as well as certain types of Plans of Reorganizations)
would have material and adverse tax and other consequences for the
limited partners. The financial statements have been prepared assuming
the Partnership will continue as a going concern. However, the
Partnership does not have, and is not anticipated to have sufficient
funds or liquidity to satisfy its mortgage loans which raises
substantial doubt about its ability to continue as a going concern.
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
4 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
IR Vista Realty Corp., the Management General Partner of the
Partnership, and IR Acquisitions Corp., the Acquisitions General
Partner, were, until November 3, 1994, wholly-owned subsidiaries of
Integrated Resources, Inc. ("Integrated") at which time, pursuant to
the consummation of Integrated's Plan of Reorganization, substantially
all the assets of Integrated were sold to Presidio Capital Corp.
("Presidio"). The Associate General Partner is Asta Associates Limited
Partnership, whose general partner is Z Square G Partners II, a general
partnership consisting of former directors and officers of Integrated.
Asta Associates Limited Partnership notified the Partnership of its
withdrawal as Associate General Partner of the Partnership. The
withdrawal was effective as of March 28, 1995, 90 days following
written notice to Limited Partners. Upon the effective date of the
withdrawal, Presidio Boram Corp. ("Boram"), a subsidiary of Presidio
became the Associate General Partner. In October 1996, the parties
determined that the withdrawal of Asta as Associate General Partner and
the appointment of Boram was based upon a mutual mistake and those
transactions were rescinded. Affiliates of the general partners are
also engaged in businesses related to the acquisition and operation of
real estate. Presidio is also the parent of other corporations that
are, or may in the future, be engaged in businesses that may be in
competition with the Partnership. Accordingly, conflicts of interest
may arise between the Partnership and such other corporations.
Presidio controls the Partnership through its direct and indirect
ownership of the Management and Acquisitions General Partners. On
August 28, 1997, an affiliate of NorthStar Capital Partners acquired
all of the Class B shares of Presidio. This acquisition, when
aggregated with previous acquisitions, caused NorthStar Capital
Partners to acquire indirect control of the Management and Acquisitions
General Partners.
Effective with the consummation of Integrated's Plan of Reorganization,
Presidio entered into an Administrative Services Agreement with
Concurrency Management Corp. ("Concurrency"). Effective January 1,
1996, Wexford Management Corp. (formerly Concurrency) assigned its
agreement to provide management and administrative services to Presidio
and its subsidiaries to Wexford Management LLC ("Wexford"). Under this
agreement, Wexford had the authority to designate directors of the
Management and Acquisitions General Partners.
On November 2, 1997, the Administrative Services Agreement with Wexford
expired. Effective November 3, 1997, Wexford and Presidio entered into
a new Administrative Services Agreement (the "ASA"), which expires on
May 3, 1998. Under the terms of the ASA, Wexford will provide
consulting and administrative services to Presidio and its affiliates,
including the Management and Acquisitions General Partners and the
Partnership. Presidio also entered into a management agreement with
NorthStar Presidio Management Company, LLC ("NorthStar Presidio").
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
4 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
Under the terms of the management agreement, NorthStar Presidio will
provide the day-to-day management of Presidio and its direct and
indirect subsidiaries and affiliates. NorthStar Presidio is engaged to
perform similar services for other entities which may be in competition
with the Partnership. Reimbursements made to Wexford for the years
ended December 31, 1997 and 1996 for management and administrative
services rendered, amounted to $23,792 and $31,812, respectively.
Effective November 3, 1997, the officers and employees of Wexford that
had served as officers and/or directors of the Management and
Acquisitions General Partners resigned and were replaced with new
individuals appointed by an affiliate of NorthStar Capital Partners.
Presidio is a liquidating company. Although it has no immediate plans
to do so, it will ultimately seek to dispose of the interests it
acquired from Integrated through liquidation, however, there can be no
assurance of the timing of such transaction or the effect it may have
on the Partnership.
The Partnership has entered into a supervisory management agreement
with IR Vista Management Corp. ("Vista Management"), an affiliate of
the Management and Acquisitions General Partners, to perform certain
functions relating to the management of the properties of the
Partnership. A portion of the property management fees payable to Vista
Management were paid to unaffiliated local management companies which
were engaged to provide local property management for one of the
Partnership's properties. For the years ended December 31, 1997, 1996
and 1995, Vista Management was entitled to receive $590,901, $587,941
and $611,599, respectively, of which $381,738, $416,007 and $281,980
was paid to the unaffiliated local management companies. Fees are not
charged for properties net leased to tenants. The amount due to
affiliates of $2,088,670 and $1,889,508 at December 31, 1997 and 1996,
respectively, represents management fees payable to Vista Management
for its supervisory management services. The Management General Partner
suspended payment of these fees starting in 1991 in order to slow the
depletion of the Partnership's working capital reserve balance.
The general partners are entitled to receive 1% of distributable cash
from the operations, sales, financing and working capital reserve
account, and an allocation of 1% of the net income or loss of the
Partnership. Such amounts allocated and distributed to the general
partners are apportioned 80% to the Management General Partner, 10% to
the Acquisitions General Partner and 10% to the Associate General
Partner.
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
5 REAL ESTATE
Real estate is summarized as follows:
<TABLE>
<CAPTION>
December 31,
-----------------------------------
1997 1996
<S> <C> <C><
Buildings and improvements $ 145,735,487 $ 144,472,117
Accumulated depreciation (55,442,857) (50,581,846)
------------- -------------
$ 90,292,630 $ 93,890,271
============= =============
</TABLE>
Florida Property
The Florida Property, which was located in Orlando, was net leased to a
tenant under a lease which commenced on November 1, 1981 and was to
terminate on March 31, 1998. The initial annual rent was $2,393,268 and
increased in each subsequent year by a percentage equal to the rate of
increase in the Consumer Price Index, U.S. City Average, with a maximum
of 7% increase in any year. Rental income for the year ended December
31, 1995 was $3,622,271.
On January 12, 1996, the Partnership entered into a Settlement
Agreement (the "Settlement Agreement") with AEW #2 Trust ("AEW") with
respect to a pending foreclosure of the mortgage loan made by AEW to
the Partnership in the original principal amount of $21,360,000 (the
"Loan"). The Loan was secured by a first mortgage lien on the leasehold
estate and the improvements located thereon.
The Loan became due and payable in accordance with its terms on October
26, 1995 and the Loan was not satisfied on such date. As of November
30, 1995, the outstanding indebtedness of the Loan was comprised of the
principal amount of $21,360,000 plus accrued and unpaid interest in the
amount of $14,454,058. The amount of such outstanding indebtedness
exceeded the fair market value of the Florida Property. AEW commenced
an action to foreclose its mortgage on December 7, 1995 and a
certificate of title was issued in connection with such action on
February 26, 1996.
Under the terms of the Settlement Agreement, AEW agreed to pay to the
Partnership a fee not to exceed $400,000 and to bear substantially all
costs and expenses relating to the consummation of the foreclosure
action provided the Partnership agreed to cooperate with AEW in
connection with the foreclosure action. On May 21, 1996, the
Partnership received $306,572 with respect to this fee.
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
5 REAL ESTATE (continued)
As a result of the above transaction, the Partnership recognized during
the first quarter of 1996, a gain on the foreclosure of the Florida
Property of $19,429,198 ($207.25 per unit of limited partnership
interest).
Texas Property
The Texas Property, which is located in Irving, was net leased to
Integra-A Hotel and Restaurant Company, formerly known as Brock Hotel
Corporation ("Integra") for a stated term of 15 years beginning on
April 29, 1983. The initial annual basic rent was $852,500 and was to
increase in the fourth, seventh, tenth, and thirteenth year of the net
lease by a percentage equal to the rate of increase in a certain index
subject to certain minimum and maximum rentals.
Integra ceased paying rent for the period from October 1, 1985 through
December 31, 1986 and was in default of its net lease obligations to
the Partnership. Pursuant to a settlement reached with Integra on
December 30, 1986, an agreement was entered into, resolving Integra's
default under its net lease. The Partnership waived payment of the
unpaid rent for the period October 1, 1985 through May 31, 1986, in the
amount of $568,333 and reduced the rent payable under the net lease to
$776,000 per year commencing June 1, 1986 and ending May 31, 1991.
In December 1990, following a subsequent Integra default, the net lease
was amended and assigned to Showbiz Pizza Time, Inc. ("Showbiz"), a
Kansas Corporation. Rent payable pursuant to this Second Amendment to
and Assignment of Net Lease was reduced to $459,000 per annum
commencing June 1, 1991 through November 30, 1996. Beginning December
1, 1996, and continuing through May 31, 1998, the rent shall be the
greater of (i) the fair market rental or (ii) $459,000 per annum. At
December 1, 1996, management and the tenant agreed to continue the rent
at $459,000 per annum through May 31, 1998. In connection with the
Second Amendment, Hallwood Group Incorporated ("Hallwood"), the
guarantor of the net lease to Integra, paid $452,667 to the Partnership
representing rent due from November 1, 1990 through and including May
31, 1991. The payment of $452,667, plus $25,000 in accrued late
charges, represented the entire satisfaction of Hallwood's obligation
as guarantor of the net lease, with respect to rent due.
Due to the soft market conditions in the Irving, Texas area and the
estimated fair value of the Texas Property, management recorded a
write-down for impairment of $3,000,000 during 1991. Management has
determined that no additional write-down for impairment was required
for the years ended December 31, 1997, 1996 and 1995.
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
5 REAL ESTATE (continued)
New York Property
The Partnership acquired an office building located at 250 Park Avenue
in New York City, New York. Office space is leased to various
unaffiliated third parties under operating leases with original terms
ranging from 5 to 20 years.
Minimum future rental receipts, excluding operating escalations and
other charges, due from tenants pursuant to the terms of existing
noncancellable leases, as of December 31, 1997, are approximately as
follows:
Year ending December 31,
1998 $ 13,944,000
1999 13,382,000
2000 13,288,000
2001 13,304,000
2002 13,053,000
Thereafter 59,958,000
--------------
$ 126,929,000
==============
The holder of the mortgage loan on the New York Property has asserted
that such mortgage loan became due and payable during 1996 and the
lender is currently attempting to foreclose on the New York Property
(Note 7). In order to protect its interest in the property, on June 19,
1997 the Partnership filed a voluntary petition for reorganization
under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy
Court for Northern District of California (Note 3).
Each of the Partnership's properties are collateralized by mortgages
payable
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
6 RECEIVABLES AND OTHER ASSETS
Receivables and other assets consist of the following:
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1996
----------- -----------
<S> <C> <C>
Step rental receivable .. $ 5,154,312 $ 5,115,223
Prepaid real estate taxes 2,028,971 2,035,363
Leasing commissions, net 3,380,509 2,325,472
Other ................... 612,105 675,689
----------- -----------
$11,175,897 $10,151,747
=========== ===========
</TABLE>
Amortization of leasing commissions amounted to $382,304, $1,066,340
and $416,375 for the years ended December 31, 1997, 1996 and 1995,
respectively.
7 MORTGAGE LOANS PAYABLE
Mortgage loans payable consist of the following:
<TABLE>
<CAPTION>
December 31,
1997 1996
----------- -----------
<S> <C> <C>
New York Property - wraparound purchase
money note and mortgage ........... $90,160,000 $90,160,000
Texas Property - wraparound purchase
money note and mortgage ........... 9,000,000 9,000,000
----------- -----------
$99,160,000 $99,160,000
=========== ===========
</TABLE>
New York PM Note
The New York PM Note, which commenced in January of 1984, has a term of
40 years and is payable interest only to the extent that there is cash
flow from property operations, for the first 15 years of its term.
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
7 MORTGAGE LOANS PAYABLE (continued)
New York PM Note (continued)
Interest not paid currently from cash flow from the New York Property
is deferred. The note bears interest at the rate of 16.5% per annum
simple interest plus additional interest commencing January 1, 1986 in
the amount of 20% of the gross rental income from the New York Property
in excess of $10,000,000. However, at no time may the effective
cumulative compounded annual yield on the outstanding principal balance
exceed 16.5%. For the years ended December 31, 1997, 1996 and 1995,
additional interest was $885,849, $1,862,367 and $2,003,048,
respectively. After the 15th year of the New York PM Note, debt service
payments will be recomputed based upon the then outstanding principal
amount of the note and deferred interest so that the entire outstanding
indebtedness will be fully amortized over the next 25 years in equal
monthly installments in arrears. The New York PM Note is secured by a
nonrecourse all-inclusive wraparound purchase money mortgage which is
inclusive of, and subordinate to, the first wraparound and the
underlying mortgages.
The New York PM Note permits the Partnership to defer payment of some
or all of the interests accrued on the New York PM Note, provided,
among other things, that the Partnership does not defer interest in an
amount that any time exceeds the aggregate debt service that would have
been due for the immediately preceding 84-month period. In August 1996,
the Partnership received notice from the holder of the New York PM Note
that the interest deferred exceeded the permitted deferral and that the
full debt service payment for interest accrued during August 1996 (in
the amount of $1,239,700) would be due and payable on September 1, 1996
and that, if such payment was not received, the New York Lender would
be entitled to accelerate the indebtedness secured by the New York
Mortgage and exercise all available remedies (including the
commencement of a foreclosure action against the New York Property).
The Partnership did not have sufficient funds to make the payment on
September 1, 1996, and, in October 1996, the New York Lender declared
the entire outstanding principal balance of $90,160,000, together with
all accrued and unpaid interest of approximately $104,882,000,
immediately due and payable, and thereafter commenced an action to
foreclose upon the New York Property. The total outstanding
indebtedness (including related deferred interest payable)
significantly exceeds the estimated fair market value of the New York
Property.
The Partnership was notified on November 12, 1996 that on November 7,
1996 the Supreme Court of the State of New York in the County of New
York appointed Darrell Paster, of Ferrer, Paster & Enriquez as a
receiver of all earnings, revenues, rents, issues, profits and income
with respect to the New York Property during the pendency of the
foreclosure action. On May 9, 1997 the lender moved for summary
judgement on the foreclosure issue. On June 19, 1997, the Partnership
filed a voluntary petition for reorganization under Chapter 11 of the
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
7 MORTGAGE LOANS PAYABLE (continued)
New York PM Note (continued)
Bankruptcy Code in the United States Bankruptcy Court for the Northern
District of California. The filing of this petition acts as a stay of
the foreclosure proceeding. This bankruptcy petition was filed to
enable the Partnership to reorganize its affairs under the protection
of Chapter 11 and to propose and confirm a plan of reorganization.
Consequently, the Partnership ceased accruing interest on the New York
PM Note as of June 19, 1997. At a hearing held before the Bankruptcy
Court on July 29, 1997, the Bankruptcy Court denied the Partnership's
request to permit the Partnership to collect and use the rents and
other income of the New York Property and approved the request of the
New York Lender that the Receiver remain in place and continue to
collect the rents and income and to manage, maintain and operate the
New York Property. See Note 3 above.
A foreclosure of the New York Property would result in adverse tax and
economic consequences to limited partners. If the New York Property is
foreclosed upon, the Partnership estimates that as required by
generally accepted accounting principles, it will recognize a gain of
approximately $112,000,000 ($1,199 per unit of limited partnership
interest). In addition, the Partnership estimates that each limited
partner would recognize a taxable gain of approximately $1,454 per unit
of limited partnership interest, with no cash available for
distribution to the Partners. Any such foreclosure also would have a
significant impact on future operating revenues and expenses and cash
flow resulting from operations would be significantly reduced.
Florida PM Note
The Florida PM Note, which commenced in June of 1983 and was foreclosed
on February 26, 1996 (Note 4), had a term of 40 years with payments of
interest only, to the extent that there was cash flow from the net
lease, for the first 15 years of its term, and an original issue
discount of $100,000. Interest not paid currently from cash flow from
the net lease was deferred. The Florida PM Note was collateralized by a
nonrecourse wraparound purchase money mortgage which was subject to an
existing $12,000,000 mortgage. The interest rate on the Florida PM Note
was 17.5% ($3,738,000 per annum) payable monthly, in arrears. After the
15th year, debt service payments were to be recomputed so that the
entire outstanding principal balance ($21,360,000), together with
interest on that amount (but not on the deferred interest), would be
fully amortized over the next 25 years in equal monthly installments,
in arrears at 17.5% per annum. The Florida PM Note became due and
payable in accordance with its terms on October 26, 1995 and the loan
was not satisfied on such date.
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
7 MORTGAGE LOANS PAYABLE (continued)
Texas PM Note
The Texas PM Note, which commenced in December of 1983, has a term of
15 years, originally bore interest at the rate of 17% per annum and is
payable interest only ($1,530,000 per annum) to the extent that there
is cash flow from the net lease, for its entire term. Interest not paid
currently from cash flow from the net lease is deferred. The Texas PM
Note is secured by a nonrecourse purchase money deed of trust which
encumbers the Partnership's interest in the Texas Property. The Texas
PM Note may be prepaid, in whole or in part, at any time during its
term. In addition, NCNB Texas ("NCNB"), the holder of the underlying
debt, has the right to require a mandatory prepayment of the Texas PM
Note, including all accrued and unpaid interest thereon, following any
sale, transfer or encumbrance of the Texas Property by the Partnership
without its consent. On the 15th anniversary of the Texas PM Note
(December 1998), the outstanding principal balance ($9,000,000),
together with all deferred but unpaid interest thereon, is due and
payable.
Following the 1986 default by Integra on its net lease obligations,
NCNB agreed to a modification of the Texas PM Note to reduce the
interest rate thereunder to 13.25% per annum for the period commencing
May 1, 1986 and ending April 30, 1991, at which time the interest rate
was to return to 17%. NCNB was entitled to receive, at the maturity
date of the Texas PM Note, an additional amount equal to 70% of the
sales price of the Texas Property or, in the event the property is not
sold, 70% of the market value of the property in excess of $15,142,000
up to $17,713,000 and 30% of any portion of the sales price or the
market value in excess of $17,713,000. NCNB has further agreed that its
rate of return on the Texas PM Note may not at any time exceed a
compound yield of 18% per annum and will reduce future payments to the
extent necessary to achieve an 18% return. In connection with the 1990
amendment and assignment of the net lease to Showbiz, NCNB agreed to a
modification to reduce the stated interest rate to 10.25% from June 1,
1991 through the maturity date.
The Texas PM Note permits the Partnership to defer payment of some or
all of the interest accrued on the Texas PM Note, provided, among other
things, that the Partnership does not defer interest in an amount that
at any time exceeds $8,500,000. The Partnership does not expect to
exceed that maximum deferral amount prior to the maturity date in
December 1998. At that time, unless the Partnership is able to
refinance the Texas Mortgage or agree with the holder of the Texas
Mortgage (the "Texas Lender") on a restructuring of the Texas Mortgage,
the Texas Lender may accelerate the indebtedness secured by the Texas
Mortgage and exercise all available remedies (including the
commencement of a foreclosure against the Texas Property). A
foreclosure of the Texas Mortgage would have significant adverse tax
consequences to the limited partners of the Partnership with no cash
available for distribution to the limited partners.
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
7 MORTGAGE LOANS PAYABLE (continued)
Texas PM Note (continued)
As of June 19, 1997, the Partnership ceased accruing interest on the
Texas PM Note. In June 1997, the Partnership and the Texas Lender
entered into an agreement, pursuant to which, among other things, the
Partnership and the Texas Lender agreed to the terms and conditions
with respect to the treatment of the claim of the Texas Lender against
the Partnership in the Chapter 11 Plan and to support the confirmation
and vote in favor of the Chapter 11 Plan. Additionally, under the
agreement, the Texas Lender agreed to consent to the Partnership's use
of the rent and other income of the Texas Property to the extent
necessary to make payment of the ground rent and partial interest
payments on a monthly basis during the pendency of the reorganization
case and the Partnership agreed to grant the Texas Lender adequate
protection for the Partnership's use of such cash upon customary terms
and conditions. The Bankruptcy Court approved the foregoing arrangement
pursuant to an order dated October 6, 1997, although the Chapter 11
Plan was denied confirmation. See Note 3 above.
There is no assurance that the Partnership will be able to successfully
avoid a foreclosure of the New York Property, or refinance or
restructure the Texas Mortgage prior to maturity. If both the New York
Property and the Texas Property are foreclosed, the Partnership would
lose all sources of revenue and would be forced to dissolve.
For the years ended December 31, 1997, 1996 and 1995, the Partnership
paid $1,900,667, $7,202,164 and $12,999,578, respectively, toward its
current mortgage loan interest obligations for all the mortgage loans
noted above.
8 DEFERRED INTEREST PAYABLE
Deferred interest payable is summarized as follows:
<TABLE>
<CAPTION>
December 31,
-----------------------------
1997 1996
------------ ------------
<S> <C> <C>
New York PM Note $115,139,823 $107,877,317
Texas PM Note .. 7,398,881 7,145,319
------------ ------------
$122,538,704 $115,022,636
============ ============
</TABLE>
The deferred interest payable does not accrue additional interest.
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
9 GROUND LEASES
The Florida Property was located on a parcel of land which was net
leased to the Partnership under a Florida Ground Lease. The Florida
Ground Lease was for a 99-year term and had an initial base rent of
$300,000 per annum payable in equal monthly installments of $25,000.
The initial base rent increased annually by 14.5% per annum,
compounded, to a maximum of $1,331,920 which would have occurred in
1996. This Florida Property was foreclosed upon on February 26, 1996
(Note 5).
The Texas Property is located on a parcel of land which is net leased
to the Partnership under a Texas Ground Lease. The Texas Ground Lease
commenced on December 15, 1983, has a 99-year term and has a base rent
of $100,000 per annum payable in equal monthly installments of $8,333,
plus incentive rent equal to 10% of gross income from the Texas
Property in excess of $852,000. Other than the Partnership's
obligations to pay ground rent, the obligations of the Partnership will
be performed by the lessee's performance of its obligations under its
net lease. During 1997, the Partnership paid $100,000 in ground rent
expense.
The New York Property is located on a parcel of land which is owned by
the seller and net leased to the Partnership. The term of the New York
Ground Lease expires on March 31, 2011 and the Partnership has three
21-year renewal options. The New York Ground Lease has an initial base
rent of $600,000 per annum, payable in equal monthly installments of
$50,000, and will be increased in April 1998 to $615,000 per annum. The
annual rent payable for each optional renewal term will be fixed at the
beginning of such terms at the greater of $615,000 or an amount equal
to 6% of the then fair market value of the New York land. During 1997,
the Partnership paid $600,000 in ground rent expense.
Minimum future ground rent payments due under the Partnership's ground
leases, not including any incentive rent under the Texas Ground Lease,
is as follows:
<TABLE>
<CAPTION>
Texas New York
Property Property Total
------------- ------------- --------------
<S> <C> <C> <C>
Year ending December 31,
1998 $ 100,000 $ 611,250 $ 711,250
1999 100,000 615,000 715,000
2000 100,000 615,000 715,000
2001 100,000 615,000 715,000
2002 100,000 615,000 715,000
Thereafter 8,100,000 5,073,750 13,173,750
------------- ------------- --------------
$ 8,600,000 $ 8,145,000 $ 16,745,000
============= ============= ==============
</TABLE>
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
10 STOCK OPTIONS
On May 29, 1987, as a condition of the lease modification with Integra,
Integra issued warrants in registered form to purchase 93,747 shares of
Integra's common stock at an exercise price of $12.50 per share, of
which 937 shares were issued to the General Partners. The individual
warrants to purchase one share of common stock are exercisable on or
before July 1, 2006. Limited partners received one warrant for each
limited partnership unit owned.
11 PARTNERS' DEFICIT
The General Partners hold a 1% equity interest in the Partnership.
However, at the inception of the Partnership, the General Partners'
equity account was credited with only the actual capital contributed in
cash, $39,700. The Partnership's management determined that this
accounting does not appropriately reflect the Limited Partners' and the
General Partners' relative participations in the Partnership's net
assets, since it does not reflect the General Partners' 1% equity
interest in the Partnership. Thus, the Partnership has restated its
financial statements to reallocate $464,050 (1% of the gross proceeds
raised at the Partnership's formation) of the partners' equity to the
General Partners' equity account. This reallocation was made as of the
inception of the Partnership and all periods presented in the financial
statements have been restated to reflect the reallocation. The
reallocation has no impact on the Partnership's financial position,
results of operations, cash flows, distributions to partners, or the
partners' tax basis capital accounts.
12 STATUS OF INTEGRATED
On February 13, 1990, Integrated, the sole shareholder of the
Management and Acquisitions General Partners, filed a voluntary
petition for reorganization under Chapter 11 of the United States
Bankruptcy Code. While Integrated's bankruptcy did not directly affect
the Partnership's operations, it has resulted in certain changes.
On August 8, 1994, The Bankruptcy Court confirmed a Plan of
Reorganization (the "Steinhardt Plan") proposed by Steinhardt
Management Company, Inc. and the Official Committee of Subordinated
Bondholders and on November 3, 1994, the Steinhardt Plan was
consummated. Presidio purchased substantially all of the assets of
Integrated including its interest in the Management and Acquisitions
General Partners. Presidio is a British Virgin Islands corporation
owned 12% by IR Partners, a general partnership, and 88% by former
creditors of Integrated.
The Partnership filed a Proof of Claim against Integrated in
Integrated's Chapter 11 proceeding with respect to certain potential
and unliquidated claims and disputes involving Integrated and its
affiliates. These claims and disputes were resolved and approved by the
Bankruptcy Court on January 22, 1996. During 1996, the Partnership
received approximately $272,000 with respect to these claims, which is
included in other income in the statements of operations.
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
13 RECONCILIATION OF NET (LOSS) INCOME AND NET LIABILITIES PER
FINANCIAL STATEMENTS TO TAX BASIS
The Partnership has computed depreciation for tax purposes using the
Accelerated and Modified Accelerated Cost Recovery Systems, which is
not in accordance with generally accepted accounting principles.
A reconciliation of net (loss) income per financial statements to the
tax basis of accounting is as follows:
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net (loss) income per financial
statements ......................... $ (4,801,154) $ 4,782,912 $(11,140,689)
Tax depreciation in excess of
financial statement depreciation ... (2,938,081) (229,785) (3,875,102)
Gain in foreclosure of property ........ -- 11,788,724 --
Expense accruals recorded for
financial statements in excess
of tax basis ....................... 1,064,377 809,456 --
Interest expense recorded for
financial statements in excess
of tax basis ....................... 7,516,068 17,661,137 --
------------ ------------ ------------
Net income (loss) per tax basis ........ $ 841,210 $ 34,812,444 $(15,015,791)
============ ============ ============
</TABLE>
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
NOTES TO FINANCIAL STATEMENTS
13 RECONCILIATION OF NET (LOSS) INCOME AND NET LIABILITIES PER
FINANCIAL STATEMENTS TO TAX BASIS
(continued)
The differences between the Partnership's net liabilities per financial
statements and the tax basis of accounting are as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------
1997 1996
------------- -------------
<S> <C> <C>
Net liabilities per financial statements .. $(114,464,757) $(109,663,603)
Write-down for impairment ................. 3,000,000 3,000,000
Cumulative tax depreciation in excess of
financial statement depreciation ...... (57,372,617) (54,434,536)
Deferred interest ......................... 25,177,205 17,661,137
Cost of tenant improvements written-off for
financial statement purposes .......... 3,954,756 3,954,756
50% of acquisition fees paid to affiliates
expensed for tax purposes ............. (2,569,976) (2,569,976)
Income and expense accruals ............... 1,873,833 809,456
Syndication costs ......................... 5,333,790 5,333,790
------------- -------------
Net liabilities per tax basis ............. $(135,067,766) $(135,908,976)
============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
REDUCTIONS
COST RECORDED
CAPITALIZED SUBSEQUENT
SUBSEQUENT TO
INITIAL COST TO PARTNERSHIP TO ACQUISITION ACQUISITION
---------------------------- ---------------------------- ---------
BUILDINGS
AND
ENCUM- IMPROVE- IMPROVE- CARRYING WRITE-
DESCRIPTION BRANCES (2) LAND MENTS MENTS COSTS DOWNS (3)
----------- ------------ ---- ----- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Texas Property:
Net leased to
Showbiz Pizzatime, Inc.
Irving, Texas $ 16,398,881 $ - $ 10,000,000 $ - $ 563,989 $ 3,000,000
New York Property
New York, New York 205,299,823 98,000,000 33,304,191 6,867,307 -
------------- -------- ------------- ------------ ----------- -----------
Totals $ 221,698,704 $ - $ 108,000,000 $ 33,304,191 $ 7,431,296 $ 3,000,000
============= ======= ============= ============ =========== ===========
<CAPTION>
GROSS
AMOUNT AT WHICH
CARRIED AT
CLOSE OF
PERIOD LIFE ON WHICH
--------------------- DEPRECIATION IN
BUILDINGS ACCUMU- DATE LATEST
AND LATED OF DATE STATEMENTS
IMPROVE- DEPRE- CONS- ACQUIR- OF OPERATIONS
DESCRIPTION LAND MENTS (1) TOTAL CIATION TRUCTION ED IS COMPUTED
----------- ---- --------- ----- ------- -------- ------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Texas Property:
Net leased to
Showbiz Pizzatime, Inc.
Irving, Texas $ - $ 10,563,989 $ 7,563,989 $ 3,719,398 1982 12/83 40 Years
New York Property
New York, New York - 138,171,498 138,171,498 51,723,459 1924 1/84 20-40 Years
Totals $ - $ 148,735,487 $ 145,735,487 $ 55,442,857
===== ============= ============= =============
</TABLE>
(1) Aggregate cost for federal income tax purposes.
(2) Consists of mortgage loans and deferred interest payable at December 31,
1997.
(3) Write-down for impairment due to decline in estimated fair value.
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION
A) RECONCILIATION OF REAL ESTATE OWNED
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------------
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Balance at the beginning of year (1) $ 144,472,117 $ 170,379,274 $ 169,084,455
Additions during year - purchases ... 1,263,370 2,399,849 1,294,819
------------- ------------- -------------
145,735,487 172,779,123 170,379,274
Other changes
Tenant improvements (2) ........... -- (3,954,756) --
Foreclosure of Florida Property (3) -- (24,352,250) --
------------- ------------- -------------
Balance at end of year .............. $ 145,735,487 $ 144,472,117 $ 170,379,274
============= ============= =============
</TABLE>
(1) Includes the initial cost of the properties plus acquisition and closing
costs and write-downs for impairment.
(2) Includes tenant improvements at the New York Property which were written-off
during 1996.
(3) Represents the cost basis of the Florida Property which was foreclosed
during 1996.
(B) RECONCILIATION OF ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
Year ended December 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of year ........... $ 50,581,846 $ 54,673,898 $ 49,484,005
Additions during year - depreciation (1) 4,861,011 7,523,512 5,189,893
------------ ------------ ------------
55,442,857 62,197,410 54,673,898
Other changes
Tenant improvements (2) .............. -- (3,954,756) --
Foreclosure of Florida Property (3) .. -- (7,660,808) --
------------ ------------ ------------
Balance at end of year ................. $ 55,442,857 $ 50,581,846 $ 54,673,898
============ ============ ============
</TABLE>
<PAGE>
VISTA PROPERTIES
(A limited partnership)
(Debtor-in-possession)
Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (continued_
(1) Depreciation is provided on buildings using the straight-line method over
the useful life of the property, which is estimated to be 40 years for buildings
and 20 years for improvements.
(2) Includes tenant improvements at the New York Property which were written-off
during 1996.
(3) Represents the accumulated depreciation of the Florida Property which was
foreclosed during 1996.
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of Registrant
Management and Acquisitions General Partners
The names, offices held and the ages of the executive officers and directors of
the Management and Acquisitions General Partners are as follows, respectively:
<TABLE>
<CAPTION>
Has served as a
Director and/or
Officer of the
Managing General
Name Age Position Held Partner since
---- --- ------------- -------------
<S> <C> <C> <C>
W. Edward Scheetz 33 Director November 1997
David Hamamoto 38 Director November 1997
Richard Sabella 42 President, Director November 1997
David King 35 Executive VP, Director, Assistant Treasurer November 1997
Lawrence R. Schachter 41 Senior VP, Chief Financial Officer January 1998
Kevin Reardon 39 VP, Secretary, Treasurer, Director November 1997
Allan B. Rothschild 36 Executive VP December 1997
Marc Gordon 33 VP November 1997
Charles Humber 24 VP November 1997
Adam Anhang 24 VP November 1997
Gregory Peck 23 Assistant Secretary November 1997
</TABLE>
W. Edward Scheetz co-founded NorthStar Capital Partners with David Hamamoto in
July 1997, having previously been a partner at Apollo Real Estate Advisors L.P.
since 1993. From 1988 to 1993, Mr. Scheetz was a
principal with Trammell Crow Ventures.
David Hamamoto co-founded NorthStar Capital Partners with W. Edward Scheetz in
July 1997, having previously been a partner and a co-head of the Real Estate
Principal Investment Area at Goldman, Sachs & Co., where he initiated the effort
to build a real estate principal investment business in 1988 under the auspices
of the Whitehall Funds.
Richard Sabella joined NorthStar Capital Partners in November 1997, having
previously been the head of real estate and a partner at the law firm of Cahill,
Gordon & Reindel since 1989. Mr. Sabella has also been associated with the law
firms of Milgrim, Thomajian, Jacobs & Lee, P.C. and Cravath, Swaine & Moore.
David King joined NorthStar Capital Partners in November 1997, having previously
been a Senior Vice President of Finance at Olympia & York Companies (USA). Prior
to joining Olympia & York in 1990, Mr. King worked for Bankers Trust in its real
estate finance group.
Lawrence R. Schachter joined NorthStar Presidio in January 1998, having
previously held the position as Controller at CB Commercial/Hampshire, LLC from
1996 to 1997. Prior to joining CB, Mr. Schachter held the position of Controller
at Goodrich Associates in 1996 and at Greenthal/Harlan Realty Services Co. from
1992 to 1995. Mr. Schachter, who holds a CPA, graduated from Miami University
(Ohio).
<PAGE>
Kevin Reardon joined NorthStar Capital Partners in October 1997, having
previously held the position of Controller at Lazard Freres Real Estate
Investors from 1996 to 1997. Prior to joining Lazard Freres, Mr. Reardon was the
Director of Finance in charge of European expansion at the law firm of Dewey
Ballantine from 1993 to 1996. Prior to 1993, Mr. Reardon held a financial
position at Hearst - ABC - Viacom Entertainment Services. Mr. Reardon, who holds
a CPA, graduated from Fordham University with a B.S. in Accounting.
Allan B. Rothschild joined NorthStar Presidio in December 1997, having
previously been the Senior Vice President and General Counsel of Newkirk Limited
Partnership where he managed a large portfolio of net-leased real estate assets.
Prior to joining Newkirk, Mr. Rothschild was associated with the law firm of
Proskauer, Rose LLP in its real estate group.
Marc Gordon joined NorthStar Capital Partners in October 1997, having previously
been a Vice President in the Real Estate Investment Banking Group at Merrill
Lynch where he executed corporate finance and strategic transactions for public
and private real estate ownership companies, including REITs, real estate
service companies, and real estate intensive operating companies. Prior to
joining Merrill Lynch in 1993, Mr. Gordon was in the Real Estate and Banking
Group at the law firm of Irell & Manella. Mr. Gordon graduated from Dartmouth
College with an A.B. in economics and also holds a J.D. from the UCLA School of
Law.
Charles Humber joined NorthStar Capital Partners in September 1997, having
previously worked for Merrill Lynch's Real Estate Investment Banking Group from
1996 to 1997. Mr. Humber graduated from Brown University with a B.A. in
international relations and organizational behavior and management which is
where he was prior to 1996.
Adam Anhang joined NorthStar Capital Partners in August 1997, having previously
worked for The Athena Group's Russia and Former Soviet Union development team
from 1996 to 1997. Mr. Anhang graduated from the Wharton School of the
University of Pennsylvania with a B.S. in economics with concentrations in
finance and real estate, which is where he was prior to 1996.
Gregory Peck joined NorthStar Capital Partners in July 1997, having previously
worked for the Morgan Stanley Realty Real Estate Funds (MSREF) and Morgan
Stanley's Real Estate Investment Banking Group from 1996 to 1997. Prior to
joining Morgan Stanley, Mr. Peck worked for Lazard Freres & Co. LLC in the Real
Estate Investment Banking Group from 1994 to 1996. Mr. Peck graduated from
Columbia College with an A.B. in mathematics and an A.B. in economics.
There are no family relations between any executive officer and any other
executive officer or director of the Management and Acquisitions General
Partners.
Many of the above officers and directors of the Management and Acquisitions
General Partners also are officers and/or directors of the general partners of
other public partnerships affiliated with Presidio.
<PAGE>
Associate General Partner
Asta Associates Limited Partnership, a Connecticut limited partnership, is the
Associate General Partner of Registrant. Its general partner is Z Square G
Partners II, a New York general partnership which was formed in October, 1982.
Arthur H. Goldberg and Z Square Partners are the general partners of Z Square G
Partners II. Z Square Partners is a New York general partnership which was
formed in October, 1982. The general partners of Z Square Partners are Selig A.
Zises and Jay H. Zises. Asta Associates Limited Partnership notified the
Partnership of its withdrawal as Associate General Partner of the Partnership.
The withdrawal was effective as of March 28,1995, 90 days following written
notice to Limited Partners. Upon the effective date of the withdrawal, Presidio
Boram Corp. ("Boram"), a subsidiary of Presidio became the Associate General
Partner. In October 1996, the parties determined that the withdrawal of Asta as
Associate General Partner and the appointment of Boram was based upon a mutual
mistake and those transactions were rescinded.
Arthur H. Goldberg, age 54, is the President of Manhattan Associates. He served
as President and Chief Operating Officer of Integrated for more than five years
prior to his resignation in January, 1990. Mr. Goldberg also served as Chief
Executive Officer of Integrated from February, 1989, as a member of the
Executive Committee of the Board of Directors from July, 1989 and as Co-Chief
Executive Officer from August, 1989, each until his resignation in January,
1990. He has been a member of the Bar of the State of New York since 1967. He is
a graduate of New York University School of commerce and its School of Law.
Selig A. Zises, age 55, was a Director of Integrated until April, 1990 and was
the Chairman of the Board of Integrated and Chief Executive Officer from 1969 to
1989. He is currently the President of Associated Ventures Management, a private
investment partnership.
Jay H. Zises, age 53, was a Director of Integrated until April 1990 and from
December 1977 to 1989 was Chairman of the Executive Committee of the Board of
Directors of Integrated. He is currently President and general partner of
Associated Capital, a private investment partnership.
Registrant believes, based on written representations received by it, that for
the year ended December 31, 1997 all filing requirements under Section 16(a) of
the Securities Exchange Act of 1934 applicable to beneficial owners of
Registrant's securities, Registrant's general partners and the officers and
directors of such general partners, were complied with.
Item 11. Executive Compensation
Registrant is not required to pay the officers or directors of the Management,
Acquisitions or Associate General Partners any direct compensation, and no such
compensation was paid during the fiscal year ended December 31, 1997. Certain
officers and directors of the Management General Partner receive compensation
from the Management General Partner and/or its affiliates (but not from
Registrant) for services performed for various affiliated entities, which may
include services performed for Registrant. See "Item 13. Certain Relationships
and Related Transactions."
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners
No person owns, of record, or is known by Registrant to own
beneficially more than 5% of the Units of Registrant.
Security Ownership of Managemenet
None of the Management, Acquisitions or Associate General
Partners beneficially owns any Units of Registrant.
To the knowledge of the Registrant, the following sets forth
certain information regarding ownership of the Class A shares of Presidio as of
March 11, 1998 (except as otherwise noted) by (i) each person or entity who owns
of record or beneficially five percent or more of the Class A shares, (ii) each
director and executive officer of Presidio, and (iii) all directors and
executive officers of Presidio as a group. To the knowledge of Presidio, each of
such shareholders has sole voting and investment power as to the shares shown
unless otherwise noted.
All outstanding shares of Presidio are owned by Presidio
Capital Investment Company, LLC ("PCIC"), a Delaware limited liability company.
The interests in PCIC (and beneficial ownership in Presidio) are held as
follows:
<TABLE>
<CAPTION>
Percentage Ownership
in PCIC and Percentage
Beneficial Ownership
Name of Beneficial Owner in Presidio
------------------------ -----------------------
<S> <C>
Five Percent Holders:
Presidio Holding Company, LLC(1) 71.93%
AG Presidio Investors, LLC(2) 14.12%
DK Presidio Investors, LLC(3) 8.45%
Stonehill Partners, L.P.(4) 5.50%
</TABLE>
The holdings of the directors and executive officers of Presidio are as follows:
<TABLE>
<CAPTION>
<S> <C>
Directors and Officers:
Adam Anhang(5) 0%
Marc Gordon(5) 0%
David Hamamoto(5) 71.93%
Charles Humber(5) 0%
David King(5) 0%
Gregory Peck(5) 0%
Kevin Reardon(5) 0%
Allan Rothschild(5) 0%
Richard J. Sabella(5) 0%
Lawrence Schachter(5) 0%
W. Edward Scheetz(5) 71.93%
Directors and Officers as a group: 71.93%
</TABLE>
<PAGE>
(1) Presidio Holding Company, LLC is a New York limited liability
company whose address is 527 Madison Avenue, 16th Floor, New
York, New York 10022. PHC has two members, Polaris Operating
LLC ("Polaris") which holds a 1% interest, and Northstar
Operating, LLC ("Northstar") which holds a 99% interest.
Polaris is a Delaware limited liability company whose address
is 527 Madison Avenue, 16th Floor, New York, New York 10022.
Polaris has two members, Sextant Operating Corp. ("Sextant"),
which holds a 1% interest, and Northstar, which holds a 99%
interest. Sextant is a Delaware corporation whose address is
527 Madison Avenue, 16th Floor, New York, New York 10022 and
whose sole shareholder is Northstar. Northstar is a Delaware
limited liability company whose address is 527 Madison Avenue,
16th Floor, New York, New York 10022. Northstar has two
members, Northstar Capital Partners ("NCP"), which holds a 99%
interest, and Northstar Capital Holdings I, LLC ("NCHI"),
which holds a 1% interest. Both NCP and NCHI are Delaware
limited liability companies, whose business address is 527
Madison Avenue, 16th Floor, New York, New York 10022. NCP has
two members, NCHI, which holds a 74.75% interest, and
Northstar Capital Holdings II LLC ("NCHII"), which holds a
25.25% interest. The business address for NCHII, a Delaware
limited liability company is 527 Madison Avenue, 16th Floor,
New York, New York 10022. NCHII has three members, NCHI, which
holds a 99% interest, Edward Scheetz, who holds a 0.5%
interest and David Hamamoto, who holds a 0.5% interest. Mr.
Scheetz, a U.S. citizen whose business address is 527 Madison
Avenue, 16th Floor, New York, New York 10022, is a founding
member of NCP. Mr. Hamamoto, a U.S. citizen whose business
address is 527 Madison Avenue, 16th Floor, New York, New York
10022, is a founding member of NCP. NCHI has two members, Mr.
Scheetz and Mr. Hamamoto, each of whom holds a 50% interest.
Pursuant to that certain Amended and Restated Pledge and
Security Agreement (the "Pledge Agreement") dated March 5,
1998 made by PHC in favor of Credit Suisse First Boston
Mortgage Capital LLC ("CSFB"), PHC pledged all of its
membership interest in PCIC to CSFB as security for loans
issued under the Loan Agreement dated as of February 20, 1998
by and among PHC and CSFB and the First Amendment thereon
dated March 5, 1998 (together, the "Loan Agreement"). The
Pledge Agreement and Loan Agreement contain standard default
and event of default provisions which may at a subsequent date
result in a change of control of PCIC and, therefore, the
Registrant.
(2) Each of Angelo, Gordon & Co., L.P., as sole manager of AG
Presidio Investors, LLC, and John M. Angelo and Michael L.
Gordon, as general partners of the general partner of Angelo,
Gordon & Co., L.P. may be deemed to beneficially own for
purposes of Rule 13d-3 of the Exchange Act the securities
beneficially owned by AG Presidio Investors, LLC. Each of John
M. Angelo and Michael L. Gordon disclaim such beneficial
ownership. The business address for such persons is c/o
Angelo, Gordon & Co, L.P., 345 Park Avenue, 26th Floor, New
York, New York 10167.
<PAGE>
(3) M.H. Davidson & Company, Inc., as sole manager of DK Presidio
Investors, LLC may be deemed to beneficially own for purposes
of Rule 13d-3 of the Exchange Act, the securities beneficially
owned by DK Presidio Investors, LLC. The business address for
such person is c/o M.H. Davidson & Company, 885 Third Avenue,
New York, New York 10022.
(4) Includes shares of PCIC beneficially owned by Stonehill
Offshore Partners Limited and Stonehill Institutional
Partners, L.P. John A. Motulsky is a managing general partner
of Stonehill Partners, L.P., a managing member of the
investment advisor to Stonehill Offshore Partners Limited and
is a general partner of Stonehill Institutional Partners, L.P.
John A. Motulsky disclaims beneficial ownership of the shares
held by these entities. The business address for such person
is c/o Stonehill Investment Corporation, 110 East 59th Street,
New York, New York 10022.
(5) The business address for such person is 527 Madison Avenue,
16th Floor, New York, New York 10022.
Item 13. Certain Relationships and Related Transactions
Taxable income generated by Registrant during the year ended December 31, 1997
allocated to each of the Management, Acquisitions and Associate General Partners
were $6,961, $871 and $871, respectively.
Transactions with Affiliates of Management
Vista Management has been retained by Registrant to perform certain property
management services for all properties of Registrant which are not subject to
long-term net leases. As compensation for such services, Vista Management is
entitled to receive up to 6% of the annual gross revenues of the properties
where it performs all leasing and re-leasing services and up to 3% of gross
revenues where it does not perform such services. The fee paid to Vista
Management is reduced by the amount of any fee paid to unaffiliated third
parties for such management. For the fiscal year ended December 31, 1997,
$580,900 was earned by Vista Management for such services, of which $381,739 was
paid to unaffiliated third parties. As of December 31, 1997, $2,088,760 of fees
due to Vista Management were deferred. The Management General Partner has
suspended payment of the fee earned by Vista Management to slow the depletion of
Registrant's working capital reserve balance.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
1. Financial Statements - The list of Financial Statements appears on
page 9.
2. Schedules - The list of Financial Statement Schedules appears on
page 9.
3. Exhibits - See the Exhibit index at page 36 of this Annual Report on
Form 10-K.
(b) Reports on Form 8-K:
Registrant did not file any reports on Form 8-K during the last quarter
of the fiscal year.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized on the 27th day of March, 1998.
VISTA PROPERTIES
By: IR VISTA REALTY CORP.
Management General Partner
By: /s/ Richard Sabella April 16, 1998
-------------------
Richard Sabella
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 Registrant in their
capacities as directors and/or officers (as to the Managing General Partner) on
the date indicated below.
Signature Title Date
--------- ----- ----
/s/ Lawrence Schachter Senior Vice President and April 16, 1998
- ----------------------
Lawrence Schachter Chief Financial Officer
/s/ Richard Sabella Director and President April 16, 1998
- ----------------------
Richard Sabella
/s/ David King Director and Executive
- --------------
David King Vice President April 16, 1998
/s/ Kevin Reardon Director and Vice President,
- ------------------
Kevin Reardon Treasurer and Secretary April 16, 1998
<PAGE>
EXHIBIT INDEX
Exhibit
3(A) Second Amended and Restated Certificate of Limited Partnership.*
3(B) Second Amended and Restated Agreement of Limited Partnership*
10(A) Amended and Restated Agent's Agreement between Registrant and
Resources Property Management Corp. with respect to management
services.*
10(E) Amended and Restated Agreement dated July 6, 1983, between IR
Vista Realty Corp., Asta Associates Limited Partnership, Z Square
G Partners II and Integrated Resources, Inc.
with respect to consulting services.*
10(F) Ground Lease Agreement with respect to the Orlando Land from AEW #
2 Trust ("AEW") to Registrant.*
10(G) Purchase Money Mortgage Note from Registrant to AEW.*
10(H) Mortgage and Security Agreement from Registrant to AEW.*
10(I) Assignment and Assumption of Martin Marietta Corporation Net Lease
("MMC Net Lease").*
10(J) Letter from Martin Marietta re: the MMC Net Lease.*
10(K) MMC Net Lease - Agreement of Lease.*
10(L) MMC Net Lease - First Amendment to Agreement of Lease.*
10(M) Option Agreement between Registrant and AEW.*
10(N) Mortgage and Security Agreement from AEW to Registrant
("Reciprocal Mortgage").*
10(O) Collateral Assignment of Mortgage and Note from AEW to
Registrant.*
10(P) Collateral Assignment of Leases and Rent from AEW to Registrant.*
10(Q) Paying Agent and Agency Agreement among Registrant, AEW and State
Street Bank and Trust Company.*
10(R) Deed of Trust Note dated December 15, 1983 from Registrant to
Republic-Bank Dallas, N.A., as Trustee ("RepublicBank").*
10(S) Deed of Trust dated December 15, 1983 from Registrant to Billy J.
Harris, as trustee, for the benefit of RepublicBank.*
10(T) Ground Lease Agreement dated December 15, 1983 between
RepublicBank, as lessor, and Registrant, as lessee.*
10(U) Net Lease Agreement dated as of April 29, 1983 between
RepublicBank, as landlord and Brock Hotel Corporation, as tenant.*
<PAGE>
10(V) Paying Agent Agreement dated December 15, 1983 among Registrant,
RepublicBank and Mellon Financial Services Real Estate Investment
Management Group.*
10(W) Consolidation Modification and Extension Agreement dated December
28, 1977 between Parkbuilt Associates, Inc. ("Parkbuilt") and
Emigrant Savings Bank ("Emigrant").*
10(X) Mortgage dated December 28, 1977 between Parkbuilt, as mortgagor,
and Emigrant, as mortgagee.*
10(Y) Collateral Assignment of Leases dated December 28, 1977 between
Parkbuilt, as assignor, and Emigrant, as assignee.*
10(Z) Mortgage dated December 28, 1977 between Febe Associates ("Febe"),
as mortgagor, and Bankers Life Company ("Bankers"), as mortgagee.*
10(aa) Collateral Assignment of Lease between Febe, as assignor, and
Bankers, as assignee.*
10(bb) Wraparound Mortgage Note dated January 4, 1984 by Park 250
Associates ("Park") to Bankers Trust Company, as Trustee ("BTC").*
10(cc) Wraparound Mortgage dated January 4, 1984 between Park, as
mortgagor, and BTC, as mortgagee.*
10(dd) First Amendment to Wraparound Mortgage dated January 4, 1984 among
Park, Registrant and BTC.*
10(ee) Purchase Money Mortgage Note dated January 4, 1984 by Registrant
to BTC.*
10(ff) Purchase Money Wraparound Mortgage dated January 4, 1984 between
Registrant, as mortgagor, and BTC, as mortgagee.*
10(gg) Agreement of Lease dated as of April 1, 1961 between New York
State Realty and Terminal Company, as lessor, and 250 Park Avenue
Corporation, as lessee.*
10(hh) Amendment to Agreement of Lease dated December 28, 1977 between
Febe Associates, as lessor, and 250 Park Avenue Corporation, as
lessee.*
10(ii) Paying Agent and Agency Agreement dated January 4, 1984 among
Registrant, BTC and State Street Bank and Trust Company.*
10(jj) Collateral Assignment of Mortgage dated January 4, 1984 between
BTC, as assignor, and Registrant, as assignee.*
10(kk) Reciprocal Mortgage dated January 4, 1984 between BTC, as
mortgagor, and Registrant, as mortgagee.*
10(ll) Land Option Agreement dated January 4, 1984 between BTC, as
optionor, and Registrant, as optionee.*
10(mm) Letter Agreement dated January 4, 1984 regarding survival of Land
Option Agreement.*
<PAGE>
10(nn) Option Agreement dated January 4, 1984 between Registrant, as
optionor, and BTC, as optionee.*
10(oo) First Amendment to Net Lease, dated as of June 1, 1986, between
Registrant and Brock.*
10(pp) Agreement of Modification of Deed of Trust and Note, dated as of
May 1, 1986, between Registrant and the mortgagee.*
10(qq) Modification of Guaranty between Registrant and the Hallwood Group
Incorporated dated December 13, 1990.*
10(rr) Second Agreement of Modification of Deed of Trust and note between
Registrant and NCNB Texas dated December 31, 1990.*
10(ss) Second Amendment to and Assignment of Net Lease between
Registrant, Integra, and Showbiz Pizza Time Inc. dated December
13, 1990.*
10(tt) Settlement Agreement between Registrant and AEW #2 Trust dated
January 12, 1996.*
10(uu) Affidavit of Mark A. Albertson , a Director of Aldrich, Eastman &
Waltch, L.P., the attorney-in-fact for Plaintiff, Bankers trust
Company as Trustee for the General Motors Hourly-Rate Employees
Pension Trust, and as Trustee for the General Motors Retirement
Program for Salaried Employees Trust "Plaintiff", in support of
application for appointment of a Receiver, as filed in the Supreme
Court of the State of New York, County of New York on October 29,
1996 against Vista Properties "Defendant". (1)
10(vv) Summons filed by Bankers Trust Company, as Trustee for the General
Motors Hourly-Rate Employees Pension Trust, and as Trustee for the
General Motors Retirement Program for Salaried Employees Trust
against Vista Properties, as filed in the Supreme Court of the
State of New York, County of New York on October 31, 1996. (1)
10(ww) Order appointing Receiver, at IAS Part 32 of the Supreme Court of
the State of New York, held in and for the County of New York, at
the Courthouse, 60 Centre Street, New York, New York on November
7, 1996. (1)
28(A) Prospectus of Registrant, dated September 2, 1983, as supplemented
on October 17, 1983, November 11, 1983, November 29, 1983, January
25, 1984, March 2, 1984, July 9, 1984, August 5, 1984 and
September 14, 1984.*
28(A) Prospectus of Registrant, dated September 2, 1983, as supplemented
on October 17, 1983, November 11, 1983, November 29, 1983, January
25, 1984, March 2, 1984, July 9, 1984, August 5, 1984 and
September 14, 1984.*
<PAGE>
28(B) Report of Registrant on Form 10-K for fiscal year ended December
31, 1983, pages 3-6.*
28(C) Report of Registrant on Form 8-K dated December 30, 1986.*
28(D) Report of Registrant on Form 8-K dated December 20, 1990.*
28(E) Report of Registrant on Form 8-K dated December 6, 1996.*
- ------------------
* Incorporated by Reference.
(1) Filed herewith
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF THE DECEMBER 31, 1997 FORM 10K OF VISTA PROPERTIES AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 8,569,410
<SECURITIES> 0
<RECEIVABLES> 11,175,897
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 110,037,937
<CURRENT-LIABILITIES> 0
<BONDS> 221,698,704
0
0
<COMMON> 0
<OTHER-SE> (114,464,757)
<TOTAL-LIABILITY-AND-EQUITY> 110,037,937
<SALES> 0
<TOTAL-REVENUES> 20,101,659
<CGS> 0
<TOTAL-COSTS> 7,915,817
<OTHER-EXPENSES> 7,570,261
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,416,735
<INCOME-PRETAX> (4,801,154)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,801,154)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
