UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number: 0-13329
HUTTON/CONAM REALTY INVESTORS 4
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Exact name of Registrant as specified in its charter
California 11-2685746
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State or other jurisdiction of
incorporation or organization I.R.S. Employer Identification No.
Attention: Andre Anderson
3 World Financial Center, 29th Floor,
New York, New York 10285
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Address of principal executive offices zip code
Registrant's telephone number, including area code: (212) 526-3237
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
Title of Class
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (X)
Documents Incorporated by Reference:
Portions of Prospectus of the Registrant dated January 13, 1984 (included in
Amendment No. 1 to Registration Statement No. 2-84863, filed January 13, 1984)
are incorporated by reference into Part III of this report.
Portions of Parts I, II, III and IV are incorporated herein by reference to the
Partnership's Annual Report to Unitholders for the year ended December 31,
1996. PART I
Item 1. Business
General Development of Business
Hutton/ConAm Realty Investors 4 (the "Registrant" or the "Partnership") is a
California limited partnership of which RI 3-4 Real Estate Services Inc. ("RI
3-4 Services," formerly Hutton Real Estate Services VIII, Inc.), a Delaware
corporation, and ConAm Property Services IV, Ltd., a California limited
partnership ("ConAm Services"), are the general partners (together, the
"General Partners").
Commencing January 13, 1984, the Registrant began offering through E.F. Hutton
& Company Inc., an affiliate of the Registrant ("Hutton"), up to a maximum of
130,000 units of limited partnership interest (the "Units") at $500 per Unit.
Investors who purchased the Units (the "Limited Partners") are not required to
make any additional capital contributions. The Units were registered under the
Securities Act of 1933, as amended (the "Act"), under Registration Statement
No. 2-84863, which Registration Statement was declared effective on January 13,
1984. The offering of Units was terminated on October 11, 1984. Upon
termination of the offering, the Registrant had accepted subscriptions for
128,110 Units for an aggregate of $64,055,000.
Narrative Description of Business
The Registrant is engaged in the business of acquiring, operating and holding
for investment multifamily residential properties which by virtue of their
location and design and the nature of the local real estate market have the
potential for long-term capital appreciation and generation of current income.
All of the proceeds available for investment in real estate were originally
invested in three residential apartment properties and three limited
partnerships, each of which owns a specified property. Funds held as a working
capital reserve are invested in bank certificates of deposit, unaffiliated
money market funds or other highly liquid short-term investments where there is
appropriate safety of principal in accordance with the Registrant's investment
objectives and policies.
The Registrant's principal investment objectives with respect to its interests
in real property are:
(1) capital appreciation;
(2) distributions of net cash from operations attributable to rental income;
and
(3) preservation and protection of capital.
Distributions of net cash from operations will be the Registrant's objective
during its operational phase, while preservation and appreciation of capital
continue to be the Registrant's longer term objectives. The attainment of the
Registrant's objectives will depend on many factors, including future economic
conditions in the United States as a whole and, in particular, in the
localities in which the Registrant's properties are located, especially with
regard to achievement of capital appreciation.
From time to time the Registrant expects to sell its real property interests
taking into consideration such factors as the amount of appreciation in value,
if any, to be realized and the possible risks of continued ownership. In
consideration of these factors and improving market conditions the General
Partners have begun to sell the properties, and intend to sell the remaining
four properties over the next few years. No property will be sold, financed or
refinanced by the Registrant without the agreement of both General Partners.
Proceeds from any future sale, financing or refinancing of properties will not
be reinvested and may be distributed to the General Partners and Limited
Partners (sometimes referred to together herein as the "Partners"), so that the
Registrant will, in effect, be self-liquidating. If deemed necessary, the
Registrant may retain a portion of the proceeds from any sale, financing or
refinancing as capital reserves. As partial payment for properties sold, the
Registrant may receive purchase money obligations secured by mortgages or deeds
of trust. In such cases, the amount of such obligations will not be included
in Net Proceeds From Sale or Refinancing (distributable to the Partners) until
and only to the extent the obligations are realized in cash, sold or otherwise
liquidated.
Originally, the Registrant acquired six residential apartment complexes
(collectively, the "Properties"), either directly or through investments in
limited partnerships or joint ventures. Two of these, Trails at Meadowlakes
Apartments and Cypress Lakes Apartments were sold on July 20, 1995. As of
December 31, 1996, the Registrant had interests in the Properties as follows:
(1) Pelican Landing, a 204-unit apartment complex located in Clearwater,
Florida; (2) Village at the Foothills II, a 120-unit apartment complex located
in Tucson, Arizona; (3) River Hill Apartments, a 192-unit apartment complex
located in the Las Colinas area of Irving, Texas; (4) Shadowood Village, a
110-unit apartment complex located in Jacksonville, Florida. In September
1996, the Partnership signed a contract to sell River Hill Apartments, however,
in November 1996, the prospective buyer executed its right to terminate the
purchase agreement during the due diligence period. On January 24, 1997, the
Partnership signed a contract to sell the property to another institutional
investor. However, on March 17, 1997, the General Partners opted to allow the
prospective buyer to exercise its right to terminate the purchase agreement.
The General Partners have since resumed marketing River Hill Apartments for
sale. For further information on each of the Properties, see Item 2 of this
report and Note 4 to the Consolidated Financial Statements incorporated herein
by reference to the Partnership's Annual Report to Unitholders for the year
ended December 31, 1996, which is included as an exhibit under Item 14.
Competition
The Registrant's real property investments are subject to competition from
similar types of properties in the vicinities in which they are located and
such competition has increased since the Registrant's investment in the
Properties due principally to the addition of newly-constructed apartment
complexes offering increased residential and recreational amenities. The
Properties have also been subject to competition from condominiums and
single-family properties, especially during periods of low mortgage interest
rates. The Registrant competes with other real estate owners and developers in
the rental and leasing of its Properties by offering competitive rental rates
and, if necessary, leasing incentives. Such competition may affect the
occupancy levels and revenues of the Properties. The occupancy levels at the
Properties in Arizona and Florida reflect some seasonality, which is also
reflected in the markets. In some cases, the Registrant may compete with other
partnerships affiliated with either General Partner of the Registrant.
For a discussion of current market conditions in each of the areas where the
Partnership's Properties are located, see Item 2 below.
Employees
The Registrant has no employees. General services are performed by RI 3-4
Services, ConAm Services, ConAm Management Corporation ("ConAm Management"), an
affiliate of ConAm Services, as well as Service Data Corporation and First Data
Investor Services Group, both unaffiliated companies. The Registrant has
entered into management agreements pursuant to which ConAm Management provides
management services with respect to the Properties. First Data Investor
Services Group has been retained by the Registrant to provide all accounting
and investor communication functions, while Service Data Corporation provides
transfer agent services. See Item 13 for a further description of the service
and management agreements between the Registrant and affiliated entities.
Item 2. Properties
Below is a description of the Properties and a discussion of current market
conditions in each of the areas where the Properties are located. For
information on the purchase of the Properties, reference is made to Note 4 to
the Consolidated Financial Statements in the Partnership's Annual Report to
Unitholders for the year ended December 31, 1996, which is filed as an exhibit
under Item 14. Average occupancy rates and appraised values of the
Partnership's real estate investments are incorporated by reference to the
Partnership's Annual Report to Unitholders for the year ended December 31,
1996, which is filed as an exhibit under Item 14.
River Hill Apartments - Irving, Texas
Situated approximately 15 miles northwest of Dallas, this 192-unit apartment
complex is located in Las Colinas, a 12,220 acre master-planned community in
the city of Irving. Following a period of overbuilding during the 1980s,
limited new construction and sustained population growth have fueled a healthy
multifamily housing market in this area in recent years. The Las Colinas
submarket reported average occupancy of 95% as of the second quarter of 1996,
compared with 96% in third quarter of 1995. While average rental rates in the
overall Dallas market increased 5% from the second quarter of 1995 to the
second quarter of 1996, the Las Colinas submarket reported a 1% decrease during
the same period. Although approximately 1,020 units have been approved for
construction in the Las Colinas submarket, a two-year building moratorium
instituted in the market during 1995 remains in effect. Nonetheless,
competition for tenants remains strong as there are a number of competing
properties within River Hill's submarket.
One factor which could hinder the Partnership's ability to complete a sale of
River Hill and the ultimate sales value of the property are defects related to
the original design and construction of the property. The Partnership
favorably settled claims against several parties related to the soil condition
and defects in April 1991 and used the settlement proceeds to repair certain
aspects of the defective work, as previously disclosed. Nevertheless, the
presence of these original structural problems may have an adverse impact on
the Partnership's ability to complete the sale and the final selling price.
Shadowood Village - Jacksonville, Florida
Shadowood Village is a 110-unit luxury apartment complex located in an
oceanside residential area in Jacksonville in the Southeast submarket. The
area has experienced generally favorable market conditions in recent years,
with physical occupancy in the Southeast submarket reaching 95% in the second
quarter of 1996, largely unchanged from 94% a year earlier. Although rents have
remained relatively flat during the past year for the Southeast submarket, a
number of newer properties have implemented rent increases over the past year,
and in Shadowood Village's immediate area, rents rose 8% from the second
quarter of 1995 to the second quarter of 1996. These Favorable market
conditions have led to an increase in new multifamily construction, including
five complexes with more than 1,400 units proposed for the near future.
Furthermore, there were more total units permitted (1,597) for new construction
in the first half of 1996 than in any full year since 1991. Nonetheless, the
robust Jacksonville economy and strong population growth is expected to keep
pace with the new supply and it is expected that the apartment market will
remain relatively stable in 1997.
Village at the Foothills II - Tucson, Arizona
This 120-unit apartment community is situated near the prestigious "foothills"
section of Tucson. Village at the Foothills II competes with a number of
apartment complexes and condominium developments within the Tucson area. While
Tucson's economy began to slow in 1995 and 1996, construction of multifamily
properties has increased significantly. The addition of new properties is
beginning to put downward pressure on occupancy rates and limiting rental rate
increases. The increased competition has also led to the reemergence of rental
incentives. In addition, the multifamily market has been unfavorably impacted
by relatively low interest rates which has made home ownership a viable
alternative for renters. A local survey of metropolitan Tucson conducted in
the second quarter of 1996 showed an average occupancy rate of 88.9% among
multifamily properties, down from 91.1% at the same period in 1995. In the
Catalina Foothills submarket where Village at the Foothills II is located,
occupancy rates declined from 91% in the second quarter of 1995 to 84.5% in the
same period in 1996.
Pelican Landing - Clearwater, Florida
This 204-unit apartment complex is situated in southeast Clearwater in Pinellas
County. Overall occupancy in the Pinellas County was 96% in the third quarter
of 1996, compared with 97% in the third quarter of 1995, and rental rates
increased by approximately 6% during the same period. Pelican Landing is
located in the Gateway submarket which reported an average occupancy rate of
96% in the third quarter. In keeping with Pinellas County averages, rental
rates in the Gateway submarket also increased by 6% from 1995 to 1996. As much
of the surrounding area is already built up, new construction has remained
minimal with only 374 units permitted for the first nine months of 1996. It is
not expected that there will be significant new construction in the market in
the foreseeable future. The minimal new construction coupled with continuing
population growth are expected to result in sustained strength in market
conditions.
Item 3. Legal Proceedings
The Registrant is not subject to any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of the year ended December 31, 1996, no matter was
submitted to a vote of security holders through the solicitation of proxies or
otherwise.
PART II
Item 5. Market for the Partnership's Limited Partnership Units and Related
Security Holder Matters
As of December 31, 1996, the number of Unitholders of record was 6,985.
No established public trading market has developed for the Units, and it is not
anticipated that such a market will develop in the future.
Distributions of Net Cash Flow From Operations, when made, are paid on a
quarterly basis, with distributions generally occurring approximately 45 days
after the end of each quarter. Such distributions have been made primarily
from net operating income with respect to the Registrant's investment in the
Properties and from interest on short-term investments, and partially from
excess cash reserves. Information on cash distributions paid by the
Partnership for the past two years is incorporated by reference to the
Partnership's Annual Report to Unitholders for the year ended December 31,
1996, which is filed as an exhibit under Item 14. The level of future
distributions will be evaluated on a quarterly basis and will depend on the
Partnership's operating results and future cash needs. Reference is made to
Item 7 for a discussion of the General Partners' expectations for future cash
distributions.
Item 6. Selected Financial Data
Incorporated by reference to the Partnership's Annual Report to Unitholders for
the year ended December 31, 1996, which is filed as an exhibit under Item 14.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
At December 31, 1996, the Partnership had cash and cash equivalents of
$2,314,876, which were invested in unaffiliated money market funds, a decrease
of $121,480 from the balance at December 31, 1995. The decrease is
attributable to cash used for distributions, and additions to real estate
exceeding cash provided by operating activities. The Partnership expects
sufficient cash to be generated from operations to meet its current operating
expenses.
The Partnership had signed a contract, dated September 26, 1996, to sell River
Hill Apartments. On November 8, 1996, the prospective buyer executed its right
to terminate the purchase agreement during the due diligence period.
Subsequently, the Partnership resumed marketing the property for sale and
signed a contract dated January 24, 1997 to sell the property to an
unaffiliated institutional investor. However, on March 17, 1997, the General
Partners opted to allow the prospective buyer to exercise its right to
terminate the purchase agreement. The General Partners have since resumed
marketing River Hill Apartments for sale. Accordingly, River Hill Apartments
was reclassified on the consolidated balance sheet as of December 31, 1996, as
"Property held for disposition" at its net book value.
The General Partners declared a cash distribution of $3.75 per Unit for the
quarter ended December 31, 1996 which was paid to investors on February 5,
1997. The level of future distributions will be evaluated on a quarterly basis
and will depend on the Partnership's operating results and future cash needs.
Given the anticipated sale of River Hill Apartments and the corresponding
reduction in the Partnership's cash flow, the General Partners expect that the
level of cash distributions will be reduced to reflect cash flow from the
remaining three properties.
Given the performance of the Partnership's properties, and the improvement in
the real estate capital markets which has increased demand by potential buyers,
the General Partners have determined that it is in the best interest of the
Partnership to attempt to sell the remaining properties in an orderly manner
over the next few years. Assuming these efforts are successful, the General
Partners expect to distribute the sales proceeds and subsequently dissolve the
Partnership in 1998 or 1999. However, meeting this objective will be dependent
upon a variety of factors, many of which are not within the Partnership's
control. Consequently, there can be no assurance that any specific property or
all the properties can be sold, that particular prices will be achieved, or
that all the properties can be sold within this time frame.
Accounts payable and accrued expenses decreased from $181,438 at December 31,
1995 to $108,269 at December 31, 1996 primarily due to write-offs of holdback
deposits and legal fees related to the sale of Cypress Lakes, and a reduction
in the accrual of appraisal fees due to the sale of Cypress Lakes and Trails at
Meadowlakes in July 1995.
The General Partners continue to perform various improvements at the properties
including interior repairs at Village at the Foothills II, Pelican Landing and
Shadowood Village and other repairs to prepare vacant apartments for
reoccupancy. In addition, exterior painting at Pelican Landing commenced in
the first quarter of 1997 and is scheduled to be finished by the end of the
second quarter. The General Partners will monitor the need for additional
improvement work at the properties on an ongoing basis to keep them competitive
in their respective markets.
On March 15, 1996, based upon, among other things, the advice of legal counsel,
Skadden, Arps, Slate, Meagher & Flom, the General Partners adopted a resolution
that states among other things, if a Change of Control (as defined below)
occurs, the General Partners may distribute the Partnership's cash balances not
required for its ordinary course day-to-day operations. "Change in Control"
means any purchase or offer to purchase more than 10% of the Units that is not
approved in advance by the General Partners. In determining the amount of the
distribution, the General Partners may take into account all material factors.
In addition, the Partnership will not be obligated to make any distribution to
any partner and no partner will receive any distribution until the General
Partners have declared the distribution and established a record date and
distribution date for the distribution.
Results of Operations
1996 versus 1995
Partnership operations for the year ended December 31, 1996 resulted in net
income of $1,022,553, compared with net income of $3,259,624 for the year ended
December 31, 1995. The decline in net income is primarily attributable to the
$2,854,884 gain recognized on the sale of Trails at Meadowlakes and Cypress
Lakes. Excluding the gain, the Partnership generated income of $404,740 for
the year ended December 31, 1995. Net cash provided by operating activities
was $2,137,022 for the year ended December 31, 1996, compared to $2,363,323 in
fiscal 1995. The decrease is primarily due to the decrease in cash flow from
property operations resulting from the sale of Trails at Meadowlakes and
Cypress Lakes in July 1995.
Rental income for the year ended December 31, 1996 was $4,778,238, compared
with $6,351,434 for the year ended December 31, 1995. The decrease in 1996
reflects lower revenues primarily due to the sale of Trails at Meadowlakes and
Cypress Lakes, partially offset by increased rental income at three of the four
remaining properties. Interest and other income for the year ended December
31, 1996 was $148,102, compared with $245,330 in 1995. The decrease is
primarily due to the Partnership maintaining lower average cash balances in
1996.
Total expenses for the year ended December 31, 1996 were $3,903,787, compared
with $6,192,024 for 1995. The decrease in 1996 reflects a decrease in
depreciation, interest and property operating expenses and the absence of a
loss on write-down of real estate. Depreciation and property operating
expenses declined primarily as a result of the sale of Trails at Meadowlakes
and Cypress Lakes. There was no interest expense in 1996 due to the July 1995
pre-payment of the mortgage loan secured by Trails at Meadowlakes. Total
expenses were also higher in the 1995 period due to a $477,170 loss on the
write-down of River Hill Apartments. General and administrative expenses for
1996 decreased from 1995 as a result of decreases in legal fees and appraisal
fees, partially offset by higher partnership administrative expenses.
1995 versus 1994
Partnership operations for the year ended December 31, 1995 resulted in net
income of $3,259,624, compared with net income of $984,628 for the year ended
December 31, 1994. The increase in net income was attributable to the
$2,854,884 gain recognized on the sale of Trails at Meadowlakes and Cypress
Lakes, partially offset by a decrease in rental income and the $477,170 loss
recognized on the write-down of River Hill Apartments. Excluding the gain
recognized on the sale of the properties, income from operations was down for
1995 compared to 1994, primarily as a result of the sale of Trails at
Meadowlakes and Cypress Lakes, write-down of River Hill Apartments, and, to a
lesser extent, from an increase in repairs and maintenance expenses at three of
the remaining properties and higher insurance expense.
Rental income for the year ended December 31, 1995 was $6,351,434, compared
with $7,552,784 for the year ended December 31, 1994. The decrease in 1995
reflects lower revenues primarily due to the sale of Trails at Meadowlakes and
Cypress Lakes, partially offset by increased rental income at the four
remaining properties. Interest income for the year ended December 31, 1995 was
$245,330, compared with $79,860 in 1994. The increase in 1995 is due primarily
to increased available cash balances resulting from the suspension of cash
distributions beginning in the third quarter of 1994, and higher interest rates
in 1995.
Total expenses for the year ended December 31, 1995 were $6,192,024, compared
with $6,648,016 for 1994. The decrease in 1995 reflects a decrease in interest
expense, depreciation and property operating expenses. All three expense
categories declined primarily as a result of the sale of Trails at Meadowlakes
and Cypress Lakes. Partially offsetting the reduction in property operating
expenses due to the sales, was the $477,170 loss on the write-down of River
Hill Apartments and an increase in repairs and maintenance at three of the
remaining properties and insurance expense. General and administrative expenses
for 1995 increased from 1994 as a result of increases in audit and other
partnership administration expenses.
The average occupancy levels at each of the properties for the years ended
December 31, 1996, 1995 and 1994 were as follows:
Twelve Months Ended December 31,
Property 1996 1995 1994
Pelican Landing 97% 97% 97%
Village at the Foothills II 95% 95% 95%
River Hill Apartments 96% 96% 96%
Shadowood Village 95% 95% 96%
Item 8. Financial Statements and Supplementary Data
The financial statements are incorporated by reference to the Partnership's
Annual Report to Unitholders for the year ended December 31, 1996, which is
filed as an exhibit under Item 14. Supplementary Data is incorporated by
reference to pages F-1 and F-2 of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The Registrant has no officers or directors. RI 3-4 Services and ConAm
Services, the co-General Partners of the Registrant, jointly manage and control
the affairs of the Registrant and have general responsibility and authority in
all matters affecting its business.
RI 3-4 Services
RI 3-4 Services (formerly Hutton Real Estate Services VIII, Inc.) is a Delaware
corporation formed on October 29, 1982, and is an affiliate of Lehman Brothers
Inc. See the section captioned "Certain Matters Involving Affiliates of RI
3-4 Services" for a description of the Hutton Group's acquisition by Shearson
Lehman Brothers, Inc. ("Shearson") and the subsequent sale of certain of
Shearson's domestic retail brokerage and asset management businesses to Smith
Barney, Harris Upham & Co. Incorporated ("Smith Barney"), which was followed by
a change in name to RI 3-4 Services.
Certain officers and directors of RI 3-4 Services are now serving (or in the
past have served) as officers or directors of entities which act as general
partners of a number of real estate limited partnerships which have sought
protection under the provisions of the Federal Bankruptcy Code. The
partnerships which have filed bankruptcy petitions own real estate which has
been adversely affected by the economic conditions in the markets in which the
real estate is located and, consequently, the partnerships sought the
protection of the bankruptcy laws to protect the partnerships' assets from loss
through foreclosure.
The names and ages of, as well as the positions held by, the directors and
executive officers of RI 3-4 Services are set forth below. There are no family
relationships between any executive officers or directors.
Name Office
Paul L. Abbott Director, President, Chief Financial
Officer and Chief Executive Officer
Donald E. Petrow Vice President
David Sclafani Vice President
Paul L. Abbott, 51, is a Managing Director of Lehman Brothers. Mr. Abbott
joined Lehman Brothers in August 1988, and is responsible for investment
management of residential, commercial and retail real estate. Prior to joining
Lehman Brothers, Mr. Abbott was a real estate consultant and a senior officer
of a privately held company specializing in the syndication of private real
estate limited partnerships. From 1974 through 1983, Mr. Abbott was an officer
of two life insurance companies and a director of an insurance agency
subsidiary. Mr. Abbott received his formal education in the undergraduate and
graduate schools of Washington University in St. Louis.
Donald E. Petrow, 40, is a First Vice President of Lehman Brothers Inc. Since
March 1989, he has been responsible for the investment management and
restructuring of various investment portfolios, including but not limited to,
federal insured mortgages, tax exempt bonds, multifamily and commercial real
estate. From November 1981 to February 1989, Mr. Petrow, as Vice President of
Lehman, was involved in investment banking activities relating to partnership
finance and acquisitions. Prior to joining Lehman, Mr. Petrow was employed in
accounting and equipment leasing firms. Mr. Petrow holds a B.S. Degree in
accounting from Saint Peters College and an M.B.A in Finance from Pace
University.
David Sclafani, 24, is an Associate of Lehman Brothers Inc. Mr. Sclafani
joined Lehman Brothers in March 1996 and is responsible for the investment
management and restructuring of various limited partnerships holding multi-
family real estate. Prior to joining Lehman Brothers, Mr. Sclafani worked in
the real estate finance department of a major foreign bank managing performing
and non-performing loans. Mr. Sclafani holds a B.S. Degree in Finance from
Siena College in Loudonville, N.Y.
ConAm Services
ConAm Services is a California limited partnership organized on August 30,
1982. The sole general partner of ConAm Services is Continental American
Development, Inc. ("ConAm Development"). The names and ages of, as well as the
positions held by, the directors and executive officers of ConAm Development
are set forth below. There are no family relationships between any executive
officers or directors.
Name Office
Daniel J. Epstein President and Director
E. Scott Dupree Vice President/Director
Robert J. Svatos Vice President/Director
Ralph W. Tilley Vice President
J. Bradley Forrester Vice President
Daniel J. Epstein, 57, has been the President and a Director of ConAm
Development and ConAm Management (or its predecessor firm) and a general
partner of Continental American Properties, Ltd. ("ConAm"), an affiliate of
ConAm Services, since their inception. Prior to that time Mr. Epstein was Vice
President and a Director of American Housing Guild, which he joined in 1969. At
American Housing Guild, he was responsible for the formation of the
Multi-Family Division and directed its development and property management
activities. Mr. Epstein holds a Bachelor of Science degree in Engineering from
the University of Southern California.
E. Scott Dupree, 46, is a Vice President and general counsel of ConAm
Management responsible for negotiation, documentation, review and closing of
acquisition, sale and financing proposals. Mr. Dupree also acts as principal
legal advisor on general legal matters ranging from issues and contracts
involving the management company to supervision of litigation and employment
issues. Prior to joining ConAm Management in 1985, he was corporate counsel to
Trusthouse Forte, Inc., a major international hotel and restaurant corporation.
Mr. Dupree holds a B.A. from United States International University and a Juris
Doctorate degree from the University of San Diego.
Robert J. Svatos, 38, is a Vice President and Chief Financial Officer of ConAm
Management, and has been with the company since 1988. His responsibilities
include the accounting, treasury and data processing functions of the
organization. Mr. Svatos is part of the firm's due diligence team, analyzing a
broad range of projects for ConAm Management's fee client base. Prior to
joining ConAm Management, he was the Chief Financial Officer for AmeriStar
Financial Corporation, a nationwide mortgage banking firm. Mr. Svatos holds an
M.B.A. in Finance from the University of San Diego and a Bachelor of Science
degree in Accounting from the University of Illinois. Mr. Svatos is a
Certified Public Accountant.
Ralph W. Tilley, 42, is a Vice President and Treasurer of ConAm Management. He
is responsible for the financial aspects of syndications and acquisitions, and
ConAm Management's asset management portfolio and risk management activities.
Prior to joining ConAm Management in 1980, he was a senior accountant with KPMG
Peat Marwick, specializing in real estate. He holds a Bachelor of Science
degree in Accounting from San Diego State University and is a Certified Public
Accountant.
J. Bradley Forrester, 39, currently serves as a Senior Vice President of ConAm
Management Corporation. He is responsible for property acquisition and
disposition on a nationwide basis. Additionally, he is involved with the
company's real estate development activities. Prior to joining ConAm, Mr.
Forrester served as Senior Vice President - Commercial Real Estate for First
Nationwide Bank in San Francisco, where he was responsible for a $2 billion
problem asset portfolio including bank-owned real estate and non- performing
commercial real estate loans. His past experience includes significant
involvement in real estate development and finance, property acquisitions and
dispositions and owner's representation matters. Prior to entering the real
estate profession, he worked for KPMG Peat Marwick in Dallas, Texas. Mr.
Forrester holds a Bachelor of Science degree in Accounting from Louisiana State
University. He received his CPA certification in the State of Texas.
Certain Matters Involving Affiliates of RI 3-4 Services
On July 31, 1993, Shearson sold certain of its domestic retail brokerage and
asset management businesses to Smith Barney. Subsequent to this sale, Shearson
changed its name to "Lehman Brothers Inc." The transaction did not affect the
ownership of the Partnership's General Partners. However, the assets acquired
by Smith Barney included the name "Hutton." Consequently, the Hutton Real
Estate Services general partner changed its name to "RI 3-4 Real Estate
Services, Inc." and the Hutton Group changed its name to "LB I Group Inc." to
delete any references to "Hutton."
Item 11. Executive Compensation
Neither of the General Partners nor any of their directors or executive
officers received any compensation from the Registrant. See Item 13 of this
report for a description of certain transactions of the General Partners and
their affiliates with the Registrant.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of December 31, 1996, no person was known by the Registrant to be the
beneficial owner of more than five percent of the Units of the Registrant.
Daniel J. Epstein, President and Director of ConAm Services, owned twenty Units
as of December 31, 1996. No other directors or executive officers of the
General Partners own any Units.
Item 13. Certain Relationships and Related Transactions
RI 3-4 Services and ConAm Services each received $106,758.50 as its allocable
share of Net Cash From Operations with respect to the year ended December 31,
1996, pursuant to the Amended and Restated Certificate and Agreement of Limited
Partnership of the Registrant. Pursuant to the Amended and Restated
Certificate and Agreement of Limited Partnership of the Registrant, for the
year ended December 31, 1996, $213,517 of the Registrant's net income was
allocated to the General Partners ($106,758.50 to RI 3-4 Services and
$106,758.50 to ConAm Services). For a description of the share of Net Cash
From Operations and the allocation of income and loss to which the General
Partners are entitled, reference is made to the material contained on pages 48
through 51 of the Prospectus of the Registrant dated January 13, 1984 (the
"Prospectus"), contained in Amendment No. 1 to Registrant's Registration
Statement No. 2-84863, filed January 13, 1984, under the section captioned
"Distributions and Allocations," which section is incorporated herein by
reference thereto.
The Registrant has entered into property management agreements with ConAm
Management pursuant to which ConAm Management has assumed direct responsibility
for day-to-day management of the Properties. It is the responsibility of ConAm
Management to select resident managers and monitor their performance. ConAm
Management's services also include the supervision of leasing, rent collection,
maintenance, budgeting, employment of personnel, payment of operating expenses,
and related services. For such services, ConAm Management is entitled to
receive a management fee as described on pages 32 and 33 of the Prospectus
under the caption "Investment Objectives and Policies - Management of
Properties," which description is herein incorporated by reference. A summary
of property management fees earned by ConAm Management during the past three
fiscal years is incorporated by reference to Note 6 to the Consolidated
Financial Statements included in the Partnership's Annual Report to Unitholders
for the year ended December 31, 1996, which is filed as an exhibit under Item
14.
Pursuant to Section 12(g) of Registrant's Amended and Restated Certificate and
Agreement of Limited Partnership, the General Partners and their affiliates may
be reimbursed by the Registrant for certain of their costs as described on page
16 of the Prospectus, which description is incorporated herein by reference.
First Data Investor Services Group provides partnership accounting and investor
relations services for the Registrant. Prior to May 1993, these services were
provided by an affiliate of a general partner. The Registrant's transfer agent
and certain tax reporting services are provided by Service Data Corporation.
Both First Data Investor Services Group and Service Data Corporation are
unaffiliated companies. A summary of amounts paid to the General Partners or
their affiliates during the past three years is incorporated by reference to
Note 6 to the Consolidated Financial Statements, included in the Partnership's
Annual Report to Unitholders for the year ended December 31, 1996, which is
filed as an exhibit under Item 14.
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K
(a)(1) Financial Statements:
Page
Consolidated Balance Sheets - December 31, 1996 and 1995 (1)
Consolidated Statements of Partners' Capital (Deficit) - For the
years ended December 31, 1996, 1995 and 1994 (1)
Consolidated Statements of Operations - For the years ended
December 31, 1996, 1995 and 1994 (1)
Consolidated Statements of Cash Flows - For the years ended
December 31, 1996, 1995 and 1994 (1)
Notes to the Consolidated Financial Statements (1)
Report of Independent Accountants (1)
(a)(2) Financial Statement Schedule:
Schedule III - Real Estate Investments and Property Held for
Disposition F-1
Report of Independent Accountants on Schedule III F-2
(1) Incorporated by reference to the Partnership's Annual Report to
Unitholders for the year ended December 31, 1996, filed as an exhibit
under Item 14.
(a)(3) Exhibits:
(3) Certificate and Agreement of Limited Partnership (included as,
and incorporated herein by reference to, Exhibit A to the Prospectus
of Registrant dated January 13, 1984 (the "Prospectus"), contained
in Amendment No. 1 to Registration Statement No. 2-84863 of
Registrant, filed January 13, 1984 (the "1984 Registration
Statement")).
(4) Subscription Agreement and Signature Page (included as, and
incorporated herein by reference to, Exhibit 3.1 to the Prospectus).
(10)(A) Purchase Agreement relating to Pelican Landing (formerly
Feather Sound Apartments), between the Registrant and Feather Sound,
Inc., and the exhibits thereto (included as, and incorporated herein
by reference to, Exhibit (10)(B) to the 1984 Annual Report).
(B) Purchase Agreement relating to River Hill Apartments
(formerly Oxbow Ridge I), between the Registrant and Tres Titan
Investors, and the exhibits thereto (included as, and incorporated
herein by reference to, Exhibit (10)(D) to the 1984 Annual Report).
(C) Purchase Agreement relating to Village at the Foothills II
(formerly Ina Village Apartments), between the Registrant and Epoch
Properties, Inc. and the exhibits thereto (included as, and
incorporated herein by reference to, Exhibit (10)(E) to the 1984
Annual Report).
(D) Documents relating to Shadowood Village (included as, and
incorporated herein by reference to, Exhibit (10)(A) to Registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1985 (the "1985 Quarterly Report" (Commission File No. 0- 13329)).
(E) Settlement Agreement by and among the Managing Joint
Venturers and the Epoch Joint Venturers dated July 1, 1992 (included
as, and incorporated herein by reference to Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1992 (Commission File No. 0-13329)).
(F) Amended and Restated Agreement of Limited Partnership of
Village at the Foothills II Joint Venture Limited Partnership dated
as of July 1, 1992 (included as, and incorporated herein by
reference to Exhibit 10.2 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1992 (Commission File
No. 0- 13329)).
(G) Certificate and Agreement of Limited Partnership of River
Hill Apartments, Ltd (included as, and incorporated herein by
reference to Exhibit 10(I) to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1991 (Commission File
No. 0-13329)).
(H) Amended and Restated Agreement of Limited Partnership of
Shadowood Village, Ltd., dated as of July 1, 1992 (included as, and
incorporated herein by reference to Exhibit 10.2 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1992 (Commission File No. 0-13329)).
(I) Property Management Agreement between Hutton/ConAm Realty
Investors 4 and ConAm Management Corporation for the Pelican Landing
property (included as, and incorporated herein by reference to
Exhibit 10-M to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993 (Commission File No. 0- 13329)).
(J) Property Management Agreement between Hutton/ConAm Realty
Investors 4 and ConAm Management Corporation for the River Hill
property (included as, and incorporated herein by reference to
Exhibit 10-N to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993 (Commission File No. 0-13329)).
(K) Property Management Agreements between Hutton/ConAm Realty
Investors 4 and ConAm Management Corporation for the Shadowood
Village property (included as, and incorporated herein by reference
to Exhibit 10-O to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1993 (Commission File No. 0- 13329)).
(L) Property Management Agreement between Hutton/ConAm Realty
Investors 4 and ConAm Management Corporation for the Village at the
Foothills II property (included as, and incorporated herein by
reference to Exhibit 10-Q to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1993 (Commission File No.
0-13329)).
(13) Annual Report to Unitholders for the year ended December 31, 1996.
(21) List of Subsidiaries, Joint Ventures or Limited Partnerships
(included as, and incorporated herein by reference to Exhibit 22 of
the Registrant's Annual Report on Form 10-K filed March 27, 1992
(Commission File No. 0-13329)).
(27) Financial Data Schedule.
(99) Portions of the Prospectus of Registrant dated January 13, 1984
(included as, and incorporated herein by reference to Exhibit 28 to
the Registrant's 1988 Annual Report on Form 10-K for the fiscal year
ended December 31, 1988 (Commission File No. 0-13329)).
(b) Reports on Form 8-K:
No reports on Form 8-K were filed in the fourth quarter of 1996.
SIGNATURES
------------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: March 26, 1997
HUTTON/CONAM REALTY INVESTORS 4
BY: RI 3-4 Real Estate Services Inc.
General Partner
BY: /s/Paul L. Abbott
Name: Paul L. Abbott
Title: Director, President,
Chief Executive Officer
and Chief Financial Officer
BY: ConAm Property Services IV, Ltd.
General Partner
BY: Continental American Development, Inc.
General Partner
BY: /s/ Daniel J. Epstein
Name: Daniel J. Epstein
Title: President, Director and
Principal Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capabilities and on the dates indicated.
RI 3-4 REAL ESTATE SERVICES INC.
A General Partner
Date: March 26, 1997
BY: /S/ Paul L. Abbott
Paul L. Abbott
Director, President,
Chief Executive Officer
and Chief Financial Officer
Date: March 26, 1997
BY: /S/ Donald E. Petrow
Donald E. Petrow
Vice President
Date: March 26, 1997
BY: /S/ David Sclafani
David Sclafani
Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
CONAM PROPERTY SERVICES IV, LTD.
A General Partner
By: Continental American Development, Inc.
General Partner
Date: March 26, 1997
BY: /S/ Daniel J. Epstein
Daniel J. Epstein
Director and President
Date: March 26, 1997
BY: /S/ E. Scott Dupree
E. Scott Dupree
Vice President/Director
Date: March 26, 1997
BY: /S/ Robert J. Svatos
Robert J. Svatos
Vice President/Director
Date: March 26, 1997
BY: /S/ Ralph W. Tilley
Ralph W. Tilley
Vice President
Date: March 26, 1997
BY: /S/ J. Bradley Forrester
J. Bradley Forrester
Vice President
Hutton/ConAm Realty Investors 4
Annual Report 1996
Exhibit 13
Hutton/ConAm Realty Investors 4 is a California limited
partnership formed in 1984 to acquire, operate and hold
for investment multifamily housing properties. At
December 31, 1996, the Partnership's portfolio
consisted of four apartment properties located in
Arizona, Texas and Florida. Provided below is a
comparison of average occupancy levels for the years
ended December 31, 1996 and 1995.
Average Occupancy
Property Location 1996 1995
Pelican Landing Clearwater, Florida 97% 97%
River Hill Apartments Irving, Texas 96% 96%
Shadowood Village Jacksonville, Florida 95% 95%
Village at the Foothills II Tucson, Arizona 95% 95%
Administrative Inquiries Performance Inquiries/Form 10-Ks
Address Changes/Transfers First Data Investor Services Group
Service Data Corporation P.O. Box 1527
2424 South 130th Circle Boston, Massachusetts 02104-1527
Omaha, Nebraska 68144-2596 Attn: Financial Communications
800-223-3464 800-223-3464
Message to Investors
----------------------
Presented for your review is the 1996 Annual Report for Hutton/ConAm Realty
Investors 4. In this report, we review Partnership operations and discuss
general market conditions affecting the Partnership's properties. We have also
included a performance summary which addresses operating results at each of the
properties and financial highlights for the year.
Property Update
The Partnership signed a contract dated January 24, 1997 to sell River Hill
Apartments to an unaffiliated institutional investor. However, on March 17,
1997, the General Partners opted to allow the prospective buyer to exercise its
right to terminate the purchase agreement. The General Partners have since
resumed marketing River Hill Apartments for sale.
Operations Overview
Multi-family real estate continued to perform well during 1996, with property
values and apartment rents increasing in many areas of the country. In
particular, Jacksonville and Clearwater were among the strongest multifamily
housing markets in the country. The improving conditions prompted a rise in
new construction in the markets where the Partnership owns properties, causing
a slowdown in leasing activity towards the end of the year. In Tucson, market
conditions were also impacted by new construction and the decision of many
renters to purchase homes. This increased the use of rent specials to attract
new tenants at many apartment properties, including Village at the Foothills
II. Nonetheless, all of the Partnership's properties maintained average
occupancy levels for the year of at least 95%, and the Partnership's rental
income for the four properties increased by 3.1% from the previous year. It is
expected that the competitive conditions will persist in each market in 1997,
but continued economic growth and a slowdown in construction should prevent
these areas from becoming significantly overbuilt.
Cash Distributions
The Partnership paid cash distributions totaling $15 per Unit for the year
ended December 31, 1996, including the fourth quarter distribution of $3.75 per
Unit, which was credited to your brokerage account or sent directly to you on
February 5, 1997. Since inception, the Partnership has paid distributions
totaling $333.01 per original $500 Unit, including $94 per Unit in return of
capital payments. The level of future distributions will be evaluated on a
quarterly basis and will depend on the Partnership's operating results and
future cash needs. Given the anticipated sale of River Hill Apartments and the
corresponding reduction in the Partnership's cash flow, we expect that the
level of cash distributions will be reduced to reflect cash flow from the
remaining three properties.
General Information
As you are probably aware, several third parties have commenced partial tender
offers to purchase Units of the Partnership at grossly inadequate prices which
are substantially below the Partnership's Net Asset Value. In response, we
recommended that limited partners reject these offers because they do not
reflect the underlying value of the Partnership's assets. To date, holders of
over 98% of the outstanding Units agreed that these offers were inadequate,
rejected the offers and did not tender their Units. Please be assured that if
any additional tender offers are made for your Units, we will make every effort
to provide you with our position regarding such offer on a timely basis.
Summary
We will continue to explore opportunities to sell the Partnership's remaining
properties within the next few years. Assuming these efforts are successful,
we would expect to distribute the sales proceeds and subsequently dissolve the
Partnership in 1998 or 1999. However, meeting this objective will be dependent
upon a variety of factors, many of which are not within the Partnership's
control. Consequently, there can be no assurance that any specific property or
all the properties can be sold, or that certain prices will be achieved, within
this time frame. In the interim, we will seek to maximize the performance of
the properties and further improve their marketability and appeal. We will
keep you apprised of significant developments affecting your investment in
future reports.
Very truly yours,
/s/ Paul L. Abbott /s/ Daniel J. Epstein
Paul L. Abbott Daniel J. Epstein
President President
RI 3-4 Real Estate Services Inc. Continental American Development, Inc.
General Partner of ConAm Property
Services IV, Ltd.
March 26, 1997
Performance Summary
---------------------
Pelican Landing - Clearwater Florida
This 204-unit apartment complex maintained strong operating results in 1996,
with average occupancy of 97%, unchanged for the third consecutive year, and a
2% increase in rental income from 1995. These favorable operating results
reflect the continued strength of the Clearwater apartment market. Overall
occupancy in Pinellas County was 96% in the third quarter of 1996, compared
with 97% a year earlier, and rental rates increased by approximately 6% during
the same period. In keeping with Pinellas County averages, rental rates in
Pelican Landing's submarket also increased by 6% from 1995 to 1996. New
construction has remained minimal with only 374 units permitted for the first
nine months of 1996, and it is not expected that there will be significant new
construction in the foreseeable future. The minimal new construction coupled
with an increasing population are expected to result in continuing strong
market conditions.
River Hill Apartments - Irving, Texas
River Hill Apartments reported stable occupancy of 96% in 1996, unchanged for
the fourth consecutive year. Rental rate increases were instituted on renewal
units during the year, bringing about a 6% increase in rental income from 1995
to 1996. River Hill is located in the Las Colinas submarket of Irving, which
reported average occupancy of 95% as of the second quarter of 1996, compared
with 96% in third quarter of 1995. While average rental rates in the overall
Dallas market increased 5% from the second quarter of 1995 to the second
quarter of 1996, the Las Colinas submarket reported a 1% decrease during the
same period. Although approximately 1,020 units have been approved for
construction in the Las Colinas submarket, a two-year building moratorium
instituted in the market during 1995 remains in effect. Nonetheless,
competition for tenants remains strong as there are a number of competing
properties within River Hill's submarket.
Shadowood Village - Jacksonville, Florida
Shadowood Village is a 110-unit luxury apartment complex located in an
oceanside residential area in Jacksonville. The property reported an average
occupancy level of 95% in 1996, unchanged from 1995, and a 3.8% increase in
rental income from the prior year. Property improvements for the year included
carpet replacement, irrigation repairs and other improvements to maintain the
property's competitive position.
Favorable market conditions in the Jacksonville area have led to an increase in
new multifamily construction, including five complexes with more than 1,400
units proposed for the near future. Furthermore, there were more total units
permitted (1,597) for new construction in the first half of 1996 than in any
full year since 1991. Nonetheless, the robust Jacksonville economy and strong
population growth is expected to keep pace with the new supply and it is
expected that the apartment market will remain relatively stable in 1997.
Village at the Foothills II - Tucson, Arizona
This 120-unit apartment community is situated near the prestigious "foothills"
section of Tucson. Village at the Foothills II competes with a number of
apartment complexes and condominium developments within the Tucson area. The
property reported an average occupancy of 95% in 1996, unchanged from 1995.
While Tucson's economy began to slow in 1995 and 1996, construction of
multifamily properties has increased significantly. The addition of new
properties is beginning to put downward pressure on occupancy rates and
limiting rental rate increases. The increased competition has also led to the
reemergence of rental incentives. In addition, the multifamily market has been
unfavorably impacted by relatively low interest rates which has made home
ownership a viable alternative for renters. A local survey of metropolitan
Tucson conducted in the second quarter of 1996 showed an average occupancy rate
of 88.9% among multifamily properties, down from 91.1% at the same period in
1995. In the Catalina Foothills submarket where Village at the Foothills II is
located, occupancy rates declined from 91% in the second quarter of 1995 to
84.5% in the same period in 1996. Financial Highlights
Selected Financial Data
For the periods ended December 31, 1996 1995 1994 1993 1992
Dollars in thousands,
except for per unit data
Total Income $ 4,926 $ 6,597 $ 7,633 $ 7,299 $ 7,020
Gain on Sale of Properties - 2,855 - - -
Net Income 1,023 3,260 985 724 719
Net Cash Provided by
Operating Activities 2,137 2,363 3,034 2,778 2,706
Long-term Obligations at Year End - - 5,051 5,091 5,127
Total Assets at Year End 26,010 27,247 44,686 45,646 47,463
Net Income per
Limited Partnership Unit* 6.32 22.28 2.12 2.30 1.31
Distributions per
Limited Partnership Unit* 15.00 11.25 9.00 18.00 17.00
Special Distributions per
Limited Partnership Unit* - 111.25 - - -
* 128,110 units outstanding
- - Total income decreased in 1996 primarily due to the July 1995 sale of Trails
at Meadowlakes and Cypress Lakes. This was partially offset by increased
rental income at the three of the four remaining properties.
- - The decline in net income in 1996 is primarily attributable to the $2,854,884
gain recognized on the sale of Trails at Meadowlakes and Cypress Lakes in
1995. Excluding the gain, the Partnership generated income from operations
of $404,740 for the year ended December 31, 1995, as compared to $1,022,553
in 1996.
Cash Distributions
Per Limited Partnership Unit
1996 1995
Special Distributions* $ _ $ 111.25
First Quarter 3.75 _
Second Quarter 3.75 3.75
Third Quarter 3.75 3.75
Fourth Quarter 3.75 3.75
Total $ 15.00 $ 122.50
*On August 22, 1995, the Partnership paid a special cash
distribution totaling $111.25 per Unit, reflecting net proceeds
received from the sale of Trails at Meadowlakes and Cypress Lakes
of $94 per Unit and excess cash reserves of $17.25 per Unit which
the General Partners determined could be distributed since the
loan secured by Trails at Meadowlakes was paid off.
Consolidated Balance Sheets At December 31, At December 31,
1996 1995
Assets
Property:
Land $ 5,627,763 $ 7,526,126
Building and improvements 20,448,021 26,226,602
26,075,784 33,752,728
Less accumulated depreciation (9,754,730) (8,958,549)
16,321,054 24,794,179
Property held for disposition 7,358,300 -
Cash and cash equivalents 2,314,876 2,436,356
Other assets 15,370 16,206
Total Assets $26,009,600 $27,246,741
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 108,269 $ 181,438
Distribution payable 533,792 587,171
Due to general partners and affiliates 20,443 19,602
Security deposits payable 144,220 143,040
Total Liabilities 806,724 931,251
Partners' Capital:
General Partners - -
Limited Partners 25,202,876 26,315,490
Total Partners' Capital 25,202,876 26,315,490
Total Liabilities and Partners' Capital $26,009,600 $27,246,741
Consolidated Statement of Partners' Capital (Deficit)
For the years ended December 31, 1996, 1995 and 1994
General Limited
Partners Partners Total
Balance at December 31, 1993 $(584,636) $ 40,036,129 $ 39,451,493
Net Income 712,746 271,882 984,628
Cash distributions (128,110) (1,152,990) (1,281,100)
Balance at December 31, 1994 - 39,155,021 39,155,021
Net Income 405,680 2,853,944 3,259,624
Cash distributions (405,680) (15,693,475) (16,099,155)
Balance at December 31, 1995 - 26,315,490 26,315,490
Net Income 213,517 809,036 1,022,553
Cash distributions (213,517) (1,921,650) (2,135,167)
Balance at December 31, 1996 $ - $ 25,202,876 $ 25,202,876
Consolidated Statements of Operations
For the years ended December 31, 1996 1995 1994
Income
Rental $4,778,238 $6,351,434 $7,552,784
Interest and other 148,102 245,330 79,860
Total Income 4,926,340 6,596,764 7,632,644
Expenses
Property operating 2,545,471 3,630,788 3,927,435
Loss on write-down of real estate - 477,170 -
Depreciation 1,184,781 1,610,725 2,034,770
Interest - 283,556 513,636
General and administrative 173,535 189,785 172,175
Total Expenses 3,903,787 6,192,024 6,648,016
Income from operations 1,022,553 404,740 984,628
Gain on sale of properties - 2,854,884 -
Net Income $1,022,553 $3,259,624 $ 984,628
Net Income Allocated:
To the General Partners $ 213,517 $ 405,680 $ 712,746
To the Limited Partners 809,036 2,853,944 271,882
$1,022,553 $3,259,624 $ 984,628
Per limited partnership unit
(128,110 outstanding)
Income from operations $ 6.32 $ 2.00 $ 2.12
Gain on sale - 20.28 -
Net Income $ 6.32 $ 22.28 $ 2.12
Consolidated Statements of Cash Flows
For the years ended December 31, 1996 1995 1994
Cash Flows From Operating Activities:
Net Income $ 1,022,553 $ 3,259,624 $ 984,628
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 1,184,781 1,610,725 2,034,770
Loss on write-down of real estate - 477,170 -
Gain on sale of properties - (2,854,884) _
Increase (decrease) in cash arising
from changes in operating assets and
liabilities:
Other assets 836 6,321 (2,205)
Accounts payable and accrued expenses (73,169) 21,651 1,041
Security deposits payable 1,180 (145,295) 15,144
Due to affiliates 841 (11,989) 208
Net cash provided by operating activities 2,137,022 2,363,323 3,033,586
Cash Flows From Investing Activities:
Net proceeds from sale of properties - 17,551,351 -
Additions to real estate (69,956) (149,631) (39,087)
Net cash provided by (used for) investing
activities (69,956) 17,401,720 (39,087)
Cash Flows From Financing Activities:
Mortgage principal payments - (5,051,086) (39,742)
Distributions (2,188,546) (15,511,984) (1,921,650)
Net cash used for financing activities (2,188,546) (20,563,070) (1,961,392)
Net increase (decrease) in cash and cash
equivalents (121,480) (798,027) 1,033,107
Cash and cash equivalents, beginning of
period 2,436,356 3,234,383 2,201,276
Cash and cash equivalents, end of period $ 2,314,876 $ 2,436,356 $ 3,234,383
Supplemental Disclosure of Cash Flow
Information:
Cash paid during the period for interest $ - $ 283,556 $ 513,636
Notes to the Consolidated Financial Statements
December 31, 1996, 1995 and 1994
1. Organization
Hutton/ConAm Realty Investors 4 (the "Partnership") was organized as a limited
partnership under the laws of the State of California pursuant to a Certificate
and Agreement of Limited Partnership (the "Partnership Agreement") dated May
10, 1984. The Partnership was formed for the purpose of acquiring and operating
certain types of residential real estate. The general partners of the
Partnership are RI 3-4 Real Estate Services, Inc., an affiliate of Lehman
Brothers (see below), and ConAm Property Services IV, Ltd. ("ConAm"), an
affiliate of Continental American Properties, Ltd (the "General Partners"). The
Partnership will continue until December 31, 2010 unless sooner terminated
pursuant to the terms of the Partnership Agreement.
On July 31, 1993, Shearson Lehman Brothers Inc. sold certain of its domestic
retail brokerage and asset management business to Smith Barney, Harris Upham &
Co. Incorporated ("Smith Barney"). Subsequent to the sale, Shearson Lehman
Brothers Inc. changed its name to Lehman Brothers Inc. ("Lehman Brothers"). The
transaction did not affect the ownership of the General Partners. However, the
assets acquired by Smith Barney included the name "Hutton". Consequently,
effective October 8, 1993, the Hutton Real Estate Services VIII, Inc. General
Partner changed its name to RI 3-4 Real Estate Services, Inc.
On March 15, 1996, based upon, among other things, the advice of legal counsel,
Skadden, Arps, Slate, Meagher & Flom, the General Partners adopted a resolution
that states, among other things, if Change of Control (as defined below)
occurs, the General Partners may distribute the Partnership's cash balances not
required for its ordinary course day-to-day operations. "Change of Control"
means any purchase or offer to purchase more than 10% of the Units that is not
approved in advance by the General Partners. In determining the amount of the
distribution, the General Partners may take into account all material factors.
In addition, the Partnership will not be obligated to make any distribution to
any partner and no partner will be entitled to receive any distribution until
the General Partners have declared the distribution and established a record
date and distribution.
2. Significant Accounting Policies
Financial Statements - The consolidated financial statements include the
accounts of the Partnership and its affiliated ventures. The effect of
transactions between the Partnership and its ventures have been eliminated in
consolidation.
Real Estate Investments - Real estate investments are recorded at the lower of
cost, less accumulated depreciation or fair value. Cost includes the initial
purchase price of the property, legal fees, acquisition and closing costs.
Leases are accounted for under the operating method. Under this method,
revenue is recognized as rentals are earned and expenses (including
depreciation) are charged to operations when incurred. Leases are generally for
terms of one year or less.
Depreciation is computed using the straight-line method based upon the
estimated useful lives of the properties. Maintenance and repairs are charged
to operations as incurred. Significant betterments and improvements are
capitalized and depreciated over their estimated useful lives.
For assets sold or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is
reflected in income for the period.
Accounting for Impairment - In March 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of" ("FAS 121"), which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. FAS 121 also addresses the accounting
for long- lived assets that are expected to be disposed of. Assets held for
disposition are recorded at the lessor of carrying value or fair market value
less costs to sell. The Partnership adopted FAS 121 in the fourth quarter of
1995.
Property Held for Disposition - During the fourth quarter of 1996 River Hill
Apartments was reclassified to "Property held for disposition" at its net book
value. Accordingly, River Hill Apartments will no longer be depreciated.
Offering Costs - Costs relating to the sale of limited partnership units were
deferred during the offering period and charged to the limited partners'
capital accounts upon the consummation of the public offering.
Income Taxes - No provision for income taxes has been made in the financial
statements since income, losses and tax credits are passed through to the
individual partners.
Cash and Cash Equivalents - Cash equivalents consist of short-term highly
liquid investments which have maturities of three months or less from the date
of issuance. The carrying amount approximates fair value because of the short
maturity of these instruments. Cash and cash equivalents include security
deposits of $91,641 and $87,579 at December 31, 1996 and 1995 respectively,
restricted under certain state statutes.
Concentration of Credit Risk - Financial instruments which potentially subject
the Partnership to a concentration of credit risk principally consist of cash
and cash equivalents in excess of the financial institutions' insurance limits.
The Partnership invests available cash with high credit quality financial
institutions.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Reclassifications - Certain prior year amounts have been reclassed to conform
to the current year's presentation.
3. The Partnership Agreement
The Partnership Agreement provides that net cash from operations, as defined,
will be distributed quarterly, 90% to the limited partners and 10% to the
General Partners.
Net loss and all depreciation for any fiscal year will be allocated 99% to the
limited partners and 1% to the General Partners.
Net income before depreciation will be allocated as follows:
(a) To the extent that net income from operations before depreciation does not
exceed the amount of net cash from operations distributable to the partners
with respect to such fiscal year, net income from operations before
depreciation shall be allocated among the partners, pro rata in accordance with
the amount of net cash from operations distributable to each partner with
respect to such fiscal year to the extent thereof; and
(b) To the extent that net income from operations before depreciation exceeds
the amount of net cash from operations distributable to the partners with
respect to such fiscal year, such excess shall be allocated (1) first, 100% to
the General Partners, pro rata, in an amount equal to the excess, if any, of
the General Partners' deficits, if any, in their capital accounts, over an
amount equal to 1% of the aggregate capital contributions to the Partnership as
reduced by the amount of the General Partners' capital contributions, and (2)
second, 99% to the limited partners and 1% to the General Partners.
Net proceeds from sales or refinancing will be distributed 100% to the limited
partners until each limited partner has received an amount equal to his
adjusted capital value (as defined) and an annual, cumulative 7% return
thereon. The balance, if any, will be distributed 85% to the limited partners
and 15% to the General Partners.
4. Real Estate Investments
Real estate investments consist of four residential apartment complexes
acquired either directly or through investments in joint ventures and limited
partnerships as follows:
Apartment Date Purchase
Property Name Units Location Acquired Price
Pelican Landing 204 Clearwater, FL 3/28/85 $ 12,179,329
Village at the
Foothills II 120 Tucson, AZ 5/30/85 7,216,400
River Hill
Apartments 192 Irving, TX 6/12/85 11,488,015
Shadowood Village 110 Jacksonville, FL 7/3/86 5,400,000
Pelican Landing Apartments was acquired directly by the Partnership. Village
at the Foothills II was acquired through a joint venture with an unaffiliated
developer and River Hill Apartments and Shadowood Village were acquired through
limited partnerships with unaffiliated developers. To each limited partnership
and joint venture, the Partnership assigned its rights to acquire the above
properties and contributed cash equal to the purchase price of the properties.
The Partnership's partners did not make initial capital contributions to these
limited partnerships and joint ventures.
On July 20, 1995, the Partnership sold Trails at Meadowlakes and Cypress Lakes
(the "Properties"). Trails at Meadowlakes and Cypress Lakes sold for
$8,940,000 and $8,825,000, respectively, to an institutional buyer (the
"Buyer"), which is unaffiliated with the Partnership. The selling price was
determined by arm's length negotiations between the Partnership and the Buyer.
The Partnership received net proceeds of $17,551,351 from the transaction of
which $5,057,952, representing outstanding principal and interest, was used to
fully satisfy the Partnership's mortgage obligation on Trails at Meadowlakes.
The transaction resulted in a gain on sale of $2,854,884 for financial
statement purposes.
On August 22, 1995, the Partnership paid a special distribution of $14,252,238
to the limited partners. The special distribution was comprised of net
proceeds from the sale of the Properties and from Partnership cash reserves.
On January 24, 1997, the Partnership executed an agreement for the purchase and
sale of River Hill Apartments with an institutional investor. However, on
March 17, 1997, the General Partners opted to allow the prospective buyer to
exercise its right to terminate the purchase agreement. The General Partners
have since resumed marketing River Hill Apartments for sale. Accordingly, River
Hill Apartments has been reclassified on the balance sheet as "Property held
for disposition" at its net book value.
Based on the adoption of FAS 121, the Partnership recorded a write-down of
$477,170 in 1995 to reduce the carrying value of River Hill Apartments to its
estimated fair value. The impairment was caused by the need for necessary
property improvements and changing market conditions.
The limited partnership agreement of River Hill Apartments substantially
provides that:
a. Net cash from operations of River Hill Apartments will be distributed
100% to the Partnership until it has received an annual, noncumulative
return of 10% on its adjusted capital contribution. Any remaining balance
will be distributed 60% to the Partnership and 40% to the co-venturer.
b. Net income of the limited partnership will be allocated to the
Partnership and the co-venturers basically in accordance with the
distribution of net cash from operations. All net losses and depreciation
will be allocated to the Partnership.
c. Net proceeds from a sale or refinancing of River Hill Apartments will
be distributed 100% to the Partnership, until it has received an amount
equal to 110% of its adjusted capital contribution. Distributions will
then be made 75% to the Partnership and 25% to the co-venturer, until the
Partnership has received an additional 110% of the Partnership's adjusted
capital contribution. Any remaining balance will be distributed 50% to the
Partnership and 50% to the co-venturer.
The joint venture and limited partnership agreements of Village at the
Foothills II and Shadowood Village substantially provide that:
a. Available cash from operations will be distributed 100% to the
Partnership until it has received its annual, noncumulative preferred
return, as defined. Any remaining balance will be distributed 99% to the
Partnership and 1% to the corporate General Partners.
b. Net income will be allocated first, proportionately to partners with
negative capital accounts, as defined, until such capital accounts, as
defined, have been increased to zero; then, to the Partnership up to the
amount of any payments made on account of its preferred return; thereafter,
99% to the Partnership and 1% to the corporate General Partners. All
losses will be allocated first to the partners with positive capital
accounts, as defined, until such accounts have been reduced to zero and,
then, 99% to the Partnership and 1% to the corporate General Partners.
c. Income from a sale will be allocated to the Partnership until the
Partnership's capital accounts, as defined, are equal to the fair market
value of the venture's assets at the date of the amendments; then, any
remaining balance will be allocated 99% to the Partnership and 1% to the
corporate General Partners. Net proceeds from a sale or refinancing will
be distributed first to the partners with a positive capital account
balance, as defined; thereafter, 99% to the Partnership and 1% to the
corporate General Partners.
5. Mortgage Payable
On July 19, 1985, the Partnership obtained financing of $5,200,000,
collateralized by a first mortgage encumbering Trails at Meadowlakes. The loan
had an initial term of five years bearing interest at an annual rate of 12.50%
with monthly payments of interest only. The loan was extended in 1990 for an
additional five years bearing interest at a rate of 10.125% with monthly
principal and interest payments. On July 20, 1995 the partnership closed on the
sale of Trails at Meadowlakes and used a portion of the sales proceeds to
satisfy the Partnership's outstanding mortgage obligation of $5,029,661.
6. Transactions with Related Parties
The following is a summary of fees earned and reimbursable expenses paid for
the years ended December 31, 1996, 1995 and 1994, and the unpaid portion at
December 31, 1996:
Unpaid at
December 31, Earned
1996 1996 1995 1994
RI 3-4 Real Estate Services, Inc.
and affiliates:
Out-of-pocket expenses $ - $ 724 $ 3,541 $ 2,227
ConAm and affiliates:
Property operating salaries - 307,565 411,731 610,064
Property management fees 20,443 239,560 322,934 378,727
Total $20,443 $547,849 $738,206 $991,018
7. Reconciliation of Financial Statement and Tax Information
The following is a reconciliation of the net income for financial statement
purposes to net income for federal income tax purposes for the years ended
December 31, 1996, 1995 and 1994:
1996 1995 1994
Net income per financial statements $ 1,022,553 $ 3,259,624 $ 984,628
Depreciation deducted for tax
purposes in excess of
depreciation expense per
financial statements (92,628) (105,426) (159,133)
Tax basis joint venture net loss
in excess of GAAP basis joint
venture net income (104,176) (103,451) (106,637)
Financial statements loss on
write-down of real estate over
tax basis loss on write-down of
real estate - 477,170 -
Gain on sale of properties
for tax purposes in excess of
gain per financial statements - 5,305,729 -
Other (2,213) 470 (25,567)
Taxable net income $ (823,536)$ 8,834,116 $ 693,291
The following is a reconciliation of partners' capital for financial statement
purposes to partners' capital for federal income tax purposes as of December
31, 1996, 1995 and 1994:
1996 1995 1994
Partners' capital per
financial statements $25,202,876 $26,315,490 $39,155,021
Adjustment for cumulative
difference between tax basis
net income and net income
per financial statements (1,834,166) (1,635,149) (7,209,641)
Partners' capital per tax return $23,368,710 $24,680,341 $31,945,380
8. Distributions Paid
Cash distributions, per the consolidated statements of partners' capital, are
recorded on the accrual basis, which recognizes specific record dates for
payments within each calendar year. The consolidated statements of cash flows
recognize actual cash distributions paid during the calendar year. The
following table discloses the annual amounts as presented on the consolidated
financial statements:
Distributions Distributions
Payable Distributions Distributions Payable
Beginning of Year Declared Paid December 31,
1996 $587,171 $ 2,135,167 $ 2,188,546 $ 533,792
1995 - 16,099,155 15,511,984 587,171
1994 640,550 1,281,100 1,921,650 -
Report of Independent Accountants
-------------------------------------
To the Partners of
Hutton/ConAm Realty Investors 4:
We have audited the consolidated balance sheets of Hutton/ConAm Realty
Investors 4, a California limited partnership, and Consolidated Ventures as of
December 31, 1996 and 1995, and the related consolidated statements of
operations, partners' capital and cash flows for each of the three years in the
period ended December 31, 1996. These consolidated financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Hutton/ConAm Realty Investors 4, a California limited partnership, and
Consolidated Ventures as of December 31, 1996 and 1995, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1996, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
February 14, 1997
Net Asset Valuation
---------------------
Comparison of Acquisition Costs to Appraised Value and
Determination of
Net Asset Value Per $406 Unit at December 31, 1996 (Unaudited)
Acquisition Cost
(Purchase Price Partnership's
Plus General Share of
Partners' December 31,
Date of Acquisition 1996 Appraised
Property Acquisition Fees) Value (1)
Pelican Landing 03-28-85 $ 12,700,000 $ 11,200,000
Village at the Foothills II 05-30-85 7,376,000 4,600,000
River Hill Apartments 06-12-85 12,016,575 7,500,000
Shadowood Village 07-03-86 5,649,540 4,400,000
$ 37,742,115$ 27,700,000
Cash and cash equivalents 2,314,876
Other assets 15,370
30,030,246
Less:
Total liabilities (806,724)
Partnership Net Asset Value (2) $ 29,223,522
Net Asset Value Allocated:
Limited Partner $ 29,223,522
General Partners -
$ 29,223,522
Net Asset Value Per Unit (128,110 units outstanding) $228.11
(1) This represents the Partnership's share of the December 31, 1996 Appraised
Values which were determined by an independent property appraisal firm.
(2) The Net Asset Value assumes a hypothetical sale at December 31, 1996 of all
the Partnership's properties at a price based upon their value as a rental
property as determined by an independent property appraisal firm, and the
distribution of the proceeds of such sale, combined with the Partnership's
cash after liquidation of the Partnership's liabilities, to the Partners.
Limited Partners should note that appraisals are only estimates of current
value and actual values realizable upon sale may be significantly different. A
significant factor in establishing an appraised value is the actual selling
price for properties which the appraiser believes are comparable. In addition,
the appraised value does not reflect the actual costs which would be incurred
in selling the properties. As a result of these factors and the illiquid
nature of an investment in Units of the Partnership, the variation between the
appraised value of the Partnership's properties and the price at which Units of
the Partnership could be sold is likely to be significant. Fiduciaries of
Limited Partners which are subject to ERISA or other provisions of law
requiring valuations of Units should consider all relevant factors, including,
but not limited to Net Asset Value per Unit, in determining the fair market
value of the investment in the Partnership for such purposes.
Schedule III - Real Estate Investments and Property Held for Disposition:
December 31, 1996
Village
Residential Property: Pelican at the River Hill Shadowood
Consolidated Ventures: Landing Foothills Apts Village Total
Location Clearwater Irving Tucson Jacksonville na
,FL ,TX ,AZ ,FL
Construction date 1984-1985 1984-1985 1984-1985 1985-1986 na
Acquisition date 03-11-87 06-12-85 05-30-85 07-03-86 na
Life on which depreciation
in latest income statements
is computed (3) (3) (3) (3) na
Encumbrances - - - - -
Initial cost to Partnership:
Land $ 3,484,946 $1,584,049 $3,059,866 $ 566,000$ 8,694,861
Buildings and
improvements 9,422,260 5,838,595 9,060,195 5,125,065 29,446,115
Costs capitalized
subsequent to acquisition:
Land, buildings
and improvements (539) 11,134 125,472 44,274 180,341
Write-down (4) - - (4,498,633) - (4,498,633)
Elimination of
accumulated depreciation - - (388,600) - (388,600)
Gross amount at which
carried at close of period:
Land $ 3,474,525 $1,583,964 $1,898,363 $ 569,274$ 7,526,126
Buildings and
improvements 9,432,142 5,849,814 5,459,937 5,166,065 25,907,958
12,906,667 7,433,778 7,358,300 5,735,339 33,434,084
Accumulated
depreciation 4,624,707 2,827,357 - 2,302,666 9,754,730
(1) Represents aggregate cost for both financial reporting and Federal income
tax purposes.
(2) The amount of accumulated depreciation for Federal income tax purposes is
$23,106,082.
(3) Buildings and improvements - 25 years; personal property - 10 years.
(4) In 1995, the Partnership recorded a write-down to reduce the carrying
value of River Hill Apartments to its estimated fair value.
A reconciliation of the carrying amount of real estate and accumulated
depreciation for the years ended December 31, 1996, 1995, and 1994 follows:
1996 1995 1994
Real estate investments and property
held for disposition:
Beginning of year $33,752,728 $60,325,756 $60,286,669
Additions 69,956 149,631 39,087
Write-down - (4,498,633) -
Dispositions - (22,224,026) -
Reclassification to held for
disposition (388,600) - -
End of year $33,434,084 $33,752,728 $60,325,756
Accumulated depreciation:
Beginning of year $ 8,958,549 $18,896,846 $16,862,076
Depreciation expense 1,184,781 1,610,725 2,034,770
Elimination of accumulated depreciation - (388,600) -
Write-down - (4,021,463) -
Dispositions - (7,527,559) -
End of year $ 9,754,730 $ 8,958,549 $18,896,846
Report of Independent Accountants
------------------------------------
Our report on the consolidated financial statements of Hutton/ConAm Realty
Investors 4, a California limited partnership, and Consolidated Ventures has
been incorporated by reference in this Form 10-K from the Annual Report to
unitholders of Hutton/ConAm Realty Investors 4 for the year ended December 31,
1996. In connection with our audits of such financial statements, we have also
audited the related financial statement schedule listed in the index of this
Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
February 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,314,876
<SECURITIES> 000
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 15,370
<PP&E> 33,434,084
<DEPRECIATION> 9,754,730
<TOTAL-ASSETS> 26,009,600
<CURRENT-LIABILITIES> 806,724
<BONDS> 000
<COMMON> 000
000
000
<OTHER-SE> 25,202,876
<TOTAL-LIABILITY-AND-EQUITY> 26,009,600
<SALES> 4,778,238
<TOTAL-REVENUES> 4,926,340
<CGS> 000
<TOTAL-COSTS> 2,545,471
<OTHER-EXPENSES> 1,358,316
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 1,022,553
<INCOME-TAX> 000
<INCOME-CONTINUING> 1,022,553
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 1,022,553
<EPS-PRIMARY> 6.32
<EPS-DILUTED> 6.32
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