SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d) of
Securities Exchange Act of 1934
Commission File
For the year ended December 31, 1996 Number 0-12210
----------------- -------
PRESIDENTIAL ASSOCIATES I LIMITED PARTNERSHIP
(Exact name of small business issuer as specified in its charter)
Maryland 36-3110117
(State of organization) (IRS Employer Identification No.)
One International Place, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (617) 330-8600
--------------
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-B 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-KSB or any amendment to
this Form 10-KSB. [ ]
The Registrant's revenues for its most recent fiscal year were $231,071.
No market exists for the limited partnership interests of the registrant, and,
therefore, no aggregate market value can be computed.
DOCUMENTS INCORPORATED BY REFERENCE
None
Transitional Small Business Disclosure Format: Yes ___ No X
<PAGE>
PART I
Item 1. Description of Business.
Organization
Presidential Associates I Limited Partnership (the "Partnership") was
organized as a Maryland limited partnership under the Maryland Revised Uniform
Limited Partnership Act on July 20, 1983, for the purpose of investing in
Presidential Towers Ltd. (the "Operating Partnership"), an Illinois limited
partnership organized for the purpose of building, owning and operating a
residential apartment complex in downtown Chicago, Illinois (the "Project").
The general partners of the Partnership are Winthrop Financial Co.,
Inc., a Massachusetts corporation ("Winthrop Financial"), and Linnaeus-Phoenix
Associates Limited Partnership ("Linnaeus-Phoenix"). Winthrop Financial is the
Partnership's managing general partner. Collectively, Winthrop Financial and
Linnaeus-Phoenix shall be referred to hereinafter as the "General Partners."
Winthrop Financial is a wholly-owned subsidiary of First Winthrop Corporation
which is wholly owned by Winthrop Financial Associates, A Limited Partnership
("WFA"), a Maryland limited partnership. See "Change in Control."
The only business of the Partnership is investing as a limited partner
in the Operating Partnership. As of the date hereof, the general partners of the
Operating Partnership are (i) McHugh Levin Associates Venture ("McHugh Levin"),
an Illinois limited partnership whose general partners are James P. McHugh and
Daniel E. Levin, (ii) Madison-Canal Company, an Illinois limited partnership
whose general partner is Daniel J. Shannon and (iii) TKI Presidential Partners.
As of the date hereof, the Partnership holds a 19.998% limited
partnership interest in the Operating Partnership. In exchange for this interest
the Partnership made a capital contribution of $33,172,524 to the Operating
Partnership. See "Restructuring of
Operating Partnership."
Development
The Partnership was initially capitalized with contributions totaling $300
from the General Partners. In September 1983, the Partnership completed a
private offering of 590 units of limited partnership interest (the "Units")
pursuant to Regulation D under the Securities Act of 1933. The Partnership
raised $59,000,000 in capital contributions from 545 investor limited partners
(the "Limited Partners"). Of the $59,000,000 raised, $697,380 was received upon
the Limited Partners' admission to the Partnership, and the balance was paid in
installments pursuant to the terms of promissory notes (the "Investor Notes")
delivered to the Partnership by the Limited Partners. The last installment was
due on January 15, 1990. As of April 1, 1997, $88,832 of this installment
remains uncollected.
Based on the projected occupancy levels and rental rates, it was
expected that the Project would operate at a deficit until approximately 1993.
Accordingly, at the time of the offering the Operating Partnership designated
approximately $21 million of the capital contribution from the Partnership as
operating reserves.
The General Partners and the general partners of the Operating
Partnership projected that these reserves and deficit loans would be sufficient
to fund operations until the Project could achieve break-even operations.
However, due to lower than projected revenues and higher than projected real
estate taxes, the Project's cash flow deficit was significantly higher than
anticipated, and thus the reserves were depleted sooner than anticipated.
Restructuring of Operating Partnership
After failing to meet its mortgage obligations, the mortgage loan on
the Project was assigned by the lender to the Department of Housing and Urban
Development ("HUD") which had insured the mortgage. The Operating Partnership
and HUD entered into a written tentative Restructuring Agreement (the
"Restructuring Agreement") in December 1991. The Restructuring Agreement, which
was implemented on April 18, 1995 and was approved by a majority in interest of
the limited partners of the Partnership, provided for the split of the then
existing mortgage note into two new mortgage notes. This was designed to afford
the Project achievable debt service obligations under the Restructuring
Agreement. Both new mortgage notes mature on the same date as the original
mortgage loan, September 1, 2028. HUD will, however, have the right to
accelerate the obligations evidenced by the notes at any time after June 1,
2015.
Each of the notes is prepayable in whole or in part at any time without
penalty. The new first mortgage note, in the amount of $127,000,000, bears
interest at an annual rate of 8.1%. All accrued and unpaid interest will be
compounded annually at the rate of 8.1%. The first mortgage note consists of two
tiers. The first tier, in the principal amount of $71,000,000, is to be repaid
through level monthly payments which amortizes the debt over the remaining loan
term. A service charge payable to HUD in the amount of 0.5% per annum of the
then outstanding principal mortgage balance will be payable monthly. The
secondary tier note is in the amount of $56,000,000. The secondary tier requires
semi-annual payments of principal and interest in an amount equal to 80% of the
Project's net cash flow; provided, however, that commencing on the tenth
anniversary of the closing (June 1, 2005), the semi-annual payments will be in
an amount equal to the greater of (i) 80% of the Project's net cash flow or (ii)
a fixed minimum payment of $164,025 that shall increase each year between the
eleventh year and twentieth year after closing. The annual HUD 0.5% service
charge will accrue on the then outstanding principal amount of the second tier
and be due only upon prepayment in full of the first mortgage note or maturity
of the first mortgage note. In addition, the Operating Partnership is obligated
to reduce the secondary tier's principal by a total of $10,000,000 over a six
year period.
The principal amount of the new second mortgage note is $63,001,421.
The second mortgage note bears no interest and is payable from available
proceeds from a sale or refinancing of the Project. While the new second
mortgage note bears no interest, after payment in full of the principal amount
of the second mortgage note from the proceeds of a sale or refinancing of the
Project, 40% of all additional sale or refinancing proceeds shall be paid to HUD
until HUD shall have received $20,000,000 in excess of the principal amount of
the second mortgage note. HUD has the right to call this second note at any time
on or after June 1, 2015. The Restructuring Agreement also requires the
Operating Partnership to establish a deficit escrow account of $3,000,000 over a
six year period from sources other than the operating revenues of the Project to
provide additional collateral security for the mortgages. The two capital
requirements described above necessitated raising $13,000,000 of new equity
(available over six years, as required).
In order to implement the Restructuring Agreement and raise the $13,000,000
of new equity, a third party investor, TKI Presidential Partners ("TKI"), was
admitted to the Operating Partnership as a general partner. TKI agreed to
contribute $14,000,000 over a six year period (as required by the Restructuring
Agreement with HUD) in exchange for a 79% general partnership interest in the
Operating Partnership, 79% of all future distributions by the Operating
Partnership of operating cash flow, a preferential return of its capital
contribution from the proceeds of a sale or refinancing, 79% of all additional
proceeds of a sale or refinancing, 100% of all future tax losses of the
Operating Partnership and effective control, through rights to approve or
initiate certain actions, over all major business decisions affecting the
Operating Partnership. As a result of TKI's investment, the Partnership's
interest in the Operating Partnership was reduced from a 94.99% limited
partnership interest to a 19.998% limited partnership interest and certain
control rights over major business decisions of the Operating Partnership were
transferred to TKI. Pursuant to the terms of the Partnership Agreement of the
Operation Partnership, the Partnership is entitled to receive a distribution
from the Operating Partnership to reimburse it for its administrative expenses
and professional fees up to an annual maximum of $30,000. In addition, the
Operating Partnership made distributions to the Partnership during 1995 and 1996
of approximately $102,980 and $229,049, respectively. However, due to TKI being
entitled to a priority return, there can be no assurance that the Operating
Partnership will be able to make additional distributions to the Partnership, if
at all, until the property is sold. However, due to the preferred return to TKI
and HUD, it is possible that a sale will not generate sufficient funds to permit
a distribution to the Partnership. Accordingly, it is anticipated that limited
partners will not receive a return of their original investment in the
Partnership.
<PAGE>
Change in Control
Until December 22, 1994, Arthur J. Halleran, Jr. was the sole general
partner of Linnaeus Associates Limited Partnership ("Linnaeus"). On December 22,
1994, pursuant to an Investment Agreement entered into among Nomura Asset
Capital Corporation ("NACC"), Mr. Halleran and certain other individuals who
comprised the senior management of WFA, the general partnership interest in
Linnaeus was transferred to W.L. Realty, L.P. ("W.L. Realty"). W.L. Realty is a
Delaware limited partnership, the general partner of which was, until July 18,
1995, A.I. Realty Company, LLC ("Realtyco"), an entity owned by certain
employees of NACC. On July 18, 1995 Londonderry Acquisition II Limited
Partnership ("Londonderry II"), a Delaware limited partnership, and affiliate of
Apollo Real Estate Advisors, L.P. ("Apollo"), acquired, among other things,
Realtyco's general partner interest in W.L. Realty and a sixty four percent
(64%) limited partnership interest in W.L. Realty, and WFA acquired the general
partnership interest in Linnaeus-Phoenix.
As a result of the foregoing acquisitions, Londonderry II is the sole
general partner of W.L. Realty which is the sole general partner of Linnaeus,
and which in turn is the sole general partner of WFA. As a result of the
foregoing, effective July 18, 1995, Londonderry II, an affiliate of Apollo,
became the controlling entity of Winthrop Financial and Linnaeus-Phoenix. In
connection with the transfer of control, the officers and directors of Winthrop
Financial resigned and Londonderry II appointed new officers and directors. See
Item 9, "Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act.
Employees
The Partnership has no employees. Affiliates of Winthrop Financial
provide administrative services for the Partnership.
Item 2. Description of Properties.
The Partnership has no properties other than its interest in the
Operating Partnership. For a description of the properties of the Operating
Partnership, see Item 1, Description of Business.
<PAGE>
Item 3. Legal Proceedings.
To the best of the Partnership's knowledge, there are no material
pending legal proceedings to which it is a party.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the period
covered by this report.
<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related
Security Holder Matters.
The Partnership is a limited partnership and thus has no common stock.
There is no established public trading market for the Units of limited
partnership interest in the Partnership. Trading in Units is sporadic and occurs
solely through private transactions.
As of March 1, 1997, there were approximately holders of 590
outstanding Units.
The Partnership's partnership agreement requires that Cash Flow (as
defined therein) be distributed to the partners in specified proportions at
reasonable intervals during the fiscal year and in any event no later than 60
days after the close of each fiscal year. There are no restrictions on the
Partnership's present or future ability to make distributions of cash flow. For
the years ended December 31, 1996 and 1995, there were no cash distributions
paid or accrued to the Limited Partners. In April 1997, however, the Partnership
made a distribution to its partners of $200,200 ($2,002 to the General Partners
and $198,198 ($335.93 per unit) to the limited partners. See Item 6
"Management's Discussion and Analysis or Plan of Operation" for the Registrant's
ability to make distributions in the future.
<PAGE>
Item 6. Management's Discussion and Analysis or Plan of
Operation.
Liquidity and Capital Resources
The Partnership's primary source of liquidity is distributions from the
Operating Partnership. During 1996, the Partnership received distributions
totaling $229,049 from the Operating Partnership as compared to $102,980 in
1995. Pursuant to the terms of the Partnership Agreement of the Operating
Partnership, the Partnership is entitled to receive a distribution from the
Operating Partnership to reimburse it for its administrative expenses and
professional fees up to an annual maximum of $30,000. However, due to TKI being
entitled to a priority return, there can be no assurance that the Operating
Partnership will be able to make additional distributions to the Partnership, if
at all, until the property is sold. However, due to the preferred return to TKI
and HUD, it is possible that a sale will not generate sufficient funds to permit
a distribution to the Partnership. Accordingly, it is anticipated that limited
partners will not receive a return of their original investment in the
Partnership. See "Item 1, Business-Restructuring of Operating Partnership."
The Partnership is responsible for paying various administrative costs
associated with monitoring the Partnership's investment in the Operating
Partnership, and paying various professional fees associated with the affairs of
the Partnership. In order to satisfy certain of these administrative costs and
professional fees, Winthrop Financial made non-interest bearing loans to the
Partnership (collectively, the "WFC Loan"). In connection with the Restructuring
of the Operating Partnership, the amount due on the WFC Loan was forgiven in
1995. In addition, the Partnership's partnership agreement was amended in 1995
to delete the $125,000 annual administration fee payable to Winthrop Financial.
As a result, the Partnership recognized forgiveness of debt income in the amount
of $921,249.
Results of Operations
The Partnership's net income for the year ended December 31, 1996 was
$230,481 as compared to $1,023,372 for the year ended December 31, 1995. The
decrease in net income is attributable to the forgiveness of debt of $921,249
recognized in 1995. With respect to the Partnership's other items of income,
distributions from the Operating Partnership increased from $102,980 in 1995 to
$229,049 in 1996 and interest income was 2,022 in 1996 as compared to zero in
1995. The increase in interest income is due to the Partnership having cash
reserves in 1996.
As discussed above, future operation of the Partnership are subject to
the Operating Partnership's ability to make distributions to the Partnership.
Expenses are expected to remain relatively constant for future periods.
<PAGE>
The General Partners believe that the inflation rate did not materially
affect the business or operating results of the Partnership during the last
three years; however, as discussed in Item 1 above, general economic conditions
have had a substantial effect on the operations of the Operating Partnership
since 1988. The residential market in Chicago is expected to continue to be
competitive for the foreseeable future.
<PAGE>
Item 7. Financial Statements.
INDEX TO FINANCIAL STATEMENTS
PRESIDENTIAL ASSOCIATES I LIMITED PARTNERSHIP
Independent Auditors' Report
Balance Sheets as of December 31, 1996 and 1995
Statements of Operations for the years ended December 31,
1996 and 1995
Statements of Partners' Equity (Deficit) for the years
ended December 31, 1996 and 1995
Statements of Cash Flows for the years ended December 31, 1996 and 1995
Notes to Financial Statements
INDEPENDENT AUDITORS' REPORT
To the Partners
Presidential Associates I Limited Partnership
We have audited the accompanying balance sheets of Presidential
Associates I Limited Partnership as of December 31, 1996 and 1995, and the
related statements of operations, partners' equity (deficit) and cash flows for
the two years in the period ended December 31, 1996. These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Presidential
Associates I Limited Partnership as of December 31, 1996 and 1995, and the
results of its operations, changes in partners' equity (deficit) and its cash
flows for the two years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
February 21, 1997
<PAGE>
Presidential Associates I Limited Partnership
BALANCE SHEETS
<TABLE>
December 31,
1996 1995
-------- ------
ASSETS
<S> <C> <C>
Cash and cash equivalents $319,440 $121,409
Due from operating partnership 14,020 1,652
-------- ---------
$333,460 $123,061
======= =======
LIABILITIES AND PARTNERS' EQUITY
Loans from general partner $ - $ 20,082
PARTNERS' EQUITY 333,460 102,979
------- -------
$333,460 $123,061
======= =======
</TABLE>
See notes to financial statements
<PAGE>
Presidential Associates I Limited Partnership
STATEMENTS OF OPERATIONS
Year ended December 31,
<TABLE>
1996 1995
---------- -------
Expenses
<S> <C> <C>
Other $ 590 $ 857
---------- ------------
Loss before other income (590) (857)
Other income
Distribution from operating partnership 229,049 102,980
Forgiveness of debt income - 921,249
Interest income 2,022 -
--------- ---------------
NET INCOME $230,481 $1,023,372
======= =========
Units of investor limited partnership interest outstanding 590 590
=== ===
Net income allocated to general partner $1,152 $5,117
===== =====
Net income allocated to special limited partner $1,152 $5,117
===== =====
Net income allocated to investor limited partners $228,177 $1,013,138
======= =========
Net income per unit of investor limited
partnership interest outstanding $391 $1,735
=== =====
</TABLE>
<PAGE>
Presidential Associates I Limited Partnership
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
Years ended December 31, 1996 and 1995
<TABLE>
Special
General limited
partner partner
Linnaeus
Winthrop Phoenix
Financial Associates Investor
Company, Limited limited
Inc. Partnership partners Total
<S> <C> <C> <C> <C>
Partners' deficit, December 31, 1994 $(276,630) $(578,539) $ (65,224) $ (920,393)
Capital contributions 100 - 88,732 88,832
Less capital contributions
not yet received (100) - (88,732) (88,832)
Net income 5,117 5,117 1,013,138 1,023,372
--------- ---------- --------- ---------
Partners' equity (deficit),
December 31, 1995 (271,513) (573,422) 947,914 102,979
Capital contributions 100 - 88,732 88,832
Less capital contributions
not yet received (100) - (88,732) (88,832)
Net income 1,152 1,152 228,177 230,481
---------- ---------- ---------- ----------
Partners' equity (deficit),
December 31, 1996 $(270,361) $(572,270) $1,176,091 $ 333,460
======== ======== ========= ==========
</TABLE>
See notes to financial statements
<PAGE>
Presidential Associates I Limited Partnership
STATEMENTS OF CASH FLOWS
Year ended December 31,
<TABLE>
1996 1995
----------- ---------
Cash flows from operating activities
<S> <C> <C>
Net income $230,481 $1,023,372
Adjustments to reconcile net income to
net cash provided by operating activities
Forgiveness of debt income - (921,249)
Increase in due from operating partnership (12,368) (1,652)
-------- -----------
Net cash provided by operating activities 218,113 100,471
------- ----------
Cash flows from financing activities
Loans from general partner - 20,938
Repayment of general partner loans (20,082) -
-------- ---------------
Net cash provided by (used in) financing activities (20,082) 20,938
-------- -----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 198,031 121,409
Cash and cash equivalents, beginning 121,409 -
------- ---------------
Cash and cash equivalents, ending $319,440 $ 121,409
======= ==========
</TABLE>
See notes to financial statements
<PAGE>
Presidential Associates I Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
The Partnership was organized under laws of the State of Maryland on July 1,
1983 to acquire a limited partnership interest in Presidential Towers, Ltd.
(the "operating partnership").
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Investment in the Operating Partnership
The investment in the operating partnership is reported using the equity
method of accounting, under which the initial investment is recorded at
cost, increased or decreased by the Partnership's share of income or losses,
and decreased by distributions. The investment cannot be reduced below zero.
Federal and State Income Taxes
No provision or benefit for income taxes has been included in these
financial statements since taxable income or loss passes through to, and is
reportable by, the partners individually.
Cash Equivalents
For the purposes of the statement of cash flows, the partnership considers
all highly liquid financial instruments, which consist of a money market
account, purchased with a maturity of three months or less to be cash
equivalents. The carrying amount approximates fair value because of the
short maturity of this instrument.
NOTE B - INVESTMENT IN OPERATING PARTNERSHIP
The Partnership held a 94.99% interest in the operating partnership which
constructed, owns and operates four 49-story residential and commercial
towers in Chicago, Illinois. During 1995, the Partnership agreed to the
restructuring of the operating partnership which included the admission of
an additional general partner and an amendment to the operating
partnership's partnership agreement. The amendment resulted in the
Partnership's interest in the operating partnership being reduced to
19.998%. Further, all losses from the operating partnership are allocated to
the new general partner.
<PAGE>
Presidential Associates I Limited Partnership
NOTE B - INVESTMENT IN OPERATING PARTNERSHIP (Continued)
The following is a summary of the financial position of the operating
partnership at December 31, 1996 and 1995, and a summary of its results of
operations for each of the two years in the period ended December 31, 1996,
prepared in conformity with generally accepted accounting principles.
<TABLE>
BALANCE SHEETS
1996 1995
------------------ -----------
<S> <C> <C>
Assets
Buildings, improvements and personal property,
net of accumulated depreciation of
$68,493,872 and $62,249,876 $ 81,659,639 $ 86,196,802
Land 7,798,111 7,798,111
Other assets 8,514,187 8,336,270
------------- -------------
$ 97,971,937 $102,331,183
=========== ===========
Liabilities
Mortgages payable $190,574,545 $188,551,650
Other liabilities 7,987,878 9,326,038
------------- -------------
198,562,423 197,877,688
Partners' deficit (100,590,486) (95,546,505)
----------- -----------
$ 97,971,937 $102,331,183
============ ===========
</TABLE>
STATEMENTS OF OPERATIONS
<TABLE>
1996 1995
------------------ -----------
<S> <C> <C>
Revenue
Rental $24,999,329 $23,239,471
Other 3,072,995 2,794,290
Interest 192,068 112,603
------------ ------------
28,264,392 26,146,364
---------- ----------
Expenses
Operating expenses 27,846,040 27,019,082
Amortization 72,979 116,722
Depreciation 6,243,996 6,190,654
----------- -----------
34,163,015 33,326,458
---------- ----------
Net loss $ (5,898,623) $ (7,180,094)
=========== ===========
</TABLE>
<PAGE>
Presidential Associates I Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1996 and 1995
NOTE B - INVESTMENT IN OPERATING PARTNERSHIP (Continued)
The unrecognized portion of cumulative losses will be offset against the
Partnership's share of future income from Presidential Towers, Ltd. The
cumulative unrecognized loss at December 31, 1996 and 1995 is $87,999,502.
NOTE C - CAPITAL CONTRIBUTIONS
Capital contributions receivable are recorded when received, and at December
31, 1996 and 1995 are as follows:
<TABLE>
1996 1995
-------- ------
<S> <C> <C>
Investor limited partners $88,732 $88,732
General partner 100 100
-------- --------
$88,832 $88,832
====== ======
</TABLE>
NOTE D - RELATED PARTY TRANSACTIONS
The general partner had made unsecured, noninterest bearing operating
deficit loans to the Partnership. These loans were payable on demand and as
of December 31, 1995, $20,082 is due to WFC. During 1996, these loans were
paid in full.
Management believes it is not practicable to estimate the fair value of the
advances from the general partner because loans with similar characteristics
are not currently available to the partnership.
During 1995, the partners agreed to amend the terms of the partnership
agreement. The amendment eliminated the annual administration fee and the
general partner agreed to forgive the unpaid fees payable and the operating
deficit loans. At December 31, 1995, forgiveness of indebtedness income of
$921,249 is reflected in partnership income.
As of December 31, 1996 and 1995, $14,020 and $1,652, respectively, is due
from the operating partnership for operating expenses the Partnership paid
on its behalf. The balance is due on demand.
<PAGE>
Presidential Associates I Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1996 and 1995
NOTE E - RECONCILIATION OF NET LOSS
The Partnership's income for income tax purposes for 1996 and 1995 was
calculated as follows:
<TABLE>
1996 1995
------------ --------
<S> <C> <C>
Net income for financial statement purposes $230,481 $ 1,023,372
Cancellation of indebtedness income - 52,381,829
Amortization of construction period interest - (83,990)
and taxes
Accelerated depreciation - (148,285)
Other (2) 10,080
Distribution from operating partnership
recognized as income (229,049) (102,980)
Non-recognized portion of income (loss)
from the operating partnership 229,049 (2,241,636)
------- ----------
Income for income tax purposes $230,479 $50,838,390
======= ==========
</TABLE>
<TABLE>
In addition, the net difference between buildings and
improvements for tax purposes and financial statement purposes of
the operating partnership for 1996 and 1995 is as follows:
1996 1995
---------------- ----------
<S> <C> <C>
Buildings and improvements as reported $81,659,639 $86,196,802
Buildings and improvements for tax purposes 22,434,368 32,593,051
---------- ----------
Net difference $59,225,271 $53,603,751
========== ==========
</TABLE>
<PAGE>
<PAGE>
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16(a) of the Exchange
Act.
The Partnership has no officers or directors. Winthrop Financial
manages and controls substantially all of the Partnership affairs and has
general responsibility and ultimate authority in all matters affecting its
business. As of March 1, 1997, names of the directors and executive officers of
Winthrop Financial and the position held by each of them, are as follows:
<TABLE>
Has Served as
Position Held with a Director or
Name Winthrop Financial Officer Since
<S> <C> <C>
Michael L. Ashner Chief Executive Officer 1-96
and Director
Richard J. McCready President and 7-95
Chief Operating Officer
Jeffrey Furber Executive Vice President 7-95
and Clerk
Edward Williams Chief Financial Officer 4-96
Vice President and
Treasurer
Peter Braverman Senior Vice President 1-96
</TABLE>
Michael L. Ashner, age 45, has been the Chief Executive Officer of
Winthrop Financial Associates, A Limited Partnership ("WFA") since January 15,
1996. From June 1994 until January 1996, Mr. Ashner was a Director, President
and Co-chairman of National Property Investors, Inc.("NPI"), a real estate
investment company. Mr. Ashner was also a Director and executive officer of NPI
Property Management Corporation ("NPI Management") from April 1984 until January
1996. In addition, since 1981 Mr. Ashner has been President of Exeter Capital
Corporation, a firm which has organized and administered real estate limited
partnerships.
Richard J. McCready, age 38, is the President and Chief
Operating Officer of WFA and its subsidiaries. Mr. McCready
previously served as a Managing Director, Vice President and Clerk
of WFA and a Director, Vice President and Clerk of the Managing
General Partner and all other subsidiaries of WFA. Mr. McCready
joined the Winthrop organization in 1990.
Jeffrey Furber, age 37, has been the Executive Vice President of WFA
and the President of Winthrop Management since January 1996. Mr. Furber served
as a Managing Director of WFA from January 1991 to December 1995 and as a Vice
President from June 1984 until December 1990.
<PAGE>
Edward V. Williams, age 56 , has been the Chief Financial Officer of WFA
since April 1996. From June 1991 through March 1996, Mr. Williams was Controller
of NPI and NPI Management. Prior to 1991, Mr. Williams held other real estate
related positions including Treasurer of Johnstown American Companies and Senior
Manager at Price Waterhouse.
Peter Braverman, age 45, has been a Senior Vice President of WFA since
January 1996. From June 1995 until January 1996, Mr. Braverman was a Vice
President of NPI and NPI Management. From June 1991 until March 1994, Mr.
Braverman was President of the Braverman Group, a firm specializing in
management consulting for the real estate and construction industries. From 1988
to 1991, Mr. Braverman was a Vice President and Assistant Secretary of Fischbach
Corporation, a publicly traded, international real estate and construction firm.
One or more of the above persons are also directors or officers of a
general partner (or general partner of a general partner) of the following
limited partnerships which either have a class of securities registered pursuant
to Section 12(g) of the Securities and Exchange Act of 1934, or are subject to
the reporting requirements of Section 15(d) of such Act: Winthrop Partners 79
Limited Partnership; Winthrop Partners 80 Limited Partnership; Winthrop Partners
81 Limited Partnership; Winthrop Residential Associates I, A Limited
Partnership; Winthrop Residential Associates II, A Limited Partnership; Winthrop
Residential Associates III, A Limited Partnership; 1626 New York Associates
Limited Partnership; 1999 Broadway Associates Limited Partnership; Indian River
Citrus Investors Limited Partnership; Nantucket Island Associates Limited
Partnership; One Financial Place Limited Partnership; Riverside Park Associates
Limited Partnership; Springhill Lake Investors Limited Partnership; Twelve AMH
Associates Limited Partnership; Winthrop California Investors Limited
Partnership; Winthrop Growth Investors I Limited Partnership; Winthrop Interim
Partners I, A Limited Partnership; Southeastern Income Properties Limited
Partnership; Southeastern Income Properties II Limited Partnership; Winthrop
Miami Associates Limited Partnership; and Winthrop Apartment Investors Limited
Partnership.
Except as indicated above, neither the Partnership nor Winthrop
Financial has any significant employees within the meaning of Item 401(b) of
Regulation S-B. There are no family relationships among the officers and
directors of Winthrop Financial.
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Partnership under Rule 16a-3(e) during the Partnership's most
recent fiscal year and Forms 5 and amendments thereto furnished to the
Partnership with respect to its most recent fiscal year, the Partnership is not
aware of any director, officer, beneficial owner of more than ten percent of the
units of imited partnership interest in the Partnership that failed to file on a
timely basis, as disclosed in the above Forms, reports required by section 16(a)
of the Exchange Act during the most recent fiscal year or prior fiscal years.
<PAGE>
Item 10. Executive Compensation.
The Partnership is not required to and did not pay any compensation to the
officers or directors of the General Partner. The General Partners do not
presently pay any compensation to any of its officers or directors. (See Item
12, "Certain Relationships and Related Transactions.")
Item 11. Security Ownership of Certain Beneficial Owners and
Management.
(a) Security ownership of certain beneficial owners.
The Partnership is a limited partnership and has issued Units of
limited partnership interest. The Units are not voting securities, except that
the consent of the Limited Partners is required to approve or disapprove certain
transactions including the removal of a General Partner, certain amendments to
the Partnership Agreement, the dissolution of the Partnership or the sale of all
or substantially all of the assets of the Partnership. No Limited Partner owns
beneficially more than 5% of the Units in the Partnership.
No other person or group is known by the Partnership to be the
beneficial owner of more than 5% of the outstanding partnership interest as of
the date of this Annual Report.
(b) Security Ownership of Management.
One Unit of limited partnership interest is owned by a limited partner
of Linnaeus who is also a limited partner of the general partner of WFA and a
former employee and officer of WFA, Winthrop Financial and First Winthrop
Corporation. In addition, WFA owns two units of limited partnership interest. No
other officer, director or partner of Winthrop Financial or Linnaeus-Phoenix
owns any Units as of the date hereof in his individual capacity.
(c) Changes in Control.
As a result of the implementation of the Restructuring Agreement in
1995, TKI Presidential Partners, in exchange for a commitment to make a capital
contribution of $14,000,000 to the Operating Partnership over 6 years, acquired
certain control rights over major business decisions of the Operating
Partnership previously held by the Partnership, or WFC Realty Co., Inc. In
addition, as a result of the Restructuring Agreement the Partnership's interest
in the Operating Partnership was reduced from 94.99% to 19.998%.
<PAGE>
Item 12. Certain Relationships and Related Transactions.
(a) Transactions with Management and Others.
Pursuant to the terms of the Partnership Agreement, the General
Partners and their affiliates are entitled to receive various fees, commissions,
cash distributions, allocations of taxable income or loss and expense
reimbursements from the Partnership.
In 1995, the partners agreed to amend the Partnership's partnership
agreement to eliminate the annual administration fee payable to Winthrop
Financial. In addition, Winthrop Financial agreed to forgive the unpaid fees and
operating deficit loans which had previously been made. As a result, at December
31, 1995, $921,249 of forgiveness of indebtedness income is reflected in
partnership income.
During April of 1997, however, the Partnership made a distribution to
its partners of $200,200 ($2,002 to the General Partners and $198,198 ($335.93
per unit) to the limited partners.
<PAGE>
PART IV
Item 13. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) Exhibits:
The Exhibits listed on the accompanying Index to Exhibits are
filed as part of this Annual Report and incorporated in this
Annual Report as set forth in said Index.
(b) Reports on Form 8-K - None
<PAGE>
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.
PRESIDENTIAL ASSOCIATES I LIMITED
PARTNERSHIP
By: Winthrop Financial Co., Inc.,
Managing General Partner
By: /s/ Michael Ashner
Michael Ashner
Chief Executive Officer
Date: April 14, 1997
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 and in the capacities and on the dates indicated.
Signature/Name Title Date
/s/ Michael Ashner Chief Executive April 14, 1997
- ------------------
Michael Ashner Officer and Director
/s/ Edward V. Williams Chief Financial Officer April 14, 1997
Edward V. Williams
<PAGE>
EXHIBIT INDEX
Exhibit No.
3.,4 Amended and Restate Limited Partnership (1)
Agreement and Certificate of Amendment of
Presidential Associates I Limited Partnership
(b) Amendment to Amended and Restated Limited (3)
Partnership Agreement and Certificate of
Limited Partnership of Presidential Associates
I Limited Partnership dated April 19, 1995
10(a) Form of Investor Bond issued to the Partnership (1)
by Continental Casualty Company
(b) Trust Agreement dated as of September 15, (1)
1980 between the Operating Partnership and
LaSalle National Bank
(c) Letter of Credit and Reimbursement Agreement (1)
dated as of July 21, 1983 between the Operating
Partnership and Citibank, N.A.
(d) Revolving Credit and Term Loan Agreement dated (1)
as of September 30, 1983 between the Partnership
and Citibank, N.A.
(e) Regulatory Agreement for Multi-Family Housing (1)
project dated as of July 1, 1983 between LaSalle
National Bank, as Trustee, the Operating
Partnership, the General Partners and the
Secretary of Housing and Urban Development
(f) Building Loan Agreement dated as of July 1, 1983 (1)
between LaSalle National Bank, as Trustee, and
American National Bank & Trust Company of Chicago,
as Trustee for the City of Chicago
(g) Mortgage Note dated as of July 1, 1983 in the (1)
amount of $158,900,000 from LaSalle National
Bank, as Trustee, to American National Bank &
Trust Company of Chicago, as Trustee
(h) Mortgage dated as of July 1, 1983 between (1)
LaSalle National Bank and Trust Company of
Chicago, as Trustee
(i) Architectural Services Agreement dated as of (1)
July 1, 1983 between LaSalle National Bank,
as Trustee, and Solomon Cordwell Buenz &
Associates, Inc.
<PAGE>
(j) Construction Contract dated as of July 21, (1)
1983 between LaSalle National Bank, as Trustee,
and James McHugh Development Co.
(k) Management Agreement dated as of July 14, (1)
1983 between the Operating Partnership and
The Habitat Company
(l) Financing Agreement dated as of July 1, 1983 (1)
among the City of Chicago, the Operating
Partnership, LaSalle National Bank, as Trustee,
Madison-Canal Company, McHugh Levin Associates
Venture and American National Bank & Trust Company
of Chicago, as Trustee
(m) Security Agreement - (Chattel Mortgage) dated (1)
July 1, 1983 between LaSalle National Bank,
as Trustee, and American National Bank & Trust
Company of Chicago, as Trustee
(n) Commitment Letter dated March 22, 1983 of (1)
GNMA with respect to the Project
(o) Loan Agreement dated September 20, 1988 between (2)
Presidential Towers, Ltd. and American National
Bank and Trust Company of Chicago
(p) Third Amended and Restated Limited Partnership (3)
Agreement of Presidential Towers, Ltd., dated
April 19, 1995
(q) Amended and Restated Substitute Mortgage Note, (3)
dated April 18, 1995 made by LaSalle National
Trust, N.A., as trustee, in favor of the Secretary
of Housing and Urban Development
(r) Third Modification to Mortgage, dated April 18, (3)
1995, between LaSalle National Trust, N.A., as
Trustee the Secretary of Housing and Urban Development
(s) Amendment to Regulatory Agreement for Multifamily (3)
Housing Projects, dated as of April 18, 1995,
between LaSalle National Bank, as Trustee, and
Presidential Towers, Ltd. and the Secretary of
Housing and Urban Development
(t) Restructuring Agreement, dated April 18, 1995, (3)
among LaSalle National Trust, as Trustee,
Presidential Towers, Ltd. and the Secretary of
Housing and Urban Development.
27. Financial Data Schedule
- --------------------
(1) Incorporated herein by reference to the Partnership's
Registration Statement on Form 10 (Commission Partnership
file number 0-12210).
(2) Incorporated herein by reference to Exhibit 10(p) to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1985.
(3) Incorporated herein by reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from audited financial statements for the
one year period ending December 31, 1996 and is
qualified in its entirety by reference to such financial
statements
</LEGEND>
<CIK> 0000726666
<NAME> PRESIDENTIAL ASSOCIATES I LIMITED PARTNERSHIP
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 319440
<SECURITIES> 0
<RECEIVABLES> 14020
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 333460
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 333460
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 333460
<TOTAL-LIABILITY-AND-EQUITY> 333460
<SALES> 0
<TOTAL-REVENUES> 231071
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 590
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 230481
<INCOME-TAX> 0
<INCOME-CONTINUING> 230481
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 230481
<EPS-PRIMARY> 390.65
<EPS-DILUTED> 390.65
</TABLE>
