<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
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
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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 0-12538
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First Capital Institutional Real Estate, Ltd. - 1
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2197264
- -------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two North Riverside Plaza,
Suite 1100, Chicago, Illinois 60606-2607
- --------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (312) 207-0020
---------------------
Securities registered pursuant to
Section 12(b) of the Act: NONE
---------------------
Securities registered pursuant to
Section 12(g) of the Act: Limited Partnership Units
-------------------------
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 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:
The First Amended and Restated Certificate and Agreement of Limited Partnership
filed as Exhibit A to the definitive Prospectus dated October 25, 1982, included
in the Registrant's Registration Statement on Form S-11 (Registration No. 2-
79092), is incorporated herein by reference in Part IV of this report.
Exhibit Index - Page A-1
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<PAGE>
PART I
ITEM 1. BUSINESS
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The registrant, First Capital Institutional Real Estate, Ltd.- 1 (the
"Partnership") is a limited partnership organized in 1982 under the Florida
Uniform Limited Partnership Law. The Partnership sold $60,000,000 in Limited
Partnership Units (the "Units") to the public from November 1982 through March
1983, pursuant to a Registration Statement on Form S-11 filed with the
Securities and Exchange Commission (Registration Statement No. 2-79092).
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement.
The business of the Partnership is to invest primarily in existing, improved,
income-producing commercial real estate, such as shopping centers, warehouses,
office buildings, and, to a lesser extent, in other types of income-producing
commercial real estate. From May 1983 to January 1985, the Partnership made
three real property investments and purchased 50% interests in three joint
ventures with an Affiliated partnership. Each of these joint ventures was
formed for the purpose of acquiring a 100% interest in certain real property and
are operated under the common control of First Capital Financial Corporation
(the "Managing General Partner"). Through December 31, 1996, the Partnership
has sold two of the real property investments.
Property management services for one of the Partnership's real estate
investments is provided by an independent real estate management company for
fees calculated as a percentage of gross rents received from the property.
Affiliates of the Managing General Partner provide property management and/or
supervisory services for fees calculated as a percentage of gross rents received
from each of the Partnership's properties.
The real estate business is highly competitive. The results of operations of
the Partnership will depend upon the availability of suitable tenants, real
estate market conditions and general economic conditions which may impact the
success of those tenants. Properties owned by the Partnership frequently
compete for tenants with similar properties owned by others.
As of March 1, 1997, there were nine employees at the Partnership's properties
for on-site property maintenance and administration.
ITEM 2. PROPERTIES (a)(b)
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As of December 31, 1996, the Partnership owned, directly or through joint
venture interests, the following four property interests, all of which were
owned in fee simple, except as noted in note (e).
<TABLE>
<CAPTION>
Net Leasable Number of
Property Name Location Sq. Footage Tenants (c)
- ------------------------- -------------------- ------------ -----------
<S> <C> <C> <C>
Shopping Center:
- -------------------------
Lakewood Square (d) Lakewood, California 150,711 32(1)
Office Buildings:
- -------------------------
Foxhall Square (d) Washington, DC 141,902 66
Peachtree Palisades (e) Atlanta, Georgia 128,276 31(2)
12621 Featherwood (d) Houston, Texas 88,811 0(f)
</TABLE>
2
<PAGE>
ITEM 2. PROPERTIES (Continued)
Notes:
-----
a) For a discussion of significant operating results and major capital
expenditures planned for the Partnership's properties refer to Item 7 -
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
b) For Federal income tax purposes, the Partnership depreciates the portion of
the acquisition costs of its properties allocable to real property
(exclusive of land) and all improvements thereafter, over useful lives
ranging from 18 years utilizing Accelerated Cost Recovery System ("ACRS")
to 39 years utilizing Modified ACRS straight-line method. The Partnership's
portion of real estate taxes for Foxhall Square Building ("Foxhall"),
Lakewood Square Shopping Center ("Lakewood"), 12621 Featherwood Building
("Featherwood") and Peachtree Palisades East Office Building ("Peachtree")
was $162,500, $103,200, $41,200 and $70,700, respectively, for the year
ended December 31, 1996. In the opinion of the Managing General Partner,
the Partnership's properties are adequately insured and serviced by all
necessary utilities.
c) Represents the total number of tenants, as well as the number of tenants,
in parenthesis, that individually occupy more than 10% of the net leasable
square footage of the property.
d) The Partnership owns a 50% joint venture interest in this property.
e) The Partnership leases the land on which this property is situated.
f) Sole tenant vacated building on December 14, 1996.
The following table presents each of the Partnership's properties' occupancy
rates as of December 31 for each of the last five years:
<TABLE>
<CAPTION>
Property Name 1996 1995 1994 1993 1992
--------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Lakewood 95% 96% 84% 86% 94%
Foxhall 89% 83% 88% 85% 82%
Peachtree 96% 90% 81% 77% 85%
Featherwood 0% 100% 100% 100% 100%
</TABLE>
The amounts in the following table represent each of the Partnership properties'
average annual rental rate per square foot for each of the last five years ended
December 31 which were computed by dividing each property's base rental revenues
by its average occupied square footage:
<TABLE>
<CAPTION>
Property Name 1996 1995 1994 1993 1992
--------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Lakewood $14.09 $13.67 $14.56 $14.17 $15.15
Foxhall $22.80 $22.99 $22.64 $21.94 $21.94
Peachtree $11.61 $11.73 $11.62 $11.95 $12.41
Featherwood $11.63 $11.18 $10.61 $10.05 $10.23
</TABLE>
3
<PAGE>
ITEM 2. PROPERTIES (Continued)
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The following table summarizes the principal provisions of the leases for the
tenants which occupy ten percent or more of the rentable square footage at each
of the Partnership's properties. No individual tenant at Foxhall or Featherwood
occupies ten percent or more of the rentable square footage of those buildings.
<TABLE>
<CAPTION>
Partnership's Share of per annum
Base Rents (a) for Percentage of Net Renewal
------------------------------------- Leasable Options
Final Twelve Expiration Date of Square Footage (Renewal
1997 Months of Lease Lease Occupied Options/Years)
------------------------------------- ------------------ ------------------ --------------
Lakewood
- --------
<S> <C> <C> <C> <C> <C>
Cost Plus
(specialty store) $123,500 $123,500 10/28/07 13% 2/10
Peachtree
- ---------
Railcar Management, Inc.
(railway management) $278,800 $319,400 12/26/01 15% None
Jacor Communications, Inc.
(radio broadcasting) $278,900 $367,500 8/31/07 16% None
</TABLE>
a) The Partnership's share of per annum base rents for each of the tenants
listed above for the years between 1997 and the final twelve months of
each of the above leases is no lesser or greater than the amounts listed
in the above table.
The amounts in the following table represent the Partnership's portion of leases
in the year of expiration (assuming no lease renewals) for the Partnership
through the year ended December 31, 2006:
<TABLE>
<CAPTION>
Number Base Rents in Year % of Total
Year of Tenants Square Feet of Expiration (a) Base Rents (b)
- ---- ---------- ----------- ---------------------- --------------
<S> <C> <C> <C> <C>
1997 16 19,418 $128,944 3.21%
1998 25 71,948 $317,311 8.77%
1999 20 44,027 $382,538 12.18%
2000 8 20,496 $151,118 5.48%
2001 20 71,081 $666,005 28.64%
2002 4 11,167 $ 92,151 5.69%
2003 14 28,794 $222,028 15.65%
2004 1 2,913 $ 43,551 3.60%
2005 7 38,364 $250,037 24.50%
2006 7 20,572 $112,736 16.62%
</TABLE>
a) Represents the Partnership's portion of base rents to be collected on
expiring leases.
4
<PAGE>
ITEM 2. PROPERTIES (Continued)
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b) Represents the Partnership's portion of base rents to be collected on
expiring leases as a percentage of the Partnership's portion of the total
base rents to be collected on leases in effect as of December 31, 1996.
ITEM 3. LEGAL PROCEEDINGS
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(a & b) The Partnership and its properties were not a party to, nor the subject
of, any material pending legal proceedings, nor were any such proceedings
terminated during the quarter ended December 31, 1996. Ordinary routine
litigation incidental to the business which is not deemed material was pursued
during the quarter ended December 31, 1996.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
(a,b,c & d) None.
5
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S EQUITY AND RELATED SECURITY HOLDER MATTERS
There has not been, nor is there expected to be, a public market for Units.
As of March 1, 1997, there were 8,147 Holders of Units.
6
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------------
1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues $ 5,074,600 $ 4,946,700 $ 4,684,100 $ 4,682,700 $ 5,742,100
Net income (loss) $ 1,389,800 $ 173,300 $ 434,400 $ 1,167,800 $ (194,800)
Net income (loss)
allocated to Limited
Partners $ 1,478,900 $ 276,900 $ 532,200 $ 1,262,200 $ (199,800)
Net income (loss)
allocated to Limited
Partners per Unit
(60,000 Units
outstanding) $ 24.65 $ 4.62 $ 8.87 $ 21.04 $ (3.33)
Total assets $28,137,300 $28,553,900 $29,792,600 $30,524,900 $30,432,200
Distributions to Limited
Partners per Unit
(60,000 Units
outstanding) (a) $ 28.00 $ 25.68 $ 23.32 $ 13.32 $ 102.12
Return of capital to
Limited Partners per
Unit (60,000 Units
outstanding) (b) $ 3.35 $ 21.06 $ 14.45 N/A $ 102.12
OTHER DATA: Investment
in commercial rental
properties (net of
accumulated
depreciation and
amortization) $23,837,900 $24,149,000 $25,324,600 $25,990,100 $26,455,500
Number of real property
interests owned at
December 31 4 4 4 4 4
- --------------------------------------------------------------------------------------
</TABLE>
Notes:
(a) Distributions per Unit to Limited Partners for the year ended December 31,
1992 included Sale Proceeds of $70.00.
(b) For purposes of this table, return of capital represents either: 1) the
amount by which distributions, if any, exceed net income for the respective
year or 2) total distributions, if any, when the Partnership incurs a net
loss for the respective year. Pursuant to the Partnership Agreement,
Capital Investment is only reduced by distributions of Sale Proceeds.
Accordingly, return of capital as used in this table does not impact
Capital Investment.
The following table includes a reconciliation of Cash Flow (as defined in the
Partnership Agreement) to cash flow provided by operating activities as
determined by generally accepted accounting principles ("GAAP"):
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------------------
1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash Flow (as defined in
the Partnership
Agreement) (a) $ 2,533,800 $ 2,443,600 $ 2,069,000 $ 2,346,700 $ 2,953,900
Items of reconciliation:
Changes in assets and
liabilities:
Decrease (increase) in
current assets 76,700 79,400 59,500 (29,000) (21,100)
(Decrease) increase in
current liabilities (162,600) 85,600 61,000 7,600 69,000
- -------------------------------------------------------------------------------------------
Net cash provided by
operating activities $ 2,447,900 $ 2,608,600 $ 2,189,500 $ 2,325,300 $ 3,001,800
- -------------------------------------------------------------------------------------------
Net cash (used for)
provided by investing
activities $(1,132,900) $(1,094,700) $ (969,200) $ (713,500) $ 5,025,000
- -------------------------------------------------------------------------------------------
Net cash (used for)
financing activities $(1,643,800) $(1,497,600) $(1,227,600) $(1,082,700) $(6,147,100)
- -------------------------------------------------------------------------------------------
</TABLE>
(a) Cash Flow is defined in the Partnership Agreement as Partnership revenues
earned from operations (excluding tenant deposits and proceeds from the
sale or disposition of any Partnership properties), minus all expenses
incurred (including Operating Expenses and any reserves deemed reasonably
necessary by the Managing General Partner), except depreciation and
amortization expenses and capital expenditures, lease acquisition
expenditures and the General Partners' Subordinated Partnership Management
Fee.
The above selected financial data should be read in conjunction with the
financial statements and the related notes appearing on pages A-1 through A-7 in
this report and the supplemental schedule on pages A-8 and A-9.
7
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The ordinary business of the Partnership is expected to pass through three
phases: (i) Offering of Units and investment in properties, (ii) operation of
properties and (iii) sale or other disposition of properties.
The Partnership commenced the Offering of Units on November 16, 1982 and began
operations on January 3, 1983, after reaching the required minimum subscription
level. In March, 1983, the Offering was terminated upon the sale of 60,000
Units. During the period of 1983 to 1985 the Partnership purchased a total of
six properties, including three 50% joint venture interests.
One of the Partnership's objectives is to dispose of its properties when market
conditions allow for the achievement of the maximum possible sales price. The
Partnership, in addition to being in the operation of properties phase, is in
the disposition phase of its life cycle. During the disposition phase of the
Partnership's life cycle, comparisons of operating results are complicated due
to the timing and effect of property sales. Partnership operating results are
generally expected to decline as real property interests are sold since the
Partnership no longer receives income generated from such real property
interests. Through December 31, 1996 the Partnership has sold two real property
investments.
The tenant occupying 100% of Featherwood vacated the property on December 14,
1996, which was the maturity date of their lease. The Managing General Partner
is evaluating alternatives for the property, including costs associated with
retenanting the property into a multi-tenant building or the possible sale of
the property.
OPERATIONS
The table below is a recap of certain operating results of each of the
Partnership's properties for the years ended December 31, 1996, 1995 and 1994.
The discussion following the table should be read in conjunction with the
Financial Statements and Notes thereto appearing in this report.
<TABLE>
<CAPTION>
Comparative Operating Results
(a)
For the Years Ended December 31,
--------------------------------
1996 1995 1994
- ----------------------------------------------------------------
<S> <C> <C> <C>
FOXHALL SQUARE BUILDING (50%)
Rental revenues $1,576,900 $1,643,500 $1,634,200
- ----------------------------------------------------------------
Property net income (b) $ 455,700 $ 483,800 $ 449,400
- ----------------------------------------------------------------
Average occupancy 85% 85% 86%
- ----------------------------------------------------------------
PEACHTREE PALISADES OFFICE BUILDING
Rental revenues $1,486,000 $1,402,200 $1,249,000
- ----------------------------------------------------------------
Property net income (loss) (b) $ 72,700 $ 9,300 $ (67,700)
- ----------------------------------------------------------------
Average occupancy 91% 84% 80%
- ----------------------------------------------------------------
LAKEWOOD SQUARE SHOPPING CENTER (50%)
Rental revenues $1,297,700 $1,170,100 $1,168,900
- ----------------------------------------------------------------
Property net income $ 641,100 $ 602,500 $ 496,600
- ----------------------------------------------------------------
Average occupancy 96% 91% 84%
- ----------------------------------------------------------------
12621 FEATHERWOOD BUILDING (50%)
Rental revenues $ 506,000 $ 498,700 $ 456,700
- ----------------------------------------------------------------
Property net income (b) $ 197,300 $ 154,400 $ 94,800
- ----------------------------------------------------------------
Average
occupancy (c) 92% 100% 100%
- ----------------------------------------------------------------
</TABLE>
(a) Excludes certain income and expense items which are either not directly
related to individual property operating results such as interest income
and general and administrative expenses or are related to properties
previously owned by the Partnership.
(b) Property net income (loss) excludes provisions for value impairment which
were included in the Statements of Income and Expenses for the years ended
December 31, 1995 and 1994 (see Note 7 of Notes to Financial Statements for
additional information).
(c) Property has been vacant since December 14, 1996.
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1996 TO THE YEAR ENDED DECEMBER 31,
1995
Net income increased by $1,216,500 for the year ended December 31, 1996, when
compared to the year ended December 31, 1995, which was primarily the result of
$1,100,000 of provisions for value impairment recorded in 1995. Exclusive of
the provisions, net income increased $116,500 for the year ended December 31,
1996 when compared to the year ended December 31, 1995. The increase was
primarily due to improved operating results at Peachtree Palisades East Office
Building ("Peachtree"), Featherwood and Lakewood Square Shopping Center
("Lakewood") as well as decreased general and administrative expenses due to
reduced printing and mailing costs. Partially offsetting the increase in net
income was diminished operating results at Foxhall Square Building ("Foxhall").
Rental revenues increased by $153,100 or 3.2% for the year ended December 31,
1996, when compared to the year ended December 31, 1995. The primary factors
which caused the increase in rental revenues for the comparable periods were:
1) increased base rental income at Peachtree as a result of increases in the
average occupancy and the revenues generated by the parking facility, partially
offset by a decrease in real estate tax escalation income; 2) increased base
rents and tenant expense reimbursements for common area maintenance at Lakewood
primarily due to an increase in occupancy; and 3) increased real estate tax
escalation income at Featherwood.
Real estate tax expense increased by $33,500 for the year ended December 31,
1996 when compared to the year ended December 31, 1995 primarily due to the
1995 receipts of refunds for 1993/1994 real estate taxes at Lakewood and for
1992 real estate taxes at Peachtree. Real estate tax expense, exclusive of the
refunds, decreased as a result of decreases in the assessed valuations of
Foxhall and Featherwood.
Property operating expenses increased by $24,300 for the year ended December
31, 1996 when compared to the year ended December 31, 1995. The increase was
primarily due to an increase in utilities at Foxhall and an increase in
security costs at Lakewood.
8
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1995 TO THE YEAR ENDED DECEMBER 31,
1994
Net income for the year ended December 31, 1995 decreased by $261,100 when
compared to the year ended December 31, 1994. The effects of provisions for
value impairment recorded for the years ended December 31, 1995 and 1994 of
$1,100,000 and $500,000, respectively, had a significant impact on the
comparison of net income. For additional information regarding provisions for
value impairment, see Note 7 of Notes to Financial Statements.
Net income for the year ended December 31, 1995, exclusive of the provisions
for value impairment, increased by $338,900 when compared to the year ended
December 31, 1994. The increase in net income for the years under comparison
was primarily due to: 1) improved operating results at all of the Partnership's
properties totaling $276,900; 2) increased interest income of $57,900 resulting
from an increase in rates available on the Partnership's short-term investments
and 3) decreased general and administrative costs of $4,100 resulting from a
decrease in data processing and appraisal fees partially offset by increases in
personnel costs and printing and mailing costs.
Rental revenues increased by $204,700 or 4.5% for the year ended December 31,
1995, when compared to the year ended December 31, 1994. Rental revenues
increased at all of the Partnership's properties due to: 1) increased base
rents at Peachtree resulting from an increase in occupancy; 2) increased base
rents, tenant expense reimbursements and income from the operations of the
parking garage at Foxhall; 3) increased base rents and tenant reimbursements
for real estate taxes and common area costs charged to the sole tenant at
Featherwood and 4) increased base rents at Lakewood primarily due to an
increase in occupancy, partially offset by a decrease in tenant reimbursements
for real estate taxes due to the receipt of real estate tax refunds for the
1993/1994 and 1994/1995 tax years.
Real estate tax expense decreased by $89,100 for the year ended December 31,
1995 when compared to the year ended December 31, 1994. The decrease was
primarily due to the receipt of refunds in 1995 of $27,800 for 1993/1994 and
$29,400 for 1994/1995 real estate taxes at Lakewood and $38,700 for 1992 real
estate taxes at Peachtree. Also contributing to the decrease was a decrease in
real estate taxes at Featherwood resulting from decreases in the assessed value
and the tax rate. Although the assessed value at Foxhall has decreased and the
actual taxes paid in 1995 were lower than in 1994, real estate tax expense was
higher in 1995 due to the fact that 1994 included a refund for real estate
taxes for the 1992/1993 tax year.
Depreciation and amortization expense increased by $35,700 for the year ended
December 31, 1995 when compared to the year December 31, 1994. The increase was
due to the fact that periodic depreciation and amortization expense for assets
placed in service in 1995 exceeded the periodic depreciation and amortization
expense for certain assets whose depreciable and amortizable lives expired in
1994.
Insurance expense decreased by $17,300 for the year ended December 31, 1995,
when compared to the year ended December 31, 1994. This decrease was primarily
due to lower group rates on the Partnership's combined insurance coverage as a
result of a minimal amount of claims made over the past several years.
To increase and/or maintain occupancy levels at the Partnership's properties,
the Managing General Partner, through its Affiliated asset and property
management groups, continues to take the following actions: 1) implementation
of marketing programs, including hiring of third-party leasing agents or
providing on-site leasing personnel, advertising, direct mail campaigns and
development of building brochures; 2) early renewal of existing tenant leases
and addressing any expansion needs these tenants may have; 3) promotion of
local broker events and networking with local brokers; 4) networking with
national level retailers; 5) cold-calling other businesses and tenants in the
market area; and 6) providing rental concessions or competitively pricing
rental rates depending on market conditions.
The rate of inflation has remained relatively stable during the years under
comparison and has had a minimal impact on the operating results of the
Partnership. The nature of various tenants lease clauses protects the
Partnership, to some extent, from increases in the rate of inflation. Certain
of the lease clauses provide for the following: 1) annual rent increases based
on the Consumer Price Index or graduated rental increases; 2) percentage
rentals at shopping centers, for which the Partnership receives as additional
rent a percentage of a tenant's sales over predetermined amounts and 3) total
or partial tenant reimbursement of property operating expenses (e.g., common
area maintenance, real estate taxes, etc.).
LIQUIDITY AND CAPITAL RESOURCES
A primary objective of the Partnership is to provide cash distributions to
Partners from Partnership operations. Cash Flow (as defined in the Partnership
Agreement) is generally not equal to Partnership net income or cash flow as
determined by GAAP, since certain items are treated differently under the
Partnership Agreement than under GAAP. The Managing General Partner believes
that to facilitate a clear understanding of the Partnership's operations, an
analysis of Cash Flow (as defined in the Partnership Agreement) should be
examined in conjunction with an analysis of net income or cash flow as
determined by GAAP. The second table in Selected Financial Data includes a
reconciliation of Cash Flow (as defined in the Partnership Agreement) to cash
flow provided by operating activities as determined by GAAP. Such amounts are
not indicative of actual distributions to Partners and should not necessarily
be considered as an alternative to the results disclosed in the Statements of
Income and Expenses and Statements of Cash Flows.
Cash Flow (as defined in the Partnership Agreement) increased by $90,200 for
the year ended December 31, 1996 when compared to the year ended December 31,
1995. This increase was primarily due to the increase in net income, exclusive
of depreciation, amortization, and provisions for value impairment for the
comparable periods, as previously discussed.
The decrease in the Partnership's cash position of $328,800 as of December 31,
1996 when compared to December 31, 1995 was primarily the result of investments
in debt securities, distributions paid to partners and payments for capital and
tenant improvements exceeding net cash provided by operating activities. Liquid
assets of the Partnership as of December 31, 1996 were comprised of
undistributed cash from operations retained for working capital purposes.
9
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
Net cash provided by operating activities continues to be the Partnership's
primary source of funds. Net cash provided by operating activities for the year
ended December 31, 1996 was $2,447,900, a $160,700 decrease when compared to
the year ended December 31, 1995. This decrease was primarily due to the 1995
receipt of a rebate for the replacement of the air conditioner and the timing
of the payments of expenses at Foxhall. Partially offsetting the decrease was
the timing of the receipt of rental payments at Peachtree, Foxhall and
Featherwood.
The increase in net cash used for investing activities of $38,200 for the year
ended December 31, 1996 when compared to the year ended December 31, 1995 was
due to 1996 investments in debt securities, partially offset by a decrease in
expenditures for capital and tenant improvements and leasing costs at the
Partnership's properties. The increase in investments in debt securities is a
result of the extension of the maturities of certain of the Partnership's
short-term investments in an effort to maximize the return on these amounts
while they are held for working capital purposes. These investments are of
investment-grade and generally mature less than one year from their date of
purchase. The Partnership maintains working capital reserves to pay for capital
and tenant and leasing costs. During the year ended December 31, 1996, the
Partnership spent $832,900 for building and tenant improvements and leasing
costs and has budgeted to spend approximately $650,000 during the year ending
December 31, 1997. Included in the 1997 budgeted amount are capital and tenant
improvements and leasing costs of approximately $325,000, $250,000 and $75,000
at Foxhall, Peachtree and Lakewood, respectively. The Managing General Partner
believes these expenditures are necessary to increase and/or maintain occupancy
levels in very competitive markets, maximize rental rates charged to new and
renewing tenants and prepare the properties for eventual disposition.
The increase in net cash used for financing activities of $146,200 for the year
ended December 31, 1996 when compared to the year ended December 31, 1995 was
due primarily to an increase in distributions paid to Limited Partners.
On December 14, 1996, the sole tenant occupying Featherwood vacated the
premises upon the expiration of their lease. The Managing General Partner is
currently marketing the property for sale, however, if a satisfactory sale
cannot be completed, the Managing General Partner will attempt to retenant the
building. The retenanting of the building is projected to cost the Partnership
as much as $600,000 if the building is converted from single tenant to multi-
tenant use.
In December 1996, the Managing General Partner became aware of the existence of
hazardous substances in the ground under Lakewood. The source of the hazardous
substance is believed to emanate from a tenant operating a dry cleaning
business at Lakewood. The Partnership and its Affiliated partner in the joint
venture which owns Lakewood are currently utilizing consultants to evaluate the
matter and propose courses of action. The effects on the Partnership cannot be
determined at this time as the costs associated with this matter are not yet
determinable.
The Managing General Partner continues to take a conservative approach to
projections of future rental income and to maintain higher levels of cash
reserves due to the anticipated capital and tenant improvements and leasing
costs necessary to be made at the Partnership's properties during the next
several years. As a result of this, cash continues to be retained to supplement
working capital reserves. For the year ended December 31, 1996, Cash Flow (as
defined in the Partnership Agreement) retained to supplement working capital
was $853,800.
Distributions to Limited Partners for the quarter ended December 31, 1996 were
declared in the amount of $420,000 or $7.00 per Unit. Cash distributions are
made 60 days after the last day of each fiscal quarter. The amount of future
distributions to Limited Partners will ultimately be dependent upon the
performance of the Partnership's investments as well as the Managing General
Partner's determination of the amount of cash necessary to supplement working
capital reserves to meet future liquidity requirements of the Partnership.
Accordingly, there can be no assurance as to the amounts of cash for future
distributions to Partners.
10
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted as a separate section of this report.
See page A-1 "Index of Financial Statements, Schedule and Exhibits."
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
11
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) DIRECTORS
The Partnership has no directors. First Capital Financial Corporation
("FCFC") is the Managing General Partner. The directors of FCFC, as of
March 28, 1997, are shown in the table below. Directors serve for one year
or until their successors are elected. The next annual meeting of FCFC will
be held in June 1997.
<TABLE>
<CAPTION>
Name Office
---- ------
<S> <C>
Samuel Zell....................................... Chairman of the Board
Douglas Crocker II................................ Director
Sheli Z. Rosenberg................................ Director
</TABLE>
Samuel Zell, 55, has been a Director of the Managing General Partner since
1983 (Chairman of the Board since December 1985) and is Chairman of the
Board of Equity Financial and Management Company ("EFMC") and Equity Group
Investments, Inc. ("EGI"), and is a trustee and beneficiary of a general
partner of Equity Holdings Limited, an Illinois Limited Partnership, a
privately owned investment partnership. He is also Chairman of the Board of
Directors of Chart House Enterprises, Inc., Ramco Energy plc, TeleTech
Holdings Inc., Anixter International Inc, American Classic Voyages Co and
Manufactured Home Communities, Inc. ("MHC"). He is Chairman of the Board of
Trustees of Equity Residential Properties Trust. He is a director of
Quality Food Centers, Inc. ("QFC") and Sealy Corporation. He is Chairman of
the Board of Directors and Chief Executive Officer of Capsure Holdings
Corp. and Co.-Chairman of the Board of Revco D.S., Inc.
Douglas Crocker II, 56, has been President and Chief Executive Officer
since December 1992 and a Director since January 1993 of the Managing
General Partner. Mr. Crocker has been an Executive Vice President of EFMC
since November 1992. Mr. Crocker has been President, Chief Executive
Officer and trustee of Equity Residential Properties Trust since March 31,
1993. He was President of Republic Savings Bank, F.S.B. ("Republic") from
1989 to June 1992 at which time the Resolution Trust Company took control
of Republic. Mr. Crocker is a member of the Board of Directors of Horizon
Group, Inc.
Sheli Z. Rosenberg, 55, was President and Chief Executive Officer of the
Managing General Partner from December 1990 to December 1992 and has been a
Director of the Managing General Partner since September 1983; was
Executive Vice President and General Counsel for EFMC from October 1980 to
November 1994; has been President and Chief Executive Officer of EFMC and
EGI since November 1994; has been a Director of Great American Management
and Investment Inc. ("Great American") since June 1984 and is a director of
various subsidiaries of Great American. She is also a director of Anixter
International Inc., Capsure Holdings Corp., American Classic Voyages Co.,
Jacor Communications, Inc., Revco D.S., Inc., Sealy Corporation, QFC and
MHC. She is also a trustee of Equity Residential Properties Trust. Ms.
Rosenberg is a Principal of Rosenberg & Liebentritt, P.C., counsel to the
Partnership, the Managing General Partner and certain of their Affiliates.
She had been Vice President of First Capital Benefit Administrators, Inc.
("Benefit Administrators") since July 22, 1987 until its liquidation in
November 1995. Benefit Administrators filed for protection under the
Federal Bankruptcy laws on January 3, 1995.
12
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (Continued)
(b, c & e) EXECUTIVE OFFICERS
The Partnership does not have any executive officers. The executive
officers of the Managing General Partner as of March 28, 1997 are shown in
the table. All officers are elected to serve for one year or until their
successors are elected and qualified.
<TABLE>
<CAPTION>
Name Office
---- ------
<S> <C>
Douglas Crocker II..................... President and Chief Executive Officer
Gus J. Athas........................... Senior Vice President
Norman M. Field........................ Vice President - Finance and Treasurer
</TABLE>
PRESIDENT AND CEO- See Table of Directors above.
Gus J. Athas, 60, has been Senior Vice President of the Managing General
Partner since March 1995. Mr. Athas has served as Senior Vice President,
General Counsel and Assistant Secretary of Great American since March 1995.
Mr. Athas has served as Senior Vice President, General Counsel and
Secretary of Falcon Building Products, Inc. since March 1994 and served as
Vice President and Secretary from January 1994 to March 1994. Mr. Athas has
served as Senior Vice President, General Counsel and Secretary of Eagle
Industries, Inc. ("Eagle") since May 1993. From September 1992 to May 1993,
Mr. Athas was Vice President, General Counsel and Secretary of Eagle. From
November 1987 to September 1992, Mr. Athas served as Vice President,
General Counsel and Assistant Secretary of Eagle.
Norman M. Field, 48, has been Vice President of Finance and Treasurer of
the Managing General Partner since February 1984, and also served as Vice
President and Treasurer of Great American from July 1983 until March 1995.
Mr. Field had been Treasurer of Benefit Administrators since July 22, 1987
until its liquidation in November 1995. Benefit Administrators filed for
protection under the Federal bankruptcy laws on January 3, 1995. He was
Chief Financial Officer of Equality Specialties, Inc. ("Equality"), a
subsidiary of Great American, from August 1994 to April 1995. Equality was
sold in April 1995.
(d) FAMILY RELATIONSHIPS
There are no family relationships among any of the foregoing directors and
officers.
(f) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
With the exception of the bankruptcy matter disclosed under Items 10 (a),
(b), (c) and (e), there are no involvements in certain legal proceedings
among any of the foregoing directors and officers.
13
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
- -------- ----------------------
(a,b,c & d) As stated in Item 10, the Partnership has no officers or directors.
Neither the Managing General Partner, nor any director or officer of the
Managing General Partner, received any direct remuneration from the Partnership
during the year ended December 31, 1996. However, the Managing General Partner
and Affiliates of the Managing General Partner do compensate the directors and
officers of the Managing General Partner. For additional information see Item
13 (a) Certain Relationships and Related Transactions.
(e) None.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------
(a) As of March 1, 1997 no person owned of record or was known by the
Partnership to own beneficially more than 5% of the Partnership's 60,000
Units then outstanding.
(b) The Partnership has no directors or executive officers. As of March 1,
1997, the executive officers and directors of First Capital Financial
Corporation, the Managing General Partner, as a group, did not own any
Units.
(c) None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
(a) Certain Affiliates of the Managing General Partner, provide leasing,
property management and supervisory services to the Partnership.
Compensation for these property management services may not exceed 6% of
the gross receipts from the property being managed where the Managing
General Partner or Affiliates provide leasing, re-leasing, or leasing
related services, or 3% of gross receipts where the Managing General
Partner or Affiliates do not perform leasing, re-leasing or leasing related
services. For the year ended December 31, 1996, these Affiliates were
entitled to supervisory and property management and leasing fees of
approximately $198,800. In addition, other Affiliates of the Managing
General Partner was entitled to compensation and reimbursements of
approximately $95,100 from the Partnership for insurance, personnel, and
other miscellaneous services. Services of Affiliates shall be on terms
which are fair, reasonable and no less favorable to the Partnership than
reasonably could be obtained from unaffiliated persons. As of December 31,
1996 total fees and reimbursements of $20,500 were due to Affiliates.
Jacor Communications, Inc. ("Jacor"), a radio broadcasting company, of
which an approximate 43% interest is owned by Zell Chilmark Fund LP, an
Affiliate of the Managing General Partner, is obligated to the Partnership
under a lease for office space at Peachtree. During the year ended December
31, 1996, Jacor paid rent of $207,000. The rent paid by Jacor is comparable
to that paid by other tenants at Peachtree.
As of December 31, 1996, the Partnership has a recorded liability in the
total amount of $403,000 payable to the Managing General Partner for real
estate commissions earned in connection with the sale of Partnership
properties. Under the terms of the Partnership Agreement, these commissions
will not be paid until such time as Limited Partners have received
cumulative distributions of Sale or Refinancing Proceeds equal to 100% of
their Original Capital Contribution plus a cumulative return (including all
Cash Flow which has been distributed to the Limited Partners from the
initial date of investment) of 6% simple interest per annum on their
Capital Investment.
14
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (Continued)
In accordance with the Partnership Agreement, subsequent to March 31, 1983,
the Termination of the Offering, the General Partners are entitled to 10%
of distributable Cash Flow (as defined by the Partnership Agreement) as
their Subordinated Partnership Management Fee, provided that Limited
Partners first receive specified non-cumulative annual rates of return on
their Capital Investment.
In accordance with the Partnership Agreement, Net Profits (exclusive of
depreciation and Net Profits from the sale or disposition of Partnership
properties) are allocated: first, to the General Partners, in an amount
equal to the greater of the General Partners' Subordinated Partnership
Management Fee or 1% of such Net Profits; and second, the balance, if any,
to the Limited Partners. Net Profits from the sale or disposition of a
Partnership property are allocated: first, to the General Partners, in an
amount equal to the aggregate amount of depreciation previously allocated
to them; second, to the General Partners and the Limited Partners with
negative balances in their capital accounts pro rata in proportion to such
respective negative balances, to the extent of the total of such negative
balances; third, to the General Partners, in an amount necessary to make
the aggregate amount of their capital accounts equal to the greater of the
Sale Proceeds to be distributed to the General Partners with respect to the
sale or disposition of such property or 1% of such Net Profits; and fourth,
the balance, if any, to the Limited Partners. Net Losses (exclusive of
depreciation and Net Losses from the sale, disposition or provision for
value impairment of Partnership properties) are allocated 1% to the General
Partners and 99% to the Limited Partners. All depreciation is allocated 10%
to the General Partners and 90% to the Limited Partners. Net Losses from
the sale, disposition or provision for value impairment of Partnership
properties are allocated: first, to the extent that the balance in the
General Partners' capital accounts exceeds their Capital Investment or the
balance in the capital accounts of the Limited Partners exceeds the amount
of their Capital Investment (collectively, the "Excess Balances"), to the
General Partners and the Limited Partners pro rata in proportion to such
Excess Balances until such Excess Balances are reduced to zero; second, to
the General Partners and the Limited Partners and among them (in the ratio
which their respective capital account balances bear to the aggregate of
all capital account balances) until the balance in their capital accounts
shall be reduced to zero; third, the balance, if any, 99% to the Limited
Partners and 1% to the General Partners. In all events there shall be
allocated to the General Partners not less than 1% of Net Profits and Net
Losses from the sale, disposition or provision for value impairment of a
Partnership property. The General Partners were not entitled to cash
distributions for the year ended December 31, 1996. For the year ended
December 31, 1996, the General Partners were allocated Net (Losses) of
$(89,100).
(b) Rosenberg & Liebentritt, P.C. ("Rosenberg"), serves as legal counsel to the
Partnership, the Managing General Partner and certain of their Affiliates.
Sheli Z. Rosenberg, President and Chief Executive Officer of the Managing
General Partner from December 1990 to December 1992 and a director of the
Managing General Partner since September 1983, is a Principal of Rosenberg.
Compensation for these services are on terms which are fair, reasonable and
no less favorable to the Partnership than reasonably could have been
obtained from unaffiliated persons. Total legal fees paid to Rosenberg for
the year ended December 31, 1996 were $35,300.
(c) No management person is indebted to the Partnership.
(d) None.
15
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- -------- ----------------------------------------------------------------
(a,c & d) (1,2 & 3) See Index of Financial Statements, Schedule and Exhibits
on page A-1 of Form 10-K.
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K for the quarter ended December 31,
1996.
16
<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.
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. - 1
BY: FIRST CAPITAL FINANCIAL CORPORATION
MANAGING GENERAL PARTNER
Dated: March 28, 1997 By: /s/ DOUGLAS CROCKER II
-------------- --------------------------------------
DOUGLAS CROCKER II
President and Chief 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 and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<C> <C> <S>
/s/ SAMUEL ZELL March 28, 1997 Chairman of the Board and Director
- ------------------------- --------------- of the Managing General Partner
SAMUEL ZELL
/s/ DOUGLAS CROCKER II March 28, 1997 President, Chief Executive Officer
- ------------------------- --------------- and Director of the Managing General
DOUGLAS CROCKER II Partner
/s/ SHELI Z. ROSENBERG March 28, 1997 Director of the Managing General
- ------------------------- --------------- Partner
SHELI Z. ROSENBERG
/s/ GUS J. ATHAS March 28, 1997 Senior Vice President
- ------------------------- --------------
GUS J. ATHAS
/s/ NORMAN M. FIELD March 28, 1997 Vice President--Finance and
- ------------------------- -------------- Treasurer
NORMAN M. FIELD
</TABLE>
17
<PAGE>
INDEX OF FINANCIAL STATEMENTS, SCHEDULE AND EXHIBITS
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
<TABLE>
<CAPTION>
Pages
-------------
<S> <C>
Report of Independent Auditors A-2
Balance Sheets as of December
31, 1996 and 1995 A-3
Statements of Partners' Capital
for the Years Ended December
31, 1996, 1995, 1994 A-3
Statements of Income and
Expenses for the Years Ended
December 31, 1996, 1995, 1994 A-4
Statements of Cash Flows for the
Years Ended December 31, 1996,
1995, 1994 A-4
Notes to Financial Statements A-5 to A-7
SCHEDULE FILED AS PART OF THIS REPORT
III - Real Estate and Accumulated
Depreciation as of December 31, 1996 A-8 and A-9
</TABLE>
All other schedules have been omitted as inapplicable, or for the reason that
the required information is shown in the financial statements or notes thereto.
EXHIBITS FILED AS PART OF THIS REPORT
EXHIBITS (3 & 4) First Amended and Restated Certificate and Agreement of
Limited Partnership as set forth on pages A-1 through A-29 of the Partnership's
definitive Prospectus dated October 25, 1982; Registration Statement No. 2-
79092, filed pursuant to Rule 424 (b), is incorporated herein by reference. The
Partnership agreement as filed has subsequently been amended to reflect the
admission, withdrawal and substitution of Limited Partners, the reduction of
Limited Partners' Capital Contributions, and the withdrawal of an individual
General Partner.
EXHIBIT (10) An amendment to the Lease Agreement for a tenant whose 1997
budgeted rental income payments exceeded 10% of one of the Partnership's
properties.
EXHIBIT (13) Annual Report to Security Holders
The 1995 Annual Report to Limited Partners is being sent under separate cover,
not as a filed document and not via EDGAR, for the information of the
Commission.
EXHIBIT (27) Financial Data Schedule
A-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Partners
First Capital Institutional Real Estate, Ltd. - 1
Chicago, Illinois
We have audited the accompanying balance sheets of First Capital Institutional
Real Estate, Ltd. - 1 as of December 31, 1996 and 1995, and the related
statements of income and expenses, partners' capital and cash flows for each of
the three years in the period ended December 31, 1996, and the financial
statement schedule listed in the accompanying index. These financial statements
and schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Capital Institutional
Real Estate, Ltd. - 1 at December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
Ernst & Young LLP
Chicago, Illinois
March 14, 1997
A-2
<PAGE>
BALANCE SHEETS
December 31, 1996 and 1995
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1996 1995
- ---------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $ 5,501,700 $ 5,501,700
Buildings and improvements 31,417,700 30,584,800
- ---------------------------------------------------------------------------
36,919,400 36,086,500
Accumulated depreciation and amortization (13,081,500) (11,937,500)
- ---------------------------------------------------------------------------
Total investment properties, net of accumulated
depreciation and amortization 23,837,900 24,149,000
Cash and cash equivalents 3,926,100 4,254,900
Investment in debt securities 300,000
Rents receivable 60,200 149,800
Other assets 13,100 200
- ---------------------------------------------------------------------------
$ 28,137,300 $28,553,900
- ---------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 263,000 $ 432,500
Due to Affiliates 20,500 21,900
Real estate commissions due to Managing General
Partner 403,000 403,000
Security deposits 147,200 145,800
Distributions payable 420,000 385,200
Other liabilities 117,300 109,000
- ---------------------------------------------------------------------------
1,371,000 1,497,400
- ---------------------------------------------------------------------------
Partners' (deficit) capital:
General Partners (448,400) (359,300)
Limited Partners (60,000 Units issued and
outstanding) 27,214,700 27,415,800
- ---------------------------------------------------------------------------
26,766,300 27,056,500
- ---------------------------------------------------------------------------
$ 28,137,300 $28,553,900
- ---------------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the years ended December 31, 1996, 1995 and 1994
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' (deficit) capital, January 1,
1994 $(157,900) $29,546,700 $29,388,800
Net (loss) income for the year ended
December 31, 1994 (97,800) 532,200 434,400
Distributions for the year ended December
31, 1994 (1,399,200) (1,399,200)
- -------------------------------------------------------------------------------
Partners' (deficit) capital, December 31,
1994 (255,700) 28,679,700 28,424,000
Net (loss) income for the year ended
December 31, 1995 (103,600) 276,900 173,300
Distributions for the year ended December
31, 1995 (1,540,800) (1,540,800)
- -------------------------------------------------------------------------------
Partners' (deficit) capital, December 31,
1995 (359,300) 27,415,800 27,056,500
Net (loss) income for the year ended
December 31, 1996 (89,100) 1,478,900 1,389,800
Distributions for the year ended December
31, 1996 (1,680,000) (1,680,000)
- -------------------------------------------------------------------------------
Partners' (deficit) capital, December 31,
1996 $(448,400) $27,214,700 $26,766,300
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
A-3
<PAGE>
STATEMENTS OF INCOME AND EXPENSES
For the years ended December 31, 1996, 1995 and 1994
(All dollars rounded to nearest 00s except per Unit amounts)
<TABLE>
<CAPTION>
1996 1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
Rental $4,866,600 $4,713,500 $4,508,800
Interest 208,000 233,200 175,300
- -----------------------------------------------------------------------------
5,074,600 4,946,700 4,684,100
- -----------------------------------------------------------------------------
Expenses:
Depreciation and amortization 1,144,000 1,170,300 1,134,600
Property operating:
Affiliates 227,200 199,200 221,900
Nonaffiliates 998,900 1,002,600 988,500
Real estate taxes 377,500 344,000 433,100
Insurance--Affiliate 60,400 46,300 63,600
Repairs and maintenance 692,200 702,700 694,400
General and administrative:
Affiliates 37,800 47,300 37,000
Nonaffiliates 146,800 161,000 176,600
Provisions for value impairment 1,100,000 500,000
- -----------------------------------------------------------------------------
3,684,800 4,773,400 4,249,700
- -----------------------------------------------------------------------------
Net income $1,389,800 $ 173,300 $ 434,400
- -----------------------------------------------------------------------------
Net (loss) allocated to General Partners $ (89,100) $ (103,600) $ (97,800)
- -----------------------------------------------------------------------------
Net income allocated to Limited Partners $1,478,900 $ 276,900 $ 532,200
- -----------------------------------------------------------------------------
Net income allocated to Limited Partners
per Unit (60,000 Units outstanding) $ 24.65 $ 4.62 $ 8.87
- -----------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1996, 1995 and 1994
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1996 1995 1994
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $1,389,800 $ 173,300 $ 434,400
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,144,000 1,170,300 1,134,600
Provisions for value impairment 1,100,000 500,000
Changes in assets and liabilities:
Decrease (increase) in rents receivable 89,600 (82,500) 179,300
(Increase) decrease in other assets (12,900) 161,900 (119,800)
(Decrease) increase in accounts payable
and accrued expenses (169,500) 69,500 41,500
(Decrease) increase in due to Affiliates (1,400) (22,800) 16,000
Increase in other liabilities 8,300 38,900 3,500
- ----------------------------------------------------------------------------------
Net cash provided by operating activities 2,447,900 2,608,600 2,189,500
- ----------------------------------------------------------------------------------
Cash flows from investing activities:
Payments for capital and tenant improvements (832,900) (1,094,700) (969,200)
(Increase) in investments in debt securities (300,000)
- ----------------------------------------------------------------------------------
Net cash (used for) investing activities (1,132,900) (1,094,700) (969,200)
- ----------------------------------------------------------------------------------
Cash flows from financing activities:
Distributions paid to Partners (1,645,200) (1,505,400) (1,249,100)
Increase in security deposits 1,400 7,800 21,500
- ----------------------------------------------------------------------------------
Net cash (used for) financing activities (1,643,800) (1,497,600) (1,227,600)
- ----------------------------------------------------------------------------------
Net (decrease) increase in cash and cash
equivalents (328,800) 16,300 (7,300)
Cash and cash equivalents at the beginning of
the year 4,254,900 4,238,600 4,245,900
- ----------------------------------------------------------------------------------
Cash and cash equivalents at the end of the
year $3,926,100 $4,254,900 $4,238,600
- ----------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
A-4
<PAGE>
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD.-1
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms in
the Partnership's Registration Statement filed with the Securities and Exchange
Commission on Form S-11. Definitions of these terms are contained in Article
III of the First Amended and Restated Certificate and Agreement of Limited
Partnership, which is included in the Registration Statement and incorporated
herein by reference.
ORGANIZATION:
The Partnership was formed on June 6, 1982, by the filing of a Certificate and
Agreement of Limited Partnership with the Department of State of the State of
Florida, and commenced the Offering of Units on November 16, 1982. The
Certificate and Agreement, as amended and restated, authorized the sale to the
public of up to 50,000 Units (with the Managing General Partner's option to
increase to 60,000 Units) and not less than 1,300 Units. On January 3, 1983,
the required minimum subscription level was reached and the Partnership
operations commenced. The Managing General Partner exercised its option to
increase the Offering to 60,000 Units, which amount was sold prior to the
Termination of the Offering in March 1983. The Partnership was formed to invest
primarily in existing, improved, income-producing commercial real estate.
The Partnership Agreement provides that the Partnership will be dissolved on or
before December 31, 2013. The Limited Partners, by a majority vote, may
dissolve the Partnership at any time.
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP"). Under this method of accounting,
revenues are recorded when earned and expenses are recorded when incurred.
Preparation of the Partnership's financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
The financial statements include the Partnership's 50% interest in three joint
ventures with Affiliated partnerships. These joint ventures were formed for the
purpose of each acquiring a 100% interest in certain real properties and are
operated under the common control of the Managing General Partner. Accordingly,
the Partnership's pro rata share of the ventures' revenues, expenses, assets,
liabilities and Partners' capital is included in the financial statements.
The Partnership is not liable for Federal income taxes as the Partners
recognize their proportionate share of the Partnership income or loss on their
individual tax returns; therefore, no provision for income taxes is made in the
financial statements of the Partnership. It is not practicable for the
Partnership to determine the aggregate tax bases of the Limited Partners;
therefore, the disclosure of the difference between the tax bases and the
reported assets and liabilities of the Partnership would not be meaningful.
Commercial rental properties are recorded at cost, net of any provisions for
value impairment, and depreciated (exclusive of amounts allocated to land) on
the straight-line method over their estimated useful lives. Upon classifying a
commercial rental property as held for disposition, no depreciation or
amortization of such property is provided for in the financial statements.
Lease acquisition fees are recorded at cost and amortized on the straight-line
method over the life of the each respective lease. Maintenance and repair costs
are expensed against operations as incurred; expenditures for improvements are
capitalized to the appropriate property accounts and depreciated on the
straight-line method over the estimated life of such improvements.
During the first quarter of 1996, the Partnership adopted Financial Accounting
Standards Board Statement No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" (the "Standard"). The
Standard established guidance for determining if the value of defined assets is
impaired, and if so, how impairment losses should be measured and reported in
the financial statements. Management is not aware of any indicator that would
result in any significant impairment loss. The Standard also addressed the
accounting for long-lived assets to be disposed of. Evaluation of the potential
impairment of the value of the Partnership's assets is performed on an
individual property basis.
Cash equivalents are considered all highly liquid investments with maturity of
three months or less when purchased.
Investments in debt securities are comprised of obligations of the United
States government totaling $300,000 and are classified as held-to-maturity.
These investments are carried at their amortized cost basis in the financial
statements which approximated fair market value. All of these securities had a
maturity of less than one year when purchased.
The Partnership's financial statements include financial instruments, including
receivables and trade liabilities. The fair value of all financial instruments,
including cash and cash equivalents, was not materially different from their
carrying value at December 31, 1996 and 1995.
Certain reclassifications have been made to the previously reported 1995 and
1994 statements in order to provide comparability with the 1996 statements.
These reclassifications have no effect on net (loss) income or Partners'
(deficit) capital.
2. RELATED PARTY TRANSACTIONS:
In accordance with the Partnership Agreement, subsequent to March 31, 1983, the
Termination of the Offering, the General Partners are entitled to 10% of
distributable Cash Flow (as defined by the Partnership Agreement) as their
Subordinated Partnership Management Fee, provided that Limited Partners first
receive specified non-cumulative annual rates of return on their Capital
Investment.
A-5
<PAGE>
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD.-1
In accordance with the Partnership Agreement, Net Profits (exclusive of
depreciation and Net Profits from the sale, disposition, or provision for value
impairment of Partnership properties) are allocated: first, to the General
Partners, in an amount equal to the greater of the General Partners'
Subordinated Partnership Management Fee or 1% of such Net Profits; second, the
balance, if any, to the Limited Partners. Net Profits from the sale,
disposition, or provision for value impairment of a Partnership property are
allocated: first, to the General Partners, in an amount equal to the aggregate
amount of depreciation previously allocated to them; second, to the General
Partners and the Limited Partners with negative balances in their capital
accounts pro rata in proportion to such respective negative balances, to the
extent of the total of such negative balances; third, to the General Partners,
in an amount necessary to make the aggregate amount of their capital accounts
equal to the greater of the Sale Proceeds to be distributed to the General
Partners with respect to the sale, disposition, or provision for value
impairment of such property or 1% of such Net Profits; and fourth, the balance,
if any, to the Limited Partners. Net Losses (exclusive of depreciation and Net
Losses from the sale, disposition, or provision for value impairment of
Partnership properties) are allocated 1% to the General Partners and 99% to the
Limited Partners. All depreciation is allocated 10% to the General Partners and
90% to the Limited Partners. Net Losses from the sale, disposition, or
provision for value impairment of Partnership properties are allocated: first,
to the extent that the balance in the General Partners' capital accounts
exceeds their Capital Investment or the balance in the capital accounts of the
Limited Partners exceeds the amount of their Capital Investment (collectively,
the "Excess Balances"), to the General Partners and the Limited Partners pro
rata in proportion to such Excess Balances until such Excess Balances are
reduced to zero; second, to the General Partners and the Limited Partners and
among them (in the ratio which their respective capital account balances bear
to the aggregate of all capital account balances) until the balance in their
capital accounts shall be reduced to zero; third, the balance, if any, 99% to
the Limited Partners and 1% to the General Partners. In all events there shall
be allocated to the General Partners not less than 1% of Net Profits and Net
Losses from the sale, disposition, or provision for value impairment of a
Partnership property. The General Partners were not entitled to cash
distributions for the years ended December 31, 1996, 1995 and 1994. During the
year ended December 31, 1996, the General Partners were allocated a Net (Loss)
of $(89,100). During the year ended December 31, 1995, the General Partners
were allocated a Net (Loss) of $(103,600) which included a (loss) from
provisions for value impairment of $(11,000). During the year ended December
31, 1994, the General Partners were allocated a Net (Loss) of $(97,800) which
included a (loss) from provision for value impairment of $(5,000).
Affiliates of the Managing General Partner provide property management services
to the Partnership for management fees ranging from 1% to 6% of rents collected
plus reimbursement of specified costs.
Fees and reimbursements paid and payable by the Partnership to Affiliates for
the years ended December 31, 1996, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---------------- ---------------- ----------------
Paid Payable Paid Payable Paid Payable
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Property management and
leasing fees $194,300 $17,500 $195,400 $13,000 $179,200 $40,300
Reimbursement of property
insurance premiums, at
cost 60,400 None 46,300 None 61,700 None
Reimbursement of expenses,
at cost:
--Accounting 24,900 2,400 18,600 5,900 19,800 2,000
--Investor communication 15,700 600 23,200 3,000 14,900 2,400
--Legal 35,300 None 37,600 None 38,400 None
- ------------------------------------------------------------------------------
$330,600 $20,500 $321,100 $21,900 $314,000 $44,700
- ------------------------------------------------------------------------------
</TABLE>
As of December 31, 1996, the Partnership has a recorded liability in the total
amount of $403,000 payable to the Managing General Partner for real estate
commissions earned in connection with the sale of Partnership properties in
prior years. Under the terms of the Partnership Agreement, these commissions
will not be paid until such time as Limited Partners have received cumulative
distributions of Sale or Refinancing Proceeds equal to 100% of their Original
Capital Contribution plus a cumulative return (including all Cash Flow which
has been distributed to the Limited Partners from the initial date of
investment) of 6% simple interest per annum on their Capital Investment.
Jacor Communications, Inc. ("Jacor"), a radio broadcasting company, which is
approximately 43% owned by Zell Chilmark Fund LP, an Affiliate of the Managing
General Partner, is obligated to the Partnership under a lease for office space
at Peachtree Palisades East Office Building. For the year ended December 31,
1996, Jacor paid approximately $207,000 in total rents. The rent paid by Jacor
is comparable to that paid by other tenants at this property.
3. FUTURE MINIMUM RENTALS:
The Partnership's share of future minimum rental income due on non-cancelable
leases as of December 31, 1996 were as follows:
<TABLE>
<S> <C>
1997 $ 4,014,500
1998 3,618,300
1999 3,141,300
2000 2,758,900
2001 2,325,600
Thereafter 6,596,800
--------------
$22,455,400
--------------
</TABLE>
The Partnership is subject to the usual business risks associated with the
collection of the above-scheduled rentals. In addition to the amounts scheduled
above, the Partnership expects to receive rental revenue from operating expense
and real estate tax
A-6
<PAGE>
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD.-1
reimbursements and percentage rents. Percentage rents earned for the years
ended December 31, 1996, 1995 and 1994 were $6,800, $30,800 and $22,800,
respectively.
4. INCOME TAX:
The Partnership utilizes the accrual basis of accounting for both tax reporting
and financial statement purposes. Financial statement results will differ from
tax results due to the use of differing depreciation lives and methods, the
recognition of rents received in advance as taxable income, the use of
differing methods in computing the gain on sale of property and the
Partnership's provision for value impairment.
The net effect of these accounting differences for the year ended December 31,
1996 was that net income for tax reporting purposes was less than the net
income for financial statement purposes by $594,900. The aggregate cost of
commercial rental properties for federal income tax purposes at December 31,
1996 was $40,629,500.
5. MANAGEMENT AGREEMENT:
On-site management for the Lakewood Square Shopping Center ("Lakewood") is
provided by an independent real estate management company for fees calculated
as a percentage of gross rents received from the property.
An Affiliate of the Managing General Partner provides supervisory management
for this property for fees calculated as a percentage of gross rents received
from this property.
6. ENVIRONMENTAL MATTER:
In December 1996, the Managing General Partner became aware of the existence of
hazardous substances in the ground under Lakewood. The source of the hazardous
substance is believed to emanate from a tenant operating a dry cleaning
business at Lakewood. The Partnership and its Affiliated partner in the joint
venture which owns Lakewood are currently utilizing consultants to evaluate the
matter and propose courses of action. The effects on the Partnership cannot be
determined at this time, as the costs associated with this matter are not
presently determinable at this time. The financial statements do not include
any adjustments that might result from the outcome of this matter.
7. PROVISIONS FOR VALUE IMPAIRMENT:
Due to regional factors and other matters affecting the Partnership's office
properties there was uncertainty as to the Partnership's ability to recover the
net carrying basis of certain of its properties. Accordingly, it was deemed
appropriate to reduce the bases of such properties in the Partnership's
financial statements during the years ended December 31, 1995 and 1994.
The provisions for value impairment were considered non-cash events for the
purposes of the Statements of Cash Flow and were not utilized in the
determination of Cash Flows (as defined in the Partnership Agreement). The
following is a summary of the provisions for value impairment reported by the
Partnership for the years ended December 31, 1995 and 1994:
<TABLE>
<CAPTION>
Property 1995 1994
-----------------------------------
<S> <C> <C>
12621 Featherwood $ 300,000 $500,000
Peachtree Palisades 600,000
Foxhall Square 200,000
-----------------------------------
$1,100,000 $500,000
-----------------------------------
</TABLE>
A-7
<PAGE>
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD.-1
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Column A Column C Column D Column E
- -------------------- --------------------------------- --------------------------- -------------------------------------------
Initial cost to Costs capitalized Gross amount at which
Partnership subsequent to acquisition carried at close of period
--------------------------------- --------------------------- --------------------------------------------
Buildings Buildings
and Improve- Carrying and
Description Land Improvements ments Costs (1) Land Improvements Total (2)(3)
- -------------------- ----------- -------------- ----------- --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shopping Center:
Lakewood Square
Shopping Center
(Lakewood, CA)
(50% interest) $ 2,652,800 $ 7,988,700 $ 769,100 $ 40,200 $ 2,652,800 $ 8,798,000 $ 11,450,800
Office Buildings:
Foxhall Square
Building
(Washington, D.C.)
(50% interest) 2,351,100 5,893,400 2,346,200 188,500 2,351,100 8,228,100 (6) 10,579,200
Peachtree Palisades
Office Building
(Atlanta, GA) (7) 8,273,500 4,267,800 46,400 (7) 11,987,700 (8) 11,987,700
12621 Featherwood
Building
(Houston, TX)
(50% interest) 497,800 5,037,700 108,800 57,400 497,800 2,403,900 (9) 2,901,700
----------- ------------ ----------- --------- ----------- ------------ ------------
$ 5,501,700 $ 27,193,300 $ 7,491,900 $ 332,500 $ 5,501,700 $ 31,417,700 $ 36,919,400
=========== ============ =========== ========= =========== ============ ============
</TABLE>
Column B - Not Applicable.
<TABLE>
<CAPTION>
Column F Column G Column H Column I
------------ ------------ -------- --------------
Life on
which
depreciation
in latest
Accumulated income
Depreciation Date of Date statements is
(2) construction Acquired computed
------------ ------------ -------- --------------
<S> <C> <C> <C> <C>
Shopping Center:
Lakewood Square
Shopping Center
(Lakewood, CA) 35(4)
(50% interest) $ 2,933,100 1982 5/84 2-10(5)
Office Buildings:
Foxhall Square
Building
(Washington, D.C.) 35(4)
(50% interest) 3,321,100 1972 6/84 1-10(5)
Peachtree Palisades
Office Building 35(4)
(Atlanta, GA) 5,493,300 1965 9/83 1-10(5)
12621 Featherwood
Building
(Houston, TX)
(50% interest) 1,334,000 1983 1/85 35(4)
------------
$ 13,081,500
============
</TABLE>
See accompanying notes on following page.
A-8
<PAGE>
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. - 1
NOTES TO SCHEDULE III
Note 1. Consists of legal fees, appraisal fees, title costs and other related
professional fees.
Note 2. The following is a reconciliation of activity in columns E and F:
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995 December 31, 1994
--------------------------- -------------------------- --------------------------
Accumulated Accumulated Accumulated
Cost Depreciation Cost Depreciation Cost Depreciation
------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at
beginning of year $ 36,086,500 $ 11,937,500 $ 36,091,800 $ 10,767,200 $ 35,622,600 $ 9,632,500
Additions during
year:
Improvements 832,900 1,094,700 969,200
Provisions for
depreciation
and amortization 1,144,000 1,170,300 1,134,700
Deductions
during year:
Provisions for value
impairment (1,100,000) (500,000)
------------ ------------ ------------ ------------ ------------ ------------
Balance at
end of year $ 36,919,400 $ 13,081,500 $ 36,086,500 $ 11,937,500 $ 36,091,800 $ 10,767,200
============ ============ ============ ============ ============ ============
</TABLE>
Note 3. The aggregate cost for Federal income tax purposes as of December 31,
1996 was $40,629,500.
Note 4. Estimated useful life for building.
Note 5. Ranges of estimated useful life for improvements.
Note 6. Includes provision for value impairment of $200,000.
Note 7. The Partnership leases the land on which this property is situated.
The lease expires on December 31, 2021.
Note 8. Includes provision for value impairment of $600,000.
Note 9. Includes provisions for value impairment of $2,800,000.
A-9
<PAGE>
SECOND AMENDMENT
This Second Amendment (the "Second Amendment") is made and entered into
as of the _____ day of ______________, 1996, by and between First Capital
Institutional Real Estate Ltd.-1, ("Landlord") by its agent, Equity Office
Holdings, L.L.C., a Delaware limited liability company and Railcar, Ltd., a
Georgia corporation, ("Tenant").
WITNESSETH
WHEREAS, Landlord and Tenant are parties to that certain lease dated
the 27th day of May, 1993 currently containing approximately 3,803 rentable
square feet of space described as Suite No. 315 on the third (3rd) floor (the
"Original Premises") of the building commonly known as Peachtree Palisades East
and the address of which is 1819 Peachtree Road, N.E., Atlanta, Georgia (the
"Building"), which lease has been previously amended or assigned by an
instrument dated October 19,1994 and is hereby further amended (as so amended
the Lease unless the context herein requires otherwise); and
WHEREAS, Tenant and Landlord agree to relocate Tenant from the Original
Premises to 5,465 rentable square feet of space described as Suite No. 455 on
the fourth (4th) floor of Building shown on Exhibit A attached hereto (the
"Substitution Space"); and
WHEREAS, Tenant and Landlord are willing to do the same on the terms
and conditions hereinafter set forth;
WHEREAS, the Lease by its terms shall expire on April 30, 1998 ("Prior
Termination Date"), and the parties desire to extend the Lease, all on the terms
and conditions set forth below;
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant agree as
follows:
I. SUBSTITUTION. Effective as of the Substitution Effective Date
(hereinafter defined), the Original Premises is hereby increased from 3,803
rentable square feet, described as Suite No. 315 on the third (3rd) floor of the
Building, to 5,465 rentable square feet, described as Suite No. 455 on the
fourth (4th) floor of the Building, by substituting the Substitution Space for
the Original Premises. The Lease Term for the Substitution Space shall commence
on the Substitution Effective Date and, unless sooner terminated pursuant to the
terms of the Lease, shall end on the Extended Termination Date, as hereinafter
defined.
II. SUBSTITUTION EFFECTIVE DATE.
A. The Substitution Effective Date shall be the earlier to occur
of (i) December 27, 1996 (the "Target Substitution Effective Date"), and (ii)
the date upon which Landlord's improvement work in the Substitution Space (the
"Landlord Work") has been substantially completed; provided however, that if
Landlord shall be delayed in substantially completing the Landlord Work in the
Substitution Space as a result of the occurrence of any of the following (a
"Delay"):
1. Tenant's failure to furnish information reasonably
requested or to respond to any reasonable request by Landlord for any approval
or information within any time period prescribed or, if no time period is
prescribed, then within two (2) Business Days of such request; or
2. Tenant's insistence on materials, finishes or
installations that have long lead times after having first been informed by
Landlord that such materials, finishes or installations will cause a Delay; or
1
<PAGE>
3. Changes in any plans and specifications mutually
agreed by Landlord and Tenant; or
4. The performance or non-performance by a person or
entity employed by Tenant in the completion of any work (all such work and such
persons or entity employed by Tenant in the completion of any work being subject
to the prior approval of Landlord); or
5. Any request by Tenant that Landlord delay the
completion of any of the Landlord Work; or
6. Any breach or default by Tenant in the performance of
Tenant's obligation under the Lease; or
7. Any delay resulting from Tenant's having taken
possession of the Substitution Space for any reason prior to substantial
completion of the Landlord Work; or
8. Any other delay chargeable to Tenant, its agents,
employees or independent contractors; or
9. Any other cause reasonably beyond Landlord's control;
then, for purposes of determining the Substitution Effective Date, the date of
substantial completion shall be deemed to be the day that said Landlord Work
would have been substantially completed absent any such Delay(s), provided
however, the Substitution Effective Date shall in no event be later than
December 27, 1996. Notwithstanding anything herein to the contrary, the
Substitution Effective Date will be deferred beyond December 27, 1996 to the
extent substantial completion occurs thereafter due to Landlord fault or delay
or contractor fault or delay in completing Landlord Work beyond the date
submitted in contractor's bid for construction. The Substitution Space shall be
deemed to be substantially completed on the date that Landlord's architect
reasonably determines that all Landlord's work has been performed (or would have
been performed absent any Delay[s]), other than any details of construction,
mechanical adjustment or any other matter, the nonperformance of which does not
materially interfere with Tenant's use of the Substitution Space. The
adjustment of the Substitution Effective Date, if any, and accordingly, the
postponement of Tenant's obligation to pay Rent on the Substitution Space shall
be Tenant's sole remedy and shall constitute full settlement of all claims that
Tenant might otherwise have against Landlord by reason of the Substitution Space
not being ready for occupancy by Tenant on the Target Substitution Effective
Date. During any period that the Substitution Effective Date is postponed and
Tenant's obligation to pay Rent on the Substitution Space is correspondingly
postponed, Tenant shall continue to be obligated to pay Rent on the Original
Premises in accordance with the terms of the Lease without regard to this Second
Amendment.
B. In addition to the postponement, if any, of the Substitution
Effective Date as a result of the applicability of Paragraph II.A. of this
Second Amendment, the Substitution Effective Date shall be delayed to the extent
that Landlord fails to deliver possession of the Substitution Space for any
other reason reasonably beyond Landlord's control (other than Delays by Tenant),
including, but not limited to, holding over by prior occupants. Any such delay
in the Substitution Effective Date shall not subject Landlord to any liability
for any loss or damage resulting therefrom. Landlord agrees to use reasonable
efforts to cause Landlord Work to be completed by the Target Substitution
Effective Date subject to the contractor's estimated date of completion of
Landlord Work.
2
<PAGE>
C. The Substitution Space is subject to all the terms and
conditions of the Lease (as modified herein) except that Tenant shall not be
entitled to receive any allowances, abatements or other financial concessions
(which are non-remedial in nature, e.g. other than abatement due to
condemnation, casualty, etc.) granted with respect to the Substitution Space
unless such concessions are expressly provided for in this Second Amendment with
respect to the Substitution Space. Effective as of the Substitution Effective
Date, the Lease shall be terminated with respect to the Original Premises, and,
unless otherwise specified, "Premises" shall mean the Substitution Space. After
the Substitution Effective Date, Tenant shall have no further obligations under
the Lease with respect to the Original Premises. Tenant shall vacate the
Original Premises within two (2) business days following the date Landlord
substantially completes Landlord Work in the Substitution Space (such date is
referred to herein as the "Original Premises Vacation Date") and return the same
to Landlord in accordance with the terms and conditions of the Lease.
III. EXTENSION. The remaining Lease Term is hereby modified from
one (1) year, four (4) months, and five (5) days expiring on April 30, 1998
("Prior Termination Date") to sixty (60) months, ("Extended Lease Term")
expiring on December 26, 2001 ("Extended Termination Date"), unless sooner
terminated in accordance with the terms of the Lease. That portion of the Lease
Term commencing the day immediately following the Prior Termination Date and
ending on the Extended Termination Date shall be referred to herein as the
"Extended Term."
IV. MONTHLY BASE RENTAL.
Commencing on the Substitution Effective Date through the Extended
Termination Date, the schedule of monthly installments of Base Rental contained
in Exhibit B-1 of the Lease is hereby revised as follows:
Tenant shall pay Landlord the sum of Four Hundred Forty-one Thousand
Four Hundred Ninety-seven and 03/100 Dollars ($441,497.03) as Base Rental for
the Substitution Space in sixty-two (62) installments (reduced by any
installments +made+ in accordance with the following schedule due before the
Substitution Effective Date) as follows:
(i.) One (1) installment of Nine Hundred Ninety-one and 63/100
Dollars ($991.63) payable on or before the first day of each month during the
period beginning December 27, 1996 and ending December 31, 1996.
(ii.) Four (4) equal installments of Six Thousand One Hundred
Forty-eight and 13/100 Dollars ($6,148.13) each payable on or before the first
day of each month during the period beginning January 1, 1997 and ending April
30, 1997.
(iii.) Twelve (12) equal installments of Six Thousand Eight Hundred
Thirty-one and 25/100 Dollars ($6,831.25) each payable on or before the first
day of the month during the period beginning May 1, 1997 and ending April 30,
1998.
(iv.) Twelve (12) equal installments of Seven Thousand Two Hundred
Eighty-six and 67/100 Dollars ($7,286.67) each payable on or before the first
day of each month during the period beginning May 1, 19998 and ending April 30,
1999.
(v.) Thirty-one (31) equal installments of Seven Thousand Seven
Hundred Forty-two and 08/100 Dollars ($7,742.08) each payable on or before the
first day of each month during the period beginning May 1, 1999 and ending
November 30, 2001.
(vi.) One (1) installment of Six Thousand Four Hundred Ninety-three
and 36/100 Dollars ($6,493.36) payable on or before the first day of the month
during the period beginning December 1, 2001 and ending December 26, 2001.
3
<PAGE>
All such Base Rental shall be payable by Tenant in accordance with the
terms of Article V of the Lease.
V. TENANT'S PRO RATA SHARE. For the period commencing with the
Substitution Effective Date and ending on the Extended Termination Date,
(i)Tenant's Pro Rata Share for the Premises is Four and Twenty-six One
Hundredths percent (4.26%), and (ii) for purposes of Exhibit B-2, the Base Year
for the computation of Tenant's Pro Rata Share of Basic Costs applicable to the
Substitution Space is 1996. Any Additional Base Rental and other operating
expense allocations for any period shall be determined based on a weighted
average of those Tenant's Pro Rata Share percentages and Base Year amounts as
are applicable during the period. Tenant's obligation to pay Additional Base
Rental with regard to the Substitution Space shall not commence until January 1,
1998.
VI. IMPROVEMENTS TO SUBSTITUTION SPACE.
A. Tenant has inspected the Substitution Space and agrees to accept
the same "as is" without any agreements, representations,
understandings or obligations on the part of Landlord to perform any
alterations, repairs or improvements, except as expressly provided
otherwise in Exhibit C of this Second Amendment.
B. COMPLETION OF LANDLORD WORK. Tenant acknowledges that any
incomplete Landlord Work will be performed by Landlord in the
Substitution Space during Normal Business Hours after the Substitution
Effective Date unless postponed as provided herein. Landlord and
Tenant agree to cooperate with each other in order to enable the
Landlord Work to be performed in a timely manner and with as little
inconvenience to the operation of Tenant's business as is reasonably
possible.
VII. EARLY ACCESS TO SUBSTITUTION SPACE. During any period that
Tenant shall be permitted to enter the Substitution Space prior to the
Substitution Effective Date (e.g., to perform alterations or improvements), if
any, Tenant shall comply with all terms and provisions of the Lease, except
those provisions requiring payment of Base Rental or Additional Base Rental as
to the Substitution Space. If Tenant takes possession of the Substitution Space
prior to the Substitution Effective Date for any reason whatsoever (other than
the performance of work in the Substitution Space with Landlord's prior
approval), such possession shall be subject to all the terms and conditions of
the Lease, and Tenant shall pay Base Rental and Additional Base Rental as
applicable to the Substitution Space to Landlord on a per diem basis for each
day of occupancy prior to the Substitution Effective Date.
VIII. HOLDING OVER. In the event Tenant continues to occupy the
Original Premises after the Original Premises Vacation Date, such occupancy
shall be that of a tenancy at sufferance and in no event for month-to-month or
year-to-year, but Tenant shall, throughout the entire holdover period, be
subject to all the terms and provision of this Lease. No holding over by Tenant
in the Original Premises or payments of money by Tenant to Landlord after the
Original Premises Vacation Date shall be construed to prevent Landlord from
recovery of immediate possession of the Original Premises by summary proceedings
or otherwise. In addition to the obligation to pay the amounts set forth in
Article IV above during any such holdover period, Tenant also shall be liable to
Landlord for all damage, including any consequential damage, which Landlord may
suffer by reason of any holding over by Tenant in the Original Premises, and
Tenant shall indemnify Landlord against any and all claims made by any other
tenant or prospective tenant against Landlord for delay by Landlord in
delivering possession of the Original Premises to such other tenant or
prospective tenant caused by Tenant's holding over.
IX. RENEWAL OPTION
A. Tenant shall have the right to extend the Lease Term as to all
space then leased for one (1) additional period of five (5) years (the
"Renewal Term"), if:
4
<PAGE>
1. Landlord receives notice of exercise ("Non-Binding
Renewal Notice") not less than nine (9) full calendar months
prior to the expiration of the Extended Lease Term, and Binding
Renewal Notice (hereinafter defined) not less than six (6) full
calendar months prior to the expiration of the Extended Lease
Term; and
2. Tenant is not in default under the Lease at the time
that Tenant delivers its Non-Binding Renewal Notice and Binding
Renewal Notice; and
3. No part of the Premises is sublet to any party other
than Railcar Management, Inc. at the time that Tenant delivers
its Non-Binding Renewal Notice and Binding Renewal Notice; and
4. The Lease has not been assigned to any party other
than Railcar Management, Inc. pursuant to an assignment
requiring Landlord's consent under the Lease on the date that
Tenant delivers its Non-Binding Renewal Notice and on the date
Tenant delivers its Binding Renewal Notice; and
5. Tenant executes and returns the Renewal Amendment
(hereinafter defined) within fifteen (15) days after its
submission to Tenant.
B. The Initial Base Rental rate per rentable square foot for the
Premises during the Renewal Term shall equal the Prevailing Market Rate
(hereinafter defined) per rentable square foot.
C. Tenant shall pay Additional Base Rental (i.e. Basic Costs) for
the Premises during the Renewal Term in accordance with Exhibit B-2 of
the Lease, as amended by paragraph V above.
D. Tenant shall be entitled to no less than two (2) unassigned
parking spaces per 1,000 useable square feet of office space leased
during the Renewal Term at the then current market rate for said
spaces.
E. Within thirty (30) days after receipt of Tenant's Non-Binding
Renewal Notice, Landlord shall advise Tenant of the applicable Base
Rental rate for the Premises for the Renewal Term. If Tenant desires
to lease the Premises for the Renewal Term at such rate, Tenant shall
give Landlord final binding written notice ("Binding Renewal Notice")
no later than six (6) months prior to the expiration of the Extended
Term (the "Notification Deadline"). If Tenant disagrees with Landlord
s determination of the applicable Base Rental rate, Tenant, within
thirty (30) days after the date on which Landlord advises Tenant of
such rate, shall provide Landlord with a written notice of rejection
(the "Rejection Notice"). If Tenant fails to provide Landlord with
either a Binding Renewal Notice or a Rejection Notice by the
Notification Deadline, Tenant's Renewal Option shall be null and void
and of no further force and effect. If Tenant provides Landlord with a
Binding Renewal Notice, Landlord and Tenant shall enter into the
Renewal Amendment upon the terms and conditions set forth therein. If
Tenant provides Landlord with a Rejection Notice, Landlord and Tenant
shall work together in good faith to agree upon the Prevailing Market
Rate for the Premises during the Renewal Term. Upon agreement Tenant
shall provide Landlord with a Binding Renewal Notice and Landlord and
Tenant shall enter into the Renewal Amendment in accordance with the
terms and conditions thereof.
5
<PAGE>
F. If Tenant is entitled to and properly exercises its Renewal
Option, Landlord shall prepare an amendment (the "Renewal Amendment")
to reflect changes in the Base Rental, Lease Term, Termination Date and
other appropriate terms. The Renewal Amendment shall be:
1. Sent to Tenant within a reasonable time after receipt
of the Binding Renewal Notice; and
2. Executed by Tenant and returned to Landlord in
accordance with paragraph A.5 above.
G. For purposes hereof, "Prevailing Market Rate" shall mean the
arms length fair market annual rental rate per rentable square foot for
renewal leases and amendments entered into on or about the date on
which the Prevailing Market Rate is being determined hereunder for
space comparable to the Premises, in the Building and office buildings
comparable to the Building in the Midtown Atlanta market. The
determination of Prevailing Market Rate shall take into account any
material economic differences between the terms of this Lease and any
comparable lease, such as rent abatements, construction costs and other
concessions and the manner, if any, in which the landlord under any
such lease is reimbursed for operating expenses and taxes. The
determination of Prevailing Market Rate shall also take into
consideration any reasonably anticipated changes in the Prevailing
Market Rate from the time such Prevailing Market Rate is being
determined and the time such Prevailing Market Rate will become
effective under this Lease.
X. RIGHT OF FIRST OFFER.
A. Tenant shall have an ongoing Right of First Offer
through the Extended Lease Term on the 2,581 rentable square
feet adjoining the Premises on the fourth (4th) floor of the
Building effective upon execution of the Second Amendment and
the 2,627 rentable square feet located on the fourth (4th)
floor of the Building effective February 1, 1999 or such
earlier date if said space should become available prior to
February 1, 1999 (current lease expires 8/31/99) (collectively,
the "Offer Space" and as further defined on Exhibit B attached
hereto), which Right of First Offer shall be exercised as
follows: when Landlord has a bonafide prospective third party
tenant or existing tenant ("Prospect") interested in leasing
all or any portion of the Offer Space or renewing or extending
an existing lease with respect thereto (or otherwise amending
an existing lease, the effect of which would be to allow an
existing tenant or any other party the right to continue
leasing or using such Offer Space beyond the date such right
would terminate but for such amendment), Landlord shall advise
Tenant in writing (the "Advice") of the terms under which
Landlord is prepared to lease the Offer Space (or applicable
portion thereof) to such Prospect, and Tenant may lease such
Offer Space, under such terms (except as otherwise provided
herein), in its entirety only , by providing Landlord with
written notice of exercise ("Notice of Exercise") within five
(5) business days after the receipt of the Advice, except that
Tenant shall have no such Right of First Offer and Landlord
need not provide Tenant with an Advice if:
1. Tenant is in default under the Lease at the
time Landlord would otherwise deliver the Advice; or
2. the Premises, or any portion thereof, is
sublet to any party other than Railcar Management,
Inc. at the time Landlord would otherwise deliver the
Advice; or
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3. the Lease has been assigned to any party other
than Railcar Management, Inc., pursuant to an
assignment requiring Landlord's consent under the
Lease, prior to the date Landlord would otherwise
deliver the Advice; or
4. the Offer Space is not intended for the
exclusive use of Tenant during the Lease Term unless
by Railcar Management, Inc.; or
5. the Tenant is not occupying the Premises on
the date Landlord would otherwise deliver the Advice
unless such date is prior to the Substitution
Effective Date of the Lease or unless the Premises are
occupied by Railcar Management, Inc.; or
6. less than twelve (12) months remain in the
Lease Term (as extended or renewed) as of the date
Landlord reasonably determines the commencement date
for the lease of such Offer Space will occur.
B. The Offer Space (including improvements and personalty, if any)
shall be accepted by Tenant in its condition and as-built configuration
existing on the earlier of the date Tenant takes possession of the
Offer Space or the date the term for such Offer Space commences, unless
the Advice specifies an allowance for work to be performed by Landlord
in the Offer Space, in which case Landlord shall perform work in the
Offer Space as specified by Tenant, and approved by Landlord, equal to
such allowance plus such other work as the parties shall agree. Rental
on such Offer Space shall not commence until such work is substantially
complete pursuant to Article III of the Lease and subject to any delays
caused by Tenant as defined by Article III of the Lease.
C. The rights of Tenant hereunder with respect to the applicable
Offer Space shall terminate on the earlier to occur of (i) Tenant's
failure to exercise its Right of First Offer within the five (5)
business day period provided in paragraph A above, and (ii) the date
Landlord would have provided Tenant an Advice if Tenant had not been in
violation of one or more of the conditions set forth in Paragraph A
above. Notwithstanding the foregoing, if Landlord does not enter into
a lease for the Offer Space with the Prospect or any other prospect on
substantially those terms specified in the Advice within a period of
four (4) months following the date of the Advice (or the date Landlord
would have provided Tenant an Advice if Tenant had not been in
violation of one or more of those conditions set forth in the Paragraph
A above), Tenant shall once again have a Right of First Offer with
respect to the Offer Space.
D. 1. If Tenant exercises its Right of First Offer, Landlord
shall prepare an amendment (the "Offer Space Amendment") adding
the Offer Space to the Premises on the terms set forth in the
Advice and reflecting the changes in the Base Rental, Rentable
Area of the Premises, Tenant's Pro Rata Share and other
appropriate terms.
2. The term for the Offer Space shall commence upon the
commencement date stated in the Advice unless otherwise agreed
in writing to by Landlord and Tenant and thereupon such Offer
Space shall be considered a part of the Premises, provided
that, except as otherwise provided herein, all of the terms
stated in the Advice (including, without limitation, the
expiration date set forth in the Advice) shall govern Tenant's
leasing of the Offer Space and, only to the extent that they do
not conflict with the Advice, the terms and conditions of this
Lease shall apply to the Offer Space. Notwithstanding the
foregoing, provided Tenant's remaining Lease Term from the
commencement date of the Offer Space
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term is no less than thirty-six (36) months, the expiration
date for the term of the Offer Space shall be coterminous with
the Expiration Date of the Lease and all applicable terms, e.g.
allowance for improvements and other concessions, stated in the
Advise shall be pro-rated accordingly for the lesser term, if
any, from that stated in the Advice.
3. Tenant shall be entitled to two (2) unassigned parking
spaces per 1,000 useable square feet of Offer Space leased at
the then current market rate for said parking spaces.
4. A copy of the Offer Space Amendment shall be (i) sent
to Tenant within a reasonable time after Landlord's receipt of
the Notice of Exercise, and (ii) executed by Tenant and
returned to Landlord within fifteen (15) business days
thereafter.
E. Notwithstanding the foregoing, if any Offer Space is vacant at
any time prior to Landlord s submittal of an Advice, Tenant shall have
the right to lease such Offer Space at the Prevailing Market Rate for
new space and such other mutually acceptable terms and conditions as
the parties shall agree in good faith. If Tenant leases only a portion
of the available Offer Space, the balance which Tenant does not lease
shall be tenantable and marketable in the sole discretion of the
Landlord, reasonably exercised.
XI. PARKING.
1. Effective November 1, 1996 and during the Extended Term,
Landlord shall make available to Tenant, up to twenty (20) unreserved
parking spaces (the "Spaces") in the parking garage attached to the
Building (the "Garage") for the use of Tenant and its employees in
common with all other users of the Garage. The charge for said Spaces
shall be the market rate, which is subject to change. Notwithstanding
the foregoing, (i) the charge for said Spaces shall not increase to
more than $70.00 per space per month during the Extended Term; (ii)
during the period beginning December 27, 1996 and ending December 26,
1997, eight (8) of said Spaces shall be granted to Tenant at no charge;
and (iii) during the period beginning December 27, 1997 and ending
April 30, 1998, seven (7) of said Spaces shall be granted to Tenant at
no charge. No deductions or allowances shall be made for days when
Tenant or any of its employees does not utilize the parking facilities
or for Tenant utilizing less than all of the Spaces. Tenant shall not
have the right to lease or otherwise use more than the number of Spaces
set forth above.
2. Except for particular spaces and areas designated by Landlord
for reserved parking, all parking in the Building garage (the "Garage")
shall be on an unreserved, first-come, first-served basis.
3. Except as caused by Landlord's gross negligence or willful
misconduct, Landlord shall not be responsible for money, jewelry,
automobiles or other personal property lost in or stolen from the
Garage or the surface parking areas regardless of whether such loss or
theft occurs when the Garage or other areas therein are locked or
otherwise secured. Except as caused by the negligence or willful
misconduct of Landlord, Landlord shall not be liable for any loss,
injury or damage to persons using the Garage or the surface parking
areas or automobiles or other property therein, it being agreed that,
to the fullest extent otherwise permitted by law, the use of the Spaces
shall be at the sole risk of Tenant and its employees.
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4. Landlord shall have the right from time to time to designate
the location of the Spaces and to promulgate reasonable rules and
regulations regarding the Garage, the surface parking areas, if any,
the Spaces and the use thereof, including, but not limited to, rules
and regulations controlling the flow of traffic to and from various
parking areas, the angle and direction of parking and the like. Tenant
shall comply with and cause its employees to comply with all such rules
and regulations as well as all reasonable additions and amendments
thereto.
5. Tenant shall not store or permit its employees to store any
automobiles in the Garage or on the surface parking areas without the
prior written consent of Landlord. Except for emergency repairs,
Tenant and its employees shall not perform any work on any automobiles
while located in the Garage or on the Property. If it is necessary for
Tenant or its employees to leave an automobile in the Garage or on the
surface parking areas overnight, Tenant shall, to the extent reasonably
practical, provide Landlord with prior notice thereof designating the
license plate number and model of such automobile.
6. Landlord shall have the right to temporarily close the Garage
or certain areas therein in order to perform necessary repairs,
maintenance and improvements to the Garage or the surface parking
areas, if any.
7. Tenant shall have the right to assign or sublease any of the
Spaces, up to two (2) spaces per 1,000 useable square feet of office
space assigned or subleased in accordance with the terms of Article
XIII of the Lease. Landlord shall have the right to terminate this
Article XI with respect to any Spaces above two (2) spaces per 1,000
useable square feet of office space that Tenant desires to sublet or
assign. This paragraph 7 shall not apply to any assignment or
subletting pursuant to Article XII below.
8. Landlord may elect to provide parking cards or keys to control
access to the Garage or surface parking areas. In such event, Landlord
shall provide Tenant with one card or key for each Space that Tenant is
leasing hereunder, provided that Landlord shall have the right to
require Tenant or its employees to place a deposit on such access cards
or keys and to pay a fee for any lost or damaged cards or keys.
XII. ASSIGNMENT AND SUBLETTING. Notwithstanding any provision in
the Lease to the contrary, Tenant shall have the right to assign or
sublease the Lease (or any rights or interest hereunder, including,
without limitation, a portion of the Premises, parking spaces and Right
of First Offer) to Railcar Management, Inc. without the consent of
Landlord.
XIII. NOTICES ADDRESSES.
Tenant:
Prior to the Relocation Effective Date, notices shall be sent to Tenant
at the following address:
1819 Peachtree Road, N.E.
Suite 315
Atlanta, Georgia 30309
On or after the Relocation Effective Date, notices shall be sent to
Tenant at the following address:
1819 Peachtree Road, N.E.
Suite 455
Atlanta, Georgia 30309
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Landlord:
1819 Peachtree Road, N.E.
Suite 420
Atlanta, Georgia 30309
Attention: Building Manager
With a copy to:
Equity Office Properties, L.L.C.
Two North Riverside Plaza
Suite 2200
Chicago, Illinois 60606
Attention: General Counsel
Payment of Rent only shall be made payable to the order of First
Capital Institutional Real Estate, Ltd.-1 at the following address:
1819 Peachtree Road, N.E.
Suite 420
Atlanta, Georgia 30309
IX. MISCELLANEOUS
A. This Second Amendment sets forth the entire agreement between
the parties with respect to the matters set forth herein. There have been no
additional or written representations or agreements.
B. Except as herein modified or amended, the provisions,
conditions and terms of the Lease (excluding this Second Amendment) shall remain
unchanged and in full force and effect.
C. In the case of any inconsistency between the provisions of the
Lease (excluding this Second Amendment) and this Second Amendment, the
provisions of this Second Amendment shall govern and control.
D. Submission of this Second Amendment by Landlord is not an offer
to enter into this Second Amendment but rather is a solicitation for such an
offer by Tenant. Landlord shall not be bound by this Second Amendment until
Landlord has executed and delivered same to Tenant.
E. The capitalized terms used in this Second Amendment shall have
the same definitions as set forth in the Lease (excluding this Second Amendment)
to the extent that such capitalized terms are defined therein and not redefined
in this Second Amendment.
F. Landlord and Tenant each warrant and represent to the other
that it has had no dealings with any real estate broker, agent or finder in
connection with the negotiations of this Second Amendment excepting Cushman &
Wakefield of Georgia, Inc. ("Broker") and Equity Office Properties, L.L.C.
("Co-Broker"), collectively (the "Brokers") and it knows of no other real estate
broker, agent or finder other than the Brokers who represented Tenant in the
original Lease, who is entitled to any commission in connection with this Second
Amendment. Landlord and Tenant each covenant and agree to defend, indemnify and
hold the other harmless from and against any and all loss, liability, damage,
claim, judgment, cost or expense (including, but not limited to, attorneys' fees
and expenses and court costs) that may be incurred or suffered by the other
because of any claim for any fee, commission or similar compensation with
respect to this Second Amendment made by any broker, agent or finder except for
Brokers
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claiming to have dealt with the indemnifying party whether or not such claim is
meritorious. Landlord agrees to pay the commission due Brokers in connection
with this Second Amendment pursuant to a separate written commission agreement.
The parties hereby acknowledge that Cushman & Wakefield of Georgia, Inc. has
represented Tenant in this transaction and Equity Office Properties, L.L.C., has
represented Landlord in this transaction.
G. Landlord acknowledges that Tenant is a wholly-owned subsidiary
of Progress Rail Services Corporation.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this
Amendment as of the day and year first above written.
WITNESSES; ATTESTATION LANDLORD:First Capital Institutional Real
Estate Ltd.-1
BY: EQUITY OFFICE HOLDINGS, L.L.C.,
a Delaware limited liability company, as
agent
By:______________________________________
__________________________________
Name (print):_____________________ Name:____________________________________
__________________________________ Title:___________________________________
Name (print):_____________________ Date:____________________________________
TENANT: Railcar, Ltd.,
a Georgia corporation
By:______________________________________
__________________________________
Name (print):_____________________ Name:____________________________________
__________________________________ Title:___________________________________
Name (print):_____________________ Date:____________________________________
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<PAGE>
EXHIBIT A
This Exhibit is attached to and made a part of the Second Amendment
dated ____________________, 1996, by and between First Capital Institutional
Real Estate Ltd.-1, ("Landlord"), by its agent Equity Office Holdings, L.L.C., a
Delaware limited liability company and Railcar, Ltd., a Georgia corporation
("Tenant") for space in the Building located at 1819 Peachtree Road, N.E.
Atlanta, Georgia.
The Substitution Space shall consist of 5,465 rentable square feet
described as Suite 455 located on the fourth (4th) floor in the Building
commonly known as Peachtree Palisades East in the approximate location outlined
below:
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EXHIBIT B
This Exhibit is attached to and made a part of the Second Amendment
dated ____________________, 1996, by and between First Capital Institutional
Real Estate Ltd.-1, ("Landlord"), by its agent Equity Office Holdings, L.L.C., a
Delaware limited liability company and Railcar Ltd., a Georgia corporation
("Tenant") for space in the Building located at 1819 Peachtree Road, N.E.
Atlanta, Georgia.
The Offer Spaces shall consist of 2,627 rentable square feet located on
the fourth (4th) floor and 2,581 rentable square feet location on the fourth
(4th) floor in the Building commonly known as Peachtree Palisades East in the
approximate locations outlined below
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EXHIBIT C
TURN-KEY WORK LETTER
--------------------
This Exhibit is attached to and made a part of the Second Amendment
dated _________________________, 1996 by and between First Capital Institutional
Real Estate Ltd. - 1, by its agent Equity Office Holdings, L.L.C., a Delaware
limited liability corporation ("Landlord") and Railcar, Ltd., a Georgia
corporation ("Tenant") for space in the Building located at 1819 Peachtree
Road, Atlanta, Georgia.
1. This Work Letter shall set forth the obligations of Landlord
and Tenant with respect to the preparation of the Premises for Tenant's
occupancy. All improvements described in this Work Letter to be constructed in
and upon the Premises by Landlord are hereinafter referred to as the "Landlord
Work." It is agreed that construction of the Landlord Work is intended to be
"turn-key" and will be completed at Landlord's sole cost and expense.
Notwithstanding the foregoing, Landlord and Tenant acknowledge that Plans
(hereinafter defined) for the Landlord Work have not yet been priced and,
therefore, it is impossible to determine the exact cost of the Landlord Work at
this time. Accordingly, Landlord and Tenant agree that Landlord's obligation to
pay for the cost of Landlord Work shall be limited to Sixty Thousand One Hundred
Fifteen and 00/100 Dollars ($60,115.00) (the "Maximum Amount") and that Tenant
shall be responsible for the cost of Landlord Work to the extent that it exceeds
the Maximum Amount. Landlord shall enter into a direct contract for the
Landlord Work with a general contractor selected by Landlord; provided however,
Landlord shall not commence construction until Tenant has approved the final
construction amount. Notwithstanding the foregoing, any delay in completion of
Landlord Work as a result of Tenant's non-approval of the final construction
amount shall be deemed a Delay under this Second Amendment. In addition,
Landlord shall have the right to select and\or approve of any subcontractors
used in connection with the Landlord Work.
2. Space planning, architectural and engineering (mechanical,
electrical and plumbing) drawings for the Landlord Work shall be prepared at
Landlord's sole cost and expense, provided that such costs shall be included in
the cost of Landlord Work for purposes of determining if the Maximum Amount is
exceeded. The space planning, architectural and mechanical drawings are
collectively referred to herein as the "Plans".
3. Tenant shall furnish any requested information and approve or
disapprove any preliminary or final layout, drawings, or plans within five (5)
Business Days after written request. Any disapproval shall be in writing and
shall specifically set forth the reasons for such disapproval. Tenant and
Tenant s Architect shall devote such time in consultation with Landlord and
Landlord's engineer as may be required to provide all information Landlord deems
necessary in order to enable Tenant's Architect and engineer to complete, and
obtain Tenant's written approval of the Plans for the Landlord Work by not later
than November 11, 1996 (the "Plans Due Date"). In the event that Tenant fails
to approve the Plans by the Plans Due Date, Tenant shall be responsible for one
(1) day of Delay (as defined in the Lease) for each day during the period
beginning on the day following the Plans Due Date and ending on the date Tenant
approves the Plans.
4. Prior to commencing any construction of Landlord Work, Landlord
shall submit to Tenant a written estimate setting forth the anticipated cost of
the Landlord Work, including but not limited to labor and materials,
contractor's fees and permit fees. Within five (5) Business Days thereafter,
Tenant shall either notify Landlord in writing of its approval of the cost
estimate, or specify its objections thereto and any desired changes to the
proposed Landlord Work. In the event Tenant notifies Landlord of such
objections and desired changes, Tenant shall work with Landlord to reach a
mutually acceptable alternative cost estimate.
5. In the event Landlord's estimate and/or the actual cost of
construction shall exceed the Maximum Amount (such amounts exceeding the Maximum
Amount being herein referred to as the "Excess Costs"), Tenant shall pay to
Landlord such Excess Costs, to the extent actually incurred, upon demand,
provided Landlord notifies Tenant of any Excess Costs to be incurred prior to
performance of the related Landlord Work. In the event the Maximum Amount
exceeds the cost of Landlord Work, any remaining Maximum Amount shall be applied
to Tenant's Base Rental. The statements of costs submitted to Landlord by
Landlord's contractors shall be conclusive for purposes of determining the
actual cost of the items described therein. The amounts payable hereunder
constitute Rent payable pursuant to the Lease, and the failure to timely pay
same constitutes an event of default under the Lease.
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<PAGE>
6. If Tenant shall request any change, addition or alteration in
any of the Plans after approval by Landlord and Tenant, Landlord shall have such
revisions to the drawings prepared, and Tenant shall reimburse Landlord for the
cost thereof upon demand to the extent that the cost of performing such revision
cause the cost of Landlord Work to exceed the Maximum Amount. Promptly upon
completion of the revisions, Landlord shall notify Tenant in writing of the
increased cost, if any, which will be chargeable to Tenant by reason of such
change, addition or deletion. Tenant shall, within three (3) business days,
notify Landlord in writing whether it desires to proceed with such change,
addition or deletion. In the absence of such written authorization, Landlord
shall have the option to continue work on the Premises disregarding the
requested change, addition or alteration, or Landlord may elect to discontinue
work on the Premises until it receives notice of Tenant's decision, in which
event Tenant shall be responsible for any Delay in completion of the Premises
resulting therefrom. In the event such revisions result in a higher estimate of
the cost of construction and/or higher actual construction costs which exceed
the Maximum Amount, such increased estimate or costs shall be deemed Excess
Costs pursuant to Paragraph 5 hereof and Tenant shall pay such Excess Costs to
the extent actually incurred upon demand.
7. Following approval of the Plans and the payment by Tenant of
the required portion of the Excess Costs, if any, Landlord shall cause the
Landlord Work to be constructed substantially in accordance with the approved
Plans. Landlord shall notify Tenant of the estimated date for substantial
completion of the Landlord Work.
8. Notwithstanding anything herein to the contrary, Landlord shall
enforce against contractor all terms and conditions of Landlord's construction
contract with contractor prior to imposing Excess Costs on Tenant.
9. This Exhibit C shall not be deemed applicable to any additional
space added to the original Premises at any time or from time to time, whether
by any options under the Lease or otherwise, or to any portion of the original
Premises or any additions to the Premises in the event of a renewal or extension
of the original Term of this Lease, whether by any options under the Lease or
otherwise, unless expressly so provided in the Lease or any amendment or
supplement to the Lease.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease
as of the day and year first above written.
ATTEST: LANDLORD: FIRST CAPITAL INSTITUTIONAL
REAL ESTATE LTD-1, a Delaware limited
liability company
BY: EQUITY OFFICE HOLDINGS, L.L.C. a
Delaware limited liability company, as
agent
_____________________________ By:____________________________________
Name (print):________________ Name:__________________________________
_____________________________ Title:_________________________________
Name (print):________________ Date:__________________________________
ATTEST: TENANT: Railcar, Ltd.,
a Georgia corporation
_____________________________ By:____________________________________
Name (print):________________ Name:__________________________________
_____________________________ Title:_________________________________
Name (print):________________ Date:__________________________________
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SECOND AMENDMENT
This Second Amendment (the "Second Amendment") is made and entered into
as of the 4th day of December, 1996, by and between First Capital Institution
Real Estate Ltd.-1, ("Landlord") by its agent, Equity Office Holdings, L.L.C., a
Delaware limited liability company and Railcar Management, Inc., a Georgia
corporation ("Tenant").
WITNESSETH
WHEREAS, Landlord and Tenant are parties to that certain Lease dated
the 27th day of May, 1993 currently containing approximately 15,240 rentable
square feet of space described as Suite No. 303 on the third (3rd) floor
("Original Premises") of the building commonly known as Peachtree Palisades East
and the address of which is 1819 Peachtree Road (the "Building"), which lease
has been previously amended or assigned by instrument(s) dated October 19, 1994
and is hereby further amended (as so amended, the "Lease" unless the context
herein requires otherwise) (collectively the "Lease"); and
WHEREAS, Tenant has requested that additional space consisting of
approximately 3,803 rentable square feet described as Suite 315 on the third
(3rd) floor of the Building shown on Exhibit A attached hereto (the "Expansion
Space") be added to the Premises and that the Lease be appropriately amended
(the Original Premises and Expansion Space are sometimes collectively referred
to as the "Premises"), and Landlord is willing to do the same on the terms and
conditions set forth below;
WHEREAS, the Lease by its terms shall expire on April 30, 1998 ("Prior
Termination Date"), and the parties desire to extend the Lease, all on the terms
and conditions set forth below;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant agree as
follows:
I. EXPANSION. Effective as of the Expansion Effective Date (as
hereinafter defined), the Premises is increased from 15,240 rentable square feet
on the third (3rd) floor to 19,043 rentable square feet on the third (3rd) floor
by the addition of the Expansion Space. The Lease term for the Expansion Space
shall commence on the Expansion Effective Date and end on the Extended
Termination Date (as hereinafter defined). The Expansion Space is subject to
all the terms and conditions of the Lease except as expressly modified herein
and except that Tenant shall not be entitled to receive any allowances,
abatements or other financial concessions (which are non-remedial in nature,
e.g., other than abatement due to condemnation, casualty, etc.) granted with
respect to the Premises unless such concessions are expressly provided for
herein with respect to the Expansion Space.
A. The Expansion Effective Date shall be the earlier to occur of
(i) December 27, 1996 ("Target Expansion Effective Date"), and (ii) the date
upon which Landlord's improvement work in the Expansion Space (the "Landlord
Work") has been substantially completed; provided, however, that if Landlord
shall be delayed in substantially completing the Landlord Work in the Expansion
Space as a result of the occurrence of any of the following (a "Delay"):
1. Tenant's failure to furnish information reasonably
requested or to respond to any reasonable request by Landlord
for any approval or information within any time period
prescribed or, if no time period is prescribed, then within two
(2) Business Days of such request; or
2. Tenant's insistence on materials, finishes or
installations that have long lead times after having first been
informed by Landlord that such materials, finishes or
installations will cause a Delay; or
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3. Changes in any plans and specifications mutually
agreed by Landlord and Tenant; or
4. The performance or nonperformance by a person or
entity employed by Tenant in the completion of any work (all
such work and such persons or entities being subject to the
prior approval of Landlord); or
5. Any request by Tenant that Landlord delay the
completion of any of Landlord Expansion Work; or
6. Any breach or default by Tenant in the performance of
Tenant's obligations under the Lease; or
7. Any delay resulting from Tenant's having taken
possession of the Expansion Space for any reason prior to
substantial completion of the Landlord Expansion Work; or
8. Any other delay chargeable to Tenant, its agents,
employees or independent contractor; or
9. Any other cause reasonably beyond Landlord's control;
then, for purposes of determining the Expansion Effective Date, the
date of substantial completion shall be deemed to be the day that said
Landlord Work would have been substantially completed absent any such
Delay(s); provided, however, the Expansion Effective Date shall in no
event be later than December 27, 1996. Notwithstanding anything herein
to the contrary, the Expansion Effective Date will be deferred beyond
December 27, 1996 to the extent substantial completion occurs
thereafter due to Landlord fault or delay or contractor fault or delay
in completing Landlord Work beyond the date submitted in contractor s
bid for construction. The Expansion Space shall be deemed to be
substantially completed on the date that Landlord's architect
reasonably determines that all Landlord Expansion Work has been
performed (or would have been performed absent any Delays), other than
any details of construction, mechanical adjustment or any other matter,
the noncompletion of which does not materially interfere with Tenant's
use of the Expansion Space. The adjustment of the Expansion Effective
Date, if any, and, accordingly, the postponement of Tenant's obligation
to pay Rent on the Expansion Space, shall be Tenant's sole remedy and
shall constitute full settlement of all claims that Tenant might
otherwise have against Landlord by reason of the Expansion Space not
being ready for occupancy by Tenant on the Target Expansion Effective
Date.
B. As of the date of execution of this Second Amendment, the
Expansion Space is occupied by Railcar, Ltd., an affiliate of Tenant.
Landlord is negotiating with Railcar, Ltd. to relocate it to other
space in the Building. The parties hereto agree that if Landlord fails
to deliver the Expansion Space on or before the Target Expansion
Effective Date as a result of continued occupancy of the Expansion
Space by Railcar, Ltd., such delay shall not delay the Expansion
Effective Date nor shall it subject Landlord to any liability for any
loss or damage resulting therefrom; provided however, Tenant shall have
no obligation to pay rental on the Expansion Space so long as Railcar,
Ltd. is paying rental thereon.
II. EXTENSION. The remaining Lease Term is hereby modified from
one (1) year, four (4) months, and five (5) days expiring on April 30, 1998
("Prior Termination Date") to sixty (60) months, ("Extended Lease Term")
expiring on December 26, 2001 ("Extended Termination Date"), unless sooner
terminated in accordance with the terms of the Lease. That portion of the Lease
Term commencing the day immediately following the Prior Termination Date
("Extension Date") and ending on the Extended Termination Date shall be referred
to herein as the "Extended Term."
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III. MONTHLY BASE RENTAL.
A. Original Premises Through Prior Termination Date. The Base
Rental, Additional Base Rental and all other charges under the Lease
shall be payable as provided therein with respect to the Original
Premises through and including the Prior Termination Date.
B. Original Premises From and After Extension Date. As of the
Extension Date, the schedule of monthly installments of Base Rental
payable with respect to the Original Premises for the Extended Lease
Term is the following:
Tenant shall pay Landlord the sum of Nine Hundred Thirty-one Thousand
Two Hundred Thirty-seven and 74/100 Dollars ($931,237.74) as Base
Rental for the Original Premises for the Extended Term in forty- four
(44) monthly installments as follows:
(i.) Twelve (12) equal installments of Twenty Thousand Three Hundred
Twenty and 00/100 Dollars ($20,320.00) each payable on or before the
first day of each month during the period beginning May 1, 1998 and
ending April 30, 1999.
(ii.) Thirty-one (31) equal installments of Twenty-one Thousand Five
Hundred Ninety and 00/100 Dollars ($21,590.00) each payable on or
before the first day of each month during the period beginning May 1,
1999 and ending November 30, 2001.
(iii.) One (1) equal installment of Eighteen Thousand One Hundred
Seven and 74/100 Dollars ($18,107.74) payable on or before the first
day of the month during the period beginning December 1, 2001 and
ending December 26, 2001.
All such Base Rental shall be payable by Tenant in accordance with the
terms of Article V of the Lease.
C. Expansion Space From Expansion Effective Date Through Extended
Termination Date. As of the Expansion Effective Date, the schedule of
monthly installment of Base Rental payable with respect to the
Expansion space for the balance of the Lease Term and the Extended
Lease Term is the following:
Tenant shall pay Landlord the sum of Three Hundred Seven Thousand Two
Hundred Thirty and 21/100 ($307,230.21) as Base Rental for the Extended
Term in sixty (62) installments (reduced by any installments in
accordance with the following schedule due before the Expansion
Effective Date) as follows:
(i.) One (1) installment of Six Hundred Ninety and 06/100 Dollars
($690.06) payable on or before the first day of each month during the
period beginning December 27, 1996 and ending December 31, 1996.
(ii.) Four (4) equal installments of Four Thousand Two Hundred
Seventy-eight and 38/100 Dollars ($4,278.38) each payable on or before
the first day of each month during the period beginning January 1, 1997
and ending April 30, 1997.
(iii.) Twelve (12) equal installments of Four Thousand Seven Hundred
Fifty-three and 75/100 Dollars ($4,753.75) each payable on or before
the first day of the month during the period beginning May 1, 1997 and
ending April 30, 1998.
(iv.) Twelve (12) equal installments of Five Thousand Seventy and
67/100 Dollars ($5,070.67) each payable on or before the first day of
each month during the period beginning May 1, 19998 and ending April
30, 1999.
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(v.) Thirty-one (31) equal installments of Five Thousand Three
Hundred Eighty-seven and 58/100 Dollars ($5,387.58) each payable on or
before the first day of each month during the period beginning May 1,
1999 and ending November 30, 2001.
(vi.) One (1) installment of Four Thousand Five Hundred Eighteen and
61/100 Dollars (4,518.61) payable on or before the first day of the
month during the period beginning December 1, 2001 and ending December
26, 2001.
All such Base Rental shall be payable by Tenant in accordance with the
terms of Article V of the Lease.
IV. TENANT'S PRO RATA SHARE.
A. For the period commencing with the Expansion Effective Date and
ending the Extended Termination Date, (i) Tenant's Pro Rata Share for
the Expansion Space is Two and Ninety-six One Hundredths percent
(2.96%), (ii) for purposes of Exhibit B-2, the Base Year for
computation of Tenant's Pro Rata Share of Basic Costs applicable to the
Expansion Space is 1996 and Tenant's obligation to pay Additional Base
Rental with regard to the Expansion Space shall not commence until
January 1, 1998.
B. For purposes of Exhibit B-2, effective May 1, 1998, the Base
Year for computation of Tenant's Pro Rata Share of Basic Costs
applicable to the Original Premises shall be 1996.
C. Any Additional Base Rental and other operating expense
allocations for any period shall be determined on a weighted average of
those Tenant's Pro Rata Share percentages and Base Year amounts as are
applicable during the period.
V. IMPROVEMENTS TO THE PREMISES AND EXPANSION SPACE.
A. Tenant has inspected the Expansion Space and agrees to accept
the same "as is" without any agreements, representations,
understandings or obligations on the part of Landlord to perform any
alterations, repairs or improvements, except as expressly provided
otherwise in Exhibit C of this Second Amendment.
B. COMPLETION OF LANDLORD WORK. If Landlord Work is incomplete on
the Expansion Effective Date for any reason whatsoever, the Expansion
Effective Date shall not be postponed or delayed except as otherwise
provided in Article I.A. herein. Tenant acknowledges than any
incomplete Landlord Work will be performed by Landlord during Normal
Business Hours after the Expansion Effective Date unless postponed as
provided herein. Landlord and Tenant agree to cooperate with each
other in order to enable Landlord Work to be performed in a timely
manner and with as little inconvenience to the operation of Tenant s
business as is reasonably possible. Notwithstanding anything herein to
the contrary, any delay in the completion of Landlord Work or
inconvenience suffered by Tenant during the performance of Landlord
Work shall not subject Landlord to any liability for any loss or damage
resulting therefrom or entitle Tenant to any credit, abatement or
adjustment of Rent of other sums payable under the Lease; provided
however, if Landlord Work is not complete due to fault or delay of
Landlord or contractor which delays completion of Landlord Work beyond
the date submitted by contractor in bid for completion of Landlord
Work, then Rental for the Expansion Space shall abate until substantial
completion of Landlord Work.
VI. EARLY ACCESS TO EXPANSION SPACE. During any period that Tenant
shall be permitted to enter the Expansion Space prior to the Expansion Effective
Date (e.g., to perform alterations or improvements), Tenant shall comply with
all terms and provisions of the Lease, except those provisions requiring payment
of Base Rental or Additional
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Base Rental as to the Expansion Space. If Tenant takes possession of the
Expansion Space prior to the Expansion Effective Date for any reason whatsoever
(other than the performance of work in the Expansion Space with Landlord's prior
approval), such possession shall be subject to all the terms and conditions of
the Lease, and Tenant shall pay Base Rental and Additional Base Rental as
applicable to the Expansion Space to Landlord on a per diem basis for each day
of occupancy prior to the Expansion Effective Date.
VII. RENEWAL OPTION
A. Tenant shall have the right to extend the Lease Term as to all
space then leased for one (1) additional period of five (5) years (the "Renewal
Term"), if:
1. Landlord receives notice of exercise ("Non-Binding
Renewal Notice") not less than twelve (12) full calendar months
prior to the expiration of the Extended Lease Term and Binding
Renewal Notice (hereinafter defined) not less than ten (10)
full calendar months prior to the expiration of the Extended
Lease Term; and
2. Tenant is not in default under the Lease at the time
that Tenant delivers its Non-Binding Renewal Notice and Binding
Renewal Notice; and
3. No part of the Premises is sublet to any party other
than Railcar, Ltd. at the time that Tenant delivers its
Non-Binding Renewal Notice and Binding Renewal Notice; and
4. The Lease has not been assigned to any party other
than Railcar, Ltd. pursuant to an assignment requiring
Landlord's consent under the Lease on the date that Tenant
delivers its Non-Binding Renewal Notice and on the date Tenant
delivers its Binding Renewal Notice; and
5. Tenant executes and returns the Renewal Amendment
(hereinafter defined) within fifteen (15) days after its
submission to Tenant.
B. The Initial Base Rental rate per rentable square foot for the
Premises during the Renewal Term shall equal the Prevailing Market Rate
(hereinafter defined) per rentable square foot.
C. Tenant shall pay Additional Base Rental (i.e. Basic Costs) for
the Premises during the Renewal Term in accordance with Exhibit B-2 of
the Lease, as amended by paragraph V above.
D. Tenant shall be entitled to no less than two (2) unassigned
parking spaces per 1,000 useable square feet of office space leased
during the Renewal Term at the then current market rate for said
spaces.
E. Within thirty (30) days after receipt of Tenant's Non-Binding
Renewal Notice, Landlord shall advise Tenant of the applicable Base
Rental rate for the Premises for the Renewal Term. If Tenant desires
to lease the Premises for the Renewal Term at such rate, Tenant shall
give Landlord final binding written notice ("Binding Renewal Notice")
no later than ten (10) months prior to the expiration of the Extended
Term (the "Notification Deadline"). If Tenant disagrees with
Landlord's determination of the applicable Base Rental rate, Tenant,
within thirty (30) days after the date on which Landlord advises Tenant
of such rate, shall provide Landlord with a written notice of rejection
(the "Rejection Notice"). If Tenant fails to provide Landlord with
either a Binding Renewal Notice or a Rejection Notice by the
Notification Deadline, Tenant's Renewal Option shall be null and void
and of no further force and effect. If Tenant provides Landlord with a
Binding Renewal Notice, Landlord and Tenant shall
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enter into the Renewal Amendment upon the terms and conditions set
forth therein. If Tenant provides Landlord with a Rejection Notice,
Landlord and Tenant shall work together in good faith to agree upon the
Prevailing Market Rate for the Premises during the Renewal Term. Upon
agreement Tenant shall provide Landlord with a Binding Renewal Notice
and Landlord and Tenant shall enter into the Renewal Amendment in
accordance with the terms and conditions thereof.
F. If Tenant is entitled to and properly exercises its Renewal
Option, Landlord shall prepare an amendment (the "Renewal Amendment")
to reflect changes in the Base Rental, Lease Term, Termination Date and
other appropriate terms. The Renewal Amendment shall be:
1. Sent to Tenant within a reasonable time after receipt
of the Binding Renewal Notice; and
2. Executed by Tenant and returned to Landlord in
accordance with paragraph A.5 above.
G. For purposes hereof, "Prevailing Market Rate" shall mean the
arms length fair market annual rental rate per rentable square foot for
renewal leases and amendments entered into on or about the date on
which the Prevailing Market Rate is being determined hereunder for
space comparable to the Premises, in the Building and office buildings
comparable to the Building in the Midtown Atlanta market. The
determination of Prevailing Market Rate shall take into account any
material economic differences between the terms of this Lease and any
comparable lease, such as rent abatements, construction costs and other
concessions and the manner, if any, in which the landlord under any
such lease is reimbursed for operating expenses and taxes. The
determination of Prevailing Market Rate shall also take into
consideration any reasonably anticipated changes in the Prevailing
Market Rate from the time such Prevailing Market Rate is being
determined and the time such Prevailing Market Rate will become
effective under this Lease.
VIII. RIGHT OF FIRST OFFER.
A. Effective November 1, 1998 or such earlier date if said
space(s) become(s) available prior to November 1, 1998 Tenant shall
have an ongoing Right of First Offer through the Extended Lease Term on
the 8,625 rentable square feet located on the second (2nd) floor of the
Building (current lease expires 7/31/99), the 1,061 rentable square
feet located on the second (2nd) floor of the Building (current lease
expires 5/31/99), and the 2,689 rentable square feet located on the
second (2nd) floor of the Building (current lease expires 5/31/99)
described in Exhibit B attached hereto, (collectively, the "Offer
Space"), which Right of First Offer shall be exercised as follows: when
Landlord has a bonafide prospective third party tenant or existing
tenant ("Prospect") interested in leasing all or any portion of the
Offer Space or renewing or extending an existing lease with respect
thereto (or otherwise amending an existing lease, the effect of which
would be to allow an existing tenant or any other party the right to
continue leasing or using such Offer Space beyond the date such right
would terminate but for such amendment), Landlord shall advise Tenant
in writing (the "Advice") of the terms under which Landlord is prepared
to lease the Offer Space (or applicable portion thereof) to such
Prospect, and Tenant may lease such Offer Space, under such terms (or
as provided otherwise herein), in its entirety only, by providing
Landlord with written notice of exercise ("Notice of Exercise") within
five (5) business days after the receipt of the Advice, except that
Tenant shall have no such Right of First Offer and Landlord need not
provide Tenant with an Advice if:
1. Tenant is in default under the Lease at the time
Landlord would otherwise deliver the Advice; or
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2. the Premises, or any portion thereof, is sublet to any
party other than Railcar, Ltd. at the time Landlord would
otherwise deliver the Advice; or
3. the Lease has been assigned to any party other than
Railcar, Ltd. pursuant to an assignment requiring Landlord s
consent under the Lease, prior to the date Landlord would
otherwise deliver the Advice; or
4. the Offer Space is not intended for the exclusive use
of Tenant during the Lease Term unless by Railcar, Ltd.; or
5. the Tenant is not occupying the Premises on the date
Landlord would otherwise deliver the Advice unless such date is
prior to the Expansion Effective Date of the Lease or unless
the Premises are occupied by Railcar, Ltd.; or
6. less than twelve (12) months remain in the Lease Term
(as extended or renewed) as of the date Landlord reasonably
determines the commencement date for the lease of such Offer
Space will occur.
B. The Offer Space (including improvements and personalty, if any)
shall be accepted by Tenant in its condition and as-built configuration
existing on the earlier of the date Tenant takes possession of the
Offer Space or the date the term for such Offer Space commences, unless
the Advice specifies an allowance for work to be performed by Landlord
in the Offer Space, in which case Landlord shall perform work in the
Offer Space as specified by Tenant, and approved by Landlord equal to
such allowance plus such other work as the parties shall agree. Rental
on such Offer Space shall not commence until such work is substantially
complete pursuant to Article III of the Lease and subject to any delays
caused by Tenant as defined by Article III of the Lease.
C. The rights of Tenant hereunder with respect to the applicable
Offer Space shall terminate on the earlier to occur of (i) Tenant's
failure to exercise its Right of First Offer within the five (5)
business day period provided in paragraph A above, and (ii) the date
Landlord would have provided Tenant an Advice if Tenant had not been in
violation of one or more of the conditions set forth in Paragraph A
above. Notwithstanding the foregoing, if Landlord does not enter into
a lease for the Offer Space with the Prospect or any other prospect on
substantially those terms specified in the Advice within a period of
four (4) months following the date of the Advice (or the date Landlord
would have provided Tenant an Advice if Tenant had not been in
violation of one or more of those conditions set forth in Paragraph A
above), Tenant shall once again have a Right of First Offer with
respect to the Offer Space.
D. 1. If Tenant exercises its Right of First Offer, Landlord
shall prepare an amendment (the "Offer Space Amendment") adding
the Offer Space to the Premises on the terms set forth in the
Advice and reflecting the changes in the Base Rental, Rentable
Area of the Premises, Tenant's Pro Rata Share and other
appropriate terms.
2. The term for the Offer Space shall commence upon the
commencement date stated in the Advice unless otherwise agreed
in writing to by Landlord and Tenant and thereupon such Offer
Space shall be considered a part of the Premises, provided
that, except as otherwise provided herein, all of the terms
stated in the Advice (including, without limitation, the
expiration date set forth in the Advice) shall govern Tenant's
leasing of the Offer Space and, only to the extent that they do
not conflict with the Advice, the terms and conditions of this
Lease shall apply to the Offer Space. Notwithstanding the
foregoing, provided Tenant's
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remaining Lease Term from the commencement date of the Offer
Space term is no less than thirty-six (36) months, the
expiration date for the term of the Offer Space shall be
coterminous with the Expiration Date of the Lease, and all
applicable terms, e.g., allowance for improvements and other
concessions, stated in the Advise shall be pro-rated
accordingly for the lesser term, if any, from that stated in
the Advice.
3. Tenant shall be entitled to two (2) unassigned parking
spaces per 1,000 useable square feet of Offer Space leased at
the then current market rate for said spaces.
4. A copy of the Offer Space Amendment shall be (i) sent
to Tenant within a reasonable time after Landlord's receipt of
the Notice of Exercise, and (ii) executed by Tenant and
returned to Landlord within fifteen (15) business days
hereafter.
E. Notwithstanding the foregoing, if any Offer Space is vacant at
any time prior to Landlord's submittal of an Advice, Tenant shall have
the right to lease such Offer Space, at the Prevailing Market Rate for
new space and such other mutually acceptable terms and conditions as
the parties agree in good faith. If Tenant leases only a portion of
the available Offer Space, the balance shall be tenantable and
marketable in the sole discretion of Landlord, reasonably exercised.
IX. PARKING.
1. Per the terms of the Lease (excluding this Second Amendment),
Tenant currently is entitled to fifty-four (54) unassigned parking
spaces. Twenty-seven (27) of said spaces are currently available at no
cost to Tenant. Effective upon the Expansion Effective Date, Tenant
shall be entitled to sixty-eight (68) unassigned parking spaces. During
the period beginning December 27, 1996 and ending December 26, 1997,
thirty-one (31) of said spaces shall be available to Tenant at no cost
to Tenant. During the period beginning December 27, 1997 and ending
April 30, 1998, twenty-seven (27) of said spaces shall be available to
Tenant at no cost to Tenant.
2. Effective May 1, 1998 and during the Extended Term, Landlord
shall make available to Tenant, up to sixty-eight (68) unreserved
parking spaces (the "Spaces") in the parking garage attached to the
Building (the "Garage") for the use of Tenant and its employees in
common with all other users of the Garage. The charge for said Spaces
shall be the market rate, which is subject to change. Notwithstanding
the foregoing, the charge for said Spaces shall not increase to more
than $70.00 per space per month during the Extended Term. No
deductions or allowances shall be made for days when Tenant or any of
its employees does not utilize the parking facilities or for Tenant
utilizing less than all of the Spaces. Tenant shall not have the right
to lease or otherwise use more than the number of Spaces set forth
above.
3. Except for particular spaces and areas designated by Landlord
for reserved parking, all parking in the Building garage (the "Garage")
shall be on an unreserved, first-come, first-served basis.
4. Except as caused by Landlord's gross negligence or willful
misconduct, Landlord shall not be responsible for money, jewelry,
automobiles or other personal property lost in or stolen from the
Garage or the surface parking areas regardless of whether such loss or
theft occurs when the Garage or other areas therein are locked or
otherwise secured. Except as caused by the negligence or
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willful misconduct of Landlord, Landlord shall not be liable for any
loss, injury or damage to persons using the Garage or the surface
parking areas or automobiles or other property therein, it being agreed
that, to the fullest extent otherwise permitted by law, the use of the
Spaces shall be at the sole risk of Tenant and its employees.
5. Landlord shall have the right from time to time to designate
the location of the Spaces and to promulgate reasonable rules and
regulations regarding the Garage, the surface parking areas, if any,
the Spaces and the use thereof, including, but not limited to, rules
and regulations controlling the flow of traffic to and from various
parking areas, the angle and direction of parking and the like. Tenant
shall comply with and cause its employees to comply with all such rules
and regulations as well as all reasonable additions and amendments
thereto.
6. Tenant shall not store or permit its employees to store any
automobiles in the Garage or on the surface parking areas without the
prior written consent of Landlord. Except for emergency repairs,
Tenant and its employees shall not perform any work on any automobiles
while located in the Garage or on the Property. If it is necessary for
Tenant or its employees to leave an automobile in the Garage or on the
surface parking areas overnight, Tenant shall, to the extent reasonably
practical, provide Landlord with prior notice thereof designating the
license plate number and model of such automobile.
7. Landlord shall have the right to temporarily close the Garage
or certain areas therein in order to perform necessary repairs,
maintenance and improvements to the Garage or the surface parking
areas, if any.
8. Tenant shall have the right to assign or sublease any of the
Spaces, up to two (2) spaces per 1,000 useable square feet of office
space assigned or subleased in accordance with the terms of Article
XIII of the Lease. Landlord shall have the right to terminate this
Article XI with respect to any Spaces above two (2) spaces per 1,000
useable square feet of office space, that Tenant desires to sublet or
assign. This paragraph 8 shall not apply to any assignment or
subletting pursuant to Article X below.
9. Landlord may elect to provide parking cards or keys to control
access to the Garage or surface parking areas. In such event, Landlord
shall provide Tenant with one card or key for each Space that Tenant is
leasing hereunder, provided that Landlord shall have the right to
require Tenant or its employees to place a deposit on such access cards
or keys and to pay a fee for any lost or damaged cards or keys.
X. ASSIGNMENT AND SUBLETTING. Notwithstanding any provision in
the Lease to the contrary, Tenant shall have the right to assign or
sublease the Premises (or any rights or interest hereunder, including,
without limitation, a portion of the Premises, parking spaces and Right
of First Offer) to Railcar, Ltd., without the consent of Landlord.
XI. NOTICES ADDRESSES.
Notices shall be sent to Tenant and Landlord at the following
addresses:
Tenant:
1819 Peachtree Road, N.E.
Suite 303
Atlanta, Georgia 30309
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Landlord:
1819 Peachtree Road, N.E.
Suite 420
Atlanta, Georgia 30309
Attention: Building Manager
With a copy to:
Equity Office Properties, L.L.C.
Two North Riverside Plaza
Suite 2200
Chicago, Illinois 60606
Attention: General Counsel
Payment of Rent only shall be made payable to the order of First
Capital Institutional Real Estate, Ltd.-1 at the following address:
1819 Peachtree Road, N.E.
Suite 420
Atlanta, Georgia 30309
XII. MISCELLANEOUS.
A. This Second Amendment sets forth the entire agreement between
the parties with respect to the matters set forth herein. There have
been no additional oral or written representations or agreements.
B. Except as herein modified or amended, the provisions,
conditions and terms of the Lease (excluding this Second Amendment)
shall remain unchanged and in full force and effect.
C. In the case of any inconsistency between the provisions of the
Lease (excluding this Second Amendment) and this Second Amendment, the
provisions of this Second Amendment shall govern and control. Under no
circumstances shall this Second Amendment be deemed to grant Tenant any
further right to expand the Premises or extend the Lease beyond such
right as expressly provided herein, provided, however, any such
additional rights specifically provided Tenant in the Lease are not
hereby relinquished or waived.
D. Submission of this Second Amendment by Landlord is not an offer
to enter into this Second Amendment but rather is a solicitation for
such an offer by Tenant. Landlord shall not be bound by this Second
Amendment until Landlord has executed and delivered the same to Tenant.
E. The capitalized terms used in this Second Amendment shall have
the same definitions as set forth in the Lease (excluding this Second
Amendment) to the extent that such capitalized terms are defined
therein and not redefined in this Second Amendment.
F. This Second Amendment is contingent on and subject to full
execution of the document relocating Railcar, Ltd. from the Expansion
Space on the third (3rd) floor of the Building to substitution space
located on the fourth (4th) floor of the Building.
G. Landlord and Tenant each warrant and represent to the other
that it has had no dealings with any real estate broker, agent or
finder in connection with the negotiations of the Second Amendment
excepting Cushman & Wakefield of Georgia, Inc. ("Broker") and Equity
Office Properties, L.L.C. ("Co-Broker"), collectively (the "Brokers")
and it knows of no other real estate broker, agent or finder other than
the Brokers who represented Tenant in the original Lease who is
entitled to any commission in connection with this
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Second Amendment. Landlord and Tenant each covenant and agree to
defend, indemnify and hold the other harmless from and against any and
all loss, liability, damage, claim, judgment, cost or expense
(including, but not limited to, attorneys' fees and expenses and court
costs) that may be incurred or suffered by the other because of any
claim for any fee, commission or similar compensation with respect to
the Second Amendment made by any broker, agent or finder except for
Brokers claiming to have dealt with the indemnifying party whether or
not such claim is meritorious. Landlord agrees to pay the commission
due Brokers in connection with this Second Amendment pursuant to a
separate written commission agreement. The parties hereby acknowledge
that Cushman & Wakefield of Georgia, Inc. has represented Tenant in
this transaction and Equity Office Properties, L.L.C., has represented
Landlord in this transaction.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this
Amendment as of the day and year first above written.
WITNESSES; ATTESTATION LANDLORD:First Capital Institutional Real
Estate Ltd.-1
BY: EQUITY OFFICE HOLDINGS, L.L.C.,
a Delaware limited liability company, as
agent
By:
------------------------------------
- ----------------------------------
Name (print): Angel Rivera Name: Arvid Povilaitis
--------------------- ------------------------------------
Title: V.P.
- ---------------------------------- -----------------------------------
Name (print): Timothy Holder Date: 12/4/96
--------------------- ------------------------------------
TENANT: Railcar Management, Inc.,
a Georgia corporation
By:
--------------------------------------
- ----------------------------------
Name (print): Jimmy Duckworth Name: Debra DeWitt
--------------------- ------------------------------------
Title:
- ---------------------------------- -----------------------------------
Name (print): Date: 12/4/96
--------------------- ------------------------------------
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EXHIBIT A
This Exhibit is attached to and made a part of the Second Amendment
dated 12/4, 1996, by and between First Capital Institutional Real Estate Ltd.-1,
("Landlord"), by its agent Equity Office Holdings, L.L.C., a Delaware limited
liability company and Railcar Management, Inc., a Georgia corporation ("Tenant")
for space in the Building located at 1819 Peachtree Road, N.E. Atlanta, Georgia.
The Expansion Space shall consist of 3,803 rentable square feet
described as Suite 315 located on the third (3rd) floor in the Building commonly
known as Peachtree Palisades East in the approximate location outlined below:
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EXHIBIT B
This Exhibit is attached to and made a part of the Second Amendment
dated 12/4, 1996, by and between First Capital Institutional Real Estate Ltd.-1,
("Landlord"), by its agent Equity Office Holdings, L.L.C., a Delaware limited
liability company and Railcar Management, Inc., a Georgia corporation ("Tenant")
for space in the Building located at 1819 Peachtree Road, N.E. Atlanta, Georgia.
The Offer Spaces shall consist of 8,625 rentable square feet located on
the second (2nd) floor and 1,061 rentable square feet located on the second
(2nd) floor and 2,689 rentable square feet located on the second (2nd) floor in
the Building commonly known as Peachtree Palisades East in the approximate
locations outlined below:
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EXHIBIT C
TURN-KEY WORK LETTER
--------------------
This Exhibit is attached to and made a part of the Second Amendment
dated 12/4, 1996 by and between First Capital Institutional Real Estate Ltd. -
1, by its agent Equity Office Holdings, L.L.C., a Delaware limited liability
corporation ("Landlord") and Railcar Management, Inc., a Georgia corporation
("Tenant") for space in the Building located at 1819 Peachtree Road, Atlanta,
Georgia.
1. This Work Letter shall set forth the obligations of Landlord
and Tenant with respect to the preparation of the Premises and Expansion Space
for Tenant's occupancy. All improvements described in this Work Letter to be
constructed in and upon the Premises and Expansion Space by Landlord are
hereinafter referred to as the "Landlord Work." It is agreed that construction
of the Landlord Work is intended to be "turn-key" and will be completed at
Landlord's sole cost and expense. Notwithstanding the foregoing, Landlord and
Tenant acknowledge that Plans (hereinafter defined) for the Landlord Work have
not yet been priced and, therefore, it is impossible to determine the exact cost
of the Landlord Work at this time. Accordingly, Landlord and Tenant agree that
Landlord's obligation to pay for the cost of Landlord Work shall be limited to
Fifty-seven Thousand One Hundred Twenty-nine and 00/100 Dollars ($57,129.00)
(the "Maximum Amount") and that Tenant shall be responsible for the cost of
Landlord Work to the extent that it exceeds the Maximum Amount. Landlord shall
enter into a direct contract for the Landlord Work with a general contractor
selected by Landlord; provided however, Landlord shall not commence construction
until Tenant has approved the final construction amount. Notwithstanding the
foregoing, any delay in completion of Landlord Work as a result of Tenant's
non-approval of the final construction amount shall be deemed a Delay under this
Second Amendment. In addition, Landlord shall have the right to select and\or
approve of any subcontractors used in connection with the Landlord Work.
2. Space planning, architectural and engineering (mechanical,
electrical and plumbing) drawings for the Landlord Work shall be prepared at
Landlord's sole cost and expense, provided that such costs shall be included in
the cost of Landlord Work for purposes of determining if the Maximum Amount is
exceeded. The space planning, architectural and mechanical drawings are
collectively referred to herein as the "Plans".
3. Tenant shall furnish any requested information and approve or
disapprove any preliminary or final layout, drawings, or plans within five (5)
Business Days after written request. Any disapproval shall be in writing and
shall specifically set forth the reasons for such disapproval. Tenant and
Tenant's Architect shall devote such time in consultation with Landlord and
Landlord's engineer as may be required to provide all information Landlord deems
necessary in order to enable Tenant's Architect and engineer to complete, and
obtain Tenant's written approval of the Plans for the Landlord Work by not later
than November 11, 1996 (the "Plans Due Date"). In the event that Tenant fails
to approve the Plans by the Plans Due Date, Tenant shall be responsible for one
(1) day of Delay (as defined in the Lease) for each day during the period
beginning on the day following the Plans Due Date and ending on the date Tenant
approves the Plans.
4. Prior to commencing any construction of Landlord Work, Landlord
shall submit to Tenant a written estimate setting forth the anticipated cost of
the Landlord Work, including but not limited to labor and materials,
contractor's fees and permit fees. Within five (5) business days thereafter,
Tenant shall either notify Landlord in writing of its approval of the cost
estimate, or specify its objections thereto and any desired changes to the
proposed Landlord Work. In the event Tenant notifies Landlord of such
objections and desired changes, Tenant shall work with Landlord to reach a
mutually acceptable alternative cost estimate.
5. In the event Landlord's estimate and/or the actual cost of
construction shall exceed the Maximum Amount (such amounts exceeding the Maximum
Amount being herein referred to as the "Excess Costs"), Tenant shall pay to
Landlord such Excess Costs, to the extent actually incurred, upon demand,
provided Landlord notifies Tenant of any Excess Costs to be incurred prior to
performance of the related Landlord Work. In the event the Maximum Amount
exceeds the cost of Landlord Work, any remaining Maximum Amount shall be applied
to Tenant's Base Rental. The statements of costs submitted to Landlord by
Landlord's contractors shall be conclusive for purposes of determining the
actual cost of the items described therein. The amounts payable hereunder
constitute Rent payable pursuant to the Lease, and the failure to timely pay
same constitutes an event of default under the Lease.
6. If Tenant shall request any change, addition or alteration in
any of the Plans after approval by Landlord and Tenant, Landlord shall have such
revisions to the drawings prepared, and Tenant shall reimburse Landlord for the
cost thereof upon demand to the extent that the cost of performing such revision
cause the cost of Landlord Work to exceed the Maximum Amount. Promptly upon
completion of the revisions, Landlord shall notify Tenant in writing of the
increased cost, if any, which will be chargeable to Tenant by reason of such
change, addition or deletion. Tenant shall, within three (3) business days,
14
<PAGE>
notify Landlord in writing whether it desires to proceed with such change,
addition or deletion. In the absence of such written authorization, Landlord
shall have the option to continue work on the Premises and Expansion Space
disregarding the requested change, addition or alteration, or Landlord may elect
to discontinue work on the Premises until it receives notice of Tenant's
decision, in which event Tenant shall be responsible for any Delay in completion
of the Premises and Expansion Space resulting therefrom. In the event such
revisions result in a higher estimate of the cost of construction and/or higher
actual construction costs which exceed the Maximum Amount, such increased
estimate or costs shall be deemed Excess Costs pursuant to Paragraph 5 hereof
and Tenant shall pay such Excess Costs to the extent actually incurred upon
demand.
7. Following approval of the Plans and the payment by Tenant of
the required portion of the Excess Costs, if any, Landlord shall cause the
Landlord Work to be constructed substantially in accordance with the approved
Plans. Landlord shall notify Tenant of the estimated date for substantial
completion of the Landlord Work.
8. Notwithstanding anything herein to the contrary, Landlord shall
enforce against contractor all terms and conditions of Landlord's construction
contract with contractor prior to imposing Excess Costs on Tenant.
9. This Exhibit C shall not be deemed applicable to any additional
space added to the Original Premises or Expansion Space at any time or from time
to time, whether by any options under the Lease or otherwise, or to any portion
of the Original Premises or Expansion Space or any additions to the Premises in
the event of a renewal or extension of the Extended Term of this Second
Amendment, whether by any options under the Lease or otherwise, unless expressly
so provided in the Lease, the Second Amendment or any subsequent amendment or
supplement to the Lease.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Second
Amendment as of the day and year first above written.
ATTEST: LANDLORD: FIRST CAPITAL INSTITUTIONAL
REAL ESTATE LTD-1, a Delaware limited
liability company
BY: EQUITY OFFICE HOLDINGS, L.L.C.,
a Delaware limited liability company, as
agent
By:
------------------------------------
- ----------------------------------
Name (print): Angel Rivera Name: Arvid Povilaitis
--------------------- ------------------------------------
Title: V.P.
- ---------------------------------- -----------------------------------
Name (print): Timothy Holder Date: 12/4/96
--------------------- ------------------------------------
TENANT: Railcar Management, Inc.,
a Georgia corporation
By:
--------------------------------------
- ----------------------------------
Name (print): Jimmy Duckworth Name: Debra DeWitt
--------------------- ------------------------------------
Title:
- ---------------------------------- -----------------------------------
Name (print): Date: 12/4/96
--------------------- ------------------------------------
15
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<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,926,100
<SECURITIES> 300,000
<RECEIVABLES> 60,200
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,286,300
<PP&E> 36,919,400
<DEPRECIATION> 13,081,500
<TOTAL-ASSETS> 28,137,300
<CURRENT-LIABILITIES> 850,700
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 26,766,300
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 5,074,600
<CGS> 0
<TOTAL-COSTS> 2,356,200
<OTHER-EXPENSES> 184,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,389,800
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,389,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,389,800
<EPS-PRIMARY> 24.65
<EPS-DILUTED> 24.65
</TABLE>
