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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
Commission file number 0-13458
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Connecticut 06-1094176
(State of Organization) (I.R.S. Employer Identification No.)
900 Cottage Grove Road, South Building
Bloomfield, Connecticut 06002
(Address of principal executive offices)
Registrant's telephone number, including area code: (860) 726-6000
Securities registered pursuant to Section
12(b) of the Act:
None
(Title of Each Class)
Securities registered pursuant to Section
12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. Not applicable.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
PART I PAGE
Item 1. Business 3
Item 2. Properties 6
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9
PART II
Item 5. Market for Registrant's Common Equity and Related Security Holder Matters 9
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 8. Financial Statements and Supplementary Data 16
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 40
PART III
Item 10. Directors and Executive Officers of the Registrant 40
Item 11. Executive Compensation 42
Item 12. Security Ownership of Certain Beneficial Owners and Management 43
Item 13. Certain Relationships and Related Transactions 43
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 44
SIGNATURES 46
</TABLE>
2
<PAGE>
PART I
ITEM 1. BUSINESS
The Registrant, Connecticut General Equity Properties-I Limited Partnership
(the "Partnership") was formed on November 14, 1983, under the Uniform Limited
Partnership Act of the State of Connecticut for the purpose of acquiring,
operating, holding for investment and disposing of industrial and office
buildings and service center space and, to a lesser extent, residential
properties. On January 31, 1984, the Partnership commenced an offering of
$50,000,000 (subject to increase up to $65,000,000) of Limited Partnership
Interests (the "Units") at $1,000 per Unit, pursuant to a Registration Statement
on Form S-11 under the Securities Act of 1933 (Registration No.
2-87976).
The General Partner of the Partnership is Connecticut General Realty
Resources, Inc.-Third (the "General Partner"), which is an indirect wholly owned
subsidiary of CIGNA Corporation, a publicly held corporation whose stock is
traded on the New York Stock Exchange.
A total of 39,236.25 Units were sold to the public prior to the offering's
termination on December 31, 1985. The holders of 12,314 Units were admitted to
the Partnership in 1984; the holders of 23,381.75 Units were admitted in 1985;
and on January 2, 1986, the holders of the 3,540.5 remaining Units were admitted
to the Partnership. From the 39,236.25 Units sold, the Partnership received net
proceeds of $35,602,279. The holders of Units ("Unit Holders" or "Limited
Partners") of the Partnership share in the ownership of the Partnership's real
property investments according to the number of Units held. Subsequent to
admittance to the Partnership, no Unit Holder has made any additional capital
contribution. The Partnership is engaged solely in the business of real estate
investment.
A presentation of information about industry segments is not applicable.
The Partnership is engaged in passive activities and therefore investors
are subject to the applicable provisions of the Internal Revenue Service Code
and Regulations. Losses from "passive activities" (which include any rental
activity) may only offset income from "passive activities". Investors' passive
losses in excess of passive income from all sources are suspended and are
carried over to future years when they may be deducted against passive income
generated by the Partnership in such year (including gain recognized on the sale
of the Partnership's assets) or against passive income derived by investors from
other sources. Any suspended losses remaining subsequent to Partnership
dissolution may be used by investors to offset ordinary income.
The Partnership acquired five commercial properties (including one owned
through a joint venture) located in Missouri, Arizona, Illinois, Florida and
Massachusetts. In order to acquire the properties, the Partnership, which
purchased its properties for all cash, invested a total of $30,803,712, paid
$2,418,158 in acquisition fees and closing costs, established reserves for
improvements of $1,203,321 and established working capital reserves of
$1,177,088.
Pursuant to the Partnership Agreement, the Partnership is required to
terminate on or before December 31, 2013. The Partnership anticipated that prior
to its termination and dissolution, some or all of the Partnership's properties
would be sold, the retention or sale of any property dependent, in part, on the
anticipated remaining economic benefits of continued ownership. It was expected
that most sales would occur after a period of ownership extending from nine to
twelve years after acquisition. The Partnership sold Courtyard Shopping Center,
located near Chicago in Villa Park, Illinois, on January 11, 1990. The
Partnership sold Westside Industrials located in Phoenix, Arizona as follows:
two of the six buildings (42,480 of the 105,560 square feet) on April 15, 1994;
one additional building (12,600 square feet) on April 27, 1995; and the
remainder of the project on December 26, 1995. Reference is made to Item 7 and
Item 8 for further descriptions of the sales. The General Partner estimates that
the sales of the remaining properties and termination of the Partnership may
occur in the next four to five years.
3
<PAGE>
The Partnership has made the real property investments set forth in the
following table:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
===================================================================================================================================
Name, Type of Property and PURCHASE PRICE ACQUISITION SIZE (D) DATE OF TYPE OF
Location (A)(B)(C) FEES AND SQ. FT. PURCHASE OWNERSHIP
EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
1. Woodlands Plaza II $7,902,880 $498,052 72,465 10-15-84 100% fee simple interest
Office Building
St. Louis, Missouri
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2. Westside Industrials $2,976,000 $350,266 105,560 02-01-85 100% fee simple interest
(formerly Interpark) (sold)
Phoenix, Arizona (e)
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3. Lake Point, I, II, III $9,603,000 $803,929 135,008 07-31-86 100% fee simple interest
Service Center
Orlando, Florida
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4. Westford Corporate $4,321,832 $372,000 162,765 09-11-86 26.08% fee simple
Center, Westford, interest
Massachusetts (f)
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5. Courtyard Shopping $6,000,000 $393,911 57,332 05-10-85 100% fee simple interest
Center (sold)
Villa Park, Illinois(g)
===================================================================================================================================
</TABLE>
[FN]
(a) The Partnership did not incur any debt in connection with the acquisition
of these investment properties.
[FN]
(b) Excludes all broker fees paid at closing.
[FN]
(c) This table does not reflect purchase price adjustments resulting from
master lease provisions.
[FN]
(d) Represents net leasable area at acquisition date; net leasable area may
change due to expansion or tenant improvements.
[FN]
(e) The Partnership sold two of the six buildings, representing 42,480 of the
105,560 square feet on April 15, 1994. An additional building, representing
12,600 square feet was sold on April 27, 1995. The remaining three
buildings were sold on December 26, 1995.
[FN]
(f) The Partnership owns a 26.08% interest in the joint venture partnership
which owns the Westford Corporate Center. CIGNA Income Realty-I Limited
Partnership, an affiliated partnership, is the co-venturer. The information
shown represents the Partnership's share of the total investment.
[FN]
(g) The Partnership sold the Courtyard Shopping Center on January 11, 1990.
4
<PAGE>
Woodlands Plaza II is located in the West County office market of Greater
St. Louis. Overall, the St. Louis economy saw continued growth through 1995,
albeit at a slightly slower pace than in 1994. During the year, St. Louis added
approximately 34,000 new jobs and unemployment fell to a twenty year low of
4.8%. While the manufacturing sector continued to decline, the service sector,
including computer services, health and tourism, grew by approximately 3.3% for
the year. The defense industry was also helped by a $1.8 billion contract from
the United States Air Force awarded to McDonnell Douglas, the largest defense
manufacturer and employer in the state. Office markets throughout the state were
strong. The West County suburban office market contains a total of approximately
12 million square feet. The West County market had an average occupancy of 95%
during 1995, up slightly from 1994. While the suburban office market is
improving, there are still many alternatives for users in the 15,000 square foot
range. The vacancies in the market create enough significant competition that
the investment requirements for re-leasing space is significant. While West
County markets continue to report positive absorption and rental rates are
improving, tenant improvements remain high as a result of the competitive
choices available. The Woodlands submarket of West County, where Woodlands Plaza
II is located, is comprised of nine buildings containing just under 400,000
square feet. Occupancy in 1995 for the Woodlands submarket remained at 82%.
Woodlands Plaza II ended the year 75% occupied, down from the 92% at the close
of 1994. Average rental rates are estimated to remain level or increase slightly
in 1996. Assisted by the expanding market, the supply of Class A office
buildings has been all but absorbed and rental rates are on the rise. There is
no new construction currently underway, although several developers have
announced that they are ready to begin construction on office buildings that
have already gone through planning and zoning.
The Orlando metropolitan area is expected to sustain its steady growth in
population and employment through the end of the decade. The two main sectors of
growth are the trade and service industries. Lake Point I, II and III is located
in the Southern Orlando service center market which contains approximately 3.7
million square feet of service center/warehouse space. Through 1995, new
construction levels in the market were negligible and occupancy levels rose from
84% at the close of 1994 to 87% in 1995 with net absorption of approximately
175,000 square feet of space. Lake Point, which has excellent site access and a
desirable location close to the airport within the Lee Vista Center, was well
ahead of the market at 98%, up significantly from 89% at year end 1994. Rental
rates at the property are competitive with the market range of $4.75 to $8.50
per square foot dependent on grade level or dock-high space. Rents at the
property range from $5.50 to $7.50 per square foot. Lee Vista Center, a planned
business park, is located approximately ten miles southeast of Orlando's central
business district and approximately one mile north of the Orlando International
Airport. Lake Point, which contains a single story office/industrial space with
loading dock areas, is a unique product within the business park and therefore
has limited direct competition. The business park contains mostly office
buildings but also hotels, a daycare center and restaurants. The Orlando Airport
service center market is made up of mostly warehouse or distribution space. In a
recovering market, any development within Lee Vista Center is likely to be
high-rise office, unlikely competition for Lake Point.
Westford Corporate Center is located in the Boston submarket known as the
Northwest Corridor, between Routes I-128 and I-495. During 1995, metropolitan
Boston experienced continued job growth due to the strengthened economy.
Out-migration trends have finally reversed and over one-half of the jobs lost
during the 1989-1992 recession have been regained. Nearly two-thirds of all new
jobs are in the service sector, including computer software, engineering, and
research and health care. Overall, manufacturing employment continues to
decline, although the computer hardware industry has finally turned around. The
market in which Westford competes contains approximately 16.8 million square
feet of space with a 19% vacancy rate. Absorption through the end of 1995
totalled approximately 1,177,300 square feet. Westford maintained its 100%
occupancy level in 1995. Rents for R&D space held steady during the year in the
$5.75 to $7 per square foot range. Rents and occupancy levels in the market will
move up slowly as the market works through an estimated 1-2 year supply of
available R&D space.
Approximate occupancy levels for the properties on a quarterly basis are
set forth in the table in Item 2.
The Partnership itself has no employees; however, the unaffiliated property
managers engaged by CIGNA Investments, Inc. ("CII", formerly CIGNA Capital
Advisers, Inc.) on behalf of the Partnership maintain on-site staff. For a
description of asset management services provided by CII and the terms of
transactions between the Partnership and affiliates of the General Partner, see
Item 13 and the Notes to Financial Statements.
5
<PAGE>
The following list details gross revenues from operations for each of the
Partnership's investment properties as a percentage of the Partnership's total
gross revenues during 1993, 1994 and 1995. Included in this calculation is the
Partnership's interest in the gross revenues of the Westford joint venture. In
each year, interest income accounted for the balance of gross revenues.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1993 1994 1995
---- ---- ----
1. Woodlands Plaza II 31% 29% 36%
Office Building
St. Louis, MO
2. Westside Industrials 15% 12% 7%
Phoenix, AZ (a)
3. Lake Point I, II, III 42% 42% 40%
Service Center
Orlando, FL
4. Westford Corporate Center 11% 15% 15%
Westford, MA
</TABLE>
[FN]
(a) The Partnership sold two of the six buildings, representing 42,480 of the
105,560 square feet on April 15, 1994. An additional building, representing
12,600 square feet was sold on April 27, 1995. The remaining three
buildings were sold on December 26, 1995.
ITEM 2. PROPERTIES
The Partnership owns directly and through a joint venture partnership the
properties described in Item 1 herein. Reference is made to Items 1, 7, and 8
for information on properties sold by the Partnership, including sales during
the year ended December 31, 1995. The lease terms on the properties range from
less than one year to ten years, with the majority being three to five years.
Most of the leases contain provisions for one or more of the following:
percentage rent, escalation and common area maintenance recapture. Reference is
made to the Notes to Financial Statements for information regarding minimum
annual future rentals under existing leases and operating expense
reimbursements. In the opinion of the General Partner, the Partnership's
properties continue to be adequately insured.
Woodlands Plaza II is a three-story suburban office structure situated on
Lots 1, 2 and 3 of The Woodlands Business Park located in St. Louis, Missouri.
The building was completed in July 1983 and sold to the Partnership in October
1984. The building design features exterior masonry construction and is divided
into two separate buildings that overlook the Woodlands Lake. The building has
approximately 71,927 square feet of net leasable area.
The following table provides information on tenants that occupy ten percent
or more of Woodland Plaza II's net leasable area.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
TENANT SQUARE PRINCIPAL BASE RENT LEASE RENEWAL OTHER
FOOTAGE BUSINESS PER ANNUM DATES OPTION INFORMATION
====================================================================================================================================
1. Doane Agricultural 11,301 Agriculture $155,808 08/01/91- 1, 5 year ext. --
Services Co. 07/31/96 option
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2. Dun & Bradstreet 11,101 Financial $169,290 07/01/95- 1, 5 year ext. --
Services 06/30/00 option
====================================================================================================================================
</TABLE>
6
<PAGE>
The following table provides lease expiration information relative to
Woodlands Plaza II.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
=================================================================================================================
YEAR NUMBER OF LEASES SQUARE FOOTAGE ANNUALIZED BASE PERCENTAGE OF TOTAL
EXPIRING RENT ANNUALIZED
BASE RENT
- -----------------------------------------------------------------------------------------------------------------
1996 2 16,590 $236,724 30%
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1997 4 8,732 $127,207 16%
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1998 1 2,941 $42,645 5%
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1999 2 8,531 $127,296 16%
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2000 3 15,369 $232,894 30%
- -----------------------------------------------------------------------------------------------------------------
2001 1 1,294 $21,998 3%
=================================================================================================================
</TABLE>
Lake Point I, II, III is within Lee Vista Center, a planned business park,
located in the southeast sector of the Orlando, Florida, metropolitan area. Lee
Vista Center is located approximately 10 miles southeast of Orlando's central
business district and approximately 1 mile north of the Orlando International
Airport. The property consists of four single-story office/service buildings and
two single-story office/warehouse buildings containing a total of 135,008 square
feet of gross leasable area.
The following table provides information on tenants that occupy ten percent
or more of Lake Point I, II, III's net leasable area.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
TENANT SQUARE PRINCIPAL BASE RENT LEASE RENEWAL OTHER
FOOTAGE BUSINESS PER ANNUM DATES OPTION INFORMATION
====================================================================================================================================
1. Attorney's Title 27,360 Insurance $373,557 07/31/87- -- Step up rent
Insurance Fund 02/28/07
- ------------------------------------------------------------------------------------------------------------------------------------
2. Alpha Flight Services 32,400 Catering $180,667 02/01/89- 1, 5 year ext. --
01/31/99 option
- ------------------------------------------------------------------------------------------------------------------------------------
3. Krogel Air Freight 14,824 Air Freight $75,602 12/01/95- -- Step up rent
11/30/00
====================================================================================================================================
</TABLE>
The following table provides lease expiration information relative to Lake
Point I, II, III.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
=================================================================================================================
YEAR NUMBER OF LEASES SQUARE FOOTAGE ANNUALIZED PERCENTAGE OF TOTAL
EXPIRING BASE RENT ANNUALIZED
BASE RENT
- -----------------------------------------------------------------------------------------------------------------
1996 5 29,204 $247,644 21%
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1997 1 1,836 $15,491 1%
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1998 3 22,184 $230,501 20%
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1999 1 32,400 $180,667 16%
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2000 2 19,864 $118,442 10%
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Thereafter 1 27,360 $373,557 32%
=================================================================================================================
</TABLE>
7
<PAGE>
The following list compares approximate occupancy levels by quarter for the
Partnership's investment properties during 1991, 1992, 1993, 1994 and 1995:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
==========================================================================================================================
WOODLANDS PLAZA II WESTSIDE IND. PARK LAKE POINT I, II, III WESTFORD
OFFICE BLDG. PHOENIX, AZ (A) SERVICE CENTER CORPORATE CENTER
ST. LOUIS, MO ORLANDO, FL WESTFORD, MA (B)
==========================================================================================================================
- --------------------------------------------------------------------------------------------------------------------------
1991
- -----------------
AT 03/31 75% 93% 96% 10%
AT 06/30 75% 96% 96% 10%
AT 09/30 82% 93% 91% 10%
AT 12/31 82% 93% 91% 10%
- --------------------------------------------------------------------------------------------------------------------------
1992
- -----------------
AT 03/31 77% 97% 86% 60%
AT 06/30 73% 97% 86% 60%
AT 09/30 84% 97% 85% 60%
AT 12/31 84% 97% 85% 60%
- --------------------------------------------------------------------------------------------------------------------------
1993
- -----------------
AT 03/31 87% 97% 88% 60%
AT 06/30 80% 74% 88% 60%
AT 09/30 90% 67% 94% 60%
AT 12/31 81% 67% 93% 75%
- --------------------------------------------------------------------------------------------------------------------------
1994
- -----------------
AT 03/31 81% 67% 90% 75%
AT 06/30 78% 100% 83% 85%
AT 09/30 84% 85% 89% 100%
AT 12/31 92% 80% 89% 100%
- --------------------------------------------------------------------------------------------------------------------------
1995
- -----------------
AT 03/31 94% 80% 100% 100%
AT 06/30 90% 100% 100% 100%
AT 09/30 79% 100% 100% 100%
AT 12/31 75% N/A 98% 100%
==========================================================================================================================
</TABLE>
An "N/A" indicates that the property was not owned by the Partnership at the end
of the quarter.
[FN]
(a) Two of six buildings at Westside Industrials were sold on April 15, 1994,
representing 42,480 of the 105,560 square feet. An additional building,
representing 12,600 square feet was sold on April 27, 1995. The remaining
three buildings were sold on December 26, 1995.
[FN]
(b) See the Notes to Financial Statements for a description of the joint
venture partnership through which the Partnership has made this real
property investment. The Partnership owns a 26.08% interest in the joint
venture which owns the property.
8
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
Neither the Partnership nor its properties are party to, or the subject of,
any legal proceedings involving any material exposure.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS
As of December 31, 1995, there were approximately 3,858 record Unit
Holders. There is no established public trading market for Units. The General
Partner will not redeem or repurchase Units.
The Revenue Act of 1987 adopted provisions which have an adverse impact on
investors in a "publicly traded partnership" ("PTP"). A PTP is a partnership
whose interests are traded on an established securities market or readily
tradable on a secondary market (or the substantial equivalent thereof). If the
Partnership were classified as a PTP, (i) the Partnership may be taxed as a
corporation and (ii) the passive activity rules of section 469 are applied
separately with respect to items attributable to each publicly traded
partnership. On November 29, 1995, the Internal Revenue Service ("IRS") issued
the Final PTP Regulations under section 1.7704-1. The Final PTP Regulations are
effective for the tax years beginning after December 31, 1995. However, a
transition rule exists for partnerships that were engaged in an activity before
December 4, 1995 and that do not add a substantial new line of business after
that date. The Partnership qualifies for the transition rule and may continue to
rely on Notice 88-75 for guidance through the end of 2005. In Notice 88-75, the
IRS established alternative safe harbors that allow interests in a partnership
to be transferred or redeemed in certain circumstances without causing the
partnership to be characterized as a PTP. Units of the Partnership are not
listed or quoted for trading on an established securities exchange. However,
CIGNA Financial Partners ("CFP") will, upon request, provide a Limited Partner
desiring to sell or transfer Units with a list of secondary market firms which
may provide a means for matching potential sellers with potential buyers of
Units, if available. Frequent sales of Units utilizing these services could
cause the Partnership to be deemed a PTP. The Partnership has adopted a policy
prohibiting transfers of Units in secondary market transactions unless,
notwithstanding such transfers, the Partnership will satisfy at least one of the
safe harbors. Although such a restriction could impair the ability of investors
to liquidate their investment, the service provided by CFP described above
should allow a certain number of transfers to be made in compliance with the
safe harbor.
The Partnership declared quarterly cash distributions to Limited Partners
for 1995 and 1994 as set forth in the following table:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Cash Distribution per Unit
Quarter Date Paid (a) 1995 1994
-------- ------------- ---- ----
1st May 15 $ 5.01 $ 7.50
2nd August 15 13.71 (c) 32.01 (b)
3rd November 15 10.02 (d) 5.01
4th February 15 37.31 (e) 3.12
-------- --------
$ 66.05 $ 47.64
======== ========
<FN>
(a) Quarterly distributions are paid 45 days following the end of the calendar quarter.
<FN>
(b) Includes $27.00 per Unit from a partial sale of Westside Industrials.
<FN>
(c) Includes $8.70 per Unit from a partial sale of Westside Industrials.
<FN>
(d) Includes $4.84 per Unit from a lease termination fee received at Woodlands Plaza II.
<FN>
(e) Includes $28.31 per Unit from the sale of the remainder of Westside Industrials.
</TABLE>
9
<PAGE>
Reference is made to Item 6 for information on cash distributions paid to
Limited Partners during 1995, 1994, 1993, 1992, and 1991.
There are no material legal restrictions upon the Partnership's ability to
make distributions in accordance with the provisions of the Partnership
Agreement. The Partnership intends to continue its policy of making quarterly
distributions of distributable cash from operations. Reference is made to Notes
to Financial Statements for a description of payments to the State of
Connecticut on behalf of Limited Partners and charged to Limited Partner capital
accounts.
<TABLE>
<CAPTION>
ITEM 6. SELECTED FINANCIAL DATA (A)
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
DECEMBER 31, 1995, 1994, 1993, 1992, 1991
(NOT COVERED BY REPORT OF INDEPENDENT ACCOUNTANTS)
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Total assets (b) $ 15,779,061 $ 15,886,403 $ 18,116,233 $ 18,841,802 $ 23,231,572
Total income 2,761,823 2,338,050 2,600,369 2,649,750 2,736,543
Net income (loss) (c) 1,173,396 (232,492) 406,434 (2,651,499) 230,926
Net income (loss) per Unit (c) 29.34 (7.08) 10.26 (66.90) 5.83
Cash distributions to
limited partners (d) 1,250,072 1,890,411 1,174,738 1,727,963 1,040,549
Cash distributions per Unit (d) 31.86 48.18 29.94 44.04 26.52
<FN>
(a) The above selected financial data should be read in conjunction with the
financial statements and the related notes appearing herein. Reference is
made to Notes to Financial Statements for a description of payments to the
State of Connecticut on behalf of limited partners. These payments are
charged to limited partner capital accounts and have not been included as
part of the above presentation.
<FN>
(b) Total assets includes Partnership's equity investment in joint venture. See
the Notes to Financial Statements for a description of the joint venture.
<FN>
(c) Included in 1995 is a gain on sale of property of $464,957 ($449,775 to
limited partners or $11.46 per unit). Included in 1994 and 1992 are losses
due to impairment of assets of $835,000 ($21.07 per Unit) and $2,791,040
($70.42 per Unit), respectively. Included in 1994 is a gain on sale of
property of $245,873 ($195,721 to limited partners or $4.99 per Unit).
<FN>
(d) Quarterly distributions are paid 45 days following the end of the calendar
quarter. Cash distributions to limited partners in 1995 include proceeds
from the sale of Building #6 of Westside Industrials. Included in 1994 are
the proceeds from the sale of Buildings #1 and #2 of Westside Industrials.
</TABLE>
10
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
On January 31, 1984, the Partnership commenced an offering of $50,000,000
(subject to an increase to $65,000,000) of limited partnership interests
pursuant to a Registration Statement on Form S-11 under the Securities Act of
1933. The offering terminated on December 31, 1985 and a total of 39,236.25
Units were issued by the Partnership and assigned to the public at $1,000 per
interest. Subsequent to the termination of the offering, no Unit Holder has made
any additional capital contribution. The Partnership does not expect to seek
additional capital contributions.
After deduction of selling expenses and other offering costs, the
Partnership had $35,602,279 with which to make investments in real properties,
to pay legal fees and other costs (including acquisition fees) related to such
investments, for working capital reserves and to fund extra lease-up costs. A
portion of the proceeds was utilized to acquire the properties described in Item
1 herein. The Partnership did not incur any debt in connection with the
acquisition of the properties. The Partnership does not intend to incur mortgage
indebtedness relative to the properties at any time during the term of the
Partnership.
At December 31, 1995, the Partnership's cash and cash equivalents and the
Partnership's share of cash and cash equivalents from the Westford Office
Venture totalled $2,052,475 and $275,388, respectively, which were available for
working capital requirements, cash reserves and distributions to partners.
Reference is made to Item 5 for information on cash distributions to Limited
Partners for 1995. Cash distributions for 1995 included sales proceeds from the
two partial sales of Westside Industrials during 1995 and a lease termination
fee received from a significant vacating tenant at Woodlands Plaza II. The
remainder of the cash distributed for 1995 was equivalent to the Partnership's
adjusted cash from operations. The Partnership's cash distributions for 1996 are
expected to reflect actual operating results subject to changes in reserves for
liabilities or leasing risk. Based on property operational plans for 1996, the
General Partner estimates that the Partnership will produce positive cash flow
from operations, net of capital improvements and Partnership expenses.
Reference is made to Item 1 for a description of the Partnership's
investment properties and a description of the markets in which the properties
operate. Reference is made to Item 2 for significant tenant information and
lease information.
Early in 1995, a potential user/owner approached the manager for the
Westside property and offered to buy vacant building #6 (12,600 square feet,
representing 100% of the vacant space at December 31, 1994) at a gross price of
$29 per square foot. On April 27, 1995, the Partnership sold building #6 for a
gross sales price of $365,400. After closing costs and expenses, the Partnership
netted approximately $341,000 which was distributed to Limited Partners along
with the second quarter distribution on August 15, 1995. On December 26, 1995,
the Partnership sold the remainder of the Westside Industrials property
(buildings #3, 4 & 5) to Zimmerman Properties, Inc. for a gross sales price of
$1,175,000. After closing costs and expenses, the Partnership netted
approximately $1,110,600 which was distributed to Limited Partners along with
the fourth quarter distribution on February 15, 1996. Reference is made to Notes
to Financial Statements for a description of the book and tax effects of the
sales.
Lake Point's adjusted cash from operations for the year totalled
approximately $537,000 in 1995 compared with $505,000 in 1994. A significant
amount of leasing led to tenant improvements and leasing commissions of $327,000
for 1995. Lake Point ended 1995 at 98% occupancy, up from 89% at year-end 1994.
During 1995, an early renewal was executed with a tenant occupying 27,360 square
feet, 20% of total space, extending the original maturity date of 1997 to 2007.
Additionally, 14,988 square feet of vacant space was leased and lease renewals
representing 22,120 square feet were executed. For 1996, five leases
representing 29,204 square feet are set to expire, of which 23,799 is scheduled
to be renewed. Of the renewals scheduled, 52% is from one tenant currently
occupying 12,278 square feet. Negotiations to renew the lease are already
underway and are expected to be concluded well in advance
11
<PAGE>
of the current expiration date of August 1996. New leasing or expansions are
scheduled to total 7,565 square feet. Based on the leasing planned during 1996,
tenant improvements and leasing commissions have been estimated to approximate
$312,000, to be funded by cash from operations. Additionally roof repairs and a
plumbing project have been estimated at $68,000, also to be funded by cash from
operations.
Woodlands Plaza generated adjusted cash from operations of $487,000 after
$148,000 of leasing commissions, tenant improvements and capital expenditures,
versus a deficit of $9,000 for 1994. An extensive amount of leasing was
completed during 1994 (16,608 square feet of space was leased) and included
approximately $305,000 of leasing costs and capital improvements. Leasing
exposure for 1995 included 24,168 square feet, or 34% of net rentable area,
including an early termination of a 10,319 square foot tenant. Physical
occupancy of 92% at the beginning of the year dropped to 75% by December 31,
1995. During the second quarter of 1995, a lease was signed with Dun &
Bradstreet for 11,101 square feet to replace the 10,319 square feet vacated by
Magnum Mortgage. The Partnership benefited from an early termination fee of
$190,000 collected from Magnum Mortgage. Two leases, accounting for 3,522 square
feet, were renewed during 1995, one new lease for 2,040 square feet was signed
and leases representing 11,741 square feet expired without renewal or
replacement. A new five year lease for 14,048 square feet, not included in
year-end 1995 occupancy, was signed during December 1995 by Mosby Year Book for
occupancy by the second quarter of 1996. Rent will approximate $16 per square
foot with $11 per square foot in tenant improvements. Leasing exposure for 1996,
two tenants representing 16,590 square feet, 23% of total space, and 30% of
gross annual rent, is minimal as both leases are expected to renew with slight
increases in base rent. Commissions and tenant improvements for the two renewals
are estimated to approximate $198,000. In addition, costs for the Mosby Year
Book lease and the two December 1995 renewals are estimated to be funded in 1996
at a total cost of $255,860. Based on current estimates, leasing costs will be
funded by cash from property operations.
Westford Corporate Center is owned by a joint venture partnership in which
the Partnership owns a 26.08% equity investment. Adjusted cash from operations
at Westford Corporate Center for 1995 was $1,155,000 ($301,000 attributable to
the Partnership's interest) after capital expenditures of $44,000. During the
year one of the two existing tenants expanded into space vacated by a former
tenant. The property remains at 100% occupancy. Cash flow from operations in
1996 is expected to be similar to 1995, with no capital expenditures planned.
The Partnership's strategy includes property sales in two to three years
for each of the Partnership's wholly owned properties. The Westford property,
26.08% owned through a joint venture, may have to be held until the existing
tenants' leases reach expiration and are renewed or the space is leased to new
tenants in 1999 or 2000.
RESULTS OF OPERATIONS
Partnership net operating income, (total revenue less property operating
expenses, general and administrative expenses and fees and reimbursements to
affiliates and exclusive of the Partnership's share of the joint venture),
increased in 1995 to approximately $1,407,000 versus approximately $1,024,000 in
1994.
At Lake Point, net operating income increased approximately $150,000 in
1995. The increase was primarily attributable to a rise in rental income
resulting from new leasing activity.
Woodlands Plaza's net operating income increased in 1995 by approximately
$338,000 over 1994, due to a rise in rental income from extensive leasing
activity in the latter half of 1994, and $230,000 of lease termination fees
collected in 1995.
At Westside Industrials, net operating income was lower in 1995 than 1994
by approximately $66,000. Revenues declined in 1995 because of the sale of
buildings #1 and #2 in April 1994 and the loss of three unreplaced tenants in
the second half of 1994 occupying 12,600 square feet. In addition, 1994 revenue
included the residual of a 1993 lease termination fee. Offsetting the decline in
revenue was a reduction in property operating expenses because of the property
sale and because of the nonrecurring exterior painting and landscaping projects
completed in 1994.
12
<PAGE>
A majority of the balance of the change in net operating income from 1994
to 1995 represents Partnership management fees and interest income. Management
fees are based on adjusted cash from operations, which increased in 1995.
RESULTS - 1995 COMPARED WITH 1994
Rental income increased by approximately $360,000 for the year ended
December 31, 1995, as compared with 1994, as a result of the tenant changes at
each of the Partnership's properties. Rental income at Woodlands increased
approximately $348,000 for the year due to revenues generated by extensive
leasing activity at the property during 1994 and three lease termination fees
totalling $230,000 received during 1995. At Westside, rental income decreased
approximately $104,000 due to the sale of buildings #1 and #2 in April 1994 and
the loss of unreplaced tenants occupying 12,600 square feet in the latter half
of 1994. In addition, Westside's 1994 revenue included the residual of a 1993
lease termination fee. Rental income at Lake Point increased approximately
$116,000 for the year due to an increase in scheduled rent resulting from
leasing activity.
The increase in other income for the year ended December 31, 1995, as
compared with 1994, was primarily the result of expense charge-back billings to
the new tenants at Lake Point as allowed by the negotiated lease terms.
The increase in interest income for the year ended December 31, 1995, as
compared with 1994, was the result of an increase in interest rates on short
term investments combined with higher average cash balances.
Property operating expenses decreased for the year ended December 31, 1995,
as compared with 1994, as a result of the partial sales of Westside. In
addition, Westside incurred nonrecurring repairs and maintenance costs in 1994
due to exterior painting and landscaping projects. An increase in operating
expenses at Woodlands was primarily due to property management fees (earned as a
percentage of revenues) coupled with expenses for one-time maintenance and space
planning projects. In addition, Woodland's incurred additional utility and
janitorial expenses due to a higher level of occupancy. Woodlands recorded lower
property tax expenses as a result of a successful property tax appeal in 1995.
Property operating expenses increased slightly at Lake Point due to property
management fees (earned as a percentage of revenues).
The increase in fees and reimbursements to affiliates for the year ended
December 31, 1995, as compared to 1994, was primarily due to increased
partnership management fees as a result of an increase in adjusted cash from
operations.
Depreciation and amortization increased for the year ended December 31,
1995, as compared with 1994, due primarily to accelerated depreciation and
amortization of assets associated with vacated tenants at Woodlands and as a
result of new tenant improvements at Lake Point. Partially offsetting the
increase was a decrease in depreciation and amortization expense at Westside due
to the sale of buildings #1 and #2 in April 1994 and building #6 in April 1995.
The gains on sale were the result of the Westside sales of building #6 in
April 1995 and buildings #3, #4 and #5 in December 1995. The sale of buildings
#1 and #2 occurred in April 1994.
The joint venture operations improved for the year ended December 31, 1995,
as compared with 1994, due to a tenant's expansions in the second and third
quarters of 1994.
RESULTS - 1994 COMPARED WITH 1993
Rental income decreased by approximately $203,000 for the year ended
December 31, 1994, as compared with 1993, as a result of the tenant changes
which have decreased rental income at each of the Partnership's properties.
Rental income at Woodlands Plaza decreased approximately $37,000 due to
decreased average occupancy at the property. In addition, during the second
quarter of 1993, a tenant at Woodlands paid a premium to extend their occupancy
beyond the lease expiration date. At Westside Industrials, rental income
decreased approximately $118,000, due to the loss of income from a lease buy-out
negotiated as part of an early termination in 1993, the loss of 7,560 occupied
square feet from the sale of buildings #1 and #2 in April 1994, and the loss of
tenants occupying
13
<PAGE>
12,600 square feet in the latter half of 1994. Rental income at Lake Point
decreased approximately $48,000 due to decreased average occupancy and renewal
of several tenants at lower rates in the second quarter of 1994.
Other income decreased approximately $75,000 for the year ended December
31, 1994, as compared with 1993. The decrease was due primarily to lower
recoveries of operating expenses and taxes at Woodlands and Lake Point. The
decrease was expected at Woodlands as base years have taken the place of expense
stops on new and renewed leases in addition to an overall drop in expenses at
the property. The decrease at Lake Point was due to decreased average occupancy.
In addition, 1993 includes a $10,000 forfeited security deposit from the buy-out
agreement at Westside.
The increase in interest income for the year ended December 31, 1994, as
compared with 1993, was the result of an increase in the Partnership's average
cash balance attributable to the net proceeds from the sale of buildings #1 and
#2 of the Westside property and an increase in rates during the year.
Property operating expenses decreased overall as a result of decreases at
Westside and Woodlands for the year ended December 31, 1994, as compared with
1993. The total decrease at Westside was due to lower repairs and maintenance
and property tax costs resulting from the sale of buildings #1 and #2. In
addition, Westside's 1993 results included plumbing expenses and parking lot
lighting. The decrease was partially offset by exterior painting expenditures at
Westside incurred in 1994. The decrease at Woodlands was attributable to
nonrecurring parking lot repairs made during 1993 and decreased utility usage as
a result of occupancy changes in 1994. At Lake Point, real estate taxes
increased in 1994 as a result of an increase in the assessment value and the
mill rate.
Depreciation and amortization decreased for the year ended December 31,
1994, as compared with 1993, due to the expiration of the useful lives of
certain assets.
In 1994 the Partnership recorded impairment losses relative to Woodlands
Plaza and Westside due to estimated future cash flow declines reflecting a
change in the estimated holding period of the Woodlands property and increased
capital expenditures and leasing costs at Westside.
The improvement in operating results by the joint venture property for the
year ended December 31, 1994, as compared with 1993, was due to the new tenant
which took occupancy in October 1993 and its subsequent expansions in April and
September 1994.
The gain on sale was the result of the sale of buildings #1 and #2 of the
Westside property in April 1994.
INFLATION
With inflation at a low rate during 1995, 1994, and 1993, the effect of
inflation and changing prices on current revenue and income from operations has
been minimal.
Any significant inflation in future periods may increase rental rates (from
leases to new tenants or renewals of leases to existing tenants) assuming no
major changes in market conditions. At the same time, it is anticipated that
property operating expenses will be similarly affected. Assuming no major
changes in occupancy levels, increases in rental income are expected to cover
inflation driven increases in the cost of operating the properties and in
property taxes.
Inflation may also contribute to capital appreciation of the Partnership's
investment properties over a period of time as rental rates and replacement
costs of properties increase.
The recapture and escalation clauses that exist on certain of the leases at
each of the Partnership's properties offer the Partnership some protection
against inflation. Escalation clauses offset the increases in operating expenses
under inflation. As operating expenses increase due to inflation so will the
escalation revenues due to the Partnership,
14
<PAGE>
offsetting, at least in part, the increase in total expenses. The recapture
provisions protect the Partnership from rising costs of common area maintenance
as well as taxes and other operating expenses by passing these increases
through, at least partially, to the lessees.
15
<PAGE>
<TABLE>
<CAPTION>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
INDEX
<S> <C>
PAGE
Report of Independent Accountants 17
Financial Statements:
Balance Sheets, December 31, 1995 and 1994 18
Statements of Operations, For the Years Ended December 31, 1995, 1994 and 1993 19
Statements of Partners' Capital (Deficit), For the Years Ended December 31, 1995, 1994 and 1993 20
Statements of Cash Flows, For the Years Ended December 31, 1995, 1994 and 1993 21
Notes to Financial Statements 22
Schedules:
III - Real Estate and Accumulated Depreciation, December 31, 1995 28
Schedules not filed:
All schedules other than those indicated in the index have been omitted as
the required information is inapplicable or the information is presented in the
financial statements or related notes.
</TABLE>
<TABLE>
<CAPTION>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
UNCONSOLIDATED VENTURE
WESTFORD OFFICE VENTURE
INDEX
<S> <C>
PAGE
Report of Independent Accountants 30
Financial Statements:
Balance Sheets, December 31, 1995 and 1994 31
Statements of Operations, For the Years Ended December 31, 1995, 1994 and 1993 32
Statements of Partners' Capital, For the Years Ended December 31, 1995, 1994 and 1993 33
Statements of Cash Flows, For the Years Ended December 31, 1995, 1994 and 1993 34
Notes to Financial Statements 35
Schedules:
III - Real Estate and Accumulated Depreciation, December 31, 1995 39
Schedules not filed:
All schedules other than those indicated in the index have been omitted as
the required information is inapplicable or the information is presented in the
financial statements or related notes.
</TABLE>
16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Connecticut General Equity Properties-I
Limited Partnership
In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Connecticut
General Equity Properties-I Limited Partnership at December 31, 1995 and 1994,
and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1995, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Partnership's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Hartford, Connecticut
February 21, 1996
17
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<S> <C> <C>
ASSETS 1995 1994
------ ---- ----
Property and improvements, at cost:
Land and improvements $ 2,533,388 $ 2,810,237
Buildings 11,904,091 13,002,842
Tenant improvements 2,872,782 2,879,677
--------------- ---------------
17,310,261 18,692,756
Less accumulated depreciation 6,783,301 6,686,953
--------------- ---------------
Net property and improvements 10,526,960 12,005,803
Equity investment in unconsolidated joint venture 2,679,392 3,043,024
Cash and cash equivalents 2,052,475 368,015
Accounts receivable (net of allowance of $6,535 in 1995
and $1,684 in 1994) 107,677 97,349
Prepaid expenses and other assets 27,971 76,872
Deferred charges, net 384,586 295,340
--------------- ---------------
Total $ 15,779,061 $ 15,886,403
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities:
Accounts payable and accrued expenses (including $32,837
in 1995 and $9,324 in 1994 due to affiliates) $ 161,220 $ 220,449
Tenant security deposits 86,457 102,076
Unearned income 61,649 6,269
--------------- ---------------
Total liabilities 309,326 328,794
--------------- ---------------
Partners' capital (deficit):
General Partner:
Capital contributions 1,000 1,000
Cumulative net income 165,478 143,212
Cumulative cash distributions (167,140) (156,705)
--------------- ----------------
(662) (12,493)
--------------- ---------------
Limited partners (39,236.25 Units):
Capital contributions, net of offering costs 35,602,279 35,602,279
Cumulative net income 3,700,536 2,549,406
Cumulative cash distributions (23,832,418) (22,581,583)
--------------- ---------------
15,470,397 15,570,102
--------------- ---------------
Total partners' capital 15,469,735 15,557,609
--------------- ---------------
Total $ 15,779,061 $ 15,886,403
=============== ===============
The Notes to Financial Statements are an integral
part of these statements.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<S> <C> <C> <C>
1995 1994 1993
---- ---- ----
Income:
Base rental income $ 2,435,302 $ 2,075,169 $ 2,278,062
Other operating income 257,244 209,731 284,251
Interest income 69,277 53,150 38,056
------------- ------------- --------------
2,761,823 2,338,050 2,600,369
------------- ------------- --------------
Expenses:
Property operating expenses 964,050 981,864 1,024,209
General and administrative 142,119 151,281 143,965
Fees and reimbursements to affiliates 249,135 181,076 186,304
Depreciation and amortization 856,048 769,621 859,774
Loss due to impairment of assets -- 835,000 --
------------- ------------- --------------
2,211,352 2,918,842 2,214,252
------------- ------------- --------------
Net partnership operating income (loss) 550,471 (580,792) 386,117
Other income:
Gain on sale of property 464,957 245,873 --
Equity interest in joint venture net income 157,968 102,427 20,317
------------- ------------- --------------
Net income (loss) $ 1,173,396 $ (232,492) $ 406,434
============= ============= ==============
Net income (loss):
General Partner $ 22,266 $ 45,368 $ 4,064
Limited partners 1,151,130 (277,860) 402,370
------------- ------------- --------------
$ 1,173,396 $ (232,492) $ 406,434
============= ============= ==============
Net income (loss) per Unit $ 29.34 $ (7.08) $ 10.26
============= ============= ==============
Cash distributions per Unit $ 31.88 $ 48.19 $ 29.95
============= ============= ==============
The Notes to Financial Statements are an integral
part of these statements.
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<S> <C> <C> <C>
General Limited
Partner partners Total
Balance (deficit) at December 31, 1992 $ (40,015) $ 18,511,626 $ 18,471,611
Cash distributions (13,573) (1,175,062) (1,188,635)
Net income 4,064 402,370 406,434
------------- -------------- --------------
Balance (deficit) at December 31, 1993 (49,524) 17,738,934 17,689,410
Cash distributions (8,337) (1,890,972) (1,899,309)
Net income (loss) 45,368 (277,860) (232,492)
------------- -------------- --------------
Balance (deficit) at December 31, 1994 (12,493) 15,570,102 15,557,609
Cash distributions (10,435) (1,250,835) (1,261,270)
Net income 22,266 1,151,130 1,173,396
------------- -------------- --------------
Balance (deficit) at December 31, 1995 $ (662) $ 15,470,397 $ 15,469,735
============= ============== ==============
The Notes to Financial Statements are an integral
part of these statements.
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<S> <C> <C> <C>
1995 1994 1993
---- ---- ----
Cash flows from operating activities:
Net income (loss) $ 1,173,396 $ (232,492) $ 406,434
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Loss due to impairment of assets -- 835,000 --
Gain on sale of property (464,957) (245,873) --
Deferred rent credits 50,990 43,252 63,085
Depreciation and amortization 856,048 769,621 859,774
Equity interest in joint venture net income (157,968) (102,427) (20,317)
Accounts receivable (10,328) 38,272 (69,517)
Accounts payable and accrued expenses (18,216) (66,507) 21,423
Other, net 88,662 (35,936) 28,531
---------------- ---------------- --------------
Net cash provided by operating activities 1,517,627 1,002,910 1,289,413
---------------- ---------------- --------------
Cash flows from investing activities:
Purchases of property and improvements (283,499) (412,099) (170,503)
Payment of leasing commissions (265,056) (79,587) (62,376)
Proceeds from sale of property 1,540,400 1,115,100 --
Payment of closing costs related to sale of property (85,544) (53,100) --
Distribution from joint venture partnership 521,600 -- --
---------------- ---------------- --------------
Net cash provided by (used in) investing activities 1,427,901 570,314 (232,879)
---------------- ---------------- --------------
Cash flows from financing activities:
Cash distributions to limited partners (1,250,633) (1,890,735) (1,175,156)
Cash distributions to General Partner (10,435) (8,337) (4,604)
---------------- ---------------- --------------
Net cash used in financing activities (1,261,068) (1,899,072) (1,179,760)
---------------- ---------------- --------------
Net increase (decrease) in cash and cash equivalents 1,684,460 (325,848) (123,226)
Cash and cash equivalents, beginning of year 368,015 693,863 817,089
---------------- ---------------- --------------
Cash and cash equivalents, end of year $ 2,052,475 $ 368,015 $ 693,863
================ ================ ==============
Supplemental disclosure of non-cash information:
Accrued purchase of property and improvements $ 1,804 $ 43,019 $ 32,000
================ ================ ==============
The Notes to Financial Statements are an integral
part of these statements.
</TABLE>
21
<PAGE>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF ACCOUNTING
The General Partner of Connecticut General Equity Properties-I Limited
Partnership (the "Partnership") is Connecticut General Realty Resources,
Inc.-Third (the "General Partner"), an indirect, wholly owned subsidiary of
CIGNA Corporation. The Partnership is a Delaware limited partnership which owns
and operates three commercial properties (including one owned through a joint
venture) located in Missouri, Florida and Massachusetts. In addition, the
Partnership owned and operated a commercial property located in Arizona, a
portion of which was sold in 1994 with the remainder sold in 1995.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The Partnership's records are maintained on the accrual basis of accounting
for financial reporting purposes and are adjusted for federal income tax
reporting. The net effect of the adjustments as of December 31, 1995, 1994 and
1993, principally relating to the classification of syndication costs,
differences in depreciation methods and impairment losses, are summarized as
follows:
<TABLE>
<capiton>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Financial Tax Financial Tax Financial Tax
Reporting Reporting Reporting Reporting Reporting Reporting
Total assets $ 15,779,061 $ 24,096,319 $ 15,886,403 $ 24,728,396 $ 18,116,233 $ 26,239,834
Partners' capital (deficit):
General Partner (662) (28,026) (12,493) (24,632) (49,524) (20,733)
Limited partners 15,470,397 23,876,718 15,570,102 24,430,553 17,738,934 25,882,197
Net income (loss) (a):
General Partner 22,266 7,041 45,368 4,438 4,064 6,503
Limited partners 1,151,130 697,000 (277,860) 439,328 402,370 643,807
Net income (loss) per Unit (a): 29.34 17.76 (7.08) 11.20 10.26 16.41
<FN>
(a) Included in 1995 is a gain on sale of property of $464,957 ($449,775 or
$11.46 per Unit to limited partners) for financial reporting purposes and a
loss of $328,484 ($8.29 per Unit) for tax reporting. Included in 1994 is
$835,000 of loss due to impairment of assets for financial reporting only
($21.07 per Unit) and a gain on sale of property of $245,873 ($195,721 or
$4.99 per Unit to limited partners) for financial reporting and a loss of
$80,448 ($2.03 per Unit) for tax reporting.
</TABLE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) PROPERTY AND IMPROVEMENTS: Property and improvements are carried at cost
less accumulated depreciation. The cost represents the initial purchase
price, subsequent capitalized costs and adjustments, including certain
acquisition expenses and impairment losses. Amounts received under master
lease agreements have been treated as a reduction of the related property's
purchase price. Depreciation on the property and improvements is calculated
on the straight-line method based on the estimated useful lives of
buildings and land improvements (15 to 39 years) and tenant improvements
(the respective lease terms). Maintenance and repair expenses are charged
to operations as incurred.
22
<PAGE>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
As a result of inherent changes in market values of real estate property
and improvements, the Partnership reviews potential impairment annually.
The undiscounted future cash flows for each property, as estimated by the
Partnership, is compared to the carrying value. If the carrying value is
greater than the sum of the estimated future undiscounted cash flows, and
deemed other than temporary, an impairment loss is recorded.
In 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (the
"Statement"). Under the Statement, entities should continue to compare the
sum of the expected undiscounted future net cash flows to the carrying
value of the asset. If an impairment exists, the Statement requires a
writedown to the fair value. Long-lived assets to be disposed of, including
real estate held for sale, must be carried at the lower of cost or fair
value less costs to sell. In addition, the Statement prohibits depreciation
of long-lived assets to be disposed. The Partnership will adopt this
Statement in the first quarter of 1996; the effect on the Partnership's
results of operations, liquidity and financial condition is not expected to
be material.
B) EQUITY INVESTMENT IN UNCONSOLIDATED JOINT VENTURE: The Partnership uses the
equity method of accounting with respect to its interest in the Westford
Office Venture (the "Venture"), a joint venture partnership with an
affiliated limited partnership.
C) CASH AND CASH EQUIVALENTS: Short-term investments with a maturity of three
months or less at the time of purchase are generally reported as cash
equivalents.
D) PREPAID EXPENSES AND OTHER ASSETS: Other assets include a receivable from a
tenant at Lake Point for reimbursement of tenant improvement costs of
$27,177 and $56,480 at December 31, 1995 and 1994, respectively.
E) DEFERRED CHARGES: Deferred charges consist of leasing commissions and
rental concessions, which are being amortized using the straight-line
method over the respective lease terms.
F) PARTNERS' CAPITAL: Offering costs comprised of sales commissions and other
issuance expenses have been charged to the partners' capital accounts as
incurred.
G) INCOME TAXES: No provision for income taxes has been made as the liability
for such taxes is that of the partners rather than the Partnership.
H) BASIS OF PRESENTATION: Certain amounts in the 1993 and 1994 Financial
Statements have been reclassified to conform to the 1995 presentation.
3. INVESTMENT PROPERTIES
At December 31, 1995, the Partnership owned two commercial properties
directly and a 26.08% interest in another through a joint venture with an
affiliated partnership. The properties are located in Missouri, Florida and
Massachusetts. At December 31, 1995, the properties were operating with leases
in effect generally for a term of three to ten years. No mortgage debt was
incurred in the purchase of the Partnership's properties.
23
<PAGE>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
On January 11, 1990, the Partnership sold the Courtyard Shopping Center for
$6,445,363. The carrying value of the center at the time of sale was $5,666,874.
After deducting closing costs of $233,808, the Partnership recorded a gain on
the sale of $544,681.
On April 15, 1994, the Partnership sold buildings #1 and #2 (totalling
42,480 square feet) of Westside Industrials for $1,115,100. The net proceeds to
the Partnership were $1,062,000 after deducting closing costs. The two buildings
had a carrying value of $816,127 and the Partnership recorded a gain of
$245,873.
With respect to the Partnership's accounting policy for impairment of
assets, the Partnership recognized impairment of asset losses in 1994 and 1992.
In 1994, the Partnership recorded impairments of $600,000 and $235,000 relative
to Woodlands Plaza and Westside, respectively. In 1994, the impairment loss for
Westside was the result of an anticipated decline in estimated future cash flow
resulting from budgeted increases in capital expenditures and leasing costs to
cure current and future vacancies. For Woodlands Plaza, the estimated holding
period of the property was shortened. In 1992, the Partnership recorded
impairments of $1,100,000 and $700,000 relative to Woodlands Plaza and Westside,
respectively. Additionally, in 1992, the Partnership recorded an impairment of
asset loss relative to its joint venture interest in Westford Corporate Center
of $991,040. In 1992, estimated future cash flows declined at Woodlands and
Westside reflecting changes in estimated potential revenue from future leasing.
As a result of the oversupply of space and the continued downward pressure on
rental rates in the markets in which these properties operate, expected future
rental rates would be renewed and/or negotiated to lower rates. At Westford, the
estimated holding period was reduced.
4. VENTURE AGREEMENT
The Partnership has a 26.08% interest in the Westford Office Venture, which
owns the Westford Corporate Center, an office and research/development facility.
The Venture is a joint venture between the Partnership and CIGNA Income Realty-I
Limited Partnership, an affiliated limited partnership.
Summary financial information for the Venture as of and for the years ended
December 31, 1995, 1994 and 1993 follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995 1994 1993
---- ---- ----
Total assets $ 11,280,276 $ 12,671,892 $ 12,343,992
Total liabilities 751,999 749,320 814,161
Total income 1,911,290 1,686,829 1,280,650
Net income 605,705 392,741 77,904
</TABLE>
Pursuant to the Joint Venture Agreement, net income or loss, cash
distributions from operations, net income and distributable cash from the sale
or disposition of the property are generally allocated to the venturers in
accordance with their percentage capital contributions. Percentage interests are
subject to change in the future if any additional contributions made by the
venturers to the Venture are disproportionate to their present percentage
interests.
The Venture paid a distribution to the venturers of $2,000,000 in 1995, of
which the Partnership's share was $521,600. No distributions were made by the
Venture in 1994 or 1993.
24
<PAGE>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. DEFERRED CHARGES
Deferred charges at December 31, 1995 and 1994 consist of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
---- ----
Deferred leasing commissions $ 988,388 $ 880,435
Accumulated amortization (628,194) (660,477)
------------ ------------
360,194 219,958
Deferred rent credits 24,392 75,382
------------ ------------
$ 384,586 $ 295,340
============ ============
</TABLE>
6. LEASES
All of the properties have leases currently in effect which are accounted
for as operating leases. The majority have terms which range from three to five
years. Following is a schedule of minimum annual future rentals based upon
non-cancelable leases currently in effect, assuming no exercise of tenant
renewal options (does not include leases relative to the Partnership's interest
in the Westford Office Venture).
Year ending December 31:
1996 $ 1,784,170
1997 1,451,156
1998 1,296,565
1999 912,899
2000 672,855
Thereafter 3,280,357
Certain of the leases contain provisions whereby tenants pay their pro rata
share of any increases in common area maintenance, taxes and operating expenses
over base period amounts. Pursuant to such provisions, the Partnership earned
$244,671 in 1995, $202,036 in 1994 and $248,679 in 1993. These amounts are
included in other income on the Statement of Operations.
Generally, a portion of the net leasable area for commercial real estate
properties is occupied by significant tenants (occupying ten percent or more of
net leasable area). Significant tenant information for the Partnership's
investment properties, including the property owned through a joint venture, is
as follows: Woodlands Plaza - two tenants occupy 31% of net leasable area and
account for 41% of gross rental revenue; Lake Point - three tenants occupy 55%
of net leasable area and account for 54% of gross rental revenue; Westford - two
tenants occupy 100% of the net leasable area and account for 100% of gross
rental revenue. Any loss of a significant tenant could have a material adverse
effect on the Partnership's results of operations. Although an uncertainty
exists relative to the replacement of a tenant upon early termination, the
revenue effect of an early termination of a significant tenant is tempered by
the potential for termination fees, and is therefore not likely to be material
to the Partnership's liquidity or financial condition.
25
<PAGE>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. TRANSACTIONS WITH AFFILIATES
Fees and other expenses incurred by the Partnership related to the General
Partner or its affiliates during the periods ended December 31, 1995, 1994 and
1993 are:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995 1994 1993
---- ---- ----
Partnership management fee(a) $ 124,050 $ 80,512 $ 88,709
Property management fees(b)(c) 55,633 45,019 53,197
Printing 13,504 11,407 13,036
Reimbursement (at cost) for
out of pocket expenses 55,948 44,138 31,362
------------ ------------ ------------
$ 249,135 $ 181,076 $ 186,304
============ ============ ============
</TABLE>
[FN]
(a) Includes management fees attributable to the Partnership's 26.08% interest
in the Westford Office Venture.
[FN]
(b) Does not include property management fees earned by independent management
companies of $112,749, $95,063 and $105,292 for 1995, 1994 and 1993,
respectively. Certain property management services have been contracted by
an affiliate of the General Partner on behalf of the Partnership and are
paid directly by the Partnership to the third party companies.
[FN]
(c) Does not include management fees earned by an affiliate of $14,577, $13,210
and $9,351 attributable to the Partnership's 26.08% interest in the
Westford Office Venture for the years ended December 31, 1995, 1994 and
1993, respectively.
8. PARTNERS' CAPITAL
During 1991, the State of Connecticut enacted income tax legislation, a
part of which affects partnerships. The portfolio income allocations made by the
Partnership to the limited partners are considered Connecticut based income and
subject to Connecticut tax. The Partnership has elected to pay the tax due on
the limited partners' share of portfolio income and, therefore, paid tax due of
$561 directly to the State of Connecticut in April 1995 for the 1994 Form CT-G
Connecticut Group Income Tax Return. The Partnership also accrued the 1995
estimated payment of $763 as of December 31, 1995. These amounts were treated as
reductions of partners' capital and reported as distributions in the
accompanying financial statements.
9. SALE OF INVESTMENT PROPERTY
The sale of the remaining buildings of Westside Industrials was completed
through two separate sales in 1995. On April 27, 1995 the Partnership sold
building #6 (totalling 12,600 square feet) for a gross sales price of $365,400.
The carrying value of the property was $257,629 for financial reporting and
$373,010 for tax reporting. After deducting closing costs of $24,372, the
Partnership recorded a gain of $83,399 for financial reporting and a loss of
$31,982 for tax reporting. On December 26, 1995 the Partnership sold the
remaining three buildings, #3, 4 and 5 (totalling 50,480 square feet), for a
gross sales price of $1,175,000. The carrying value of the property was $729,032
for financial reporting and $1,407,091 for tax reporting. After deducting
closing costs of $61,173 and leasing commissions paid at closing of $3,237, the
Partnership recorded a gain of $381,558 for financial reporting
26
<PAGE>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
and a loss of $296,502 for tax reporting.
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments," defines the fair value of a financial
instrument as the amount at which the instrument could be exchanged in a current
transaction between willing parties. The carrying amounts of the Partnership's
financial instruments, cash, accounts receivable, other assets, and accounts
payable and accrued liabilities, approximate fair value because of the short
maturity of such instruments.
11. PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net income or loss and
cash distributions from operations, as well as any net losses arising from the
sale or disposition of investment properties are to be allocated 1% to the
General Partner and 99% to the Limited Partners. Cash distributions are
allocated to the Partners following the receipt by an affiliate of the General
Partner of a partnership management fee of 9% of "Adjusted Cash From
Operations", as defined in the Partnership Agreement.
Distributable cash from the sale or disposition of investment properties
is to be generally allocated in the following order:
o To the Limited Partners up to the amount of their Original Invested
Capital;
o To the Limited Partners in an amount which, when added to prior
distributions from operations, equals a 10% cumulative non-compounded
return on their Adjusted Invested Capital;
o To an affiliate of the General Partner as a Subordinated Disposition
Fee; and
o With respect to the remainder, 85% to the Limited Partners and 15% to
the General Partner.
Net income from the sale or disposition of investment properties is to be
generally allocated as follows:
o To each Partner having a deficit balance in his capital account in the
same ratio as such deficit balance bears to the aggregate of deficit
balances of all Partners;
o To the Partners in an amount equal to that distributed to them in
respect of such sale or disposition; and
o With respect to the remainder, 99% to the Limited Partners and 1% to
the General Partner.
12. SUBSEQUENT EVENTS
On February 15, 1996, the Partnership paid a cash distribution of
$1,463,905 to the limited partners and $2,108 to the General Partner.
27
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP SCHEDULE III
(A CONNECTICUT LIMITED PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
===========================================================================================================
Costs
Capitalized Subsequent
Initial Cost to Partnership (A)(B) to Acquisition (C)
----------------------------------------------------------------------------
<S> <C> <C> <C>
Land and Land Land, Building and
Description Improvements Buildings Improvements
- -----------------------------------------------------------------------------------------------------------
Woodlands Plaza II $ 1,252,294 $ 6,436,730 $ (154,380)
Office Building
St Louis, MO
Lake Point I, II, III 1,413,971 6,615,761 1,745,885
Service Center
Orlando, FL
- -----------------------------------------------------------------------------------------------------------
Totals $ 2,666,265 $ 13,052,491 $ 1,591,505
===========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
===========================================================================================================
Gross Amount at Which Carried at Close of Period (E)(F)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Land and Land Building and
Description Improvements Improvements Tenant Improvements Total
- -----------------------------------------------------------------------------------------------------------
Woodlands Plaza II $ 980,294 $ 5,438,878 $ 1,115,472 $ 7,534,644
Office Building
St Louis, MO
Lake Point I, II, III 1,553,094 6,465,213 1,757,310 9,775,617
Service Center
Orlando, FL
- -----------------------------------------------------------------------------------------------------------
Totals $ 2,533,388 $ 11,904,091 $ 2,872,782 $ 17,310,261
===========================================================================================================
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP SCHEDULE III
(A CONNECTICUT LIMITED PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
DECEMBER 31, 1995
======================================================================================================================
<S> <C> <C> <C> <C>
Life on Which
Depreciation in Latest
Accumulated Date of Statement of Operations
Description Depreciation (G) Construction Date Acquired is Computed
- ----------------------------------------------------------------------------------------------------------------------
Woodlands Plaza II $ 3,249,907 1983 10/15/84 2-39 years
Office Building
St Louis, MO
Lake Point I, II, III 3,533,394 1985 07/31/86 2-39 years
Service Center
Orlando, FL
- ----------------------------------------------------------------------------------------------------------------------
Totals $ 6,783,301
======================================================================================================================
</TABLE>
[FN]
(A) The cost to the Partnership represents the initial purchase price of the
properties including certain acquisition fees and expenses. In accordance
with the Partnership Agreement, all properties were acquired without
incurring any mortgage debt.
[FN]
(B) The Partnership received $475,617 and $1,294,910 from the sellers of
Woodlands Plaza II and Lake Point I, II, III, respectively, under master
lease agreements, which were treated as a reduction of initial cost to the
Partnership.
[FN]
(C) Included in Costs Capitalized Subsequent to Acquisition are impairment of
assets losses for Woodlands Plaza II in the amount of $600,000 for 1994 and
$1,100,000 for 1992.
[FN]
(D) Includes the sale of two of the six buildings at
Westside Industrials during 1994 and the sale of the remaining four
buildings in 1995.
[FN]
(E) The aggregate cost of the real estate owned at December 31, 1995 for
federal income tax purposes is $19,999,715.
[FN]
(F) Reconciliation of real estate owned:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
=================================================================================================
Description 1995 1994 1993
=================================================================================================
Balance at beginning of period $ 18,692,756 $ 20,221,872 $20,019,369
Additions during period 242,284 423,118 202,503
Reductions during period (C)(D) (1,624,779) (1,952,234) --
- -------------------------------------------------------------------------------------------------
Balance at end of period $ 17,310,261 $ 18,692,756 $ 20,221,872
=================================================================================================
<FN>
(G) Reconciliation of accumulated depreciation:
=================================================================================================
Description 1995 1994 1993
=================================================================================================
Balance at beginning of period $ 6,686,953 $ 6,296,738 $5,532,115
Additions during period 736,049 692,861 764,623
Reductions during period (D) (639,701) (302,646) --
- -------------------------------------------------------------------------------------------------
Balance at end of period $ 6,783,301 $6,686,953 $ 6,296,738
=================================================================================================
29
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Connecticut General Equity Properties-I
Limited Partnership
In our opinion, the financial statements listed in the accompanying index (see
page 16) present fairly, in all material respects, the financial position of
Westford Office Venture at December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Partnership's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
Price Waterhouse LLP
Hartford, Connecticut
February 21, 1996
30
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
UNCONSOLIDATED VENTURE
WESTFORD OFFICE VENTURE
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<S> <C> <C>
ASSETS 1995 1994
------ ---- ----
Property and improvements, at cost:
Land and improvements $ 2,546,078 $ 2,501,875
Buildings 10,716,382 10,716,382
Tenant improvements 1,492,102 1,492,102
-------------- --------------
14,754,562 14,710,359
Less accumulated depreciation 4,726,178 4,209,052
-------------- --------------
Net property and improvements 10,028,384 10,501,307
Cash and cash equivalents 1,055,936 1,901,019
Accounts receivable 608 885
Prepaid expenses and other assets 2,600 16,401
Deferred charges, net 192,748 252,280
-------------- --------------
Total $ 11,280,276 $ 12,671,892
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses (including $8,731
in 1995 and $9,317 in 1994 due to affiliates) $ 27,327 $ 24,648
Deferred acquisition fees payable to affiliate 724,672 724,672
-------------- --------------
Total liabilities 751,999 749,320
-------------- --------------
Partners' capital:
CGEP:
Capital contributions 4,718,527 4,718,527
Cumulative cash distributions (2,347,200) (1,825,600)
Cumulative net income 308,065 150,097
-------------- --------------
2,679,392 3,043,024
-------------- --------------
CIR:
Capital contributions 13,439,197 13,439,197
Cumulative cash distributions (6,652,800) (5,174,400)
Cumulative net income 1,062,488 614,751
-------------- --------------
7,848,885 8,879,548
-------------- --------------
Total partners' capital 10,528,277 11,922,572
-------------- --------------
Total $ 11,280,276 $ 12,671,892
============== ==============
The Notes to Financial Statements are an integral
part of these statements.
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
UNCONSOLIDATED VENTURE
WESTFORD OFFICE VENTURE
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<S> <C> <C> <C>
1995 1994 1993
---- ---- ----
Income:
Base rental income $ 1,481,811 $ 1,342,969 $ 1,121,765
Other income 376,258 288,888 130,370
Interest income 53,221 54,972 28,515
------------- ------------- --------------
1,911,290 1,686,829 1,280,650
------------- ------------- --------------
Expenses:
Property operating expenses 597,935 633,601 608,323
General and administrative 75,097 57,198 54,125
Fees and reimbursements to affiliates 55,895 50,651 35,855
Depreciation and amortization 576,658 552,638 504,443
------------- ------------- --------------
1,305,585 1,294,088 1,202,746
------------- ------------- --------------
Net income $ 605,705 $ 392,741 $ 77,904
============= ============= ==============
Net income:
CGEP $ 157,968 $ 102,427 $ 20,317
CIR 447,737 290,314 57,587
------------- ------------- --------------
$ 605,705 $ 392,741 $ 77,904
============= ============= ==============
The Notes to Financial Statements are an integral
part of these statements.
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
UNCONSOLIDATED VENTURE
WESTFORD OFFICE VENTURE
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<S> <C> <C> <C>
CGEP CIR Total
Balance at December 31, 1992 $ 2,920,280 $ 8,531,647 $ 11,451,927
Net income 20,317 57,587 77,904
------------- -------------- --------------
Balance at December 31, 1993 2,940,597 8,589,234 11,529,831
Net income 102,427 290,314 392,741
------------- -------------- --------------
Balance at December 31, 1994 3,043,024 8,879,548 11,922,572
Net income 157,968 447,737 605,705
Cash distributions (521,600) (1,478,400) (2,000,000)
------------- -------------- --------------
Balance at December 31, 1995 $ 2,679,392 $ 7,848,885 $ 10,528,277
============= ============== ==============
The Notes to Financial Statements are an integral
part of these statements.
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
UNCONSOLIDATED VENTURE
WESTFORD OFFICE VENTURE
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<S> <C> <C> <C>
1995 1994 1993
---- ---- ----
Cash flows from operating activities:
Net income $ 605,705 $ 392,741 $ 77,904
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 576,658 552,638 504,443
Accounts receivable 277 117,497 (118,382)
Accounts payable and accrued expenses 2,679 (33,616) (1,742)
Other, net 13,801 (13,463) 10,017
------------- ------------- -------------
Net cash provided by operating activities 1,199,120 1,015,797 472,240
------------- ------------- -------------
Cash flows from investing activities:
Purchases of property and improvements (44,203) (248,005) (119,429)
Payment of leasing commissions -- (39,758) (41,715)
------------- ------------- -------------
Net cash used in investing activities (44,203) (287,763) (161,144)
------------- ------------- -------------
Cash flows from financing activities:
Cash distribution to venture partners (2,000,000) -- --
------------- ------------- -------------
Net cash used in financing activities (2,000,000) -- --
------------- ------------- -------------
Net increase (decrease) in cash and cash equivalents (845,083) 728,034 311,096
Cash and cash equivalents, beginning of year 1,901,019 1,172,985 861,889
------------- ------------- -------------
Cash and cash equivalents, end of year $ 1,055,936 $ 1,901,019 $ 1,172,985
============= ============= =============
Supplemental disclosure of non-cash information:
Accrued purchase of property and improvements $ -- $ -- $ 31,225
============= ============= =============
The Notes to Financial Statements are an integral
part of these statements.
</TABLE>
34
<PAGE>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
UNCONSOLIDATED VENTURE
WESTFORD OFFICE VENTURE
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Westford Office Venture (the "Venture") is a joint venture partnership in
which Connecticut General Equity Properties-I Limited Partnership ("CGEP") owns
a 26.08% interest. The remaining 73.92% interest is held by CIGNA Income
Realty-I Limited Partnership ("CIR"), an affiliated limited partnership. The
Venture owns and operates a commercial property, an office and
research/development facility located in Westford, Massachusetts.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) PROPERTY AND IMPROVEMENTS: Property and improvements are carried at cost
less accumulated depreciation. The cost represents the initial purchase
price, subsequent capitalized costs and adjustments, including certain
acquisition expenses and impairment loss. Amounts received under the master
lease agreement from the seller of the Westford Corporate Center were
treated as a reduction of the property purchase price. Depreciation on
property and improvements is calculated on the straight-line method based
on the estimated useful lives of buildings and improvements (15 to 39
years) and tenant improvements (the respective lease terms). Maintenance
and repair expenses are charged to operations as incurred.
As a result of inherent changes in market values of real property, the
Partnership reviews potential impairment annually. The undiscounted future
cash flows for each property, as estimated by the Partnership, is compared
to the carrying value. If the carrying value is greater than the sum of the
estimated future undiscounted cash flows, and deemed other than temporary,
an impairment loss is recognized currently.
In 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (the
"Statement"). Under the Statement, entities should continue to compare the
sum of the expected undiscounted future net cash flows to the carrying
value of the asset. If an impairment exists, the Statement requires a
writedown to the fair value. Long-lived assets to be disposed of, including
real estate held for sale, must be carried at the lower of cost or fair
value less costs to sell. In addition, the Statement prohibits depreciation
of long-lived assets to be disposed. The Venture will adopt this Statement
in the first quarter of 1996; the effect on the Venture's results of
operations, liquidity and financial condition is not expected to be
material.
B) CASH AND CASH EQUIVALENTS: Short-term investments with a maturity of three
months or less at the time of purchase are generally reported as cash
equivalents.
C) DEFERRED CHARGES: Deferred charges consist of leasing costs which are
amortized using the straight-line method over the respective lease terms.
D) INCOME TAXES: No provision for income taxes has been made as the liability
for such taxes is that of the limited partners of the partnership involved
in the Venture.
35
<PAGE>
E) BASIS OF PRESENTATION: Certain amounts in the 1993 and 1994 Financial
Statements have been reclassified to conform to the 1995 presentation.
3. INVESTMENT PROPERTY
The Venture purchased Westford Corporate Center located in Westford,
Massachusetts, without incurring any long-term debt.
The Venture recognized an impairment of asset loss in 1992 of $3,800,000
principally due to a reduction in the estimated holding period.
4. DEFERRED CHARGES
Deferred charges at December 31, 1995 and 1994 consist of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
---- ----
Deferred leasing costs $ 441,543 $ 441,543
Accumulated amortization (248,795) (189,263)
----------- ----------
$ 192,748 $ 252,280
=========== ==========
</TABLE>
5. LEASES
The property is leased under leases which are accounted for as operating
leases, having remaining lease terms of less than four years. Following is a
schedule of minimum annual future rentals based upon non-cancelable commercial
leases currently in effect, assuming no exercise of tenant renewal options:
Year ending December 31:
1996 $ 1,425,303
1997 1,425,303
1998 1,425,303
1999 356,326
2000 and Thereafter --
Leases generally include provisions for tenants to pay pro rata share of
increases in operating expenses over base period amounts. During 1995, 1994 and
1993 the Venture earned $376,258, $288,888 and $130,370, respectively, under
such provisions. These amounts are included in other income on the Statement of
Operations.
Generally, a portion of the net leasable area for commercial real estate
properties is occupied by significant tenants (occupying ten percent or more of
net leasable area). Significant tenant information for the Venture's investment
property is as follows: Two tenants occupy 100% of the net leasable area and
account for 100% of gross rental revenue. Any loss of a significant tenant could
have a material adverse effect on the Venture's results of
36
<PAGE>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
Unconsolidated Venture
Westford Office Venture
Notes to Financial Statements - Continued
operations. Although an uncertainty exists relative to the replacement of a
tenant upon early termination, the revenue effect of an early termination of a
significant tenant is tempered by the potential for termination fees, and is
therefore not likely to be material to the Venture's liquidity or financial
condition.
6. TRANSACTIONS WITH AFFILIATES
An affiliate of the venturers provided investment property acquisition
services in 1986. Fees for such services totalled approximately $1,000,000 in
1986 of which $724,672 will be payable from sales proceeds.
During 1995, 1994 and 1993, an affiliate of the general partners of the
venturers provided property management services at Westford Corporate Center for
fees totalling $55,895, $50,651 and $35,855, respectively. In addition, the
affiliate contracted for on-site property management services with an
unaffiliated third party company on behalf of the Venture. For the years ended
1995, 1994 and 1993, $52,957, $50,646 and $35,949 of fees were paid directly by
the Venture to an unaffiliated on-site property manager.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and estimated fair values
of the Venture's financial instruments at December 31, 1995. Statement of
Financial Accounting Standards No. 107, "Disclosures about Fair Value of
Financial Instruments", defines the fair value of a financial instrument as the
amount at which the instrument could be exchanged in a current transaction
between willing parties.
<TABLE>
<CAPTION>
<S> <C> <C>
Carrying Fair
Amount Value
ASSETS:
Cash and cash equivalents 1,055,936 1,055,936
Accounts receivable 608 608
Other assets 2,600 2,600
LIABILITIES:
Accounts payable and accrued expenses 27,327 27,327
Deferred acquisition fees due to affiliates 724,672 493,200
</TABLE>
The carrying amounts shown in the table are included in the balance sheet
under the indicated captions.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
Cash, Accounts receivable, Other assets, and Accounts payable and accrued
expenses: The carrying amounts approximate fair value because of the short
maturity of those instruments.
Deferred acquisition fees due to affiliates: The fair value was estimated
by discounting cash flows over the estimated holding period of the
investment property using a market rate.
37
<PAGE>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
Unconsolidated Venture
Westford Office Venture
Notes to Financial Statements - Continued
8. JOINT VENTURE AGREEMENT
Pursuant to the Joint Venture Agreement, results of operations, including
net income or loss and cash distributions, shall generally be allocated to the
venturers in proportion to their percentage capital contributions. However,
certain acquisition-related expenses incurred by each venture partner in
acquiring its interest in the Venture have been recorded in the Venture's books.
The related expense or depreciation of such amounts has been allocated to the
respective venture partner who incurred the expense.
Net income and distributable cash from the sale or disposition of property
shall be allocated in the following order:
o To the venturers having negative capital account balances pro rata in
proportion to their negative capital accounts; and
o To the venturers in an amount necessary so that the capital account
balances of the venturers shall be in proportion to their respective
percentage interests.
38
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP SCHEDULE III
(UNCONSOLIDATED VENTURE)
WESTFORD OFFICE VENTURE
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
=============================================================================================================
Initial Cost Costs Capitalized Subsequent
to Venture (A)(B) to Acquisition (C)
------------------------------------------------------------------------------
<S> <C> <C> <C>
Land and Land Land, Building and
Description Improvements Buildings Improvements
=============================================================================================================
Westford Corporate Center $3,223,875 $13,759,689 $ (2,229,002)
Westford, MA
=============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
==============================================================================================================
Gross Amount at Which Carried at Close of Period (D)(E)
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Land and Land Building and
Description Improvements Improvements Tenant Improvements Total
- --------------------------------------------------------------------------------------------------------------
Westford Corporate Center $ 2,546,078 $ 10,716,382 $ 1,492,102 $ 14,754,562
Westford, MA
==============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
==============================================================================================================
<S> <C> <C> <C> <C>
Life on Which
Depreciation in
Latest Statement of
Accumulated Date of Operations is
Description Depreciation (F) Construction Date Acquired Computed
- --------------------------------------------------------------------------------------------------------------
Westford Corporate Center $ 4,726,178 1986 09/11/86 2-39 years
Westford, MA
==============================================================================================================
</TABLE>
[FN]
(A) The cost to the Venture represents the initial purchase price of the
properties including certain acquisition fees and expenses. In accordance
with the Joint Venture Agreement, the property was acquired without
incurring any mortgage debt.
[FN]
(B) The Venture received $245,531 under a Master Lease Agreement, which was
treated as a reduction of initial cost to Venture.
[FN]
(C) Included in Costs Capitalized Subsequent to Acquisition is an
impairment of assets loss in the amount of $3,800,000.
[FN]
(D) The aggregate cost of the real estate owned at December 31, 1995 for
federal income tax purposes is $18,554,563.
[FN]
(E) Reconciliation of real estate owned:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
=================================================================================================
Description 1995 1994 1993
=================================================================================================
Balance at beginning of period $ 14,710,359 $ 14,493,579 $ 14,342,925
Additions during period 44,203 216,780 150,654
- -------------------------------------------------------------------------------------------------
Balance at end of period $ 14,754,562 $ 14,710,359 $ 14,493,579
=================================================================================================
<FN>
(F) Reconciliation of accumulated depreciation:
=================================================================================================
Description 1995 1994 1993
=================================================================================================
Balance at beginning of period $ 4,209,052 $ 3,712,142 $ 3,254,267
Additions during period 517,126 496,910 457,875
- -------------------------------------------------------------------------------------------------
Balance at end of period $ 4,726,178 $ 4,209,052 $ 3,712,142
=================================================================================================
</TABLE>
39
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The General Partner of the Partnership, Connecticut General Realty
Resources, Inc.-Third, a Delaware corporation, is an indirect, wholly owned
subsidiary of CIGNA Corporation, a publicly held corporation whose stock is
traded on the New York Stock Exchange. The General Partner has responsibility
for and control over the affairs of the Partnership.
The directors and executive officers of the General Partner as of February
15, 1996 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Name Office Served Since
R. Bruce Albro Director May 2, 1988
J. Robert Andrews Director April 2, 1990
David Scheinerman Director July 25, 1995
John D. Carey President, Controller September 7, 1993
September 4, 1990
Verne E. Blodgett Vice President, Counsel April 2, 1990
Joseph W. Springman Vice President, Assistant Secretary September 7, 1993
David C. Kopp Secretary September 29, 1989
Marcy F. Blender Treasurer August 1, 1994
</TABLE>
There is no family relationship among any of the foregoing directors or
officers. There are no arrangements or understandings between or among said
officers or directors and any other person pursuant to which any officer or
director was selected as such.
The foregoing directors and officers are also officers and/or directors of
various affiliated companies of Connecticut General Realty Resources,
Inc.-Third, including CIGNA Financial Partners, Inc. (the parent of Connecticut
General Realty Resources, Inc.-Third), CIGNA Investments, Inc., CIGNA
Corporation (the parent of CIGNA Investments, Inc.), Connecticut General
Corporation (the parent of CIGNA Financial Partners, Inc.).
40
<PAGE>
The business experience of each of the directors and executive officers of
the General Partner of the Partnership is as follows:
R. BRUCE ALBRO - DIRECTOR
Mr. Albro, age 53, a Senior Managing Director of CIGNA Investment
Management (CIM), joined Connecticut General's Investment Operations in 1971 as
a Securities Analyst in Paper, Forest Products, Building and Machinery.
Subsequently, he served as a Research Department Unit Head, as an Assistant
Portfolio Manager, then as Director of Equity Research and a member of the
senior staff of CIGNA Investment Management Company and as a Portfolio Manager
in the Fixed Income area. He then headed the Marketing and Merchant Banking area
for CII. Prior to his current assignment of Division Head, Portfolio Management
Division, he was an insurance portfolio manager, and prior to that, he was
responsible for Individual Investment Product Marketing. In addition, Mr. Albro
currently serves as President of the CIGNA Funds Group and other CIGNA
affiliated mutual funds. Mr. Albro received a Master of Arts degree in Economics
from the University of California at Berkeley and a Bachelor of Arts degree in
Economics from the University of Massachusetts at Amherst.
J. ROBERT ANDREWS - DIRECTOR
Mr. Andrews, age 51, is a Managing Director of CIGNA Investment Management
and is one of seven senior managers in the Real Estate Investment Division,
heading the Real Estate Acquisition and Dispositions Department. He joined
CIGNA's Real Estate Division in 1983. Prior to his current assignment, he was
the Head of the Tax Advantaged Investment Department; a Vice President - Real
Estate Portfolio Manager for Pension Accounts; one of six Vice President -
Territorial Managers in the Mortgage and Real Estate Acquisition unit and an
Assistant Vice President in the Real Estate Asset Management unit. Prior to
coming to CIGNA, he was the principal of a real estate consulting firm
specializing in domestic and international multi-family residential construction
and development. Prior to forming his own business, Mr. Andrews was an
Acquisition Director and Regional Director of Operations for a publicly owned
(NYSE) real estate development company. He received a Bachelor of Arts degree in
Architecture and a Master of Business Administration degree in Finance and Real
Estate from The Pennsylvania State University.
DAVID SCHEINERMAN - DIRECTOR
Mr. Scheinerman, age 35, was appointed Chief Financial Officer of CIGNA
Individual Insurance, a division with more than $77 billion of life insurance in
force, in July of 1995. Mr. Scheinerman has served in various actuarial and
business management capacities with CIGNA. In 1991 he was appointed Vice
President and Pricing Actuary for CIGNA HealthCare. He has more than 12 years of
financial management experience and has served as Chief Financial Officer of
Crusader Insurance PLC, a CIGNA subsidiary life company in the United Kingdom.
Mr. Scheinerman holds a BA in Mathematics from Rice University and an MBA from
the University of Pennsylvania Wharton School of Business. He is a fellow of the
Society of Actuaries and a member of the American Academy of Actuaries.
JOHN D. CAREY - PRESIDENT, CONTROLLER
Mr. Carey, age 32, joined CIGNA Investment Management-Real Estate as
Controller of Tax Advantaged Investments in 1990. In September 1993, Mr. Carey
was appointed President. Prior to joining CIGNA Investment Management, he held
the position of manager at KPMG Peat Marwick LLP in the audit department and was
a member of the Real Estate Focus Group. His experiences include accounting and
financial reporting for public and private real estate limited partnership
syndications. Mr. Carey is a graduate of Central Connecticut State University
with a Bachelor of Science Degree and is a Certified Public Accountant.
41
<PAGE>
VERNE E. BLODGETT - VICE PRESIDENT, COUNSEL
Mr. Blodgett, age 58, is an Assistant General Counsel of CIGNA Corporation.
He joined Connecticut General Life Insurance Company in 1975 as an investment
attorney and has held various positions in the Legal Division of Connecticut
General Life Insurance Company prior to his appointment as Assistant General
Counsel in 1981. Mr. Blodgett received a Bachelor of Arts degree from Yale
University and graduated with honors from the University of Connecticut School
of Law. He is a member of the Connecticut and the American Bar Associations.
JOSEPH W. SPRINGMAN - VICE PRESIDENT, ASSISTANT SECRETARY
Mr. Springman, age 54, is Managing Director and department head responsible
for asset management. He joined CIGNA's Real Estate operations in 1970. He has
held positions as an officer or director of several real estate affiliates of
CIGNA. His past real estate assignments have included Development and
Engineering, Property Management, Director, Real Estate Operations, Portfolio
Management and Vice President, Real Estate Production. Prior to assuming his
asset management post, Mr. Springman was responsible for production of real
estate and mortgage investments. He received a Bachelor of Science degree from
the U.S. Naval Academy.
DAVID C. KOPP - SECRETARY
Mr. Kopp, age 50, is Secretary of CII, Corporate Secretary of Connecticut
General Life Insurance Company and Assistant Corporate Secretary and Assistant
General Counsel, Insurance and Investment Law of CIGNA Corporation. He also
serves as an officer of various other CIGNA Companies. In August of 1995, he
also assumed responsibility as chief compliance officer for CIGNA HealthCare, a
division of CIGNA Corporation. He joined Connecticut General Life Insurance
Company in 1974 as a commercial real estate attorney and held various positions
in the Legal Department of Connecticut General Life Insurance Company prior to
his appointment as Corporate Secretary in 1977. Mr. Kopp is an honors graduate
of Northern Illinois University and served on the law review at the University
of Illinois College of Law. He is a member of the Connecticut Bar Association
and is Past President of the Hartford Chapter, American Society of Corporate
Secretaries.
MARCY F. BLENDER - TREASURER
Marcy F. Blender, age 39, is Assistant Vice President, Bank Resources of
CIGNA Corporation. In this capacity she is responsible for bank relationship
management, bank products and services, bank compensation and control, and bank
exposure management. Marcy joined Insurance Company of North America (INA) in
1979. She has held a variety of financial and investment positions with INA and
later with the merged CIGNA Corporation before assuming her current
responsibilities in 1992. She received a B.A. degree from Rutgers University and
an M.B.A. from Drexel University. She is a Certified Public Accountant.
ITEM 11. EXECUTIVE COMPENSATION
Officers and directors of the General Partner receive no current or
proposed direct compensation from the Partnership in such capacities. However,
certain officers and directors of the General Partner received compensation from
the General Partner and/or its affiliates (but not from the Partnership) for
services performed for various affiliated entities, which may include services
performed for the Partnership, but such compensation was not material in the
aggregate.
42
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No person or group is known by the Partnership to own beneficially more
than 5% of the outstanding Units of interest of the Partnership.
As of February 15, 1996, the individual directors and the directors and
officers, as a group, of the General Partner beneficially owned Partnership
Units and shares of the common stock of CIGNA, parent of the General Partner, as
set forth in the following table:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Units Shares
Beneficially Beneficially Percent of
Name Owned(a) Owned(b) Class
R. Bruce Albro (c) 0 6,653 *
J. Robert Andrews (d) 0 1,885 *
David Scheinerman 0 0 *
All directors and officers
Group (8) (e) 0 15,388 *
* Less than 1% of class
<FN>
(a) No officer or director of the General Partner possesses a right to acquire
beneficial ownership of additional Units of interest of the Partnership.
<FN>
(b) The directors and officers have sole voting and investment power over all
the shares of CIGNA common stock they own beneficially.
<FN>
(c) Shares beneficially owned includes options to acquire 4,487 shares and 1,432 shares which are restricted as to
disposition.
<FN>
(d) Shares beneficially owned includes 1,885 shares which are restricted as to disposition.
<FN>
(e) Shares beneficially owned by directors and officers include 6,492 shares of CIGNA common stock which may be
acquired upon exercise of stock options and 7,611 shares which are
restricted as to disposition.
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The General Partner of the Partnership is generally entitled to receive 1%
of cash distributions, when and as cash distributions are made to the Limited
Partners, and is generally allocated 1% of profits or losses. The General
Partner was entitled to receive distributable cash from 1995 operations of
$10,435. The General Partner was allocated a share of the Partnership income in
the amount of $22,266 for 1995. Reference is also made to the Notes to Financial
Statements included in this annual report for a description of such
distributions and allocations. The relationship of the General Partner (and its
directors and officers) to its affiliates is set forth in Item 10.
CII provided asset management services to the Partnership during 1995 for
the Woodlands Plaza II Office Building, Westside Industrials and Lake Point
Service Center for fees calculated at 6% of gross revenues collected from the
properties less amounts earned by independent third party property management
companies contracted by CII on behalf of the Partnership. In 1995, CII earned
asset management fees amounting to $55,633 for such services, of which $7,877
was unpaid as of December 31, 1995. Independent third party property managers
earned $112,749 of management fees, of which $7,622 was unpaid as of December
31, 1995. In 1995, CII provided asset management services for the Partnership's
investment in the Westford Office Venture for fees calculated at 6% of gross
revenues collected. CII earned $14,577 for such services. Independent third
party property managers earned $13,811 of fees relating to Westford.
43
<PAGE>
CFP provided partnership management services for the Partnership at fees
calculated at 9% of adjusted cash from operations in any one year. In 1995, CFP
earned partnership management fees amounting to $124,050 for such services, of
which $18,910 was unpaid as of December 31, 1995.
The General Partner and its affiliates may be reimbursed for their direct
expenses incurred in the administration of the Partnership. In 1995, the General
Partner and its affiliates were entitled to reimbursement for such out of pocket
administrative expenses in the amount of $69,452 of which $6,050 was unpaid as
of December 31, 1995.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements. See Index to Financial Statements in Item 8.
2. Financial Statement Schedules
(a) Real Estate and Accumulated Depreciation. See Index to
Financial Statements in Item 8.
3. Exhibits
3(a)Partnership Agreement, incorporated by reference to Exhibit A
to the Prospectus of Registrant, dated January 31, 1984, File
No. 2-87976.
3(b) First Amendment to Partnership Agreement, dated March 1,
1985, incorporated by reference to Exhibit 3(b) to
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1985.
4 Certificate of Limited Partnership dated November 9, 1983,
incorporated by reference to Exhibit 4 to Form S-11
Registration Statement under the Securities Act of 1933,
File No. 2-87976.
10(a) Acquisition and Disposition Services Agreement, dated as
of January 31, 1984, between Connecticut General Equity
Properties-I Limited Partnership and CIGNA Capital
Advisers, Inc., incorporated by reference to Exhibit 10(a)
to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987.
(b) Supervisory Property Management Agreement, dated as of
January 31, 1984, between Connecticut General Equity
Properties-I Limited Partnership and CIGNA Capital
Advisors, Inc., incorporated by reference to Exhibit 10(b)
to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987.
(c) Agreement concerning Certain Capital Contributions, dated
as of December 30, 1983, between Connecticut General
Management Resources, Inc. and Connecticut General Realty
Resources, Inc.-Third, incorporated by reference to
Exhibit 10(c) to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1987.
(d) Real Estate Purchase Agreement, dated as of July 25, 1984,
relating to the acquisition of Woodlands Plaza II Office
Building, incorporated by reference to Exhibit 10(d) to
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1985.
(e) Bill of Sale and Assignment, dated October 15, 1984,
relating to the acquisition of Woodlands Plaza II Office
Building, incorporated by reference to Exhibit 10(e) to
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1985.
44
<PAGE>
(f) Assignment and Assumption Agreement, dated as of January
17, 1985, relating to the acquisition of Interpark
Industrial Park, incorporated by reference to Exhibit
10(f) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1985.
(g) Real Estate Purchase Agreement between LaSalle National
Bank and Connecticut General Resources, Inc.-Third dated
May 8, 1985, relating to the acquisition of the Courtyard
Shopping Center, incorporated by reference to Exhibit
10(g) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1985.
(h) Real Estate Purchase Agreement between Crow-Vista #2 and
Connecticut General Equity Properties-I Limited
Partnership dated as of July 31, 1986, relating to the
acquisition of Lake Point I, II, III, incorporated by
reference to Exhibit 10(b) to Current Report on Form 8-K
dated July 31, 1986.
(i) Management and Leasing Agreement between Trammel Crow
Realty Associates, Inc. and Connecticut General Equity
Properties-I Limited Partnership dated as of July 31,
1986, relating to Lake Point I, II, III, incorporated by
reference to Exhibit 10(d) to Current Report on Form 8-K
dated July 31, 1986.
(j) Joint Venture Agreement between CIGNA Income Realty-I
Limited Partnership and Connecticut General Equity
Properties-I Limited Partnership dated as of November 1,
1986, relating to the acquisition of the Westford
Corporate Center, incorporated by reference to Exhibit
10(k) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1986.
(k) Real Estate Purchase Agreement between Robert M. Doyle and
Ian S. Gillespie, as trustees of Westford Office Center
Trust, and Westford Office Venture, dated as of September
10, 1986, relating to the acquisition of the Westford
Corporate Center, incorporated by reference to Exhibit
10(l) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1986.
(l) Management Agreement between the Westford Office Venture
and Codman Management Co., dated as of September 10, 1986,
relating to the Westford Corporate Center, incorporated by
reference to Exhibit 10(n) to Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1986.
(m) Real Estate Purchase Contract between Solman Brothers
Leasing and Connecticut General Equity Properties-I
Limited Partnership dated as of February 22, 1994,
relating to the sale of Westside Industrial Buildings 1
and 2.
(n) Deposit Receipt and Real Estate Purchase Contract between
JACLS Holding Company and/or Nominee and Connecticut
General Equity Properties-I Limited Partnership dated as
of February 20, 1995, relating to the sale of Westside
Industrial Building #6 closed on April 27, 1995.
(o) Deposit Receipt and Real Estate Purchase Contract between
Zimmerman Properties, Inc. and Connecticut General Equity
Properties-I Limited Partnership dated as of August 2,
1995, relating to the sale of Westside Industrial
Buildings #3, #4 and #5 closed on December 26, 1995.
27 Financial Data Schedules
(b) No reports on Form 8-K were filed during the last quarter of the fiscal
year.
45
<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.
CONNECTICUT GENERAL EQUITY PROPERTIES-I
LIMITED PARTNERSHIP
By: Connecticut General Realty
Resources, Inc.-Third,
General Partner
Date: March 25, 1996 By: /s/ John D. Carey
-------------------
John D. Carey, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities (with respect to the General Partner) and on the date
indicated.
/s/ R. Bruce Albro Date: March 25, 1996
------------------------------------------
R. Bruce Albro, Director
/s/ J. Robert Andrews Date: March 25, 1996
------------------------------------------
J. Robert Andrews, Director
/s/ David Scheinerman Date: March 25, 1996
------------------------------------------
David Scheinerman, Director
/s/ John D. Carey Date: March 25, 1996
------------------------------------------
John D. Carey, President, Controller
(Principal Executive Officer)
(Principal Accounting Officer)
/s/ Marcy F. Blender Date: March 25, 1996
------------------------------------------
Marcy F. Blender, Treasurer
(Principal Financial Officer)
<PAGE>
Exhibit 10(o)
DEPOSIT RECEIPT AND REAL ESTATE PURCHASE CONTRACT
Phoenix , Arizona August 2 , 19 95
------------------ ------------ ----
Received from Zimmerman Properties, Inc. and/or Nominee ("Purchaser"), the
sum of Twenty Five Thousand and no/100------- Dollars ($ 25,000.00 ) in the form
of a check to be deposited in Escrow upon acceptance from Seller , as an earnest
money deposit on account of the purchase price of One Million One Hundred
Seventy-Five Thousand and no/100------- Dollars ($ 1,175,000.00 ) for that
certain property situated in the City of Phoenix , County of Maricopa , State of
Arizona, and described as follows (the "Property"): Westside Business Center,
34th Drive and Flower Street Buildings 3, 4 and 5 Parcel Numbers:
108-03-059,060,061, 062 and 068
TERMS OF SALE:
1. The deposit shall be immediately deposited into escrow with the
below-named Escrow Holder. The remainder of the purchase price shall be paid as
follows:
$25,000.00 Earnest Money Deposit
$1,150,000.00 Payable at Close of Escrow
$1,175,000.00 Total Sales Price
2. Upon mutual execution of this Contract, the parties shall execute
instructions to Lawyers Title of Arizona Karma Stockstill (the "Escrow Holder"),
to consummate the purchase in accordance with the terms and provisions hereof.
The provisions hereof shall constitute joint instructions to the Escrow Holder;
provided, however, that the parties shall execute such additional instructions
as they may agree upon or as requested by the Escrow Holder not inconsistent
with the provisions hereof. Said escrow shall provide for a closing of on or
before September 30, 1995. Escrow fees shall be shared by Seller and Purchaser
on a 50/50 basis.
3. As soon as reasonably possible following opening of escrow, Seller shall
pay for and furnish to Purchaser a Preliminary Title Report on the Property,
together with full copies of all exceptions of record set forth therein
("Exceptions"), including but not limited to covenants, conditions,
restrictions, reservations, easements, rights and rights of way of record,
assessments, liens and other matters of record. Purchaser shall have ten (10)
days after receipt of said Preliminary Title Report, together with full copies
of said Exceptions, within which to notify the Seller and the Escrow Holder, in
writing, of Purchaser's reasonable disapproval of any Exceptions shown in said
Title Report. Failure of Purchaser reasonably to disapprove any Exception(s)
within the aforementioned time limit shall be deemed an approval of said
Preliminary Title Report*. The Policy of Title Insurance shall be a standard
coverage policy in the amount of the total purchase price and shall be paid for
by Seller. * See Addendum A, Paragraph 1.
4. In the event that the foregoing contingency or any contingency to this
Contract has not been eliminated or satisfied within the time limits and
pursuant to the provisions herein, unless Purchaser elects to waive the specific
contingency by written notice to the Seller and to the Escrow Holder, the
Contract resulting from Seller's acceptance hereof shall be deemed null and
void, the deposit shall be returned to Purchaser and the escrow shall be
cancelled.
<PAGE>
5. Seller warrants that Seller has not received nor is Seller aware of any
notification from any governmental authority having jurisdiction, requiring any
work to be done on the Property. Seller further warrants that in the event any
such notice or notices are received by Seller prior to the close of escrow and
Seller is unable to or does not elect to perform the work required in said
notice at Seller's sole cost and expense on or before the close of escrow, said
notices shall be submitted to Purchaser for his examination and written
approval. Should Purchaser fail to approve said notice and thereby elect not to
acquire the Property subject to the effect of same, within five (5) days from
the date Seller submits said notice to Purchaser, then this Contract shall be
cancelled without further liability to either party, and all deposits returned
to Purchaser.
6. Property taxes, rentals, and operating or other expenses, if any, shall
be prorated as of the date of close of escrow, and Seller shall pay the cost of
any stamps to be attached to the deed or other similar fees or taxes in
accordance with the requirements of any lawful authority. Any advance Tenant
deposits or payments shall be prorated and credited accordingly to Purchaser. As
to assessments, the information pertaining thereto shall be set forth in the
aforementioned Preliminary Title Report and, if approved, Purchaser, at
Purchaser's option, may either take title subject to the unpaid principal
balance thereof with this sum to be credited towards the total purchase price
and to apply towards the cash sum required to be paid through escrow or require
Seller to remove said lien for assessments at the time of closing.
7. Purchaser reserves the right to take title to the subject property in a
name or assignee other than shown above; provided, however, that such right
shall not relieve Purchaser of his liabilities hereunder as a principal obligor.
8. Purchaser shall have 30 days from August 11, 1995 within which to
investigate the Property, its value, zoning, environmental and building matters,
its condition including, but not limited to the presence of asbestos, hazardous
materials and underground storage tanks--and its suitability for Purchaser's
intended use. Seller hereby warrants that to the best of its knowledge the
premises described herein and the improvements thereon do not violate the
applicable building or zoning regulations and that Seller is unaware of any
material defect in the Property or improvements thereon with the exception of
the following, to wit: None . (If none -- so indicate.) If Purchaser gives
written notice to Seller by 5:00 PM of the final date of the above-referenced
period, of dissatisfaction with any of the referenced matters, and Seller and
Purchaser have not entered into a mutually agreeable resolution of the matter by
5:00 PM 7 days thereafter, this Contract shall be deemed cancelled and Purchaser
shall be entitled to return of deposit. If Purchaser fails to give written
notice of dissatisfaction by 5:00 PM of the first-referenced period, then
Purchaser's right to object to such matters shall be deemed waived.
9. If there is any loss or damage to the Property between the date hereof
and the date of closing of escrow, by reason of fire, vandalism, flood,
earthquake or act of God, the risk of loss shall be on the Seller, provided,
however that if the cost of repairing such loss or damage would exceed 10
percent of the purchase price, (a) Purchaser may elect to cancel this Contract
unless Seller agrees in writing to pay the cost of repairing all such loss or
damage, and (b) Seller may elect to cancel this Agreement unless Purchaser
agrees in writing either to accept the Property without offset or additional
consideration or to pay the cost of repairing such loss or damage to the extent
such cost would exceed 10 percent of the purchase price.
<PAGE>
Page 3
11. Any addendum or exhibit attached hereto and either signed or initialed
by the parties shall be deemed a part hereof.
12. Time is of the essence of this Contract.
13. The following shall apply in the event of default by either party under
this Contract:
(a) IF PURCHASER IS IN DEFAULT (check one):
X SPECIFIC PERFORMANCE/DAMAGES
Seller may elect to treat this Contract as cancelled, in which
case all payments and things of value received hereunder shall
be forfeited and retained by Seller, and Seller may recover
such damages as may be proper, or Seller may elect to treat
this Contract as being in full force and effect and Seller
shall have the right to specific performance, or damages, or
both.
LIQUIDATED DAMAGES
All payments and things of value received hereunder shall be
forfeited by Purchaser and retained by Seller and both parties
shall thereafter be released from all obligations hereunder.
It is agreed that such payments and things of value are
LIQUIDATED DAMAGES and (except as provided in subsection (c))
are SELLER'S SOLE AND ONLY REMEDY for Purchaser's failure to
perform the obligations of this Contract. Seller expressly
waives the remedies of specific performance and additional
damages.
(b) IF SELLER IS IN DEFAULT:
Purchaser may elect to treat this Contract as cancelled in
which case all payments and things of value received hereunder
shall be returned and Purchaser may recover such damages as
may be proper, or Purchaser may elect to treat this Contract
as being in full force and effect and Purchaser shall have the
right to specific performance or damages, or both.
(c) COSTS AND EXPENSES:
Anything to the contrary herein notwithstanding, in the event
of any litigation or arbitration arising out of this Contract,
the prevailing party shall be awarded all reasonable costs and
expenses, including attorneys' fees and expert witness fees.
14. AGENCY DISCLOSURE
Seller and Purchaser each warrant that they have dealt with no other real
estate brokers in connection with this transaction except: Lee & Associates
(Matt Hobaica) , who represents the Seller , and Cutler Commercial (Rod Crotty)
, who represents the Buyer.
15. Seller agrees to pay Broker a real estate brokerage commission for
services rendered in effecting this sale, in the amount called for in Seller's
contract with Broker for the sale of the Property, if any, and otherwise in the
amount of 5 % of the accepted sales price.
<PAGE>
Page 4
Sale proceeds sufficient to pay the commission are hereby assigned to
Broker, and Escrow Holder is hereby instructed to pay said commission to Broker
out of Seller's proceeds at the close of escrow. This instruction shall not be
withdrawn or modified without Broker's written consent. Nothing contained herein
shall negate any additional rights Broker may have under any other contract
between Seller and Broker for the sale of the Property.
16. In the event that Broker deems it necessary to file an interpleader
action in court to resolve a dispute over the earnest money deposit referenced
herein, Purchaser and Seller authorize Broker to draw from the earnest money
deposit an amount necessary to advance the legal fees and costs of bringing the
interpleader action. The amount of deposit remaining after advancing those costs
shall be interpleaded into court in accordance with state law. Purchaser and
Seller further agree that the defaulting party shall pay any further court costs
and reasonable attorney's fees incurred by Broker in bringing or being involved
in such action.
17. The Foreign Investment in Real Property Tax Action ("FIRPTA"), IRC
1445, requires that every purchaser of U.S. real property must, unless an
exemption applies, deduct and withhold from Seller's proceeds ten percent (10%)
of the gross sales price. The primary exemptions which might be applicable are:
(a) seller provides purchaser with an affidavit under penalty of perjury, that
seller is not a "foreign person", as defined in FIRPTA, or (b) seller provides
purchaser with a "qualifying statement," as defined in FIRPTA, issued by the
Internal Revenue Service. Seller and Purchaser agree to execute and deliver as
appropriate, any instrument, affidavit and statement, and to perform any acts
reasonably necessary to carry out the provisions of FIRPTA and regulations
promulgated thereunder.
18. In the event that this offer is not accepted by Seller on or before 5
o'clock p m, August 11 , 19 , this offer shall become null and void, and the
deposit made herewith shall be returned to Purchaser. Purchaser hereby agrees to
purchase the above-described property for the price and upon the terms and
conditions herein expressed. All tenders and notices required hereunder shall be
made and given to either of the parties hereto at their respective addresses
herein set forth. Purchaser hereby acknowledges receipt of a copy of this
Contract.
19. The parties hereto agree to comply with all applicable federal, state
and local laws, regulations, codes, ordinances and administrative orders having
jurisdiction over the parties, property or the subject matter of this Agreement,
including, but not limited to, the 1964 Civil Rights Act and all amendments
thereto, the Foreign Investment in Real Property Tax Act, the Comprehensive
Environmental Response Compensation and Liability Act, and The Americans With
Disabilities Act.
<PAGE>
Page 5
20. See Addendum A attached hereto as an intrigal part of this purchase
contract.
Date: August 15, 1995
Purchaser: Zimmerman Properties, Inc. and/or
Nominee
a(n)
By:
Title:
By:
Title:
Address:
The undersigned Seller hereby accepts this Contract and agrees to sell the
Property to Purchaser for the price and on the terms and conditions set forth
herein. Seller hereby acknowledges receipt of a copy of this Contract.
Date:
Seller: Connecticut General Equity
Properties-I Limited Partnership
a(n) By: CIGNA Investments, Inc.
By: Stephen J. Olstein
Title: Managing Director
By:
Title:
Address: 900 Cottage Grove Road
Bloomfield, CT 06002
- --------------------------------------------------------------------------------
CONSULT YOUR ADVISORS - This document has been prepared for approval by your
attorney and financial advisor. No representation or recommendation is made by
Broker as to the legal sufficiency or tax consequences of this document or the
transaction to which it relates. These are questions for your attorney and
financial advisor.
In any real estate transaction, it is recommended that you consult with a
professional, such as a civil engineer, industrial hygienist or other person
with experience in evaluating the condition of property, including the possible
presence of asbestos, hazardous materials and underground storage tanks.
- -------------------------------------------------------------------------------
<PAGE>
Page 6
ADDENDUM A
THIS ADDENDUM TO PURCHASE CONTRACT ("Addendum") is attached to and constitutes
an integral part of the Purchase Contract between ZIMMERMAN PROPERTIES, INC.
AND/OR NOMINEE, as Purchaser and CONNECTICUT GENERAL EQUITY PARTNERS, as Seller.
The terms of this Addendum shall be incorporated in the Purchase Contract for
all purposes. In the event of a conflict between the provisions of the Purchase
Contract and the provisions of this Addendum, this Addendum shall control.
1. CONVEYANCE OF PROPERTY - The property shall be conveyed to Purchaser at
Closing, with no exception shown on the title policy except as approved by
Purchaser. However, delivery of a title insurance policy fully acceptable to
Purchaser shall be only a condition of Closing and shall not be a covenant of
Seller. Seller shall be under no obligation to clear any encumbrances from the
title (except for monetary liens other than liens for current taxes not yet due)
or to create any encumbrance on, or for the benefit of, the Property. If Seller
does not deliver title in a form fully acceptable to Purchaser, then Purchaser's
sole and exclusive remedy shall be to terminate the Purchase Agreement and have
the Deposit returned. If Purchaser chooses not to terminate the Purchase
Agreement, then Purchaser shall accept such title as Seller delivers without
deduction of the Purchase Price.
2. EXPENSES - Each party shall bear its own legal expenses in connection
with this transaction. Seller shall pay all standard coverage title insurance
costs, and the costs for the Preliminary Title Report.
3. PHYSICAL CONDITION OF THE PROPERTY - Purchaser will acquire the Property
"as is", with no repairs or improvements required of Seller.
4. SELLER CONTINGENCY - This Purchase Contract is contingent upon Seller's
Investment Committee approval. Such approval shall be in writing and furnished
to Escrow Agent within fifteen (15) days after the Purchaser has waived all
their contingencies stated herein in writing to Seller. If Seller's Investment
Committee does not approve of this transaction within the fifteen (15) day
period, this Purchase Contract will be come null and void.
5. TITLE - Title to property shall be simultaneously conveyed to Buyer
and/or its nominee by a recordable Special Warranty Deed subject only to items
specifically approved by Buyer and Seller.
6. TAX DEFERRED EXCHANGE - Seller agrees to cooperate with Buyer to effect
a tax deferred 1031 exchange, although close of escrow is not contingent upon
this exchange.
7. MILCO LEASE RENEWAL - Seller has negotiated and entered into a lease
renewal with Milco for certain space within the Property. The Milco lease
contains a provision that grants Milco a one time right to terminate the lease
if the landlord is unable to acquire and improve the 20,375 square foot parcel
adjacent to and due north of the premises leased to Milco, which parcel is
currently owned by United Parcel Service (the "Adjacent Parcel"). The landlord
under the Milco lease has until February 1, 1996 to acquire the Adjacent Parcel
and to complete the parking lot and interior improvements, the total cost of
which is currently projected to be $66,000. Milco as tenant has the right to
terminate its lease if the landlord does not acquire the Adjacent Parcel.
Purchaser's obligation to purchase the Property under
<PAGE>
Page 7
this Contract is not contingent upon Milco's exercising or failing to
exercise such termination right. Purchaser's obligation to purchase the Property
under this Contract is also not contingent upon Seller's entering into a
purchase contract with United Parcel Service for the Adjacent Parcel. Purchaser
further understands that as of the date of this Contract, United Parcel Service
has communicated to Seller its intention not to sell the Adjacent Parcel. In the
event, however, that Seller does enter into a contract with United Parcel
Service to purchase the Adjacent Parcel, but at the time of closing of this
Contract has not closed the purchase of the Adjacent Parcel, Seller agrees to
assign its rights under the contract for the Adjacent Parcel to Purchaser, and
Purchaser agrees to assume Seller's obligations thereunder and to reimburse
Seller for its costs expended in connection with obligations thereunder and to
reimburse Seller for its costs expended in connection with such contract in an
amount not to exceed $66,000, in addition to payment of the purchase price for
the Property under this Contract. In the event that Seller has closed any such
purchase of the Adjacent Parcel prior to the consummation of this Contract, at
the Closing of this Contract, Purchaser shall reimburse Seller the foregoing
amounts expended in addition to payment of the Purchase Price for the Property
under this Contract and Seller shall convey the Adjacent Parcel to Purchaser.
8. LEASES, LEASE RENEWALS AND CONTRACTS - After the end of the Feasibility
Period and until the close of escrow hereunder, Seller agrees not to enter into
any new leases, lease renewals or any contracts affecting the property extending
beyond the Closing date without Purchaser's prior written consent, which consent
shall not be unreasonably withheld. Purchaser shall have a period of five (5)
business days after receipt of Seller's request for such approval in which to
approve or disapprove of such lease, renewal or contracts. If Purchaser fails to
respond within such time period, Purchaser shall be deemed to have approved of
such lease, renewal or contracts as submitted by Seller.
9. BUYER'S FEASIBILITY - Within ten (10) business days after the opening of
escrow, Seller will make available for Buyer's inspection the following items if
in Seller's possession or accessible to Seller:
a. Operating statement for the property identifying all income
collected and operating expenses paid for the past 12 months.
Buyer agrees and understands that such operating statements
reflect several buildings that were originally owned by Seller but
were recently sold to several investors/users. In addition, Seller
will provide, if available, copies of base year operating expenses
for current tenants.
b. Rent roll for the property.
c. Copies of real and personal property tax bills for the preceding
12 months.
d. Copies of all utility bills for the preceding 12 months.
e. Clean copies of building and site plans and specifications of the
project.
f. Copies of all service contracts.
g. Legible copies of all tenant leases and amendments or
modifications thereof in effect.
<PAGE>
Page 8
10. OTHER CONTINGENCIES - Within twenty-five (25) days after the opening of
escrow, Seller, at Seller's expense, shall provide to Buyer the following items
for Buyer's written approval or disapproval as provided in Paragraph 8 of the
Purchase Contract.
a. A current Phase I Environmental Assessment Report, including a
reliance letter for the benefit of Buyer. Buyer will pay Seller
the additional costs, if any, for the cost of said reliance
letter.
b. A current Pest Control Inspection Report.
c. A current ALTA Survey for the property.
d. A form of estoppel certificates for all leases, to be approved by
Buyer. Seller will use its best efforts to obtain signed estoppel
certificates for no less than fifty-five percent (55%) of the
project.
Initials
=========
<PAGE>
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