<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the Fiscal Year Ended DECEMBER 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
COMMISSION FILE NO.
0-14105
---------------
MURRAY INCOME PROPERTIES I, LTD.
(Exact Name of Registrant as Specified in its Charter)
TEXAS 75-1946214
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5550 LBJ FREEWAY, SUITE 675, DALLAS, TEXAS 75240
(Address of principal executive offices) (Zip Code)
(972) 991-9090
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------ ------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III or this Form 10-K or any
amendment to this Form 10-K. [ ]
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
PART I
<S> <C> <C>
Item 1. Business 1
Item 2. Properties 2
Item 3. Legal Proceedings 3
Item 4. Submission of Matters to a Vote of Security Holders 3
PART II
Item 5. Market for the Partnership's Limited Partnership 4
Interests and Related Security Holder Matters
Item 6. Selected Financial Data 4
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Item 8. Financial Statements and Supplementary Data 9
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 19
PART III
Item 10. Directors and Executive Officers of the Partnership 20
Item 11. Executive Compensation 21
Item 12. Security Ownership of Certain Beneficial Owners
and Management 22
Item 13. Certain Relationships and Related Transactions 22
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 23
Signatures 30
Index to Exhibits 31
</TABLE>
<PAGE> 3
PART I
ITEM 1. BUSINESS.
General. Murray Income Properties I, Ltd. (the "Partnership") was formed
March 12, 1984 under the Texas Uniform Limited Partnership Act to acquire
recently constructed income-producing shopping centers located in growth
markets. As of November, 1989, the Partnership became governed by the Texas
Revised Limited Partnership Act. The General Partners of the Partnership are
Murray Realty Investors VIII, Inc., a Texas corporation, and Crozier Partners
VIII, Ltd., a Texas limited partnership.
The Partnership acquired its first shopping center, Mountain View Plaza
("Mountain View"), in 1985, and its second shopping center, Castle Oaks Village
("Castle Oaks"), in 1986. The Partnership also in 1986 acquired an 85% interest
in Tower Place Joint Venture, which owns Tower Place Festival Shopping Center
("Tower Place"). The remaining 15% interest in the joint venture is owned by
Murray Income Properties II, Ltd., a publicly- registered real estate limited
partnership, the general partners of which are affiliates of the General
Partners. All acquisitions were paid for in cash. For a more detailed
description of the joint venture interest and the properties acquired by the
Partnership, see "Item 2. Properties".
The Partnership is in competition for tenants for its properties with
other real estate limited partnerships as well as with individuals,
corporations, real estate investment trusts, pension funds and other entities
engaged in the ownership and operation of retail real estate. When evaluating a
particular location to lease, a tenant may consider many factors, including,
but not limited to, space availability, rental rates, lease terms, access,
parking, quality of construction and quality of management. While the General
Partners believe that the Partnership's properties are generally competitive
with other properties with regard to these factors, there can be no assurance
that, in the view of a prospective tenant, other retail properties will not be
more attractive.
Mountain View Plaza Shopping Center. At December 31, 1997, Mountain View
was 100% leased. One tenant, Wild Oats Markets, Inc., leases approximately
33.3% of the total rentable space of the property. The Wild Oats lease expires
on August 31, 2005 and the tenant has an option to renew for two successive
five year periods. Childtime Childcare leases 10.3% of the total rentable
space. The Childtime Childcare lease expires January 31, 2000. This tenant has
no further options to renew its lease. At December 31, 1996, Mountain View was
100% leased.
Mountain View is subject to competition from similar types of properties
in the vicinity in which it is located. The following information on
competitive properties in the vicinity of Mountain View has been obtained from
sources believed reliable by the Partnership. The accuracy of this information
was not independently verified by the Partnership.
<TABLE>
<CAPTION>
Rentable Percent Leased at
Property Square Feet December 31, 1997
-------- ----------- -----------------
<S> <C> <C> <C>
1 81,500 95%
2 61,000 100%
3 94,100 92%
</TABLE>
Castle Oaks Village Shopping Center. At December 31, 1997, Castle Oaks
was 92% leased. One tenant, Razmiko's Ltd., leases 13.5% of the total rentable
space of the property. This lease expires on September 30, 2000. At December
31, 1996, Castle Oaks was 91% leased.
Castle Oaks is subject to competition from similar types of properties in
the vicinity in which it is located. The following information on such
competitors has been obtained from sources believed reliable by the
Partnership. The accuracy of this information was not independently verified by
the Partnership.
1
<PAGE> 4
<TABLE>
<CAPTION>
Rentable Percent Leased at
Property Square Feet December 31, 1997
-------- ----------- -----------------
<S> <C> <C> <C>
1 100,000 91%
2 48,500 100%
3 42,900 100%
</TABLE>
Tower Place Festival Shopping Center. At December 31, 1997, Tower Place
was 100% leased. One tenant, General Cinema, leases 27.8% of the total rentable
space of the property and another, J&K Cafeterias, leases 10.6% of the total
rentable space. The General Cinema lease expires on September 30, 2006, with
the tenant having the option to extend the term of the lease for two successive
terms of five years each. The J&K Cafeteria lease expires on April 30, 2004,
and the tenant has the option to renew for two periods of five years each. At
December 31, 1996, Tower Place was 100% leased.
Tower Place is subject to competition from similar types of properties in
the vicinity in which it is located. The following information on such
competitors has been obtained from sources believed reliable by the
Partnership. The accuracy of this information was not independently verified by
the Partnership.
<TABLE>
<CAPTION>
Rentable Percent Leased at
Property Square Feet December 31, 1997
-------- ----------- -----------------
<S> <C> <C>
1 248,700 96%
2 40,800 97%
3 65,800 96%
</TABLE>
The Partnership has no employees. However, the Partnership is required to
reimburse 47% of the costs of four employees to Murray Income Properties II,
Ltd., an affiliate of the Partnership.
For a definition of the terms used herein and elsewhere in this Form
10-K, see "Glossary" incorporated by reference herein as contained in the
Prospectus dated May 31, 1984 filed as a part of Amendment No. 2 to
Registrant's Form S-11 Registration Statement (File No. 2-90016) attached
hereto as Exhibit 99a.
ITEM 2. PROPERTIES.
The Partnership owns the properties described below:
Location Description of Property
-------- -----------------------
Scottsdale, Arizona Mountain View Plaza Shopping Center
A 58,154 square foot shopping
center situated on 7.6 acres. At
December 31, 1997, Mountain View
was 100% leased at an average
annual lease rate of $12.62. Lease
rates range from $6.83 to $20.88
per square foot.
San Antonio, Texas Castle Oaks Village Shopping Center
A 33,435 square foot shopping
center situated on 3.013 acres. At
December 31, 1997, Castle Oaks was
92% leased at an average annual
lease rate of $10.88. Lease rates
range from $9.60 to $12.50 per
square foot.
2
<PAGE> 5
The Partnership also owns an 85% interest in Tower Place Joint Venture
which owns the property described below:
Pineville (Charlotte), Tower Place Festival Shopping Center
North Carolina A 114,586 square foot shopping
center situated on 10.777
acres. At December 31, 1997, Tower
Place was 100% leased at an
average annual lease rate of
$13.69. Lease rental rates range
from $8.00 to $16.50 per square
foot.
ITEM 3. LEGAL PROCEEDINGS.
There are no material legal proceedings to which the General Partners or
the Partnership is a party or to which any of the Partnership's properties are
subject.
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 year covered by this report through the solicitation of proxies
or otherwise.
3
<PAGE> 6
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS AND
RELATED SECURITY HOLDER MATTERS.
A public market for Interests does not exist and is not likely to
develop. Consequently, a Limited Partner may not be able to liquidate its
investment in the event of emergency or for any other reason, and Interests may
not be readily accepted as collateral for a loan. Further, the transfer of
Interests is subject to certain limitations. For a description of such
limitations, see Article XIII of the Agreement of Limited Partnership as
contained in the Prospectus dated May 31, 1984 filed as a part of Amendment No.
2 to Registrant's Form S-11 Registration Statement (File No. 2-90016) attached
hereto as Exhibit 99b.
At December 31, 1997, there were 2,400 record holders, owning an
aggregate of 28,277 Interests.
The Partnership made its initial Cash Distribution from Operations
following the quarter ended March 31, 1985, the first complete quarter
subsequent to the acceptance of subscriptions for the minimum number of
Interests offered, and has continued to make distributions after each
subsequent quarter. See "Item 6. Selected Financial Data" for the cash
distributions per Interest during the period from January 1, 1993 to December
31, 1997. The Partnership intends to continue making Cash Distributions from
Operations on a quarterly basis.
The Partnership Agreement provides that under certain circumstances, the
General Partners may, in their sole discretion and upon the request of a
Limited Partner, repurchase the Interests held by such Limited Partner. Murray
Realty Investors VIII, Inc. is obligated to set aside 25% of its share of Cash
Distributions from Operations and Crozier Partners VIII, Ltd. is obligated to
set aside 25% of its 5% share of Cash Distributions from Operations that is
subordinated to the prior receipt by the Limited Partners of a non-cumulative
7% annual return from Cash Distributions from Operations for this purpose. Any
such repurchase shall be subject to the availability of funds set aside and the
other terms and conditions set forth in the Partnership Agreement. For
information on such terms and conditions, see Section 10.15 of the Agreement of
Limited Partnership as contained in amendment number nine to the Agreement of
Limited Partnership contained in the Proxy Statement dated October 11, 1989
attached hereto as Exhibit 99c. As of December 31, 1997, no funds were
available for this purpose.
ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Income $ 3,298,152 $ 3,052,985 $ 2,846,710 $ 2,804,229 $ 2,685,556
Earnings Before
Minority Interest 1,275,571 1,037,019 918,032 926,811 826,360
Minority Interest
in Joint Venture's
Earnings 135,394 132,060 115,220 109,520 118,743
Net Earnings 1,140,177 904,959 802,812 817,291 707,617
Earnings per Limited
Partnership Interest * 39.59 31.42 27.87 28.38 24.57
Distributions per
Limited Partnership
Interest * 58.13 50.00 50.00 50.00 42.50
Total Assets at
Year End $19,350,195 $19,993,931 $20,598,892 $21,234,326 $21,923,351
</TABLE>
4
<PAGE> 7
* Based on limited partnership interests outstanding at year-end and net
earnings or distributions allocated to the Limited Partners.
The above selected financial data should be read in conjunction with the
financial statements and related notes appearing in Item 8 of this report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Liquidity and Capital Resources
As of December 31, 1997, the Partnership had cash and cash equivalents of
$1,620,246. Such amounts represent cash generated from operations and working
capital reserves.
An increase in investment properties, buildings and improvements of
$50,624 from December 31, 1996 to December 31, 1997 is primarily due to the
replacement of a roof on one of the buildings at Mountain View, the
installation of additional parking lot lighting at Tower Place and tenant
improvements at all of the Partnership's properties.
Rental income from leases with escalating rental rates is accrued using
the straight line method over the related lease terms. At December 31, 1997 and
December 31, 1996, there were $492,448 and $506,148, respectively, of accounts
receivable related to such accruals. Accounts receivable also consist of tenant
receivables, receivables for rent collected (but not yet remitted to the
Partnership by the property management companies), and interest receivable on
short-term investments. A decrease from December 31, 1996 to December 31, 1997
in accounts receivable (before bad debts) of $15,968 is primarily due to a
decrease in receivables for rent collected (but not yet remitted to the
Partnership by the property management companies) at Tower Place and Mountain
View and receivables related to the accruals described above at Tower Place. As
of December 31, 1997 and December 31, 1996, the Partnership had allowances of
$5,655 and $7,283, respectively, for uncollectible accounts receivable.
During the year ended December 31, 1997, the Partnership made Cash
Distributions from Operations totaling $1,674,183. Subsequent to December 31,
1997 the Partnership made a Cash Distribution from Operations of $432,046
relating to the three months ended December 31, 1997. The distributed funds
were derived from the net cash flow generated from operations of the
Partnership's properties and from interest earned, net of administrative
expenses, on funds invested in short-term money market instruments.
Future liquidity is currently expected to result from cash generated from
the operations of the Partnership's properties (which could be affected
negatively in the event of weakened occupancies, and/or rental rates), interest
earned on funds invested in short-term money market instruments and ultimately
through the sale of the Partnership's properties.
Market conditions continued to strengthen in the markets in which the
Partnership owns property, as evidenced by the improved performance of all
three shopping centers in 1997 as compared to 1996. Average occupancy, average
lease rates, and rental income were higher at all three properties in 1997 than
in the previous year. The Charlotte retail market has remained healthy, with
occupancy rates stable in the face of supermarket driven development. This
development is expected to continue with the construction of a 65-mile loop
around the city, spurring residential development in the suburbs which in turn
provides the impetus for the development of new shopping centers. This new
development could eventually have a negative impact on rental rates and
occupancy at Tower Place. The Phoenix retail market remained strong in 1997, as
the overall occupancy rate remained at 92% for the second consecutive year. The
North Scottsdale submarket, where Mountain View is located, had an occupancy
rate of 98% at year-end 1997, the highest occupancy rate of any submarket in
the Phoenix metropolitan area. There was little change in the San Antonio
retail market in 1997. According to published reports,
5
<PAGE> 8
the occupancy rate for the city as a whole was 90% at year-end 1997, unchanged
from year-end 1996. Northwest San Antonio, where Castle Oaks is located, was
also unchanged from year-end 1996, with a year-end occupancy rate of 89%.
Results of Operations
Rental income increased $232,755 (8%) for the year ended December 31,
1997 as compared to the year ended December 31, 1996. Rental income increased
$205,514 (7%) for the year ended December 31, 1996 as compared to the year
ended December 31, 1995. The following information details the rental income
generated, bad debt expense incurred, and average occupancy for the years ended
December 31, 1997, December 31, 1996 and December 31, 1995, respectively, for
each of the Partnership's properties:
<TABLE>
<CAPTION>
For the years ended
December 31,
-------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Mountain View Plaza Shopping Center
Rental income $ 1,023,190 $ 907,881 $ 870,777
Bad debt expense (recovery) -0- (45) 542
Average occupancy 100% 95% 97%
Castle Oaks Shopping Center
Rental income $ 414,070 $ 333,257 $ 283,022
Bad debt expense (recovery) (4,625) 9,788 10,533
Average occupancy 90% 75% 69%
Tower Place Festival Shopping Center
Rental income $ 1,772,710 $ 1,736,077 $ 1,617,902
Bad debt expense (recovery) 2,997 (4,305) (5,521)
Average occupancy 98% 97% 96%
</TABLE>
Rental income at Mountain View increased $115,309 (13%) for the year ended
December 31, 1997, as compared to the year ended December 31, 1996 with higher
rent due to higher occupancy, higher rental rates and increased tenant
reimbursements for common area maintenance costs and real estate taxes being
offset by decreases in tenant reimbursements for insurance costs. Rental income
at Mountain View increased $37,104 (4%) for the year ended December 31, 1996,
as compared to the year ended December 31, 1995 primarily due to higher rent
due to higher rental rates and increased tenant reimbursements for common area
maintenance costs, real estate taxes and insurance costs.
Mountain View averaged 100% occupancy during 1997, a five percent increase
over the previous year. During the year, two tenants who occupy 2,080 square
feet renewed their leases for five years. One tenant who occupies 880 square
feet renewed its lease for three years. One tenant who occupied 880 square feet
vacated its space prior to the expiration of its lease but continued to pay
rent under the terms of its lease. Reay's Ranch Markets, the specialty grocery
store who occupied 19,359 square feet, was acquired by Wild Oats Markets, a
larger chain which operates approximately 45 stores. In November, Wild Oats
closed the location at Mountain View due to lower than anticipated sales. Wild
Oats does intend to continue paying rent. As of December 31, 1997, Mountain
View was 100% leased.
Rental income at Castle Oaks increased $80,813 (24%) for the year ended
December 31, 1997 as compared to the year ended December 31, 1996 primarily due
to an increase in occupancy, an increase in rental rates and higher tenant
reimbursements for common area maintenance costs, real estate taxes and
insurance costs. Rental income at Castle Oaks increased $50,235 (18%) for the
year ended December 31, 1996 as compared to the year ended December 31, 1995
primarily due to an increase in occupancy and rental rates and higher tenant
reimbursements for common area maintenance costs, real estate taxes and
insurance costs.
6
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Castle Oaks averaged 90% occupancy during the year, a 15% increase over
the previous year. One tenant who occupied 1,830 square feet vacated its space
upon expiration of its lease. This space was subsequently leased to a new
tenant. One new lease for 1,245 square feet was executed and this tenant took
occupancy in December. One tenant who occupied 932 square feet vacated its
space upon expiration of its lease and one tenant who occupies 1,500 square
feet renewed its lease for five years. As of December 31, 1997, Castle Oaks was
92% leased.
Rental income at Tower Place increased $36,633 (2%) for the year ended
December 31, 1997 as compared to the year ended December 31, 1996 primarily due
to an increase in occupancy, an increase in rental rates and an increase in
tenant reimbursements for common area maintenance costs, offset by a decrease
in percentage rent received. Rental income at Tower Place increased $118,175
(7%) for the year ended December 31, 1996 as compared to the year ended
December 31, 1995 primarily due to an increase in rental rates along with an
increase in percentage rent received from J&K Cafeterias and an increase in
tenant reimbursements for common area maintenance costs, offset by lower tenant
reimbursements for real estate taxes and insurance costs.
Tower Place averaged 98% occupancy for the year ended December 31, 1997, a
one percent increase over the previous year. Two tenants who occupied 3,360
square feet vacated their space upon expiration of their leases. Both of these
spaces were subsequently leased to new tenants who took occupancy during 1997.
Four tenants totalling 5,864 square feet vacated their spaces prior to the
expiration of their leases. One of these tenants, who had occupied 1,600 square
feet, continued to pay rent under the lease. This space was subsequently
subleased to a new tenant and this lease expires on April 30, 1998. The other
three spaces which were vacated have all been re-leased with two of the new
tenants taking occupancy in 1997 and one during the first quarter of 1998. Two
tenants who occupy 3,000 square feet renewed their leases for five years and
three tenants who occupy 5,180 square feet renewed their leases for three
years. As of December 31, 1997, Tower Place was 98% occupied.
Interest income of the Partnership increased $12,412 (16%) for the year
ended December 31, 1997 as compared to the year ended December 31, 1996
primarily due to larger balances of invested funds. Interest income of the
Partnership was relatively unchanged for the year ended December 31, 1996 as
compared to the year ended December 31, 1995.
Depreciation is provided over the estimated useful lives of the respective
assets using the straight line method. The estimated useful lives of the
buildings and improvements range from three to twenty-five years.
Property operating expenses consist primarily of real estate taxes,
property management fees, insurance costs, utility costs, repair and
maintenance costs, leasing and promotion costs, and amortization of deferred
leasing costs. Property operating expenses decreased $7,399 (1%) for the year
ended December 31, 1997 as compared to the previous year primarily due to lower
repair and maintenance costs at Mountain View. Mountain View's total operating
expenses decreased with decreases in parking lot and roof maintenance being
offset by increases in property management fees, security costs, and real
estate taxes. Castle Oaks' total operating expenses increased slightly with
increases in landscaping costs and property management fees being offset by
decreases in legal fees and insurance costs. Tower Place's total operating
expenses increased with increases in parking lot maintenance costs, leasing and
promotion costs and property management fees being offset by decreases in
utilities and landscaping costs.
Property operating expenses increased $44,106 (6%) for the year ended
December 31, 1996 as compared to the previous year primarily due to higher
repair and maintenance costs and landscaping costs at Tower Place and Mountain
View. Mountain View's total operating costs increased because of increases in
parking lot and roof maintenance and security services. Castle Oaks' total
operating expenses decreased primarily because of lower landscaping costs and
legal fees. Tower Place's total operating expenses increased with increases in
repair and maintenance costs, property management
7
<PAGE> 10
fees, and landscaping costs offset by decreases in leasing and promotion costs,
insurance and real estate taxes.
General and administrative expenses incurred are related to legal and
accounting expenses, rent, investor services costs, salaries and benefits and
various other costs required for the administration of the Partnership,
including reimbursements of shared direct operating costs to Murray Income
Properties II, Ltd. General and administrative expenses increased $22,081 (7%)
for the year ended December 31, 1997 as compared to the year ended December 31,
1996, primarily due to increases in rent, telephone, salaries and benefits,
seminars and education costs, and legal and accounting fees.
General and administrative expenses increased $46,522 (17%) for the year
ended December 31, 1996 as compared to the year ended December 31, 1995. The
Partnership became subject to electronic filing requirements with the
Securities and Exchange Commission during the year ended December 31, 1995.
Costs associated with filing the 1995 Form 10-K and the quarterly Form 10-Q's
for 1996 caused the Partnership's compliance costs to increase. Also, legal
costs increased because of due diligence performed and negotiations with
limited partners who wanted to acquire the Partnership's investor list in order
to solicit the partners to purchase their interests. The Partnership also
incurred additional printing and postage costs to respond to all limited
partners regarding these solicitations.
Bad debt expenses decreased $7,066 for the year ended December 31, 1997 as
compared to the same period in 1996 with bad debts at Tower Place being offset
by recoveries at Castle Oaks. Bad debt expenses remained flat for the year
ended December 31, 1996 as compared to the same period in 1995 with bad debts
at Castle Oaks being offset by recoveries at Mountain View and Tower Place. The
reduction is primarily due to intensive efforts by Partnership management and
the property managers to recognize and resolve potential tenant problems as
rapidly as possible, thereby reducing the buildup in outstanding rent
receivables.
The effect of inflation on results of operations for the years ended
December 31, 1997, 1996, and 1995 was not significant.
Over the past several years the real estate markets have gotten stronger
and the properties' performance has improved. This improvement has resulted in
an increase in the number of potential buyers as well as the number of parties
interested in purchasing limited partnership units on the secondary market.
Some of these groups have solicited the Partnership's limited partners directly
with offers to buy their units. Barring any unforseen circumstances, the
General Partners believe that the markets will continue to improve. Also,
management will continue to pursue a strategy of carefully selecting tenants,
achieving the highest rents possible, and maintaining the properties in first
class condition. This strategy should result in the properties being well
positioned when the decision to sell is made. Management is constantly
analyzing market conditions, comparable sales, and economic trends in order to
evaluate their impact on the value of the Partnership's properties, and intends
to sell the portfolio at the time when such a sale will maximize the
properties' values and otherwise be in the best interest of the Limited
Partners.
8
<PAGE> 11
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following financial statements are filed as a part of this report:
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
Independent Auditors' Report 10
Consolidated Balance Sheets - December 31, 1997 and 1996 11
Consolidated Statements of Earnings - Years ended 12
December 31, 1997, 1996, and 1995
Consolidated Statements of Changes in Partners' Equity - 13
Years ended December 31, 1997, 1996, and 1995
Consolidated Statements of Cash Flows - Years ended 14
December 31, 1997, 1996, and 1995
Notes to Consolidated Financial Statements 15 - 18
</TABLE>
9
<PAGE> 12
INDEPENDENT AUDITORS' REPORT
The Partners
Murray Income Properties I, Ltd.:
We have audited the accompanying consolidated balance sheets of Murray Income
Properties I, Ltd. (a limited partnership) and consolidated joint venture as of
December 31, 1997 and 1996, and the related consolidated statements of
earnings, changes in partners' equity and cash flows for each of the years in
the three-year period ended December 31, 1997. These consolidated financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Murray Income
Properties I, Ltd. and consolidated joint venture as of December 31, 1997 and
1996, and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1997, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Dallas, Texas
February 27, 1998
10
<PAGE> 13
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Investment properties, at cost (note 3):
Land $ 6,232,801 $ 6,232,801
Buildings and improvements 20,319,183 20,268,559
------------ ------------
26,551,984 26,501,360
Less accumulated depreciation 9,779,632 8,929,957
------------ ------------
Net investment properties 16,772,352 17,571,403
Cash and cash equivalents 1,620,246 1,417,536
Accounts and notes receivable,
net of allowance of $5,655 and $7,283,
in 1997 and 1996, respectively (note 1) 712,929 727,269
Other assets, at cost, net of accumulated
amortization of $512,307 and $437,800 in
1997 and 1996, respectively 244,668 277,723
------------ ------------
$ 19,350,195 $ 19,993,931
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 13,498 $ 25,301
Accrued property taxes 195,500 193,937
Security deposits 183,609 205,793
------------ ------------
Total liabilities 392,607 425,031
------------ ------------
Minority interest in joint venture (note 3) 1,391,212 1,468,518
------------ ------------
Partners' equity:
General Partners:
Capital contributions 1,000 1,000
Cumulative net earnings 217,606 194,802
Cumulative cash distributions (366,834) (333,350)
------------ ------------
(148,228) (137,548)
------------ ------------
Limited Partners (28,227 Interests):
Capital contributions, net of offering costs 24,570,092 24,570,092
Cumulative net earnings 11,119,449 10,002,076
Cumulative cash distributions (17,974,937) (16,334,238)
------------ ------------
17,714,604 18,237,930
------------ ------------
Total partners' equity 17,566,376 18,100,382
------------ ------------
$ 19,350,195 $ 19,993,931
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
11
<PAGE> 14
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Years Ended
December 31
----------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Income:
Rental (notes 3 and 5) $ 3,209,970 $ 2,977,215 $ 2,771,701
Interest 88,182 75,770 75,009
----------- ----------- -----------
3,298,152 3,052,985 2,846,710
----------- ----------- -----------
Expenses:
Depreciation 849,675 850,676 853,900
Property operating 837,331 844,730 800,624
General and administrative 337,203 315,122 268,600
Bad debts (recoveries), net (1,628) 5,438 5,554
----------- ----------- -----------
2,022,581 2,015,966 1,928,678
----------- ----------- -----------
Earnings before minority
interest 1,275,571 1,037,019 918,032
Minority interest in joint venture's
earnings (note 3) 135,394 132,060 115,220
----------- ----------- -----------
Net earnings $ 1,140,177 $ 904,959 $ 802,812
=========== =========== ===========
Earnings per limited partnership
interest $ 39.59 $ 31.42 $ 27.87
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
12
<PAGE> 15
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
Year ended December 31, 1995:
Balance at December 31, 1994 $ (114,097) $ 19,387,015 $ 19,272,918
Net earnings 16,056 786,756 802,812
Cash distributions ($50.00 per limited
partnership interest) (28,803) (1,411,350) (1,440,153)
------------ ------------ ------------
Balance at December 31, 1995 $ (126,844) $ 18,762,421 $ 18,635,577
------------ ------------ ------------
Year ended December 31, 1996:
Net earnings 18,099 886,860 904,959
Cash distributions ($50.00 per limited
partnership interest) (28,803) (1,411,351) (1,440,154)
------------ ------------ ------------
Balance at December 31, 1996 $ (137,548) $ 18,237,930 $ 18,100,382
------------ ------------ ------------
Year ended December 31, 1997:
Net earnings 22,804 1,117,373 1,140,177
Cash distributions ($58.13 per limited
partnership interest) (33,484) (1,640,699) (1,674,183)
------------ ------------ ------------
Balance at December 31, 1997 $ (148,228) $ 17,714,604 $ 17,566,376
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
13
<PAGE> 16
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended
December 31
-----------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,140,177 $ 904,959 $ 802,812
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Bad debts (recoveries), net (1,628) 5,438 5,554
Depreciation 849,675 850,676 853,900
Amortization of other assets 74,507 67,548 63,986
Minority interest in joint venture's earnings 135,394 132,060 115,220
Change in assets and liabilities:
Accounts and notes receivable 15,968 (43,476) (39,704)
Other assets (41,452) (82,739) (70,469)
Accounts payable (11,803) (1,314) 5,755
Accrued property taxes and security deposits (20,621) (1,762) 63,482
----------- ----------- -----------
Net cash provided by operating activities 2,140,217 1,831,390 1,800,536
----------- ----------- -----------
Cash flows from investing activities -
Additions to investment properties (50,624) (100,147) (107,651)
----------- ----------- -----------
Cash flows from financing activities:
Distributions to minority interest in
joint venture (212,700) (198,750) (182,550)
Cash distributions (1,674,183) (1,440,154) (1,440,153)
----------- ----------- -----------
Net cash used in financing activities (1,886,883) (1,638,904) (1,622,703)
----------- ----------- -----------
Net increase in cash and cash equivalents 202,710 92,339 70,182
Cash and cash equivalents at beginning of year 1,417,536 1,325,197 1,255,015
----------- ----------- -----------
Cash and cash equivalents at end of year $ 1,620,246 $ 1,417,536 $ 1,325,197
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
14
<PAGE> 17
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED DECEMBER 31, 1997
1. ORGANIZATION AND BASIS OF ACCOUNTING
The Partnership was formed March 12, 1984 by filing a Certificate and
Agreement of Limited Partnership with the Secretary of State of the State of
Texas. The Partnership Agreement authorized the issuance of up to 30,000
limited partnership interests at a price of $1,000 each, of which 28,227
limited partnership interests were issued. Proceeds from the sale of limited
partnership interests, net of related selling commissions, dealer-manager fees
and other offering costs, are recorded as contributed capital.
The consolidated financial statements include the accounts of the
Partnership and Tower Place Joint Venture (85% owned by the Partnership). All
significant intercompany balances and transactions have been eliminated in
consolidation.
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 income and expenses during the reporting
period. Actual results could differ from those estimates.
Rental income is recognized as earned under the leases. Accordingly, the
Partnership accrues rental income for the full period of occupancy using the
straight line method over the related terms. At December 31, 1997 and 1996,
there were $492,448 and $506,148, respectively, of accounts receivable related
to such accruals.
Other assets consist primarily of deferred leasing costs which are amortized
using the straight line method over the lives of the related leases.
Depreciation is provided over the estimated useful lives of the respective
assets using the straight line method. The estimated useful lives of the
buildings and improvements range from three to twenty-five years.
The Partnership periodically reevaluates the propriety of the carrying
amounts of investment properties to determine whether current events and
circumstances warrant an adjustment to such carrying amounts. Such evaluations
are performed utilizing annual appraisals performed by independent appraisers
as well as internally developed estimates of expected undiscounted future cash
flows. In the event the carrying value of an individual property exceeds
expected future undiscounted cash flows, the property is written down to the
most recently appraised value. Since inception of the Partnership, none of the
Partnership's properties have required write downs.
No provision for income taxes has been made as the liabilities for such
taxes are those of the individual Partners rather than the Partnership. The
Partnership files its tax return on the accrual basis used for Federal income
tax purposes.
Earnings and cash distributions per limited partnership interest are based
upon the limited partnership interests outstanding at year-end and the net
earnings and cash distributions allocated to the Limited Partners in accordance
with the Partnership Agreement.
(Continued)
15
<PAGE> 18
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For purposes of reporting cash flows, the Partnership considers all
certificates of deposit and highly liquid debt instruments with original
maturities of three months or less to be cash equivalents.
The following information relates to estimated fair values of the
Partnership's financial instruments as of December 31, 1997 and 1996. For cash
and cash equivalents, accounts and notes receivable, accounts payable, accrued
property taxes payable, and security deposits, the carrying amounts approximate
fair value because of the short maturity of these instruments.
2. PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits or losses of
the Partnership and cash distributions are generally allocated 98% to the
Limited Partners and 2% to the General Partners. Cash Distributions from the
sale or refinancing of a property are allocated as follows:
(a) First, all Cash Distributions from Sales or Refinancings shall be
allocated 99% to the Limited Partners and 1% to the Non-corporate
General Partner until the Limited Partners have been returned their
original invested Capital from Cash Distributions from Sales or
Refinancings, plus their Preferred Return from Cash Distributions from
Operations or Cash Distributions from Sales or Refinancings, or both.
(b) Next, all Cash Distributions from Sales or Refinancings shall be
allocated 1% to the Non-corporate General Partner and 99% to the Limited
Partners and the General Partners. Such 99% will be allocated (i) first
to the Corporate General Partner in an amount equal to any unpaid Cash
Distributions from Operations subordinated to the Limited Partners' 7%
non-cumulative annual return and (ii) thereafter, 80% to the Limited
Partners and 20% to the General Partners.
Cash Distributions from Sales or Refinancings (other than the 1% of Cash
Distributions from Sales or Refinancings payable to the Non-corporate
General Partner) payable to the General Partners shall be allocated 62
1/2% to the Non-corporate General Partner and 37 1/2% to the Corporate
General Partner.
3. INVESTMENT PROPERTIES
The Partnership owns and operates Mountain View Plaza, a shopping center
located in Scottsdale, Arizona, and Castle Oaks Village, a shopping center
located in Castle Hills (San Antonio), Texas. In addition, the Partnership owns
an 85% interest in Tower Place Joint Venture, a joint venture which owns Tower
Place Festival Shopping Center located in Pineville (Charlotte), North
Carolina. The remaining interest in the joint venture is owned by Murray Income
Properties II, Ltd. ("MIP II"), an affiliated real estate limited partnership.
The Tower Place Joint Venture Agreement provides that the Partnership will
share profits, losses, and cash distributions according to the Partnership's
85% ownership interest in the joint venture.
(Continued)
16
<PAGE> 19
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Operating leases with tenants range in terms from two to 20 years. Fixed
minimum future rentals under existing leases at December 31, 1997 are as
follows:
<TABLE>
<CAPTION>
Years ending December 31:
<S> <C>
1998 $ 2,452,283
1999 2,147,336
2000 1,583,271
2001 1,310,825
2002 1,158,913
Thereafter 2,766,152
---------
$11,418,780
===========
</TABLE>
Rental income includes $653,652, $588,924, and $511,614 in 1997, 1996, and
1995, respectively, related to reimbursements from tenants for common area
maintenance costs, real estate taxes and insurance costs.
4. RECONCILIATION OF CONSOLIDATED FINANCIAL STATEMENT NET EARNINGS AND PARTNERS'
EQUITY TO FEDERAL INCOME TAX BASIS NET EARNINGS AND PARTNERS' EQUITY
Reconciliation of consolidated financial statement net earnings to Federal
income tax basis net earnings is as follows:
<TABLE>
<CAPTION>
Years Ended
December 31
-----------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Net earnings - financial statement basis $ 1,140,177 $ 904,959 $ 802,812
----------- ----------- -----------
Financial statement basis depreciation/amortization
over (under) tax basis depreciation/amortization 32,530 17,687 (12,924)
Financial statement basis rental income
over tax basis rental income (13,895) (17,927) (15,833)
Tax basis operating expenses over financial statement
basis operating expenses -0- -0- (34,725)
Financial statement basis joint venture earnings
under (over) tax basis joint venture earnings 28,191 (2,145) 24,027
----------- ----------- -----------
Sub-total 46,826 (2,385) (39,455)
----------- ----------- -----------
Net earnings - Federal income tax basis $ 1,187,003 $ 902,574 $ 763,357
=========== =========== ===========
</TABLE>
(Continued)
17
<PAGE> 20
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Reconciliation of consolidated financial statement partners' equity
to Federal income tax basis partners' equity is as follows:
<TABLE>
<CAPTION>
December 31
--------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Total partners' equity - financial statement basis $ 17,566,376 $ 18,100,382 $ 18,635,577
Current year financial statement net earnings
under (over) tax basis net earnings 46,826 (2,385) (39,455)
Cumulative prior years financial statement net
earnings over tax basis net earnings (1,195,595) (1,193,210) (1,153,755)
------------ ------------ ------------
Total partners' equity - Federal income tax basis $ 16,417,607 $ 16,904,787 $ 17,442,367
============ ============ ============
</TABLE>
Because many types of transactions are susceptible to varying
interpretations under Federal and state income tax laws and regulations, the
amounts reported above may be subject to change at a later date upon final
determination by the taxing authorities.
5. BUSINESS AND CREDIT CONCENTRATION
As previously noted the Partnership's properties are located in
Scottsdale, Arizona, San Antonio, Texas and Charlotte, North Carolina.
The Partnership had no outstanding receivable balances at December 31,
1997 or 1996, which, individually, exceeded 5% of the Partnership's total
assets.
Rental income from a major customer was approximately $448,000 for the
years ended 1997, 1996, and 1995, respectively.
18
<PAGE> 21
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
19
<PAGE> 22
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP.
Murray Realty Investors VIII, Inc., a Texas corporation, and Crozier
Partners VIII, Ltd., a Texas limited partnership, are the General Partners of
the Partnership. The Limited Partners voting a majority of the Interests may,
without the consent of the General Partners, remove a General Partner and elect
a successor General Partner.
The Partnership Agreement provides that the Partnership will have an
Investment Committee consisting initially of three members, appointed by Murray
Realty Investors VIII, Inc. (the "Corporate General Partner"). A person
appointed to the Investment Committee may be removed by the Corporate General
Partner, but the Corporate General Partner must name a replacement. The
acquisition, sale, financing or refinancing of a Partnership property must be
approved by a majority of the members of the Investment Committee. The members
of the Investment Committee currently are Messrs. Jack E. Crozier, Mitchell L.
Armstrong and W. Brent Buck. Murray Realty Investors VIII, Inc. is owned 60% by
Mr. Armstrong and 40% by Mr. Buck. The following is a brief description of Jack
E. Crozier, a general partner of Crozier Partners VIII, Ltd., a General
Partner, and the directors and executive officers of the Corporate General
Partner:
Crozier Partners VIII, Ltd, General Partner
Jack E. Crozier, 69, General Partner. From 1954 through July 1990, Mr.
Crozier was affiliated with Murray Financial Corporation and various of its
affiliates. From 1977 through 1988, he was President of Murray Financial
Corporation, and from 1982 until June 1990, he also served as President of
Murray Savings Association, a principal affiliate of Murray Financial
Corporation. He served as President or Director of various other subsidiaries
of Murray Financial Corporation which were engaged in real estate finance,
development and management. He also served as the general partner in a number
of publicly registered limited partnerships, and a number of non-registered
limited partnerships, all of which had real estate as their principal assets.
Since June 1990, he has remained as a partner or limited partner in several
real estate oriented limited partnerships. He is a consultant to several
companies.
Murray Realty Investors VIII, Inc., Corporate General Partner
The directors and executive officers of Murray Realty Investors VIII, Inc.
are:
Mitchell L. Armstrong, 47, President and Director. Mr. Armstrong became
President of Murray Realty Investors VIII, Inc. on November 15, 1989. From
September 1984 to that date, he was Senior Vice President - Product Development
of Murray Realty Investors, Inc., and Murray Property Investors and Vice
President - Tax for Murray Properties Company. From November 1988 to November
15, 1989, he also served as Secretary to these companies. From August 1983 to
September 1984, he was Executive Vice President of Dover Realty Investors. From
September 1980 to August 1983, he was with Murray Properties Company, in charge
of tax planning and reporting. From July 1972 to August 1980, he was with the
international accounting firm of Deloitte Haskins & Sells (now Deloitte &
Touche). Mr. Armstrong is a Certified Public Accountant and a Certified
Financial Planner and holds a Bachelor of Business Administration degree with
high honors in Accounting from Texas Tech University. He is a member of the
American Institute of Certified Public Accountants and a member of the
Institute of Certified Financial Planners.
W. Brent Buck, 42, Executive Vice President and Director. Mr. Buck became
Executive Vice President of Murray Realty Investors VIII, Inc., on November 15,
1989. From September 1981 to November 15, 1989, Mr. Buck served in various
capacities for Murray Properties Company and certain subsidiaries. His primary
responsibilities included property acquisitions and asset management. He was
responsible for initially identifying and negotiating the purchase of all
properties in the Partnership,
20
<PAGE> 23
except for Mountain View Plaza Shopping Center. Since their acquisition to the
present time, he has continued to oversee the management of all properties of
the Partnership. Mr. Buck holds a Master of Business Administration degree in
Finance and a Bachelor of Public Administration degree in Urban Administration
from the University of Mississippi. He also holds a Texas real estate salesman
license and a Mississippi broker's license.
ITEM 11. EXECUTIVE COMPENSATION.
Murray Income Properties I, Ltd. does not have any employees. However,
pursuant to an amendment to the Partnership Agreement effective November 15,
1989, it reimburses Murray Income Properties II, Ltd. for forty-seven percent
(47%) of executive compensation incurred in the management of that partnership
and Murray Income Properties I, Ltd. Murray Income Properties II, Ltd. is a
real estate limited partnership the general partners of which are affiliates of
the General Partners. The following table presents Murray Income Properties I,
Ltd.'s share of executive compensation paid by Murray Income Properties II,
Ltd.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
Annual Compensation
------------------------------------
All Other
Name and Principal Position Year Salary Compensation(1)
---- ------- ---------------
<S> <C> <C> <C>
Mitchell L. Armstrong, 1997 $58,092 $ 2,495
President* 1996 56,236 443
1995 54,864 291
W. Brent Buck, 1997 $43,260 $ 1,503
Executive Vice President* 1996 41,877 196
1995 40,856 157
</TABLE>
* Offices held in Murray Realty Investors VIII, Inc., the Corporate General
Partner. (1) The Partnership provides the named executive officers with certain
group life, health, medical and other non-cash benefits generally available to
all salaried employees. The amounts shown in this column include the following:
a) Contributions by the Partnership under its SEP-IRA plan which
equaled 3% of each employee's covered compensation (salary and term
insurance value). Prior to 1997, contributions were made only on
behalf of the Partnership's non-management employees. Commencing in
1997, contributions were made on behalf of every employee of the
Partnership, including $1,765 for Mr. Armstrong and $1,307 for Mr.
Buck.
b) Full premium cost of term insurance that will benefit the executive.
The Partnership and Murray Income Properties II, Ltd. entered into
severance agreements with Mr. Armstrong and Mr. Buck effective September 16,
1996. Pursuant to these agreements, upon the occurrence of specified events,
the Partnership will be obligated for forty seven (47%) of any benefits paid
pursuant to the agreements to either Mr. Armstrong or Mr. Buck. The agreement
with Mr. Armstrong provides for a benefit amount equal to the value of the
aggregate of one month of his highest monthly salary paid at any time during
the twelve months prior to his termination multiplied by fifteen (15), plus the
current monthly cost of such health, disability and life benefits (including
spousal or similar coverage and coverage for children) which he was receiving
or entitled to receive immediately prior to termination multiplied by eighteen
(18). The agreement with Mr. Buck provides for a benefit amount equal to the
value of the aggregate of one month of his highest monthly salary paid at any
time during the twelve months prior to his termination multiplied by twelve
(12), plus the current monthly cost of such health, disability and life
benefits (including spousal or similar coverage and coverage for children)
21
<PAGE> 24
which he was receiving or entitled to receive immediately prior to termination
multiplied by fourteen (14).
The Partnership has not paid and does not propose to pay any bonuses or
deferred compensation, compensation pursuant to retirement or other plans, or
other compensation to the officers, directors or partners of the General
Partners other than described in the above table or the above paragraph. In
addition, there are no restricted stock awards, options or stock appreciation
rights, or any other long term incentive payouts.
During the operational and liquidation stages of this Partnership, the
General Partners and their affiliates receive various fees and distributions.
For information on these types of remuneration, reference is made to the
section entitled "Management Compensation" as contained in the Prospectus dated
May 31, 1984 filed as a part of Amendment No. 2 to Registrant's Form S-11
Registration Statement (File No. 2-90016) attached hereto as Exhibit 99d. See
"Item 13. Certain Relationships and Related Transactions" for information on
the fees and other compensation or reimbursements paid to the General Partners
or their Affiliates during the year ended December 31, 1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
No person (including any "group" as that term is used in Section 13
(d)(3) of the Securities Exchange Act of 1934) is known to the Partnership to
be the beneficial owner of more than five percent of the outstanding voting
Interests as of December 31, 1997.
No General Partner, officer, director or partner of the General Partners
beneficially owned or owned of record directly or indirectly any Interests as
of December 31, 1997.
No arrangements are known to the Partnership which may result in a change
of control of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During the year ended December 31, 1997 the Partnership reimbursed Murray
Income Properties II, Ltd. ("MIP II") for forty-seven percent (47%) of the
costs associated with the management of the Partnership and MIP II. MIP II is a
publicly-registered real estate limited partnership the general partners of
which are affiliates of the General Partners. The reimbursement has been
included in general and administrative expenses.
22
<PAGE> 25
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 of this Form 10-K.
2. Financial Statement Schedules with Independent Auditors' Report
Thereon:
(i) Consolidated Valuation and Qualifying Accounts (Schedule
II) - Years ended December 31, 1997, 1996, and 1995.
(iii) Consolidated Real Estate and Accumulated Depreciation
(Schedule III) - December 31, 1997.
All other schedules have been omitted because they are not
required or the required information is shown in the
consolidated financial statements or notes thereto.
(b) Reports on Form 8-K filed during the last quarter of the year:
None
(c) Exhibits:
3a Agreement of Limited Partnership of Murray Income
Properties, Ltd.-84. Reference is made to Exhibit A of
the Prospectus dated May 31, 1984 contained in Amendment
No. 2 to Partnership's Form S-11 Registration Statement
(File No. 2-90016).
3b Amended and Restated Certificate and Agreement of
Limited Partnership dated as of May 23, 1984. Reference
is made to Exhibit 3b to the 1989 Annual Report on Form
10-K filed with the Securities and Exchange Commission
on March 31, 1989.
(File No. 0-14105)
3c Amended and Restated Certificate and Agreement of
Limited Partnership dated as of June 25, 1984. Reference
is made to Exhibit 3c to the 1989 Annual Report on Form
10-K filed with the Securities and Exchange Commission
on March 31, 1989.
(File No. 0-14105)
3d Amended and Restated Certificate and Agreement of
Limited Partnership dated as of November 27, 1984.
Reference is made to Exhibit 3d to the 1989 Annual
Report on Form 10-K filed with the Securities and
Exchange Commission on March 31, 1989. (File No.
0-14105)
3e Amended and Restated Certificate and Agreement of
Limited Partnership dated as of April 1, 1985. Reference
is made to Exhibit 3e to the 1989 Annual Report on Form
10-K filed with the Securities and Exchange Commission
on March 31, 1989.
(File No. 0-14105)
3f Amended and Restated Certificate and Agreement of
Limited Partnership dated as of November 15, 1989.
Reference is made to Exhibit 3f to the 1989 Annual
Report on Form 10-K filed with the Securities and
Exchange Commission on March 31, 1989. (File No.
0-14105)
23
<PAGE> 26
3g Amended and Restated Certificate and Agreement of
Limited Partnership dated as of January 10, 1990.
Reference is made to Exhibit 3g to the 1989 Annual
Report on Form 10-K filed with the Securities and
Exchange Commission on March 31, 1989. (File No.
0-14105)
4 Form of Certificate representing Limited Partnership
Interest. Reference is made to Exhibit 4 to Amendment
No. 1 to Partnership's Form S-11 Registration Statement,
filed with the Securities and Exchange Commission on May
17, 1984.
(File No. 2-90016)
10a Lease Agreement with Palo Alto Educational Systems, Inc.
to lease certain premises as described within the Lease
Agreement dated April 11, 1983 at Mountain View Plaza
Shopping Center. Reference is made to Exhibit 10m to the
1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1989.
(File No. 0-14105)
10b Lease Agreement with General Cinema Corporation of North
Carolina to lease certain premises as described within
the Lease Agreement dated July 23, 1985 at Tower Place
Festival Shopping Center. Reference is made to Exhibit
10o to the 1989 Annual Report on Form 10-K filed with
the Securities and Exchange Commission on March 31,
1989. (File No. 0-14105)
10c Lease Agreement with J&K Cafeterias to lease certain
premises as described in the Lease Agreement dated April
12, 1994 at Tower Place Festival Shopping Center.
Reference is made to Exhibit 10d to the 1994 Annual
Report on Form 10-K filed with the Securities Exchange
Commission on March 21, 1995. (File No. 0-14105)
10d Data Processing System Use Agreement between Murray
Income Properties I, Ltd. and The Mavricc Management
Systems, Inc., dated September 1, 1996. Reference
is made to Exhibit 10d to the 1996 Annual Report on Form
10-K filed with the Securities Exchange Commission on
March 19, 1997. (File No. 0-14105)
10e Property Management Agreement and Exclusive Marketing
Agreement with Zell Management and Development, Inc. for
property management services described in the Property
Management Agreement dated December 20, 1989 (as
extended pursuant to the Extension of Property
Management Agreement dated December 3, 1997 at Mountain
View Plaza Shopping Center). Filed herewith.
10f Management Agreement with CK Charlotte Overhead Limited
Partnership for management and operation services
described in the Management Agreement dated November 14,
1997 at Tower Place Festival Shopping Center. Filed
herewith.
10g Management Agreement with Cavender & Hill Properties,
Inc. for management and operation services described in
the Management Agreement dated June 30, 1996 at Castle
Oaks Shopping Center. Reference is made to Exhibit 10a
to the 1996 2nd Quarter Report on Form 10-Q filed with
the Securities and Exchange Commission on August 7,
1996. (File No. 0-14105)
10h Lease Modification Agreement No. 1 dated February 14,
1992 with Childtime Childcare, Inc. at Mountain View
Plaza Shopping Center. Reference is made to Exhibit 10k
to the 1992 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 19, 1993.
(File No. 0-14105)
24
<PAGE> 27
10i Lease Agreement with Reay's Ranch Markets, Inc. to lease
certain premises as described within the Lease Agreement
dated October 20, 1992 at Mountain View Plaza Shopping
Center. Reference is made to Exhibit 10m to the 1992
Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 19, 1993. (File No.
0-14105)
10j Third Amendment to Lease with Reay's Ranch Markets, Inc.
dated November 3, 1993 at Mountain View Plaza Shopping
Center. Reference is made to Exhibit 10n to the 1993
Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 21, 1994. (File No. 0-14105)
10k Fourth Amendment of Lease Agreement, Consent to
Assignment and Estoppel Certificate dated June 30, 1997
by, between and among Wild Oats Markets, Inc., Reay's
Ranch Markets, Inc., and Murray Income Properties I,
Ltd. Filed herewith.
10l Lease Agreement with Brown Group Retail, Inc. to lease
certain premises as described within the Lease Agreement
dated November 9, 1993 at Tower Place Festival Shopping
Center. Reference is made to Exhibit 10p to the 1993
Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 21, 1994. (File No.
0-14105)
10m Lease Agreement with Razmiko's, Ltd. to lease certain
premises as described within the Lease Agreement dated
August 1, 1995 at Castle Oaks Shopping Center. Reference
is made to Exhibit 10m to the 1995 Annual Report on Form
10-K filed with the Securities and Exchange Commission
on March 21, 1996. (File No. 0- 14105)
10n Severance Agreements by and among Murray Income
Properties I, Ltd. and Murray Income Properties II, Ltd.
and Mitchell L. Armstrong dated September 16, 1996.
Reference is made to Exhibit 10a to the 1996 3rd Quarter
Report on Form 10-Q filed with he Securities and
Exchange Commission on November 8, 1996. (File No.
0-14105)
10o Severance Agreements by and among Murray Income
Properties I, Ltd. and Murray Income Properties II, Ltd.
and W. Brent Buck dated September 16, 1996. Reference is
made to Exhibit 10a to the 1996 3rd Quarter Report on
Form 10-Q filed with he Securities and Exchange
Commission on November 8, 1996. (File No.
0-14105)
27 Financial Data Schedule. Filed herewith.
99a Glossary, as contained in the Prospectus dated May 31,
1984 filed as part of Amendment No. 2 to Registrant's
Form S-11 Registration Statement (File No. 2-90016).
Filed herewith.
99b Article XIII of the Agreement of Limited Partnership as
contained in the Prospectus dated May 31, 1984 filed as
part of Amendment No. 2 to Registrant's Form S-11
Registration Statement (File No. 2-90016). Filed
herewith.
99c Amendment number nine to the Agreement of Limited
Partnership contained in the Proxy Statement dated
October 11, 1989. Filed herewith.
99d Management Compensation as contained in the Prospectus
(Pages 10 through 17) dated May 31, 1984 filed as part
of Amendment No. 2 to Registrant's Form S-11
Registration Statement (File No. 2-90016). Filed
herewith.
25
<PAGE> 28
(d) Financial Statement Schedules with Independent Auditors' Report
Thereon:
(i) Consolidated Valuation and Qualifying Accounts (Schedule II) -
Years ended December 31, 1997, 1996, and 1995.
(ii) Consolidated Real Estate and Accumulated Depreciation (Schedule
III) - December 31, 1997.
All other schedules have been omitted because they are not required
or the required information is shown in the consolidated financial
statements or notes thereto.
26
<PAGE> 29
INDEPENDENT AUDITORS' REPORT
The Partners
Murray Income Properties I, Ltd.:
Under date of February 27, 1998, we reported on the consolidated balance sheets
of Murray Income Properties I, Ltd. (a limited partnership) and consolidated
joint venture as of December 31, 1997 and 1996, and the related consolidated
statements of earnings, changes in partners' equity, and cash flows for each of
the years in the three-year period ended December 31, 1997, as contained in
Item 8 of this annual report on Form 10-K. In connection with our audits of the
aforementioned consolidated financial statements, we also audited the related
consolidated financial statement schedules as listed in Item 14(a)2 of this
annual report on Form 10-K. These financial statement schedules are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present
fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP
Dallas, Texas
February 27, 1998
27
<PAGE> 30
Schedule II
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<TABLE>
<CAPTION>
Balance at Charged to Balance at
beginning costs and end of
Description of period expenses Deductions period
----------- ---------- --------- ---------- -----------
Allowance for doubtful accounts:
<S> <C> <C> <C> <C>
Year ended December 31, 1995 $21,446 5,554 5,242 21,758
======= ====== ====== ======
Year ended December 31, 1996 $21,758 5,438 19,913 7,283
======= ====== ====== ======
Year ended December 31, 1997 $ 7,283 (1,628) -0- 5,655
======= ====== ====== ======
</TABLE>
Deductions are primarily for writeoffs of accounts and notes receivables
deemed uncollectible by management.
28
<PAGE> 31
Schedule III
MURRAY INCOME PROPERTIES I, LTD. SCHEDULE III
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
<TABLE>
<CAPTION>
COSTS CAPITALIZED
INITIAL COST SUBSEQUENT
TO PARTNERSHIP (A) TO ACQUISITION
----------------------------------------- ------------------
BUILDINGS AND
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS
- --------------------- ------------ ---------- ------------- -----------------
<S> <C> <C> <C> <C>
Shopping Center
San Antonio, Texas $ 0 $1,240,051 $ 3,017,075 $ 543,750
Shopping Center
Scottsdale, Arizona $ 0 $2,805,238 $ 4,316,052 $ 741,956
Shopping Center
Pineville
(Charlotte),
North Carolina $ 0 $2,187,512 $ 10,280,876 $ 1,419,474
-----------
$ 0 $6,232,801 $ 17,614,003 $ 2,705,180
===========
<CAPTION>
GROSS AMOUNT
AT WHICH CARRIED AT LIFE ON WHICH
CLOSE OF PERIOD (D) DEPRECIATION IN
-------------------------------------------------------------------- FISCAL LATEST STATEMENT
BUILDINGS AND ACCUMULATED YEAR OF YEAR OF EARNINGS
LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED IS COMPUTED
-------- ------------- ---------- ------------ ------------ -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shopping Center
San Antonio, Texas $1,240,051 $ 3,560,825 $4,800,876 $ 1,858,531 1985 1986 3-25 YEARS
Shopping Center
Scottsdale, Arizona $2,805,238 $ 5,058,008 $7,863,246 $ 2,522,080 1983 1985 3-25 YEARS
Shopping Center
Pineville
(Charlotte),
North Carolina $2,187,512 $ 11,700,350 $13,887,862 $ 5,399,021 1982 1986 3-25 YEARS
---------- ------------- ---------- ------------
$6,232,801 $ 20,319,183 $26,551,984 $ 9,779,632
========== ============= ========== ============
</TABLE>
NOTES:
(A) The initial cost to the Partnership represents the original purchase price
of the properties.
(B) Reconciliation of real estate owned for 1997, 1996 and
1995:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of period $26,501,360 $26,401,213 $26,293,562
Additions during period $ 50,624 $ 100,147 $ 107,651
Retirements during period $ 0 $ 0 $ 0
----------- ----------- -----------
Balance at close of period $26,551,984 $26,501,360 $26,401,213
=========== =========== ===========
</TABLE>
(C) Reconciliation of accumulated depreciation for 1997, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of period $ 8,929,957 $ 8,079,281 $ 7,225,381
Depreciation expense $ 849,675 $ 850,676 $ 853,900
Retirements during period $ 0 $ 0 $ 0
----------- ----------- -----------
Balance at close of period $ 9,779,632 $ 8,929,957 $ 8,079,281
=========== =========== ===========
</TABLE>
(D) The aggregate cost of real estate at December 31, 1997 for Federal income
tax purposes is $26,693,487.
29
<PAGE> 32
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.
MURRAY INCOME PROPERTIES I, LTD.
By: Crozier Partners VIII, Ltd.
a General Partner
Dated: March 26, 1998 By: /s/ Jack E. Crozier
----------------------------------
Jack E. Crozier
a General Partner
By: Murray Realty Investors VIII, Inc.
a General Partner
Dated: March 26, 1998 By: /s/Mitchell Armstrong
----------------------------------
Mitchell Armstrong
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Murray Realty Investors VIII, Inc.
a General Partner
Dated: March 26, 1998 By: /s/ Brent Buck
----------------------------------
Brent Buck
Executive Vice President Director
Dated: March 26, 1998 By: /s/ Mitchell Armstrong
----------------------------------
Mitchell Armstrong
Chief Executive Officer
Chief Financial Officer
Director
30
<PAGE> 33
INDEX TO EXHIBITS
Document
3a Agreement of Limited Partnership of Murray Income Properties,
Ltd.-84. Reference is made to Exhibit A of the Prospectus
dated May 31, 1984 contained in Amendment No. 2 to
Partnership's Form S-11 Registration Statement
(File No. 2-90016).
3b Amended and Restated Certificate and Agreement of Limited
Partnership dated as of May 23, 1984. Reference is made to
Exhibit 3b to the 1989 Annual Report on Form 10- K filed with
the Securities and Exchange Commission on March 31, 1989.
(File No. 0- 14105)
3c Amended and Restated Certificate and Agreement of Limited
Partnership dated as of June 25, 1984. Reference is made to
Exhibit 3c to the 1989 Annual Report on Form 10-K filed with
the Securities and Exchange Commission on March 31, 1989.
(File No.
0-14105)
3d Amended and Restated Certificate and Agreement of Limited
Partnership dated as of November 27, 1984. Reference is made
to Exhibit 3d to the 1989 Annual Report on Form 10-K filed
with the Securities and Exchange Commission on March 31,
1989. (File No. 0-14105)
3e Amended and Restated Certificate and Agreement of Limited
Partnership dated as of April 1, 1985. Reference is made to
Exhibit 3e to the 1989 Annual Report on Form 10-K filed with
the Securities and Exchange Commission on March 31, 1989.
(File No. 0- 14105)
3f Amended and Restated Certificate and Agreement of Limited
Partnership dated as of November 15, 1989. Reference is made
to Exhibit 3f to the 1989 Annual Report on Form 10-K filed
with the Securities and Exchange Commission on March 31,
1989. (File No. 0-14105)
3g Amended and Restated Certificate and Agreement of Limited
Partnership dated as of January 10, 1990. Reference is made
to Exhibit 3g to the 1989 Annual Report on Form 10-K filed
with the Securities and Exchange Commission on March 31,
1989. (File No.
0-14105)
4 Form of Certificate representing Limited Partnership
Interest. Reference is made to Exhibit 4 to Amendment No. 1
to Partnership's Form S-11 Registration Statement, filed with
the Securities and Exchange Commission on May 17, 1984. (File
No. 2-90016)
10a Lease Agreement with Palo Alto Educational Systems, Inc. to
lease certain premises as described within the Lease
Agreement dated April 11, 1983 at Mountain View Plaza
Shopping Center. Reference is made to Exhibit 10m to the 1989
Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 31, 1989. (File No. 0-14105)
10b Lease Agreement with General Cinema Corporation of North
Carolina to lease certain premises as described within the
Lease Agreement dated July 23, 1985 at Tower Place Festival
Shopping Center. Reference is made to Exhibit 10o to the 1989
Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 31, 1989.
(File No. 0-14105)
31
<PAGE> 34
10c Lease Agreement with J&K Cafeterias to lease certain premises
as described in the Lease Agreement dated April 12, 1994 at
Tower Place Festival Shopping Center. Reference is made to
Exhibit 10d to the 1994 Annual Report on Form 10-K filed with
the Securities and Exchange Commission on March 21, 1995.
(File No. 0-14105)
10d Data Processing System Use Agreement between Murray Income
Properties I, Ltd. and The Mavricc Management Systems, Inc.,
dated September 1, 1996. Reference is made to Exhibit 10d to
the 1996 Annual Report on Form 10-K filed with the Securities
and Exchange Commission on March 21, 1997. (File No. 0-14105)
10e Property Management Agreement and Exclusive Marketing
Agreement with Zell Management and Development, Inc. for
property management services described in the Property
Management Agreement dated December 20, 1989 (as extended
pursuant to the Extension of Property Management Agreement
dated December 3, 1997 at Mountain View Plaza Shopping
Center). Filed herewith.
10f Management Agreement with CK Charlotte Overhead Limited
Partnership for management and operation services described
in the Management Agreement dated November 14, 1997 at Tower
Place Festival Shopping Center. Filed herewith.
10g Management Agreement with Cavender & Hill Properties for
management and operation services described in the Management
Agreement dated June 30, 1996 at Castle Oaks Shopping Center.
Reference is made to Exhibit 10a to the 1996 2nd Quarter
Report on Form 10-Q filed with the Securities and Exchange
Commission on August 7, 1996. (File No. 0-14105)
10h Lease Modification Agreement No. 1 dated February 14, 1992
with Childtime Childcare, Inc. at Mountain View Plaza Shopping
Center. Reference is made to Exhibit 10k to the 1992 Annual
Report on Form 10-K filed with the Securities and Exchange
Commission on March 19, 1993. (File No. 0-14105)
10i Lease Agreement with Reay's Ranch Markets, Inc. to lease
certain premises as described within the Lease Agreement
dated October 20, 1992 at Mountain View Plaza Shopping
Center. Reference is made to Exhibit 10m to the 1992 Annual
Report on Form 10-K filed with the Securities and Exchange
Commission on March 19, 1993. (File No. 0-14105)
10j Third Amendment to Lease with Reay's Ranch Markets, Inc. dated
November 3, 1993 at Mountain View Plaza Shopping Center.
Reference is made to Exhibit 10n to the 1993 Annual Report on
Form 10-K filed with the Securities and Exchange Commission on
March 21, 1994. (File No. 0-14105)
10k Fourth Amendment of Lease Agreement, Consent to Assignment
and Estoppel Certificate dated June 30, 1997 by, between and
among Wild Oats Markets, Inc., Reay's Ranch Markets, Inc.,
and Murray Income Properties I, Ltd. Filed herewith.
10l Lease Agreement with Brown Group Retail, Inc. to lease
certain premises as described within the Lease Agreement
dated November 9, 1993 at Tower Place Festival Shopping
Center. Reference is made to Exhibit 10p to the 1993 Annual
Report on Form 10-K filed with the Securities and Exchange
Commission on March 21, 1994. (File No. 0-14105)
10m Lease Agreement with Razmiko's, Ltd. to lease certain premises
as described within the Lease Agreement dated August 1, 1995
at Castle Oaks Shopping Center. Reference is made to Exhibit
10m to the 1995 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 21, 1996.
(File No. 0-14105)
32
<PAGE> 35
10n Severance Agreements by and among Murray Income Properties I,
Ltd. and Murray Income Properties II, Ltd. and Mitchell L.
Armstrong dated September 16, 1996. Reference is made to
Exhibit 10a to the 1996 3rd Quarter Report on Form 10-Q filed
with he Securities and Exchange Commission on November 8,1996.
(File No. 0-14105)
10o Severance Agreements by and among Murray Income Properties I,
Ltd. and Murray Income Properties II, Ltd. and W. Brent Buck
dated September 16, 1996. Reference is made to Exhibit 10a to
the 1996 3rd Quarter Report on Form 10-Q filed with he
Securities and Exchange Commission on November 8, 1996.
(File No. 0-14105)
27 Financial Data Schedule. Filed herewith.
99a Glossary, as contained in the Prospectus dated May 31, 1984
filed as part of Amendment No. 2 to Registrant's Form S-11
Registration Statement (File No. 2-90016). Filed herewith.
99b Article XIII of the Agreement of Limited Partnership as
contained in the Prospectus dated May 31, 1984 filed as part
of Amendment No. 2 to Registrant's Form S-11 Registration
Statement (File No. 2-90016). Filed herewith.
99c Amendment number nine to the Agreement of Limited Partnership
contained in the Proxy Statement dated October 11, 1989.
Filed herewith.
99d Management Compensation as contained in the Prospectus (Pages
10 through 17) dated May 31, 1984 filed as part of Amendment
No. 2 to Registrant's Form S-11 Registration Statement (File
No. 2-90016). Filed herewith.
33
<PAGE> 1
EXHIBIT 10e
EXTENSION OF EXCLUSIVE MARKETING AGREEMENT
This Extension of Exclusive Marketing Agreement hereinafter referred to
as "Agreement" entered into this 3rd day of December, 1997 by and between Murray
Income Properties I, Ltd., a Texas limited partnership, hereinafter referred to
as "Owner" and ZELL Commercial Real Estate Services, Inc., an Arizona
corporation, hereinafter referred to as "Agent".
R E C I T A L S :
A. Owner and Agent are parties to that certain Exclusive Marketing
Agreement dated January 10, 1990 covering the MOUNTAIN VIEW PLAZA
SHOPPING CENTER located at the southeast corner of Mountain View
Road and Hayden Road, Scottsdale, Arizona; and
B. The term of the aforesaid Agreement was to expire on December 31,
1997. The parties thereto are mutually desirous of extending the
term of the Exclusive Marketing Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
1. The expiration date of the Exclusive Marketing Agreement shall be
December 31, 1998.
2. All other terms and conditions of the Exclusive Marketing
Agreement shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this document this day and
year first above written.
WITNESS: Murray Income Properties I, Ltd., a Texas
limited partnership (Owner)
By: Murray Realty Investors VIII, Inc.,
a Texas corporation, its general partner
/s/ CHRISTINA MAYO By: /s/ BRENT BUCK
- ---------------------------- ---------------------------------------
Christina Mayo Brent Buck, Executive Vice President
WITNESS: ZELL Commercial Real Estate Services, Inc.,
an Arizona corporation (Agent)
/s/ CHRISTINA MAYO By: /s/ ALAN L. ZELL
- ---------------------------- ---------------------------------------
Christina Mayo Alan L. Zell, President
<PAGE> 2
EXTENSION OF PROPERTY MANAGEMENT AGREEMENT
This Extension of Property Management Agreement hereinafter referred to
as "Agreement" entered into this 3rd day of December, 1997 by and between Murray
Income Properties I, Ltd., a Texas limited partnership, hereinafter referred to
as "Owner" and ZELL Commercial Real Estate Services, Inc., an Arizona
corporation, hereinafter referred to as "Agent".
R E C I T A L S :
A. Owner and Agent are parties to that certain Property
Management Agreement dated December 20, 1989 covering the
MOUNTAIN VIEW PLAZA SHOPPING CENTER located at the southeast
corner of Mountain View Road and Hayden Road, Scottsdale,
Arizona; and
B. The term of the aforesaid Property Management Agreement was to
expire on December 31, 1997. The parties thereto are mutually
desirous of extending the term of the Property Management
Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
1. The expiration date of the Property Management Agreement shall
be December 31, 1998.
2. All other terms and conditions of the Property Management
Agreement shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the date and
year first above written.
WITNESS: Murray Income Properties I, Ltd., a Texas
limited partnership (Owner)
By: Murray Realty Investors VIII, Inc., a
Texas corporation, its general partner
/s/ CHRISTINA MAYO By: /s/ BRENT BUCK
- ---------------------------- ---------------------------------------
Christina Mayo Brent Buck, Executive Vice President
WITNESS: ZELL Commercial Real Estate Services, Inc.,
an Arizona corporation (Agent)
/s/ CHRISTINA MAYO By: /s/ ALAN L. ZELL
- ---------------------------- ---------------------------------------
Christina Mayo Alan L. Zell, President
<PAGE> 1
EXHIBIT 10f
CHILDRESS KLEIN PROPERTIES
November 14, 1997
Mr. Brent Buck
Murray Income Properties
299 South 9th Street
Suite 203
Oxford, MS 38655
RE: Tower Place Festival
Management Contract Renewal
Dear Brent:
Our current management agreement, dated December 12, 1994 and renewed December
1, 1995 and November 21, 1996 in letter agreements between Murray Income
Properties and CK Retail Charlotte Overhead Limited Partnership is in the
process of expiring. It is our desire to renew this management contract upon
the same terms and conditions as the previous management, dated December 12,
1994, with the exception that the term shall now expire on December 31, 1998. I
have attached as Exhibit "A", a copy of the December 12, 1994 management
agreement and would like you to indicate your approval of the renewal and the
new expiration date by signing this renewal agreement in the appropriate space
below.
It has been a pleasure to be the property manager/leasing agent at Tower Place
Festival and we look forward to continuing our relationship as your management
agent in the future.
RENEWAL AGREEMENT ACCEPTED:
<TABLE>
<CAPTION>
<S> <C>
CK Charlotte Overhead Limited Partnership Tower Place Joint Venture
a North Carolina Limited Partnership By: Murray Income Properties I, LTD.
By: Childress Klein Retail-Charlotte A Texas Ltd. Partnership, Joint Venturer
#2, Inc., Its General Partner By: Murray Realty Investors VIII, Inc.
A Texas Corp., General Partner
BY: /s/ DAVID S. MILLER By: /s/ BRENT BUCK
----------------------------------- -----------------------------------
David S. Miller, President Brent Buck, Executive Vice President
Attest/Witness: Witness:
/s/ Wendy L. Roy /s/ JONI ARMSTRONG
- -------------------------------------- --------------------------------------
Title: Asst. Secretary Name: Joni Armstrong
(Corporate Seal)
</TABLE>
<PAGE> 1
EXHIBIT 10k
FOURTH AMENDMENT OF LEASE AGREEMENT,
CONSENT TO ASSIGNMENT
AND
ESTOPPEL CERTIFICATE
THIS FOURTH AMENDMENT OF LEASE AGREEMENT, CONSENT TO ASSIGNMENT AND
ESTOPPEL CERTIFICATE (this "Agreement"), is dated as of this 30th day of June,
1997, is by, between and among Wild Oats Markets, Inc., a Delaware corporation
("Buyer"), Reay's Ranch Markets, Inc., an Arizona corporation ("Seller") and
Murray Income Properties I, Ltd., a Texas limited partnership ("Lessor").
RECITALS
A. Seller is the lessee under a lease dated October 20, 1992, by
and between Seller and Lessor. The lease was amended by a First Amendment to
Lease dated February 26, 1993, a Second Amendment to Lease dated June 1, 1993,
and a Third Amendment to Lease dated November 3, 1993 (the Lease and amendments
thereto collectively referred to herein as the "Lease"), pursuant to which
Lessor leases to Seller certain real property interests located at 9689 N.
Hayden Road, Scottsdale, AZ 85258 (the "Store").
B. In connection with Seller's sale of the assets and operations
of the Store to Buyer, Seller desires to assume Seller's obligations under the
Lease.
C. The parties desire to enter into this Agreement, pursuant to
which Lessor agrees to permit the transfer of the obligations and rights of
Seller as Lessee under the Lease, such obligations are transferred from Seller
to and unconditionally assumed by Buyer, and the Lease is amended as provided
for herein.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Amendment of Lease. As of the date upon which the assets of
the Store and Seller's interest in the Lease are transferred to Buyer (the
"Effective Date"), the Lease is hereby amended as follows:
(a) Paragraph 34 of the Lease is modified to delete the
address for Lessee contained therein and substitute "1645 Broadway, Boulder, CO
80302, Attn: Lease Administrator."
<PAGE> 2
(b) The percentage rent credit in the amount of Ten
Thousand and NO/100 Dollars ($10,000.00) granted by Lessor to Seller in
Paragraph 5(c) of the First Amendment to Lease dated February 26, 1993 is
hereby deleted and shall be of no further force or effect.
2. Assignment of Lease. As of the Effective Date, Seller hereby
sells, assigns, transfers and conveys to Buyer all of Seller's right, title and
interest in and to the Lease.
3. Assumption of Lease. As of the Effective Date, Buyer
unconditionally assumes and agrees to perform all of the terms, conditions and
obligations of Seller under the Lease. Pursuant to the terms and conditions of
the Purchase Agreement dated May 13, 1997 between Seller and Buyer for the
assets of the Store, Buyer shall defend and hold harmless Seller from any
obligations under the Lease arising from and after the Effective Date, and
Seller shall defend and hold harmless Buyer from any obligations arising prior
to the Effective Date.
4. Lessor Consent to Assignment and Release of Assignor: Lessor's
Estoppel.
(a) Subject to the terms and conditions of this
Agreement, Lessor hereby acknowledges and consents to the assignment of
Seller's interest as lessee in the Lease to Buyer and acknowledges Lessor's
continued obligation of performance to Buyer as Lessee in accordance with the
terms of the Lease. Subject to governmental approval and Paragraph 9 of the
Lease, Lessor consents to changing the name of the Store from "Reay's Ranch
Market" to "Wild Oats Community Market", "Wild Oats Market", or any other trade
name presently used by Buyer in the operation of retail grocery chains,
provided such trade name is utilized in a majority of Buyer's stores in the
Phoenix, Arizona metropolitan area.
(b) Lessor further confirms that:
(1) Lessor is the owner of the property subject
to the Lease;
(2) The Lease is unmodified and in full force and
effect, except as provided above, and without inquiry or
investigation, Seller is not in default under the Lease and no
action or inaction by Seller, with notice or the passage of
time or both will constitute a default by Seller thereunder.
(3) All the rent and other charges owed by Lessee
to Lessor under the Lease, required to be paid to the date of
this Agreement have been paid, except Lessor has not billed
Seller for first half 1997 real estate taxes and the 1997 year
end reconciliation of the estimated monthly payments of Common
Area maintenance and insurance expenses may result in a balance
due.
(4) The Lease term expires on October 31, 2005,
and the Lease contains two (2) renewal options of five (5)
years each; and
2
<PAGE> 3
(5) The current monthly installment of minimum
annual rent payable under the Lease is $10,058.44, current
monthly payment for Seller's estimated share of Common Area
maintenance expenses is $3,398.00, current rental tax charges
are $430.84 and currently monthly payment for Seller's
estimated share of insurance premium expenses is $221.00.
Lessor hereby confirms that there is no adjustment, pursuant to
Paragraph 21(c) of the Lease, to the minimum annual rent
payable thereunder as a result of this assignment, and further
that Lessor is not recapturing the premises as a result of this
assignment.
Lessor acknowledges that Buyer is relying upon the representations made by
Lessor in Section 4(b) above in obtaining Seller's interest as lessee in the
Lease.
(c) Notwithstanding Paragraph 21 of the Lease, on the
Effective Date, Lessor hereby releases and discharges Seller from any and all
obligations and liabilities arising under the Lease from and after the
Effective Date. Lessor further agrees that the Guaranty of Lease dated October
20, 1992, from the Thurland Reay Family Investment Company ("Guarantor"), shall
be terminated and any obligation of such parties for performance of the Lease
after the Effective Date is discharged. In no event shall either Seller or
Guarantor be released or discharged from liabilities arising prior to the
Effective Date.
5. Seller and Buyer Estoppel.
(a) Seller hereby confirms for the benefit of Lessor
that:
(1) This Agreement has been duly authorized by
the Board of Directors of Seller, the Lease is in full force and effect and
constitutes a legally valid instrument, binding and enforceable against Seller
in accordance with its terms, subject only to the terms and conditions of this
Agreement.
(2) There exists no default nor stated facts
which with the passage of time or the giving of notice or both could ripen into
a default on the part of Lessor.
(3) There are no offsets, deductions or credits
against the rents due and payable under the Lease.
(4) Any improvements to the premises which were
the Lessor's responsibility under the Lease have been completed in accordance
with the terms of the Lease.
(5) There is not pending or threatened against or
contemplated by Seller, any petition in bankruptcy, whether voluntary or
otherwise, any assignment for the benefit of creditors, or any petition seeking
reorganization or arrangement under the federal bankruptcy laws or those of any
state.
3
<PAGE> 4
Seller acknowledges that Lessor is relying upon the representations made by
Seller in Section 5(a) above in granting Lessor's consent to the assignment of
the Lease.
(b) Buyer hereby confirms for the benefit of Lessor that:
(1) This Agreement has been duly authorized by
the Board of Directors of Buyer, and , as of the Effective Date the Lease is
binding and enforceable against Buyer in accordance with its terms, subject
only to the terms and conditions of this Agreement.
(2) There is not pending or threatened against or
contemplated by Buyer, any petition in bankruptcy, whether voluntary or
otherwise, any assignment for the benefit of creditors, or any petition seeking
reorganization or arrangement under the federal bankruptcy laws or those of any
state.
Buyer acknowledges that Lessor is relying upon the representations made by
Buyer in Section 5(b) above in granting Lessor's consent to the assignment of
the Lease.
6. Conditions to Consent to Assignment. Lessor's grant of its
consent to the assignment of the Lease from Seller to Buyer is further subject
to the following terms and conditions:
(a) The assignment is subject to the Lease and to all of
the terms, covenants, conditions, provisions and agreements of the Lease.
(b) Buyer shall be bound by all of the terms, conditions,
provisions and agreements of the Lease for the period covered by the Lease.
(c) Neither the assignment nor Lessor's consent thereto
shall (1) operate as a consent or approval by Lessor or any of the terms,
covenants, conditions, provisions or agreements of the assignment between
Seller and Buyer and Lessor shall not be bound thereby, provided, however, that
Lessor shall be bound by Lessor's consent to the assignment as provided in this
Agreement (2) be construed to modify, waive or effect any of the terms,
covenants, conditions, provisions or agreements of the Lease, or to waive any
breach thereof, or any of the rights of Lessor thereunder, or to enlarge or
increase Lessor's obligations as lessor thereunder, except as set forth in this
Agreement, or (3) be construed as a consent by Lessor to any further assignment
or subletting either by Seller or by Buyer, it being clearly understood that
this consent shall not in any way be construed to relieve Seller or Buyer of
any obligation to obtain Lessor's express prior written consent to any further
subletting or assignment.
(d) Lessor, Seller and Buyer agree that this consent
shall not be assigned.
(e) Seller and Buyer covenant and agree that under no
circumstances shall Lessor be liable for any brokerage commission or other
charge or expense in connection with the
4
<PAGE> 5
assignment and both Seller and Buyer agree to indemnify Lessor against same and
against any cost or expense (including but not limited to attorney's fees)
incurred by Lessor in resisting any claim for any such brokerage commission.
(f) Seller and Buyer shall be liable for Lessor's
reasonable costs and expenses of $1,500.00 in connection with the negotiation
and execution of this Agreement and shall be paid on or before the date of this
Agreement.
7. Miscellaneous. This Agreement shall be governed by and
construed under the laws of the State of Arizona. This Agreement may only be
amended by a writing signed by all parties. This Agreement may be executed
simultaneously or in counterparts, each of which shall be deemed an original,
but all together shall constitute one in the same Agreement. Except as
expressly modified above, the Lease remains in full force and effect.
8. Effectiveness of Lessor's Signature. In the event the
Effective Date does not occur on or before five (5) business days after the
date of this Agreement, Lessor's signature shall be deemed null and void and
this Agreement shall be of no further force or effect.
Executed as of the date set forth above.
WILD OATS MARKETS, INC., a REAY'S RANCH MARKETS, INC.,
Delaware corporation (Buyer) an Arizona corporation (Seller)
By: /s/ Freya Brier, Esq. By: /s/ Gordon Reay
------------------------------------ -----------------------------
Title: Asst. Secretary/General Counsel Title: President
--------------------------------- -------------------------
MURRAY INCOME PROPERTIES I, LTD.,
a Texas limited partnership (Lessor)
By: Murray Realty Investors VIII, Inc., a
Texas corporation, its general partner
By: /s/ Brent Buck
------------------------------------
Title: Executive Vice President
---------------------------------
5
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MURRAY
INCOME PROPERTIES I, LTD. AND CONSOLIDATED JOINT VENTURE BALANCE SHEET AND
STATEMENT OF EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,620,246
<SECURITIES> 0
<RECEIVABLES> 718,584
<ALLOWANCES> 5,655
<INVENTORY> 0
<CURRENT-ASSETS> 2,333,175
<PP&E> 26,551,984
<DEPRECIATION> 9,779,632
<TOTAL-ASSETS> 19,350,195
<CURRENT-LIABILITIES> 208,998
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 17,566,376
<TOTAL-LIABILITY-AND-EQUITY> 19,350,195
<SALES> 0
<TOTAL-REVENUES> 3,298,152
<CGS> 0
<TOTAL-COSTS> 1,687,006
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (1,628)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,140,177
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,140,177
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,140,177
<EPS-PRIMARY> 39.59
<EPS-DILUTED> 39.59
</TABLE>
<PAGE> 1
EXHIBIT 99.A
In the event that the General Partners decide to honor a request, they
will notify the requesting Limited Partner in writing of such fact and will
forward to such Limited Partner the documents necessary to effect such
repurchase within 60 days following the receipt of the request by the General
Partners. The purchase price will be equal to 90% of the estimated fair value
of the Interests to be repurchased, as determined by the General Partners by
using such methods of valuation as they deem appropriate. The General Partners
may consider, among other criteria, the current market value of the
Partnership's properties and other assets, less all outstanding Partnership
debts and obligations. The General Partners will, as soon as possible following
return of such documents from the Limited Partner, repurchase the Interests of
the Limited Partner, provided that (i) sufficient amounts are then available in
the Repurchase Fund to repurchase all of such Interests and (ii) such documents
are returned by the end of the fiscal quarter in which the Limited Partner's
request was received by the General Partners ("current quarter"). In the event
that items (i) or (ii) above are not met, the General Partners may repurchase a
portion of such Interests or defer the repurchase of all such Interests. If the
General Partners determine to defer all or a portion of the repurchase of
certain Interests, the Limited Partners will be deemed to have priority over
subsequent requests for repurchases.
Special Power of Attorney
Under the Partnership Agreement and Subscription Agreement, each
Limited Partner irrevocably appoints the General Partners his attorney-in-fact
to make, execute, sign, acknowledge, swear to, deliver, record and file any
document or instrument which may be considered necessary or desirable by the
General Partners executing the same to carry out fully the provisions of the
Partnership Agreement.
Dissolution and Liquidation
Article XV of the Partnership Agreement provides that the Partnership
shall be dissolved and its business wound up upon the earliest to occur of (a)
the date of disposition of all assets of the Partnership, (b) the date of the
removal, resignation, adjudication of bankruptcy, insolvency or dissolution of
a General Partner, unless the Limited Partners elect to continue the business
of the Partnership, (c) that date on which Limited Partners holding a majority
of Interests vote in favor of dissolution and termination, or (d) January 31,
2020.
Upon the election by the Limited Partners to continue the business of
the Partnership after an event specified in (b) above, the Partnership shall be
required to purchase the General Partner's general partnership interest
pursuant to Section 12.3 and Section 12.4 of the Partnership Agreement.
Upon the completion of the liquidation of the Partnership, the General
Partners have the authority to execute and record a certificate of cancellation
of the Partnership, as well as any and all other documents required to
effectuate the dissolution and termination of the Partnership.
GLOSSARY
As used in this Prospectus, the following definitions of terms are
applicable:
"Affiliate": (i) any person directly or indirectly controlling,
controlled by, or under common control with, another person, (ii) a
person owning or controlling 10% or more of the outstanding voting
securities or beneficial interests of such other person, (iii) any
officer, director, partner, general trustee, or any other person acting
in a substantially similar capacity of such person, and (iv) if such
other person is an officer, director, partner, trustee or holder of 10%
or more of the voting securities or beneficial interests of such person,
any other entity for which such person acts in any capacity.
65
<PAGE> 2
"Average Annual Unreturned Invested Capital": The total of all the
Limited Partners' Original Invested Capital reduced by the total of all Cash
Distributions from Sales or Refinancings (but not below zero) to Limited
Partners, as reflected on the Partnership's books and records, weighted on a
daily average basis for the period.
"Cash Distributions from Operations": Distributions of cash receipts
from Gross Revenues after (i) operating expenses (without deduction for
depreciation), (ii) amounts set aside for reasonable reserves and (iii)
payments on the Partnership's other current obligations.
"Cash Distributions from Sales or Refinancings": Distributions of cash
receipts from Net Proceeds from Sales or Refinancings realized by the
Partnership from sales or refinancings of the Partnership's properties after
(i) amounts set aside for reasonable reserves and (ii) payments on the
Partnership's other current obligations.
"Closing Date": Such date as designated by the General Partners as the
date when the last Interest has been sold by the Partnership, but in no event
later than one year after the Registration Statement first became effective.
"Corporate General Partner": Murray Realty Investors VIII, Inc.
"Escrow Agent": Mercantile National Bank at Dallas, Dallas, Texas, or
its successor.
"General Partners": Murray Realty Investors VIII, Inc. and Crozier
Partners VIII, Ltd.
"Gross Revenues": All Partnership revenues from whatever source
derived, exclusive of revenues from the sale or refinancing of Partnership
properties.
"Initial Closing Date": The date on which subscriptions for the minimum
of 3,000 Interests have been accepted by the General Partners.
"Interest": The limited partnership interest in the Partnership
acquired by the payment of 81,000 to the Partnership.
"Limited Partners": All persons who are admitted to the Partnership as
limited partners.
"Minimum Deadline": This date that is 120 days after the date of this
Prospectus, unless extended by the General Partners by up to an additional 90
days.
"NASAA Guidelines": The guidelines for real estate programs as adopted
by the North American Securities Administrators Association as they exist on
the date the Partnership's Registration Statement is declared effective by the
Securities and Exchange Commission.
"Net Proceeds from Sales or Refinancings": The net cash realized by the
Partnership from sales, refinancings or other dispositions of Partnership
properties after the payment of all debts and expenses related to the
transactions.
"Non-corporate General Partner": Crozier Partners VIII, Ltd.
"Organizational and Offering Expenses": Expenses incurred in connection
with the organization of the Partnership and the offering of the Interests
(excluding selling commissions), including legal fees, accounting fees, escrow
fees, printing costs, filing and qualification fees, reimbursement of expenses
(excluding salaries and related salary expenses incurred during the
organization of the Partnership) incurred by the General Partners or their
Affiliates and other disbursements in connection with the sale and distribution
of Interests.
"Original Invested Capital": An amount equal to $1,000 per Interest.
"Partner": Any General Partner or Limited Partner.
"Partnership": The partnership created under the Agreement of Limited
Partnership attached as Exhibit A.
66
<PAGE> 3
"Preferred Return": The cumulative preferred return to each
Limited Partner equal to 12% per annum on his Average Annual Unreturned
Invested Capital from either Cash Distributions from Operations or Cash
Distributions from Sales or Refinancings, or both. Such cumulative preferred
return shall be calculated from the beginning of the first full fiscal quarter
after such Limited Partner purchased such Interest. A Limited Partner shall be
deemed to have purchased an Interest as of the date on which the purchase of
such Interest is reflected on the certificate of limited partnership filed with
the Secretary of State of Texas.
"Property Management Fee": The fee payable for property
management services.
"Prospectus": The prospectus contained in the Registration
Statement on the date the Registration Statement is declared effective by the
Securities and Exchange Commission.
"Registration Statement": The Partnership's Registration
Statement on Form S-11 filed with the Securities and Exchange Commission and as
amended from time to time.
"Repurchase Fund": 25% of the Corporate General Partner's share
of Cash Distributions from Operations to be used to repurchase Limited Partner
Interests under certain circumstances.
THE OFFERING
Subject to the conditions set forth in this Prospectus and in
accordance with the terms and conditions of the Partnership Agreement, the
Partnership offers through the Dealer Manager a maximum of 30,000 Interests
priced at $1,000 per Interest. Except for investors in certain states that have
imposed higher purchase requirements as set forth in the Subscription
Agreement, a form of which is included as Exhibit B, the minimum subscription
for an Individual Retirement Account is two Interests. The minimum subscription
for other investors is five Interests.
The Interests are being offered on a "best efforts" basis through
Murray Securities Corporation (the "Dealer Manager"), an Affiliate of the
General Partners. As compensation for its services in soliciting and obtaining
subscribers for the purchase of the Interests, the Partnership has agreed to
pay the Dealer Manager a commission of up to a maximum of 8 1/2% of the gross
proceeds on all sales made directly by it or by other dealers in accordance
with the following schedule:
<TABLE>
<CAPTION>
Amount of Investment
- ---------------------------------- Commission
From To Rate
- ---------- ---------- ----------
<S> <C> <C>
$ 2,000 $ 25,000.................... 8 1/2%
26,000 100,000.................... 7 1/2%
101,000 250,000.................... 6 1/2%
251,000 500,000.................... 5 1/2%
501,000 1,000,000.................... 4 1/2%
over $1,000,000...................................... 2 1/2%
</TABLE>
Subscriptions may be combined for the purpose of determining the total
commissions payable in the case of subscriptions made by any investor who,
subsequent to his initial purchase of Interests, subscribes for the purchase of
additional Interests. Any request to combine subscriptions will be subject to
verification by the General Partners that all of such subscriptions were made
by a single investor. In such an event, the commission payable with respect to
the initial purchase of Interests will be computed using the commission
schedule set forth above. The commission payable with respect to any subsequent
purchase of Interests will equal the commission that would have been payable in
accordance with the commission schedule set forth above if all purchases had
been made simultaneously, less the commissions that previously have been paid
with respect to all prior purchases of Interests by such an investor. The
difference between 8.5% of the gross proceeds from the sale of Interests and
the amount payable to the Dealer Manager with respect to such sale will be
reimbursed to the Limited Partner as soon as possible after his admission to
the Partnership.
67
<PAGE> 1
EXHIBIT 99.B
paid to the Terminated General Partners by the Partnership), such interest to
be payable at the time of each installment of principal, which shall be payable
as the Terminated General Partner and the Partnership may agree, or if they
cannot so agree, then annually over a period of five years from the date of the
Terminated General Partner's retirement, resignation, removal, adjudication of
bankruptcy, insolvency, dissolution, insanity or death. No prepayment penalty
shall be charged to the Partnership for the early payment of its note.
12.3 The fair market value of the Terminated General Partner's
interest to be purchased by the Partnership according to the provisions of
Section 12.2 above shall be determined by agreement between the Terminated
General Partner and the Partnership. If the Terminated General Partner and the
Partnership cannot agree upon the fair market value of such Partnership
interest within 90 days after the date of the Terminated General Partner's
retirement, resignation, removal, adjudication of bankruptcy, insolvency,
dissolution, insanity or death, then the Terminated General Partner and the
Partnership shall each select an independent appraiser within the next thirty
days. If such appraisers fail to agree on the fair market value of the
Terminated General Partner's interest within the next 90 days, then the two
appraisers shall jointly appoint a third appraiser whose determination shall be
final and binding. The Terminated General Partner and the Partnership shall
each compensate their respective appraisers, and the compensation of the third
appraiser, if necessary, shall be borne equally by each party.
12.4 Within 90 days after the retirement, resignation, removal,
adjudication of bankruptcy, insolvency, dissolution, insanity or death of a
General Partner (except that a General Partner shall not voluntarily withdraw
from the Partnership without at least 90 days' prior written notice to the
other General Partner and the Limited Partners of intention to withdraw, and in
such event, within the period from the date of the notice of intention to
withdraw to the date of withdrawal specified in the notice of intention),
Limited Partners holding a majority of the Interests may elect to continue the
business of the Partnership and, if they desire to do so, may elect a successor
General Partner.
ARTICLE XIII
Transfer of a Partnership Interest
13.1 The General Partners may, pursuant to this Article XIII, admit
as a substituted Limited Partner any successor in interest to a Limited Partner
who is either deceased or under legal disability or who is an assignee of a
Limited Partner.
13.2 Subject to the provisions of this Article XIII, compliance with
the suitability standards imposed by the Partnership, applicable "blue sky"
laws and the applicable rules of any other governmental authority, a Limited
Partner shall have the right to assign the whole or any portion of his
Interests (but not less than five Interests unless to an Individual Retirement
Account and then not less than two Interests) by a written assignment, the
terms of which are not in contravention of any of the provisions of this
Agreement. Any assignment in contravention of any of the provisions of this
Article XIII shall be of no force and effect and shall not be binding upon or
recognized by the Partnership.
(a) Except as provided in (b) below, an assignee of a Limited
Partner's Interest who is not admitted as a substituted Limited Partner
shall have no right to require any information or account of the
Partnership's transactions or to inspect the Partnership's books; he
shall only be entitled to receive Distributions from the Partnership and
the share of income, gain, loss, deduction and credit attributable to
the Interests acquired by reason of such assignment from the first day
of the month following the month in which the written instrument of
assignment, executed by the assignor and in form and substance
reasonably satisfactory to the General Partners, and other documents
reasonably deemed necessary or appropriate by the General Partners (as,
for example, evidence that the assignee meets investor suitability
standards) shall have been received by the Partnership.
A-17
<PAGE> 2
(b) Anything herein to the contrary notwithstanding, both the
Partnership and the General Partners shall be entitled to (i) treat the
assignor of such Interests as the absolute owner thereof in all
respects, and shall incur no liability for allocations of income, gain,
loss, deduction or credit for Distributions or for transmittal of
reports and notices required to be given to holders of Interests, until
the last day of the month in which the Partnership shall have received
the written assignment executed by the assignor in form and substance
reasonably satisfactory to the General Partners and other documents
reasonably deemed necessary or appropriate by the General Partners
(including evidence of the assignee's compliance with standards imposed
by applicable "blue sky" laws) or (ii) treat the assignee as a
substitute Limited Partner in the place of his assignor, should the
General Partners deem, in their absolute discretion, that such treatment
is in the best interests of the Partnership for any of its purposes or
for any of the purposes of this Agreement.
13.3 No assignee shall have the right to become a substituted
Limited Partner in place of his assignor unless all of the following conditions
are satisfied:
(a) The written consent of the General Partners to such
substitution shall be obtained, the granting of which shall not be
unreasonably withheld;
(b) A duly executed written instrument of assignment setting forth
the intention of the assignor that the assignee shall become a
substituted Limited Partner in his place shall have been filed with
the Partnership;
(c) The Interests being acquired by the assignee shall consist of
at least two Interests if such assignee is an Individual Retirement
Account and at least five Interests if such assignee is not an
Individual Retirement Account and, if the assignor shall retain any
Interests, such retention shall consist of at least two Interests if
such assignor is an Individual Retirement Account and at least five
Interests if such assignor is not an Individual Retirement Account;
(d) The assignor and assignee shall execute and acknowledge such
other instruments as the General Partners reasonably deem necessary or
desirable to effect such assignment and admission, including, but not
limited to, evidence of the assignee's compliance with standards imposed
by any applicable "blue sky" laws, the written acceptance and adoption
by the assignee of the provisions of this Agreement and his execution,
acknowledgment and delivery to the General Partners of a special power
of attorney, the form and content of which are more fully described in
Article XXI hereof; and
(e) The Partnership shall have received from the assignor or
assignee a transfer fee to cover all reasonable expenses of the
transfer, not to exceed $50 per transaction, but such transfer fee
may be waived by the General Partners, in their discretion.
13.4 Any person admitted to the Partnership as a substituted Limited
Partner shall be subject to all of the provisions of this Agreement as if an
original party to it.
13.5 The General Partners shall amend the certificate of limited
partnership at least once each quarter to add assignees as substituted Limited
Partners.
13.6 Upon the death or legal disability of an individual who is a
Limited Partner, his personal representative shall have all of the rights of a
Limited Partner for the purpose of settling or managing his estate, and such
power as the decedent or incompetent possessed to constitute a successor as an
assignee of his interests in the Partnership and to join with such assignee in
making application to substitute such assignee as a Limited Partner. However,
such personal representative shall not have the right to become a substituted
Limited Partner in the place of his predecessor in interest unless the
conditions of this Article XIII (other than the requirement that the assignor
execute and acknowledge instruments) are first satisfied.
A-18
<PAGE> 3
13.7 Upon the adjudication of bankruptcy or insolvency, dissolution
or other cessation of existence as a legal entity of a Limited Partner which is
not an individual, the authorized representative of such entity shall have all
of the rights of a Limited Partner for the purpose of effecting the orderly
winding up and disposition of the business of such entity and such power as
such entity possessed to constitute a successor as an assignee of its interest
in the Partnership and to join with such assignee in making application to
substitute such assignee as a Limited Partner. However, such representative
shall not have the right to become a substituted Limited Partner in the place of
his predecessor in interest unless the conditions of this Article XIII (other
than the requirement that the assignor execute and acknowledge instruments) are
first satisfied.
13.8 A General Partner may not assign his or its interest as a
General Partner to anyone other than the Partnership as provided in Article XII
of this Agreement.
13.9 No assignment of any Interests may be made if the Interests
sought to be assigned, when added to the total of all other Interests assigned
within the period of 12 consecutive months prior to the proposed date of
assignment, would, in the opinion of counsel for the Partnership, result in the
termination of the Partnership under Section 708 of the Internal Revenue Code
of 1954, as amended.
13.10 Any assignment, sale, exchange or other transfer in
contravention of any of the provisions of this Article XIII shall be void and
ineffectual, and shall not bind or be recognized by the Partnership.
ARTICLE XIV
Indemnification
14.1 No General Partner and no officer, director, partner, Affiliate
or assign of a General Partner shall be liable to the Partnership or any
Limited Partner for any loss or damage suffered by the Partnership or any
Limited Partner which arises out of any error in judgment or other action or
inaction not constituting negligence (gross or ordinary), fraud or breach of
fiduciary duty which was taken in good faith, in accordance with the exercise
of reasonable business judgment and pursuant to a determination that such
course of conduct was in the best interest of the Partnership. The Partnership
or its receiver or trustee shall indemnify, save harmless and pay all judgments
and claims against the General Partners (and each of them) or their officers,
directors, partners, Affiliates and assigns from any liability, loss or damage
incurred by them or by the Partnership by reason of any act performed or
omitted to be performed by them in connection with the activities of the
Partnership or in dealing with third parties on behalf of the Partnership,
including costs and attorneys' fees (which attorneys' fees may be paid as
incurred) and any amounts expended in the settlement of any claims of
liability, loss or damage, provided that such action was taken in good faith,
in accordance with the exercise of reasonable business judgment and pursuant to
a determination that such course of conduct was in the best interest of the
Partnership and did not constitute fraud, negligence (gross or ordinary) or
breach of fiduciary duty by such General Partner or such officer, director,
partner, Affiliate or assign and provided further that any such indemnification
shall be recoverable only from the assets of the Partnership and not from the
assets of the holders of Interests. Notwithstanding the foregoing, no
Affiliate will be indemnified or excused from liability under this Agreement in
connection with Partnership activities to the extent such Affiliate is
rendering contract services for which it receives a competitive fee. All
judgments against the Partnership and a General Partner, wherein a General
Partner is entitled to indemnification, must first be satisfied from
Partnership assets before a General Partner shall be responsible for such
obligations. The Partnership shall not pay for any insurance covering liability
of a General Partner or of officers, directors, partners, Affiliates and
assigns of a General Partner for actions or omissions for which indemnification
is not permitted hereunder; provided, however, that nothing contained herein
shall preclude the Partnership from purchasing and paying for such types of
insurance, including extended coverage liability and casualty and workmen's
compensation, as would be customary for any person owning comparable property
and engaged in a similar business or from naming a General Partner and any
Affiliate as additional
A-19
<PAGE> 1
EXHIBIT 99.C
expenditure made by the Partnership which the General Partners deem to
be the fair, just and equitable share that should be borne by Murray
Income Properties II, Ltd.
AMENDMENT NO. 9
Explanation of Amendment. Section 10.15 requires the Corporate General
Partner to allocate 25% of its share of Cash Distributions from Operations to a
"Repurchase Fund" for the purchase of Interests upon the request of a Limited
Partner. The Corporate General Partner is permitted to commingle the amount
allocated to the "Repurchase Fund" with other assets of the Corporate General
Partner. To the present time, however, the Corporate General Partner has not
been paid any Cash Distributions from Operations since the allocation and
payment of Cash Distributions to the Corporate General Partner is subordinated
to the prior receipt by the Limited Partners of a non-cumulative 7% annual
return from either Cash Distributions from Operations or Cash Distributions from
Sales or Refinancings, or both, on their Average Annual Unreturned Invested
Capital.
Since the amendments herein will reduce the allocation of Cash
Distributions from Operations to the Corporate General Partner from 8% to 3% and
will reallocate 5% of such 8% to the Non-Corporate General Partner (subordinate,
of course, in each instance to the prior receipt by the Limited Partners of a
non-cumulative 7% annual return from either Cash Distributions from Operations
or Cash Distributions from Sales or Refinancings, or both), this amendment will
require both the Corporate General Partner and the Non-Corporate General
Partner, in the proportions of 3/8ths for the Corporate General Partner and
5/8ths for the Non-Corporate General Partner, respectively, to allocate 25% of
their respective shares of any such subordinated Cash Distributions from
Operations to a "Repurchase Fund" to be established by each of them,
respectively.
The Amendment. The last two sentences in the first paragraph of Section
10.15 are hereby deleted and there is hereby substituted in lieu thereof the
following three sentences:
"The Corporate General Partner will allocate 25% of its share of Cash
Distributions from Operations to a "Repurchase Fund" and the
Non-Corporate General Partner will allocate to a "Repurchase Fund" 25%
of its 5% share of Cash Distributions from Operations that is
subordinated to the prior receipt by the Limited Partners of a
non-cumulative 7% annual return from either Cash Distributions from
Operations or Cash Distributions from Sales or Refinancings, or both, on
their Average Annual Unreturned Invested Capital. The Corporate General
Partner's share of Cash Distributions from Operations allocated to the
Repurchase Fund will be commingled with other assets of the Corporate
General Partner and the Non-corporate General Partner's share of Cash
Distributions from Operations allocated to the Repurchase Fund will be
commingled with other assets of the Non-corporate General Partner. Any
repurchase of Interests pursuant to this Section 10.15 shall be in the
proportions of 3/8ths by the Corporate General Partner and 5/8ths by the
Non-corporate General Partner, respectively.*
AMENDMENT NO. 10
Explanation of Amendment. Section 11.3 provides in respect of voting on
any matter on which the Limited Partners are entitled to vote that each Limited
Partner will be deemed to be "--the holder of only those Interests shown on
Exhibit A, as amended by the last-filed certificate of limited partnership." The
Texas Uniform Limited Partnership Act requires the filing of a certificate of
limited partnership that lists the name and address of each limited partner of a
limited partnership and the amount of the contribution of each limited partner
to the partnership. The certificate of limited partnership filed in the office
of the Secretary of State is authoritative as to the identity of limited
partners. The Texas Uniform Limited Partnership also does not permit an owner of
a limited partnership interest to be considered a "limited
(vi)
<PAGE> 1
EXHIBIT 99.D
commissions on such Interests. No selling commissions were paid on the
five Interest purchased by the Initial Limited Partner.
(4) For a discussion of the limitations imposed by the NASAA Guidelines
with respect to the percentage of capital contributions available for
the payment of acquisition expenses, see footnote (3) to "Management
Compensation."
(5) Assumes an initial working capital reserve of 2% of gross offering
proceeds. See "Investment Objectives and Policies - Working Capital
Reserve."
MANAGEMENT COMPENSATION
The following table sets forth the types and estimates of the amounts
of all fees, compensation, income, distributions and other payments that the
General Partners and their Affiliates will or may receive in connection with
the operations of the Partnership. SUCH FEES, COMPENSATION, INCOME,
DISTRIBUTIONS AND OTHER PAYMENTS WERE NOT DETERMINED BY ARMS-LENGTH BARGAINING.
See "Conflicts of Interest."
<TABLE>
<CAPTION>
Entity Receiving Method of Determination
Form of Compensation Compensation and Estimated Dollar Amount
- -------------------- ---------------- ---------------------------
<S> <C> <C>
Offering Stage
Selling Commissions Murray Securities Corpora- Up to $85 per Interest sold,
tion, an Affiliate of the reduced for purchases by one
General Partners(1) investor of more than 25
Interests and for purchases
by officers, directors, partners,
employees or Affiliates of the
General Partners or their
Affiliates. Actual amount
depends upon number of
Interests sold but could be
$2,549,575 if 30,000 Interests
are sold.(2)
Reimbursement of Murray Realty Investors Actual out-of-pocket Organiza-
Organizational and VIII, Inc. or its Affiliates tional and Offering
Offering Expenses(3) Expenses, including
accounting, legal, printing,
registration fees, etc.
Acquisition Stage
Purchase of Murray Properties Actual costs of properties
Properties at Cost(4) Company, an Affiliate acquired by Affiliates.
of the General Partners, Dollar amount is not
or its Affiliates determinable at this time.(5)
Title Insurance Dallas Title Company or A portion of the premium
Commissions(6) Texas Title Company, paid for title insurance upon
Affiliates of the General acquisition of a property.
Partners(7) The premium in Texas is
fixed by the State. Dollar
amount is not determin-
able at this time.(5)
</TABLE>
10
<PAGE> 2
<TABLE>
<CAPTION>
Entity Receiving Method of Determination
Form of Compensation Compensation and Estimated Dollar Amount
- -------------------- ---------------- ---------------------------
<S> <C> <C>
Operational Stage
Property Management Fees Murray Management Corp- An amount equal to (a) for
ration, an Affiliate of its management services,
the General Partners(8) the lesser of (i) 6% of gross
revenues or (ii) the amount
customarily charged in
arms length transactions
by others rendering com-
parable services in the
locality where the property
is located, considering the
size and type of each such
property plus (b) reim-
bursement for the actual costs
of on-site personnel engaged
in the management, leasing
and maintenance of the
property of the Partnership
and certain other costs.
Dollar amount is not deter-
minable at this time.(5)
Reimbursement of Part- Murray Realty Investors Actual cost of goods and
nership Operational VIII, Inc. or its materials used for and by the
Expenses(9) Affiliates Partnership and obtained
from an entity not affiliated
with a General Partner or an
Affiliate of the General
Partners and certain ad-
ministrative services. Dollar
amount is not determinable
at this time.(5)
Casualty Insurance Murray General Agency, A portion of the premiums
Commissions Inc., an Affiliate of paid for casualty insur-
the General Partners(10) ance. The cost of the
insurance cannot exceed
the lower quote for com-
parable terms and coverage
from two independent
brokers. Dollar amount is
not determinable at this
time.(5)
Partnership Administrative Murray Savings Associa- The excess of Murray Savings
and Property Operating tion, an Affiliate of Association's rate of
Account the General Partners(11) return on the Partnership
funds in such account over
the interest rate paid to
the Partnership on such
account. Dollar amount is
not determinable at this
time.(5)
</TABLE>
11
<PAGE> 3
<TABLE>
<CAPTION>
Entity Receiving Method of Determination
Form of Compensation Compensation and Estimated Dollar Amount
- ------------------------ ------------------------ --------------------------------
<S> <C> <C>
Interest and Other A General Partner or an An amount not in excess of
Financing Charges or Affiliate of the General the amounts that would be
Fees Partners(12) charged by unrelated lending
institutions on comparable
loans for the same purpose
and in the same locality but
never in excess of 2% over
the prime rate of Mercantile
National Bank at Dallas.
Dollar amount is not
determinable at this time.(5)
Distributive Share of Crozier Partners VIII, The Non-corporate General
Cash Distributions Ltd. and Murray Realty Partner will receive 2% of
from Operations(13) Investors VIII, Inc.(14) all Cash Distributions from
Operations. The Corporate
General Partner will receive
8% of all Cash Distributions
from Operations, subject to
the Limited Partners having
received a noncumulative
annual cash return equal to
7% of their Average Annual
Unreturned Invested Capital,
calculated from the Closing
Date. Dollar amount is not
determinable at this time.(5)
Liquidation Stage
Real Estate Commissions Crozier Partners VIII, Ltd. An amount equal to 50% of the
or its Affiliates; Murray competitive real estate
Realty Investors VIII, Inc. commission, such commission
or its Affiliates(14)(15) not to exceed 6% of the sales
price of the property. Such
commissions will be payable
only after Limited Partners
have been returned their
Original Invested Capital
from Cash Distributions from
Sales or Refinancings, plus
their Preferred Return from
either Cash Distributions
from Operations or Cash
Distributions from Sales or
Refinancings, or both. Dollar
amount is not determinable
at this time.(5)
</TABLE>
12
<PAGE> 4
<TABLE>
<CAPTION>
Entity Receiving Method of Determination
Form of Compensation Compensation and Estimated Dollar Amount
- --------------------------- ------------------------- -------------------------------
<S> <C> <C>
Title Insurance Commissions Dallas Title Company or Texas A portion of the premiums paid
Title Company, Affiliates of for title insurance upon sale,
the General Partners(7) financing or refinancing of a
property if such title
insurance is provided by
Dallas Title Company or
Texas Title Company. The
premium in Texas is fixed by
the State. Dollar amount is
not determinable at this
time.(5)
Distributive Share of Cash Crozier Partners VIII, Ltd. The Non-corporate General
Distributions from Sales or and Murray Realty Partner will receive 1% of
Refinancings(13)(16) Investors VIII, Inc.(14) all Cash Distributions from
Sales or Refinancings. The
remaining 99% shall be
allocated (a) first to the
Limited Partners until they
have been returned their
Original Invested Capital
from Cash Distributions from
Operations or Cash
Distributions from Sales or
Refinancings, or both (b)
then to the Corporate General
Partner in an amount equal to
any unpaid Cash Distributions
from Operations subordinated
to the Limited Partners' 7%
noncumulative annual return
and (c) thereafter, the
remainder shall be allocated
80% to the Limited Partners
and 20% to the General
Partners. See "Income and
Losses and Cash
Distributions." Dollar amount
is not determinable at this
time.(5)
</TABLE>
- ------------
(1) The Dealer Manager may authorize certain other broker-dealers who are
members of the National Association of Securities Dealers, Inc., to sell
Interests on a "best efforts" basis. In the event of sale by such other
broker-dealers, the Dealer Manager has advised the Partnership that the
Dealer Manager will pay to such other broker-dealers all or a portion of
its commission from such sales.
(2) See "The Offering" for a discussion of the reduction in selling
commissions payable with respect to sales to one purchaser or more than
25 Interests or with respect to sales to officers, directors, partners,
employees or Affiliates of the General Partners or their Affiliates.
13
<PAGE> 5
(3) The NASAA Guidelines require that, at a minimum, an amount equal to the
greater of (i) 67% of the Limited Partners' capital contributions or
(ii) 80% of such capital contributions reduced by .1625% for each 1% of
indebtedness encumbering the Partnership's properties be committed to
investment in properties. Investment in properties, as defined under the
NASAA Guidelines, is the amount of capital contributions actually paid
or allocated to the purchase, development, construction or improvement
of properties acquired by the Partnership (including working capital
reserves not in excess of 5% of gross offering proceeds). The remaining
capital contributions not invested in properties are available for the
payment of Organizational and Offering Expenses, selling commissions,
acquisition fees and acquisition expenses. Acquisition fees for this
purpose shall be the total of all fees and commissions paid by any party
in connection with the purchase or development of property by the
Partnership, including real estate commissions, acquisition fees,
selection fees, development fees, non-recurring management fees, or any
fees of a similar nature, however designated, but excluding a
development fee paid to a person not affiliated with the General
Partners or their Affiliates in connection with actual development of
property after acquisition by the Partnership. Acquisition expenses for
this purpose include, but are not limited to, legal fees and expenses,
travel and communication expenses, costs of appraisals, loan commitment
and loan fees ("points"), nonrefundable option payments on properties
not acquired, accounting fees and expenses, title insurance, and
miscellaneous expenses related to selection and acquisition of
properties, whether or not acquired. It is anticipated that the
Partnership will not pay any acquisition fees to the General Partners or
their Affiliates and the total of acquisition fees to all parties and
acquisition expenses will not exceed 1% of the Limited Partners' capital
contributions. Based on these assumptions and assuming the sale of
30,000 Interests with Organizational and Offering Expenses and selling
commissions equal to 11.5% of the Limited Partners' capital
contributions, the amount that would be invested in properties would be
equal to 87.5% of such contributions. The amount invested in Partnership
properties will comply with the NASAA Guidelines limitations set forth
above.
(4) An Affiliate of the General Partners may purchase property in its own
name (and assume loans in connection therewith) and temporarily hold
title thereto for the purpose of facilitating the acquisition of such
property or the borrowing of money or obtaining of financing for the
Partnership, or any other purpose related to the business of the
Partnership, provided that such property is purchased by the Partnership
for a price no greater than the cost of such property to the Affiliate,
and provided there is no difference in interest rates of the loans
secured by the property at the time acquired by the Affiliate and the
time acquired by the Partnership, nor any other benefit arising out of
such transaction to the Affiliate apart from compensation otherwise
permitted herein. In such event, such Affiliate may be reimbursed for
its expenses incurred in holding such real property prior to the
acquisition of such property by the Partnership. On March 15, 1984,
Murray Properties Company acquired Mountain View Plaza, a shopping
center in Scottsdale, Arizona for a purchase price of $6,392,916. If
sufficient funds are received by the Partnership pursuant to this
offering, the Partnership will acquire the Property from Murray
Properties Company and Murray Properties Company will be reimbursed as
provided herein. See "The Property."
(5) Any prediction of such dollar amount would necessarily involve
assumptions of future events that cannot be determined at this time.
(6) To the extent a seller of property to the Partnership sets the sales
price at a level sufficient to cover the premium for title insurance,
the Partnership, in effect, will pay the premium in the purchase price
of the property.
(7) The Partnership has entered into nonexclusive contracts with Dallas
Title Company and Texas Title Company, Affiliates of the General
Partners, pursuant to which each has agreed that, upon the request of
the Partnership, it will handle the closing of purchases, sales,
financings or refinancings by the Partnership of properties situated in
Texas and will cause to be issued title
14
<PAGE> 6
insurance policies on such properties. Either of such title insurance
agencies may receive a portion of the commission on premiums paid for title
insurance by the Partnership or by a seller of real property to the
Partnership. In Texas, title insurance premiums and the policy forms are
prescribed by the State. Each contract provides that if such title insurance
agency does not derive, in any calendar year, at least 75% of its gross
income from persons or entities not affiliated with a General Partner, that
agency's contract will terminate upon the earlier of 60 days after the end
of the calendar year or as soon as the Partnership can arrange for another
person or entity to perform such services. Each contract also provides that
it may be terminated by either party, without penalty, on 60 days' prior
written notice and that such title insurance agency shall not render
services or receive title insurance commissions in connection with the
reinvestment of any proceeds from a sale or refinancing of Partnership
properties.
(8) The Partnership has entered into an agreement with Murray Management
Corporation, an Affiliate of the General Partners, pursuant to which Murray
Management Corporation will be responsible for the management of each
property and the collection of its rental income, for which services it will
receive a monthly Property Management Fee. This Property Management Fee is
payable for professional supervisory management services undertaken in
connection with the operation of the Partnership's properties. Such fee
shall include all leasing and re-leasing fees and bonuses, and
leasing-related services, except that a separate fee may be paid for the
one-time initial lease-up of a newly constructed property if such service is
not included in the purchase price of the property, provided that such fee
shall not exceed the lesser of the cost of such services or 90% of the
competitive price that would be charged by non-affiliated persons rendering
similar services in the same or comparable geographic location. Murray
Management Corporation shall pay from the Property Management Fee, and not
as an expense of the Partnership, the expenses of rendering supervisory
property management services; provided, however, that the wages and expenses
of on-site personnel engaged in the management, leasing and maintenance of
the Partnership's properties and supplies, repairs, furniture, equipment
costs and other costs directly attributable to the Partnership's property
operations shall be deemed to be property operating expenses and as such
shall be borne by the Partnership by reimbursement to Murray Management
Corporation. Wages and other actual expenses of personnel may be allocated
between properties of the Partnership and other properties managed by Murray
Management Corporation if such properties are owned by (i) a public or
private program sponsored by the General Partners or their Affiliates or any
joint venture in which a General Partner or an Affiliate is a party or (ii)
an unaffiliated third party. Murray Management Corporation has the right to
subcontract to third parties a portion or all of the management services to
be rendered by it with respect to any particular property, provided that (a)
Murray Management Corporation shall at all times remain responsible for the
management of such property, (b) the Partnership shall not be required to
pay for duplicate services and (c) the aggregate cost to the Partnership
will not exceed the amount which would be customarily charged in arms-length
transactions by others rendering similar services in the locality where the
property is located, considering the size and type of each such property, if
only one entity had provided all such services. The agreement between the
Partnership and Murray Management Corporation may be terminated by either
party, without penalty, on 60 days' prior written notice.
(9) Except as set forth below, reimbursements to a General Partner or an
Affiliate of a General Partner shall not be allowed. A General Partner or an
Affiliate of a General Partner may be reimbursed for: (a) the actual cost of
goods and materials used for or by the Partnership and obtained from an
entity not affiliated with a General Partner or an Affiliate of a General
Partner; and (b) the lesser of the cost or 90% of the competitive price
charged by unaffiliated parties for (i) salaries and related salary expenses
for services that could be performed directly for the Partnership by
independent parties, including parties, including legal, accounting,
transfer agent, data processing, duplicating and administration of investor
accounts and (ii) Partnership reports and communications to investors. All
such transactions shall be pursuant to the terms of a written contract
15
<PAGE> 7
between the Partnership and such General Partner or Affiliate which
precisely describes the services to be rendered or the goods or materials
to be provided. No reimbursement shall be permitted for services for which
the General Partners or Affiliates receive a separate fee or for (i)
salaries, related salary expenses, traveling expenses, and other
administrative items which are incurred by any Controlling Person or which
are not directly attributable to the rendering of services to the
Partnership and (ii) any indirect expenses incurred in performing services
for the Partnership, such as rent or depreciation, utilities, capital
equipment, and other administrative items. "Controlling Person" for this
purpose shall mean any person, regardless of title, who performs executive
or senior management functions for the General Partners or Affiliates
similar to those of officers, directors, executive management and senior
management, or any person who either holds 5% or more equity interest in
the General Partners or Affiliates or has the power to direct or cause the
direction of the General Partners or Affiliates, whether through the
ownership of voting securities, by contract, or otherwise, or, in the
absence of a specific role or title, any person having the power to direct
or cause the direction of the management level employees and policies of
the General Partners or Affiliates. It is not intended that every person
who carries a title such as vice president, senior vice president,
secretary or treasurer be included in the definition of Controlling Person.
In no event shall any amount charged to the Partnership as a reimbursable
expense by the General Partners exceed the lesser of the actual cost of
such services or the amount which the Partnership would be required to pay
to independent parties for comparable services. "Costs" for purposes of
this paragraph shall include the price of goods and materials paid to
independent third parties, and direct costs incurred by the General
Partners or their Affiliates in the transactions, including overhead
directly attributable to the transaction, but excluding general or
administrative overhead. "Costs of Services" for purposes of this paragraph
shall mean the pro rata cost of personnel, including an allocation of
overhead directly attributable to such personnel, based on the amount of
time such personnel spent on such services, or other method of allocation
acceptable to the Partnership's independent certified public accountant.
Reimbursements are also allowable for certain organizational and offering
expenses and for the actual costs of on-site personnel engaged in the
management, leasing and maintenance of the property of the Partnership as
provided in note (8) above.
(10) The Partnership has entered into a nonexclusive contract with Murray
Insurance Agency, Inc., an Affiliate of the General Partners, pursuant to
which, upon the request of the Partnership, such agency will endeavor to
obtain fire, casualty or similar insurance on the properties of the
Partnership. Any commission on any casualty insurance brokered by it will
not exceed the amount customarily received by it from the brokerage of
comparable policies for unaffiliated persons. Before such agency brokers
any fire, casualty or similar insurance on any property of the Partnership,
quotes must have been received from two unaffiliated insurance brokers for
coverage and terms and comparable to that proposed to be provided by such
agency. No insurance will be brokered by the Partnership through such
agency unless the cost of such insurance will be no greater than the lower
quote of the two unaffiliated insurance agencies. The contract with Murray
Insurance Agency, Inc. provides that if such agency does not derive at
least 75% of its gross income from business done with persons or entities
not affiliated with a General Partner, that agency's contract will
terminate upon the earlier of 60 days after the end of the calendar year or
as soon as the Partnership can arrange for another person or entity to
perform such services. The contract also provides that it may be terminated
by either party, without penalty, on 60 days' prior written notice. Murray
General Agency Inc., an Affiliate of the General Partners, will receive
commissions on insurance premiums paid to Murray Insurance Agency, Inc. by
virtue of contractual arrangements between it and Murray Insurance Agency,
Inc.
(11) The General Partners may open and maintain an interest-bearing
Partnership administrative and property operating account at Murray Savings
Association, a stock association organized under the Texas Savings and Loan
Act. Murray Savings Association is a wholly-owned subsidiary of Murray
Financial Corporation, an Affiliate of the General Partners. Murray Savings
Association will pay the Partnership the highest interest rate permitted by
law on such
16
<PAGE> 8
accounts. Such accounts are insured up to a maximum of $100,000 by the
Federal Savings and Loan Insurance Corporation ("FSLIC"). It is not
anticipated that the balance of such accounts will exceed $100,000 on an
ongoing basis except to the extent monthly property operating expenses
have not been charged against collected rental income for any such
month. Murray Savings Association may receive indirect compensation to
the extent that Murray Savings Association's rate of return on the
Partnership funds in such account exceeds the interest rate paid to the
Partnership on such accounts. The Partnership will not be charged any
servicing fees on this account.
(12) It is not contemplated that a General Partner or any Affiliate of a
General Partner will make a loan to the Partnership, but the Partnership
Agreement permits any General Partner or any Affiliate of a General
Partner to make a loan to the Partnership if the interest and other
financing charges or fees on any such loan is not in excess of the
amounts which would be charged by unaffiliated lending institutions on
comparable loans for the same purpose in the same locality but not in
excess of 2% over the prime rate of Mercantile National Bank at Dallas.
Any financing charges or fees on any loan to the Partnership by a
General Partner or an Affiliate of a General Partner will be only those
incurred by such General Partner or Affiliate in connection with the
making of such a loan. Neither a General Partner nor an Affiliate of a
General Partner will make a profit from the Partnership's payment of
financing charges or fees. No property of the Partnership shall secure
any loan made to the Partnership by a General Partner or an Affiliate of
a General Partner if, at the inception of the loan, any payment of
principal or interest is to be made more than two years after the date
of the loan.
(13) For a discussion of Cash Distributions from Operations and Cash
Distributions from Sales or Refinancing, see "Income and Losses and Cash
Distributions."
(14) Crozier Partners VIII, Ltd. was formed as of January 10, 1984 under The
Texas Uniform Limited Partnership Act with Jack E. Crozier as the
general partner and Fulton Murray, individually, Fulton Murray in his
capacity as Trustee of the Beverly Murray Wilson Trust and Fulton Murray
and RepublicBank Dallas, N.A. in their capacities as Trustees of a trust
created under the Will of Owen M. Murray, Deceased, as the limited
partners.
(15) All real estate commissions payable to the General Partners or their
Affiliates for real estate brokerage services in connection with sales
of properties of the Partnership shall be cumulative but shall be paid
only after the Limited Partners have been returned their Original
Invested Capital from Cash Distributions from Sales or Refinancings,
plus their Preferred Return. If an unaffiliated broker participates in
the sale of a Partnership property, the subordination requirement will
apply only to the commission, if any, earned by the General Partners or
their Affiliates. The total of all real estate commissions payable to
all parties in connection with the sale of a Partnership property shall
not exceed a competitive real estate commission which is reasonable,
customary and competitive in light of the size, type and location of the
property or 6% of the sales price of the property. Real estate
commissions payable to the General Partners or their Affiliates will be
allocated two-thirds to the Non-corporate General Partner or its
Affiliates and one-third to the Corporate General Partner or its
Affiliates.
(16) Cash Distributions from Sales or Refinancings payable to the General
Partners (other than the 1% of Cash Distributions from Sales or
Refinancings payable to the Non-corporate General Partner) will be
divided two-thirds to the Non-corporate General Partner and one-third to
the Corporate General Partner.
17
