<PAGE> 1
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, 1998
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 of this Form 10-K or any amendment to this
Form 10-K. [ ]
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
PART I
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
Interests and Related Security Holder Matters 4
Item 6. Selected Financial Data 4
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Item 7A. Quantitative and Qualitative Disclosure About Market Risk 9
Item 8. Financial Statements and Supplementary Data 10
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 20
PART III
Item 10. Directors and Executive Officers of the Partnership 21
Item 11. Executive Compensation 22
Item 12. Security Ownership of Certain Beneficial Owners
and Management 23
Item 13. Certain Relationships and Related Transactions 23
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 24
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, 1998, Mountain View
was 98% 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, 1997, 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, 1998
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<S> <C> <C>
1 81,500 100%
2 31,400 100%
3 94,100 99%
</TABLE>
Castle Oaks Village Shopping Center. At December 31, 1998, Castle Oaks was
95% 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, 1997,
Castle Oaks was 92% 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.
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<TABLE>
<CAPTION>
Rentable Percent Leased at
Property Square Feet December 31, 1998
-------- ----------- -----------------
<S> <C> <C>
1 100,000 85%
2 40,800 97%
3 42,900 90%
</TABLE>
Tower Place Festival Shopping Center. At December 31, 1998, Tower Place was
98% 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 Cafeterias lease expires on April 30, 2004, and the
tenant has the option to renew for two periods of five years each. At December
31, 1997, 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, 1998
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<S> <C> <C>
1 65,000 100%
2 132,648 95%
3 248,700 99%
</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, 1998,
Mountain View was 98% leased at an average
annual lease rate of $12.88. 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,
1998, Castle Oaks was 95% leased at an
average annual lease rate of $11.02. Lease
rates range from $8.40 to $12.50 per square
foot.
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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, 1998, Tower Place was 98% leased at an
average annual lease rate of $13.89. 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.
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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 Interest 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, 1998, there were 2,316 record holders, owning an aggregate
of 28,227 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
Limited Partnership Interest during the period from January 1, 1994 to December
31, 1998. 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 No. 9 to the Agreement of Limited
Partnership contained in the Proxy Statement dated October 11, 1989 attached
hereto as Exhibit 99c. As of December 31, 1998, no funds were available for this
purpose.
ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>
For Years Ended December 31,
---------------------------------------------------------------------------------
1998 1997 1996 1995 1994
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Income $ 3,271,883 $ 3,298,152 $ 3,052,985 $ 2,846,710 $ 2,804,229
Earnings Before
Minority Interest 1,256,104 1,275,571 1,037,019 918,032 926,811
Minority Interest
In Joint Venture's
Earnings 140,298 135,394 132,060 115,220 109,520
Net Earnings 1,115,806 1,140,177 904,959 802,812 817,291
Basic earnings per
Limited Partnership
Interest* 38.74 39.59 31.42 27.87 28.38
Distributions per
Limited Partnership
Interest* 60.00 58.13 50.00 50.00 50.00
Total Assets at
Year End $ 18,661,233 $ 19,350,195 $ 19,993,931 $ 20,598,892 $ 21,234,326
</TABLE>
* 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.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Liquidity and Capital Resources
As of December 31, 1998, the Partnership had cash and cash equivalents of
$1,808,765. Such amounts represent cash generated from operations and working
capital reserves.
An increase in investment properties, buildings and improvements of $70,216
from December 31, 1997 to December 31, 1998 is primarily due to the replacement
of a roof on one of the buildings at Mountain View and tenant improvements at
Tower Place and Castle Oaks.
Rental income from leases with escalating rental rates is accrued using the
straight line method over the related lease terms. At December 31, 1998 and
December 31, 1997, there were $457,406 and $492,448, 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, 1997 to December 31, 1998
in accounts receivable (before bad debts) of $66,421 is primarily due to a
decrease in receivables for rent collected (but not yet remitted to the
Partnership by the property management companies) and receivables related to the
accruals described above at each of the Partnership's properties. As of December
31, 1998 and December 31, 1997, the Partnership had allowances of $8,676 and
$5,655, respectively, for uncollectible accounts receivable.
During the year ended December 31, 1998, the Partnership made Cash
Distributions from Operations totaling $1,728,185. Subsequent to December 31,
1998, the Partnership made a Cash Distribution from Operations of $432,046
relating to the three months ended December 31, 1998. 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.
Overall market conditions remained stable in the cities in which the
Partnership owns property. Real estate markets typically parallel employment,
job growth, and housing starts, and a strong national economy has spurred the
construction of new retail development in these markets. However, most of the
new space is being absorbed and, thus far, supply and demand have remained in
relative equilibrium. The second half of the year saw financing for new real
estate projects slow considerably, which may ultimately help the markets by
preventing overbuilding. It is too early to tell how this might impact the
markets in 1999. Despite the strength of the markets, two of the Partnership's
three properties experienced the loss of anchor tenants over the last 16 months.
At Tower Place, General Cinema closed its eight-screen movie theater in August,
1998, and in late 1997, Wild Oats Markets closed its grocery store at Mountain
View. Both of these tenants have continued to pay rent according to the terms of
their leases. To date, neither of these centers has seen its occupancy or
overall performance severely impacted by the loss of these anchors. However, an
unoccupied anchor space could result in less foot traffic in the shopping
center, thereby impacting the
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sales of the smaller tenants and, consequently, their ability to pay rent. It
could also impact the ability to attract new retailers when space does become
available for lease. Management is working diligently to lease this space so
that the properties' long-term performance is not adversely affected. Castle
Oaks' performance continued to improve, with average occupancy and rental income
both increasing in 1998 over 1997. This is particularly evident when comparing
the property's 1998 performance with its performance in 1996. Over this two year
period, average occupancy increased from 75% to 92%, and rental income increased
29%.
Results of Operations
Rental income decreased $28,945 (1%) for the year ended December 31, 1998
as compared to the year ended December 31, 1997. Rental income increased
$232,755 (8%) for the year ended December 31, 1997 as compared to the year ended
December 31, 1996. The following information details the rental income
generated, bad debt expense incurred, and average occupancy for the years ended
December 31, 1998, December 31, 1997 and December 31, 1996, respectively, for
each of the Partnership's properties:
<TABLE>
<CAPTION>
For the years ended
December 31,
----------------------------------------------
1998 1997 1996
------------ ------------- -----------
<S> <C> <C> <C>
Mountain View Plaza Shopping Center
Rental income $ 963,180 $ 1,023,190 $ 907,881
Bad debt expense (recovery) 6,191 -0- (45)
Average occupancy 98% 100% 95%
Castle Oaks Village Shopping Center
Rental income $ 430,721 $ 414,070 $ 333,257
Bad debt expense (recovery) (1,938) (4,625) 9,788
Average occupancy 92% 90% 75%
Tower Place Festival Shopping Center
Rental income $ 1,787,124 $ 1,772,710 $ 1,736,077
Bad debt expense (recovery) 448 2,997 (4,305)
Average occupancy 96% 98% 97%
</TABLE>
Rental income at Mountain View decreased $60,010 (6%) for the year ended
December 31, 1998 as compared to the year ended December 31, 1997 due to lower
tenant reimbursements for common area maintenance and real estate taxes. 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.
Mountain View averaged 98% occupancy during 1998, a two percent decrease
from the previous year. During the year, a tenant who occupied 880 square feet
vacated its space prior to the expiration of its lease. This space was
subsequently leased to an existing tenant as part of an expansion of its space.
Another tenant who occupied 1,278 square feet vacated its space prior to lease
expiration and this space has remained vacant. Two tenants totaling 3,438 square
feet renewed their leases for five years. One tenant who occupies 1,059 square
feet renewed its lease for three years, another tenant occupying 1,033 square
feet renewed its lease for two years, and a third tenant occupying 1,127 square
feet renewed its lease for one year. A new tenant signed a lease in December for
1,127 square feet which had been occupied by a tenant who had become delinquent
in its rental payments. Management is attempting to collect what this tenant
owed upon moving out of the space. The space previously occupied by Wild Oats
Markets, which contains 19,359 square feet, remained vacant throughout the year.
Wild Oats continues to pay rent according to the terms of its
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lease. During the first quarter, a new roof was installed on a portion of the
shopping center. This completes the re-roofing of the shopping center which was
accomplished in stages over the past several years. As of December 31, 1998,
Mountain View was 98% leased.
Rental income at Castle Oaks increased $16,651 (4%) for the year ended
December 31, 1998 as compared to the year ended December 31, 1997 primarily due
to an increase in occupancy, an increase in rental rates, and higher tenant
reimbursements for common area maintenance costs and real estate taxes. 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.
Castle Oaks averaged 92% occupancy during the year, a two percent increase
over the previous year. One new tenant who signed a lease in December 1997 took
occupancy in January 1998. One tenant who occupied 2,100 square feet renewed its
lease for five years. A tenant who occupies 1,800 square feet renewed its lease
for three years, and a tenant who occupies 1,500 square feet renewed its lease
for 39 months. A tenant who occupied 1,245 square feet signed a lease to take an
additional 932 square feet. This tenant expanded into this space subsequent to
the end of the year. Another tenant who occupied 1,506 square feet moved to
another space in the shopping center which contains 1,827 square feet and signed
a new four year lease. As of December 31, 1998, Castle Oaks was 95% leased.
Rental income at Tower Place increased $14,414 (1%) for the year ended
December 31, 1998 as compared to the year ended December 31, 1997, with
increases in rental rates offset by decreases in tenant reimbursements for
common area maintenance costs, reimbursements for common advertising costs and a
decrease in percentage rent received. 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.
Tower Place averaged 96% occupancy for the year ended December 31, 1998, a
two percent decrease from the previous year. A new lease for 1,604 square feet
was executed in January and the tenant took occupancy in February. One tenant
who occupied 1,050 square feet vacated its space prior to the expiration of its
lease. This space was subsequently leased to an existing tenant who now leases a
total of 3,750 square feet. Two other tenants who occupied a total of 3,570
square feet vacated their spaces prior to lease expiration. Both of these spaces
have been leased to new tenants who will take occupancy during the first quarter
of 1999. Two tenants who occupied a total of 2,650 square feet vacated their
spaces upon the expiration of their leases. One of these spaces, containing
1,050 square feet, was leased to a new tenant who took occupancy in September.
One tenant who occupies 3,500 square feet renewed its lease for five years and
two tenants who occupy a total of 5,322 square feet renewed their leases for
three years. A tenant who occupies 1,400 square feet renewed its lease for two
years and a tenant who occupies 1,120 square feet renewed its lease for one
year. General Cinema, whose eight-screen theater occupies 31,837 square feet,
ceased operations in August. They have continued to pay rent according to the
terms of their lease, which expires September 30, 2006. Management is
aggressively seeking a replacement tenant for this space. As of December 31,
1998, Tower Place was 98% leased.
Interest income of the Partnership increased $2,676 (3%) for the year ended
December 31, 1998 as compared to the year ended December 31, 1997 primarily due
to larger balances of invested funds. 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.
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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 increased $32,190 (4%) for the year ended December
31, 1998 as compared to the previous year primarily because of higher repair and
maintenance costs at each of the Partnership's properties and higher real estate
taxes at Mountain View and Castle Oaks. Mountain View's total operating expenses
increased with increases in parking lot repairs, legal fees, leasing and
promotion costs and real estate taxes being offset by decreases in security
costs and property management fees. Castle Oaks' total operating expenses
increased primarily because of higher repair and maintenance costs and real
estate taxes. Tower Place's total operating expenses decreased with higher
repair and maintenance costs offset by lower leasing and promotion costs. During
1998, the tenants at Tower Place stopped paying into a marketing fund for common
advertising costs. This resulted in lower income from reimbursements for
advertising costs and a corresponding decrease in advertising expenses.
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.
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 decreased $34,483 (10%)
for the year ended December 31, 1998 as compared to the year ended December 31,
1997 primarily due to decreases in accounting and legal costs, investor services
costs and telephone expenses, offset by increases in salaries and benefits.
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.
Bad debt expenses increased $6,329 for the year ended December 31, 1998 as
compared to the same period in 1997 with bad debts at Mountain View being offset
by recoveries at Castle Oaks. 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. 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 build-up in outstanding rent receivables.
The effect of inflation on results of operations for the years ended
December 31, 1998, 1997, and 1996 was not significant.
The Partnership recognizes that the arrival of the Year 2000 poses a unique
challenge to the ability of an entity's information technology system and
non-information technology systems to recognize the date change from December
31, 1999 to January 1, 2000. The Partnership is continuing to assess and has
made certain changes to provide for continued functionality of its
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systems. An assessment of the readiness of the Partnership's external entities,
such as vendors, customers, payment systems and others is still ongoing. Due to
the nature and extent of the Partnership's operations that are affected by Year
2000 issues, the Partnership does not believe that Year 2000 issues will have a
material adverse effect on the business operation or the financial performance
of the Partnership. There can be no assurance, however, that Year 2000 issues
will not adversely affect the Partnership or its business. The Partnership
believes that the cost to make appropriate changes of its internal and external
systems will not be significant and that such costs will be funded completely
through operations.
Words or phrases when used in the Form 10-K or other filings with the
Securities and Exchange Commission, such as "does not believe" and "believes" or
similar expressions, are intended to identify "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.
The Partnership's financial instruments consist of cash and cash
equivalents, accounts receivable, accounts payable, accrued property taxes
payable, and security deposits. The carrying amount of these instruments
approximate fair value due to the short-term nature of these instruments.
Therefore, the Partnership believes it is relatively unaffected by interest rate
changes or other market risks.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following financial statements are filed as part of this report:
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
Independent Auditors' Report 11
Consolidated Balance Sheets - December 31, 1998 and 1997 12
Consolidated Statements of Earnings - Years ended
December 31, 1998, 1997, and 1996 13
Consolidated Statements of Changes in Partners' Equity -
Years ended December 31, 1998, 1997, and 1996 14
Consolidated Statements of Cash Flows - Years ended
December 31, 1998, 1997, and 1996 15
Notes to Consolidated Financial Statements 16-19
</TABLE>
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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, 1998 and 1997, 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, 1998. 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, 1998 and
1997, and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1998, in conformity with
generally accepted accounting principles.
KPMG LLP
Dallas, Texas
February 26, 1999
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MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
-------------- --------------
<S> <C> <C>
ASSETS
Investment properties, at cost (note 3):
Land $ 6,232,801 $ 6,232,801
Buildings and improvements 20,389,399 20,319,183
-------------- --------------
26,622,200 26,551,984
Less accumulated depreciation 10,618,469 9,779,632
-------------- --------------
Net investment properties 16,003,731 16,772,352
Cash and cash equivalents 1,808,765 1,620,246
Accounts receivable, net of allowances of
$8,676 and $5,655 in 1998 and 1997,
respectively (note 1) 641,807 712,929
Other assets, at cost, net of accumulated
amortization of $587,283 and $512,307 in
1998 and 1997, respectively 206,930 244,668
-------------- --------------
$ 18,661,233 $ 19,350,195
============== ==============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 13,167 $ 13,498
Accrued property taxes 203,814 195,500
Security deposits 168,745 183,609
-------------- --------------
Total liabilities 385,726 392,607
-------------- --------------
Minority interest in joint venture (note 3) 1,321,510 1,391,212
-------------- --------------
Partners' equity:
General Partners:
Capital contributions 1,000 1,000
Cumulative net earnings 239,922 217,606
Cumulative cash distributions (401,398) (366,834)
-------------- --------------
(160,476) (148,228)
-------------- --------------
Limited Partners (28,227 Interests):
Capital contributions, net of offering costs 24,570,092 24,570,092
Cumulative net earnings 12,212,939 11,119,449
Cumulative cash distributions (19,668,558) (17,974,937)
-------------- --------------
17,114,473 17,714,604
-------------- --------------
Total partners' equity 16,953,997 17,566,376
-------------- --------------
$ 18,661,233 $ 19,350,195
============== ==============
</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 EARNINGS
<TABLE>
<CAPTION>
Years Ended
December 31,
---------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
INCOME:
Rental (note 3) $ 3,181,025 $ 3,209,970 $ 2,977,215
Interest 90,858 88,182 75,770
------------ ------------ ------------
3,271,883 3,298,152 3,052,985
------------ ------------ ------------
EXPENSES:
Depreciation 838,837 849,675 850,676
Property operating 869,521 837,331 844,730
General and administrative 302,720 337,203 315,122
Bad debts (recoveries), net 4,701 (1,628) 5,438
------------ ------------ ------------
2,015,779 2,022,581 2,015,966
------------ ------------ ------------
Earnings before minority interest 1,256,104 1,275,571 1,037,019
Minority interest in joint venture's
earnings (note 3) 140,298 135,394 132,060
------------ ------------ ------------
Net earnings $ 1,115,806 $ 1,140,177 $ 904,959
============ ============ ============
Basic earnings per limited partnership
interest $ 38.74 $ 39.59 $ 31.42
============ ============ ============
</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 CHANGES IN PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996:
Balance at December 31, 1995 $ (126,844) $ 18,762,421 $ 18,635,577
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
------------ ------------ ------------
YEAR ENDED DECEMBER 31, 1998:
Net earnings 22,316 1,093,490 1,115,806
Cash distributions ($60.00 per limited
partnership interest) (34,564) (1,693,621) (1,728,185)
------------ ------------ ------------
Balance at December 31, 1998 $ (160,476) $ 17,114,473 $ 16,953,997
------------ ------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
14
<PAGE> 17
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended
December 31,
----------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,115,806 $ 1,140,177 $ 904,959
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Bad debts (recoveries), net 4,701 (1,628) 5,438
Depreciation 838,837 849,675 850,676
Amortization of other assets 74,976 74,507 67,548
Minority interest in joint venture's earnings 140,298 135,394 132,060
Change in assets and liabilities:
Accounts and notes receivable 66,421 15,968 (43,476)
Other assets (37,238) (41,452) (82,739)
Accounts payable (331) (11,803) (1,314)
Accrued property taxes and security deposits (6,550) (20,621) (1,762)
------------ ------------ ------------
Net cash provided by operating activities 2,196,920 2,140,217 1,831,390
------------ ------------ ------------
Cash flows from investing activities -
Additions to investment properties (70,216) (50,624) (100,147)
------------ ------------ ------------
Cash flows from financing activities:
Distributions to minority interest in joint venture (210,000) (212,700) (198,750)
Cash distributions (1,728,185) (1,674,183) (1,440,154)
------------ ------------ ------------
Net cash used in financing activities (1,938,185) (1,886,883) (1,638,904)
------------ ------------ ------------
Net increase in cash and cash equivalents 188,519 202,710 92,339
Cash and cash equivalents at beginning of year 1,620,246 1,417,536 1,325,197
------------ ------------ ------------
Cash and cash equivalents at end of year $ 1,808,765 $ 1,620,246 $ 1,417,536
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
15
<PAGE> 18
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED DECEMBER 31, 1998
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, 1998 and 1997,
there were $457,406 and $492,448, 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.
Continued
16
<PAGE> 19
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Basic 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.
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, 1998 and 1997. For cash
and cash equivalents, accounts 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
Continued
17
<PAGE> 20
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
During 1998, the Partnership adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and related
information", which established standards for the way that public business
enterprises report information about operating segments in audited financial
statements, as well as related disclosures about products and services,
geographic areas, and major customers. The Partnership defines each of its
shopping centers as operating segments; however, management has determined that
all of its properties have similar economic characteristics and also meet the
other criteria which permit the properties to be aggregated into one reportable
segment. Management of the Partnership makes decisions about resource allocation
and performance assessment based on the same financial information presented
throughout these consolidated financial statements.
The Partnership had no outstanding receivable balances at December 31, 1998
or 1997, which, individually, exceeded 5% of the Partnership's total assets.
Rental income from a major customer was approximately $448,000 for the
three years ended 1998, 1997, and 1996, respectively.
Operating leases with tenants range in terms from two to 20 years. Fixed
minimum future rentals under existing leases at December 31, 1998 are as
follows:
Year ending December 31:
<TABLE>
<S> <C> <C>
1999 $ 2,398,846
2000 1,990,756
2001 1,621,743
2002 1,377,830
2003 1,102,100
Thereafter 1,779,249
-------------
$ 10,270,524
=============
</TABLE>
Rental income includes $582,566, $653,652, and $588,924 in 1998, 1997, and
1996, respectively, related to reimbursements from tenants for common area
maintenance costs, real estate taxes and insurance costs.
Continued
18
<PAGE> 21
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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,
---------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Net earnings - financial statement basis $ 1,115,806 $ 1,140,177 $ 904,959
------------ ------------ ------------
Financial statement basis depreciation/amortization
over tax basis depreciation/amortization 31,056 32,530 17,687
Financial statement basis rental income
under (over) tax basis rental income 13,062 (13,895) (17,927)
Financial statement basis joint venture earnings
under (over) tax basis joint venture earnings 23,381 28,191 (2,145)
------------ ------------ ------------
Sub-total 67,499 46,826 (2,385)
------------ ------------ ------------
Net earnings - Federal income tax basis $ 1,183,305 $ 1,187,003 $ 902,574
============ ============ ============
</TABLE>
Reconciliation of consolidated financial statement partners' equity to
Federal income tax basis partners' equity is as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Total partners' equity - financial statement basis $ 16,953,997 $ 17,566,376 $ 18,100,382
Current year financial statement net earnings
under (over) tax basis net earnings 67,499 46,826 (2,385)
Cumulative prior years financial statement net
earnings over tax basis net earnings (1,148,769) (1,195,595) (1,193,210)
------------ ------------ ------------
Total partners' equity - Federal income tax basis $ 15,872,727 $ 16,417,607 $ 16,904,787
============ ============ ============
</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.
19
<PAGE> 22
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
20
<PAGE> 23
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, 70, 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 1989 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. 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, 48, 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 and 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, 43, 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
21
<PAGE> 24
properties in the Partnership, 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 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.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------
All Other
Name and Principal Position Year Salary Compensation(1)
- --------------------------- ---- ------ ------------
<S> <C> <C> <C>
Mitchell L. Armstrong, 1998 $59,079 $2,525
President* 1997 58,092 2,495
1996 56,236 443
W. Brent Buck, 1998 43,995 1,536
Executive Vice President* 1997 43,260 1,503
1996 41,877 196
</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) Matching contributions by the Partnership under its SIMPLE-IRA plan
which equaled 3% of each employee's covered compensation (salary and
term insurance value). During 1998 the Partnership's matching
contributions were $1,795 for Mr. Armstrong and $1,329 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
22
<PAGE> 25
spousal or similar coverage and coverage for children) 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, 1998.
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, 1998.
No General Partner, officer, director or partner of the General Partners
beneficially owned or owned of record directly or indirectly any interest as of
December 31, 1998.
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, 1998 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.
23
<PAGE> 26
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, 1998, 1997, and 1996.
(ii) Consolidated Real Estate and Accumulated Depreciation
(Schedule III) - December 31, 1998
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)
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
24
<PAGE> 27
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
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, 1998. Filed herewith.
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 10,
1998 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 9, 1998 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)
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
25
<PAGE> 28
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. Reference is made to Exhibit 10k to the
1997 Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 26, 1998. (File No. 0-14105)
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 with 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 the
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 10b to the
1996 3rd Quarter Report on Form 10-Q filed with the 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 No. 9 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.
(d) Financial Statement Schedules with Independent Auditors' Report
Thereon:
(i) Consolidated Valuation and Qualifying Accounts (Schedule II) -
Years ended December 31, 1998, 1997, and 1996.
(ii) Consolidated Real Estate and Accumulated Depreciation (Schedule
III) - December 31, 1998.
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 26, 1999, we reported on the consolidated balance sheets
of Murray Income Properties I, Ltd. (a limited partnership) and consolidated
joint venture as of December 31, 1998 and 1997, 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, 1998, 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 LLP
Dallas, Texas
February 26, 1999
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, 1998, 1997, AND 1996
<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, 1996 $ 21,758 5,438 19,913 7,283
======== ======== ======== ========
Year ended December 31, 1997 $ 7,283 (1,628) -0- 5,655
======== ======== ======== ========
Year ended December 31, 1998 $ 5,655 4,701 1,680 8,676
======== ======== ======== ========
</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.
(a limited partnership)
AND CONSOLIDATED JOINT VENTURE
Consolidated Real Estate and Accumulated Depreciation
December 31, 1998
<TABLE>
<CAPTION>
Costs Capitalized Gross Amount
Initial Cost Subsequent at which carried at
to Partnership (A) to Acquisition Close of Period (D)
---------------------------- -------------- -----------------------------------------
Buildings and Buildings and
Description Encumbrances Land Improvements Improvements Land Improvements Total
----------- ------------ ---- ------------ ------------ ---- ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Shopping Center
San Antonio, Texas $ 0 $ 1,240,051 $ 3,017,075 $ 554,770 $ 1,240,051 $ 3,571,845 $ 4,811,896
Shopping Center
Scottsdale, Arizona $ 0 $ 2,805,238 $ 4,316,052 $ 792,464 $ 2,805,238 $ 5,108,516 $ 7,913,754
Shopping Center
Pineville
(Charlotte),
North Carolina $ 0 $ 2,187,512 $ 10,280,876 $ 1,428,162 $ 2,187,512 $ 11,709,038 $ 13,896,550
------------ ------------- ------------- ------------ ----------- ------------ -------------
$ 0 $ 6,232,801 $ 17,614,003 $ 2,775,396 $ 6,232,801 $ 20,389,399 $ 26,622,200
============ ============= ============= ============ =========== ============ =============
</TABLE>
<TABLE>
<CAPTION>
Life on which
Depreciation in
Fiscal Latest Statement
Accumulated Year of Year of Earnings
Description Depreciation Construction Acquired is Computed
----------- ------------ ------------ -------- -----------
<S> <C> <C> <C> <C>
Shopping Center
San Antonio, Texas $ 2,011,982 1985 1986 3-25 YEARS
Shopping Center
Scottsdale, Arizona $ 2,736,609 1983 1985 3-25 YEARS
Shopping Center
Pineville
(Charlotte),
North Carolina $ 5,869,878 1982 1986 3-25 YEARS
-------------
$ 10,618,469
=============
</TABLE>
Notes:
(A) The initial cost to the Partnership represents the original purchase price
of the properties.
(B) Reconciliation of real estate owned for 1998, 1997 and 1996:
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period $ 26,551,984 $ 26,501,360 $ 26,401,213
Additions during period $ 70,216 $ 50,624 $ 100,147
Retirements during period $ 0 $ 0 $ 0
------------ ------------ ------------
Balance at close of period $ 26,622,200 $ 26,551,984 $ 26,501,360
============ ============ ============
</TABLE>
(C) Reconciliation of accumulated depreciation for 1998, 1997 and 1996:
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period $ 9,779,632 $ 8,929,957 $ 8,079,281
Depreciation expense $ 838,837 $ 849,675 $ 850,676
Retirements during period $ 0 $ 0 $ 0
------------ ------------ ------------
Balance at close of period $ 10,618,469 $ 9,779,632 $ 8,929,957
============ ============ ============
</TABLE>
(D) The aggregate cost of real estate at December 31, 1998 for Federal income
tax purposes is $26,763,703
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.
<TABLE>
<CAPTION>
<S> <C>
MURRAY INCOME PROPERTIES I, LTD.
By: Crozier Partners VIII, Ltd.
a General Partner
Dated: March 26, 1999 By: /s/ Jack E. Crozier
-----------------------------------
Jack E. Crozier
a General Partner
By: Murray Realty Investors VIII, Inc.
a General Partner
Dated: March 26, 1999 By: /s/ Mitchell Armstrong
-----------------------------------
Mitchell Armstrong
President
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C>
Murray Realty Investors VIII, Inc.
a General Partner
Dated: March 26, 1999 By: /s/ Brent Buck
-----------------------------------
Brent Buck
Executive Vice President
Director
Dated: March 26, 1999 By: /s/ Mitchell Armstrong
-----------------------------------
Mitchell Armstrong
Chief Executive Officer
Chief Financial Officer
Director
</TABLE>
30
<PAGE> 33
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
3a Agreement of Limited Partnership of Murray Income Properties,
Ltd. - 84. Reference is made to Exhibit A of the Prospectus
dated Ma 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)
5 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)
</TABLE>
31
<PAGE> 34
<TABLE>
<S> <C>
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, 1998. Filed herewith.
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 10, 1998 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 9, 1998 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)
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. Reference is made to Exhibit
10k to the 1997 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 26, 1998. (File
No. 0-14105)
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 with 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)
</TABLE>
32
<PAGE> 35
<TABLE>
<S> <C>
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 the 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 10b to
the 1996 3rd Quarter Report on Form 10-Q filed with the
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 No. 9 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.
</TABLE>
33
<PAGE> 1
EXHIBIT 10d
SECOND AMENDMENT TO MURRAY INCOME PROPERTY LP SERVICES, INC./
MAVRICC MANAGEMENT SYSTEMS, INC.
DATA PROCESSING SYSTEM USE AGREEMENT
This Second Amendment is made and entered into this 1st day of September, 1998,
by MURRAY INCOME PROPERTIES I, LTD. AND MURRAY INCOME PROPERTIES II, LTD.
("MURRAY") and MAVRICC MANAGEMENT SYSTEMS, INC. ("MMS").
The parties hereto desire to amend the Data Processing System Use Agreement (the
"Agreement") entered into by them with an effective date of September 1, 1993.
In consideration of the mutual covenants and consideration furnished to each
other hereunder, the sufficiency of which is acknowledged, the parties agree as
follows:
1. TERM. The Agreement shall remain in effect through August 31, 2001.
2. PRICING. Exhibit A to the Agreement is amended as follows:
Commencing on September 1, 1998, the monthly charge for
services rendered to active Funds shall be equal to $.96 per
account. Postage up to $.33 per piece for four quarterly
distribution mailings and postage up to $.55 per piece for
the K-1 mailing are included in the monthly charge.
The annual charge for Funds that cease to operate as going
concerns shall be equal to $1.00 per account so long as
MURRAY desires to have the accounts available on-line; such
Funds charges shall be invoiced semi-annually rather than
monthly as for active Funds.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
WITNESSED: MAVRICC MANAGEMENT SYSTEMS, INC.
Laura Allan By: /s/ Kyle C. Kerbawy
--------------------------------------------------
Kyle C. Kerbawy, Chief Executive Officer
MURRAY INCOME PROPERTIES I, LTD.
By Murray Realty Investors VIII, Inc, General Partner
Linda S. Flynn By: /s/ Mitchell Armstrong
--------------------------------------------------
Mitchell Armstrong, President
MURRAY INCOME PROPERTIES II, LTD.
By Murray Realty Investors IX, Inc., General Partner
Linda S. Flynn By: /s/ Mitchell Armstrong
--------------------------------------------------
Mitchell Armstrong, President
<PAGE> 1
EXHIBIT 10e
EXTENSION OF PROPERTY MANAGEMENT AGREEMENT
This Extension of Property Management Agreement hereinafter referred to
as "Agreement" entered into this 10th day of December, 1998 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, 1998. 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, 1999.
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
By: /s/ Brent Buck
- ---------------------------- ---------------------------------------
Brent Buck, Executive Vice President
WITNESS: ZELL Commercial Real Estate Services, Inc.,
an Arizona corporation (Agent)
/s/ Debra S. Bruscheke By: /s/ Alan L. Zell
- ---------------------------- ---------------------------------------
Debra S. Bruscheke Alan L. Zell, President
<PAGE> 2
EXTENSION OF EXCLUSIVE MARKETING AGREEMENT
This Extension of Exclusive Marketing Agreement hereinafter referred to
as "Agreement" entered into this 10th day of December, 1998 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, 1998. 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, 1999.
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
By: /s/ Brent Buck
- ---------------------------- ---------------------------------------
Brent Buck, Executive Vice President
WITNESS: ZELL Commercial Real Estate Services, Inc.,
an Arizona corporation (Agent)
/s/ Debra S. Bruscheke By: /s/ Alan L. Zell
- ---------------------------- ---------------------------------------
Debra S. Bruscheke Alan L. Zell, President
<PAGE> 1
EXHIBIT 10f
November 19, 1998
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 each year
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, 1999. 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>
<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 Haggart By: /s/ Brent Buck
---------------------------------------- --------------------------------------------------
David Haggart, Vice President Brent Buck, Executive Vice President
Attest/Witness: Witness:
/s/ Wendy Roy /s/ Jan Pugh
---------------------------------------- --------------------------------------------------
Title: Secretary Name: Jan Pugh
</TABLE>
(Corporate Seal)
<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, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,808,765
<SECURITIES> 0
<RECEIVABLES> 650,483
<ALLOWANCES> 8,676
<INVENTORY> 0
<CURRENT-ASSETS> 2,450,572
<PP&E> 26,622,200
<DEPRECIATION> 10,618,469
<TOTAL-ASSETS> 18,661,233
<CURRENT-LIABILITIES> 216,981
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 16,953,997
<TOTAL-LIABILITY-AND-EQUITY> 18,661,233
<SALES> 0
<TOTAL-REVENUES> 3,271,883
<CGS> 0
<TOTAL-COSTS> 1,708,358
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,701
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,115,806
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,115,806
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,115,806
<EPS-PRIMARY> 38.74
<EPS-DILUTED> 38.74
</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
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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
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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
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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.
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