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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Fiscal Year Ended December 31, 1999 Commission File
----------------- Number: 0-13493
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TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer As Specified in Its Charter)
Massachusetts 04-2833662
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(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification Number)
5 Cambridge Center, Cambridge, Massachusetts 02142
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: 617-234-3000
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Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
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(Title of Class)
Indicate by check mark whether 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 registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. YES X NO__
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
Registrant had no revenue for its most recent fiscal year.
No market for the Limited Partnership Units exists and therefore, a market value
for such Units cannot be determined.
Documents Incorporated by Reference
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None
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PART I
Item 1. Description of Business
General
Twelve AMH Associates Limited Partnership (the "Partnership") was
organized under the Massachusetts Uniform Limited Partnership Act on April 24,
1984. The general partners of the Partnership (the "General Partners") are Two
Winthrop Properties, Inc. ("Two Winthrop") and Linnaeus-Lexington Associates
Limited Partnership ("Linnaeus-Lexington"). Two Winthrop is a Massachusetts
corporation which is a wholly-owned subsidiary of First Winthrop Corporation
("First Winthrop"), a Delaware corporation, which in turn is controlled by
Winthrop Financial Associates, A Limited Partnership ("WFA"). Linnaeus-Lexington
is a Massachusetts limited partnership. The general partner of
Linnaeus-Lexington is WFA. Two Winthrop is the managing general partner of the
Partnership.
The Partnership was capitalized by contributions from partners. In
August 1984, upon completion of its offering, the Partnership sold 600 Units of
Limited Partnership Interest at an aggregate purchase price of $57,750,000
pursuant to Regulation D promulgated under the Securities Act of 1933. The
Partnership used the net proceeds from the offering, together with a line of
credit obtained from a major commercial bank for an interim loan which has been
repaid in full, and a purchase money note from the seller, the Aetna Casualty
and Surety Company ("Aetna"), to acquire its 66.667% general partner interest in
Square 254 Limited Partnership ("Square 254") and to acquire, in 1988, a 66.67%
general partner interest in National Place Land Limited Partnership ("National
Land"). Square 254 and National Land are hereinafter collectively referred to as
the "Operating Partnerships." In addition, during the first quarter of 1998, the
Partnership, together with its partners in the Operating Partnerships, formed
The Shops LLC (see "The Retail Space" below) in which the Partnership holds a
66.67% member interest.
Square 254 is a District of Columbia limited partnership organized in
1979. The general partners of Square 254 are the Partnership, an affiliate of
Quadrangle Development Corporation ("Quadrangle") and an affiliate of Host
Marriott Corporation ("Marriott"). Quadrangle is the managing general partner of
Square 254. The limited partners are Marriott and NP Limited Partnership, an
affiliate of Quadrangle. Quadrangle is the general partner of NP Limited
Partnership and owns approximately 77% of the partnership interests in NP
Limited Partnership. Quadrangle and Marriott are not affiliated with the
Partnership, WFA or any of its affiliates.
National Land is a District of Columbia limited partnership organized
on August 8, 1988. The 66.67% general partner of National Land is the
Partnership. Quadrangle and Marriott hold both limited partner interests and
general partner interests in National Land.
The Shops LLC is a District of Columbia limited liability company. The
members of The Shops are the Partnership (66.67%), Quadrangle (16.665%) and
Marriott (16.665%).
The only business of the Partnership is investing as a general partner
in Square 254 and National Land and as a member of The Shops LLC.
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The Partnership is currently in default under its loan made by Aetna,
which was acquired from Aetna by The Travelers Casualty and Surety Company
("Travelers"). This loan is secured by the Partnership's interests in Square
254, National Land and The Shops. Further, Square 254 is in default under its
existing mortgage loan secured by its assets. In order to avoid a foreclosure on
the Partnership's assets, the Partnership, as well as Quadrangle and Marriott,
are currently in the process of finalizing a plan which would provide for the
forbearance of the exercise of any rights under the Traveler's loan for at least
two years and would entitle the Partnership to an approximately $2,800,000
payment in November 2002, as well as provide for the satisfaction of the Square
254 loans through a refinancing. Further, it is anticipated that if the
transaction is completed, any foreclosure on the collateral securing the
Traveler's loan would not occur until 2003 thereby deferring any recognition of
taxable gain until 2004. The transaction would further provide for the non-Hotel
assets to be transferred to an affiliate of Quadrangle and the Hotel would be
transferred to a newly formed limited partnership (the "New Hotel Partnership"),
in which the Partnership will hold an interest. In addition, each of the
Operating Partnerships would be dissolved. As a result, the Partnership's only
asset would then be an interest in the New Hotel Partnership. With respect to
the loan encumbering the assets of National Place (the "AEW Loan"), this loan
would be bifurcated such that a portion of the debt will be secured by the
non-Hotel assets and a portion of the debt will be secured by the Hotel assets.
If the transaction is not consummated, it is anticipated that the Partnership
will lose its assets through foreclosure which will not generate any
distributions to the partners and will cause limited partners to recognize a
gain for tax purposes. In addition to the foregoing it is anticipated that an
affiliate of Marriott will be given an option to acquire the Partnership's
interest in the New Hotel Partnership, which option will be exercisable upon
expiration of the forbearance period and prior to January 1, 2003, for a
purchase price in excess of the Traveler's loan and the $2,800,000 payment.
Properties owned by the Operating Partnerships
1. Square 254
Square 254 developed and presently owns and operates a mix-use complex
know as "National Place," located at 1331 Pennsylvania Avenue, N.W., Washington,
D.C. National Place consists of: (i) a 772-room J.W. Marriott Hotel managed by
the Marriott Corporation, (ii) 71,000 square feet of retail space which was
leased to and managed by The Rouse Company until April 1, 1998 at which time the
lease was assigned to The Shops LLC and management was transferred to an
affiliate of Quadrangle, (iii) 418,000 square feet of office space, (iv) a
leasehold interest in the 1,600-seat National Theatre leased on a net basis to
the New National Theater Corporation, which in turn contracts with the Shubert
Organization to provide programming for the theater, and (v) a 400-car parking
garage managed by QuikPark, Inc. until April 1, 1998, and since then by
All-Right Parking, Inc. In addition, Square 254 leases from National Land,
pursuant to a ground lease (the "Ground Lease") which expires in 2083, the land
on which National Place is located.
The Hotel: The J. W. Marriott Hotel is a fifteen story, 772-room hotel
which opened in February 1984. Its special features include four restaurants,
in-house catering services, health club including an indoor swimming pool, two
ballrooms of 14,000 and 8,400 square feet, 10 function rooms totaling 30,000
square feet, 18 hospitality suites, 2 Vice-Presidential suites, and 2
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Presidential suites. The following table sets forth the average occupancy,
average room rate and revenue per available room at the Hotel for the calendar
years ended December 1999 and 1998:
December 31,
1999 1998
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Average Occupancy(%) 81.6 85.5
Average Room Rate($) 177 166
Revenue per Available Room($) 144 142
Square 254 entered into a Management Agreement with Marriott pursuant
to which Marriott is acting as the exclusive agent to manage and operate the
hotel. The agreement has a term of 30 years and expires in February 2014.
Marriott may renew the agreement for four renewal terms of 10 years each and one
final renewal term through the expiration of the ground lease with National
Land. Marriott earns a management fee equal to 3% of gross revenues for central
office services and an incentive fee of 20% of the operating profit of the
hotel. For this purpose hotel operating profit is defined as the excess of gross
revenues over deductions including: (i) all normal costs of operation; (ii) the
3% of gross revenues central office services fee described above; (iii) a
reserve to cover replacements of the hotel's furniture, fixtures and equipment
and non-routine repairs and maintenance, which reserve is 5% of the hotel's
gross revenues with the balance limited at any time to 3.5% of gross revenues
for the immediately preceding three years; (iv) the hotel's pro rata share of
chain services; and (v) certain insurance costs and real estate taxes. However,
if, during the initial term of the agreement, the 80% share of the operating
profit that Square 254 is to receive is less than the Owner's Priority, defined
as 50% of Square 254's debt service on first mortgage financing, Square 254 is
to receive the portion of Marriott's 20% incentive fee needed to make up the
difference. This portion will be paid back to Marriott in subsequent years from
distributions to Square 254 in excess of the Owner's Priority. Neither Marriott
nor Square 254 may assign their rights and obligations under the agreement
without the approval of the other party except for certain small shops and
concessions in the hotel which Marriott may sublease. Square 254 may terminate
the agreement if (i) the operating profit that it receives in any two
consecutive fiscal years falls below the Owner's Priority or (ii) in any two
consecutive years during a renewal term, Square 254's rate of return on
replacement costs is less than 120% of the average annual yield for the three
immediately preceding fiscal years on 20-year U.S. Treasury bonds and, in either
case, Marriott does not advance the difference to Square 254. If Square 254
decides to sell the hotel, it must notify Marriott, which shall have the right
to purchase the hotel on the same terms as proposed to be offered to proposed
buyers.
The Office Towers: The Office Towers are known as the North and South
Towers. The North Tower has 15 floors with an aggregate of approximately 350,000
square feet of net rentable office space. The South Tower has 6 floors with an
aggregate of approximately 60,000 square feet of net rentable office space.
There is a connecting access between the two towers at the fifth floor level.
The Office Towers and common areas are managed by Quadrangle pursuant
to an agreement which was scheduled to expire on April 30, 1999 but was extended
in 1998 until April
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30, 2004. The agreement provides for fees payable to Quadrangle of (i) 3% of
gross receipts as a fee for management of the office space and (ii) $100,000 per
year increased by 25% of the percentage increase in the CPI with January 1, 1984
as the base for management of the common areas. The following table sets forth
the average occupancy and the average rent per square foot of the Office Towers
after taking into consideration any free rent periods or give-backs for the
calendar years ended December 1999 and 1998:
December 31,
1999 1998
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Average Occupancy(%) 89.6 88
Average Rent Per Square Foot ($) 30 33
The Department of Justice ("DOJ") leases, in the aggregate,
approximately 43% of the leasable space at the Office Towers (office and storage
space of 175,675 square feet, in the aggregate). The leases with DOJ provide for
annual rent payments in the aggregate of $5,738,020 and terminate on May 14,
2000 with respect to 87,413 square feet (which has been extended for an
additional 10 year term), December 10, 2000 with respect to 2,888 square feet,
December 31, 2003 with respect to 2,699 square feet and August 14, 2004 with
respect to 82,675 square feet.
The National Association of Manufacturers ("NAM") leases 10.5% of
leasable space at the Office Towers. NAM occupies the entire 6th floor (42,530
square feet), and 2,305 square feet on the 12th floor, with aggregate annual
lease payments of $1,613,427, increasing annually with a lease termination date
of April 30, 2012.
The Retail Space: The Shops at National Place is a three-story indoor
mall with 71,118 square feet of space, surrounding a central atrium, which is
interconnected to the retail space in the National Press Building. The space
beneath the National Press Building is not owned by Square 254. Effective April
1, 1998 management of the section owned by Square 254 was transferred from the
Rouse Company, which is not affiliated with the Partnership or its General
Partners, to an affiliate of Quadrangle. In addition, The Rouse Company
assigned, and The Shops LLC assumed, the lease with respect to The Shops at
National Place. The lowest level of The Shops has both retail tenants and
restaurants. The middle level has primarily retail tenants. The upper level is a
food court with fast-food restaurants and large common seating areas. In
addition, The Shops connect with the Hotel lobby on the lowest level along an
arcade, where additional food and retail operations are located. In all, there
are approximately 40 merchants currently leasing the retail space.
The retail space is governed by a lease between Square 254 as Lessor
and, effective April 1, 1998, The Shops LLC as Lessee. The original term of the
lease expires on May 15, 2014 with two options to extend (first option for 30
years and second option until the end of the ground lease). Payments to Square
254 under the lease are dependent on and a function of net cash flow from the
retail space. The Base Rent is $1,368,100 (or approximately $19.00 per square
foot). The Additional Rent $202,440 (or approximately $3 per square foot) is the
amount of the increase in the annual lease payment because the net cash flow
during the first two years of
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operation was below $18 per square foot. The Base Rent and the Additional Rent
are limited, however, to the extent that cash flow generated by The Shops LLC is
sufficient to pay such amounts. The Percentage Rent is 67% of net cash flow in
excess of the aggregate of the Base Rent and the Additional Rent up to $30.56
per square foot plus 72% of net cash flow in excess of $30.56 per square foot up
to $37 per square foot and 63% of net cash flow in excess of $37 per square
foot. No Percentage Rent was paid to Square 254 in 1999 or 1998. In addition any
increase in rent under the ground lease due to a redevelopment that materially
changes the market area will raise the fixed annual rent by 7% of such increase.
The National Theater: The National Theater is a seven-story structure
whose auditorium holds approximately 1,600 seats. It was built in 1885 with
substantial renovations in 1922 and 1984. The National Theater is leased on a
net basis to the New National Theater Corporation, which in turn contracts with
the Shubert Organization to provide programming for the theater.
Revenue received by Square 254 from the National Theater was $78,650
and $79,034 in 1998 and 1999, respectively.
Square 254 entered into a lease with the New National Theatre
Corporation with an initial term of 35 years, plus renewal options extending
throughout the 99-year term of the ground lease. The lease commenced on December
29, 1980. Under the lease, Square 254 agreed to reconstruct and renovate the
National Theatre Building, and the New National Theatre Corporation (the
"Corporation") agreed to operate the National Theatre, primarily for the
production of live, non-media drama presentations. The Corporation has
contracted with the New York-based Shubert organization to provide established
Broadway shows. The Corporation pays annual base rent under the lease of
$100,000 plus $25,000 multiplied by the percentage increase in the Consumer
Price Index for the District of Columbia (the "CPI"). The Corporation has the
right to renew the lease for five ten-year terms and one fourteen-year term.
Rent during the first two renewal terms will consist of annual base rent of
$100,000 and additional rent equal to the greater of (a) $100,000 multiplied by
the percentage increase in the CPI for that year or (b) 1% of the increase in
the Corporation's gross receipts for that year over the annual average of gross
receipts for the preceding three years. Rent is to be renegotiated by the
parties after 55 years and decided by arbitration if necessary.
The Parking Garage: The Parking Garage is a 400-car, underground
parking facility consisting of five floors of underground parking garage
facilities, together with the first floor garage entrance, driveway and ramps
leading to the parking facility, containing approximately 143,662 square feet.
Square 254 received $873,719 and $591,156 in revenue from the Parking Garage for
the years ended December 31, 1999 and 1998, respectively.
The Parking Garage was leased to QuikPark, Inc. under a lease until
April 1, 1998 at which time All-Right Parking Washington, Inc., an entity in
which an affiliate of WFA holds an ownership interest, assumed the lease and
began providing services at the Parking Garage. The rent payable under the lease
is equal to ninety-five percent of gross revenue (i.e. all receipts other than
D.C. Parking Tax). The operating expenses of the Parking Garage are expenses of
Square 254.
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2. National Land
National Land was formed in 1988 for the purpose of purchasing the fee
interest in the Land and the National Theater Building (collectively, the "New
Properties") from the Pennsylvania Avenue Development Corporation ("PADC"). As a
result, National Land became the lessor under the Ground Lease and the Theater
Lease under which Square 254 is the Lessee.
Square 254 signed a lease with the PADC on September 12, 1979 (the
"Ground Lease"). The commencement date for the land was September 12, 1979 and
for the National Theatre building was December 29, 1980. In August 1988,
National Land purchased the land and National Theatre building from PADC and
assumed the Ground Lease from PADC. The term of the lease is 99 years. At the
expiration of the lease, National Land will own the land and National Theatre
building. Square 254 pays annual rent of $2,100,000 to National Land. Square 254
is also obligated to pay Additional Ground Lease Rent consisting of (a) $600,000
of the first $3,150,000 of net cash flow pari passu with the distribution of
$2,550,000 to Square 254 and (b) 20% of all remaining net cash flow after
distribution to Square 254 of an amount equal to a 12% return upon Square 254's
equity in the property, if any, in excess of $15,000,000. No additional Ground
Lease Rent was paid by Square 254 in 1999 or 1998.
Square 254 and National Land maintain property and liability insurance
on the properties and believes such coverage to be adequate.
Buy/Sell Agreement
In 1998, the Partnership, Marriott and Quadrangle entered into a
buy/sell agreement. Pursuant to the agreement, either the Partnership, Marriott
and/or Quadrangle (the "initiating partner") has the right to give notice to the
other partners (the "non-initiating partners") that it desires to sell all of
the assets of the Operating Partnerships (the "Assets") to a third party for a
stated price. The non-initiating partners would then have the right to purchase
the initiating partner's interests in the Operating Partnerships and The Shops
for a price which the initiating partner would have received if the Assets were
sold for the price set forth in the notice. If the non-initiating partners elect
not to purchase the initiating partner's interests, then the Assets are to be
marketed for sale at a price of no less than the notice price. No partner has
presently exercised its right to purchase under the buy/sell agreement.
Competition
National Place is affected by and subject to the general competitive
conditions of the lodging industry and commercial real estate. In addition,
National Place is located in an area which contains numerous other properties
which may be considered competitive. The varying cycles of Congress (when in
session and when elections are held) cause fluctuations in the Washington D.C.
hotel market.
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Employees
The Registrant does not have any employees. Services are performed for
the Partnership by the General Partners and agents retained by it. In addition,
the Partnership has retained Winthrop Financial Co., Inc., an affiliate of the
General Partners, to perform certain administrative services for the
Partnership, such as investor communications. See Item 12, "Certain
Relationships and Related Transactions."
Item 2. Description of Properties
The Partnership owns no property other than its interest in Square 254,
NPLLP and The Shops LLC. The Operating Partnerships own no property other than
the properties which are described under Item 1 above.
The annual realty taxes for the Properties in 1999 were $3,608,642.
Item 3. Legal Proceedings
To the Partnership's knowledge, there are no material pending legal
proceedings to which the Partnership is a party or of which any of its property
is subject.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
There is no public trading market for the Units. Trading in the Units
is infrequent and occurs solely through private transactions. In addition,
transfers of Units are subject to limitations contained in the Partnership's
partnership agreement, including a requirement that the General Partners consent
thereto which consent may be granted or withheld in the General Partners' sole
discretion. As of March 15, 2000, there were approximately 698 holders of 600
outstanding Units.
The Partnership's partnership agreement requires that Cash Flow (as
defined therein) be distributed to the partners in specified portions at
reasonable intervals during the fiscal year, but in any event not less often
than annually no later than 90 days after the end of the fiscal year. There are
no restrictions on the Partnership's present or future ability to make
distributions of Cash Flow. There have been no cash distributions paid or
accrued since the inception of the Partnership.
Square 254 made distributions to the Partnership totaling $1,500,000
and $500,000 in 1999 and 1998, respectively. Certain fees due to an affiliate
were repaid from these distributions. See "Item 6, Management's Discussion and
Analysis or Plan of Operation."
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Over the past few years many companies have begun making "mini-tenders"
(offers to purchase an aggregate of less than 5% of the total outstanding units)
for limited partnership interests in the Partnership. Pursuant to the rules of
the Securities and Exchange Commission, when a tender offer is commenced for
Units the Partnership is required to provide limited partners with a statement
setting forth whether it believes limited partners should tender or whether it
is remaining neutral with respect to the offer. Unfortunately, the rules of the
Securities and Exchange Commission do not require that the bidders in certain
tender offers provide the Partnership with a copy of their offer. As a result,
the General Partners often do not become aware of such offers until shortly
before they are scheduled to expire or even after they have expired.
Accordingly, the General Partners do not have sufficient time to advise you of
its position on the tender. In this regard, please be advised that pursuant to
the discretionary right granted to the General Partners of your partnership in
the Partnership Agreement to reject any transfers of units, the General Partners
will not permit the transfer of any Unit in connection with a tender offer
unless: (i) the Partnership is provided with a copy of the bidder's offering
materials, including amendments thereto, simultaneously with their distribution
to the limited partners; (ii) the offer provides for withdrawal rights at any
time prior to the expiration date of the offer and, if payment is not made by
the bidder within 60 days of the date of the offer, after such 60 day period;
and (iii) the offer must be open for at least 20 business days and, if a
material change is made to the offer, for at least 10 business days following
such change.
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Item 6. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-KSB contain certain
forward-looking statements and involve risks and uncertainties (including
changing market conditions, competitive and regulatory matters, etc.) detailed
in the disclosure contained in this Form 10-KSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operation. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
Liquidity and Capital Resources
The Partnership's only assets consist of cash and its general
partnership interests in Square 254 and National Land and its company interest
in The Shops LLC. In order to satisfy its administrative and other expenses,
affiliates of the General Partners had previously made interest-free loans to
the Partnership for administrative expenses, an interest-bearing loan related to
the Partnership's interest in National Land and Winthrop Management has agreed
to defer its fees. As of December 31, 1999, all loans from affiliates of the
General Partners have been fully repaid and the Partnership owed $75,000 to
Winthrop Management for unpaid asset management fees. In 1999 and 1998, the
Operating Partnerships had sufficient revenues to make distributions to the
Partnership totaling $1,500,000 and $500,000, respectively. These distributions
were used to satisfy certain of the fees due to an affiliate. In 1999, the
Partnership paid $225,000 to Winthrop Management on account of its 1999 fee and
$1,300,000 of the accrued management fee balance.
The Partnership is currently in default under its loan made by Aetna,
which was acquired from Aetna by The Travelers Casualty and Surety Company
("Travelers"). This loan is secured by the Partnership's interests in Square
254, National Land and The Shops. Further, Square 254 is in default under its
existing mortgage loan secured by its assets. In order to avoid a foreclosure on
the Partnership's assets, the Partnership, as well as Quadrangle and Marriott,
are currently in the process of finalizing a plan which would provide for the
forbearance of the exercise of any rights under the Traveler's loan for at least
two years and would entitle the Partnership to an approximately $2,800,000
payment in November 2002, as well as provide for the satisfaction of the Square
254 loans through a refinancing. Further, it is anticipated that if the
transaction is completed, any foreclosure on the collateral securing the
Traveler's loan would not occur until 2003 thereby deferring any recognition of
taxable gain until 2004. The transaction would further provide for the non-Hotel
assets to be transferred to an affiliate of Quadrangle and the Hotel would be
transferred to a newly formed limited partnership (the "New Hotel Partnership"),
in which the Partnership will hold an interest. In addition, each of the
Operating Partnerships would be dissolved. As a result, the Partnership's only
asset would then be an interest in the New Hotel Partnership. With respect to
the loan encumbering the assets of National Place (the "AEW Loan"), this loan
would be bifurcated such that a portion of the debt will be secured by the
non-Hotel assets and a portion of the debt will be secured by the Hotel assets.
If the transaction is not consummated, it is anticipated that the Partnership
will lose its assets through
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foreclosure which will not generate any distributions to the partners and will
cause limited partners to recognize a gain for tax purposes. In addition to the
foregoing it is anticipated that an affiliate of Marriott will be given an
option to acquire the Partnership's interest in the New Hotel Partnership, which
option will be exercisable upon expiration of the forbearance period and prior
to January 1, 2003, for a purchase price in excess of the Traveler's loan and
the $2,800,000 payment.
Square 254
Square 254 receives room revenues from the Hotel and rental revenues
from the other components of its property and is responsible for operating
expenses, administrative expenses, capital improvements and debt service
payments. Square 254 had a decrease in cash flow in 1999 and had positive cash
flow prior to making a distribution to partners for the year ended December 31,
1998. Square 254 uses working capital reserves as its primary source of
liquidity. Square 254 had adequate working capital reserves to fund its
operations and other expenditures through 1999.
During 1999, the general partners of Square 254 made substantial
capital expenditures of $8,318,097. Such expenditures were funded from Square
254's short-term investments and unrestricted cash reserves, which together had
a balance of $11,202,009 at December 31, 1999 as well as cash generated from
operation of Square 254. Each year, a portion of the gross revenue of the Hotel
(currently 5% of gross revenue) is added to the Hotel replacement reserve
account for the purpose of funding future capital requirements of the Hotel. The
Hotel replacement reserve account had a remaining balance of $3,252,253 as of
December 31, 1999. The general partners of Square 254 currently believe Square
254's short-term investments and unrestricted cash reserves will be sufficient
to fund Square 254's operations and capital expenditures in the near future.
However, the ability of Square 254 to fund expenditures in the future will
depend on Square 254's ability to achieve certain levels of operation. If
existing reserves and future operations are not sufficient to support these
expenditures, the general partners of Square 254 will evaluate the necessity of
making these expenditures against the ability of Square 254 to obtain additional
capital from outside lending sources and the willingness and ability of the
general partners of Square 254 to contribute additional capital.
Square 254 has two mortgage loans, both of which are secured by a first
mortgage on its assets. The loans matured in 1999 at which time the lender
granted an extension to April 1, 2000. The loans, which had a principal balance
of $124,046,484 at December 31, 1999, are currently in default. If the
restructuring described above is not consummated, it is possible that the lender
will foreclose on Square 254's assets. See, Item 7 "Financial Statements" , Note
4 for a description of the terms of these loans.
Under the terms of the Ground Lease, Square 254 was able to defer
certain amounts of its rent obligations. The deferred amount accrues interest at
12.4447% per annum. Interest and deferred rent is repaid monthly to the extent
Square 254 has sufficient cash flow. In each of 1999 and 1998, Square 254 made
payments on the deferred ground rent of principal and interest of $153,929. The
outstanding balance of deferred ground rent on December 31, 1999 was $728,512.
Square 254 is current in its obligation under the Ground Lease with respect to
payment due on the deferred ground rent.
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National Land
National Land receives revenues solely from lease payment under the
Ground Lease and is responsible for debt service payments. In connection with
its acquisition of the Land, National Land obtained a loan in the original
principal amount of $43,101,900, which loan matures in 2018. As of December 31,
1999, the outstanding balance on this loan was $43,101,900. In addition, accrued
interest on this loan totaled $53,578,454 at December 31, 1999. See, Item 7,
"Financial Statements", Note 4 for a description of the terms of this loan.)
In order for National Land to sell its property or refinance the loan
encumbering the property, the consent of all of the general partners is
required.
Results of Operations
The Partnership's loss from operations decreased from $9,766,232 for the
year ended December 31, 1998 to $8,977,653 for the year ended December 31, 1999.
This decrease in loss from operations was due to a decrease in interest expense
of $860,671 due primarily to a decrease in the amortization of the Purchase
Money Note which was partially offset by an increase in other expenses. All
other items of revenue and expense remained relatively constant.
The Operating Partnerships' net loss increased from $8,383,529 for the
year ended December 31, 1998 to $8,426,534 for the year ended December 31, 1999.
The increase in net loss is attributable to an increase in interest expense,
which was partially offset by an increase in hotel and rental operations. Hotel
operations revenue increased by $680,725 for the year ended December 31, 1999 as
compared to December 31, 1998 as a result of a higher average room rate as well
as increased food, beverage and other revenue. There was also a decrease in
hotel operations expenses of $206,977 for such comparable periods due to
decreases in food costs and administrative expenses which were only slightly
offset by increases in room costs and miscellaneous costs. Rental operations
revenue increased by $286,493 and rental operations expense increased by
$141,509. Interest expense increased $2,349,144 in 1999, as compared to 1998, as
a result of an increase in interest expense from Square 254 as a result of the
AEW Loans bearing interest at a higher rate.
12
<PAGE>
Item 7. Financial Statements
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
13
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
Twelve AMH Associates Limited Partnership:
We have audited the accompanying balance sheets of Twelve AMH Associates Limited
Partnership (the "Partnership") as of December 31, 1999 and 1998, and the
related statements of operations, changes in partners' deficit and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Twelve AMH Associates Limited
Partnership as of December 31, 1999 and 1998, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Partnership will continue as a going concern. As discussed in Note 9 to the
financial statements, the uncertainty as to the Partnership's ultimate ability
to repay its purchase money note and operating deficit notes payable, which are
past due, and an operating partnership's ability to repay its loans raises
substantial doubt about the Partnership's ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 9. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
/s/ KPMG LLP
Boston, Massachusetts
April 10, 2000
14
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1999 1998
Assets:
Cash and cash equivalents............................. $ 474,167 $ 629,887
Deferred financing costs, net of accumulated
amortization of $50,000 and $50,000 respectively .. - 2,225
----------- -----------
Total assets................................... $ 474,167 $ 632,112
=========== ===========
Liabilities:
Purchase Money Note, net of unamortized discount ..... $72,599,997 $66,029,049
Notes payable ........................................ 9,873,978 9,873,978
Accrued interest on operating deficit notes .......... 22,328,033 20,776,310
Investments in Operating Partnerships ................ 21,591,416 14,072,159
Due to affiliate ..................................... 75,000 1,300,000
----------- -----------
126,468,424 112,051,496
----------- -----------
Partners' Deficit:
Limited partners - Units of Limited Partnership
interest, $96,250 stated value per unit;
authorized, issued and outstanding - 600 Units.....(124,208,033)(109,778,909)
General partners...................................... (1,786,224) (1,640,475)
----------- -----------
(125,994,257)(111,419,384)
----------- -----------
Total liabilities and partners' deficit............... $ 474,167 $ 632,112
=========== ============
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1999 1998
---- ----
Expenses:
Interest .......................................... $ 8,122,672 $ 8,983,343
Amortization ...................................... 403,521 404,630
Related party management fee ..................... 300,000 300,000
Other.............................................. 151,460 78,259
------------ -------------
8,977,653 9,766,232
------------ -------------
Loss from operations............................... (8,977,653) (9,766,232)
Interest income.................................... 20,740 13,635
Equity in losses of operating partnerships......... (5,617,960) (5,589,263)
------------ -------------
Net loss .......................................... $(14,574,873) $(15,341,860)
============ =============
Net loss allocated to general partners............. $ (145,749) $ (153,419)
============ =============
Net loss allocated to limited partners............. $(14,429,124) $(15,188,441)
============ =============
Net loss per unit of limited partnership interest.. $ (24,049) $ (25,314)
============ =============
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
YEARS ENDED DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
Limited General
Partners Partners Total
-------- -------- -----
Balance, December 31, 1997..... $ (94,590,468) $(1,487,056) $ (96,077,524)
Net Loss....................... (15,188,441) (153,419) (15,341,860)
-------------- ------------ --------------
Balance, December 31, 1998..... (109,778,909) (1,640,475) (111,419,384)
Net Loss....................... (14,429,124) (145,749) (14,574,873)
-------------- ------------ --------------
Balance, December 31, 1999..... $(124,208,033) $(1,786,224) $(125,994,257)
============== ============ ==============
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1999 1998
---- ----
Cash flows from operating activities:
Net loss........................................... $(14,574,873) $(15,341,860)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization..................................... 3,674,472 4,536,250
Equity in losses of Operating Partnerships....... 5,617,960 5,589,263
Interest added to loan principal on Purchase
Money Note..................................... 3,299,998 3,300,000
Increase in accrued interest on operating
deficit notes.................................. 1,551,723 1,551,723
Decrease in accrued expenses..................... -- (17,492)
Decrease in due to affiliate..................... (1,225,000) (1,500,000)
------------ ------------
Net cash used in operating activities............ (1,655,720) (1,882,116)
------------ ------------
Cash flows from investing activities:
Distributions received from an operating
partnership...................................... 1,500,000 500,000
------------ ------------
Net cash provided by investing activities........ 1,500,000 500,000
------------ ------------
Decrease in cash and cash equivalents.............. (155,720) (1,382,116)
Cash and cash equivalents, beginning of the
period........................................... 629,887 2,012,003
------------ ------------
Cash and cash equivalents, end of the period....... $ 474,167 $ 629,887
============ ============
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1. ORGANIZATION
Twelve AMH Associates Limited Partnership (the "Partnership") was organized as a
Massachusetts limited partnership under the Massachusetts Uniform Limited
Partnership Act on April 24, 1984, for the purpose of acquiring a 66.667%
general partnership interest in Square 254 Limited Partnership ("Square 254"), a
District of Columbia limited partnership organized in 1979. On August 31, 1984,
the Partnership acquired the interest in Square 254 from The Aetna Casualty and
Surety Company, a Connecticut corporation ("Aetna"). In 1988, the Partnership
acquired a 66.67% general partner interest in National Place Land Limited
Partnership ("National Land" or "NPLLP"). In 1998, the Partnership, together
with its partners in Square 254 and National Land, formed The Shops LLC in which
the Partnership holds a 66.67% member interest. Square 254, National Land and
The Shops LLC are collectively referred to as the Operating Partnerships.
Square 254 has developed and presently owns and operates a multiple use complex
known as "National Place", located at 1331 Pennsylvania Avenue, NW, Washington
D.C. National Place consists of the 772-room J.W. Marriott Hotel, a retail area
containing 71,000 square feet, office towers containing 418,000 net rentable
square feet, a 400-car parking garage and the 1,600-seat National Theatre, which
is subleased to a not-for-profit organization. Square 254 leased the land on
which National Place is situated and the National Theatre Building on a long
term basis from the Pennsylvania Avenue Development Corporation through August
11, 1988, after which it has been leased from National Land as described below.
Additionally, beginning April 1, 1998, Square 254 leases the retail space to The
Shops LLC. Prior to April 1, 1998, the retail space was leased to an
unaffiliated third party, as described below. The Partnership will terminate on
December 31, 2090, or sooner, in accordance with the terms of the Partnership
Agreement. The general partners of the Partnership are Two Winthrop Properties,
Inc. and Linnaeus Lexington Associates Limited Partnership. The general partners
of Square 254 are the Partnership, and affiliates of Quadrangle Development
Corporation and Marriott Corporation.
The general partners contributed $20 in respect of their general partnership
interests in the Partnership. On August 31, 1984, the Partnership admitted
investor limited partners whom subscribed for a total of 600 Units, representing
capital contributions of $57,750,000. Pursuant to the terms of the Partnership
Agreement, profits or losses and cash distributions (after certain priority
distributions) are allocated 99% to the investor limited partners and 1% to the
general partners, respectively. Profits or losses and cash distributions
resulting from the sale or refinancing of the Partnership's interest in Square
254 will be allocated 70% to the investor limited partners and 30% to the
general partners after certain priority allocations to the partners of amounts
necessary to increase their capital balances to an amount equal to their
invested capital.
19
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1. ORGANIZATION (continued)
National Land was organized on August 8, 1988 to acquire and lease both the land
underlying the National Place complex (the "Land") and the National Theatre
Building for an aggregate purchase price of $43,101,900. As owners of the Land,
the Land Partnership partners became lessors under the 99-year lease of the
Property (the "Lease") to Square 254 described in the Confidential Memorandum
dated June 11, 1984 (the "Confidential Memorandum"). Square 254, as lessee,
remains obligated under the Lease to pay rent to the Land Partnership, as
lessor. The rent payments under the Lease to the Land Partnership provide the
cash flow that will service the acquisition debt incurred by the Land
Partnership in connection with the purchase of the Land.
Each of the partners of National Land contributed to the capital of National
Land its pro rata share of the approximately $1,000,000 of expenses incurred in
connection with the purchase of the Land and the closing of the $43,101,900 loan
from AEW Trust #136, a trust funded by certain pension funds. As security for
this loan, the lender received a first priority deed of trust in the property of
National Land. The partners of National Land (including the Partnership) also
pledged a portion of their respective partnership interests in Square 254 to the
lender. In addition, the Partnership granted to Aetna a security interest in the
Partnership's interest in National Land. The Partnership's pro rata share of
National Land's initial capitalization was $667,000, which was loaned by Two
Winthrop Properties, Inc. to the Partnership at an interest rate of the then
current rate for five year U.S. Treasury Notes plus 250 basis points. This loan
was repaid from the first available cash flow from operations of the Partnership
in 1996. Net profits and losses of National Land are to be allocated among
partners in proportion to their respective partnership interests.
The Shops LLC was formed to assume the lease with respect to The Shops at
National Place previously held by The Rouse Company. Effective April 1, 1998 The
Shops LLC began leasing the retail space under a lease agreement with Square
254. The lease expires on May 15, 2014 with two options to extend (first option
for 30 years and second option until the end of the ground lease, which expires
in 2083). The minimum annual rental consists of base rent of $1,368,100 plus
additional rent of $202,440. In addition, a percentage rent would be due based
upon meeting certain operational criteria.
20
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES
Basis of Accounting
The Partnership prepares its financial statements using the accrual basis of
accounting. The Partnership, as an investor partnership, accounts for its
investments in Operating Partnerships using the equity method of accounting.
Under the equity method of accounting, the investment cost (including amounts
paid or accrued) is subsequently adjusted by the Partnership's share of the
Operating Partnerships' results of operations and by distributions received.
Costs relating to the acquisition and selection of the investments in the
Operating Partnerships are capitalized to the investment account and amortized
over forty years. Costs in excess of the Partnership's initial basis in the net
assets of Square 254 (approximately $14,800,000) are also amortized over forty
years. The accounting books and records of the Operating Partnerships are
maintained using the accrual basis of accounting.
Cash and Cash Equivalents
Investments in a money market account are considered to be cash equivalents for
financial reporting purposes.
Deferred Financing Costs
Amortization of deferred financing costs is computed using the straight-line
method over the term of the Purchase Money Note.
Income Taxes
No provision for income taxes is reflected in the accompanying financial
statements of the Partnership. Partners are required to report on their
individual tax return their allocable share of income, gains, losses, deductions
and credits of the Partnership.
Syndication Costs
Each investor limited partner's capital account has been reduced by the
partner's pro-rata share of syndication costs incurred by the Partnership.
21
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (continued)
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
3. DEFERRED FINANCING COSTS
The following is a summary of deferred financing costs at December 31, 1999 and
1998:
Amortization
Period 1999 1998
------------ --------- ----------
Financing fee, at cost 15 years $ 50,000 $ 50,000
Less: Accumulated amortization (50,000) (47,775)
--------- ----------
Unamortized costs $ -- $ 2,225
========= ==========
22
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
4. INVESTMENTS IN OPERATING PARTNERSHIPS
The Partnership's Investments in the Operating Partnerships are summarized as
follows:
National The
Square 254 Land Shops LLC Total
----------- ------------- --------- -------
Balance, December 31, 1997...$18,650,994 $(26,232,594) -- $ (7,581,600)
Distribution from
Operating Partnership..... (500,000) -- -- (500,000)
Amortization................. (401,296) -- -- (401,296)
Equity in losses of
Operating Partnerships.... (765,692) (4,823,571) -- (5,589,263)
---------- ------------ ------ ------------
Balance, December 31, 1998... 16,984,006 (31,056,165) -- (14,072,159)
---------- ------------ ------ ------------
Distribution from
Operating Partnership..... (1,500,000) -- -- (1,500,000)
Amortization................. (401,297) -- -- (401,297)
Equity in losses of
Operating Partnerships.... (245,086) (5,372,874) -- (5,617,960)
---------- ------------ ------ ------------
Balance, December 31, 1999...$14,837,623 $(36,429,039) -- $(21,591,416)
========== ============ ====== ============
23
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
4. INVESTMENTS IN OPERATING PARTNERSHIPS (continued)
The condensed financial statements and condensed notes to financial statements
of the Operating Partnerships (presented on a combined basis with all
significant inter-entity transactions eliminated) are as follows:
CONDENSED BALANCE SHEETS
December 31, December 31,
1999 1998
------------ -------------
Assets
Rental property, net of accumulated depreciation
of $99,345,012 and $91,544,702, respectively...... $114,569,383 $114,050,897
Land................................................ 39,123,872 39,123,872
Cash, cash equivalents and replacement reserve...... 11,527,380 13,470,538
Accounts receivable, net of allowance for doubtful
accounts of $210,151 and $210,151, respectively.. 4,291,140 2,971,902
Deferred costs, net of accumulated amortization
of $263,268 and $204,484, respectively........... 327,846 386,630
Other assets........................................ 3,324,324 3,868,106
------------ -------------
Total Assets............................... $173,163,945 $173,871,945
============ =============
Liabilities and Owners' Deficit
Liabilities:
Notes payable.................................. $220,726,838 $213,247,549
Accounts payable............................... 5,601,546 3,723,499
Other liabilities.............................. 354,342 493,144
------------ -------------
226,682,726 217,464,192
Owners' Deficit:
Twelve AMH Associates Limited Partnership...... (30,831,964) (23,714,004)
Others......................................... (22,686,817) (19,878,243)
------------ -------------
Total Owners' Deficit............................... (53,518,781) (43,592,247)
------------ -------------
Total Liabilities and Owners' Deficit............... $173,163,945 $173,871,945
============ =============
24
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
4. INVESTMENTS IN OPERATING PARTNERSHIPS (continued)
CONDENSED STATEMENTS OF OPERATIONS
Years Ended December 31,
---------------------------------
1999 1998
------------ -------------
Hotel:
Revenues............................... $64,646,467 $ 63,965,742
Operating expenses..................... (46,889,014) (47,095,991)
Depreciation and amortization............... (4,171,349) (4,805,883)
------------ -------------
Net hotel operations........................ 13,586,104 12,063,868
------------ -------------
Rental:
Revenues............................... 14,800,806 14,514,313
Operating expenses.......................... (7,359,285) (7,217,776)
Depreciation and amortization............... (3,687,046) (4,303,862)
------------ -------------
Net rental operations....................... 3,754,475 2,992,675
Interest.................................... (26,342,175) (23,993,031)
Other .................................... 575,062 552,959
------------ -------------
Net loss.................................... $(8,426,534) $ (8,383,529)
============ =============
Net loss allocated to Twelve AMH
Associates Limited Partnership......... $(5,617,960) $ (5,589,263)
============ =============
Net loss allocated to others................ $(2,808,574) $ (2,794,266)
============ =============
25
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
4. INVESTMENTS IN OPERATING PARTNERSHIPS (continued)
Condensed Notes to Financial Statements of the Operating Partnerships
A. Summary of Significant Accounting Policies
Rental Property
Square 254 and NPLLP review their long-lived assets and certain
identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by
which the carrying amount of the assets exceeds the fair value of the
assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.
Rental property includes building costs, lease costs and furniture,
fixtures and equipment. Building costs are recorded at cost and are
composed of the J.W. Marriott Hotel and National Place. Depreciation is
computed using the straight-line method over 40 years commencing when the
component is placed in service. Depreciation and amortization expense
amounted to $7,858,395 and $9,109,745 for 1999 and 1998, respectively.
Lease costs include costs of tenant improvements, renovation of the
National Theatre and office space leasing costs. Such amounts are amortized
over the lesser of the term of the related lease or the life of the asset,
generally five to ten years, using the straight-line method.
Furniture, fixtures and equipment are recorded at cost. Depreciation is
computed based on the useful lives of the assets, generally five to ten
years, using the straight-line method.
Deferred Financing Costs
Costs incurred in obtaining permanent loan financing are amortized on a
straight-line basis over the term of the loans.
26
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
4. INVESTMENTS IN OPERATING PARTNERSHIPS (continued)
Revenue Recognition
Base rental revenue is reported for financial statement purposes using the
straight-line method over the terms of the respective leases. Square 254
records unbilled rent receivable representing the amount that straight-line
rental revenue exceeds rents collectible under the lease agreements.
Square 254 considers current information and events regarding the tenants'
ability to repay their obligations in determining if unbilled rent
receivable is ultimately collectible. The uncollectible portion of unbilled
receivables is charged to rental revenues in the period in which the
determination is made.
Revenues from hotel operations are recorded when earned, in accordance with
accrual basis accounting.
Income Taxes
No provision has been included in the financial statements for federal
income taxes since income or loss of the Operating Partnerships is required
to be reported by the respective partners or members. The Operating
Partnerships are subject to local franchise taxes.
Certain items are treated differently for financial statement reporting and
tax return purposes.
Cash Equivalents
For financial statement purposes, the Operating Partnerships consider cash
in the hotel replacement reserve account and funds invested in money market
accounts (that have maturities of three months or less) to be cash
equivalents.
The hotel replacement reserve account is equal to 5 percent of the hotel's
gross revenues per year with the balance limited to 3.5 percent of gross
revenue for the preceding three years. The cash is not restricted.
27
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
4. INVESTMENTS IN OPERATING PARTNERSHIPS (continued)
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Partnerships to make estimates
and judgments that affect the reported amounts of assets and operating
liabilities and disclosures of contingencies at the date of the financial
statements and the revenues and expenses recognized during the reporting
period. Actual results could differ from those estimates.
Reclassification
Certain 1998 amounts have been reclassified to conform to the 1999
presentation.
B. Notes Payable
The Aetna Life Insurance Company (Aetna) provided permanent loan financing
to Square 254 in 1982 and 1984 in the form of two loans. Both loans were
due in the summer of 1999 but were extended by Aetna to January 1, 2000
through two forbearance agreements. The forbearance agreements increased
the interest rate on the first loan from 11 5/8% to 14% and from 13% to 17%
on the second loan. The forbearance agreements require a monthly payment of
$1,471,323 for interest on both loans while the principal balance was due
on January 1, 2000.
The December 31, 1999 outstanding principal balance on the first loan is
$114,400,724 and is $9,645,760 on the second loan. On January 4, 2000,
Aetna extended the due date of the principal balances to April 1, 2000.
Under the terms of the new extensions, interest is to continue at 14% and
17% until the principal is repaid. Currently Square 254 is in default on
these loans. See Note 9. At December 31, 1999, the estimated fair value of
the loans was their carrying value due to the short time frame the loans
would be outstanding after year end.
The loans are secured by the building and tenant improvements. There are no
restrictive covenants or provisions on the loans.
On August 9, 1988, NPLLP obtained financing from the AEW #136 Trust
(administered by Aldrich, Eastman and Waltch, Inc.) in an amount equal to
$43,101,900. The note, which matures on August 9, 2018, provides for base
interest of 11% per annum and for additional interest based on the
Partnership's net cash flow, as defined in the loan agreement. NPLLP did
not generate net cash flow, as defined in the loan agreement, for the years
ended December 31, 1999 and 1998.
28
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
B. Notes Payable (continued)
Minimum monthly interest payments are $187,827. Any unpaid base interest in
excess of the minimum monthly interest payment will be deferred and added
to and deemed to be additional principal. The note provides for increases
in principal from such interest deferrals to a maximum principal
outstanding of $300,000,000. NPLLP deferred $7,902,188 and $7,082,611 in
base interest for the years ended December 31, 1999 and 1998, respectively.
As of December 31, 1999 and 1998, the note payable was $96,680,354 and
$88,778,166, respectively.
All unpaid principal and interest is due and payable at maturity. In
addition, the note provides for a payment to the lender of "shared
appreciation interest" at maturity. This amount is based on the capitalized
value of the land lease and on the lender's required rate of return.
The loan agreement provides several prepayment opportunities with specified
prepayment prices throughout the term of the note. The first prepayment
option was available from August 1996 until August 1998. There have not
been any prepayments on the note.
The note is secured by NPLLP's rental property and NPLLP's interest in the
land lease. Also, NPLLP's partners have assigned portions of their
interests in Square 254 Limited Partnership as additional collateral.
C. Related Party Transactions
Square 254 has entered into a contract for hotel management services with
Marriott Corporation ("Marriott"), an affiliate of a general partner of the
Operating Partnerships, which has an initial term of 30 years commencing
with the opening date of the hotel and four 10-year renewal options. Under
the terms of the management agreement, Marriott will retain a fee equal to
20% of the operating profit of the hotel subject to certain deferrals. This
fee amounted to $3,630,233 and $3,524,168 in 1999 and 1998, respectively.
There were no deferred fees as of December 31, 1999 and 1998. In addition,
Marriott earns an amount equal to 3 percent of gross revenues to cover
costs and expenses incurred as managing agent. This fee amounted to
$1,939,394 and $1,918,970 in 1999 and 1998, respectively. Total management
fees earned by Marriott amounted to $5,569,627 and $5,443,138 in 1999 and
1998, respectively.
29
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
C. Related Party Transactions (continued)
Square 254 has entered into a property management agreement with QDC
Property Management, Inc., an affiliate of a general partner of the
Operating Partnerships. Under the terms of the agreement, the management
company will be paid a fee equal to 3 percent of the gross rentals from
National Place office space but not less than $5,000 per month.
Additionally, for common area management services, QDC Property Management,
Inc. is to be paid an annual base fee of $100,000 with increases tied to
the Consumer Price Index. Management fees earned by QDC Property
Management, Inc. amounted to $419,878 and $392,036 for the years ended
December 31, 1999 and 1998, respectively.
Square 254 reimburses Quadrangle Management Corporation ("QMC") for certain
costs incurred by QMC on its behalf, such as engineering, janitorial, and
tenants services. Total reimbursable costs earned by QMC were $674,353 and
$627,700 in 1999 and 1998, respectively.
Square 254 entered into a garage management agreement with Quik Park, Inc.,
an affiliate of QDC, which expires in 2004. Quik Park, Inc. earns a
management fee of 5 percent of gross garage revenue. The agreement with
Quik Park, Inc. was terminated effective April 1998. Allright Parking
Washington, Inc., an affiliate of a general partner of the Partnership,
assumed the management contract on the date of Quik Park Inc.'s
termination. Quik Park Inc.'s fees amounted to $18,320 for 1998. Allright
Parking Washington, Inc. received fees of $180,942 and $86,518 for 1999 and
1998, respectively.
On September 12, 1979, Square 254 entered into a 99-year land lease
agreement with Pennsylvania Avenue Development Corporation ("PADC"), a
wholly owned subsidiary of the United States government. The lease was
subsequently assumed by NPLLP on August 11, 1988 in connection with the
purchase of the leased land and related deferred rent by NPLLP. The lease
provides for a basic annual rent of $2,100,000 payable in equal monthly
installments and other rent deferrals based on Square 254's compliance with
certain criteria stated in the lease. The deferred portion accrues interest
at 12.4447%, compounded monthly. Payments on the deferred rent and accrued
interest are payable to NPLLP in equal monthly installments over a 36 year
period which began in May 1984. Square 254 has the option to prepay any or
all of the deferred rent or accrued interest thereon.
30
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
C. Related Party Transactions (continued)
Additionally, the lease provides for additional rental payments when net
cash flow, as defined in the lease agreement, is generated. No additional
rent was due for 1999 or 1998 since there was no net cash flow, as defined
in the lease agreement.
The effects of this lease have been eliminated for purposes of the
condensed financial statement information presented above.
D. Going Concern Matters
Square 254's ability to continue as a going concern has been impaired due
to the scheduled maturity of its loan obligations in 2000. NPLLP's reliance
on Square 254 for rental revenue may indicate that NPLLP will be unable to
continue as a going concern for a reasonable period of time. See Note 9.
These condensed financial statements do not include any adjustments
relating to the recoverability and classification of liabilities that might
be necessary should these Operating Partnerships be unable to continue as a
going concern. The Operating Partnerships' ability to meet these
obligations is dependent upon Square 254 refinancing its debt. Management
of the Partnership believes that Square 254 will be able to refinance the
existing debt obligations, enabling the payment of its land lease
obligations to NPLLP without a material adverse effect on NPLLP's financial
condition. See Note 9.
31
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
5. PURCHASE MONEY NOTE AND NOTES PAYABLE
In 1984, the Partnership acquired Aetna's 66.667% general partnership interest
in Square 254. The purchase price of $60,000,000 for the interest was evidenced
by a cash payment of $38,000,000 and a nonrecourse purchase money promissory
note ("Purchase Money Note") of $22,000,000. The Purchase Money Note is secured
by the Partnership's investment in Square 254 as well as a security interest in
the Partnership's interest in NPLLP. The Purchase Money Note bears simple
interest at a rate of 15% per annum, with all interest payable at maturity,
August 31, 1999.
The Purchase Money Note outstanding at December 31 is as follows:
1999 1998
----------- -----------
Purchase Money Note,
including accrued interest $72,599,997 $69,300,000
Less: Unamortized discount -- (3,270,951)
----------- -----------
$72,599,997 $66,029,049
=========== ===========
The Partnership entered into an Operating Deficit Guarantee Agreement with Aetna
which required Aetna to lend to the Partnership an aggregate amount of up to
$20,000,000, as needed by the Partnership, which in turn contributed or loaned
such amounts to Square 254. The Partnership's ability to borrow under this
agreement expired on December 31, 1989. No contributions have been made since
1987 when the Partnership contributed $1,124,678 to fund Square 254's operating
deficits. Advances under the Operating Deficit Guarantee Agreement ("Operating
Deficit Notes") bear interest at the rate of 15.5% per annum and was due and
payable together with interest on August 31, 1999. The outstanding balance of
these advances was $9,873,978 as of December 31, 1999 and 1998. The balance of
the accrued interest on these advances was $22,328,033 and $20,776,310 as of
December 31, 1999 and 1998, respectively.
In 1996, Aetna sold the Purchase Money Note and the Operating Deficit Notes to
Travelers Insurance Company.
The Partnership did not have sufficient funds to satisfy its Purchase Money Note
and Operating Deficit Notes (collectively, the "Maturing Notes") at maturity.
The lender had agreed to forbear from exercising its rights and remedies for
failure to pay the Maturing Notes until December 31, 1999. See Note 9.
32
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
6. TAXABLE LOSS
The Partnership's tax basis net loss for the years ended December 31, 1999 and
1998 differs from the net loss for financial reporting purposes primarily due to
differences in the recognition of depreciation and capitalized costs. A
reconciliation of net loss for financial reporting purposes to federal income
tax basis net loss for the years ended December 31, 1999 and 1998 follows:
1999 1998
------------- -------------
Net loss for financial reporting purposes....... $(14,574,873) $(15,341,860)
Amortization of the costs in excess of the
Partnership's initial basis in the net
assets of an Operating Partnership............ 370,046 370,046
Expenses accrued and payable to related
parties not deductible until year of
payment for tax purposes...................... (1,225,000) (1,500,000)
Interest expense on the Purchase Money Note
utilizing the simple interest method for
tax purposes.................................. 3,270,949 4,131,620
Non-deductible expenses for tax purposes........ 198 255
Legal expenses for GAAP reporting purposes...... 76,900 --
Amortization of costs........................... (19,062) (19,062)
Equity in Operating Partnerships' financial
statement loss in excess of tax loss.......... 2,667,245 861,429
Depreciation of basis adjustment under
Section 708 of the Internal Revenue Code...... (1,582,049) 1,582,049)
------------- -------------
Tax basis net loss.............................. $(11,015,646) $(13,079,621)
============= =============
Partners deficit account balances for federal income tax purposes were
$185,161,561 and $174,145,915 as of December 31, 1999 and 1998, respectively.
7. TRANSACTIONS WITH AFFILIATE
Expenses for 1999 and 1998 include an annual management fee of $300,000 earned
by an affiliate of a general partner. Unpaid management fees payable to this
affiliate amounted to $75,000 and $1,300,000 at December 31, 1999 and 1998,
respectively.
33
<PAGE>
TWELVE AMH ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
8. LIQUIDITY
During 1999 and 1998, the Partnership received $1,500,000 and $500,000,
respectively, of cash distributions from the Operating Partnerships. These funds
were used primarily to pay management fees that were due to affiliates. The
Partnership will continue to require cash to repay amounts due to affiliates,
pay management fees and general and administrative expenses, and may require
cash to satisfy its obligation to fund any operating deficits of the Operating
Partnerships. Any future distributions received by the Partnership from the
Operating Partnerships will be applied first to satisfy the unpaid management
fees.
9. GOING CONCERN
Based on the Partnership's cash flows, the Partnership did not have sufficient
funds to satisfy its existing zero coupon, purchase money notes at their
maturity. As a result, this raises substantial doubt about the Partnership's
ability to continue as a going concern. In order to avoid a foreclosure on
the Partnership's assets, the Partnership, as well as Quadrangle and Marriott,
are currently in the process of finalizing a plan which would provide for the
forbearance of the exercise of any rights under the Traveler's loan for at least
two years and would entitle the Partnership to an approximately $2,800,000
payment in November 2002, as well as provide for the satisfaction of the Square
254 loans through a refinancing. Further, it is anticipated that if the
transaction is completed, any foreclosure on the collateral securing the
Traveler's loan would not occur until 2003 thereby deferring any recognition of
taxable gain until 2004. The transaction would further provide for the non-Hotel
assets to be transferred to an affiliate of Quadrangle and the Hotel would be
transferred to a newly formed limited partnership (the "New Hotel Partnership"),
in which the Partnership will hold an interest. In addition, each of the
Operating Partnerships would be dissolved. As a result, the Partnership's only
asset would then be an interest in the New Hotel Partnership. With respect to
the loan encumbering the assets of National Place (the "AEW Loan"), this loan
would be bifurcated such that a portion of the debt will be secured by the
non-Hotel assets and a portion of the debt will be secured by the Hotel assets.
If the transaction is not consummated, it is anticipated that the Partnership
will lose its assets through foreclosure which will not generate any
distributions to the partners and will cause limited partners to recognize a
gain for tax purposes. In addition to the foregoing it is anticipated that an
affiliate of Marriott will be given an option to acquire the Partnership's
interest in the New Hotel Partnership, which option will be exercisable upon
expiration of the forbearance period and prior to January 1, 2003, for a
purchase price in excess of the Traveler's loan and the $2,800,000 payment.
34
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
35
<PAGE>
PART III
Item 9. Directors and Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act.
The Partnership has no officers or directors. Two Winthrop manages and
controls substantially all of Registrant's affairs and has general
responsibility and ultimate authority in all matters affecting its business. As
of March 1, 2000, the names of the directors and executive officers of Two
Winthrop and the position held by each of them, are as follows:
Has Served as a
Position Held with the Director or
Name Managing General Partner Officer Since
- ----------------- ------------------------------------ ----------------
Michael L. Ashner Chief Executive Officer and Director 1-96
Thomas C. Staples Chief Financial Officer 1-99
Peter Braverman Executive Vice President and Director 1-96
Patrick J. Foye Vice President - Residential and 10-98
Director
Carolyn Tiffany Chief Operating Officer and Clerk 10-95
Michael L. Ashner, age 47, has been the Chief Executive Officer of
Winthrop Financial Associates, A Limited Partnership ("WFA") and the Managing
General Partner since January 15, 1996. From June 1994 until January 1996, Mr.
Ashner was a Director, President and Co-chairman of National Property Investors,
Inc., a real estate investment company ("NPI"). Mr. Ashner was also a Director
and executive officer of NPI Property Management Corporation ("NPI Management")
from April 1984 until January 1996. In addition, since 1981 Mr. Ashner has been
President of Exeter Capital Corporation, a firm which has organized and
administered real estate limited partnerships.
Thomas C. Staples, age 44, has been the Chief Financial Officer of WFA
since January 1, 1999. From March 1996 through December 1998, Mr. Staples was
Vice President/Corporate Controller of WFA. From May 1994 through February 1996,
Mr. Staples was the Controller of the Residential Division of Winthrop
Management.
Peter Braverman, age 48, has been a Vice President of WFA and the
Managing General Partner since January 1996. From June 1995 until January 1996,
Mr. Braverman was a Vice President of NPI and NPI Management. From June 1991
until March 1994, Mr. Braverman was President of the Braverman Group, a firm
specializing in management consulting for the real estate and construction
industries. From 1988 to 1991, Mr. Braverman was a Vice President and Assistant
Secretary of Fischbach Corporation, a publicly traded, international real estate
and construction firm.
36
<PAGE>
Patrick J. Foye, age 42, has been Vice President-Residential and
Director of the Managing General Partner since October 1, 1998. Mr. Foye has
served as Executive Vice President of Apartment Investment and Management
Company ("AIMCO") since May 1998. Prior to joining AIMCO, Mr. Foye was a partner
in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998
and was Managing Partner of the firm's Brussels, Budapest and Moscow offices
from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long Island
Power Authority and serves as a member of the New York State Privatization
Council. He received a B.A. from Fordham College and a J.D. from Fordham
University Law School.
Carolyn Tiffany, age 33, has been employed with WFA since January 1993.
From 1993 to September 1995, Ms. Tiffany was a Senior Analyst and Associate in
WFA's accounting and asset management departments. Ms. Tiffany was a Vice
President in the asset management and investor relations departments of WFA from
October 1995 to December 1997, at which time she became the Chief Operating
Officer of WFA.
One or more of the above persons are also directors or officers of a
general partner (or general partner of a general partner) of the following
limited partnerships which either have a class of securities registered pursuant
to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the
reporting requirements of Section 15(d) of such Act: Winthrop Partners 79
Limited Partnership; Winthrop Partners 80 Limited Partnership; Winthrop
Residential Associates I, A Limited Partnership; Winthrop Residential Associates
II, A Limited Partnership; Winthrop Residential Associates III, A Limited
Partnership; 1999 Broadway Associates Limited Partnership; Nantucket Island
Associates Limited Partnership; Presidential Associates I Limited Partnership;
Riverside Park Associates Limited Partnership; Springhill Lake Investors Limited
Partnership; Winthrop California Investors Limited Partnership; and Winthrop
Growth Investors I Limited Partnership.
Except as indicated above, neither the Partnership nor Two Winthrop has
any significant employees within the meaning of Item 401(b) of Regulation S-B.
There are no family relationships among the officers and directors of Two
Winthrop.
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Partnership under Rule 16a-3(e) during the Partnership's most
recent fiscal year and Forms 5 and amendments thereto furnished to the
Partnership with respect to its most recent fiscal year, the Partnership is not
aware of any director, officer or beneficial owner of more than ten percent of
the units of limited partnership interest in the Partnership that failed to file
on a timely basis, as disclosed in the above Forms, reports required by section
16(a) of the Exchange Act during the most recent fiscal year or prior fiscal
years.
37
<PAGE>
Item 10. Executive Compensation
Registrant is not required to and did not pay any compensation to the
officers or directors of the Managing General Partner. The Managing General
Partner does not presently pay any compensation to any of its officers and
directors (See Item 12, "Certain Relationships and Related Transactions").
Item 11. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners.
Two Winthrop and Linnaeus own all the outstanding general partnership
interests in the Partnership. As general partners, they are entitled in the
aggregate to 1% of the Partnership's net income or loss for tax purposes, and,
after certain priority distributions, 1% of cash flow. In addition, after
certain priority allocations to the partners of amounts necessary to increase
their capital balances to an amount equal to their invested capital, the General
Partners are entitled to 30% of the proceeds of a capital transaction in
connection with the liquidation or termination of the Partnership. No other
person or group is known by the Partnership to be the beneficial owner of more
than 5% of the outstanding partnership interests as of March 15, 2000.
The Partnership is a limited partnership and has issued Units of
limited partnership interest. The Units are not voting securities, except that
the consent of the Limited Partners is required to approve or disapprove certain
transactions, including the removal of a General Partner, certain amendments to
the Partnership Agreement, the dissolution of the Partnership or the sale of all
or substantially all of the assets of the Partnership. No person or group is
known by the Partnership to be the beneficial owner of more than 5% of the
outstanding Units.
(b) Security Ownership of Management.
As of April 1, 2000, none of the officers, directors or partners the
General Partners beneficially own any Units. However, Win Partner Interest LLC,
an affiliate of the General Partners, owns 16 Units representing 2.67% of the
total outstanding Units.
(c) Changes in Control.
There exists no arrangement known to the Partnership the operation of
which may at a subsequent date result in a change in control of the Partnership.
Item 12. Certain Relationships and Related Transactions
(a) Transactions with management and others
Pursuant to the terms of the Partnership Agreement, the General
Partners and their affiliates are entitled to receive certain cash distributions
and allocations of taxable income or loss from the Partnership. In addition, the
General Partners and their affiliates are entitled to various fees in connection
with the offering and the operations of the Partnership.
38
<PAGE>
The following table sets forth the amounts of fees, commissions and
cash distributions which the Partnership paid to the General Partners and their
affiliates for the years ended December 31, 1999 and 1998:
Entity Compensation 1999 1998
- ------ ------------ ---- ----
Winthrop Financial Partnership Management Fee $1,525,000(1) $1,800,000(1)
Co., Inc.
(1) Includes payments of $1,300,000 and $1,500,000 in 1999 and 1998,
respectively, of past management fees which had been accrued.
From 1984 through 1995, Winthrop Financial Co., Inc. agreed to the
Partnership's deferral, on an interest-free basis, of the payment of an annual
partnership management fee for administrative and investor services in the
amount of $300,000. In 1998, Winthrop Financial Co., Inc. received its $300,000
current fee and $1,500,000 of its accrued fees. In 1999, Winthrop Financial Co.,
Inc. received $225,000 of its current fee and $1,300,000 on account of its
accrued fee.
Total management fees earned by Marriott and paid by Square 254 for
managing and operating the J. W. Marriott Hotel, amounted to $5,569,627 and
$5,443,138 in 1999 and 1998, respectively. Total management fees earned by
Quadrangle and paid by Square 254 for managing the Office Towers and common area
amounted to $419,878 and $392,036 for the years ended December 31, 1999 and
1998, respectively. QuikPark, Inc., an affiliate of Quadrangle, earned fees of
$18,320 in 1998 for managing and operating the parking garage. Effective April
1, 1998, All-Right Parking Washington, Inc., an affiliate of WFA began providing
management services at the Parking Garage and earned $180,942 and $86,518 in
1999 and 1998, respectively, for these services.
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibits:
The Exhibits listed on the accompanying Index to Exhibits are
filed as part of this Annual Report and incorporated in this
Annual Report as set forth in said Index.
(b) Reports on Form 8-K - None
39
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TWELVE AMH ASSOCIATES LIMITED
PARTNERSHIP
By: Two Winthrop Properties, Inc.
Managing General Partner
Date: April 13, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature/Name Title Date
- ------------------- ------------------------ --------------
/s/ Michael Ashner Chief Executive Officer April 13, 2000
- -------------------
Michael Ashner and Director
/s/ Thomas Staples Chief Financial Officer April 13, 2000
- -------------------
Thomas Staples
/s/ Peter Braverman Executive Vice President April 13, 2000
- -------------------
Peter Braverman and Director
40
<PAGE>
EXHIBIT INDEX
Exhibit Page
------- ----
3(a) Form of Amended and Restated Limited Partnership Agreement of the
Partnership (incorporated by reference to Exhibit 3 to the
Partnership's Registration Statement on Form 10 dated April 30,
1985, as thereafter amended)
3(b) Certificate of Limited Partnership of National Place Land Limited
Partnership dated August 2, 1988 (incorporated by reference to
Exhibit 3(h) to the Partnership's Annual Report on Form 10-K for
the year ended December 31, 1988)
3(c) Agreement of Limited Partnership of National Place Land Limited
Partnership dated August 8, 1988 (incorporated by reference to
Exhibit 3(c) to the Partnership's Annual Report on Form 10-K for
the year ended December 31, 1988)
3(d) Amendment to Amended and Restated Limited Partnership Agreement
of the Partnership dated August 23, 1995 incorporated by
reference to the Partnership's Current Report on Form 8-K filed
with the Securities and Exchange Commission on September 6, 1995.
4. See Exhibit 3 above
10(a) Form of Amended and Restated Limited Partnership Agreement of
Square 254 Limited Partnership (incorporated by reference to
Exhibit 10(a) to the Registration Statement)
(b) Leasing Agreement dated as of March 3, 1984 between Square 254
Limited Partnership and Quadrangle Development Corporation
(incorporated by reference to Exhibit 10(b) to the Registration
Statement)
(c) Management Agreement dated as of June 6, 1984 between Square 254
Limited Partnership and Quadrangle Development Corporation
(incorporated by reference to Exhibit 10(c) to the Registration
Statement)
(d) Garage Lease dated June 6, 1984 between Square 254 Limited
Partnership and Quickpark, Inc. (incorporated by reference to
Exhibit 10(d) to the Registration Statement)
(e) Pennsylvania Avenue Hotel Management Agreement dated as of July
23, 1984 between Square 254 Limited Partnership and Marriott
Corporation (incorporated by reference to Exhibit 10(e) to the
Registration Statement)
41
<PAGE>
(f) Lease dated September 12, 1979 between Pennsylvania Avenue
Development Corporation ("PADC") and Square 254 Limited
(incorporated by reference to Exhibit 10(f) to the Registration
Statement)
(g) Lease dated April 24, 1984 between Square 254 Limited Partnership
and The Rouse Company of the District of Columbia (incorporated
by reference to Exhibit 10(g) to the Registration Statement)
(h) Pennsylvania Avenue Technical Services Agreement between Square
254 Limited Partnership and the Marriott Corporation
(incorporated by reference to Exhibit 10(h) to the Registration
Statement)
(i) Credit and Security Agreement dated August 31, 1984 between
Citibank, N.A. and the Partnership (incorporated by reference to
Exhibit 10(i) to the Registration Statement)
(j) Sublease dated May 26, 1982 by and between Square 254 Limited
Partnership and New National Theatre Corporation incorporated by
reference to Exhibit 10(j) to the Registration Statement)
(k) Inducement Agreement dated as of August 2, 1984 by and between
Financial Guaranty Associates, Inc., the Partnership, Two
Winthrop Properties, Linnaeus Lexington Associates Limited
Partnership and Winthrop Financial Co., Inc. (incorporated by
reference to Exhibit 10(k) to the Registration Statement)
(l) Documents relating to the Mortgage Loan With Respect to the
Property Made by Aetna Casualty and Surety Corporation
(incorporated by reference to Exhibit 10(l) to the Registration
Statement)
(m) Deed dated August 8, 1988 by and between PADC and National Place
Land Limited Partnership ("NPLLP") (incorporated by reference to
Exhibit 10(m) to the Registration Statement)
(n) Deed of Trust dated August 9, 1988 by and between NPLLP, grantor,
NPLLP, grantor, and the Trustees of AEW #136 Trust, beneficiary
(incorporated by reference to Exhibit 10(n) to the Registration
Statement)
27 Financial Data Schedule
42
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from audited fianancial statments for the
Tswlve month period ending December 31, 1999
and is qualified in its entirety by reference to
such financial statements
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 474,167
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 474,167
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (125,994,257)
<TOTAL-LIABILITY-AND-EQUITY> 474,167
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 854,981
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,122,672
<INCOME-PRETAX> (14,574,873)
<INCOME-TAX> 0
<INCOME-CONTINUING> (14,574,873)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,574,873)
<EPS-BASIC> (24,048.54)
<EPS-DILUTED> (24,048.54)
</TABLE>
