UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ________ to _________
Commission file number: 0-13448
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
----------------------------------------------------
(Exact name of registrant as specified in its charter)
California 33-0058349
----------------------- ------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
400 South El Camino Real, Suite 1100 94402-1708
San Mateo, California (Zip Code)
----------------------- ------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 343-9300
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
-----------------------------------------
(Title of class)
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
---- ----
No market for the Limited Partnership Units exists and therefore
a market value for such Units cannot be determined.
DOCUMENTS INCORPORATED BY REFERENCE: None
Page 1 of 56
NO EXHIBIT INDEX REQUIRED
PART I
Item 1. Business
The Partnership, Glenborough Pension Investors, a California
Limited Partnership (formerly known as Outlook Pension Investors
- see Note 9 of the Notes to Financial Statements), was formed on
October l7, l984, under the California Revised Partnership Act.
The General Partner was API Partners, a California general
partnership consisting of Luke V. McCarthy, John R. Provine and
August Advisers, Inc., a California corporation. On April 4,
1994, several matters, submitted to a vote of security holders
through the solicitation of proxies, were approved including the
change in the general partner to Glenborough Realty Corporation
as the managing General Partner and Robert Batinovich as co-
General Partner (collectively, the "General Partner") (see Note 9
of the Notes to Financial Statements).
The Partnership's public offering commenced on January l8, l985,
and the Partnership became operational on April 9, l985, when the
impound requirements were met. The Partnership sold a total of
99,336 Combined Units through April l5, l986, when its offering
of Combined Units was terminated. Each Combined Unit included
one Limited Partnership Unit and two warrants. Each warrant
permitted the holder to purchase one additional Limited
Partnership Unit. The first warrant expired on April l5, l986
and the second warrant expired on April l5, l987. As a result of
the exercise of warrants, an additional l9,606 Limited
Partnership Units were sold.
The Partnership is party to a loan agreement, entered into on
January 16, 1995, under which the Partnership loaned to AFP
Partners, then a California general partnership, (the
"Borrower"), an affiliate of the General Partner, all of the net
proceeds received from the sale of Combined Units, less certain
reserves to be maintained by the Partnership. The Borrower used
the proceeds of ten loans (collectively, "Loans" or singly,
"Loan") to acquire thirteen properties. Separate loans were made
by the Partnership for each property or group of related
properties purchased by the Borrower. Each loan extended for a
term of ten years, was secured by the real property purchased by
the Borrower and provided partial recourse to the Borrower in the
event of nonpayment. The original loan documents (see discussion
which follows concerning forbearance agreement) provided that all
loans accrue basic interest at the rate of l3% per annum. A
minimum of 8% per annum interest was payable quarterly. Any
remaining portion of the 5%, and any previously accrued but
unpaid interest could also have been paid to the extent the cash
flow from the property securing the loan would permit.
Otherwise, all or a portion of this 5% amount would accrue and
become payable when cash flow was sufficient or upon maturity of
the loan. All loans were "participating loans", such that upon
the sale of a property or the maturity of the loan, the
Partnership would have been entitled to 75% of any increase in
the value of the property in excess of its original cost, over
and above costs of sale and accrued interest. The Borrower
pledged a certificate of deposit of $500,000 and certain
Page 2 of 56
promissory notes having an initial aggregate principal balance of
$l,500,000 as additional security for the loans.
An agreement entered into in December 1988 between the partners
of the Borrower required August Financial Corporation ("AFC"),
the parent company of one of the partners of the Borrower at the
time, to supplement deficiencies in the Borrower's cash flow by
making loans to the Borrower ("Contribution Agreement"). AFC
became insolvent and AFC's parent company, GLENFED Service
Corporation, was also insolvent and therefore not in a position
to contribute any additional capital to AFC.
During the last quarter of 1991 and the years ended December 31,
1992 and 1993, some of the Borrower's properties continued to
generate insufficient income to cover the minimum interest
payments due to the Partnership. As funds were no longer
available from AFC to supplement the Borrower's cash flow, the
Partnership and the Borrower entered into certain loan
modification agreements. The interest payment due the
Partnership by the Borrower for the quarter ended December 31,
1991 was reduced by $151,300 simultaneous with a reduction of the
note payable to the Borrower from the Partnership by the same
amount. Then, for the purpose of allowing time for negotiations
between the Partnership and the Borrower with an objective of
achieving a workout of the Loans, the Partnership elected to
forbear implementation of the payment schedules of the Loans.
The election took effect on July 1, 1992, commencing with the
payment due October 1, 1992, originally for a six month period
expiring on March 31, 1993 ("Forbearance Period"). During the
Forbearance Period, the Borrower paid all net cash flow from the
properties which secured the Loans to the Partnership. "Net Cash
Flow" was defined as all income collected by the Borrower less
operating expenses of the properties (including reserves for real
and personal property taxes and insurance) and overhead and
operating expenses of the Borrower. The Partnership and the
Borrower extended the term of the Forbearance Agreement to allow
sufficient time to complete final negotiation and documentation
of a workout and to solicit approval from the Partnership's
Limited Partners.
On April 4, 1994, these matters submitted to a vote of security
holders through the soliciation of proxies were approved. These
matters included an acquisition through deeds-in lieu of
foreclosure by the Partnership of ten of thirteen properties.
These ten properties secured approximately $12,833,000 of the
principal balances of the loans. The terms of the remaining
loans included:
(i) an increase in the principal amount of the loans by
approximately $355,000 for the costs incurred by the
Partnership in the restructuring, an interest accrual rate
change from 13% to 10% beginning January 1, 1994,
extension of the maturity dates of the loans to March 31,
2001 with five one-year renewal options, and a cross-
collateralization of the three loans with the right to
Page 3 of 56
transfer a property to the Partnership in satisfaction of
the loan without creating a default under the other loans;
(ii) a release of certain collateral notes in the aggregate
principal amount of $1,500,000 and the right to pursue
certain limited recourse liability relating to the
existing loans;
(iii) receiving secured and unsecured notes with unpaid balances
of principal and accrued interest as of September 30, 1993
aggregating approximately $1,159,000;
(iv) receiving a release from the obligation to repay
approximately $349,000 that was owed to the Borrower;
(v) acknowledgement of the termination of the contribution
agreement and releasing such rights, if any, the
Partnership may have with respect thereto;
(vi) and the termination of the servicing agreement discussed
below.
Effective July 1, 1994, the Partnership obtained ownership by
deeds-in-lieu of foreclosure of four of the Borrower's
properties: Park 100 (Buildings 42 and 46) and the Eagan and New
Hope mini-storages. In addition, title to the six auto care
centers, formerly held by the Borrower, was passed to GPI Georgia
Auto Centers, L.P., a Georgia Limited Partnership whose general
partner is GPI Auto Centers, Inc., a Georgia corporation, both of
which are wholly owned by the Partnership.
In addition to the changes discussed above, AFP Partners'
structure changed as part of the restructuring. AFP Partners was
a California general partnership whose general partners consisted
of August Financial Corporation, a California Corporation, August
Financial Partners, a California limited partnership, and August
Investment Partners, a California limited partnership. AFP
Partners, as part of the restructure, is now a California limited
partnership, whose general partners are Glenborough Realty
Corporation and Robert Batinovich, collectively owning 1%.
August Financial Partners, a California limited partnership, is
the limited partner, owning 99%.
The Partnership had a mortgage loan servicing agreement (the
"Service Agreement") with an independent mortgage banking firm
(the "Servicing Agent") unaffiliated with the Partnership, the
General Partner, the Borrower or any of their affiliates. The
Service Agreement gave the Servicing Agent specific
responsibilities concerning loan review and loan servicing. The
Servicing Agent received a basic servicing fee of l/4 of 1% of
the amount advanced under each loan agreement to the Borrower and
was entitled to a continuing service fee equal to interest at the
rate of l/8 of l% per annum on the unpaid principal balance. As
discussed previously, this agreement was terminated as part of
the restructure.
Page 4 of 56
Federal, state and local statutes, ordinances and regulations
which have been enacted or adopted regulating the discharge of
material into the environment or otherwise relating to the
protection of the environment do not presently have a material
effect on the operations nor on the capital expenditures,
earnings or competitive position of the Partnership.
Glenborough Corporation and its affiliates provided services to
the Partnership and the Borrower including investor relations,
asset management and property management. The Partnership does
not directly employ any individuals. Any persons rendering
services on behalf of the Partnership are employees of
Glenborough Corporation or its affiliates.
The business of the Partnership to date has involved only one
industry segment. The Partnership has no foreign operations and
the business of the Partnership is not seasonal.
In 1993, the Partnership's year end was changed from October 31
to December 31, therefore, comparative years are stated as they
were filed in prior years, and do not conform to the current year
ending date. The Partnership's financial statements include a
presentation of the two month transition period ended December
31, 1992.
The Partnership is currently involved in a potential merger
transaction, whereby its existing net assets and all bank debt
will merge with a newly created real estate investment trust
("REIT"). The merger requires a majority vote of the
partnerships that will be participating in the merger. If the
vote is successful, the Partnership will be fully merged into the
new REIT and will cease to exist. The limited partners are
expected to receive their solicitation materials for this
potential transaction in 1995.
Item 2. Properties
The Partnership owns ten properties and continues to hold three
real property loans as of December 31, 1994. The thirteen
properties are described below.
PARK 100 BUILDINGS
------------------
On December 31, 1985, the Partnership made a mortgage loan to the
Borrower for the purpose of acquiring Buildings 42 and 46 of the
Park 100 Business Park ("Park 100"). Park 100 consists of 65
buildings in a 1,328 acre development located at West 79th Street
and Interstate 465, in a prime industrial area of Indianapolis,
Indiana. The park is bounded on the east side by a rail line,
offering direct rail access to the park.
Building 42 is a concrete tilt-up structure with a brick facade,
containing approximately 37,200 square feet of leasable space.
Approximately 25% of the space is office, with the balance used
for warehouse/distribution. The building was completed in 1982
Page 5 of 56
and is situated on approximately 4.3 acres of land. There are
121 parking spaces.
Building 46 is a concrete tilt-up structure containing
approximately 102,400 square feet of warehouse/distribution
space. The building was completed in 1982 and is situated on
approximately 9.83 acres of land. There are 63 parking spaces.
The building contains 8 bays with 20-23 foot clear height with
12,800 square feet of space per bay. All of the bays are rail-
served.
The total amount of the loan by the Partnership was $4,160,000
consisting of $3,900,000 for the purchase price of the property,
a borrower's expense reserve of $187,200 and approximately
$72,800 to cover legal and appraisal fees, a loan origination
fee, capital improvements, and closing costs. The full amount of
the loan was secured by first deeds of trust on the properties.
On July 1, 1994, these properties were acquired by the
Partnership by a deed-in-lieu of foreclosure.
The occupancy level at December 31 (October 31 for 1992, 1991 and
1990), expressed as a percentage of the total net rentable square
feet, and the average annual rent per square foot for the last
five years was:
Occupancy Level Average Annual
Percentage Rent Per Square Foot
--------------- ---------------------
994 Building 42 100% $ 5.74
1993 Building 42 74% 5.82
1992 Building 42 77% 5.10
1991 Building 42 94% 5.63
1990 Building 42 95% 5.29
Occupancy Level Average Annual
Percentage Rent Per Square Foot
---------------- ---------------------
1994 Building 46 100% $ 3.47
1993 Building 46 88% 3.58
1992 Building 46 100% 3.52
1991 Building 46 100% 3.53
1990 Building 46 100% 3.69
Current annual rental rates for the properties range from $3.24
to $6.72.
Page 6 of 56
Two tenants occupy more than ten percent of the net rentable
square footage of the two buildings. Both tenants occupy space
in Building 46. Principal terms of the leases and the nature of
their businesses are:
Capitol City Pinnacle
Container Corp. Oil Corp.
--------------- ----------
Nature of Business Manufacturing Manufacturing
Lease Term 5 years 5 years
Expiration Date 7/31/96 1/31/99
Square Footage 51,200 51,200
(% of total) 37% 37%
Annual Rent $189,952 $165,888
Rent Increases 8/1/95 to None
$197,120
Renewal Options None None
In the opinion of management, the property is adequately covered
by insurance.
In 1994, the annual real estate tax rate was approximately 7.97%
based upon 100% of the assessed value, resulting in annual taxes
of approximately $86,100.
SEA TAC II
----------
On March 3, 1986, the Partnership made a mortgage loan to the
Borrower for the purpose of purchasing the North Sea Tac Building
II ("Sea Tac II"). Sea Tac II is a truck terminal facility
located in Seattle, Washington.
Sea Tac II is located in a wooded area north of the Sea Tac
Airport at 1900 South 146th Street in Seattle. Sea Tac II is
one of two truck terminal buildings in the immediate area
containing approximately 41,657 square feet of leasable space.
The property is concrete tilt-up construction and was completed
in 1984.
The total amount of the original loan by the Partnership was
$2,268,800 consisting of $2,114,000 for the purchase price of the
property, a borrower's expense reserve of $102,700, and $52,100
to cover legal and appraisal fees, a loan origination fee,
capital improvements, and closing costs. As part of the
restructure in 1994, the principal balance of the note was
modified to $2,333,338. The increase represents a portion of the
costs of the restructure. The entire amount of the loan is
secured by a first deed of trust on the property.
The occupancy level at December 31 (October 31 for 1992, 1991 and
1990), expressed as a percentage of the total net rentable square
Page 7 of 56
feet, and the average annual rent per square foot for the last
five years was:
Occupancy Level Average Annual
Year Percentage Rent Per Square Foot
---- --------------- --------------------
1994 100% $5.69
1993 100% 5.69
1992 100% 5.69
1991 100% 5.24
1990 100% 5.24
Current annual rental rates range from $5.55 to $5.80 per square
foot.
The principal terms of the property's two leases and the nature
of the tenants' businesses are:
Sea Air Handling Rontra
Services, Inc. Freight
--------------- --------
Nature of Business Freight Freight
Lease Term 5 years 5 years
Expiration Date 12/31/95 12/31/95
Square Footage 23,791 17,866
(% of total) 57% 43%
Annual Rent $138,000 $99,120
Rent Increase None 1/1/95 to
$102,000
Renewal Options None None
In the opinion of management, the property is adequately covered
by insurance.
In 1994, the annual real estate tax rate was approximately 1.45%
based upon 100% of the assessed value, resulting in annual taxes
of approximately $31,000.
ALL AMERICAN SELF STORAGE
--------------------------
On July 30, 1986, the Partnership made two mortgage loans to the
Borrower for the purpose of acquiring two self-storage facilities
known as All American Self Storage ("All American"). The All
American facilities are located at 7301 36th Avenue North in New
Hope, Hennepin County, and 3735 Sibley Memorial Highway in Eagan,
Dakota County, both Minneapolis, Minnesota suburbs. Both
facilities are on or near main highways.
The New Hope property was completed in February 1985, and
contains approximately 61,100 net rentable square feet in seven
rectangular buildings. The Eagan facility was completed in March
1985, and contains approximately 36,990 net rentable square feet
Page 8 of 56
in two buildings. The two facilities combined contain 810
storage units. Both facilities are constructed with brick
exteriors and wooden lapboard ends.
The total amount of the loan by the Partnership for the New Hope
property was $2,193,700 consisting of $2,069,100 for the purchase
price of the property, $20,400 for legal, appraisal and closing
costs, $5,500 for a loan origination fee, and a borrower's
expense reserve of $98,700. The full amount of the loan was
secured by a first trust deed on the property. On July 1, 1994,
this property was acquired by the Partnership by a deed-in-lieu
of foreclosure.
The total amount of the loan by the Partnership for the Eagan
property was $1,288,300 consisting of $1,215,200 for the purchase
price of the property, $11,900 for legal, appraisal and closing
costs, $3,200 for a loan origination fee, and a borrower's
expense reserve of $58,000. The full amount of the loan was
secured by a first trust deed on the property. On July 1, 1994,
this property was acquired by the Partnership by a deed-in-lieu
of foreclosure.
The occupancy level at December 31 (October 31 for 1992, 1991 and
1990), expressed as a percentage of the total net rentable square
feet, for the last five years was:
Occupancy Level
Percentage
for the Year: New Hope Eagan
---------------- --------- -----
1994 93% 96%
1993 94% 90%
1992 84% 91%
1991 84% 90%
1990 89% 94%
Because each property consists of individual self-storage units,
the facilities are rented on a month-to-month basis, and no
tenant occupies greater than 10% of the rentable space. The
average rental unit size is approximately 122 square feet, with a
size range available from 5' by 5' to 12' by 30'. Rental rates
range from $28.00 to $145.00 per month.
Page 9 of 56
Following is a schedule of current rental rates for each
property.
Eagan New Hope
-------------------- ----------------------
Unit # of Rental Unit # of Rental
Size Units Rate Size Units Rate
-------- -------- -------- -------- -------- --------
5x5 15 $28 5x5 40 $29
5x8 28 34 5x8 50 34
5x10 92 39 5x10 99 39
5x15 28 50 5x15 40 54
6x15 4 58 10x10 57 69
7x10 4 49 10x15 72 79
8x8 2 48 10x20 62 93
8x10 2 54 10x22 25 102
8x12 2 62 10x25 9 115
8x15 2 70 10x30 45 130
10x10 16 64
10x12 13 70
10x15 19 79
10x20 40 93
10x30 24 130
12x15 10 87
12x30 10 145
In the opinion of management, the property is adequately covered
by insurance.
In 1994, the annual real estate tax rate was approximately 5.93%
based upon 100% of the assessed value, resulting in annual taxes
of approximately $94,700.
PARK CENTER
-----------
On October 7, 1986, the Partnership made a mortgage loan to the
Borrower for the purpose of acquiring a shopping center known as
"Park Center". Park Center is located at the northwest corner of
17th Street and Cabrillo Park Drive in the City of Santa Ana,
Orange County, California. It is in a commercial corridor within
a high-density residential neighborhood between Interstate
Highway 5 and the Costa Mesa Freeway (Highway 55).
The property is constructed of concrete block walls with a tile
roof. The building was completed in 1979, is situated on
approximately 6.342 acres of land and contains 73,500 square feet
of leasable space. There are 287 parking spaces for a 3.9:1
parking ratio.
The total amount of the original loan by the Partnership was
$5,298,000 consisting of $4,900,000 for the purchase price of the
property, $41,400 for legal, appraisal and closing costs and
$105,000 for building and parking lot improvements. In addition,
$13,200 was paid for a loan origination fee, and $238,400 for a
borrower's expense reserve. As part of the restructure in 1994,
the principal balance of the note was modified to $5,448,427.
Page 10 of 56
The increase represents a portion of the costs of the
restructure. The full amount of the loan is secured by a first
deed of trust on the property.
The occupancy levels at December 31 (October 31 for 1992, 1991
and 1990), expressed as a percentage of the total net rentable
square feet, and the average annual rent per square foot for the
last five years was:
Occupancy Level Average Annual
Year Percentage Rent Per Square Foot
---- --------------- --------------------
1994 95% $6.04
1993 97% 6.66
1992 97% 6.80
1991 100% 7.11
1990 100% 6.77
Annual rental rates range from $3.55 to $18.00 per square foot.
It should be noted that the $18.00 rate relates to one 1,200
square foot tenant only. The next highest rate is $16.23 per
square foot.
Only one tenant, Albertson's, occupies greater than ten percent
of the leasable square footage of the property. The principal
provisions of the lease, and the nature of the tenant's business
are:
Nature of Business Supermarket
Lease Term 25 years
Expiration Date 1/31/2004
Square Feet 52,500
(% of total) 71%
Annual Rent $186,500
Rent Increases None
Percentage Rent 1% of Gross Sales
Renewal Options 5-5 year options
In the opinion of management, the property is adequately covered
by insurance.
In 1994, the annual real estate tax rate was approximately 1.03%
based upon 100% of the assessed value, resulting in annual taxes
of approximately $49,800.
COUNTRY SUITES - DFW
--------------------
On October 31, 1986, the Partnership funded a mortgage loan to
the Borrower for the purpose of acquiring a 90-suite hotel
Page 11 of 56
complex located at Highway 114 at Esters Road, in Irving, Tarrant
County, Texas.
The property was completed in April 1986 and consists of four
three-story buildings plus a laundry facility on approximately
1.8 acres of land. The property is an all-suite hotel containing
90 suites, or 108 suites when the 18 2-bedroom, 2-bath units are
separated into 1-bedroom, 1-bath units. Each suite features
complete kitchen facilities and a separate furnished living room.
The property contains a centrally located pool with spa and
conference facilities.
The total amount of the original loan made by the Partnership was
$4,900,000 consisting of $4,577,000 for the purchase price of the
property, a borrower's expense reserve of $220,500, legal,
appraisal and closing costs of approximately $40,300, a $50,000
working capital reserve, and a loan origination fee of $12,200.
As part of the restructure in 1994, the principal balance of the
note was modified to $5,039,434. The increase represents a
portion of the costs of the restructure.
Because the property is a hotel operation, there are no tenants
occupying greater than 10% of the space, and there are no leases
for the rooms. The 90 suites which make up the property have the
following characteristics:
Number of Square Total
Suites Description Feet Square Feet
---------- -------------- -------- -----------
40 1 bedroom 1 bath 400 16,000
*18 2 bedroom 2 bath 600 10,800
12 1 bedroom 1 bath 396 4,752
18 Mini-Suite 260 4,680
2 Handicap-equipped 400 800
------- ---------
Total 90 or *108 37,032
* These units can be separated into a 1-bedroom, 1-bath unit
and a room with no kitchen facilities similar to a standard
hotel room.
Most of the guests at the Country Suites seek lodging in order to
do business in the nearby Las Colinas business community or to
visit several surrounding residential areas. Both the Las
Colinas business community and these surrounding residential
areas have been masterplanned for further development.
The average annual occupancy levels and the average daily room
rates for the years ended December 31 (October 31 for 1992, 1991
and 1990) for the last five years were:
Average Annual
Occupancy Average Daily
Year Percentage Room Rate
------ ---------- -----------
1994 77.5% $58.52
Page 12 of 56
1993 76.3% 50.20
1992 65.7% 54.10
1991 59.2% 61.80
1990 78.3% 51.80
In the opinion of management, the property is adequately covered
by insurance.
In 1994, the annual real estate tax rate was approximately 1.55%
based upon 100% of the assessed value, resulting in annual taxes
of approximately $65,500.
ATLANTA AUTO CARE CENTERS
-------------------------
On December 31, 1986, the Partnership funded three mortgage loans
to the Borrower for the purpose of acquiring three Atlanta Auto
Care Centers. A fourth loan secured by three additional Atlanta
Auto Care Centers was funded over a period of time commencing in
May 1987 and ending in June 1987. The Borrower acquired all six
Atlanta Auto Care Centers from a single unrelated seller in
December 1986. The fourth loan secured by the three centers was
delayed at the request of the Partnership to permit the
Partnership to collect the proceeds resulting from the sale of
additional Limited Partnership Units as a result of the exercise
of warrants which expired in April 1987. The last three centers
were grouped to secure a single loan at the request of the
Borrower. Each loan was secured by a first mortgage on the
property or properties. On July 1, 1994, title to these
properties was passed by deed-in-lieu of foreclosure to GPI
Georgia Auto Centers, L.P., a Georgia Limited Partnership whose
general partner is GPI Auto Centers, Inc., a Georgia Corporation,
both of which are wholly owned by the Partnership.
The following table sets forth information concerning the four
loans relating to the six Atlanta Auto Care Centers, including
the location, the total amount of the loan, the amount of the
loan used to fund the purchase price, legal, appraisal and
closing costs, the Servicing Agent's origination fee, and the
Expense Reserve:
Purchase Closing Agent's Expense Total
Price Costs Fee Reserve Amount
-------- ------- ------- ------- -------
Norcross $ 915,800 $ 10,000 $ 2,400 $ 45,800 $ 974,000
College Park 720,600 10,000 1,900 36,500 769,000
Roswell 507,800 9,400 1,400 26,400 545,000
Smyrna/
Snellville/
Marietta 2,730,700 34,400 7,300 130,600 2,903,000
All six buildings are single story, multi-tenant automobile
service and repair facilities. All of the centers are concrete
tilt-up construction with service bay areas ranging in size from
900 to 2,800 square feet. The customer entrances have colorful
awnings and each space has office and customer waiting areas.
Each building was approximately one year old at the date of
Page 13 of 56
purchase, except the Snellville building which was more recently
completed. The centers are located on major traffic arteries in
retail areas.
Individual property descriptions follow for each auto carecenter.
NORCROSS
--------
The property is located in the city of Norcross, Gwinnett County,
at 4842 Jimmy Carter Boulevard, approximately eleven miles
northeast from the Atlanta Central Business District. The site
contains 1.52 acres of land on which a 10,920 square foot
building was constructed.
The occupancy level at December 31 (October 31 for 1992, 1991 and
1990), expressed as a percentage of the total net rentable square
feet, and the average annual rent per square foot for the last
five years was:
Occupancy Level Average Annual
Year Percentage Rent Per Square Foot
----- --------------- -----------------
1994 100% $ 9.49
1993 65% 10.71
1992 49% 13.18
1991 74% 12.26
1990 74% 11.86
Current annual rental rates range from $6.75 to $14.06 per square
foot.
Four tenants occupy greater than ten percent of the net leasable
square footage of the center. The principal provisions of the
leases are:
Michael Lay
Audio MBS DBA
Unlimited- Precision Meineke Kim
Gwinnett, Inc. Tune Inc. Discount Roberts
--------------- ------- -------- --------
Nature of Business Audio/Visual Tune-up Muffler Auto
Sales Shop Shop
Repairs
& Service
Lease Term 3 years 10 years 15 years 5
years
Expiration Date 9/30/96 5/31/00 5/31/00
2/28/99
Square Footage 2,800 2,400 1,920 2,800
(% of total) 26% 22% 18% 26%
Annual Rent $21,000 $29,712 $27,000
$18,900
Page 14 of 56
Rent Increase Annual- None None
Annual-
Fixed Fixed
Renewal Options None None None None
In the opinion of management, the property is adequately covered
by insurance.
In 1994, the annual real estate tax rate was approximately 3.71%
based upon 40% of the assessed value, resulting in annual taxes
of approximately $8,700.
COLLEGE PARK
------------
The property is located in the city of College Park, Fulton
County, at 5471 Old National Highway, approximately eleven miles
southwest from the Atlanta Central Business District. The site
contains 1.33 acres of land on which a 7,920 square foot building
was constructed.
The occupancy level at December 31 (October 31 for 1992, 1991 and
1990), expressed as a percentage of the total net rentable square
feet, and the average annual rent per square foot for the last
five years was:
Occupancy Level Average Annual
Year Percentage Rent Per Square Foot
---- --------------- -------------------
1994 100% $12.22
1993 100% 11.70
1992 89% 11.99
1991 100% 11.71
1990 100% 10.89
Current annual rental rates range from $11.44 to $14.92 per
square foot.
Three tenants occupy greater than ten percent of the net leasable
square footage of the property. The principal provisions of the
leases are:
Joto, ABS Zachary
Inc. Precision Duncan
------- ------------ ---------
Nature of Business Muffler Tune-up
Transmission Shop Shop Shop
Lease Term 5 years 5 years 5 years
Expiration Date 8/31/95 12/31/99 3/31/96
Square Footage 1,920 3,300 2,700
(% of total) 24% 42% 34%
Page 15 of 56
Annual Rent $28,638 $37,740 $30,371
Rent Increase Annual Annual Annual
-Fixed -Fixed -Fixed
Renewal Options 1-5 year 2-5 year 1-5 year
option options options
In the opinion of management, the property is adequately covered
by insurance.
In 1994, the annual real estate tax rate was approximately 4.03%
based upon 40% of the assessed value, resulting in annual taxes
of approximately $5,100.
ROSWELL
-------
The property is located in the city of Roswell, Fulton County, at
1177 Alpharetta Street, approximately fifteen miles north of the
Atlanta Central Business District. The site contains .86 acres
of land on which a 5,720 square foot building was constructed.
The occupancy level at December 31 (October 31 for 1992, 1991 and
1990), expressed as a percentage of the total net rentable square
feet, and the average annual rent per square foot for the last
five years was:
Occupancy Level Average Annual
Year Percentage Rent Per Square Foot
---- --------------- -------------------
1994 76% $11.64
1993 76% 11.64
1992 76% 11.64
1991 76% 11.64
1990 76% 11.48
Current annual rental rates range from $10.99 to $12.46 per
square foot.
Two tenants occupy greater than ten percent of the net leasable
square footage of the center. The principal provisions of the
leases are:
Precision Tune
(Chuck & Carol Baldwin)
Enterprises Inc.) Ian Moss
---------------------- --------------------
Nature of Business Tune-up Shop Repair of Domestic
and Foreign Autos
Lease Term 5 years 5 years
Expiration Date 2/28/00 4/30/95
Square Footage 2,400 1,920
(% of total) 42% 34%
Page 16 of 56
Annual Rent $26,376 $23,929
Rent Increase Annual-Fixed None
Renewal Options None None
In the opinion of management, the property is adequately covered
by insurance.
In 1994, the annual real estate tax rate was approximately 4.21%
based upon 40% of the assessed value, resulting in annual taxes
of approximately $7,700.
SNELLVILLE
----------
The property is located in the city of Snellville, Gwinnett
County, on Highway 78, approximately fifteen miles northeast from
the Atlanta Central Business District. The site contains 1.51
acres of land on which a 10,080 square foot building was
constructed.
The occupancy level at December 31 (October 31 for 1992, 1991 and
1990), expressed as a percentage of the total net rentable square
feet, and the average annual rent per square foot for the last
five years was:
Occupancy Level Average Annual Rent
Year Percentage Per Square Foot
----- ----------------- -------------------
1994 100% $10.40
1993 100% 8.31
1992 83% 8.10
1991 83% 11.57
1990 83% 11.57
Current annual rental rates range from $8.00 to $11.00 per square
foot.
Four tenants occupy greater than ten percent of the net leasable
square footage of the center. The principal provisions of the
leases are:
Chuck Baldwin
Chris A. Dean Enterprises, Montag
Dean Robinson Inc. Enterprises
-------------- -------- -------------- ---------
Nature of Brake General Tune-up Car Detail
Business Repair & Automotive Shop
Maintenance Repair
Lease Term 5 years 5 years 5 years 5 years
Expiration
Date 6/14/95 6/30/97 9/30/97 12/31/98
Square
Footage 2,520 3,360 2,520 1,680
(% of total) 25% 33% 25% 17%
Page 17 of 56
Annual Rent $26,386 $33,331 $27,720 $13,440
Rent Increase Annual- Annual- Fixed thru Annual-
Fixed Fixed 9/94. Fixed
Increase to
$27,720
Renewal None 1-5 year 2-5 year 1-5 year
Options option options option
In the opinion of management, the property is adequately covered
by insurance.
In 1994, the annual real estate tax rate was approximately 3.71%
based upon 40% of the assessed value, resulting in annual taxes
of approximately $11,600.
MARIETTA
---------
The property is located in the city of Marietta, Cobb County, at
1775 Cobb Parkway, approximately twelve miles northwest from the
Atlanta Central Business District. The site contains 1.89 acres
of land on which a 10,670 square foot building was constructed.
The occupancy level at December 31 (October 31 for 1992, 1991 and
1990), expressed as a percentage of the total net rentable square
feet, and the average annual rent per square foot for the last
five years was:
Occupancy Level Average Annual Rent
Year Percentage Per Square Foot
----- --------------- ---------------------
1994 100% $11.74
1993 100% 12.73
1992 90% 12.78
1991 100% 12.07
1990 90% 11.83
Current annual rental rates range from $9.00 to $14.04 per square
foot.
Page 18 of 56
Four tenants occupy greater than ten percent of the net leasable
square footage of the center. The principal provisions of the
leases are:
Fred Cummings Cottco McNeese U.S. Auto
Enterprises, Investments, Enterprises, Glass
Inc. Inc. Inc. Centers
------------ ----------- ----------- ----------
Nature of Tune-up Transmission Exhaust and Auto Glass
Business Shop Repair Shock Repair Sales, Repair
and Maintenance
Lease Term 5 years 5 years 10 years 5 years
Expiration
Date 11/30/97 3/31/00 11/30/99 3/31/00
Square
Footage 2,400 2,750 1,920 2,580
(% of total) 22% 26% 18% 24%
Annual Rent $21,600 $38,605 $19,200 $36,219
Rent Increase Annual- Annual- Annual- Annual-
Fixed Fixed Fixed Fixed
Renewal None 1-5 year None 2-5 year
Options option options
In the opinion of management, the property is adequately covered
by insurance.
In 1994, the annual real estate tax rate was approximately 2.78%
based upon 40% of the assessed value, resulting in annual taxes
of approximately $7,700.
SMYRNA
------
The property is located in the city of Smyrna, Cobb County, at
2849 South Cobb Drive, approximately twelve miles northwest from
the Atlanta Central Business District. The site contains .88
acres of land on which a 9,440 square foot building was
constructed.
The occupancy level at December 31 (October 31 for 1992, 1991 and
1990), expressed as a percentage of the total net rentable square
feet, and the average annual rent per square foot for the last
five years was:
Occupancy Level Average Annual Rent
Year Percentage Per Square Foot
---- ----------------- -----------------------
1994 100% $10.93
1993 80% 11.26
1992 80% 11.03
1991 80% 10.82
1990 80% 10.89
Page 19 of 56
Current annual rental rates range from $8.75 to $14.06 per square
foot.
Three tenants occupy greater than ten percent of the net leasable
square footage of the center. The principal provisions of the
leases are:
Diamond Auto
R & T Painting of South Clay &
Automotive Cobb, Inc. Kevin Shaw
---------- --------------- ----------
Nature of Business Muffler Auto Body Automotive
Shop Rpr & Pnt Repair
Lease Term 15 years 4 years 3 years
Expiration Date 3/31/00 3/31/95 4/30/97
Square Footage 1,920 5,600 1,920
(%of total) 20% 60% 20%
Annual Rent $27,000 $59,424 $16,800
Rent Increase None Annual-Fixed Annual-
Fixed
Renewal Options None 1-5 year optionNone
In the opinion of management, the property is adequately covered
by insurance.
In 1994, the annual real estate tax rate was approximately 3.66%
based upon 40% of the assessed value, resulting in annual taxes
of approximately $6,000.
Item 3. Legal Proceedings
On May 6, 1993, Glenborough Corporation and certain of its
affiliates entered into a settlement of a lawsuit filed by the
former management company and seller of the hotel (the "seller")
on November 13, 1991. The discussion relating to the settlement
is discussed in Note 8 in the Notes to Financial Statements and
is incorporated herein by reference.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of fiscal year 1994, no matters were
submitted to a vote of security holders through the solicitation
of proxies or otherwise.
Page 20 of 56
PART II
Item 5. Market for Partnerships Common Equity and Related
Stockholder Matters
Market Information
------------------
The units of limited partnership interest in the Partnership (the
"Units") have limited transferability. There is no public market
for the Units and it is not expected that any will develop.
There are restrictions upon the transferability of Units,
including requirements as to the minimum number of Units which
may be transferred, and that the General Partners must consent to
any transferee becoming a substituted limited partner (which
consent may be granted or withheld at the sole discretion of the
General Partner). In addition, restrictions on transfer may be
imposed under certain state securities laws. Consequently,
holders of Units may not be able to liquidate their investments
and the Units may not be readily acceptable as collateral.
Holders
-------
As of December 31, 1994, approximately 5,202 holders of record
held 118,942 Units.
Cash Distributions
------------------
The Partnership has made distributions to its partners as
follows:
Amount
Representing
Total Return of
Distributions Capital
-------------- ---------
For the year ended December 31, 1994 $ 826,000 $ -
For the year ended December 31, 1993 753,000 33,000
For the two months ended
December 31, 1992 186,000 162,000
For the year ended October 31, 1992 1,503,000 1,503,000
Cash generated from the operations of the Properties after
payment of expenses, provides the basis for ongoing cash
distributions. The Partnership's quarterly distributions for the
fiscal year 1994, paid in the quarter following the period in
which they were generated, totaled 2.9% of the total original
investor contributions.
Item 6. Selected Financial Data
This financial data should be read in conjunction with the
financial statements and related notes contained elsewhere in
this report. This financial data is not covered by the report of
the independent public accountants.
Page 21 of 56
SELECTED FINANCIAL DATA
(In thousands, except per Unit data)
For The For The For The For The For The For The
Fiscal Fiscal Two Fiscal Fiscal Fiscal
Year Year Months Year Year Year
Ended Ended Ended Ended Ended Ended
12/31/94 12/31/93 12/31/92 10/31/92 10/31/91 10/31/90
-------- -------- -------- -------- -------- --------
Total revenues $ 4,198 $ 3,993 $ 652 $ 1,524 $ 2,019 $ 2,238
Net income (loss) $ 861 $ 718 $ 25 $(3,240) $ 1,557 $ 1,851
Per Limited
Partnership Unit:
Income (loss) $ 7.16 $ 5.98 $ 0.20 $(26.97) $ 12.96 $ 15.39
Distributions:
From net income $ 6.88 $ 5.98 $ 0.20 $ - $ 12.96 $ 15.39
Representing
return of
capital $ - $ 0.28 $ 1.36 $ 12.49 $ 0.31 $ 0.24
Total assets $20,412 $20,639 $20,778 $20,557 $25,883 $25,887
Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
The Partnership maintains nominal cash reserves and distributes
the revenues received from the operations of the properties, less
partnership expenses, to the partners. Distributions to the
Limited Partners were paid at an annual rate of 2.5% for the
first quarter of 1994, but the pay rate was increased to 3% for
the remainder of 1994. Distributions to the Limited Partners in
were paid at an annual rate of 2.5% in 1993 and 5.0% in 1992.
Distributions paid in 1994 were provided by net income. Of the
total distributions paid in 1993 and 1992 (including the two
month stub period in 1992), $34,000 and $1,648,000, respectively,
represented return of capital.
The Borrower (AFP Partners, the partnership which currently owns
three properties securing first trust deed notes held by the
Partnership) possessed insufficient cash flow to make the
interest payment to the Partnership for the quarter ended
December 31, 1991. An agreement between the partners of the
Borrower required AFC, the parent company of one of the partners
of the Borrower at the time, to supplement deficiencies in the
Borrower's cash flow by making loans to the Borrower. AFC is
now insolvent and AFC's parent company, GLENFED Service
Corporation, is also insolvent and therefore not in a position to
contribute any additional capital to AFC. Under these
circumstances, management believed that a minor modification
between the Partnership and the Borrower was appropriate. As a
result, the Partnership and the Borrower entered into an
agreement on December 20, 1991 to reduce the interest payment for
Page 22 of 56
the quarter ended December 31, 1991 by $151,300 and to reduce the
note payable to the Borrower by the same amount.
The Partnership established a $150,000 line of credit facility
with an unaffiliated third party in February 1992. Funds drawn
on this line of credit bore interest at the prime rate plus 1.5%.
To cover the cash distributions to limited partners that
otherwise would have been funded by the interest not received in
December 1991, $150,000 was drawn on the line of credit in late
February 1992. This line of credit matured February 28, 1994,
but was paid off in May 1993 from proceeds from the net cash flow
payments made by the Borrower.
Due to AFC's inability to loan any additional funds to the
Borrower, and due to the properties' continued inability to
generate sufficient income to cover the minimum interest payments
due to the Partnership, a Forbearance Agreement, effective July
1, 1992 and commencing with the payment due October 1, 1992, and
originally expiring on March 31, 1993 (the "Forbearance Period"),
was reached to allow time for negotiation of a workout of the
Loans (see Note 2 of the Notes to Financial Statements). During
the Forbearance Period, the Borrower paid all net cash flow to
the Partnership from the properties which secured the Loans. "Net
Cash Flow" was defined as all income collected by the Borrower
less operating expenses of the properties (including reserves for
real and personal property taxes and insurance) and overhead and
operating expenses of the Borrower. The Partnership and the
Borrower extended the term of the Forbearance Agreement to allow
sufficient time to complete final negotiation and documentation
of a workout and to solicit approval from the Partnership's
Limited Partners.
On April 4, 1994, these matters submitted to a vote of security
holders through the soliciation of proxies were approved. These
matters included an acquisition through deeds-in-lieu of
foreclosure of ten of thirteen properties. These ten properties
secured approximately $12,833,000 of the principal balances of
the loans. The terms of the remaining loans included:
(i) an increase in the principal amount of the loans by
approximately $355,000 for the costs incurred by the
Partnership in the restructuring, an interest accrual rate
change from 13% to 10% beginning January 1, 1994,
extension of the maturity dates of the loans to March 31,
2001 with five one-year renewal options, and a cross-
collateralization of the three loans with the right to
transfer a property to the Partnership in satisfaction of
the loan without creating a default under the other loans;
(ii) a release of certain collateral notes in the aggregate
principal amount of $1,500,000 and the right to pursue
certain limited recourse liability relating to the
existing loans;
Page 23 of 56
(iii) receiving secured and unsecured notes with unpaid balances
of principal and accrued interest as of September 30, 1993
aggregating approximately $1,159,000;
(iv) receiving a release from the obligation to repay
approximately $349,000 that was owed to the Borrower;
(v) acknowledgement of the termination of the contribution
agreement and releasing such rights, if any, the
Partnership may have with respect thereto;
(vi) and the termination of the servicing agreement.
Effective July 1, 1994, the Partnership obtained ownership by
deeds-in-lieu of foreclosure of four of the Borrower's
properties: Park 100 (Buildings 42 and 46) and the Eagan and New
Hope mini-storages. In addition, title to the six auto care
centers, formerly held by the Borrower, was passed to GPI Georgia
Auto Centers, L.P., a Georgia Limited Partnership whose general
partner is GPI Auto Centers, Inc., a Georgia corporation, both of
which are wholly owned by the Partnership.
At October 31, 1992, it was determined that the Borrower had
little or no equity in the Properties securing the loans,
considering the current fair market value of the Properties, and
that the proceeds for repayment of the loans can be expected to
come only from the operation or sale of the Properties, given
AFC's inability to loan any additional funds to the Borrower.
Additionally, although the Borrower retained control of the
Properties, due to the Borrower's financial condition at that
time and the economic prospects for the Borrower and the
Properties in the foreseeable future, it was doubtful that the
Borrower would be able to rebuild equity in the Properties or
otherwise repay the Loans. As a result, for financial reporting
purposes, the Partnership reduced its Investment in Master
Agreement by $4,282,000 to the estimated net realizable value of
the underlying properties of $20,249,000. For financial
statement presentation purposes only (through June 30, 1994), the
Partnership had, in effect, foreclosed on the properties. To
recognize this, the net Investment in Master Agreement has been
reclassified to investment in real estate as of October 31, 1992.
The depreciable components of this investment are being
depreciated, beginning November 1, 1992, over the remaining
useful lives of the properties which range from 4 to 25 years for
improvements and 24 to 26 years for buildings. Additionally, all
operating revenues and expenses of the properties are being
recognized by the Partnership effective November 1, 1992. No
additional Income on Investment in Master Agreement is being
recognized.
Prior to the Forbearance Period (see Note 2 of the Notes to
Financial Statements), income received in excess of the NOI of
the properties was deferred for financial reporting purposes.
This is no longer necessary because the Partnership is now
recognizing the income and expenses of the properties. In
addition, as a result of the reduction of Investment in Master
Page 24 of 56
Agreement and subsequent financial statement presentation
reclassification to investment in real estate, the balance of
deferred income was eliminated.
Prepaid expenses and other assets increased approximately $93,000
in 1994 over 1993 as a result of advances towards and accrual for
transaction costs associated with the proposed consolidation by
merger in the amount of $365,000 (as discussed in Note 10 of the
Notes to Financial Statements). These were partially offset by a
decrease of approximately $355,000 which represented costs
associated with the restructure which were eliminated. In
addition, prepaid expenses and other assets increased due to
lease commissions paid for new leases and lease renewals
occurring in 1994 in the amount of $45,000 and prepaid insurance
of $15,000 for early payments relating to a new policy period.
Accounts payable and accrued expenses increased in 1994 compared
to 1993 due to an accrual in the amount of $100,000 for
transaction costs associated with the proposed consolidation by
merger, as discussed in Note 10 of the Notes to Financial
Statements.
As discussed in Note 9, the Partnership received approval from
the limited partners for a workout of the loans made by the
Partnership to the Borrower in April 1994 and caused the
restructure to become effective July 1, 1994.
The Partnership is currently involved in a potential merger
transaction, whereby its existing net assets and all bank debt
will merge with a newly created real estate investment trust
("REIT"). The merger requires a majority vote of the
partnerships that will be participating in the merger. If the
vote is successful, the Partnership will be fully merged into the
new REIT and will cease to exist. The limited partners are
expected to receive their solicitation materials for this
potential transaction in 1995.
RESULTS OF OPERATIONS
1994 versus 1993
----------------
As discussed in Note 2 of the Notes to Financial Statements, for
financial statement presentation purposes only (through June 30,
1994), the Partnership had, in effect, foreclosed on the
Borrower's properties and therefore, income and expense from the
operations of the properties of the Borrower were recognized in
the Partnership's financial statements. Part of the restructure,
which was effective July 1, 1994 (see Note 9 of the Notes to
Financial Statements), included actual deed-in-lieu of
foreclosure on ten of the thirteen properties owned by the
Borrower, leaving three of the loans remaining in place with
somewhat modified terms. The Partnership will continue to
account for the remaining loans as though, for financial
reporting purposes, the Partnership foreclosed on the properties.
The effect of all transactions between the Partnership and the
Page 25 of 56
borrower have been eliminated for financial statement
presentation.
Net operating income of $1,928,000 (rental revenue of $4,198,000
less operating costs of $2,270,000) was approximately $177,000
greater than net operating income in 1993. In 1994, performance
results of Country Suites-DFW, New Hope, Eagan, Snellville,
Norcross, College Park and Smyrna exceeded 1993 results. DFW
contributed the most significant increase of $53,000, which was
the result of an increase in the average occupancy (77.5% in 1994
compared to 76.3% in 1993) and the average daily room rate
($58.52 in 1994 compared to $50.20 in 1993). The $8.32 increase
in the daily room rate from 1993 to 1994 is due to an increase in
a sector of transient revenue (guests who stay from one to five
days). These guests book reservations through the franchise
reservation system, which earns the highest rated business. The
New Hope mini-storage was the second biggest contributor to the
increase in net operating income in 1994 over 1993 with a $38,000
increase. The increase was due to a rate increase and an
increase in income from the sale of abandoned property held in
the mini storage. In addition, expenses at the New Hope property
decreased as a result of a decrease in the assessed value of the
property used to determine the property tax expense and a
decrease in insurance expense. The Snellville Auto Center
contributed $35,000 to the increase in net operating income as a
result of increased market rates and a consistently higher
occupancy throughout 1994 compared to 1993. The Norcross Auto
Center contributed a $23,000 increase in net operating income due
to an increase in occupancy in 1994 over 1993 (100% in 1994
compared to 65% in 1993). The amounts by which Eagan, College
Park and Smyrna 1994 results exceeded 1993 results were minimal,
and were offset by the decrease in results in 1994 from 1993 of
the Sea Tac, Park Center, Park 100, Marietta and Roswell
properties which resulted in a combined total decrease in net
operating income of approximately $88,000.
Of this combined decrease in net operating income of $88,000,
Park Center's decrease made up 80% of this total. This decrease
was a result of increased vacancy at the property (95% occupancy
in 1994 compared to 97% in 1993), decreased market rates, and the
absence of settlements paid to the Partnership in 1994 that
equated to $18,000 in 1993.
General and administrative expenses decreased approximately
$58,000 in 1994 compared to 1993 due to the decrease in the loan
servicing fee paid to an independent mortgage banking firm
related to the Servicing Agreement (which was terminated in 1994
as part of the restructure) and the absence of general partner
liability insurance of $15,000 in 1994. Since the change in the
general partner, this insurance cost has been eliminated.
Depreciation and amortization expense increased in 1994 over 1993
due to capital additions and tenant improvements placed in
service in 1993 having a full year of depreciation in 1994 as
well as new improvements amounting to $272,000 being placed in
service in the current year.
Page 26 of 56
1993 versus 1992
----------------
In 1993, the Partnership's year end was changed from October 31
to December 31, therefore, comparative years are stated as they
were reported in prior years, and do not conform to the current
year ending date of December 31 (excluding the transition period
reporting results for the two months ended December 31, 1992).
However, except for the transition period reporting results,
there is no effect on comparability as a full year's activity is
being reported in each period presented and seasonality has no
material effect on the Partnership's financial statements.
As discussed in Note 2 in the Notes to Financial Statements, for
financial statement presentation purposes only, the Partnership
has, in effect, foreclosed on the Borrower's properties and
therefore, Income on Investment in Master Agreement is no longer
recognized. Instead, income and expense from the operations of
the properties of the Borrower is recognized.
The effect of all transactions between the Partnership and the
Borrower have been eliminated for financial statement
presentation. For instance, interest expense appears to have
decreased in the current year compared to the prior years.
However, this is due to the elimination of interest paid to the
Borrower on the note payable to affiliate in the current year, as
such amounts were immediately paid back to the Partnership as net
cash flow payments.
Although the financial statement presentation has changed and the
Partnership is recognizing the income and expense of the
Borrower's properties for the year ended December 31, 1993, as
opposed to recognizing the Income on Investment in Master
Agreement for the year ended October 31, 1992, the net income of
the properties can be compared to the Income on Investment in
Master Agreement, which represented the recognition of interest
income payments received in cash and supported by the actual net
operating income of the underlying properties. The net operating
income of $1,751,000 (rental revenue of $3,987,000 less operating
costs of $2,236,000) for the year ended December 31, 1993, is
comparable to the Income on Investment in Master Agreement of
$1,521,000 for the year ended October 31, 1992.
Net operating income of $1,751,000 for the year ended December
31, 1993 was approximately $230,000 greater than Income on
Investment in Master Agreement of $1,521,000 for the year ended
October 31, 1992. In 1993, performance results of Country Suites
- DFW, New Hope, Eagan, Park Center, Park 100 and College Park
exceeded 1992 results. DFW alone provided for increased
operating income in 1993 of $158,200 over 1992 with a 10.6
percentage point increase in occupancy from 65.7% in 1992 to
76.3% in 1993. This increase is partially attributable to the
maturity of the franchise reservation system and the
repositioning and marketing of the property taking hold. In
addition, an increase in property taxes of $48,000 was recorded
and termination fees of approximately $62,000 were paid to
terminate the franchise and management contract with the former
Page 27 of 56
management company in 1992, distorting normal operating results
for that year. The New Hope mini-storage was the second biggest
contributor to the increase in net operating income in 1993 over
1992 with a $37,000 increase. This increase was due to an
increase in occupancy of 12 percentage points in 1993 to 94% over
82% in 1992. Park Center's 1993 results exceeded 1992 results by
$18,000 due to the collection of settlements paid to the
Partnership from two tenants that had vacated their spaces in
1992 prior to their lease end date. The amounts by which the
Eagan, Park 100 and College Park 1993 results exceeded 1992
results were minimal, and were offset by the decrease in results
in 1993 from 1992 of the Sea Tac, Norcross, Roswell, Smyrna and
Snellville properties which resulted in a combined total decrease
in net operating income of approximately $66,000.
Of this combined decrease in net operating income of $66,000,
Norcross and Snellville's decreases made up 85% of this total.
The occupancy at Norcross has increased in 1993 over 1992,
however, this is largely due to a tenant occupying 2,800 square
feet beginning October 1, 1993, and this increase in occupancy is
not necessarily indicative of the year as a whole. In addition,
average annual rent per square foot has decreased from $13.18 in
1992 to $10.71 in 1993. A price sensitive market has driven
management to lower prices in order to remain competitive.
Snellville's operating expenses increased in 1993 by
approximately $8,000 due to roof and parking lot repairs needed
in 1993 that were not necessary in 1992. In addition, a tenant
occupying 1,680 square feet of space beginning December 1, 1993
is included in occupancy and average annual rent per square feet,
and again is not necessarily indicative of the years' results as
a whole.
General and administrative expense decreased approximately
$65,000 from 1992 to 1993 primarily due to decreases in general
partner liability insurance premiums and tax preparation fees for
the current year compared to the prior year. General partner
liability insurance premiums decreased $25,000 between 1992 and
1993. The 1992 general and administrative expenses included an
additional one-time tax preparation expense accrual of $10,000.
In prior years, these costs were expensed when paid. In 1992,
however, the 1991 tax costs were expensed when paid as well as an
accrual was made for the 1992 tax year expenses to be paid in
1993. The remainder of the decrease is due to payment timing
differences related to the change in the software used for the
investor relations database.
The litigation settlement expense of $33,000 for the year ended
December 31, 1993 includes $21,400 reimbursed to Glenborough
Corporation (as discussed in Note 8 of the Notes to Financial
Statements) and legal fees in the amount of $11,600 associated
with the settlement of the lawsuit brought by the former
management company and seller of the hotel.
Page 28 of 56
Item 8. Financial Statements and Supplementary Data
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Page
-----
Report of Independent Public Accountants . . . . . . . . . 30
Financial Statements:
Consolidated Balance Sheets at December 31, 1994,
1993 and 1992 . . . . . . . . . . . . . . . . . . . . . 31
Consolidated Statements of Operations for the Years ended
December 31, 1994, 1993, the Two Months Ended
December 31, 1992, and the Year Ended
October 31, 1992 . . . . . . . . . . . . . . . . . . . 32
Consolidated Statements of Partners' Equity (Deficit)
for the Years Ended
December 31, 1994, 1993, the Two Months Ended
December 31, 1992 and the Year Ended
October 31, 1992 . . . . . . . . . . . . . . . . . . . 33
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1993, the Two Months Ended
December 31, 1992, and the Year Ended
October 31, 1992 . . . . . . . . . . . . . . . . . . . 34
Notes to Consolidated Financial Statements . . . . . . . 36
Financial Statement Schedules:
Schedule III - Consolidated Real Estate Investments
and Related Accumulated Depreciation and Amortization
at December 31, 1994 . . . . . . . . . . . . . . . . . . 49
All other financial statement schedules have been omitted because
of the absence of conditions under which they are required or
because the information is included elsewhere in this report.
Page 29 of 56
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
GLENBOROUGH PENSION INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP:
We have audited the accompanying consolidated balance sheets of
GLENBOROUGH PENSION INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP
as of December 31, 1994, 1993 and 1992 and the related
consolidated statements of operations, partners' equity (deficit)
and cash flows for the years ended December 31, 1994 and 1993,
the two months ended December 31, 1992, and the year ended
October 31, 1992. These consolidated financial statements and
the schedule referred to below are the responsibility of the
Partnership's management. Our responsibility is to express an
opinion on these consolidated financial statements and the
schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of GLENBOROUGH PENSION INVESTORS, A CALIFORNIA
LIMITED PARTNERSHIP as of December 31, 1994, 1993 and 1992 and
the results of its operations and its cash flows for the years
ended December 31, 1994 and 1993, the two months ended December
31, 1992 and the year ended October 31, 1992, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic consolidated financial statements taken as a whole. The
schedule listed in the index to the financial statements and
schedules is presented for the purpose of complying with the
Securities and Exchange Commission's rules and are not part of
the basic consolidated financial statements. The schedule has
been subjected to the auditing procedures applied in the audits
of the basic consolidated financial statements and, in our
opinion, fairly states in all material respects the financial
data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
San Francisco, California,
Page 30 of 56
February 10, 1995
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Balance Sheets
(in thousands, except units outstanding)
December 31, 1994, 1993 and 1992
Assets 1994 1993 1992
------ ----- ----- -----
Real estate investments:
Land $ 6,456 $ 6,456 $ 6,456
Buildings and improvements, net of
accumulated depreciation of $1,357,
$698 and $97 in 1994, 1993 and 1992,
respectively 12,958 13,345 13,703
------- ------- -------
Net real estate investments 19,414 19,801 20,159
Cash and cash equivalents 382 271 408
Accounts receivable 106 150 57
Prepaid expenses and other assets, net
of accumulated amortization of $129,
$35 and $6 in 1994, 1993 and 1992,
respectively 510 417 154
------- ------- -------
Total assets $20,412 $20,639 $20,778
======= ======= =======
Liabilities and Partners' Equity
(Deficit)
-------------------------------
Accounts payable and accrued expenses $ 559 $ 472 $ 426
Note payable to affiliate - 349 349
Line of credit - - 150
------- ------- -------
Total liabilities 559 821 925
Partners' equity (deficit):
General Partner (55) (56) (55)
Limited Partners - 118,942 limited
partnership units outstanding 19,908 19,874 19,908
------- ------- -------
Total partners' equity 19,853 19,818 19,853
------- ------- -------
Total liabilities and partners'
equity $20,412 $20,639 $20,778
======= ======= =======
Page 31 of 56
The accompanying notes are an integral part of these consolidated statements.
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Operations
(in thousands, except per unit amounts)
For the Years Ended December 31, 1994, 1993, the Two Months Ended
December 31, 1992 and the Year Ended October 31, 1992
For the
For the For the Two Months For the
Year Ended Year Ended Ended Year Ended
Dec 31, Dec 31, Dec 31, Oct 31,
1994 1993 1992 1992
-------- -------- -------- ------
Revenues:
Income on Investment
in Master Agreement $ - $ - $ - $ 1,521
Rental revenue 4,198 3,987 651 -
Interest and other - 6 1 3
--------- -------- -------- -------
Total revenues 4,198 3,993 652 1,524
--------- -------- -------- -------
Expenses:
Operating (including $851
paid to affiliates in
1994) 2,270 2,236 433 -
General and administrative
(including $222 paid to
affiliates in 1994) 314 372 91 437
Depreciation and amortization 753 630 103 -
Litigation settlement expense - 33 - -
Interest - 4 - 45
-------- -------- -------- -------
Total expenses 3,337 3,275 627 482
-------- -------- -------- -------
Unrealized loss on Investment
in Master Agreement - - - (4,282)
-------- -------- -------- -------
Net income (loss) $ 861 $ 718 $ 25 $(3,240)
======== ======== ======== ========
Net income (loss) per limited
partnership unit $ 7.16 $ 5.98 $ 0.20 $(26.97)
======== ======== ======== ========
Distributions per limited
partnership unit:
From net income $ 6.88 $ 5.98 $ 0.20 $ -
Representing return of
capital - 0.28 1.36 12.49
Total distributions per limited -------- -------- -------- -------
partnership unit $ 6.88 $ 6.26 $ 1.56 $ 12.49
======== ======== ======== =======
The accompanying notes are in integral part of these consolidated statements.
Page 32 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Partners' Equity
(Deficit)
(in thousands)
Total
General Limited Partners'
Partner Partners Equity
--------- --------- ---------
Balance at October 31, 1991 $ (7) $ 24,764 $ 24,757
Distributions (17) (1,486) (1,503)
Net loss (32) (3,208) (3,240)
-------- -------- --------
Balance at October 31, 1992 (56) 20,070 20,014
Distributions - (186) (186)
Net income 1 24 25
-------- -------- --------
Balance at December 31, 1992 (55) 19,908 19,853
Distributions (8) (745) (753)
Net income 7 711 718
-------- -------- --------
Balance at December 31, 1993 (56) 19,874 19,818
Distributions (8) (818) (826)
Net income 9 852 861
-------- -------- --------
Balance at December 31, 1994 $ (55) $ 19,908 $ 19,853
======== ======== ========
The accompanying notes are an integral part of these consolidated statements.
Page 33 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows (in thousands)
For the Years ended December 31, 1994, 1993, the Two months ended
December 31, 1992, and the Year ended October 31, 1992
For the For the For the For the
Year Year Two Months Year
Ended Ended Ended Ended
Dec 31, Dec 31, Dec 31, Oct 31,
1994 1993 1992 1992
------ ------ ------ ------
Cash flows provided by operating
activities:
Net income (loss) $ 861 $ 718 $ 25 $(3,240)
Adjustments to reconcile net
income (loss) to net cash provided
by operating activities:
Unrealized loss on investment
in master agreement - - - 4,282
Depreciation and amortization 753 630 103 -
Changes in certain assets and
liabilities:
Accounts receivable 44 (22) (57) -
Prepaid expenses and other
assets (187) (363) (131) (4)
Accounts payable and accrued
expenses 87 46 382 (10)
Note payable to affiliate (349) - - -
Deferred income - - - 197
-------------- ------- -------
Total adjustments 348 291 297 4,465
-------------- ------- -------
Net cash provided by operating
activities 1,209 1,009 322 1,225
-------------- ------- -------
Cash flows used for investing activities:
Acquisitions of and additions
to real estate (272) (243) (7) -
Net cash used for investing ------- ------ ------- -------
activities (272) (243) (7) -
------- ------ ------- -------
Cash flows provided by (used for)
financing activities:
Proceeds from line of credit - - - 150
Principal payments on line of
credit - (150) - (151)
Distributions paid to partners (826) (753) (186) (1,503)
------- ------ ------- -------
Net cash used for financing activities (826) (903) (186) (1,504)
------ ------ ------- -------
Net increase (decrease) in cash and
cash equivalents 111 (137 129 (279)
------- ------ ------- ------
-continued-
Page 34 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows (in thousands) -continued-
For the Years ended December 31, 1994, 1993, the Two months ended
December 31, 1992, and the Year ended October 31, 1992
For the For the For the For the
Year Year Two Months Year
Ended Ended Ended Ended
Dec 31, Dec 31, Dec 31, Oct 31,
1994 1993 1992 1992
------- ------- ------- -------
Cash and cash equivalents at
beginning of period 271 408 279 558
-------- ------ ------- -------
Cash and cash equivalents at
end of period $ 382 $ 271 $ 408 $ 279
======== ====== ======= =======
Supplemental disclosure of cash
flow information:
Cash paid for interest $ - $ 4 $ - $ 45
======== ====== ======= =======
Supplemental disclosure of
non-cash transactions:
In-substance foreclosure on
properties securing investment
in master agreement:
Increase in real estate
investments $ - $ - $ - $ 20,249
======== ====== ===============
Reduction of Investment in
Mater Agreement $ - $ - $ - $(21,018)
======== ====== ===============
Reduction of deferred income $ - $ - $ - $ 769
======== ====== ===============
The accompanying notes are an integral part of these consolidated statements.
Page 35 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1994, 1993, 1992
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
--------------------------------------------------
POLICIES
--------
Organization: Glenborough Pension Investors (the
"Partnership")(formerly known as Outlook Pension Investors - see
Note 9) was organized on October 17, 1984 in accordance with the
provisions of the California Revised Limited Partnership Act and
commenced operations April 9, 1985. The General Partner was API
Partners, a California general partnership consisting of Luke V.
McCarthy, John R. Provine and August Advisers, Inc., a California
corporation. On April 4, 1994, several matters submitted to a
vote of security holders through the solicitation of proxies were
approved including the change in the general partner to
Glenborough Realty Corporation as the managing General Partner
and Robert Batinovich as co-General Partner (collectively the
"General Partner") (see Note 9).
The Partnership has raised capital by the sale of limited
partnership interests. The principal purpose of the Partnership
was to lend funds to AFP Partners (the "Borrower"), then a
California general partnership and an affiliate of the General
Partner. The funds have been used by the Borrower to acquire
real properties such as shopping centers, office buildings and
other commercial real properties from nonaffiliated sellers.
The Partnership Agreement provides that net income or loss of the
Partnership for financial statement and income tax reporting
purposes, and distributions of cash available for distribution,
as defined in the Partnership Agreement, are to be allocated 99%
to the Limited Partners and 1% to the General Partner. These
amounts may be adjusted subject to the provisions of the
Partnership Agreement.
Change in the Fiscal Year End: In 1993, the Partnership's year
end
was changed from October 31 to December 31, therefore,
comparative years are stated as they were filed in prior years,
and do not conform to the current year ending date.
Real Estate Investments: Real estate investments are stated at an
estimated net realizable value.
Buildings and improvements are being depreciated on a straight-
line basis over the remaining useful lives of the properties
which range from 4 to 25 years.
Income on Investment In Master Agreement: Commencing
November 1, 1986 and ending on October 31, 1992 (see note 2), the
Partnership recognized income from the Investment in Master
Page 37 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1994, 1993, 1992
Agreement to the extent that both cash was received from the
Borrower and the amount of cash received did not exceed the
actual net operating income (NOI) of the underlying properties.
NOI is defined as rental (or other) income, less operating
expenses (excluding depreciation, amortization and debt service).
Cash equivalents: The Partnership considers all short-term
investments (including certificates of deposit) with a maturity
of three months or less at date of purchase to be cash
equivalents.
Income taxes: Federal and state income tax laws provide that the
income or loss of the Partnership is reportable by the partners
in their tax returns. Accordingly, no provisions for such taxes
have been made in the accompanying financial statements. The
Partnership reports certain transactions differently for tax and
financial statement purposes.
Net earnings (loss) and distributions per limited partnership
unit: Net earnings (loss) and distributions per limited
partnership unit are based on 118,942 weighted average limited
partnership units outstanding in all years presented.
Note 2. INVESTMENT IN MASTER AGREEMENT
------------------------------
On January 16, 1985, the Partnership entered into a master loan
agreement under which the Partnership was obligated to loan to
the Borrower 99% of the net proceeds received upon the sale of
limited partnership units less the reserves to be maintained by
the Partnership. At October 31, 1987, the Partnership had
completed all of the loans contemplated under the master loan
agreement. Separate loans have been made by the Partnership
with respect to each property or group of related properties
purchased by the Borrower. Management believes, at inception,
that in no case did the loan amount exceed the appraised value of
the property or properties. Each loan was secured by the real
property purchased by the Borrower and provided for partial
recourse to the Borrower in the event of nonpayment. All loans
were approved by an independent Loan Servicing Agent and provide
for basic interest to accrue at the rate of 13% per annum and for
a minimum payment rate of 8% per annum payable quarterly.
All loans were "participating loans", and upon the sale of
property or the maturity of the loan the Partnership was entitled
to 75% of any increase in the value of the property in excess of
its original cost, costs of sale and accrued interest. The
master loan agreement also required the Borrower to pledge a
certificate of deposit of $500,000 and certain promissory notes
initially having an aggregate principal balance of $1,500,000,
Page 38 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1994, 1993, 1992
and additional notes if necessary, so that the pledged collateral
is never less than 5% of the gross proceeds of the sale of
partnership units and 5% of the gross proceeds of the warrants
exercised. During the year ended October 31, 1990, the Borrower
loaned the funds held in the certificate of deposit to the
Partnership in return for a note (see Note 4). Under the master
loan agreement, the Partnership was entitled to a prepayment
penalty from the Borrower of 5% of the unpaid principal balance
at the time of prepayment if the note was paid in the first 5
years of its term, decreasing to a 1% penalty if the note was
paid in the final year of its term.
Through October 31, 1987, the Partnership had made 10 loans to
the Borrower totaling $25,299,800. These 10-year notes had
payment terms consistent with the master loan agreement and
matured at various dates in fiscal years 1996 and 1997. The loan
amounts represent 100% of the cash invested by the Borrower in
each respective property including acquisition costs, acquisition
fees, other capitalized costs and expense reserves.
Through October 31, 1992, the Partnership accounted for its
Investment in Master Agreement according to certain guidelines
established by the American Institute of Certified Public
Accountants and adopted by the Securities and Exchange Commission
(SEC). These guidelines address the treatment of certain
transactions whereby a lender/investor has in effect assumed a
substantial amount of the risks associated with direct ownership
of the underlying properties.
Under these guidelines, the Partnership accounted for its loans
as investments and recognized income from them only to the extent
that it was received in cash and was supported by the NOI of the
underlying properties (see Note 1). Accordingly, no income in
excess of cash received was recognized and income from cash
received in excess of the NOI of the properties was deferred.
$197,000 and $23,000 of income was deferred in 1992 and 1991,
respectively. In addition, under the terms of the Master
Agreement the Borrower was required to pay the remaining interest
amount between the 13% basic rate and the 8% minimum payment rate
made by the Borrower when cash flow was sufficient or upon
maturity of the loans. At October 31, 1992 and 1991, unpaid
interest on the loans representing the difference between the 13%
basic interest and the amount received in cash was approximately
$8,640,100 and $7,069,100, respectively. Realization of these
amounts by the Partnership was dependent upon sufficient cash
flows from operation of the properties or a sale of the
properties at an amount sufficient to recover the original loan
amount, plus accrued interest.
Page 39 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1994, 1993, 1992
Due to AFC's inability to loan any additional funds to the
Borrower, and due to the properties' continued inability to
generate sufficient income to cover the minimum interest payments
due to the Partnership, a Forbearance Agreement, effective July
1, 1992 and commencing with the payment due October 1, 1992, and
originally expiring on March 31, 1993 (the "Forbearance Period"),
was reached to allow time for negotiation of a workout of the
Loans (see Note 2 of the Notes to Financial Statements). During
the Forbearance Period, the Borrower paid all net cash flow to
the Partnership from the properties which secured the Loans. "Net
Cash Flow" was defined as all income collected by the Borrower
less operating expenses of the properties (including reserves for
real and personal property taxes and insurance) and overhead and
operating expenses of the Borrower. The Partnership and the
Borrower extended the term of the Forbearance Agreement to allow
sufficient time to complete final negotiation and documentation
of a workout and to solicit approval from the Partnership's
Limited Partners.
At October 31, 1992, it was determined that the Borrower had
little or no equity in the Properties securing the loans,
considering the current fair market value of the Properties, and
the fact that the proceeds for repayment of the loans could be
expected to come only from the operation or sale of the
Properties, given AFC's inability to loan any additional funds to
the Borrower. Additionally, although the Borrower retained
control of the Properties, the Borrower's financial condition at
that time and the economic prospects for the Borrower and the
Properties in the foreseeable future, made it doubtful that the
Borrower would be able to rebuild equity in the Properties or
otherwise repay the Loans. As a result, for financial reporting
purposes, the Partnership reduced its Investment in Master
Agreement by $5,051,000 to the lower of cost or estimated net
realizable value of the underlying properties of $20,249,000.
For financial statement presentation purposes only (through June
30, 1994), the Partnership had, in effect, foreclosed on the
properties. To recognize this, the net Investment in Master
Agreement has been reclassified to investment in real estate as
of October 31, 1992. The depreciable components of this
investment are being depreciated over the remaining useful lives
of the properties which range from 4 to 25 years for improvements
and 24 to 26 years for buildings. Additionally, all operating
revenues and expenses of the properties are being recognized by
the Partnership effective November 1, 1992. No additional Income
on Investment in Master Agreement will be recognized. In
addition, as part of the "in-substance foreclosure" accounting
which requires that the Partnership write-down the Investment in
Master Agreement to the fair market value of the properties and
then reclassify the loans to investment in real estate, the
Page 40 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1994, 1993, 1992
balance of deferred income in the amount of $769,000 was
eliminated and was off-set against the unrealized loss on
Investment in Master Agreement.
On April 4, 1994, several matters submitted to a vote of security
holders through the soliciation of proxies were approved. These
matters included an acquisition through deeds-in-lieu of
foreclosure of ten of thirteen properties. These ten properties
secured approximately $12,833,000 of the principal balances of
the loans. The terms of the remaining loans included:
an increase in the principal amount of the loans by
approximately $355,000 for the costs incurred by the
Partnership in the restructuring, an interest accrual rate
change from 13% to 10% beginning January 1, 1994, extension
of the maturity dates of the loans to March 31, 2001 with
five one-year renewal options, and a cross-collateralization
of the three loans with the right to transfer a property to
the Partnership in satisfaction of the loan without creating
a default under the other loans;
a release of certain collateral notes in the aggregate
principal amount of $1,500,000 and the right to pursue
certain limited recourse liability relating to the existing
loans;
receiving secured and unsecured notes with unpaid balances
of principal and accrued interest as of September 30, 1993
aggregating approximately $1,159,000;
receiving a release from the obligation to repay
approximately $349,000 that was owed to the Borrower;
acknowledgement of the termination of the contribution
agreement and releasing such rights, if any, the Partnership
may have with respect thereto;
and the termination of the servicing agreement.
Effective July 1, 1994, the Partnership obtained ownership by
deeds-in-lieu of foreclosure of four of the Borrower's
properties: Park 100 (Buildings 42 and 46) and the Eagan and New
Hope mini-storages. In addition, title to the six auto care
centers, formerly held by the Borrower, was passed to GPI Georgia
Auto Centers, L.P., a Georgia Limited Partnership whose general
partner is GPI Auto Centers, Inc., a Georgia corporation, both of
which are wholly owned by the Partnership.
Note 3. REAL ESTATE INVESTMENTS
Page 41 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1994, 1993, 1992
-----------------------
The cost and accumulated depreciation and amortization of real
estate investments as of December 31, 1994 are as follows (in
thousands):
Buildings
December 31, 1994: Land and Improvements Total
Park 100 Buildings $ 712 $ 2,689 $ 3,401
Sea Tac II 712 1,236 1,948
New Hope 207 1,648 1,855
Eagan 301 765 1,066
Park Center 1,748 2,714 4,462
Country Suites - DFW 954 2,523 3,477
Auto Care Norcross 287 565 852
Auto Care College Park 266 427 693
Auto Care Roswell 206 275 481
Auto Cares:
Snellville, Marietta and
Smyrna 1,063 1,473 2,536
------ ------ ------
Subtotal 6,456 14,315 20,771
Less accumulated depreciation
and amortization - 1,357 1,357
------ ------ ------
Total $ 6,456 $12,958 $19,414
====== ====== ======
Park 100 Buildings - On December 31, 1985, the Partnership funded
a mortgage loan to the Borrower in the amount of $4,160,000 for
the purpose of purchasing Buildings 42 and 46 of the Park 100
Business Park, located in Indianapolis, Indiana. The loan was
secured by first deeds of trust on the properties. On July 1,
1994, these properties were acquired by the Partnership by deeds-
in-lieu of foreclosure.
Sea Tac II - On March 3, 1986, the Partnership funded a mortgage
loan to the Borrower in the original amount of $2,268,800 for the
purpose of purchasing Sea Tac II, located in Seattle, Washington.
As part of the restructure in 1994, the principal balance of the
note was modified to $2,333,338. The increase represents a
portion of the costs of the restructure. The loan is secured by
a first deed of trust on the property.
All American Self Storages - New Hope and Eagan - On July 30,
1986, the Partnership funded two mortgage loans to the Borrower
in the amount of $2,193,700 and $1,288,300, respectively, for the
purpose of purchasing two self-storage facilities, New Hope and
Page 42 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1994, 1993, 1992
Eagan, located in Minneapolis, Minnesota. On July 1, 1994, these
properties were acquired by the Partnership by deeds-in-lieu of
foreclosure.
Park Center - On October 7, 1986, the Partnership funded a
mortgage loan to the borrower in the original amount of
$5,298,000 for the purpose of purchasing Park Center, a shopping
center located in Santa Ana, California. As part of the
restructure in 1994, the principal balance of the note was
modified to $5,448,427. The increase represents a portion of the
costs of the restructure. The loan is secured by a first deed of
trust on the property.
Country Suites - DFW - On October 31, 1986, the Partnership
funded a mortgage loan to the Borrower in the original amount of
$4,900,000 for the purpose for purchasing a suite-hotel complex,
Country Suites - DFW, located in Irving, Texas. As part of the
restructure in 1994, the principal balance of the note was
modified to $5,039,434. The increase represents a portion of the
costs of the restructure. The loan is secured by a first deed of
trust on the property.
Atlanta Auto Care - Norcross, College Park and Roswell - On
December 31, 1986, the Partnership funded three separate mortgage
loans in the amounts of $974,000, $769,000 and $545,000,
respectively, for the purpose of purchasing three Atlanta Auto
Care Centers located in Norcross, College Park, and Roswell,
Georgia. On July 1, 1994, title to these properties was passed
by deeds-in-lieu of foreclosure to GPI Georgia Auto Centers,
L.P., a Georgia Limited Partnership whose general partner is GPI
Auto Centers, Inc., a Georgia Corporation, both of which are
wholly owned by the Partnership.
Atlanta Auto Cares - Snellville, Marietta and Smyrna - Beginning
in May 1987 and ending in June 1987, the Partnership funded a
mortgage loan in the total amount of $2,903,000 for the purpose
of purchasing three Atlanta Auto Care Centers located in
Snellville, Marietta and Smyrna, Georgia. On July 1, 1994, title
to these properties was passed by deed-in-lieu of foreclosure to
GPI Georgia Auto Centers, L.P., a Georgia Limited Partnership
whose general partner is GPI Auto Centers, Inc., a Georgia
Corporation, both of which are wholly owned by the Partnership.
Note 4. TRANSACTIONS WITH AFFILIATES
----------------------------
As discussed in Note 2, the Partnership was loaned $500,000 in
1990 by the Borrower in exchange for a note. The note was due
April 20, 1994, bore interest at 10% per annum and was secured by
Page 43 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1994, 1993, 1992
interest payments due to the Partnership from the Borrower on
funds loaned under the master loan agreement.
The Borrower possessed insufficient cash flow to make the
interest payments to the Partnership for the quarter ended
December 31, 1991. An agreement between the partners of the
Borrower required August Financial Corporation ("AFC"), one of
the partners of the Borrower at the time, to supplement
deficiencies in the Borrower's cash flow by making loans to the
Borrower. AFC became insolvent and AFC's parent company, GLENFED
Service Corporation, was also insolvent and therefore not in a
position to contribute any additional capital to AFC. Under
these circumstances, management believed that a minor
modification between the Partnership and the Borrower was
appropriate. As a result, the Partnership and the Borrower
entered into an agreement on December 20, 1991 to reduce the
interest payment due to the Partnership for the quarter ended
December 31, 1991 by $151,300 and to reduce the note payable to
the Borrower by the same amount. As part of the restructure
discussed in Note 9, the Partnership received a release from the
obligation to repay this note.
Glenborough Realty Corporation had the option to purchase the
general partner interest in the Partnership, subject to certain
conditions, including the approval of a majority of the limited
partners. This option was exercised as part of the restructure.
In accordance with the Limited Partnership Agreement, the
Partnership paid the General Partner and its affiliates
compensation for services provided to the Partnership.
Glenborough Corporation and Glenborough Hotel Group
("Glenborough") provided property management services and has
been compensated as follows:
1994
------
Property management fees $108,000
Property salaries (reimbursed) 47,700
Hotel management fees 79,000
Hotel salaries (reimbursed) 442,800
Property administrative services 173,200
These expenses are included in operating expenses on the
Statement of Operations.
The Partnership also reimbursed Glenborough for expenses incurred
and for services provided to the Partnership such as accounting,
investor services, data processing, duplicating, office supplies,
Page 44 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1994, 1993, 1992
legal and administrative services. Glenborough was reimbursed
$221,800 by the Partnership in 1994.
Note 5. LINE OF CREDIT
--------------
The Partnership established a $150,000 line of credit facility
with an unaffiliated third party in February 1992. Funds drawn
on this line of credit bore interest at the prime rate plus 1.5%.
To cover the cash distributions to limited partners that
otherwise would have been funded by the interest not received in
December 1991 (as discussed in Note 4), $150,000 was drawn on the
line of credit in late February 1992. This line of credit
matured February 28, 1994, but was paid off in May 1993 with the
proceeds from the net cash flow payments made by the Borrower.
Note 6. TAXABLE INCOME
--------------
The Partnership's tax return, its qualification as a partnership
for Federal income tax purposes and the amount of taxable income
or loss are subject to examination by Federal and State taxing
authorities. If such examinations result in changes to the
Partnership's taxable income or loss, the tax liability of the
partners could change accordingly.
For Federal income tax reporting, (a) fees paid for services
related to seeking and evaluating potential real estate
investments are deducted if and when the plans of acquisition are
subsequently abandoned, (b) depreciation is provided for under
accelerated and modified accelerated cost recovery methods,
(c) certain organizational costs classified as syndication costs
for tax purposes are not deductible, (d) lease income is
recognized under the terms of the lease contract; (e) bad debts
are written off when deemed uncollectible, and (f) gains or
losses from the sales of properties are adjusted for the turn-
around effect of the prior tax treatment of advisory fees and
accelerated cost recovery.
A reconciliation of financial reporting income or partners'
capital to taxable income or partners' capital has not been
provided as the structure of the relationship between the
Partnership and the Borrower makes such reconciliations
meaningless.
Note 7. PARTNERS' EQUITY
----------------
Distributions: The amount of all Partnership distributions is
determined by the General Partner at its sole discretion.
Page 45 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1994, 1993, 1992
The Partnership Agreement provides that distributions from "cash
flow", to the extent deemed available by the General Partner for
distribution, shall be distributed 99% to the Limited Partners
and 1% to the General Partner. "Cash flow" is defined as cash
funds provided from operations, including basic interest received
from the Borrower under the terms of the master loan agreement,
and interest income from cash and short-term investments, without
deduction for non-cash expenses, but after deducting cash funds
used to pay all expenses and debt payments, and excluding
additional interest received from the Borrower under the terms of
the loans, if any.
Distributions from sources other than operating cash flow shall
be distributed 100% to the Limited Partners until the amounts
distributed to the Limited Partners equal a complete return of
their "adjusted capital investment". "Adjusted capital
investment" is defined as the capital contributed to the
Partnership less distributions, other than distributions from
cash flow. Additional distributions, if any, shall be allocated
100% to the Limited Partners until a minimum 6% per annum
cumulative non-compounding return on the Limited Partners'
adjusted capital investment is reached. All additional
distributions, if any, are allocated 1% to the General Partner
and 99% to the Limited Partners in proportion to the number of
limited partnership units held by them.
Note 8. LITIGATION
----------
On May 6, 1993, Glenborough Corporation and certain of its
affiliates entered into a settlement of a lawsuit that had been
brought by the former management company and seller of the hotel
("the seller"), on November 13, 1991. The lawsuit alleged that,
in connection with the general partner's termination of the
former management company as operator and franchisor of the
Borrower's hotel, Glenborough and its affiliates had defamed the
former management company and interfered with its contractual
relationship with the Borrower. A majority of the amount paid to
the former management company under the settlement was funded by
Glenborough's insurance carriers, but a portion of the settlement
amount was funded by Glenborough. Pursuant to Glenborough's
indemnity rights as manager of the Borrower, AFP Partners, (and
as general partner of other Outlook partnerships that own
hotels), Glenborough is entitled to reimbursement of this portion
of the settlement payment. The Borrower's share of this
reimbursement together with the associated legal fees was $33,000
and has been included in the Partnership's December 31, 1993
statement of operations as litigation settlement expense.
Page 46 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1994, 1993, 1992
Note 9. PARTNERSHIP EVENTS
------------------
On April 4, 1994, several matters submitted to a vote of security
holders through the solicitation of proxies were approved. The
Limited Partners have given consent on the following matters:
a) the approval of the admission of Glenborough Realty
Corporation as managing general partner and Robert
Batinovich as co-general partner and the withdrawal of
API Partners as general partner;
b) the change in the name of the Partnership to
Glenborough Pension Investors by an amendment to the
partnership agreement;
c) the further amendment of the partnership agreement to
permit Glenborough Corporation, as an affiliate of the
new General Partner, to continue to receive fees in
substantially the same or somewhat lower amounts as the
fees that were being paid to Glenborough Corporation
for property management and partnership administrative
services provided for in the management agreement;
d) a restructuring of the Partnership's investments which
includes acquiring ten of thirteen properties which
secure approximately $12,833,000 of the principal
balances of the loans by deeds-in-lieu of foreclosure;
a revision of the terms of the remaining loans secured
by the three properties including an increase in the
principal amount of the loans by approximately $355,000
for the costs incurred by the Partnership in favor of
the financial advisor and the investment banking firm
used in the restructuring, an interest accrual rate
change from 13% to 10% beginning January 1, 1994,
extension of the maturity dates of the loans to March
31, 2001 with five one-year renewal options, and a
cross-collateralization of the three loans with the
right to transfer a property to the Partnership in
satisfaction of the loan without creating a default
under the other loans; a release of certain collateral
notes in the aggregate principal amount of $1,500,000
and the right to pursue certain limited recourse
liability relating to the existing loans; receiving
secured and unsecured notes with unpaid balances of
principal and accrued interest as of September 30, 1993
aggregating approximately $1,159,000; receiving a
release from the obligation to repay approximately
$350,000 that was owed to the Borrower, AFP Partners;
acknowledgement of the termination of the contribution
Page 47 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1994, 1993, 1992
agreement and releasing such rights, if any, the
Partnership may have with respect thereto; and the
termination of the servicing agreement.
Effective July 1, 1994, the Partnership obtained ownership by
deeds-in-lieu of foreclosure of four of the Borrower's
properties: Park 100 (Buildings 42 and 46) and the Eagan and New
Hope mini-storages. In addition, title to the six auto care
centers, formerly held by the Borrower, was passed to GPI Georgia
Auto Centers, L.P., a Georgia Limited Partnership whose general
partner is GPI Auto Centers, Inc., a Georgia corporation, both of
which are wholly owned by Glenborough Pension Investors.
In addition to the solicitation discussed above, but separate and
apart from this approved proposal, the Limited Partners were
asked to vote on an amendment to the Partnership Agreement which
would have permitted the General Partner to reinvest proceeds
received from the sale of properties acquired by the Partnership
pursuant to the proposal discussed above and the principal
payments received on the notes that are held by the Partnership
in real property. A majority vote was not achieved by the cutoff
date of April 5, 1994, and therefore, this "investment amendment"
proposal was not passed. On April 5, 1994, of 76,471 units
responding, 49,668 voted for the "investment amendment" proposal,
15,423 voted against the proposal, and 11,380 abstained.
In addition to the changes discussed above, AFP Partners'
structure changed as part of the restructuring. AFP Partners was
a California general partnership whose general partners consisted
of August Financial Corporation, a California Corporation, August
Financial Partners, a California limited partnership, and August
Investment Partners, a California limited partnership. AFP
Partners, as part of the restructure, is now a California limited
partnership, whose general partners are Glenborough Realty
Corporation and Robert Batinovich, collectively owning 1%.
August Financial Partners, a California limited partnership, is
the limited partner, owning 99%.
Note 10. OTHER INFORMATION
-----------------
The Partnership has been named in a Registration Statement
proposing a consolidation by merger of several entities, which
has been filed with the Securities and Exchange Commission. In
that regard, as of December 31, 1994, the Partnership has
advanced $365,000 toward the transaction costs associated with
the consolidation (included in prepaid expenses and other
assets). An additional $100,000 in transaction costs have been
included in prepaid expenses and other assets and was payable at
December 31, 1994. In the event the proposal is not approved by
Page 48 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1994, 1993, 1992
the Partnership's limited partners, and the consolidation goes
forward with any of the other entities, the amounts advanced will
be fully reimbursed by an affiliate of the general partners of
the Partnership. If the Consolidation, itself, does not go
forward with any of the other entities, the Partnership will bear
a proportion of the transaction costs based upon the number of
limited partners who voted for approval of the transaction as
compared to those who dissented or abstained. The limited
partners are expected to receive their solicitation materials for
this potential transaction in 1995.
Note 11. SUBSEQUENT EVENT
----------------
On January 10, 1995, subsequent to the Partnership's year-end,
the Partnership acquired a property, Summer Breeze Apartments
(formerly owned by Glenfed Summerbreeze Investors, Ltd., a
California Limited Partnership) by a deed-in-lieu of foreclosure.
As part of the restructure discussed in Note 9, the Partnership
received a note secured by a second-deed of trust on the property
and an unsecured note with unpaid balances of principal and
accrued interest as of September 30, 1993 aggregating
approximately $1,159,000. Summer Breeze Apartments are also
encumbered by a 1st Deed of Trust. Because the amount of the
Glenfed Summerbreeze Investors Partnership's debt was
approximately equal to the value of its assets, the partnership
had little or no net worth. The loans became due September 1,
1994. Since Glenfed Summerbreeze Investors elected not to
contribute any capital to the partnership to pay for new
financing, the Partnership agreed to pay Glenfed Summerbreeze
Investors, Ltd. $150,000 for a deed-in-lieu and dissolution of
the partnership thereby foregoing costs of foreclosure and
receiving title to the property in a more timely manner.
Management is currently working on new financing. Meanwhile, the
Partnership has made payments to the lender on the note to
postpone appointment of a receiver for the Summer Breeze
property.
Page 49 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
PROPERTIES OWNED BY GLENBOROUGH PENSION INVESTORS
AND AFP PARTNERS
Schedule III
Consolidated Real Estate Investments and Related Accummulated
Depreciation and Amortization
December 31, 1994
Costs
Capitalized
(Reduced)
Initial Costs Subsequent
to AFP to Acqstn
------------ Bldgs ----------
and Carrying
Properties Land Imprvmnts Imprvmnts Costs
---------- ----- -------- --------- --------
Park 100 Building $ 712,357 3,285,853 428,820 (65,734)
Sea Tac II 712,200 1,473,512 112,417 -
All American Self-Storage/Eagan 300,725 959,885 25,702 -
All American Self Storage/Newhope 206,867 1,939,520 76,815 -
Park Center 1,748,000 3,295,620 224,101 (50,691)
Country Suites DFW 972,429 3,850,454 163,396 (124,066)
Auto Care Norcross 286,557 640,560 58,490 -
Auto Care College Park 265,610 489,129 59,246 -
Auto Care Roswell 205,949 331,618 14,011 -
Auto Care Snellville, Marrietta,
Smyrna 1,077,180 1,730,666 138,428 (31,970)
--------- ---------- --------- ---------
Total $6,487,874 17,996,817 1,301,426 (272,461)
========= ========== ========= =========
Adjustments
-------------
Costs Captlzd
Accum Depn through subsqnt to
Oct. 31, 1992 (prior in-sub
Properties to in-sub foreclosure) foreclosure
---------- -------------------- -----------
Park 100 Buildings (1,044,448) 84,748
Sea Tac II (397,955) 48,000
All American Self Storage/Eagan (225,534) 4,535
All American Self Storage/Newhope (448,645) 81,298
Park Center (789,684) 34,890
Country Suite DFW (1,597,504) 212,114
Auto Care Norcross (146,013) 11,900
Auto Care College Park (129,660) 7,800
Auto Care Roswell (74,686) 4,290
Auto Care, Snellville, Marrietta,
Smyrna (410,528) 32,730
----------- -----------
Total (5,264,657) 522,305
=========== ===========
Page 50 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
PROPERTIES OWNED BY GLENBOROUGH PENSION INVESTORS
AND AFP PARTNERS
Schedule III
Consolidated Real Estate Investments and Related Accummulated
Depreciation and Amortization
December 31, 1994
Gross Amount at Which
Carried on Books of GPI
----------------------
Buildings
Properties Land and Improvements Total
---------- ---- ---------------- -----
Park 100 Buildings $ 712,357 2,689,239 3,401,596
Sea Tac II 712,200 1,235,974 1,948,174
All American Self Storage/Eagan 300,725 764,588 1,065,313
All American Self Storage/Newhope 206,867 1,648,988 1,855,855
Park Center 1,748,000 2,714,236 4,462,236
Country Suites DFW 953,972 2,522,851 3,476,823
Auto Care Norcross 286,557 564,937 851,494
Auto Care College Park 265,610 426,515 692,125
Auto Care Roswell 205,949 275,233 481,182
Auto Care Snellville, Marrietta,
Smyrna 1,063,234 1,473,272 2,536,506
---------- ---------- ----------
Total 6,455,471 14,315,833 20,771,304
========== ========== ==========
Gross Amount at Which
Carried on Books of GPI
----------------------
Accumulated Remaining
Depreciation Date of Depreciable
Properties and Amort Acquisition Lives
----------- ------------ ----------- -----------
Park 100 Building $ 263,872 10/86 5-25
Sea Tac II 116,522 2/88 5-25
All American Self Storage/Eagan 71,033 7/86 5-25
All American Self Storage/Newhope 160,730 7/86 5-25
Park Center 255,440 9/86 5-25
Country Suites DFW 236,313 10/86 5-25
Auto Care Norcross 51,442 12/86 5-25
Auto Care College Park 38,872 12/86 5-25
Auto Care Roswell 25,793 12/86 5-25
Auto Cares, Snellville, Marrietta,
Smyrna 137,571 12/86 5-25
----------
Total $ 1,357,588
==========
Page 51 of 56
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
PROPERTIES OWNED BY GLENBOROUGH PENSION INVESTORS
AND AFP PARTNERS
Schedule III
Consolidated Real Estate Investments and Related Accummulated
Depreciation and Amortization
December 31, 1994
Following is a summary of real estate investments:
For the Year For the Year For the Two
Months
Ended Ended Ended
December 31, December 31, December 31,
1994 1993 1992
------------- ------------ --------------
Balance at beginning of
period $ 20,498,604 20,255,580 20,249,000
Acquisitions - - -
Improvements 272,700 243,024 6,580
------------ ----------- ------------
Balance at end of period $ 20,771,304 20,498,604 20,255,580
============ =========== ============
Following is a summary of accumulated depreciation and amortization of
real estate investments:
For the Year For the Year For the Two
Months
Ended Ended Ended
December 31, December 31, December 31,
1994 1993 1992
------------- ------------ -------------
Balance at beginning of
period $ 698,240 96,427 -
Additions charged to expense 659,348 601,813 96,427
Retirements - - -
------------ ------------ ------------
Balance at end of period $ 1,357,588 698,240 96,427
============ ============ ============
Page 52 of 56
Item 9. Changes and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
General Partners
The Partnership has no directors or executive officers. The
General Partners of the registrant are Glenborough Realty
Corporation (the "Managing General Partner") and Robert
Batinovich. For informational purposes, the following are the
names and additional information relating to each of the
controlling persons, directors and executive officers of the
Managing General Partner as of March 15, 1995:
Name Age Position
---- --- --------
Robert Batinovich 58 President and Chairman of the
Board
Andrew Batinovich 36 Senior Vice President, Chief
Financial Officer and Director
Sandra L. Boyle 46 Vice President
Barbara L. Evans 54 Vice President, Secretary and
Corporate Counsel
Eugene F. Daly 51 Director
Wallace A. Krone Jr. 63 Director
Laurence N. Walker 62 Director
J. Sydney Whalen 60 Director
The following is a brief description of the background and
experience of Robert Batinovich and each of the officers and
directors of Glenborough Realty Corporation.
Robert Batinovich has been the President and a Director of
Glenborough Corporation since its inception in l978 and of
Glenborough Realty Corporation since its inception in l985. He
has been the Chief Financial Officer ("CFO") of Glenborough
Corporation since April l986 and the CFO of Glenborough Realty
Corporation from April l986 through April l988. He was a member
of the California Public Utilities Commission from l975 to
January l979 and served as its Chairman from January l977 to
January l979. He has extensive real estate investment
experience. Mr. Batinovich's business background includes
managing and owning manufacturing, vending and service companies
and a national bank.
Page 53 of 56
Andrew Batinovich has been Senior Vice President and Chief
Financial Officer of Glenborough Realty Corporation since April
l988. He was Vice President-Property Management of Glenborough
Realty Corporation from April l986 to April l988. He also is
Senior Vice President in charge of property management and
partnership accounting for Glenborough Corporation. Prior to
joining Glenborough Corporation in June l983, he was employed at
Security Pacific National Bank in its international and corporate
banking groups specializing in real estate lending. He is the
son of Robert Batinovich.
Sandra L. Boyle has been Vice President of Glenborough Realty
Corporation since February 1991. She first joined Glenborough
Corporation in 1984 and is responsible for property management,
including maintenance, capital and tenant improvements, rent
collection, budgeting and supervision of regional offices. Prior
to joining Glenborough Corporation, she was a residential real
estate marketing representative for Great Western Realtors.
Barbara L. Evans has been Secretary of Glenborough Realty
Corporation since April 1986 and Vice President since February
1991. She joined Glenborough Corporation in l985 and serves as
Counsel and Secretary. She was admitted as an attorney in the
State of California in l983. Prior to attending law school and
on a part-time basis during law school, Ms. Evans was a co-owner
of TES Associates, a property management and real estate
investment advisor.
Eugene F. Daly was elected a Director of Glenborough Realty
Corporation in August 1989. He is President of Daly
International Financial and Insurance Services. Mr. Daly is a
Registered Principal with the National Association of Securities
Dealers (NASD) and his firm Daly International Financial and
Insurance Services is a Registered Investment Advisor with the
Securities and Exchange Commission.
Wallace A. Krone, Jr. was elected a Director of Glenborough
Realty Corporation in August 1989. He has been associated with
Glenborough for approximately 15 years as an investor in
Glenborough sponsored partnerships. For the past twenty-seven
years, he has been self-employed owning various restaurants in
the San Francisco Bay Area. Currently Mr. Krone owns a number of
Burger King restaurants in the same area.
Laurence N. Walker was a Director of Glenborough Corporation from
October l984 to November l985 and served as Treasurer from
January l985 to November l985. He has been a Director of
Glenborough Realty Corporation since its inception in l985. He
is an attorney specializing in real estate law.
J. Sydney Whalen was elected a Director of Glenborough Realty
Corporation in April l988. He is a Canadian Chartered Accountant
and since l983 has been president of Whalen & Associates, a
management consulting firm specializing in executive management
and chief financial officer services to companies experiencing
operating or financial difficulties. In 1993, Mr. Whalen was a
Page 54 of 56
co-founder and became President of Round Hill Securities, Inc., a
securities broker/dealer. From l975 to l982, he was Vice
President-Finance and Administration of Raymond Kaiser Engineers,
Inc.
Item 11. Executive Compensation
The Partnership has no executive officers. For information
relating to fees, compensation, reimbursements and distributions
paid to related parties, reference is made to Item 13 below.
Item 12. Security Ownership of Certain Owners and Management
To the best knowledge of the Partnership, no person owned of
record or beneficially more than five percent (5%) of the Units
at December 31, 1994.
The Partnership, as an entity, does not have any directors or
officers. At December 31, 1994, no Units were owned by any
officers of directors of the General Partner.
Item 13. Certain Relationships and Related Transactions
During the year ended December 31, 1994, the Partnership had no
transactions or business relationships with officers or directors
of Glenborough required to be reported pursuant to Item 404 of
Regulations S-K.
An affiliate of the General Partner of the Partnership earned
compensation for specific services provided to the Partnership.
In accordance with the Limited Partnership Agreement, the
Partnership paid the General Partner and its affiliates
compensation for services provided to the Partnership.
Glenborough Corporation provides property management services and
has been compensated as follows:
1994
--------
Property management fees $108,000
Property salaries - reimbursed 47,700
Hotel management fees 79,000
Hotel salaries - reimbursed 442,800
Property administrative services 173,000
These costs are included in operating costs and expenses in the
statements of operations.
The Partnership also reimbursed Glenborough Corporation for
expenses incurred for services provided to the Partnership such
as accounting, investor services, data processing, duplicating
and office supplies, legal and administrative services, and the
actual costs of goods and materials used for or by the
Partnership. Glenborough was reimbursed $221,800 for such
expenses during the year ended December 31, 1994.
Page 55 of 56
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K
(a)(1) Financial Statements - See Index to Consolidated
Financial Statements contained in Item 8.
(2) Financial Statement Schedules - See Item 14(d)
below.
(3) Exhibits - None.
(b) Reports on Form 8-K - None.
(c) Exhibits - None.
(d) Financial Statement Schedules -
Schedule III - Consolidated Real Estate
Investments and Related Accumulated Depreciation
and Amortization at December 31, 1994.
All other schedules for which provision is made int he
applicable accounting regulation of the Securities and
Exchange commission are not required under the related
instructions or are inapplicable, and therefore have
been omitted.
Page 56 of 56
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GLENBOROUGH PENSION INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP
By:/s/ ROBERT BATINOVICH By: Glenborough Realty Corporation,
-------------------------- a California Corporation,
Robert Batinovich Its Managing General Partner
General Partner
Date: By: /s/ ROBERT BATINOVICH
-------------------- ---------------------------
Robert Batinovich
President and
Chairman of the Board
Date:
-----------------------
By: /s/ ANDREW BATINOVICH
---------------------------
Andrew Batinovich
Senior Vice President,
Chief Financial Officer
and Director
Date:
-----------------------
By: /s/ LAURENCE N. WALKER
---------------------------
Laurence N. Walker
Director
Date:
-----------------------
By: /s/ J. SYDNEY WHALEN
---------------------
J. Sydney Whalen
Director
Date:
-----------------------
(A Majority of the Board of Directors of the General Partner)
Page 57 of 56
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
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<RECEIVABLES> 106
<ALLOWANCES> 0
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<CURRENT-ASSETS> 510
<PP&E> 20771
<DEPRECIATION> (1357)
<TOTAL-ASSETS> 20412
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<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 19853
<TOTAL-LIABILITY-AND-EQUITY> 21412
<SALES> 0
<TOTAL-REVENUES> 4198
<CGS> 0
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