<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1995
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 0-14271
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
- - --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
California 94-2949474
- - --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Seaport Plaza, New York, N.Y. 10292-0116
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 214-1016
Securities registered pursuant to Section 12(b) of the Act:
None
- - --------------------------------------------------------------------------------
(Title of class)
Securities registered pursuant to section 12(g) of the Act:
Depositary Units of Limited Partnership Interest
- - --------------------------------------------------------------------------------
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes CK No _
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [CK]
DOCUMENTS INCORPORATED BY REFERENCE
Registrant's Annual Report to Unitholders for the year ended December 31,
1995 is incorporated by reference into Parts I, II and III of this Annual Report
on Form 10-K
Amended and Restated Limited Partnership Agreement of Registrant, dated
February 11, 1985, included as part of the Registration Statement filed with the
Securities and Exchange Commission on February 14, 1985 pursuant to Rule 424(b)
of the Securities Act of 1934 (the ``Prospectus'') is incorporated by reference
into Part IV of this Annual Report on Form 10-K
Index to exhibits can be found on pages 11 and 12.
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I PAGE
<S> <C> <C>
Item 1 Business......................................................................... 3
Item 2 Properties....................................................................... 4
Item 3 Legal Proceedings................................................................ 5
Item 4 Submission of Matters to a Vote of Unitholders................................... 5
PART II
Item 5 Market for the Registrant's Units and Related Unitholder Matters................. 5
Item 6 Selected Financial Data.......................................................... 6
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations..................................................................... 6
Item 8 Financial Statements and Supplementary Data...................................... 6
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure..................................................................... 6
PART III
Item 10 Directors and Executive Officers of the Registrant............................... 6
Item 11 Executive Compensation........................................................... 9
Item 12 Security Ownership of Certain Beneficial Owners and Management................... 9
Item 13 Certain Relationships and Related Transactions................................... 10
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
Consolidated Financial Statements and Consolidated Financial Statement
Schedules...................................................................... 11
Exhibits......................................................................... 11
Reports on Form 8-K.............................................................. 12
SIGNATURES.................................................................................. 17
</TABLE>
2
<PAGE>
<PAGE>
PART I
Item 1. Business
General
Prudential-Bache/Equitec Real Estate Partnership, a California Limited
Partnership (the ``Registrant''), was formed in June 1984 and will terminate on
December 31, 2009 unless terminated sooner under the provisions of the Amended
and Restated Limited Partnership Agreement (the ``Partnership Agreement''). The
Registrant was formed to invest in income-producing real estate with proceeds
raised from the initial sale of 68,795 depositary units (``Units''). On November
21, 1994, the General Partners approved a change in the Registrant's fiscal year
for financial reporting purposes from October 31 to December 31. A Form 10-Q for
the two months ended December 31, 1994 was filed to cover the transition period
resulting from this change. The Registrant's fiscal year for income tax purposes
continues to be December 31.
The Registrant is engaged solely in the business of real estate investment;
therefore, presentation of industry segment information is not applicable. For
more information regarding the Registrant's properties (collectively, the
``Properties'' or individually, a ``Property''), see Item 2 Properties. For more
information regarding the Registrant's operations, see Item 7 Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in the Registrant's Annual Report to Unitholders for the year ended
December 31, 1995 (``Registrant's Annual Report'') which is filed as an exhibit
hereto.
For the years ended December 31, 1995, October 31, 1994 and October 31, 1993,
respectively, the following Properties' rental revenues exceeded 15% of the
Registrant's total revenue:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Montrose Office Park 43% 46% 44%
Park Plaza -- -- 16
</TABLE>
For the year ended October 31, 1994, Intersolv, a tenant in the Montrose
Office Park property accounted for approximately 10% of the Registrant's total
revenue. Intersolv's lease expired in June 1995 and it vacated its space at that
time. A new tenant, Technical Resources, Inc., with a lease that commenced
September 1, 1995 and that will expire August 31, 1996, on an annualized basis
would have accounted for approximately 10% of the Registrant's total revenue for
the year ended December 31, 1995. No single tenant accounted for 10% or more of
the Registrant's total revenue in the year ended October 31, 1993.
General Partners
The general partners of the Registrant are Prudential-Bache Properties, Inc.
(``PBP''), and Glenborough Corporation (formerly Glenborough Realty Corporation)
and Robert Batinovich (together, ``Glenborough'') (collectively, the ``General
Partners'').
Glenborough replaced Equitec Financial Group, Inc. (``EFG'') as co-General
Partner of the Partnership on May 4, 1994 when EFG transferred its general
partner interest to Glenborough and withdrew and retired as general partner.
This substitution occurred as a result of the consent of a majority of interests
of the limited partners approving the transaction which was detailed in a proxy
statement dated December 1, 1993. PBP continues as co-General Partner.
Glenborough Corporation, an affiliate of Glenborough, continues to receive fees
and expense reimbursements in the same amount that was provided in the property
management agreement. See Note E to the consolidated financial statements in the
Registrant's Annual Report which is filed as an exhibit hereto.
Competition
The General Partners and their affiliates have formed, and may continue to
form, various entities to engage in businesses which may be competitive with the
Registrant.
The Registrant faces active competition in all aspects of its business and
must compete with entities which own properties similar in type to those owned
by the Registrant. The ability of the Registrant to compete with these entities
depends on many factors, including the size, condition and specific location of
3
<PAGE>
<PAGE>
its facilities, and is affected by the competitive conditions of the real estate
market in general and the local markets in particular. Since each of the
Registrant's Properties is located in an area which contains numerous other
properties which may be considered competitive, the Registrant must compete on,
among other factors, rental rates, lease terms and amenities, including
availability of parking and public transportation.
Many of the factors affecting the ability of the Registrant to compete, and
therefore affecting its revenues and expenses, are beyond the Registrant's
control, such as oversupply of similar rental facilities as a result of
overbuilding, increases in unemployment, population shifts, levels of corporate
activity, reduced availability of permanent mortgage funds, changes in zoning
laws or changes in tenants' needs. Expenses such as local real estate taxes and
utilities are subject to change and, while the provisions of certain existing
leases may mitigate the impact of any increases in such expenses, such changes
may not be fully reflected in rental rate increases upon lease renewal or in
connection with the execution of new leases if market conditions are not
favorable. Alternatively, the lack of new construction, reduced unemployment and
stable or reduced tax and utility expenses, all beyond the control of the
Registrant, may have a favorable impact upon the operations of the Properties.
The marketability of the Properties may also be affected (both positively and
negatively) by these factors as well as by changes in general or local economic
conditions including prevailing interest rates. Depending on market and economic
conditions, the Registrant may be required to retain ownership of its Properties
for periods longer than anticipated at acquisition or may need to sell or
refinance a Property during periods or under terms and conditions that are less
advantageous than would be the case if unfavorable economic or market conditions
did not exist.
The markets in which certain Properties are located have experienced softened
conditions due largely to overbuilding and the recession in the real estate
market in general. These conditions have resulted in the need for increased
rental concessions (including periods of free rent) and additional building and
tenant improvements necessary to compete for and retain tenants. A valuation
allowance of $250,000 was recorded in 1993 for Poplar Towers based on diminished
cash flows anticipated from the property over the next few years due to
significant projected building and tenant improvements and rental concessions
required to attract and maintain tenants.
Employees
The Registrant has no employees. Management and administrative services for
the Registrant are performed by the General Partners and their affiliates
pursuant to the Partnership Agreement. The General Partners receive compensation
and reimbursement of expenses in connection with such activities as described in
Section X of the Partnership Agreement. See Note E to the consolidated financial
statements in the Registrant's Annual Report which is filed as an exhibit
hereto.
Item 2. Properties
As of December 31, 1995, the Registrant owns the following properties:
<TABLE>
<CAPTION>
Effective
Average Annual
Monthly Average Rental Rate
Occupancy Rate Land Net Rentable Per Square
Location and Type In 1995 (in acres) Square Footage Foot
- - ---------------------------------------- --------------- ---------- -------------- --------------
(continued on following page)
<S> <C> <C> <C> <C>
Poplar Tower
Memphis, TN
Office building 85% 3.95 100,901 $ 9.45
Montrose Office Park
Rockville, MD
Office building complex 87 18.42 188,379 13.67
Totem Valley Business Center
Kirkland, WA
Industrial park 98 10.40 121,645 5.95
</TABLE>
4
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Effective
Average Annual
Monthly Average Rental Rate
Occupancy Rate Land Net Rentable Per Square
Location and Type In 1995 (in acres) Square Footage Foot
- - ---------------------------------------- --------------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Gateway Plaza
Sacramento, CA
Office building 83% .87 50,753 $15.13
Park Plaza
Sacramento, CA
Office building 75 1.37 70,113 11.48
---------- --------------
35.01 531,791
---------- --------------
---------- --------------
</TABLE>
The Registrant originally invested in seven properties. In May 1993, the
Registrant and the first mortgage holder of the 399 Market Street property
entered into an agreement related to a deed-in-lieu of foreclosure with regard
to the property, and the Registrant delivered to the mortgage holder the title
to the property. Ashby Industrial Center was sold on August 8, 1992 and one of
the eight buildings comprising Totem Valley Business Center was sold on
September 16, 1991.
The General Partners believe the Registrant's Properties are adequately
insured.
For information regarding the Registrant's investment in Properties and the
encumbrances to which the Properties are subject, see Note C to the consolidated
financial statements in the Registrant's Annual Report which is filed as an
exhibit hereto.
For additional information describing the Registrant's Properties, see
Supplementary Schedule III--Real Estate and Accumulated Depreciation on page 15
in Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.
Item 3. Legal Proceedings
This information is incorporated by reference to Note G to the consolidated
financial statements in the Registrant's Annual Report which is filed as an
exhibit hereto.
Item 4. Submission of Matters to a Vote of Unitholders
None
PART II
Item 5. Market for Registrant's Units and Related Unitholder Matters
As of March 1, 1996, there were 5,408 holders of record owning 68,795 Units.
A significant secondary market for the Units has not developed, and it is not
expected that one will develop in the future. There are also certain
restrictions set forth in Section IV of the Partnership Agreement limiting the
ability of a Unitholder to transfer Units. Consequently, holders of Units may
not be able to liquidate their investments in the event of an emergency or for
any other reason.
There are no material restrictions upon the Registrant's present or future
ability to make distributions in accordance with the provisions of the
Partnership Agreement; however, the Registrant has paid no distributions from
operations or otherwise during the seven most recent fiscal years. The amount,
if any, to be distributed by the Registrant from cash generated by operations in
future quarters will be based on the extent to which cash flow generated by the
Properties, after tenant and capital improvement costs, is sufficient to support
such distributions. No distributions from operations are anticipated in the
foreseeable future. Furthermore, it is unlikely that investors will be returned
a significant portion of their original investment upon the sale of the
Registrant's remaining Properties and ultimate dissolution of the Registrant.
For discussion of other factors that may affect future distributions, see
Management's Discussion and Analysis
5
<PAGE>
<PAGE>
of Financial Condition and Results of Operations on pages 11 through 12 of the
Registrant's Annual Report which is filed as an exhibit hereto.
Item 6. Selected Financial Data
The following table presents selected financial data of the Registrant. This
data should be read in conjunction with the consolidated financial statements of
the Registrant and the notes thereto on pages 2 through 10 of the Registrant's
Annual Report which is filed as an exhibit hereto.
<TABLE>
<CAPTION>
November 1
Year ended through Year ended October 31,
December 31, December 31, -------------------------------------
1995 1994 1994 1993 1992 1991
- - ------------------------------------------------------------------------------------------------------
(in thousands except per unit amounts)
<S> <C> <C> <C> <C> <C> <C>
Total revenue.................... $ 6,541 $ 1,125 $ 6,544 $ 6,841 $ 7,917 $ 8,003
------------ ------------ ------- ------- ------- -------
------------ ------------ ------- ------- ------- -------
Provision for loss on impairment
of assets...................... $ -- $ -- $ -- $ (250) $ (614) $ --
------------ ------------ ------- ------- ------- -------
------------ ------------ ------- ------- ------- -------
Net operating loss............... $ (1,032) $ (122) $ (794) $(2,236) $(3,723) $(3,439)
------------ ------------ ------- ------- ------- -------
------------ ------------ ------- ------- ------- -------
Gain (loss) on disposition of
property....................... $ -- $ -- $ -- $ 338 $ (97) $ 47
------------ ------------ ------- ------- ------- -------
------------ ------------ ------- ------- ------- -------
Net loss......................... $ (1,032) $ (122) $ (794) $(1,898) $(3,820) $(3,392)
------------ ------------ ------- ------- ------- -------
------------ ------------ ------- ------- ------- -------
Net loss per Unit................ $ (14.86) $ (1.76) $(11.43) $(27.31) $(54.97) $(48.81)
------------ ------------ ------- ------- ------- -------
------------ ------------ ------- ------- ------- -------
Total assets..................... $ 34,388 $ 35,737 $36,110 $37,402 $45,046 $49,107
------------ ------------ ------- ------- ------- -------
------------ ------------ ------- ------- ------- -------
Notes payable.................... $ 26,621 $ 26,862 $26,917 $27,328 $32,578 $32,944
------------ ------------ ------- ------- ------- -------
------------ ------------ ------- ------- ------- -------
Line of credit payable........... $ -- $ -- $ -- $ -- $ -- $ 400
------------ ------------ ------- ------- ------- -------
------------ ------------ ------- ------- ------- -------
Total cash distributions......... $ -- $ -- $ -- $ -- $ -- $ --
------------ ------------ ------- ------- ------- -------
------------ ------------ ------- ------- ------- -------
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This information is incorporated by reference to pages 11 through 12 of the
Registrant's Annual Report which is filed as an exhibit hereto.
Item 8. Financial Statements and Supplementary Data
The financial statements are incorporated by reference to pages 2 through 10
of the Registrant's Annual Report which is filed as an exhibit hereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
There are no directors or executive officers of the Registrant. The
Registrant is managed by the General Partners.
The Registrant, the Registrant's General Partners and their directors and
executive officers, and any persons holding more than ten percent of the
Registrant's Units are required to report their initial ownership of such Units
and any subsequent changes in that ownership to the Securities and Exchange
Commission on Forms 3, 4 and 5. Such executive officers, directors and persons
who own greater than ten percent of the Registrant's Units are required by
Securities and Exchange Commission regulations to furnish the Registrant with
copies of all Forms 3, 4 or 5 they file. All of these filing requirements were
satisfied on a timely basis. In
6
<PAGE>
<PAGE>
making these disclosures, the Registrant has relied solely on written
representations of the General Partners' directors and executive officers or
copies of the reports they have filed with the Securities and Exchange
Commission during and with respect to its most recent fiscal year.
Prudential-Bache Properties, Inc.
The directors and executive officers of PBP and their positions with regard
to managing the Registrant are as follows:
<TABLE>
<CAPTION>
Name Position
<S> <C>
Thomas F. Lynch, III President, Chief Executive Officer,
Chairman of the Board of Directors and Director
Barbara J. Brooks Vice President--Finance and Chief Financial Officer
Eugene D. Burak Vice President and Chief Accounting Officer
Chester A. Piskorowski Vice President
Frank W. Giordano Director
Nathalie P. Maio Director
</TABLE>
THOMAS F LYNCH, III, age 37, is the President, Chief Executive Officer,
Chairman of the Board of Directors and a Director of PBP. He is a Senior Vice
President of Prudential Securities Incorporated (``PSI''), an affiliate of PBP.
Mr. Lynch also serves in various capacities for other affiliated companies. Mr.
Lynch joined PSI in November 1989.
BARBARA J. BROOKS, age 47, is the Vice President-Finance and Chief Financial
Officer of PBP. She is a Senior Vice President of PSI. Ms. Brooks also serves in
various capacities for other affiliated companies. She has held several
positions within PSI since 1983. Ms. Brooks is a certified public accountant.
EUGENE D. BURAK, age 50, is a Vice President of PBP. He is a First Vice
President of PSI. Prior to joining PSI in September 1995, he was a management
consultant for three years and was with Equitable Capital Management Corporation
from March 1990 to May 1992. Mr. Burak is a certified public accountant.
CHESTER A. PISKOROWSKI, age 52, is a Vice President of PBP. He is a Senior
Vice President of PSI and is the Senior Manager of the Specialty Finance Asset
Management area. Mr. Piskorowski has held several positions within PSI since
April 1972. Mr. Piskorowski is a member of the New York and Federal Bars.
FRANK W. GIORDANO, age 53, is a Director of PBP. He is a Senior Vice
President of PSI and an Executive Vice President and General Counsel of
Prudential Mutual Fund Management, Inc., an affiliate of PSI. Mr. Giordano also
serves in various capacities for other affiliated companies. He has been with
PSI since July 1967.
NATHALIE P. MAIO, age 45, is a Director of PBP. She is a Senior Vice
President and Deputy General Counsel of PSI and supervises non-litigation legal
work for PSI. She joined PSI's Law Department in 1983; presently, she also
serves in numerous capacities for other affiliated companies.
James M. Kelso ceased to serve as President, Chief Executive Officer,
Chairman of the Board of Directors and Director effective June 30, 1995.
Effective June 30, 1995, Thomas F. Lynch, III was elected President, Chief
Executive Officer, Chairman of the Board of Directors and Director. Robert J.
Alexander ceased to serve as Vice President effective August 25, 1995. Eugene D.
Burak was elected Vice President effective October 9, 1995.
There are no family relationships among any of the foregoing directors or
executive officers. All of the foregoing directors and/or executive officers
have indefinite terms.
7
<PAGE>
<PAGE>
Glenborough and Robert Batinovich
Robert Batinovich, age 59, was the President, Chief Executive Officer and
Chairman of Glenborough Corporation from its inception in 1978 until his
resignation effective January 10, 1996. On August 31, 1994, Mr. Batinovich was
elected Chairman, President and Chief Executive Officer of Glenborough Realty
Trust Incorporated (``GRT''), a newly created Real Estate Investment Trust,
which began trading on the New York Stock Exchange on January 31, 1996. He was a
member of the Public Utilities Commission from 1975 to January 1979 and served
as its President from January 1977 to January 1979. He is a member of the Board
of Directors of Farr Company, a publicly held company that manufactures
industrial filters. 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.
The directors and executive officers of Glenborough Corporation and their
positions with regard to managing the Registrant are as follows:
<TABLE>
<CAPTION>
Name Position
<S> <C>
Andrew Batinovich Chief Executive Officer and Chairman of the Board
Robert E. Bailey Secretary and Corporate Counsel
Sandra L. Boyle President and Chief Operating Officer
June Gardner Director
Terri Garnick Chief Financial Officer
Judy Henrich Vice President
Wallace A. Krone, Jr. Director
</TABLE>
ANDREW BATINOVICH, age 37, was elected Chairman of the Board and Chief
Executive Officer of Glenborough Corporation on January 10, 1996. He has been
employed by Glenborough Corporation since 1983, and had functioned since 1987 as
Chief Operating Officer and Chief Financial Officer. Mr. Batinovich also serves
as Executive Vice President, Chief Operating Officer, Chief Financial Officer
and Director of GRT. He holds a California real estate broker's license and is a
Member of the National Advisory Council of BOMA International. He received his
B.A. in International Finance from the American University in Paris. Prior to
joining Glenborough Corporation, Mr. Batinovich was a lending officer with the
International Banking Group and the Corporate Real Estate Division of Security
Pacific National Bank. He is the son of Robert Batinovich.
ROBERT E. BAILEY, age 34, joined Glenborough Corporation in 1989 as Associate
Counsel and was elected Secretary of Glenborough Corporation on May 15, 1995. He
is responsible for all landlord/tenant documentation, tenant litigation,
corporate and partnership matters and employment matters. In 1984, he received
his Bachelor of Arts degree from the University of California at Santa Barbara
and his Juris Doctor degree from Vermont Law School in 1987. From 1987 to 1989,
Mr. Bailey was an associate with the law firm of Pedder, Stover, Hesseltine &
Walker, where he specialized in business litigation. He is a member of the State
Bar of California.
SANDRA L. BOYLE, age 47, has been associated with Glenborough Corporation or
its associated entities since 1984 and has served as President and Chief
Operating Officer of Glenborough Corporation since January 10, 1996. She was
originally responsible for residential marketing, and her responsibilities were
gradually expanded to include residential leasing and management in 1985, and
commercial leasing and management in 1987. She was elected Vice President in
1989, and continues to supervise marketing, leasing, property management
operations and regional offices. Ms. Boyle also serves as a Senior Vice
President of GRT. Ms. Boyle holds a California real estate broker's license and
a CPM designation, and is a member of the National Advisory Council and Finance
Committee of BOMA International; and is on the Board of Directors of BOMA San
Francisco and BOMA California.
JUNE GARDNER, age 44, was elected a director of Glenborough Corporation on
January 10, 1996. She was associated with Glenborough Corporation from 1984
through 1995, as Senior Vice President and
8
<PAGE>
<PAGE>
Corporate Controller with responsibilities in the areas of corporate financial
planning, reporting, accounting and banking relationships. Before joining
Glenborough Corporation, Ms. Gardner was Assistant Vice President of JMB Realty
Corporation from 1977 to 1984, with responsibilities in the areas of financial
management and reporting.
TERRI GARNICK, age 35, has served as Chief Financial Officer of Glenborough
Corporation since January 10, 1996. She is also Senior Vice President, Chief
Accounting Officer and Treasurer of GRT. Ms. Garnick is responsible for property
management accounting, financial statements, audits, Securities and Exchange
Commission reporting, and tax returns. Prior to joining Glenborough Corporation
in 1989, Ms. Garnick was a controller at August Financial Corporation from 1986
to 1989 and was a Senior Accountant at Deloitte, Haskins and Sells from 1983 to
1986. She is a Certified Public Accountant and has a Bachelor of Science degree
from San Diego State University.
JUDY HENRICH, age 50, is a Vice President of Glenborough Corporation,
effective January 10, 1996 and is responsible for the coordination of all
broker-dealer and investor communications for partnerships managed by
Glenborough Corporation. Prior to joining Glenborough Corporation, Ms. Henrich
was associated with Rancon Financial Corporation from 1981 through early 1995,
and as Senior Vice President since 1985, with responsibilities similar to those
at Glenborough Corporation. Ms. Henrich also served as Executive Vice President
of Rancon Securities Corporation from 1988 to 1991, and thereafter as its Chief
Executive Officer. Prior to joining Rancon, Ms. Henrich was manager of public
relations and advertising for Kaiser Development Company, a diversified real
estate holding company.
WALLACE A. KRONE, JR., age 64, has been an entrepreneur in the restaurant
business since 1965, and owns a number of Burger King restaurants in the San
Francisco area. Mr. Krone has been associated with Glenborough Corporation since
1982 as an investor in one or more partnerships, and has been a member of the
board of directors of Glenborough Corporation since 1989.
Except as noted above, there are no family relationships among the foregoing
directors or executive officers.
Item 11. Executive Compensation
The Registrant does not pay or accrue any fees, salaries or any other form of
compensation to directors and officers of the General Partners for their
services. Certain officers and directors of the General Partners receive
compensation from the General Partners and their affiliates, not from the
Registrant, for services performed for various affiliated entities, which may
include services performed for the Registrant; however, the General Partners
believe that any compensation attributable to services performed for the
Registrant is immaterial. See Item 13 Certain Relationships and Related
Transactions for information regarding compensation to the General Partners.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Glenborough Realty Corporation is owned 82% by Robert Batinovich and 18% by
Glenborough Corporation. Glenborough Corporation is 89% beneficially owned by
Robert Batinovich and members of his immediate family, including Andrew
Batinovich.
Other than the Glenborough/Batinovich relationship described above, as of
March 1, 1996, no director or executive officer of the General Partners owns
directly or beneficially any interest in the voting securities of the General
Partners.
As of March 1, 1996, no director or executive officer of either of the
General Partners owns directly or beneficially any of the Units issued by the
Registrant.
As of March 1, 1996, no beneficial owner who is neither a director nor
executive officer of either of the General Partners beneficially owns more than
five percent (5%) of the outstanding Units issued by the Registrant.
9
<PAGE>
<PAGE>
Item 13. Certain Relationships and Related Transactions
The Registrant has and will continue to have certain relationships with the
General Partners and their affiliates. However, there have been no direct
financial transactions between the Registrant and the directors or officers of
the General Partners.
Reference is made to Note E to the consolidated financial statements in the
Registrant's Annual Report which is filed as an exhibit hereto, which identifies
the related parties and discusses the services provided by these parties and the
amounts paid or payable for their services.
10
<PAGE>
<PAGE>
PART IV
<TABLE>
<CAPTION>
Page in
Annual Report
-------------
<S> <C> <C> <C>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Consolidated Financial Statements and Independent Auditors'
Report--Incorporated
by reference to the Registrant's Annual Report which is filed as an exhibit
hereto
Independent Auditors' Report 2
Consolidated Financial Statements:
Consolidated Statements of Financial Condition--December 31, 1995 and
October 31, 1994 3
Consolidated Statements of Operations--Year ended December 31, 1995, Novem-
ber 1 through December 31, 1994, and the years ended October 31, 1994 and
1993 4
Consolidated Statements of Changes in Partners' Capital--Year ended
December 31, 1995, November 1 through December 31, 1994, and the years
ended October 31, 1994 and 1993 4
Consolidated Statements of Cash Flows--Year ended December 31, 1995, Novem-
ber 1 through December 31, 1994, and the years ended October 31, 1994 and
1993 5
Notes to Consolidated Financial Statements 6
2. Consolidated Financial Statement Schedules and Independent Auditors' Report
on Schedules
Independent Auditors' Report on Schedules
Schedules:
II--Valuation and Qualifying Accounts and Reserves--Year ended December 31,
1995, and the years ended October 31, 1994 and 1993
III--Consolidated Real Estate and Accumulated Depreciation--At December 31,
1995
All other schedules have been omitted because they are not applicable or
the required information is included in the consolidated financial
statements and notes thereto.
3. Exhibits
Description:
3 and 4 Amended and Restated Limited Partnership Agreement of Registrant dated
February 11, 1985 (incorporated by reference to Amendment No. 1 to the
Registrant's Form S-11 Registration Statement filed on February 14, 1985)
and Amendment No. 1 thereto dated April 18, 1985 (incorporated by reference
to Form 8-A filed on February 28, 1986), as amended on March 25, 1994
(incorporated by reference to the Registrant's 1994 Annual Report filed on
Form 10-K)
Amended and Restated Agreement between General Partners dated December 28,
1990 (incorporated by reference to the Registrant's 1990 Annual Report
filed on Form 10-K)
</TABLE>
11
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
10(a) Note Modification Agreement between Montrose Office Park Joint Venture (a
joint venture which is indirectly wholly-owned by the Registrant) and The
Variable Annuity Life Insurance Company (incorporated by reference to the
Registrant's 1991 Annual Report filed on Form 10-K)
10(b) Settlement Statement on Ashby Industrial Center dated August 6, 1992
(incorporated by reference to the Registrant's 1992 Annual Report filed on
Form 10-K)
10(c) Escrow Instruction on Sale of Ashby Industrial Center dated August 6, 1992
(incorporated by reference to the Registrant's 1992 Annual Report filed on
Form 10-K)
10(d) Agreement regarding Deed-in-Lieu of Foreclosure and Related Matters between
the Registrant and Fidelity Bank N.A. dated May 11, 1993 (incorporated by
reference to the Registrant's Quarterly Report for the period ended April
30, 1993 filed on Form 10-Q)
13 Registrant's Annual Report to Unitholders for the year ended December 31,
1995 (with the exception of the information and data incorporated by
reference in Items 3, 7 and 8 of this Annual Report on Form 10-K, no other
information or data appearing in the Registrant's Annual Report is to be
deemed filed as part of this report)
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the period
covered by this report.
</TABLE>
12
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
Prudential-Bache/Equitec Real Estate Partnership
(a California limited partnership):
We have audited the consolidated financial statements of
Prudential-Bache/Equitec Real Estate Partnership (a California limited
partnership) as of December 31, 1995 and October 31, 1994, and for the years
ended December 31, 1995, October 31, 1994 and 1993, and the period November 1,
1994 through December 31, 1994, and have issued our report thereon dated
February 16, 1996; such financial statements and report are included in your
1995 Annual Report and are incorporated herein by reference. Our audits also
included the consolidated financial statement schedules of
Prudential-Bache/Equitec Real Estate Partnership, listed in Item 14. These
financial statement schedules are the responsibility of the Partnership's
management. Our responsibility is to express an opinion based on our audits. In
our opinion, such financial statement schedules, when considered in relation to
the basic financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
Deloitte & Touche LLP
San Francisco, California
February 16, 1996
13
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
- - --------------------------------------------------------------------------------
Allowance for Loss on Impairment of Assets
<TABLE>
<CAPTION>
Deduc-
tions-Amounts Balance at
Year ended Year ended Balance at Additions-Amounts written-off during end of
December 31, October 31, beginning of year reserved during year year year
- - ------------ ----------- ----------------- -------------------- ------------------ ----------
<S> <C> <C> <C> <C> <C>
1995* $ 500,000 $ -- $ -- $ 500,000
1994 500,000 -- -- 500,000
1993 1,550,000 250,000 1,300,000 500,000
</TABLE>
* Includes the period November 1 through December 31, 1994.
14
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
SCHEDULE III--CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1995
(in thousands)
<TABLE>
<CAPTION>
Initial cost to
Registrant
-------------------------
Buildings Gross amount at which carried
and Net costs at close of period
improve- capitalized --------------------------------------
ments, (disposed) Buildings,
furniture subsequent to furniture
Description Encumbrances Land and fixtures acquisition Land and fixtures Total (A)
<S> <C> <C> <C> <C> <C> <C> <C>
- - ---------------------- ------------ ------- ------------- ------------- ------- ------------ ---------
Poplar Tower
Memphis, TN
Office building $ 3,482 $ 1,678 $ 4,928 $ 1,263 $ 1,678 $ 6,191 $ 7,869
Montrose Office Park
Rockville, MD
Office building
complex 13,055 5,918 15,766 1,891 5,918 17,657 23,575
Totem Valley
Business Center
Kirkland, WA
Industrial park 3,645 2,666 5,265 (591) 2,111 5,229 7,340
Gateway and Park
Plaza
Sacramento, CA
Office buildings 6,439 1,163 9,075 1,583 1,163 10,658 11,821
------------ ------- ------------- ------------- ------- ------------ ---------
Totals $ 26,621 $11,425 $35,034 $ 4,146 $10,870 $ 39,735 $ 50,605
------------ ------- ------------- ------------- ------- ------------ ---------
------------ ------- ------------- ------------- ------- ------------ ---------
See notes to Schedule III on the following page.
<CAPTION>
Life on
which
depreciation
in the latest
Accumulated Property statement of
depreciation valuation Date of Date operations is
Description (B) allowance construction acquired computed
<S> <C> <C> <C> <C> <C>
- - ---------------------- ----------- --------- ------------ ---------- -------------
Poplar Tower
Memphis, TN 3 to
Office building $ 4,133 $ 250 1974 5/01/86 30 years
Montrose Office Park
Rockville, MD
Office building 3 to
complex 6,789 1980-83 8/11/86 30 years
Totem Valley
Business Center
Kirkland, WA 3 to
Industrial park 2,266 1983-86 3/13/87 30 years
Gateway and Park
Plaza
Sacramento, CA 3 to
Office buildings 4,717 250 1982 6/15/87 30 years
----------- ---------
Totals $17,905 $500
----------- ---------
----------- ---------
</TABLE>
15
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
NOTES TO SCHEDULE III
(in thousands)
December 31, 1995
NOTE A--RECONCILIATION SUMMARY OF TRANSACTIONS--REAL ESTATE
<TABLE>
<CAPTION>
November 1 Year ended
Year ended through October 31,
December 31, December 31, -----------------
1995 1994 1994 1993
------------ ------------ ------- -------
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $ 50,013 $ 49,983 $49,647 $59,925
Additions during period 592 30 336 204
------------ ------------ ------- -------
50,605 50,013 49,983 60,129
Cost of real estate sold -- -- -- (10,482)
------------ ------------ ------- -------
Balance at end of period $ 50,605 $ 50,013 $49,983 $49,647
------------ ------------ ------- -------
------------ ------------ ------- -------
</TABLE>
The allowance for loss on impairment for the above assets is $500 at December
31, 1995. See Note C to the consolidated financial statements in the
Registrant's Annual Report which is filed as an exhibit hereto.
The aggregate cost of land, buildings, and furniture and fixtures for Federal
income tax purposes for the tax year ended December 31, 1995 was $49,194.
NOTE B--RECONCILIATION SUMMARY OF TRANSACTIONS--ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
November 1 Year ended Octo-
Year ended through ber 31,
December 31, December 31, -----------------
1995 1994 1994 1993
------------ ------------ ------- -------
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $ 16,177 $ 15,889 $14,253 $15,953
Additions during period 1,728 288 1,636 2,407
------------ ------------ ------- -------
17,905 16,177 15,889 18,360
Accumulated depreciation on real estate sold -- -- -- (4,107)
------------ ------------ ------- -------
Balance at end of period $ 17,905 $ 16,177 $15,889 $14,253
------------ ------------ ------- -------
------------ ------------ ------- -------
</TABLE>
16
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Prudential-Bache/Equitec Real Estate
Partnership,
A California Limited Partnership
By: Prudential-Bache Properties, Inc.,
A Delaware corporation, Managing General Partner
By: /s/ Eugene D. Burak Date: March 29, 1996
----------------------------------------
Eugene D. Burak
Vice President and Chief Accounting Officer
By: Glenborough Realty Corporation
General Partner
By: /s/ Andrew Batinovich Date: March 29, 1996
----------------------------------------
Andrew Batinovich
Chief Executive Officer and Chairman of
the Board of Directors
By: Robert Batinovich
General Partner
By: /s/ Robert Batinovich Date: March 29, 1996
----------------------------------------
Robert Batinovich
General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities (with respect to the General Partners) and on
the dates indicated.
By: Prudential-Bache Properties, Inc.,
A Delaware corporation, Managing General Partner
By: /s/ Thomas F. Lynch, III Date: March 29, 1996
----------------------------------------
Thomas F. Lynch, III
President, Chief Executive Officer and
Chairman of the Board of Directors
By: /s/ Barbara J. Brooks Date: March 29, 1996
----------------------------------------
Barbara J. Brooks
Vice President-Finance and Chief
Financial Officer
By: /s/ Eugene D. Burak Date: March 29, 1996
----------------------------------------
Eugene D. Burak
Vice President
By: /s/ Frank W. Giordano Date: March 29, 1996
----------------------------------------
Frank W. Giordano
Director
By: /s/ Nathalie P. Maio Date: March 29, 1996
----------------------------------------
Nathalie P. Maio
Director
17
<PAGE>
<PAGE>
By: Glenborough Corporation and Robert Batinovich
General Partners
By: /s/ Robert Batinovich Date: March 29, 1996
----------------------------------------
Robert Batinovich
Individually
By: /s/ Andrew Batinovich Date: March 29, 1996
----------------------------------------
Andrew Batinovich
Chief Executive Officer and Chairman of
the Board of Directors
By: /s/ June Gardner Date: March 29, 1996
----------------------------------------
June Gardner
Director
By: /s/ Terri Garnick Date: March 29, 1996
----------------------------------------
Terri Garnick
Chief Financial Officer
18
<PAGE>
1995 ANNUAL REPORT
<PAGE>
1995
- - --------------------------------------------------------------------------------
Prudential-Bache/Equitec Annual
Real Estate Partnership Report
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
1996
Message to our Unitholders:
1
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
Prudential-Bache/Equitec Real Estate Partnership
(a California limited partnership):
We have audited the accompanying consolidated statements of financial
condition of Prudential-Bache/Equitec Real Estate Partnership (a California
limited partnership) as of December 31, 1995 and 1994, and the related
consolidated statements of operations, changes in partners' capital and cash
flows for the years ended December 31, 1995, October 31, 1994 and 1993, and the
period November 1, 1994 through December 31, 1994. The financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the consolidated financial position of Prudential-Bache/Equitec Real
Estate Partnership at December 31, 1995 and October 31, 1994, and the results of
its operations and its cash flows for the years ended December 31, 1995, October
31, 1994 and 1993, and the period November 1, 1994 through December 31, 1994, in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
San Francisco, California
February 16, 1996
2
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31, October 31,
1995 1994
- - ----------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
ASSETS
Investment in property:
Land $ 10,870 $ 10,870
Buildings, improvements and equipment 39,735 39,113
Less: Accumulated depreciation (17,905) (15,889)
Allowance for loss on impairment of assets (500) (500)
------------ -----------
Net investment in property 32,200 33,594
Cash and cash equivalents 806 1,219
Prepaid expenses and other assets, net 1,382 1,297
------------ -----------
Total assets $ 34,388 $ 36,110
------------ -----------
------------ -----------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Notes payable $ 26,621 $ 26,917
Due to affiliates 700 697
Accounts payable and accrued liabilities 291 501
Security deposits and deferred revenue 232 260
Real estate taxes payable 73 110
------------ -----------
Total liabilities 27,917 28,485
------------ -----------
Contingencies
Partners' capital
Unitholders (68,795 depositary units issued and outstanding) 6,714 7,857
General partners (243) (232)
------------ -----------
Total partners' capital 6,471 7,625
------------ -----------
Total liabilities and partners' capital $ 34,388 $ 36,110
------------ -----------
------------ -----------
- - ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
3
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
November 1 Year ended October
Year Ended through 31,
December 31, December 31, -------------------
1995 1994 1994 1993
- - --------------------------------------------------------------------------------------------------------
(in thousands,
except per depositary unit amounts)
<S> <C> <C> <C> <C>
REVENUES
Operating $ 5,982 $1,039 $ 5,997 $ 6,342
Recovery of expenses 559 86 547 499
------------ ------------ ------- -------
6,541 1,125 6,544 6,841
------------ ------------ ------- -------
EXPENSES
Property operating 2,813 472 2,711 3,181
Interest 2,411 391 2,364 2,593
Depreciation and amortization 1,965 328 1,883 2,634
General and administrative 384 56 380 419
Provision for loss on impairment of assets -- -- -- 250
------------ ------------ ------- -------
7,573 1,247 7,338 9,077
------------ ------------ ------- -------
Net operating loss (1,032) (122) (794) (2,236)
Gain on disposition of property -- -- -- 338
------------ ------------ ------- -------
Net loss $ (1,032) $ (122) $ (794) $(1,898)
------------ ------------ ------- -------
------------ ------------ ------- -------
ALLOCATION OF NET LOSS
Unitholders $ (1,022) $ (121) $ (786) $(1,879)
------------ ------------ ------- -------
------------ ------------ ------- -------
General partners $ (10) $ (1) $ (8) $ (19)
------------ ------------ ------- -------
------------ ------------ ------- -------
Net loss per depositary unit $ (14.86) $(1.76) $(11.43) $(27.31)
------------ ------------ ------- -------
------------ ------------ ------- -------
- - --------------------------------------------------------------------------------------------------------
</TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<CAPTION>
GENERAL
UNITHOLDERS PARTNERS TOTAL
- - ---------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Partners' capital (deficit)--October 31, 1992 $10,522 $ (205) $10,317
Net loss (1,879) (19) (1,898)
----------- -------- -------
Partners' capital (deficit)--October 31, 1993 8,643 (224) 8,419
Net loss (786) (8) (794)
----------- -------- -------
Partners' capital (deficit)--October 31, 1994 7,857 (232) 7,625
Net loss (121) (1) (122)
----------- -------- -------
Partners' capital (deficit)--December 31, 1994 7,736 (233) 7,503
Net loss (1,022) (10) (1,032)
----------- -------- -------
Partners' capital (deficit)--December 31, 1995 $ 6,714 $ (243) $ 6,471
----------- -------- -------
----------- -------- -------
- - ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
4
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the November 1 Year ended
Year Ended through October 31,
December 31, December 31, --------------------
1995 1994 1994 1993
- - -------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,032) $ (122) $ (794) $(1,898)
------------ ------------ ------- -------
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,965 328 1,883 2,634
Lease concessions-effective rents 69 13 138 281
Bad debt expense -- -- 18 20
Gain on disposition of property -- -- -- (338)
Leasing commissions paid (260) (18) (125) (45)
Provision for loss on impairment of assets -- -- -- 250
Changes in:
Prepaid expenses and other assets (145) (21) (122) 24
Due to affiliates (7) 10 42 164
Accounts payable and accrued liabilities (2) (208) (16) 225
Security deposits and deferred revenue (30) 2 (21) (6)
Real estate taxes payable (37) -- (92) 36
------------ ------------ ------- -------
Total adjustments 1,553 106 1,705 3,245
------------ ------------ ------- -------
Net cash provided by (used in) operating
activities 521 (16) 911 1,347
CASH FLOWS FROM INVESTING ACTIVITIES
Building improvements (592) (30) (336) (204)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes (241) (55) (411) (445)
------------ ------------ ------- -------
Net increase (decrease) in cash and cash
equivalents (312) (101) 164 698
Cash and cash equivalents at beginning of
period 1,118 1,219 1,055 357
------------ ------------ ------- -------
Cash and cash equivalents at end of period $ 806 $1,118 $ 1,219 $ 1,055
------------ ------------ ------- -------
------------ ------------ ------- -------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Interest paid $ 2,546 $ 533 $ 2,369 $ 2,511
------------ ------------ ------- -------
------------ ------------ ------- -------
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
The Partnership entered into a deed-in-lieu of foreclosure agreement with the lender on the 399 Market
Street property in 1993. See note F for further information.
- - ------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
5
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. General
Prudential-Bache/Equitec Real Estate Partnership, A California Limited
Partnership (the ``Partnership''), was formed on June 19, 1984 and will
terminate on December 31, 2009 unless ended sooner under the provisions of the
Amended and Restated Limited Partnership Agreement (the ``Partnership
Agreement''). The Partnership was formed for the purpose of purchasing, holding,
operating, leasing and selling various real properties. The general partners of
the Partnership are Prudential-Bache Properties, Inc. (``PBP'') and Glenborough
Corporation (formerly Glenborough Realty Corporation) and Robert Batinovich
(together, ``Glenborough'') (collectively, the ``General Partners''). At
December 31, 1995, the Partnership owned five properties.
Glenborough replaced Equitec Financial Group, Inc. (``EFG'') as co-General
Partner of the Partnership on May 4, 1994 when EFG transferred its general
partner interest to Glenborough and withdrew and retired as general partner.
This substitution occurred as a result of the consent of a majority of interests
of the limited partners approving the transaction which was detailed in a proxy
statement dated December 1, 1993. PBP continues as co-General Partner.
Glenborough Corporation, an affiliate of Glenborough, continues to receive fees
and expense reimbursements in the same amount that was provided in the property
management agreement (see Note E).
B. Summary of Significant Accounting Policies
Basis of accounting principles
The books and records of the Partnership are maintained on the accrual basis
of accounting in accordance with generally accepted accounting principles.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the General Partners to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The Partnership's fiscal year for financial reporting purposes now ends on
December 31. On November 21, 1994, the General Partners approved a change in the
Partnership's fiscal year for financial reporting purposes from October 31 to
December 31.
The consolidated financial statements of the Partnership include the accounts
of Montrose Office Park Limited Partnership, in which the Partnership owns a
100% interest.
Investment in property
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards (``SFAS'') No. 121, ``Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of,'' which was
adopted by the Partnership as of January 1, 1995 for its financial statements
for the year ended December 31, 1995. Under SFAS No. 121, impairment for
properties to be held and used is determined to exist when estimated amounts
recoverable through future operations on an undiscounted basis are below the
properties' carrying value. If a property is determined to be impaired, it
should be recorded at the lower of its carrying value or its estimated fair
value. For properties that are held for sale, SFAS No. 121 states that they
should be reported at the lower of carrying amount or estimated fair value less
cost to sell. The implementation of SFAS No. 121 did not affect the
Partnership's results of operations or financial position for the year ended
December 31, 1995.
Prior to 1995, property investments were carried at the lower of depreciated
cost or estimated amounts recoverable through future operations and ultimate
disposition of the property. A provision for loss on impairment of assets is
recorded when estimated amounts recoverable through future operations and
ultimate disposition of the property on an undiscounted basis are below
depreciated cost.
6
<PAGE>
<PAGE>
Property investments are depreciated or amortized using the straight-line
method over their estimated economic lives which range from 3 to 30 years
depending on property type.
Cash and cash equivalents
Cash and cash equivalents include money market funds whose cost approximates
market value.
Other assets
Other assets consist primarily of loan fees, lease concessions, and lease
commissions. Loan fees are capitalized and amortized on a straight-line basis
over the terms of the respective loans. Lease concessions and lease commissions
are deferred and amortized over the terms of the respective leases.
Income taxes
The Partnership is not required to provide for, or pay, any Federal or state
income taxes. Income tax attributes that arise from its operations are passed
directly to the individual partners. The Partnership may be subject to other
state and local taxes in jurisdictions in which it operates.
Information on the Partnership's tax basis net losses and the partners' tax
basis capital accounts is as follows:
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
(in thousands)
Net loss, Federal income tax basis $ (677) $ (481) $(1,605)
------- ------- -------
------- ------- -------
Partners' capital, Federal income tax basis $12,245 $12,921 $13,403
------- ------- -------
------- ------- -------
</TABLE>
Profit and loss allocations/distributions
For financial and tax reporting purposes, net profits or losses are allocated
99% to the Unitholders and 1% to the General Partners.
No distributions have been paid since 1988.
C. Investment in Property and Notes Payable
The Partnership's properties, net of accumulated depreciation, and the
related debt at December 31, 1995 and October 31, 1994 were:
<TABLE>
<CAPTION>
Investment Notes Payable
------------------- -------------------
Property 1995 1994 1995 1994
- - ----------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Montrose Office Park, Rockville, MD $16,786 $17,221 $13,055 $13,279
Gateway and Park Plaza, Sacramento, CA 7,104 7,705 6,439 6,449
Totem Valley Business Center, Kirkland, WA 5,074 5,277 3,645 3,645
Poplar Tower, Memphis, TN 3,736 3,891 3,482 3,544
Less: allowance for loss on impairment of assets (500) (500) -- --
------- ------- ------- -------
$32,200 $33,594 $26,621 $26,917
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
A valuation allowance of $250,000 was recorded in 1993 for Poplar Towers
based on diminished cash flows anticipated from the property. A valuation
allowance of $250,000 was recorded in 1992 for Gateway because its depreciated
cost exceeded the estimated amount recoverable through future operations and
ultimate sale of the property.
7
<PAGE>
<PAGE>
Individual rental properties are pledged as collateral for the related notes
payable which bear interest at rates ranging from 7.5% to 10.25% at December 31,
1995. Certain notes provide for variable interest rates with the interest in
excess of the monthly payment, if any, added to the principal balance. The notes
are generally payable monthly with certain notes requiring balloon payments
between 1996 and 1998. The carrying amounts of the notes payable are reasonable
estimates of fair value due to the short period of time until their expected
realization. Principal payments at December 31, 1995 are required as follows:
<TABLE>
<CAPTION>
Year ending
December 31, (in thousands)
- - ---------------- --------------
<S> <C>
1996 $ 3,666
1997 12,871
1998 10,084
--------------
Total $ 26,621
--------------
--------------
</TABLE>
The Partnership has initiated discussions with the lender to extend the
maturity date and lower the interest rate of the Poplar Tower note that has a
balloon payment due in October 1996. No assurance can be given that the
Partnership will be successful in obtaining an extension or in refinancing the
note.
D. Lease Agreements
The provisions of the leases generally require tenants to pay for their
proportionate share of increases in building operating costs and property tax
increases. Future minimum rental receipts due under the noncancellable operating
leases with tenants are as follows:
<TABLE>
<CAPTION>
Year ending
December 31, (in thousands)
- - ---------------- --------------
<S> <C>
1996 $ 5,315
1997 3,677
1998 3,008
1999 2,161
2000 1,523
Thereafter 4,463
--------------
Total $ 20,147
--------------
--------------
</TABLE>
For the years ended December 31, 1995, October 31, 1994 and October 31, 1993,
respectively, the following properties' rental revenues exceeded 15% of the
Partnership's total revenue:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Montrose Office Park 43% 46% 44%
Park Plaza -- -- 16
</TABLE>
During the year ended December 31, 1995, Technical Resources Inc., a tenant
in the Montrose Office Park property, on an annualized basis would have
accounted for approximately 10% of the Partnership's total revenue. During the
year ended October 31, 1994, Intersolv, a tenant in the Montrose Office Park
property, accounted for approximately 10% of the Partnership's total revenue. No
single tenant accounted for 10% or more of the Partnership's total revenue for
the year ended October 31, 1993.
8
<PAGE>
<PAGE>
E. Related Parties
The General Partners and their affiliates perform services for the
Partnership which include, but are not limited to: accounting and financial
management; registrar, transfer and assignment functions; property management;
investor communications; printing and other administrative services. The General
Partners and their affiliates receive reimbursements for costs incurred in
connection with these services, the amount of which is limited by the provisions
of the Partnership Agreement. The costs and expenses were:
<TABLE>
<CAPTION>
November 1,
Year ended through Year ended
December 31, December 31, October 31,
1995 1994 1994 1993
- - -----------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
PBP and affiliates
General and administrative $112 $ 10 $ 136 $ 186
------ ------
------- -------
Glenborough and affiliates
Property management fee and expenses 663 103 212 *
Leasing commissions 136 18 31 *
------ ------
------- -------
799 121 243 *
------ ------
------- -------
$911 $131 $ 379 $ 186
------ ------
------ ------
------- -------
------- -------
- - ---------------
</TABLE>
* Glenborough replaced EFG as General Partner in May 1994 (see Note A);
therefore, 1994 fiscal year amounts include costs incurred from June 1 through
October 31, 1994 only and 1993 fiscal year amounts are not presented.
PBP is not being paid on a current basis for general and administrative
expenses other than printing costs. During the year ended December 31, 1995, PBP
was reimbursed $100,000, which was applied to prior years' general and
administrative expenses due. At December 31, 1995 and October 31, 1994, the
total liability outstanding to PBP was approximately $700,000 and $697,000,
respectively.
The Partnership maintains an investment account with the Prudential
Institutional Liquidity Portfolio Fund, an affiliate of PBP, for investment of
its available cash in short-term instruments pursuant to the guidelines
established by the Partnership Agreement.
Prudential Securities Incorporated (``PSI''), an affiliate of PBP, owns 180
depositary units at December 31, 1995.
F. Disposition of Properties
On May 11, 1993, in response to a demand for payment by Fidelity Bank, N.A.
(the ``Bank'') resulting from defaults by the Partnership under certain
provisions of the first mortgage, the Partnership and the Bank entered into an
agreement related to a deed-in-lieu of foreclosure with regard to the 399 Market
Street property in Philadelphia, Pennsylvania, for which the Bank held the first
mortgage. The Partnership delivered to the Bank the title to the property. As a
result of the disposition of the property, the Partnership recorded a gain on
disposition of property of approximately $338,000 during the year ended October
31, 1993.
G. Contingencies
On or about October 18, 1993, a putative class action, entitled Kinnes, et
al. v. Prudential Securities Group Inc. et al. (CV-93-654), was filed in the
United States District Court for the District of Arizona, purportedly on behalf
of investors in the Partnership and against the Partnership, PBP, PSI and a
number of other defendants. Defendants filed a motion to dismiss on December 22,
1993.
On or about November 16, 1993, a putative class action captioned Connelly et
al. v. Prudential-Bache Securities Inc. et al. (CIV-93-713), was filed in the
United States District Court for the District of Arizona, purportedly on behalf
of investors in the Partnership and against the Partnership, PBP, PSI and a
number of other defendants. Plaintiffs subsequently filed a motion to
consolidate this action with the Kinnes case.
By order of the Judicial Panel on Multidistrict Litigation dated April 14,
1994, the Kinnes case, and by order dated June 8, 1994, the Connelly case,
together with a number of other actions, on each occasion not
9
<PAGE>
<PAGE>
involving the Partnership, were transferred to a single judge of the United
States District Court for the Southern District of New York and consolidated for
pretrial proceedings under the caption In re Prudential Securities Incorporated
Limited Partnerships Litigation (MDL Docket 1005). On June 8, 1994, plaintiffs
in the transferred cases filed a complaint that consolidated the previously
filed complaints and named as defendants, among others, PSI, certain of its
present and former employees, PBP and EFG. The Partnership was not named as a
defendant in the consolidated complaint, but the name of the Partnership was
listed as being among the limited partnerships at issue in the case.
On August 9, 1995 PBP, PSI and other Prudential defendants entered into a
Stipulation and Agreement of Partial Compromise and Settlement with legal
counsel representing plaintiffs in the consolidated actions. The court
preliminarily approved the settlement agreement by order dated August 29, 1995
and, following a hearing held November 17, 1995, found that the agreement was
fair, reasonable, adequate and in the best interests of the plaintiff class. The
court gave final approval to the settlement, certified a class of purchasers of
specific limited partnerships, including the Partnership, released all settled
claims by members of the class against the PSI settling defendants and
permanently barred and enjoined class members from instituting, commencing or
prosecuting any settled claim against the released parties. The full amount due
under the settlement agreement has been paid by PSI.
10
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A California Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
All of the Partnership's properties generated cash flow from operations after
debt service during the year ended December 31, 1995.
During the year ended December 31, 1995, the Partnership disbursed
approximately $592,000 for building and tenant improvements primarily at the
Totem Valley, Montrose Office Park and Poplar Towers properties. In order to
keep the Partnership's properties competitive, building and tenant improvements
will continue to be required. Building and tenant improvements are currently
budgeted at approximately $1,134,000 for 1996.
The Partnership had cash of approximately $806,000 at December 31, 1995. PBP
is not being reimbursed for its general and administrative expenses (other than
printing) on a current basis. During the year ended December 31, 1995, PBP was
reimbursed $100,000, which was applied to prior years' general and
administrative expenses due. At December 31, 1995, the total liability
outstanding (including printing) was approximately $700,000. Cash on hand plus
any cash generated from operations may not be sufficient to fund building and
tenant improvements and to pay deferred general and administrative expenses.
The Partnership has initiated discussions with the lender to extend the
maturity date and lower the interest rate of the Poplar Tower note that has a
balloon payment due in October 1996. No assurance can be given that the
Partnership will be successful in obtaining an extension or in refinancing the
note.
For the year ended October 31, 1994, Intersolv, a tenant in the Montrose
Office Park property, accounted for approximately 10% of the Registrant's total
revenue. Intersolv's lease expired in June 1995 and it vacated its space at that
time. A new tenant, Technical Resources, Inc., with a lease that commenced
September 1, 1995 and that will expire August 31, 1996, on an annualized basis,
would have accounted for approximately 10% of the Registrant's total revenue for
the year ended December 31, 1995.
The General Partners continue to evaluate all of the properties' prospects
for eventual sale. It is unlikely that investors will be returned a significant
portion of their original investment upon the sale of the properties and
ultimate dissolution of the Partnership.
Results of Operations
1995 versus 1994
The Partnership's net loss increased by approximately $238,000 for the year
ended December 31, 1995 as compared to the year ended October 31, 1994 (``fiscal
1994'') for the reasons discussed below.
Operating revenues decreased by approximately $15,000 for the year ended
December 31, 1995 as compared to fiscal year 1994 as increases at the Totem
Valley, Gateway, and Poplar Tower properties were more than offset by decreases
at the Park Plaza and Montrose properties. The increases and decreases in
operating revenue were primarily the result of corresponding changes in average
occupancies.
Recovery of expenses increased by approximately $12,000 for the year ended
December 31, 1995 as compared to fiscal 1994 primarily due to greater tenant
work order recoveries at the Montrose property offset by decreases in various
other expense recoveries at all of the properties.
Property operating expenses increased by approximately $102,000 during the
year ended December 31, 1995 as compared to fiscal 1994 due primarily to
increased tenant work order costs and increased utilities expenses.
Depreciation and amortization increased by approximately $82,000 during the
year ended December 31, 1995 as compared to fiscal 1994 due to increased
building and tenant improvement additions.
Interest expense increased by approximately $47,000 during the year ended
December 31, 1995 as compared to fiscal 1994 because of increases in interest
rates on variable rate notes.
11
<PAGE>
<PAGE>
1994 versus 1993
The Partnership's net loss decreased by approximately $1,104,000 for the
fiscal 1994 as compared to the corresponding period in 1993 (``fiscal 1993'')
for the reasons discussed below.
Operating revenue decreased by approximately $345,000 during fiscal 1994 as
compared to fiscal 1993. This decrease is primarily attributable to the
disposition of the 399 Market Street property pursuant to the deed-in-lieu of
foreclosure (discussed in Note F to the financial statements) and lower
occupancy levels at the Park Plaza property, partially offset by improved
occupancy levels at the Montrose Office Park and Poplar Tower properties.
Recovery of expenses increased by approximately $48,000 during fiscal 1994 as
compared to fiscal 1993 due to the timing of billings at the Montrose Office
Park property in 1994, offset by a decrease due to the disposition of the 399
Market Street property.
Property operating expenses decreased by approximately $470,000 during fiscal
1994 as compared to fiscal 1993 due primarily to the disposition of the 399
Market Street property.
Depreciation and amortization decreased by approximately $751,000 during
fiscal 1994 as compared to fiscal 1993 due to the disposition of the 399 Market
Street property and reduced depreciation on the Poplar Towers property due to
the establishment of a property valuation allowance in 1993.
Interest expense decreased by approximately $229,000 during fiscal 1994 as
compared to fiscal 1993 due to the disposition of the 399 Market Street property
and lower interest charges relating to two floating rate mortgage loans.
General and administrative expenses decreased by approximately $39,000 during
fiscal 1994 as compared to fiscal 1993 due to the timing of certain expense
accruals recorded in the respective years and a continuing general reduction in
the costs associated with the administration of the Partnership.
12
<PAGE>
<PAGE>
OTHER INFORMATION
The Partnership's Annual Report on Form 10-K as filed with the Securities and
Exchange Commission is available to limited partners without charge upon written
request to:
Prudential-Bache/Equitec Real Estate Partnership
P.O. Box 2016
Peck Slip Station
New York, N.Y. 10272-2016
13
<PAGE>
<PAGE>
<PAGE>
Prudential Securities Incorporated
BULK RATE
P.O. Box 2016
U.S. POSTAGE
Peck Slip Station
PAID
New York, NY 10272
Automatic Mail
PBEQ86/170368
<PAGE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for P-B Equitec Real Estate
and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000757191
<NAME> P-B Equitec Real Estate
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-1-1995
<PERIOD-END> Dec-31-1995
<PERIOD-TYPE> 12-Mos
<CASH> 806,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 50,605,000
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 17,905,000
<TOTAL-ASSETS> 34,388,000
<CURRENT-LIABILITIES> 27,917,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,471,000
<TOTAL-LIABILITY-AND-EQUITY> 34,388,000
<SALES> 5,982,000
<TOTAL-REVENUES> 6,541,000
<CGS> 0
<TOTAL-COSTS> 5,162,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,411,000
<INCOME-PRETAX> (1,032,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,032,000)
<EPS-PRIMARY> (14.86)
<EPS-DILUTED> 0
</TABLE>
