UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1996
[ ] Transition Report Pursuant to Section 13 or 15(a) of the
Securities Exchange Act of 1934
Commission File Number 0-15756
LIF
(Exact name of registrants as specified in its charter)
California 94-2969720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P. O. Box 130, Carbondale, Colorado 81623
(Address of principal executive offices)
(970) 963-8007
(Partnership's telephone number, including area code)
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 whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.405 of this chapter) 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 [ ]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Inapplicable.
DOCUMENTS INCORPORATED BY REFERENCE: None
<PAGE>
LIF
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1996
TABLE OF CONTENTS
Item No. Name of Item
Part I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Part II
Item 5. Market for Partnership's Common Equity and Related
Shareholders Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 8. Financial Statements and Supplementary Data
Item 9. Change in and Disagreements with Accountants on
Accounting and Financial Disclosure
Part III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners
and Management
Item 13. Certain Relationships and Related Transactions
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K
Signatures
Index to Consolidated Financial Statements and Supplemental
Consolidated Financial Statement Schedules
<PAGE>
PART I
ITEM 1. BUSINESS
LIF (the "Partnership") is a limited partnership which was organized under
the California Revised Limited Partnership Act on June 29, 1984. The
Partnership was organized to acquire real properties, including
commercial, residential and agricultural properties, located primarily
within the western portion of the United States, and to make short-term
loans and capital contributions to other limited partnerships formed to
acquire or develop and operate one or more income-producing real
properties. The Partnership was formed with the following principal
investment objectives: (i) to provide the maximum possible cash
distributions from operations, a substantial portion of which may not be
taxable to the holders of units of limited partnership interest in the
Partnership (the "Holders"); (ii) to provide for capital growth through
appreciation in values; and (iii) to protect the Partnership's capital. The
General Partner of LIF is Partners '85 (the "General Partner") a partnership
whose General Partner is Landsing Equities Corporation.
The Partnership's business consists of a single segment -- acquisition and
operation of one or more income-producing real properties and making
short-term loans and capital contributions to operating entities formed to
acquire or develop real properties. For a schedule of the Partnership's
income and losses and assets, see Item 6, Selected Financial Data. The
Partnership will not be engaged in the production of goods or the rendering
of services. For a more specific discussion of the Partnership's operations
and financial condition, see Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations.
The Partnership currently has an investment in Landsing Private Fund-21
("P-21") which owns one multi-family rental property, Alpine Center
Partners ("ACP") which owns one commercial rental property under
construction; and Cattle Creek Development Partners ("CCDP") which owns
two retail rental properties. For financial reporting purposes the
Partnership's investments are presented on a consolidated basis.
Results of the Partnership's operations depend primarily upon the
successful operation of it's investment. The yields (return on capital)
available on equity ownership of investments in income-producing and
other types of real estate investments depend to a large extent upon the
ability to lease or rent the property, the geographic location of the
property, competition and other factors, none of which can be predicted
with any certainty.
The Partnership has not engaged in research activities relating to the
development or improvement of products or services. The Partnership has
not made, nor does it anticipate making, during the succeeding fiscal year,
any capital expenditures for environmental control facilities, nor does it
expect any material effects upon capital expenditures, earnings or
competitive position resulting from compliance with present federal, state
or local environmental control provisions. The Partnership has no
employees. All of the Partnership's operations are located in the United
States.
<PAGE>
<TABLE>
ITEM 2. PROPERTIES
A description of the income-producing properties which the Partnership
owned at December 31, 1996 is as follows:
<CAPTION>
Financial
Occupancy Average
Net For the Physical Effective
Rentable Year Ended Occupancy Rental
Name & Location Type Sq. Ft. 12/31/96 At 12/31/96 Rate
<F1> <F2> <F3>
<S> <C> <C> <C> <C> <C>
Whistler Point Apt Residential 140,230 92% 89% $ 9
Boise, Idaho
Valley View
Business Center
Glenwood Springs, CO Retail 20,750 80% 90% $ 6
701 Cooper
Glenwood Springs, CO Commercial 2,937 100% 100% $10
Alpine Center
Carbondale, CO Commercial 21,783 <F4> <F4> <F4>
</TABLE>
[FN]
<F1>
Expressed as a percentage, it compares the actual dollar amount of
rent received with the dollar amount of rent which would be received
if the property were fully leased.
<F2>
Physical occupancy denotes the percentage of net rentable square
footage leased as of a certain date.
<F3>
Represents the average effective rental rates, per square foot, for the
year ended December 31, 1996.
<F4>
Alpine Center was under construction as of December 31, 1996 and
thus not available for occupancy. Initial occupancy of Phase I which
contains 12,349 square feet occurred in February 1997.
Each of the Partnership's properties is subject to substantial encumbrances.
Reference is made to Schedule XI to the Financial Statements filed as part
of this annual report for information regarding such encumbrances.
ITEM 3. LEGAL PROCEEDINGS
The Partnership, through CCDP, has had suit filed against it by two tenants
alleging loss of business during the re-development of CCDP's property.
No action has been taken by the Plaintiffs and CCDP is seeking to have the
matter dismissed. CCDP's defense is being paid by its insurance carrier.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
No matter has been submitted to a vote of the limited partners (the
"Limited Partners") through the solicitation of proxies or otherwise, during
the fourth quarter of 1996.
<PAGE>
<TABLE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED SHAREHOLDERS MATTERS
There is no established public trading market for the Units of Limited
Partnership interest of the Partnership and there are substantial restrictions
on the transferability of such Units imposed by federal and state securities
laws and by the Limited Partnership Agreement.
The approximate number of record holders of Units of the Partnership as
of January 1, 1997, is 951.
The Limited Partners of the Partnership are entitled to certain distributions
under the Amended and Restated Certificate and Agreement of Limited
Partnership of the Partnership. A cash distribution of $15 per unit was
paid on September 30, 1996 to Limited Partners of record as of September
15, 1996.
ITEM 6. SELECTED FINANCIAL DATA
(In thousands, except per Unit amount)
<CAPTION>
. . . . . . .DECEMBER 31 . . . . . . .
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Total Revenues $ 1,517 $1,542 $1,361 $1,216 $1,157
Net Income (Loss) 136 (52) 27 58 (47)
Net Income (Loss) Per Unit<F1> (11) (4) 2 5 (4)
Total Assets 9,864 9,076 8,153 7,318 7,385
Long-term Obligations - Net 7,960 6,897 5,591 4,406 4,489
Cash Distributions-Limited Partners 193 385 385 0 0
Paid Per Unit<F1> 15 30 30 0 0
<FN>
<F1>
Based on a weighted average of 12,820 limited partnership units
outstanding in 1996, 1995, 1994, 1993, and 1992.
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
INTRODUCTION
The Partnership was organized to acquire real properties, including
commercial, residential and agricultural properties, located primarily
within the western portion of the United States, and to make short-term
loans and capital contributions to other limited partnerships formed to
acquire or develop and operate one or more income-producing real
properties.
The Partnership currently has an investment in Landsing Private Fund-21
("P-21") which owns one multi-family rental property, Alpine Center
Partners ("ACP") which owns one commercial building under
construction, and Cattle Creek Development Partners ("CCP") which owns
two retail rental properties. For financial reporting purposes the
Partnership's investments are presented on a consolidated basis.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1996, the Partnership's consolidated cash balance
totaled $388,000. Cash not required for current operations is placed in
federally insured financial instruments, certificates of deposit, and money
market funds which can be liquidated as needed. It is the Partnership's
intention to maintain adequate cash reserves for its operations.
During 1996, the Partnership experienced a net decrease in cash and cash
equivalents of $168,000. During this same period, the Partnership
experienced a net decrease in short-term investments of $99,000. As of
December 31, 1996, cash plus short-term investment totaled $388,000
versus a balance of $655,000 at December 31, 1995 for a net decrease of
$267,000. The Partnership made one Short-Term Loan during 1996. The
Partnership had two Short-Term Loans repaid in full and a third partially
repaid in 1996.
The Short-Term Loan made to Prince Creek Partners, a Colorado limited
partnership ("PCP"), was repaid in June 1996. The three rental residential
property acquired by PCP were sold in 1996. The Partnership recognized
a gain of $33,000 as a result of these sales.
The Short-Term Loan made to Thompson Creek Partners, a Colorado
limited partnership ("TCP"), was repaid in June 1996. The rental
residential property acquired by TCP was sold in 1996. The Partnership
recognized a gain of $6,000 as a result of this sale.
The Short-Term Loan made to Cattle Creek Development Partners, a
Colorado limited partnership ("CCDP"), was partially repaid in December
1996. The remaining loan balance, including accrued and unpaid interest,
as of December 31, 1996 was $550,000. The loan is currently past due
and is thus in default. It is expected that the two commercial properties
securing this loan will either be sold in 1997 or the remainder of the Short-
Term Loan will be repaid. As of December 31, 1996, one of the properties
owned by CCDP was 100% occupied, while the other property owned by
CCDP was 90% occupied. Currently as a Co-General Partner of CCDP,
the Partnership is allocated 99% of all the profits, losses and cash
distributions of CCDP as long as the Short-Term Loan remains
outstanding.
On June 3, 1996, the Partnership made a Short-Term Loan in the principal
amount of $585,000 to Alpine Center Partners, a Colorado limited
partnership ("ACP"). ACP was organized to acquire one commercial
property located in Carbondale, Colorado. The property is currently
undergoing renovation and expansion. The Partnership also made a capital
contribution to ACP in the amount of $10,000 and became a Co-General
Partner of ACP. As a Co-General Partner of ACP, the Partnership will be
allocated 95% of all profits, losses and cash distributions of ACP as long
as the Short-Term Loan remains outstanding. Upon repayment of the loan,
the Partnership will receive 1% of profits and losses and 1% of cash
distributions. A Short-Term Loan currently bears interest at the rate of
6.87% per annum and is due and payable on March 3, 1997, with the
option of exercising five (5) three month extensions. Each three month
extension requires a payment of an exercise fee in the amount of $3,410,
and an adjustment to the interest rate (Index Rate plus 2%). As of
December 31, 1996, the property owned by ACP was under construction
and not available for occupancy. Occupancy of Phase I was achieved in
February 1997.
For financial reporting purposes, results of operations for CCDP, TCP and
ACP have been shown on a consolidated basis.
<PAGE>
RESULTS OF OPERATIONS
The Partnership's revenues for the year ended December 31, 1996 have
declined compared to 1995. Rental revenues were $1,483,000 in 1996, a
decrease of $59,000 or approximately 4% from 1995. Rental revenues
were $1,542,000 in 1995, an increase of $210,000 or approximately 16%
from 1994. The decline in rental revenues in 1996 versus 1995 were the
result of the sale of four properties in 1996, which properties were
operational for the entire year in 1995. The improvement in revenues in
1995 as compared to 1994 was the result of the acquisition of four
residential properties, which were only partially included in 1994's
operation and improved operations at Whistler Point Apartments.
Operating expenses were $595,000 in 1996, a decrease of $48,000 or 7%
from 1995. Operating expenses were $643,000 in 1995, an increase of
$104,000 or 19% from 1994. The decrease in operating expenses in 1996
was the result of property sales during the year. Specifically, maintenance
and repairs decreased 14%, and general and administrative costs decreased
12%. Other operating costs remained steady with 1995 levels. The
increase of operating expenses in 1995 versus 1994 was the result of
having more properties operating for the entire year in 1995 as compared
to 1994.
Net operating income of the properties (rental revenue less operating
expenses) was $888,000 in 1996, a decrease of $11,000 or 2% from 1995.
Management believes net operating income is the best indication of the
properties performance. The decrease of 4% was due to the sale of four
residential properties in 1996 that were in operation for the entire year
1995.
Interest income decreased slightly in 1996. The decline was due to the
decrease in the Partnership's short term investments and cash equivalents,
and reduced interest rates.
Interest expense increased 16% in 1996 from 1995 levels due to average
larger outstanding loan balances in 1996 and acquisition of Alpine Center.
Interest expense increased in 1995 from 1994, due to the acquisition of new
properties in 1994.
Entity level general and administrative expenses, exclusive of that at the
property level, remained consistent in 1996 compared to 1995, after a 33%
decrease in 1995 versus 1994.
The net loss for the Partnership was $136,000 in 1996, an increase of
$59,000 from a net loss of $84,000 in 1995. The net loss of the
Partnership of $52,000 in 1995 was a decrease of $79,000 from the net
income of $27,000 in 1994. These decreases are a result of acquiring new
properties in 1994 and 1996, and the related increased depreciation and
interest expense amounts.
<PAGE>
PROPERTY OPERATIONS
Residential Property - Four residential properties were sold in 1996 at a
profit of $39,000 to the Partnership. The remaining residential property's,
Whistler Point Apartments in Boise, Idaho, operations remained stable. In
1996, the Partnership continued to make capital improvements to the
property to allow it to compete effectively with new competition. The
Partnership is continuing this program in 1997. The Partnership
anticipates that when this improvement program is completed, the property
will be placed on the market for sale in 1998.
Commercial Property - The 701 Cooper Building remained 100% occupied
during 1996. The Valley View Business Center improved its occupancy
from 80% to 90% by year-end. As of March 31, 1997, the property is 99%
occupied and leased. The Fund acquired the Alpine Center complex in
1996. The property is currently undergoing a renovation and expansion.
Occupancy of Phase I occurred in February 1997. As of March 31, 1997,
Phase I was 63% leased.
OCCUPANCY
Occupancy at all of the Partnership's properties remain high in 1996. As
of December 31, 1996, occupancy at Whistler Point Apartments was 92%.
This occupancy, despite new competition, is expected to remain stable
through 1997. Occupancy at properties owned by CCDP was 90% as of
December 31, 1996. It is expected that all Partnership properties will
maintain stable occupancy during 1997.
DISTRIBUTIONS
A cash distribution of $15.00/unit was paid on September 30, 1996.
INFLATION
The effect of inflation on the Partnership's operations have been no greater
than the effect on the economy as a whole. Because of competitive
conditions, market rate rents may increase or decrease disproportionately
with inflation while property operating costs continue to follow
inflationary trends. Inflationary conditions are not expected to have a
major impact on the Partnership during 1997.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is contained at page F-1 following in
this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The General Partner of the Partnership is Partners '85, which has sole
responsibility for all aspects of the Partnership's operations. Partners '85
is a limited partnership, whose General Partner is Landsing Equities
Corporation, a California corporation.
Landsing Equities Corporation was incorporated in California in 1983. It
is a wholly-owned subsidiary of The Landsing Corporation which has
acted as a sponsor of real estate investment programs, providing property
acquisition and management services.
Gary K. Barr is the Director and President of Landsing Equities
Corporation. His principal occupation during the last five years or more,
and certain other affiliations are set forth below:
Gary K. Barr. Mr. Barr serves as Chairman and Chief Executive Officer
of Pacific Coast Capital and has served as President and Director of
Landsing Pacific Fund from its inception in November, 1988 to July, 1992.
Mr. Barr received a Bachelor of Science degree in Mechanical Engineering
from Oklahoma State University in 1967 and a Master of Business
Administration degree from the Stanford University Graduate School of
Business in 1972. Mr. Barr serves on the Board of Governors of the
National Association of Real Estate Investment Trusts and on its Editorial
Board. Mr. Barr has served as President of the California Chapter of the
Real Estate Securities and Syndication Institute of the National Association
of Realtors ("RESSI"), which has awarded him the designation of
Specialist in Real Estate Securities. Since 1983, he has served on the
Board of Directors of Silicon Valley Bancshares. In 1989 he authored the
book J.K. Lasser's "Real Estate Investment Guide" published by Prentice
Hall.
ITEM 11. EXECUTIVE COMPENSATION
The Director and President of Landsing Equities Corporation does not
receive compensation from the Partnership. However, the General Partner,
Partners '85, has contracted with Pacific Coast Capital, an affiliate, for the
provision of certain asset management and administrative services. During
1996, Pacific Coast Capital received management fees of $103,000, which
were determined based on expenses incurred in order to operate the
Partnership. In addition, Pacific Coast Capital was paid $25,000 for
property management services. These property management fees were
based on 2% of the monthly property revenues received from Whistler
Point Apartments. See Item 13, Certain Relationships and Related
Transactions for further information.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No persons or groups are known by the Partnership to hold more than 5%
of the Units of limited partnership of the Partnership. The General Partner
is not a direct or beneficial owner of Units of limited partnership. The
General Partner knows of no arrangement, including any pledge by any
person of securities of the Partnership, the operation of which may at a
subsequent date result in a change in control of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership has agreements with The Landsing Corporation and one of
its affiliates, Pacific Coast Capital, pursuant to which the Partnership has
paid various fees and compensation to these companies.
The Partnership has entered into a property management agreement with
Pacific Coast Capital for the management of the Partnership's property.
During 1996, the Partnership paid Pacific Coast Capital $25,000 for
property management and leasing services.
The Partnership has retained Pacific Coast Capital to serve as advisor and
to manage the day-to-day operations of the Partnership. Pacific Coast
Capital is to perform these services based on reimbursement of costs
incurred but in no case are these to exceed those which the Partnership
would have to pay independent parties for comparable services. During
1996, the Partnership paid Pacific Coast Capital expense reimbursements
of $103,000.
For information concerning the agreements between the Partnership and
the affiliates of The Landsing Corporation, see Note 2 of Notes to
Financial Statements filed as part of this Annual Report.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
See the Index on page F-1.
2. Financial Statement Schedules
See the Index on page F-1.
3. Exhibits
See the Exhibit Index which immediately precedes the
Exhibits filed with this Report.
(b) No reports were filed by the Partnership on Form 8-K during
the fourth quarter ended December 31, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
LIF
By: Partners '85
By: Landsing Equities Corporation,
General Partner
March 31, 1997 By: /s/ Gary K. Barr
GARY K. BARR, President and Director
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
Partnership and in the capacities and on the dates indicated.
March 31, 1997 /s/ Gary K. Barr
GARY K. BARR, President and Director
Landsing Equities Corporation
(Principal Executive Officer)
Supplemental Information to be Furnished With Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered
Securities Pursuant to Section 12 of the Act.
No Annual Report or Proxy material has been sent to Partnership's security
holders. An Annual Report will be furnished to such security holders
subsequent to the filing of Partnership's Annual Report on Form 10-K, and,
when so sent, Partnership shall furnish copies of such material to the
Commission.
<PAGE>
LIF
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL
CONSOLIDATED FINANCIAL STATEMENT SCHEDULES INCLUDED IN THE FORM 10-K
Report of Independent Accountants
Financial Statements:
Consolidated Balance Sheets, December 31, 1996 and 1995
Consolidated Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Changes in Partners' Equity for the Years
Ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
Supplemental Consolidated Financial Statement Schedules:
Schedule X - Supplementary Consolidated Income Statement
Information for the Years Ended December 31, 1996, 1995 and 1994
Schedule XI - Real Estate and Accumulated Depreciation
for the Year Ended December 31, 1996
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of LIF:
We have audited the accompanying consolidated financial statements and
consolidated financial statement schedules of LIF and subsidiaries listed in
the index on page F-1 of this Form 10-K as of December 31, 1996 and
1995, and the related consolidated statements of operations, partners'
equity and cash flows for each of the three years in the period ended
December 31, 1996. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion
on these financial statements and financial statement schedules based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards required 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 LIF and subsidiaries as of December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles. In addition, in our opinion, the
consolidated financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
DALBY, WENDLAND & CO., P.C.
Glenwood Springs, Colorado
March 13, 1997
<PAGE>
<TABLE>
LIF
CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1996 AND 1995
(In thousands)
<CAPTION>
1996 1995
<S> <C> <C>
ASSETS
INVESTMENT IN REAL ESTATE:
Rental property $11,871 $10,267
Accumulated depreciation (2,282) (2,010)
Rental property - net 9,316 8,257
CASH AND CASH EQUIVALENTS (including interest
bearing deposits of $282 in 1996 and $548 in 1995) 388 556
OTHER ASSETS:
Short-term investments 0 99
Accounts receivable 9 15
Deferred loan costs, net of accumulated
amortization of $174 in 1996 and $135 in 1995 122 132
Prepaid expenses 29 17
Total other assets 154 263
TOTAL $ 9,864 $ 9,076
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Notes payable $ 7,960 $ 6,897
Accounts payable 29 80
Other liabilities 194 170
Total liabilities 8,183 7,147
Minority Interest 75
PARTNERS' EQUITY 1,606 1,929
TOTAL $ 9,864 $ 9,076
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
LIF
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(In thousands except per unit amounts)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
REVENUES:
Rental $1,483 $1,542 $1,332
Interest 34 25 29
Total revenues 1,517 1,567 1,361
EXPENSES:
Interest 533 482 341
Operating 595 643 539
Depreciation and amortization 343 307 246
General and administrative 218 187 208
Total expenses 1,689 1,619 1,334
NET INCOME (LOSS) FROM OPERATIONS $ (172) $ (52) $ 27
GAIN FROM SALE OF REAL ESTATE 36 0 0
NET INCOME (LOSS) $ (136) $ (52) $ 27
NET INCOME (LOSS) PER PARTNERSHIP UNIT
General Partners $ 0 $ 0 $ 0
Limited Partners (11) (4) 2
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
LIF
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(In thousands, except partnership units)
<CAPTION>
LIMITED PARTNERS
NUMBER OF GENERAL TOTAL
PARTNERSHIP PARTNER PARTNERS'
UNITS AMOUNT AMOUNT EQUITY
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 12,820 $2,882 $ (82) $2,800
Net income - 1994 27 0 27
Distribution - 1994 (385) (41) (426)
Contributions - 1994 0 1 1
BALANCE, DECEMBER 31, 1994 12,820 2,524 (122) 2,402
Net loss - 1995 (52) 0 (52)
Distribution - 1995 (385) (41) (426)
Contributions - 1995 0 5 5
BALANCE, DECEMBER 31, 1995 12,820 2,087 (158) 1,929
Net loss - 1996 (136) 0 (136)
Distribution - 1996 (192) (22) (214)
Contributions - 1996 0 27 20
BALANCE, DECEMBER 31, 1996 12,820 $1,759 $(153) $1,606
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
LIF
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(In thousands)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (136) $ (52) $ 27
(Gain) loss on sale of property (36)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 297 267 246
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 6 (15) 7
Decrease (increase) in prepaid expenses
and deposits (12) (2) (15)
Increase (decrease) in accounts payable (51) 64 1
(Decrease) increase in other liabilities 24 (50) 10
Net cash provided by operating activities 138 212 276
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (932) (868) (1,915)
Sale of investment property 208 0 0
Proceeds from short-term investments 99 99 688
Net cash used in investing activities (625) (769) (1,227)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from financing 563 5,707 1,312
(Distributions) contributions net (187) (421) (426)
Payments on notes payable (164) (4,401) (127)
Proceeds from sale of minority interest 107 0 0
Net cash provided by financing activities 319 885 759
Increase (decrease) in cash and
cash equivalents (168) 328 (192)
Cash and cash equivalents at beginning of year 556 228 420
Cash and cash equivalents at end of year $ 388 $ 556 $ 228
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
LIF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per unit amounts)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - LIF (the "Partnership") is a limited partnership
organized under the laws of the state of California for the purpose
of investing in income properties and making short-term loan and
capital contributions to operating entities formed to acquire or
develop and operate one or more income producing real
properties. The General Partner is Partners '85 (the "General
Partner"), a California limited partnership, whose General Partner
is Landsing Equities Corporation. LIF was formed in June 1984,
and shall continue until December 31, 2034, unless sooner
terminated.
Investment In Real Estate Partnership - At December 31, 1996
and 1995, the Partnership was invested in Landsing Private Fund
("P-21"), a wholly-owned real estate partnership, and CCDP, a
Colorado limited partnership formed in 1994. The Partnership
has a 99% profits and loss interest and cash distribution interest in
CCDP. On the occurrence of certain events, the Partnership's
cash distribution interest is reduced to 1%. Additionally, the
profits and loss interest is reduced to 1%. The other partners in
CCDP are affiliates of the General Partner. In 1995 and for a
portion of 1996, the Partnership was also invested in Prince Creek
Partners ("PCP") and Thompson Creek Partners ("TCP"). In
1996, the properties owned by these partnerships were sold and
the partnerships terminated. During 1996, the Partnership
invested into a new entity - Alpine Center Partners ("ACP"). The
Partnership acquired rental real estate in Colorado in 1996. The
Partnership has a 95% profits and loss interest and cash
distribution interest in ACP. Upon the occurrence of certain
events, the Partnership's cash distribution interest is reduced to
1%. Additionally, the profits and loss interest is reduced to 1%.
The other partners in ACP are affiliates of the General Partner.
For financial reporting purposes, the Partnership consolidates the
operations of P-21, PCP, CCDP, TCP and ACP with that of the
Partnership. All significant intercompany transactions and
balances have been eliminated. Minority interest was
insignificant at December 31, 1996 and 1995.
Rental Property - Rental property is stated at cost. Depreciation is
computed by the straight-line method over estimated useful lives
ranging from five to forty years. Major additions and betterments
are capitalized at cost, while maintenance and repairs which do
not improve or extend the life of the respective assets are
expensed currently. When assets are retired or otherwise
disposed of, the costs and related accumulated depreciation are
removed from the accounts, and any gain or loss on disposal is
included in the results of operations.
<PAGE>
Deferred Loan Costs - Loan fees are deferred and amortized over
the life of the related note payable.
Cash and Cash Equivalents - The Partnership considers all highly
liquid investments with a maturity of three months or less at the
time of purchase to be cash equivalents.
Short-Term Investments - The Partnership invests in short-term
federally insured certificates of deposits which mature on a date
in excess of three months from the date of purchase. The cost of
these investments approximates market value.
Income Taxes - No provision for federal or state income taxes has
been made in the consolidated financial statements because these
taxes are the obligation of the partners.
Net Income (Loss) Per Partnership Unit is based on weighted
average units outstanding of 12,820 in 1996, 1995 and 1994, after
giving effect to net income (loss) allocated to the General Partner
of $0 in 1996, $0 in 1995, and $0 in 1994. Cash distributions of
$15 per unit were paid to holders of record as of September 30,
1996. Cash distributions of $30 per unit were paid to holders in
1995 and 1994.
Concentrations of Credit Risk - The Partnership's financial
instruments that are exposed to concentrations of credit risk
consist primarily of its cash and cash equivalents. The
Partnership's cash and cash equivalents are in high-quality
institutions with high credit ratings. This investment policy limits
the Partnership's exposure to concentrations of credit risk.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect
certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
Reclassifications - Certain amounts in the 1994 and 1995 financial
Statements have been reclassified to conform to the 1996 presentation.
<PAGE>
2. RELATED PARTY TRANSACTIONS
The Partnership has entered into agreements with Pacific Coast
Capital. Advisory services for investment management, general
and administrative and property management are provided by
Pacific Coast Capital. The General Partner is an affiliate of
Pacific Coast Capital. The related party transactions delineated in
the Partnership Agreement with affiliates of the General Partner
are as follows:
1996 1995 1994
General and Administrative Support Fees $ 103 $ 103 $ 105
Property Management $ 25 $ 28 $ 26
In addition, as described in Note 1, the Partnership has invested in
new partnerships during 1994 and 1996. The other partners in
those partnerships are affiliates of the General Partner.
3. RENTAL PROPERTY
Rental property consists of the following:
1996 1995
Land $ 1,922 $ 1,751
Building and improvements 9,676 8,516
Total $11,598 $10,267
The residential leases are generally for a term of one year or less
or are on a month-to-month basis. Retail leases range from one to
five years in length.
<PAGE>
<TABLE>
4. NOTES PAYABLE
<CAPTION>
1996 1995
<S> <C> <C>
First note payable bears interest at 8%, matures
September 1, 2000, and is collateralized by
Whistler Point Apartments. The note requires monthly
payments of principal and interest of $42 per month.
In addition the note is guaranteed by the Landsing
Corporation. $5,373 $5,447
First note payable collateralized by the Valley View
Business Park, with an interest rate of 9.00%, and
monthly payments of $11, matures on December 10, 1998. 1,068 649
Second note payable collateralized by the Valley View
Business Park, with an interest rate of 8.5% and monthly
payments of $2, matures on August 28, 2004. 199 202
First note payable collateralized by 701 Cooper commercial
building, with an interest rate of 9.99% and monthly
payments of $3, matures on October 7, 2001. 324 193
First note payable collateralized by residence at 481 Mesa
Verde, with an interest rate of 6.375% and monthly
payments of $1, matures on July 1, 2024. 0 109
First note payable collateralized by residence at 3901
Mountain Drive, with an interest rate of 8.25% and monthly
payments of $1, matures on July 1, 2024. 0 86
First note payable collateralized by residence at 0051 Badger
Court, with an interest rate of 8.79% and monthly payments
of $1, matures on September 1, 2024. 0 93
First note payable collateralized by residence at 239 Crystal
Road, with an interest rate of 9.0% and monthly payments of
$1, matures on October 1, 2024. 0 118
First note payable collateralized by Alpine Center, with
an interest rate of 8.75% and monthly payments of $9,
matures on June 3, 1997. 996 0
TOTAL $7,960 $6,897
</TABLE>
<PAGE>
The Partnership paid interest of $533 in 1996, $482 in 1995,
and $340 in 1994.
Principal payments required in future years are as follows:
1997 $ 1,118
1998 1,169
1999 363
2000 5,168
2001 142
Total $ 7,960
5. RENTAL PROPERTIES UNDER OPERATING LEASES
Minimum future rents from rental properties under operating
leases having initial or remaining noncancelable lease terms in
excess of one year at December 31, 1996, are as follows:
1997 $ 185
1998 162
1999 76
2000 32
2001 24
Total $ 479
<PAGE>
<TABLE>
6. RECONCILIATION TO INCOME TAX BASIS OF ACCOUNTING
The difference at December 31, 1996, 1995 and 1994, between
the basis of accounting used in the accompanying consolidated
financial statements and the income tax basis used to file the
Partnership's federal income tax return are as follows:
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Net income (loss) $ (136) $ (52) $ 27
Remove book (income) loss from partnership
investments 96 (43) (78)
Difference in book vs. tax loss from
partnerships (175) (86) (45)
Net income (loss) - tax basis (215) (181) (96)
Partners' equity 1,732 1,929 2,402
Remove equity in partnership investments (509) (453) (403)
Syndication costs 1,906 1,906 1,906
Investment in partnerships (978) (803) (717)
Partners' equity - tax basis 2,151 2,579 3,188
</TABLE>
<PAGE>
<TABLE>
SCHEDULE X
LIF
SUPPLEMENTARY CONSOLIDATED INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(In thousands)
<CAPTION>
Column A Column B
ITEM CHARGED TO COSTS & EXPENSES
1996 1995 1994
<S> <C> <C> <C>
1. Maintenance and repairs $ 151 $ 176 $ 139
2a. Depreciation 304 267 224
2b. Amortization of deferred expenses 39 40 22
3. Property taxes 146 146 129
4. Utilities 72 69
5. General & Administrative 147 168
6. Property Management 57 58
As to items omitted, amounts did not exceed one percent of total revenue.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE XI
LIF
(A California limited partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(In thousands)
<CAPTION>
COST
CAPITALIZED
INITIAL COST SUBSE- CONSOLI- CONSOLI-
BLDG. & QUENT TO DATED DATED ACCUMULATED
ENCUM- IMPROVE- ACQUI- ADJUST- CARRYING DEPRECI-
BRANCES LAND MENTS TOTAL SITION MENT COST ATION
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Whistler Point Apts. $5,373 $1,351 $5,947 $7,298 $ 762 $ (122) $ 7,938 $2,190
Boise, ID
Date Acquired: 12/23/85
Valley View Business Park 1,267 187 751 938 819 (15) 1,742 76
Glenwood Springs, CO
Date Acquired: 08/28/94
701 Cooper-Commercial 324 65 261 326 1 (6) 321 16
Glenwood Springs, CO
Date Acquired: 06/20/94
Alpine Center 996 410 326 736 861 0 1,597 0
Carbondale, CO
Date Acquired: 06/03/96
TOTAL $7,960 $2,013 $7,285 $9,298 $2,443 $ (143) $11,598 $2,282
</TABLE>
<PAGE>
SCHEDULE XI
LIF
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(In thousands)
NOTES:
(1) The Partnership's policy is to invest in income producing real
properties and make short-term loans and capital contributions to
operating entities formed to acquire or develop and operate one or
more income producing real properties. Costs incurred before
completion of the development are included in building basis.
Costs incurred after completion of the development projects and
costs incurred subsequent to the purchase of completed projects
are included as improvements.
(2) Depreciation is computed by the straight-line method on lives of
five to forty years.
<PAGE>
E X H I B I T I N D E X
Exhibit Number
in Accordance with
601 of
Regulation S-K Exhibit Description
3.1 Amended and Restated Certificate and Agreement of
Limited Partnership of LIF, a California limited
partnership, filed as Exhibit 3 to Partnership's
Registration Statement No. 2-94509 on Form S-11, as
amended, is incorporated herein by reference.
3.2 Assignment Agreement, filed as Exhibit 10.1 to
Partnership's Registration Statement No. 2-94509 on
Form S-11, as amended, is incorporated herein by
reference.
10.1 Agreement of Limited Partnership for Cattle Creek
Development Partners, Ltd. (Incorporated by reference
to Form 8-K dated August 31, 1994)
10.2 Promissory Note to LIF. (Incorporated by reference to
Form 8-K dated August 31, 1994)
10.3 Bill of Sale, along with the Closing and Settlement
Agreement for the acquisition of Valley View Business
Park. (Incorporation by reference to Form 8-K dated
August 31, 1994)
10.4 Promissory Note to Alpine Bank, along with related Deed
of Trust. (Incorporated by reference to Form 8-K dated
August 31, 1994)
10.5 Promissory Note to Norman Overacker and Elaine
Overacker, along with related Deed of Trust.
(Incorporated by reference to Form 8-K dated
August 31, 1994)
10.6 Closing and Settlement Agreement for acquisition of 701
Cooper Avenue Building. (Incorporated by reference to
Form 8-K dated August 31, 1994)
10.7 Promissory Note to Alpine Bank, along with related Deed
of Trust. (Incorporated by reference to Form 8-K dated
August 31, 1994)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 388
<SECURITIES> 0
<RECEIVABLES> 9
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 122
<PP&E> 11,598
<DEPRECIATION> 2,282
<TOTAL-ASSETS> 9,864
<CURRENT-LIABILITIES> 223
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,681
<TOTAL-LIABILITY-AND-EQUITY> 9,864
<SALES> 0
<TOTAL-REVENUES> 1,517
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,156
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 533
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (136)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
