FORM 10-KSB--Annual or Transitional Report Under
Section 13 or 15(d)
[X] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 [No Fee Required]
For the fiscal year ended December 31, 1999
or
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 [No Fee Required]
For the transition period.........to.........
Commission file number 0-14569
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
(Name of small business issuer in its charter)
Maryland 04-2848939
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
Issuer's telephone number
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 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
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $26,159,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of December 31, 1999. No market exists for the limited partnership
interests of the Registrant, and, therefore, no aggregate market value can be
determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
Item 1. Description of Business
Springhill Lake Investors Limited Partnership (the "Registrant") was organized
as a Maryland limited partnership under the Maryland Revised Uniform Limited
Partnership Act on December 28, 1984, for the purpose of investing as a general
partner in First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth and Ninth
Springhill Lake Limited Partnerships and Springhill Commercial Limited
Partnership (collectively, the "Operating Partnerships"), each of which is a
Maryland limited partnership owning a section of a garden apartment complex in
Greenbelt, Maryland (the "Project" or "Property"). The Registrant is the sole
General Partner of each Operating Partnership. The Limited Partner of each
Operating Partnership is Theodore N. Lerner ("Lerner"), a former General Partner
of the Operating Partnerships whose interest was converted to that of a Limited
Partner on January 16, 1985 in conjunction with the Registrant's acquisition of
its interest in the Operating Partnerships. The Managing General Partner of the
Registrant is Three Winthrop Properties, Inc. ("Three Winthrop") a wholly-owned
subsidiary of First Winthrop Corporation ("FWC"). See "Transfer of Control". The
non-managing General Partner is Linnaeus-Lexington Associates Limited
Partnership ("Linnaeus-Lexington"). Both the Managing General Partner and the
non-managing General Partner are hereby collectively known as the "General
Partners". The Partnership Agreement provides that the Partnership and Operating
Partnerships are to terminate on December 31, 2035 unless terminated prior to
such date.
The Registrant was initially capitalized with nominal capital contributions from
its General Partners. In April 1985, the Registrant completed a private offering
of 649 units of limited partnership interest (the "Units") pursuant to
Regulation D under the Securities Act of 1933 and the terms of the Confidential
Memorandum dated January 16, 1985. The Registrant raised $40,562,500 in capital
contributions from investors who were admitted to the Registrant as limited
partners ("Limited Partners"). Since its initial offering, the Registrant has
not received, nor are limited partners required to make, additional capital
contributions.
The Registrant purchased its interest in the Operating Partnerships on January
16, 1985, for $73,514,921, of which $58,000,000 was financed by means of a
mortgage loan, which was subsequently refinanced in 1993. See "Item 7, Financial
Statements, Note F" for further information concerning the mortgage loan
encumbering the property.
The Registrant's interest in the Operating Partnerships entitles it to 90% of
profits and losses for tax purposes, 90% of the Operating Partnerships' cash
flow (after certain priority distributions), and 85% of the proceeds of a sale
or disposition of the Project (after certain priority distributions).
The only business of the Registrant is investing as a general partner in the
Operating Partnerships, and as such, to cause the Operating Partnerships to own
and operate the Project, until such time as a sale, if any, of all or a portion
of the Project appears to be advantageous to the Registrant and is permitted
under the terms of the Operating Partnerships' Partnership Agreements. See "Item
2, Description of Property" for further information on the project owned by the
Operating Partnerships.
The Registrant has no employees. Management and administrative services are
performed by the Managing General Partner and by agents retained by the Managing
General Partner. On May 1, 1995, the Registrant removed Lerner Corporation as
managing agent for the Project. Since that time management services at the
Project have been provided by affiliates of the Managing General Partner.
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the Partnership's project. The number and quality of competitive properties,
including those which may be managed by an affiliate of the Managing General
Partner, in such market area could have a material effect on the rental market
for the apartments and commercial space at the Registrant's property and the
rents that may be charged for such apartments and space. While the Managing
General Partner and its affiliates own and/or control a significant number of
apartment units in the United States, such units represent an insignificant
percentage of total apartment units in the United States and competition for the
apartments is local.
The Partnership receives income from its interest in the Project and is
responsible for operating expenses, capital improvements and debt service
payments under mortgage obligations secured by the Property. The Partnership
financed its investment primarily through non-recourse debt. Therefore, in the
event of default, the lender can generally look only to the subject property for
recovery of amounts due.
Both the income and expenses of operating the project owned by the Partnership
are subject to factors outside of the Partnership's control, such as changes in
the supply and demand for similar properties resulting from various market
conditions, increases/decreases in unemployment or population shifts, changes in
the availability of permanent mortgage financing, changes in zoning laws, or
changes in patterns or needs of users. In addition, there are risks inherent in
owning and operating residential properties because such properties are
susceptible to the impact of economic and other conditions outside of the
control of the Partnership.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the project
owned by the Partnership.
The Partnership monitors the Property for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed, which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.
A further description of the Partnership's business is included in Management's
Discussion and Analysis or Plan of Operations" included in "Item 6." of this
Form 10-KSB.
Transfer of Control
On October 28, 1997, Insignia Financial Group, Inc. ("Insignia") acquired 100%
of the Class B stock of FWC. Pursuant to this transaction, the by-laws of Three
Winthrop were amended to provide for the creation of a Residential Committee.
Pursuant to the amended and restated by-laws, Insignia had the right to elect
one director to Three Winthrop's Board of Directors and appoint the members of
the Residential Committee. The Residential Committee is generally authorized to
cause Three Winthrop to take such actions as it deems necessary and advisable in
connection with the activities of the Registrant.
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired 100% of Class B stock of
FWC and, accordingly, the right to elect the members of the Residential
Committee. The Managing General Partner does not believe that this transaction
has had or will have a material effect on the affairs and operations of the
Partnership.
Item 2. Description of Properties
The Registrant owns no property other than its interest in the Operating
Partnerships. The following table sets forth the Registrant's investments in
property through its Operating Partnerships:
Date of
Property Purchase Type of Ownership Use
Springhill Lake 10/84 Fee ownership subject Apartment
Greenbelt, Maryland to a first mortgage. 2,899 units
The Project was initially acquired by the Operating Partnerships in October 1984
for an initial cost of $73,316,500. The Project consists of 2,899 apartment and
townhouse units and an eight-store shopping center situated on 154 acres of
landscaped grounds. The Project also contains a clubhouse/community center, two
Olympic-size swimming pools and six tennis courts.
Schedule of Properties:
Set forth below for the Registrant's property is the gross carrying value,
accumulated depreciation, depreciable life, method of depreciation and federal
tax basis.
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Springhill Lake $107,987 $53,589 10-25 yrs S/L $30,753
</TABLE>
See "Item 7. Financial Statements, Note A" for a description of the
Partnership's depreciation policy.
Schedule of Property Indebtedness:
The following table sets forth certain information relating to the loans
encumbering the Registrant's property.
<TABLE>
<CAPTION>
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
Property 1999 Rate Amortized Date Maturity (2)
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Springhill Lake $55,402 9.30% (1) 05/03 $49,017
1st mortgage
</TABLE>
(1) The principal balance is being amortized over 120 months with a balloon
payment due May, 2003.
(2) See "Item 7. Financial Statements - Note F" for information with respect
to the Registrant's ability to prepay this loan and other specific details
about the loan.
Rental Rates and Occupancy:
Average annual rental rate and occupancy for 1999 and 1998 for the property:
Average Annual Average Annual
Rental Rates Occupancy
(per unit)
Property 1999 1998 1999 1998
Springhill Lake $9,517 $9,168 90% 90%
As noted under "Item 1. Description of Business," the real estate industry is
highly competitive. The Property is subject to competition from other
residential complexes in the area. The Managing General Partner believes that
the property is adequately insured. The property is a predominately residential
complex which leases units for lease terms of one year or less. No residential
tenant leases 10% or more of the available rental space. The property is in good
physical condition, subject to normal depreciation and deterioration as is
typical for assets of this type and age.
Real Estate Taxes and Rates:
Real estate taxes and rates in 1999 for the property were:
1999 1999
Billing Rate
(in thousands)
Springhill Lake $1,783 4.57%
Capital Improvements:
Springhill Lake: The Partnership completed approximately $6,156,000 in capital
expenditures at Springhill Lake as of December 31, 1999, consisting primarily of
appliances, roof improvements, computers, lighting, heating, plumbing, floor
covering, furniture and fixtures replacements, pool upgrades, interior
decoration, major landscaping, exterior painting, and parking lot, recreational
facility, and structural improvements. These improvements were funded primarily
from replacement reserves and operations. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $869,700.
Additional improvements may be considered and will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property.
Item 3. Legal Proceedings
Grady v. Springhill Lake Apartments (Pending before the Prince George's County
Human Relations Commission, case no. AP94-1233). This public accommodation
discrimination claim was filed on December 16, 1994, however, the Commission
failed to notify the Registrant of the charge until September 8, 1996. On
December 26, 1996, the Registrant filed its position statement in this matter.
In his charge, the Complaintant claims that he was denied information regarding
the rental of an apartment for commercial use because of his race. In fact, the
Property does not lease apartments for commercial use, and, at the time, the
Property had no commercial space available for lease. In addition, the
Registrant believes that the almost two year delay in notifying the Registrant
of the charge is so prejudicial that the charge should be dismissed. The
Registrant is vigorously defending this matter.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Item 4. Submission of Matters to a Vote of Security Holders
During the quarter ended December 31, 1999, no matter was submitted to a vote of
unit holders through the solicitation of proxies or otherwise.
PART II
Item 5. Market for the Partnership Equity and Related Partner Matters
The Partnership, a publicly-held limited partnership, offered and sold 649
limited partnership units aggregating $40,562,500. The Partnership currently has
357 holders of record owning an aggregate of 649 Units. Affiliates of the
Managing General Partner own 316.65 units or 48.79% of the outstanding limited
partnership units at December 31, 1999. No public trading market has developed
for the Units, and it is not anticipated that such a market will develop in the
future.
During the years ended December 31, 1999 and 1998, there were no cash
distributions. Future cash distributions will depend on the levels of net cash
generated from operations, the availability of cash reserves, and the timing of
debt maturity, refinancing and/or property sale. The Partnership's distribution
policy is reviewed on a semi-annual basis. There can be no assurance, however,
that the Partnership will generate sufficient funds from operations, after
required capital expenditures, to permit distributions to its partners in 2000
or subsequent periods. See "Item 2. Description of Properties - Capital
Improvements" for information relating to anticipated capital expenditures at
the Project.
Various parties, including affiliates of the Managing General Partner made
tender offers for units, during the years ended December 31, 1999 and 1998. As a
result of these and prior tender offers at December 31, 1999, AIMCO and its
affiliates own 316.65 limited partnership units in the Partnership representing
approximately 48.79% of the outstanding units. It is possible that AIMCO or its
affiliates will make one or more additional offers to acquire additional limited
partnership interests in the Partnership for cash or in exchange for units in
the operating partnership of AIMCO. Consequently, AIMCO is in a position to
significantly influence all voting decisions with respect to the Registrant.
Under the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters. When voting on
matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the Managing General Partner because of their
affiliation with the Managing General Partner.
Item 6. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-KSB and the other filings with the Securities and
Exchange Commission made by the Registrant from time to time. The discussion of
the Registrant's business and results of operations, including forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Registrant's business and results of operation. Accordingly,
actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors, including those
identified herein.
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
Results of Operations
The Registrant's net income for the year ended December 31, 1999 was
approximately $1,056,000 as compared to net income of approximately $196,000 for
the year ended December 31, 1998 (See "Item 7. Financial Statements - Note D"
for a reconciliation of these amounts to the Registrant's federal taxable
income). Income before minority interest for the year ended December 31, 1999
was $1,727,000 as compared to $712,000 for the year ended December 31, 1998. The
increase in income before minority interest is due to an increase in total
revenues partially offset by an increase in total expenses. The increase in
total revenues is attributable to an increase in rental and other income which
more than offset a casualty gain that was recorded during the year ended
December 31, 1998. Rental income increased due to an increase in average annual
rental rates. Other income increased primarily due to the receipt of a court
granted motion for summary judgment and attorney fees and costs in favor of the
Registrant in connection with a legal dispute, as disclosed in the second
quarter of 1999. In addition, other income increased due to increases in late
charges. A casualty gain of approximately $126,000 was recognized at December
31, 1998 as a result of three separate fires at Springhill Lake Apartments,
which occurred late in 1997.
Total expenses increased slightly due to increases in depreciation, bad debt and
general and administrative expenses which were partially offset by decreases in
property taxes, interest and operating expenses. Depreciation expense increased
due to the completion of capital improvements and replacements at the Project.
Bad debt expense increased due to additional write-offs of tenant receivables
and charges that were deemed to be uncollectible. Property tax expense decreased
primarily due to the payment, during 1998, of two property tax bills from a
prior year that were previously in dispute. Interest expense decreased due to
scheduled principal payments, which reduced the carrying balance of the debt
encumbering the Project. Operating expense decreased primarily due to decreases
in the property payroll and related benefit expenses.
General and administrative expense increased due to increases in general partner
reimbursements and professional fees. Included in general and administrative
expense for the years ended December 31, 1999 and 1998 are reimbursements to the
Managing General Partner allowed under the Partnership Agreement. In addition,
costs associated with the quarterly and annual communications with investors and
regulatory agencies and the annual audits and appraisals required by the
Partnership Agreement are also included.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of its investment property to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Registrant from increases in expense. As part of this
plan, the Managing General Partner attempts to protect the Registrant from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
Managing General Partner will be able to sustain such a plan.
Liquidity and Capital Reserves
At December 31, 1999, the Registrant held cash and cash equivalents of
approximately $2,343,000, compared to approximately $3,328,000 at December 31,
1998. The decrease in cash and cash equivalents of approximately $985,000 is
primarily due to approximately $4,692,000 of cash used by investing activities
and approximately $1,681,000 of cash used in financing activities which more
than offset approximately $5,388,000 of cash provided by operating activities.
Cash used by investing activities consisted of property improvements and
replacements and was partially offset by net receipts from restricted escrow
accounts maintained by the mortgage lender. Cash used in financing activities
consisted of principal payments made on the mortgage encumbering the
Registrant's property. The Registrant invests its working capital reserves in
money market accounts.
The Registrant has invested as a general partner in the Operating Partnerships,
and as such, receives distributions of cash flow from the Operating Partnerships
and is responsible for expenditures consisting of (i) interest payable on the
New Mortgage Loans and (ii) fees payable to affiliates of the General Partners.
The General Partners believe that funds distributed by the Operating
Partnerships to the Registrant will be sufficient to pay such expenditures.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical assets
and other operating needs of the Registrant and to comply with federal, state
and local legal and regulatory requirements. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $869,700.
Additional improvements may be considered and will depend on the physical
condition of the property as well as anticipated cash flow generated by the
property.
The Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $55,402,000, is amortized over 120 months with a
balloon payment of approximately $49,017,000 due in May 2003. The General
Partner will attempt to refinance such indebtedness and/or sell the property
prior to such maturity date. If the property cannot be refinanced or sold for a
sufficient amount, the Registrant will risk losing the property through
foreclosure.
During the years ended December 31, 1999 and 1998, there were no cash
distributions. Future cash distributions will depend on the levels of net cash
generated from operations, the availability of cash reserves, and the timing of
debt maturity, refinancing and/or property sale. The Partnership's distribution
policy is reviewed on a semi-annual basis. There can be no assurance, however,
that the Partnership will generate sufficient funds from operations, after
required capital expenditures, to permit distributions to its partners in 2000
or subsequent periods.
Various parties, including affiliates of the Managing General Partner made
tender offers for units, during the years ended December 31, 1999 and 1998. As a
result of these and prior tender offers at December 31, 1999, AIMCO and its
affiliates own 316.65 limited partnership units in the Partnership representing
approximately 48.79% of the outstanding units. It is possible that AIMCO or its
affiliates will make one or more additional offers to acquire additional limited
partnership interests in the Partnership for cash or in exchange for units in
the operating partnership of AIMCO. Consequently, AIMCO is in a position to
significantly influence all voting decisions with respect to the Registrant.
Under the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters. When voting on
matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the Managing General Partner because of their
affiliation with the Managing General Partner.
Year 2000 Compliance
General Description
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent upon the Managing General Partner and its affiliates for management
and administrative services ("Managing Agent"). Any of the Managing Agent's
computer programs or hardware that had date-sensitive software or embedded chips
might have recognized a date using "00" as the year 1900 rather than the year
2000. This could have resulted in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
Computer Hardware, Software and Operating Equipment
In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. No material failure or erroneous results have occurred in the
Managing Agent's computer applications related to the failure to reference the
Year 2000 to date.
Third Parties
To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.
Costs
The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.
Risks Associated with the Year 2000
The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership have not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue.
At this time, the Managing Agent does not believe that the Partnership's
businesses, results of operations or financial condition will be materially
adversely effected by the Year 2000 issue.
Contingency Plans Associated with the Year 2000
The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.
Item 7. Financial Statements
Report of Independent Public Accountants - Arthur Andersen LLP
Report of KPMG LLP, Independent Auditors
Consolidated Balance Sheet - December 31, 1999
Consolidated Statements of Operations - Years ended December 31, 1999 and
1998
Consolidated Statements of Changes in Partners' (Deficit) Capital - Years
ended December 31, 1999 and 1998
Consolidated Statements of Cash Flows - Years ended December 31, 1999 and
1998
Notes to Consolidated Financial Statements
REPORT OF Independent PUBLIC ACCOUNTANTS
To The Partners of
Springhill Lake Investors Limited Partnership
We have audited the accompanying consolidated balance sheet of Springhill Lake
Investors Limited Partnership and subsidiaries as of December 31, 1999, and the
related consolidated statements of operations, changes in partners' (deficit)
capital and cash flows for the year ended December 31, 1999. These consolidated
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by the Partnership's management, as well as
evaluating the overall consolidated financial statement presentation. We believe
that our audit provides 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
Springhill Lake Investors Limited Partnership and subsidiaries as of December
31, 1999, and the results of their operations and their cash flows for the year
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States.
/s/Arthur Andersen, LLP
Denver, Colorado,
March 14, 2000
Independent Auditors Report
To The Partners
Springhill Lake Investors Limited Partnership
We have audited the accompanying consolidated statements of operations, changes
in partners' (deficit) capital, and cash flows of Springhill Lake Investors
Limited Partnership and Subsidiaries for the year ended December 31, 1998. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit 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 the
Partnership's management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of operations and cash flows of
Springhill Lake Investors Limited Partnership and Subsidiaries for the year
ended December 31, 1998 in conformity with generally accepted accounting
principles.
/s/KPMG LLP
Greenville, South Carolina
March 24, 1999
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1999
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Cash and cash equivalents $ 2,343
Receivables and deposits (net of $236 allowance for
doubtful accounts) 1,337
Restricted escrows 2,056
Other assets 1,479
Investment Property:
Land $ 5,833
Buildings and related personal property 102,154
107,987
Less accumulated depreciation (53,589) 54,398
$ 61,613
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 1,403
Tenant security deposit liabilities 506
Other liabilities 676
Mortgage note payable 55,402
Minority Interest 3,731
Partners' (Deficit) Capital
General partners $ (2,865)
Investor limited partners
(649 units issued and outstanding) 2,760 (105)
$ 61,613
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
<S> <C> <C>
Revenues:
Rental income $ 24,764 $ 23,881
Other income 1,395 933
Casualty gain -- 126
Total revenues 26,159 24,940
Expenses:
Operating 11,145 11,266
General and administrative 605 514
Depreciation 4,406 4,001
Interest 5,336 5,496
Property taxes 1,777 1,976
Bad debt expense 1,163 975
Total expenses 24,432 24,228
Income before minority interest 1,727 712
Minority interest in net earnings of
operating partnerships (671) (516)
Net income $ 1,056 $ 196
Net income allocated to general partners(5%) $ 53 $ 10
Net income allocated to investor
limited partners (95%) 1,003 186
Net income $ 1,056 $ 196
Net income per limited partnership unit $ 1,545.45 $ 286.59
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(in thousands, except unit data)
<TABLE>
<CAPTION>
Total
Limited Investor Partners'
Partnership General Limited (Deficit)
Units Partners Partners Capital
<S> <C> <C> <C> <C>
Original capital contributions 649 $ -- $40,563 $40,563
Partners' (deficit) capital at
December 31, 1997 649 $(2,928) $ 1,571 $(1,357)
Net income for the year ended
December 31, 1998 -- 10 186 196
Partners' (deficit) capital at
December 31, 1998 649 (2,918) 1,757 (1,161)
Net income for the year ended
December 31, 1999 -- 53 1,003 1,056
Partners' (deficit) capital at
December 31, 1999 649 $ (2,865) $ 2,760 $ (105)
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
<S> <C> <C>
1999 1998
Cash flows from operating activities:
Net income $ 1,056 $ 196
Adjustments to reconcile net income
to net cash provided by operating activities:
Minority interest in net earnings of operating
partnerships 671 516
Depreciation 4,406 4,001
Amortization 124 124
Bad debt expense 1,163 975
Casualty gain -- (126)
Change in accounts:
Receivables and deposits (1,128) (216)
Other assets (118) (66)
Accounts payable (334) 838
Tenant security deposit liabilities 100 (10)
Other liabilities (552) (393)
Net cash provided by operating activities 5,388 5,839
Cash flows from investing activities:
Property improvements and replacements (6,156) (2,686)
Net withdrawals from (deposits to) restricted escrows 1,464 (988)
Net insurance proceeds from casualty gain -- 192
Net cash used in investing activities (4,692) (3,482)
Cash flows from financing activities:
Payments on mortgage note payable (1,681) (1,415)
Net cash used in financing activities (1,681) (1,415)
Net (decrease) increase in cash and cash equivalents (985) 942
Cash and cash equivalents at beginning of year 3,328 2,386
Cash and cash equivalents at end of year $ 2,343 $ 3,328
Supplemental disclosure of cash flow information:
Cash paid for interest $ 5,657 $ 5,378
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note A - Organization and Summary of Significant Accounting Policies
Organization: Springhill Lake Investors Limited Partnership (the "Partnership"),
a Maryland limited partnership was formed on December 28, 1984, to acquire and
own a 90% general partnership interest in Springhill Lake Limited Partnerships I
through IX and Springhill Commercial Limited Partnership (the "Operating
Partnerships"). The Operating Partnerships own and operate the Springhill Lake
complex in Greenbelt, Maryland. The complex consists of 2,899 apartment and
townhouse units and an eight-store shopping center. The Partnership Agreement
provides that the Partnership is to terminate on December 31, 2035 unless
terminated prior to such date.
Principles of Consolidation: The accompanying consolidated financial statements
include the accounts of the Partnership and the Operating Partnerships. Theodore
N. Lerner's ownership in the Operating Partnerships has been reflected as a
minority interest in the accompanying consolidated financial statements. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Allocation of Profits, Gains and Losses: The Partnership Agreement ("Agreement")
provides for net income and net losses for both financial and tax reporting
purposes to be allocated 95% to the Limited Partners and 5% to the General
Partner.
Gains from property sales are allocated in accordance with the Partnership
Agreement.
Accordingly, net income as shown in the statements of operations and changes in
partners' capital for 1999 and 1998 was allocated 95% to the limited partners
and 5% to the general partners. Net income per limited partnership unit for each
such year was computed as 95% of net income divided by 649 units outstanding.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the apartment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 15 years for additions prior to March 16, 1984, 18 years
for additions after March 15, 1984 and before May 9, 1985, and 19 years for
additions after May 8, 1985, and before January 1, 1987, and (2) for personal
property over 5 years for additions prior to January 1, 1987. As a result of the
Tax Reform Act of 1986, for additions after December 31, 1986, the modified
accelerated cost recovery method is used for depreciation of (1) real property
over 27 1/2 years and (2) personal property additions over 5 years.
Cash and Cash Equivalents: Includes cash on hand, in banks and money market
accounts. At certain times, the amount of cash deposited at a bank may exceed
the limit on insured deposits.
Investment in Properties: Investment property consists of one apartment complex
with an eight-store shopping center and is stated at cost. Acquisition fees are
capitalized as a cost of real estate. In accordance with Financial Accounting
Standards Board Statement No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," the Partnership records
impairment losses on long-lived assets used in operations when events and
circumstances indicate that the assets might be impaired and the undiscounted
cash flows estimated to be generated by those assets are less than the carrying
amounts of those assets. Costs of investment property that have been permanently
impaired have been written down to appraisal value. No adjustments for the
impairment of value were necessary for the years ended December 31, 1999 or
1998.
Segment Reporting: Statement of Financial Standards ("SFAS") No. 131, Disclosure
about Segments of an Enterprise and Related Information ("Statement 131")
established standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers. See "Note J"
for required disclosure.
Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising costs of approximately $367,000 and $310,000 for the years ended
December 31, 1999 and 1998, respectively were charged to operating expense as
incurred.
Loan Costs: Loan costs of approximately $1,359,000, net of accumulated
amortization of approximately $944,000, are included in other assets in the
accompanying balance sheet and are being amortized on a straight-line basis over
the life of the loan.
Fair Value of Financial Instruments: SFAS No. 107, "Disclosures about Fair Value
of Financial Instruments", as amended by SFAS No. 119, "Disclosures about
Derivative Financial Instruments and Fair Value of Financial Instruments",
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate fair value. Fair value is defined in the SFAS as the amount at which
the instruments could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The Partnership believes
that the carrying amount of its financial instruments (except for long term
debt) approximates their fair value due to the short term maturity of these
instruments. The fair value of the Partnership's long term debt, after
discounting the scheduled loan payments to maturity, approximates its carrying
balance.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. Commercial building lease terms are generally for terms of 3 to 10
years or month to month. The Partnership recognizes income as earned on its
leases. In addition, the Managing General Partner's policy is to offer rental
concessions during particularly slow months or in response to heavy competition
from other similar complexes in the area. Concessions are charged against rental
income as incurred.
Tenant Security Deposits: The Partnership requires security deposits from
lessees for the duration of the lease and such deposits are included in
receivables and deposits. Deposits are refunded when the tenant vacates,
provided the tenant has not damaged its space and is current on its rental
payments.
Reclassification: Certain reclassifications have been made to the 1998
information to conform to the 1999 presentation.
Income Taxes: No provision for income taxes is reflected in the accompanying
consolidated financial statements. Each partner is required to report on his
individual tax return his allocable share of income, gains, losses, deductions
and credits.
Note B - Transfer of Control
On October 28, 1997, Insignia Financial Group, Inc. ("Insignia") acquired 100%
of the Class B stock of First Winthrop Corporation ("FWC"). Pursuant to this
transaction, the by-laws of Three Winthrop, the Managing General Partner of the
Partnership and a wholly-owned subsidiary of First Winthrop Corporation, were
amended to provide for the creation of a Residential Committee. Pursuant to the
amended and restated by-laws, Insignia had the right to elect one director to
Three Winthrop's Board of Directors and appoint the members of the Residential
Committee. The Residential Committee is generally authorized to cause Three
Winthrop to take such actions as it deems necessary and advisable in connection
with the activities of the Registrant.
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and Insignia Properties Trust merged into Apartment
Investment and Management Company ("AIMCO"), a publicly traded real estate
investment trust, with AIMCO being the surviving corporation (the "Insignia
Merger"). As a result, AIMCO acquired 100% of Class B stock of FWC and,
accordingly, the right to elect the members of the Residential Committee. The
Managing General Partner does not believe that this transaction has had or will
have a material effect on the affairs and operations of the Partnership.
Note C - Real Estate and Accumulated Depreciation
Initial Cost
Investment Properties To Partnership
<TABLE>
<CAPTION>
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Springhill Lake $55,402 $ 5,833 $ 67,484 $ 34,670
</TABLE>
Gross Amount At Which
Carried
At December 31, 1999
(in thousands)
<TABLE>
<CAPTION>
Buildings
And
Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
<S> <C> <C> <C> <C> <C> <C>
Springhill Lake $5,833 $102,154 $107,987 $53,589 10/84 10-25
</TABLE>
The depreciable lives included above are for the building and components. The
depreciable lives for related personal property are 5 - 10 years.
Reconciliation of "Investment Properties and Accumulated Depreciation":
Years Ended December 31,
1999 1998
(in thousands)
Investment Properties
Balance at beginning of year $101,831 $ 99,403
Property improvements 6,156 2,686
Write off due to casualty -- (258)
Balance at end of year $107,987 $101,831
Accumulated Depreciation
Balance at beginning of year $ 49,183 $ 45,310
Depreciation of real estate 4,406 4,001
Write off due to casualty -- (128)
Balance at end of year $ 53,589 $ 49,183
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1999 and 1998, is $106,447,000 and $101,206,000. The accumulated
depreciation taken for Federal income tax purposes at December 31, 1999 and
1998, is $74,827,000 and $70,453,000.
Note D - Taxable Loss
Taxable income or loss of the Partnership is reported in the income tax returns
of its partners. Accordingly, no provision for income taxes is made in the
financial statements of the Partnership. The following is a reconciliation of
reported income and Federal taxable income:
<TABLE>
<CAPTION>
1999 1998
(in thousands, except unit data)
<S> <C> <C>
Net income as reported $ 1,056 $ 196
Excess of accelerated depreciation for
income tax purposes (124) (213)
Deferred revenue - laundry income (161) 35
Investment in properties -- 196
Other 779 (16)
Federal taxable income $ 1,550 $ 198
Federal taxable income per limited
partnership unit $ 1,142 $ 291
</TABLE>
Note E - Related Party Transactions
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for certain payments
to affiliates for services and as reimbursements of certain expenses incurred by
affiliates on behalf of the Partnership, an annual asset management fee of
$100,000 and an annual administration fee of $10,000.
The following transactions with affiliates of the Managing General Partner were
charged to expense for the years ended December 31, 1999 and 1998:
1999 1998
(in thousands)
Property management fees (included in
operating expenses) $ 748 $ 721
Reimbursement for services of affiliates
(included in general and administrative
and investment property) 529 277
During the years ended December 31 1999 and 1998, affiliates of the Managing
General Partner were entitled to receive 3% of tenant rent collections and 5% of
store commercial income from the Operating Partnership's property for providing
property management services. The Operating Partnership's paid to such
affiliates approximately $748,000 and $721,000 for the years ended December 31,
1999 and 1998, respectively.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $529,000 and
$277,000 for the years ended December 31, 1999 and 1998, respectively. Included
in these expenses is approximately $90,000 and $10,000 in reimbursements for
construction oversight costs for the year ended December 31, 1999 and 1998,
respectively. In addition the annual asset management and administration fee of
$110,000 is included for both December 31, 1999 and 1998.
Various parties, including affiliates of the Managing General Partner made
tender offers for units, during the years ended December 31, 1999 and 1998. As a
result of these and prior tender offers, AIMCO and its affiliates currently own
316.65 limited partnership units in the Partnership representing 48.79% of the
outstanding units. It is possible that AIMCO or its affiliates will make one or
more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the Registrant. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, AIMCO would in all likelihood vote
the Units it acquired in a manner favorable to the interest of the Managing
General Partner because of their affiliation with the Managing General Partner.
Note F - Mortgage Notes Payable
The principle terms of the mortgage note payable is as follows:
<TABLE>
<CAPTION>
Principal
Balance Monthly Principal
Due At Payment Balance
Property December Including Interest Maturity Due At
31, 1999 Interest Rate Date Maturity
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Springhill Lake Apartments
1st mortgage $55,402 $ 566 9.30% 5/2003 $49,017
</TABLE>
The mortgage note payable is non-recourse and is secured by pledge of the
Partnership's interest in the Operating Partnerships, and joint and several
guarantees by the Operating Partnerships which, in turn, are secured by an
indemnity first mortgage on the Operating Partnerships and a pledge of the stock
of Springfield Facilities, Inc., an affiliate. The mortgage note requires
prepayment penalties if repaid prior to maturity. Further, the property may not
be sold subject to existing indebtedness.
Scheduled principal payments of the mortgage note payable subsequent to December
31, 1999, are as follows (in thousands):
2000 $ 1,729
2001 1,881
2002 2,063
2003 49,729
$55,402
Note G - Operating Leases
One of the Operating Partnerships leases retail space to tenants in the shopping
center under operating leases which expire in various years through December 31,
2007. The leases call for base monthly rentals plus additional charges for pass
throughs and percentage rent. Minimum future rental payments to be received
subsequent to December 31, 1999 are as follows (in thousands):
2000 $ 65
2001 64
2002 64
2003 64
2004 64
Thereafter 180
$501
Note H - Casualty Gain
A casualty gain of approximately $126,000 was recognized at December 31, 1998 as
a result of three separate fires at Springhill Lake which occurred late in 1997.
As a result of these incidents, one building was extensively damaged and two
apartment units were completely destroyed. The estimated costs to be incurred to
rebuild the destroyed units approximated the estimated insurance proceeds
received.
Note I - Legal Proceedings
Grady v. Springhill Lake Apartments (Pending before the Prince George's County
Human Relations Commission, case no. AP94-1233). This public accommodation
discrimination claim was filed on December 16, 1994, however, the Commission
failed to notify the Registrant of the charge until September 8, 1996. On
December 26, 1996, the Registrant filed its position statement in this matter.
In his charge, the Complaintant claims that he was denied information regarding
the rental of an apartment for commercial use because of his race. In fact, the
Property does not lease apartments for commercial use, and, at the time, the
Property had no commercial space available for lease. In addition, the
Registrant believes that the almost two year delay in notifying the Registrant
of the charge is so prejudicial that the charge should be dismissed. The
Registrant is vigorously defending this matter.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Note J - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has one reportable segment: consisting of apartment and
townhouse units and an eight store shopping center complex located in Greenbelt
Maryland. The Partnership rents apartment units and town house to tenants for
terms that are typically twelve months or less. The space at the shopping center
is rented on a month to month basis or for terms of 3 to 10 years.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those of the Partnership as described in the summary of significant accounting
policies.
Segment information for the years ended December 31, 1999 and 1998 is shown in
the tables below (in thousands). The "Other" column includes partnership
administration related items and income and expense not allocated to the
reportable segment.
1999 Complex Other Totals
Rental income $24,764 $ -- $24,764
Other income 1,027 368 1,395
Interest expense 5,336 -- 5,336
Depreciation 4,406 -- 4,406
General and administrative expense -- 605 605
Minority interest in net earnings
of operating partnerships -- 671 671
Segment income (loss) 1,964 (908) 1,056
Total assets 60,040 1,573 61,613
Capital expenditures for investment
property 6,156 -- 6,156
1998 Complex Other Totals
Rental income $23,881 $ -- $23,881
Other income 876 57 933
Casualty gain 126 -- 126
Interest expense 5,496 -- 5,496
Depreciation 4,001 -- 4,001
General and administrative expense -- 514 514
Minority interest in net earnings
of operating partnerships -- 516 516
Segment income (loss) 1,169 (973) 196
Total assets 60,561 1,792 62,353
Capital expenditures for investment
property 2,686 -- 2,686
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Effective December 8, 1999, the Registrant dismissed its prior Independent
Auditors, KPMG LLP ("KPMG") and retained as its new Independent Auditors, Arthur
Andersen LLP. KPMG's Independent Auditor's Report on the Registrant's financial
statements for the calendar year ended December 31, 1998 did not contain an
adverse opinion or a disclaimer of opinion, and was not qualified or modified as
to uncertainty, audit scope or accounting principles. The decision to change
Independent Auditors was approved by the Managing General Partner's directors.
During the calendar year ended 1998 and through December 8, 1999, there were no
disagreements between the Registrant and KPMG on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope of
procedure which disagreements if not resolved to the satisfaction of KPMG, would
have caused it to make references to the subject matter of the disagreements in
connection with its reports.
Effective December 8, 1999, the Registrant engaged Arthur Andersen LLP as its
Independent Auditors. During the last two calendar years and through December 8,
1999, the Registrant did not consult Arthur Andersen LLP regarding any of the
matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-B.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons,
Compliance With Section 16(a) of the Exchange Act.
The Registrant has no directors or officers. Three Winthrop and
Linnaeus-Lexington are the General Partners of the Registrant. Three Winthrop is
the Managing General Partner and manages and controls substantially all of the
Registrant's affairs and has general responsibility and ultimate authority in
all matters affecting its business. On October 28, 1997, Insignia Financial
Group, Inc. ("Insignia") acquired 100% of the Class B stock of First Winthrop
Corporation. ("FWC"), the sole shareholder of Three Winthrop. Pursuant to this
transaction, the by-laws of Three Winthrop were amended to provide for the
creation of a Residential Committee. On October 1, 1998, Insignia was merged
into Apartment Investment and Management Company ("AIMCO") (See "Item 1 -
Transfer of Control"). Pursuant to the terms of Three Winthrop's by-laws, AIMCO
has the right to elect one director to Three Winthrop's Board of Directors and
appoint the members of the Residential Committee. The Residential Committee is
generally authorized to cause Three Winthrop to take such actions as it deems
necessary and advisable in connection with the activities of the Registrant.
There are no family relationships between or among any officers or directors.
Name Age Position
Patrick J. Foye 42 Vice President - Residential and Director
Martha L. Long 40 Vice President - Residential Accounting
Michael L. Ashner 47 Chief Executive Officer and Director
Peter Braverman 48 Executive Vice President and Director
Patrick J. Foye has been Executive Vice President and Director of the Managing
General Partner since October 1, 1998. Mr. Foye has served as Executive Vice
President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a
partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to
1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow
offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long
Island Power Authority and serves as a member of the New York State
Privatization Council. He received a B.A. from Fordham College and a J.D. from
Fordham University Law School.
Martha L. Long has been Senior Vice President and Controller of the Managing
General Partner and AIMCO since October 1998, as a result of the acquisition of
Insignia Financial Group, Inc. From June 1994 until January 1997, she was the
Controller for Insignia, and was promoted to Senior Vice President - Finance and
Controller in January 1997, retaining that title until October 1998. From 1988
to June 1994, Ms. Long was Senior Vice President and Controller for The First
Savings Bank, FSB in Greenville, South Carolina.
Michael L. Ashner, age 47, has been the Chief Executive Officer of Winthrop
Financial Associates, A Limited Partnership ("WFA") and the Managing General
Partner since January 15, 1996. From June 1994 until January 1996, Mr. Ashner
was a Director, President and Co-chairman of National Property Investors, Inc.,
a real estate investment company ("NPI"). Mr. Ashner was also a Director and
executive officer of NPI Property Management Corporation ("NPI Management") from
April 1984 until January 1996. In addition, since 1981 Mr. Ashner has been
President of Exeter Capital Corporation, a firm which has organized and
administered real estate limited partnerships.
Peter Braverman, age 48, has been a Vice President of WFA and the Managing
General Partner since January 1996. From June 1995 until January 1996, Mr.
Braverman was a Vice President of NPI and NPI Management. From June 1991 until
March 1994, Mr. Braverman was President of the Braverman Group, a firm
specializing in management consulting for the real estate and construction
industries. From 1988 to 1991, Mr. Braverman was a Vice President and Assistant
Secretary of Fischbach Corporation, a publicly traded, international real estate
and construction firm.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal
year and Form 5 and amendments thereto furnished to the Registrant with respect
to its most recent fiscal year, the Registrant is not aware of any director,
officer, beneficial owner of more than ten percent of the units of limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms, reports required by Section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years.
Item 10. Executive Compensation
The Registrant is not required to and did not pay any compensation to the
officers or directors of the Managing General Partner. The Managing General
Partner does not presently pay any compensation to any of its officers and
directors (See "Item 12, Certain Relationships and Related Transactions").
Item 11. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
Except as noted below, no person or entity was known by the Registrant to be the
beneficial owner or more than 5% of the Limited Partnership Units of the
Registrant as of December 31, 1999.
Number
Entity of Units Percentage
Insignia Financial Group, Inc.
(an affiliate of AIMCO) 241.15 37.157%
AIMCO Properties LP
(an affiliate of AIMCO) 75.50 11.633%
Insignia Financial Group, Inc. is ultimately owned by AIMCO. Its business
address is 55 Beattie Place, Greenville, South Carolina 29601.
AIMCO Properties LP is indirectly ultimately controlled by AIMCO. Its business
address is 2000 South Colorado Boulevard, Denver, Colorado 80222.
No director or officer of the Managing General Partner owns any Units. The
Managing General Partner owns 100 Units as required by the terms of the
Partnership Agreement governing the Partnership.
(b) Security Ownership of Management
No executive officer, director or general partner of Three Winthrop or
Linnaeus-Lexington or WFA own any units of the Registrant, or has the right to
acquire beneficial ownership of additional Units.
Item 12. Certain Relationships and Related Transactions
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
Partnership activities. The Limited Partnership Agreement provides for certain
payments to affiliates for services and as reimbursements of certain expenses
incurred by affiliates on behalf of the Partnership, an annual asset management
fee of $100,000 and an annual administration fee of $10,000.
<PAGE>
The following transactions with affiliates of the Managing General Partner were
charged to expense for the years ended December 31, 1999 and 1998:
1999 1998
(in thousands)
Property management fees $ 748 $ 721
Reimbursement for services of affiliates 529 277
During the years ended December 31 1999 and 1998, affiliates of the Managing
General Partner were entitled to receive 3% of tenant rent collections and 5% of
store commercial income from the Registrant's property for providing property
management services. The Registrant paid to such affiliates approximately
$748,000 and $721,000 for the years ended December 31, 1999 and 1998,
respectively.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $529,000 and
$277,000 for the years ended December 31, 1999 and 1998, respectively. Included
in these expenses is approximately $90,000 and $10,000 in reimbursements for
construction oversight costs for the year ended December 31, 1999 and 1998,
respectively. In addition the annual asset management and administration fee of
$110,000 is included for both December 31, 1999 and 1998.
Various parties, including affiliates of the Managing General Partner made
tender offers or units, during the years ended December 31, 1999 and 1998. As a
result of these and prior tender offers, AIMCO and its affiliates currently own
316.65 limited partnership units in the Partnership representing 48.79% of the
outstanding units. It is possible that AIMCO or its affiliates will make one or
more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the Registrant. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, AIMCO would in all likelihood vote
the Units it acquired in a manner favorable to the interest of the Managing
General Partner because of their affiliation with the Managing General Partner.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27, Financial Data Schedule is filed as an exhibit to this report.
(b) Reports on Form 8-K filed in the fourth quarter of fiscal year 1999:
Current Report on Form 8-K dated December 8, 1999 filed on December 13,
1999 disclosing the dismissal of KPMG LLP and the Registrant's Independent
Accountant and engaging Arthur Andersen, LLP as the Registrant's new
Independent Accountant.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has caused this Report on Form 10-KSB to be signed
on its behalf by the undersigned, thereunto duly authorized.
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
By: THREE WINTHROP PROPERTIES, INC.
Managing General Partner
By: /s/ Patrick J. Foye
Patrick J. Foye
Vice President - Residential
By: /s/ Martha L. Long
Martha L. Long
Vice President - Residential Accounting
Date: March 30, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
/s/ Patrick Foye Vice President-Residential
Patrick J. Foye and Director
/s/ Martha L. Long Vice President - Residential
Martha L. Long Accounting
<PAGE>
Index to Exhibits
Exhibit No. Document
3.4. Amended and Restated Limited Partnership Agreement and
Certificate of Amendment of Springhill Lake Investors
Limited Partnership(1)
3.4.(a) Amendment to Amended and Restated Limited
Partnership Agreement of Springhill Lake Investors
Limited Partnership dated August 23, 1995 (3)
10.(a) Amended and Restated Limited Partnership Agreement
and Certificate of Amendment of First Springhill Lake
Limited Partnership (Partnership Agreements of Second -
Ninth Springhill Lake Limited Partnerships are
substantially identical)(1)
(b) Loan Agreement dated as of April 30, 1993 between
Springhill Lake Investors Limited Partnership and
Marvin M. Franklin, Mark P. Snyderman and J. Grant
Monahon, as Trustees of AEW #207 Trust(2)
(c) $58,000,000 Amended and Restated Promissory Note from
Springhill Lake Investors Limited Partnership to Marvin
M. Franklin, Mark P. Snyderman and J. Grant Monahon, as
Trustees of AEW #207 Trust dated April 30, 1993(2)
(d) $5,000,000 Second Promissory Note from Springhill Lake
Investors Limited Partnership to Marvin M. Franklin,
Mark P. Snyderman and J. Grant Monahon, as Trustees of
AEW #207 Trust dated April 30, 1993(2)
(e) Amended and Restated Indemnity and Deed of Trust and
Security Agreement between the Operating Partnerships
and James C. Oliver and Fred Wolf, II, Trustees, dated
as of April 30, 1993(2)
(f) Second Indemnity and Deed of Trust and Security
Agreement between the Operating Partnerships and James
C. Oliver and Fred Wolf, II, Trustees, dated as of
April 30, 1993(2)
(g) Indemnity Agreement dated as of April 30, 1993 between
Springhill Lake Investors Limited Partnership and
Winthrop Financial Associates, A Limited Partnership(2)
(h) Amended and Restated Guaranty and Indemnity Agreement
of Property Owners dated as of April 30, 1994 between
the Operating Partnerships and Marvin M. Franklin, Mark
P. Snyderman and J. Grant Monahon, as Trustees of AEW
#207 Trust(2)
(i) Second Guaranty and Indemnity Agreement of Property
Owners dated as of April 30, 1994 between the Operating
Partnerships and Marvin M. Franklin, Mark P. Snyderman
and J. Grant Monahon, as Trustees of AEW #207 Trust(2)
27 Financial Data Schedule.
(1) Incorporated herein by reference to the Registrant's
Registration Statement on Form 10 dated April 30, 1986,
as thereafter amended.
(2) Incorporated herein by reference to the Registrant's
Annual Report on Form 10-K for the year ended December
31, 1993.
(3) Incorporated herein by reference to the Registrant's
Current Report on Form 8-K dated August 23, 1995, as
filed September 5, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Springhill
Lake Investors Limited Partnership 1999 Fourth Quarter 10-KSB and is qualified
in its entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000763399
<NAME> SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 2,343
<SECURITIES> 0
<RECEIVABLES> 1,573
<ALLOWANCES> (236)
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 107,987
<DEPRECIATION> (53,589)
<TOTAL-ASSETS> 61,613
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 55,402
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 61,613
<SALES> 0
<TOTAL-REVENUES> 26,159
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 24,432
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,336
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,056
<EPS-BASIC> 1,545.45 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
