UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file Number 0-18151
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
(Exact name of registrant as specified in governing instrument)
Delaware 13-3286866
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2 World Trade Center, New York, NY 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 392-1054
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interests
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X . No .
Indicate by check mark if disclosure files 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. [ X ]
State the aggregate market value of the voting stock held by nonaffiliates
of the registrant.
Not Applicable
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a) The following documents are filed as part of this Annual Report:
1. Financial Statements (see Index to Financial Statements
filed as part of Item 8 of this Annual Report).
2. Financial Statement Schedule (see Index to Financial
Statements filed as part of Item 8 of this Annual Report).
3. Exhibits
(2) Not applicable.
(3)(a) Amended and Restated Agreement of Limited Partnership
dated as of July 12, 1985 set forth in Exhibit A to the
Prospectus included in Registration Statement Number 2-
96767 is incorporated herein by reference.
(3)(b) Certificate of Limited Partnership dated as of July 12,
1985 incorporated by reference in Registration Statement
Number 2-96767 is incorporated herein by reference.
(4)(a) Amended and Restated Agreement of Limited Partnership
dated as of July 12, 1985 set forth in Exhibit A to the
Prospectus included in Registration Statement Number 2-
96767 is incorporated herein by reference.
(4)(b) Certificate of Limited Partnership dated as of July 12,
1985 incorporated by reference in Registration Statement
Number 2-96767 is incorporated herein by reference.
(9) Not applicable.
(10) Not applicable.
(11) Not applicable.
(12) Not applicable.
(13) Not applicable.
(16) Letter regarding change in certifying accountant.
Incorporated by reference in the Partnership's Current
Report on Form 8-K dated December 31, 1994.
(18) Not applicable.
(19) Not applicable.
(21) Subsidiaries:
TWC Eleven Limited Partnership, a Florida Limited
Partnership.
L.S. Braker Associates, a Texas Limited Partnership.
(22) Not applicable.
(23) Not applicable.
(24) Not applicable.
(27) Financial Data Schedule.
(28) Not applicable.
(99) Not applicable.
(b) Reports on Form 8-K
Report dated December 15, 1994 of the change in the Partnership's
Independent Auditor for the year ending December 31, 1994.
(c) See 3a. above.
(d) 1. Financial Statements of TWC Ten Limited Partnership an
office building located in Tampa, Florida. To be filed by
10K/A when received from TWC Ten Limited Partnership.
2. Financial Statements of Peninsula Office Park, an office
complex located in San Mateo, California. To be filed by
10-K/A when received from Peninsula Office Park.
<PAGE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DEAN WITTER REALTY GROWTH
PROPERTIES, L.P.
By: Dean Witter Realty Growth
Properties Inc.
Managing General Partner
Date: April 12, 1995 By: /s/E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
<PAGE>
TWC TEN, LTD.
(A Florida Limited Partnership)
Financial Statements for the
Years Ended December 31, 1994 and 1993, and
Independent Auditors' Report
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
TWC Ten, Ltd.:
We have audited the accompanying balance sheet of TWC Ten, Ltd. (a Florida
Limited Partnership) as of December 31, 1994 and the related statements of
operations, partners' capital (deficit), and cash flows for the year then
ended. These financial statements are the responsibility of the Partners.
Our responsibility is to express an opinion on these financial statements
based on our audit. The financial statements of TWC Ten, Ltd. for the year
ended December 31, 1993 were audited by other auditors whose report, dated
February 4, 1994 expressed an unqualified opinion on those statements.
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 Partners, 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 1994 financial statements referred to above present
fairly, in all material respects the financial position of TWC Ten, Ltd. at
December 31, 1994, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
/s/Deloitte & Touche LLP
Tampa, Florida
February 10, 1995
<PAGE>
<TABLE>
TWC TEN, LTD.
(A Florida Limited Partnership)
<CAPTION>
BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
ASSETS 1994 1993
<S> <C> <C>
Cash and cash equivalents $ 209,260 $ 300,933
Accounts receivable, net of allowance for
doubtful account of $13,505 in 1994 and
$33,000 in 1993 1,438,577 1,676,712
Deferred lease commissions, net of accumulated
amortization of $1,237,871 in 1994 and
$1,048,787 in 1993 631,408 513,771
Deferred loan costs, net of accumulated
amortization of $422,328 in 1994 and
$351,339 in 1993 165,425 236,414
Organizational costs, net of accumulated
amortization of $16,278 in 1994 and $5,042
in 1993 39,903 51,139
Prepaid expenses and other assets 112,014 94,937
Real estate and improvements (Notes 1 and 2) 20,055,060 20,212,415
$22,651,647 $23,086,321
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
LIABILITIES:
Mortgage note payable (Note 3) $20,000,000 $20,000,000
Accounts payable and accrued expenses 338,218 556,561
Accrued interest payable (Note 3) 141,666 141,666
Total liabilities 20,479,884 20,698,227
COMMITMENTS AND RELATED PARTY
TRANSACTIONS (Notes 4 and 5)
PARTNERS' CAPITAL (DEFICIT) (Note 6):
Taylor Simpson Group 6,022,325 6,238,656
Existing Partners (3,850,562) (3,850,562)
Total partners' capital (deficit) 2,171,763 2,388,094
$22,651,647 $23,086,321
<FN>
See accompanying notes to financial statements.
/TABLE
<PAGE>
<TABLE>
TWC TEN, LTD.
(A Florida Limited Partnership)
<CAPTION>
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994 AND 1993
1994 1993
<S> <C> <C>
RENTAL REVENUES (Note 4) $4,174,012 $3,489,860
OPERATING EXPENSES:
Building services 365,030 381,491
Utilities 361,862 312,063
Repairs and maintenance 61,381 130,764
Real estate taxes 424,816 429,140
Management fees (Note 5) 125,730 104,784
Administrative and other 158,093 303,519
Total operating expenses 1,496,912 1,661,761
OPERATING INCOME 2,677,100 1,828,099
INTEREST EXPENSE, NET 1,694,223 2,718,415
DEPRECIATION AND AMORTIZATION 1,389,200 1,191,803
NET LOSS $(406,323) $(2,082,119)
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
TWC TEN, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
YEARS ENDED DECEMBER 31, 1994 AND 1993
<CAPTION>
Taylor Simpson Group Existing Partners
Allocated Preferred Allocated Total
Capital Loss Net Capital Capital Loss Net Net
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1992 $ - $ - $ - $ 600 $9,145,691 $(19,170,702) $(10,024,411) $(10,024,411)
Capital contribution 6,853,904 - 6,853,904 16,971,026 (9,145,691) - 7,825,335 14,679,239
Capital distribution (184,615) - (184,615) - - - - (184,615)
Net loss - (430,633) (430,633) - - (1,651,486) (1,651,486) (2,082,119)
Balance,
December 31, 1993 6,669,289 (430,633) 6,238,656 16,971,626 - (20,822,188) (3,850,562) 2,388,094
Capital contribution 621,428 - 621,428 - - - - 621,428
Capital distribution (431,436) - (431,436) - - - - (431,436)
Net loss - (406,323) (406,323) - - - - (406,323)
Balance,
December 31, 1994 $6,859,281 $(836,956) $6,022,325 $16,971,626 $ - $(20,822,188) $ (3,850,562) $ 2,171,763
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
TWC TEN, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994 AND 1993
<CAPTION>
1994 1993
<S> <C> <C>
CASH FLOWS PROVIDED FROM (USED IN)
OPERATING ACTIVITIES:
Net loss $(406,323) $(2,082,119)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation and amortization 1,389,200 1,191,803
Provision for doubtful accounts 11,679 13,550
Cash provided by (used in) changes in:
Accounts receivable 226,457 621,509
Deferred lease commissions (306,721) (144,181)
Deferred loan costs - (133,198)
Organizational costs - (56,181)
Prepaid expenses and other assets (17,077) (32,814)
Accounts payable and accrued
expenses (218,343) (1,035,487)
Accrued interest payable - 161,641
Net cash provided from (used in)
operating activities 678,872 (1,495,477)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Expenditures for improvements (960,537) (447,704)
Net cash used in investing
activities (960,537) (447,704)
CASH FLOWS PROVIDED FROM (USED IN)
FINANCING ACTIVITIES:
Repayments of mortgage note - (4,607,271)
Capital distributions -
Taylor Simpson Group (431,436) (184,615)
Capital contributions:
Bayport, Ltd. - 152,325
Taylor Simpson Group 621,428 6,853,904
Net cash provided from
financing activities 189,992 2,214,343
Net decrease (increase)
in cash and cash
equivalents (91,673) 271,162
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 300,933 29,771
CASH AND CASH EQUIVALENTS,
END OF YEAR $209,260 $300,933
The partnership paid interest of
approximately $1,700,000 in 1994
and $2,453,000 in 1993.
<FN>
See Note 6 for summary of noncash transactions.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
TWC TEN, LTD.
( A FLORIDA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - TWC Ten, Ltd., a Florida limited partnership (the
"Partnership"), was formed
December 30, 1983 to acquire approximately 13 acres of land and to
develop and construct an eleven-story 259,513 square foot office
building and structured parking deck containing 765 parking spaces
(the "Project") in Tampa, Florida.
Bayport, Ltd., a partnership in which Dean Witter Realty Growth
Properties, L.P. is a substantial general partner, was the majority
general partner. The remaining limited partnership interests were
held by owners and employees of the Wilson Company ("Wilson
Partners").
On July 19, 1993, the Partnership Agreement was amended and restated
(the "Amended and Restated Partnership Agreement"). The partners
under the new partnership agreement are the original partners (the
"Existing Partners") and the Taylor Simpson Group ("TSG"). The
partners in TSG are Westrock Realty Associates, L.P., Ltd., as a
limited partner and Bayrock Realty Associates, L.P., Ltd., as a
general partner.
The Amended and Restated Partnership Agreement requires certain
capital contributions by the partners. TSG is required, as
necessary, to fund up to $9,000,000 of capital contributions.
Through
December 31, 1994, $5,339,068 has been contributed as an initial
capital contribution and $2,136,264 has been contributed as an
additional capital contribution. The remaining unfunded balance is
to be contributed from time-to-time to fund operating deficits. As
of the date of the Amended and Restated Partnership Agreement, the
Existing Partners contributed shortfall loans of $1,232,516,
additional shortfall loans of $3,295,259, and accrued interest
payable thereon of $2,331,831 to the Partnership. They also caused
to be discharged $813,404 of amounts payable to TWC Eleven, Ltd. (an
Existing Partner) and paid $140,000 of accrued interest payable and
$12,325 of accrued expenses on behalf of TWC Ten, Ltd.
Profits (losses) are allocated based on the provisions of the Amended
and Restated Partnership Agreement. Profits are allocated 20% to the
Existing Partners and 80% to TSG until TSG has received an annual
return of 12% on the average amount of their unrecovered capital.
Once TSG has received 12% return on the average amount of their
unrecovered capital, profits are to be allocated 50% to the Existing
Partners and 50 % to TSG. Losses are allocated 100% to TSG to the
extent of TSG's adjusted capital account. Thereafter, losses are
allocated 50% to the Existing Partners and 50% to TSG.
The Amended and Restated Partnership also includes a provision
whereby TSG is to receive guaranteed payments for three years on the
amount of TSG's unrecovered capital. The return on unrecovered
capital is 6% for two years, beginning with the year ended
December 31, 1993. The return on capital is to 8.5% for the year
ending December 31, 1995. The return on capital paid to TSG was
$431,436 and $184,615 for the years ended December 31, 1994 and 1993,
respectively.<PAGE>
Cash Equivalents - For purposes of reporting cash
flows, cash and cash equivalents include cash on hand and cash on
deposit.
Real Estate and Improvements - Real estate and improvements are
recorded at cost less accumulated depreciation and amortization.
Cost includes land and improvements, direct construction costs,
indirect project costs and carrying costs including real estate taxes
and interest incurred during the construction period.
Depreciation and amortization is computed on the straight-line basis
over the estimated useful lives of the assets: building and building
improvements, 15 to 40 years; leasehold improvements, primarily over
the lives of the related leases, 3 to 15 years.
Rental Revenues and Rents Receivable - Rental revenues and rents
receivable are recorded in accordance with Statement of Financial
Accounting Standards No. 13, "Accounting for Leases," whereby rental
revenue is recognized on a straight-line basis by totaling all rents
due under the lease, including fixed increases, and dividing by total
months of occupancy, including free rent periods.
Deferred Lease Commissions - Deferred lease commissions are amortized
on a straight-line basis over the lives of the related leases.
Organizational Costs - Organizational costs relate to the costs of
establishing the Partnership and are amortized on a straight-line
basis over 5 years.
Deferred Loan Costs - Deferred loan costs related to the construction
financing are included in the cost of the building and are amortized
on a straight-line basis over the life of the building. Deferred
loan costs related to the mortgage payable are being amortized on a
straight-line basis over the life of the mortgage.
Income Taxes - No income taxes have been provided for in these
financial statements as any such taxes, or benefits, are recognized
by the individual partners.
<TABLE>
2. REAL ESTATE AND IMPROVEMENTS
Real estate and improvements at December 31, 1994 and 1993 consists
of the following:
<CAPTION>
1994 1993
<S> <C> <C>
Land and improvements $3,013,100 $3,013,100
Building and improvements 25,129,445 24,168,908
28,142,545 27,182,008
Less accumulated depreciation
and amortization (8,087,485) (6,969,593)
$20,055,060 $20,212,415
</TABLE>
Depreciation and amortization expense was $1,117,892 and $963,450 for
the years ended December 31, 1994 and 1993, respectively.
3. MORTGAGE NOTE PAYABLE
The mortgage note payable, which was refinanced on July 19, 1993,
bears interest payable monthly at 8.5%. The mortgage note payable is
secured by substantially all real estate and improvements, rents,
leases and profits and is due on September 1, 1999. Prior to the
refinancing, the mortgage note carried interest at 11.75%. There are
no principal payments required to be made on the refinanced mortgage
note until the maturity date of September 1, 1999. Principal
payments on the mortgage note during 1993 totaled $4,607,271.
4. LEASE COMMITMENTS
Tenant leases specify minimum rentals and, in some cases, annual
fixed increases. Lease terms range from 3 to 5 years.
Future minimum rental receipts due for succeeding fiscal years under
noncancelable operating leases are as follows:
<TABLE>
Year Amount
<S> <C>
1995 $3,804,904
1996 3,587,945
1997 2,499,816
1998 2,127,607
1999 1,593,481
Thereafter 1,180,992
Total $14,794,745
</TABLE>
5. RELATED PARTY TRANSACTIONS
Interest on shortfall loans was compounded monthly at a rate of prime
plus 1% until the Partnership Agreement was amended and restated on
July 19, 1993. At that time, accrued interest of $2,331,831 was
contributed to the Partnership as part of the Existing Partners'
additional capital contribution.
In December 1988, TWC Eleven, Ltd. paid $829,771 of accrued interest
and principal in additional shortfall loans on the Partnership's
behalf. The $829,771 was reflected on the Partnership's balance
sheet as due to TWC Eleven, Ltd. until July 18, 1993 when $813,404
was contributed to the Partnership as part of the Existing Partners'
additional capital contribution.
Prior to July 19, 1993, the Partnership had a management agreement
with the Wilson Management Company which provided for the payment of
2-1/4% of rental revenue collected and a 4% lease-up fee for all new
leases. On July 19, 1993, as part of the Amended and Restated
Partnership Agreement, the management agreement was amended whereby
the Wilson Management Company will receive 3% of all rental revenue
collected, a 4% lease-up fee for all new leases, and monthly
reimbursement of $875 for office expenses. Management and lease-up
fees were approximately $227,400 in 1994 and $164,300 in 1993. The
Wilson Management Company was also reimbursed approximately $92,500
and $100,000 in 1994 and 1993, respectively, primarily for salary
costs incurred on behalf of the Partnership.
Prior to July 19, 1993, the Partnership had a management agreement
with Liberty Street/Bayport, Ltd. which required payment of a fee
calculated as a percentage of revenues and based on cash flow. On
July 19, 1993, the management agreement with Liberty Street/Bayport,
Ltd. was terminated.
On August 1, 1993, the Wilson Management Company renewed its 10,806
square-foot lease for five years beginning March 1, 1994. The new
lease requires monthly payments of $16,209 until February 28, 1999.
Rental revenues earned under this lease agreement were approximately
$196,000 in 1994 and $205,000 in 1993.
The Amended and Restated Partnership Agreement as of July 19, 1993
requires the Partnership to pay guarantee payments to TSG equaling 6%
of TSG's unrecovered capital for two years, beginning with the year
ended December 31, 1993. Guaranteed payments to the TSG for 1994 and
1993 totaled $431,436 and $184,615, respectively.
Solutions, Inc., an affiliate of The Wilson Company, performed
construction work, primarily tenant improvements, on a cost-plus
basis totaling approximately $775,687 in 1994 and $575,300 in 1993.
Certain amounts of these improvements were reimbursed to the
Partnership by tenants.
The Wilson Construction Company, an affiliate of The Wilson Company,
performed construction work on the base of the office building
totaling approximately $257,845 during 1994. No such work was
performed during 1993.
6. NONCASH TRANSACTIONS
As a result of the Amended and Restated Partnership Agreement,
certain debt amounts were converted to capital. These conversions
were considered as noncash activities for purposes of the statement
of cash flows as of December 31, 1993 as follows:
<TABLE>
<S> <C>
Existing Partners:
Shortfall loan $1,232,516
Additional shortfall loan 3,295,259
Accrued interest payable 2,331,831
Due to TWC Eleven, Ltd 813,404
Total noncash activity $7,673,010
</TABLE>
<PAGE>
PENINSULA OFFICE PARK
(a California Partnership)
Financial Statements
December 31, 1994
(With Independent Auditors Report Thereon)
<PAGE>
Independent Auditors Report
The Partners
Peninsula Office Park:
We have audited the accompanying balance sheet of Peninsula
Office Park (a California Partnership) as of December 31,
1994, and the related statements of operations, changes in
partners deficit, and cash flows for the year then ended.
These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our 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
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 financial
position of Peninsula Office Park as of December 31, 1994,
and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted
accounting principles.
/s/KPMG Peat Marwick
KPMG PEAT MARWICK LLP
February 3, 1995<PAGE>
<TABLE>
PENINSULA OFFICE PARK
(a California Partnership)
Balance Sheet
December 31, 1994
<CAPTION>
Assets
Real estate investment (notes 3 and 6):
<S> <C>
Land $1,492,170
Building and improvements 24,117,308
Furniture and fixtures 368,754
25,978,232
Less accumulated depreciation (17,672,462)
Net real estate investment 8,305,770
Cash and cash equivalents (of which $1,741,697 is
restricted (note 3)) 3,079,528
Accounts receivable (notes 3 and 4) 208,644
Step rents receivable 1,795,658
Notes receivable (net of allowance, $558,609) 231,858
Leasing commissions and costs (net of accumulated amortization,
$1,626,431) 965,823
Loan costs (net of accumulated amortization, $930,084) 308,332
Other assets 326,046
$ 15,221,659
Liabilities and Partners Deficit
Notes payable (note 3) 36,345,046
Accounts payable and accrued expenses (notes 5 and 6) 230,139
Tenant security deposits 373,602
Equity and losses in excess of investment (note 4) 2,133,585
Total liabilities 39,082,372
Partners' deficit (23,860,713)
<FN>
Commitments and contingencies (notes 3, 4, 5 and 6)
$ 15,221,659
See accompanying notes to financial statements.
/TABLE
<PAGE>
<TABLE>
PENINSULA OFFICE PARK
(a California Partnership)
Statement of Operations
Year ended December 31, 1994
<S> <C>
Rental income (notes 3 and 7) 6,039,721
Other income 269,136
Interest income 160,633
Equity in net loss of associated partnership (note 4) (93,457)
6,376,033
Expenses:
Operating (notes 5 and 6) 1,802,173
Real estate tax 287,259
Insurance 100,776
Other 97,008
2,287,216
Interest expense (note 3) 3,413,628
Depreciation and amortization 1,449,439
Net loss $ (774,250)
<FN>
See accompanying notes to financial statements.
/TABLE
<PAGE>
<TABLE>
PENINSULA OFFICE PARK
(a California Partnership)
Statement of Changes in
Partners' Deficit
Year ended December 31, 1994
<S> <C>
Balance at December 31, 1993 $ (22,896,463)
Net loss (774,250)
Capital distributions (190,000)
Balance at December 31, 1994 $ (23,860,713)
<FN>
See accompanying notes to financial statements.
/TABLE
<PAGE>
<TABLE>
PENINSULA OFFICE PARK
(a California Partnership)
Statement of Cash Flows
Year ended December 31, 1994
<S> <C>
Cash flows from operating activities:
Net loss $ (774,250)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 1,449,439
Equity in net loss of associated partnership 93,457
Change in assets and liabilities:
Increase in accounts and step rents receivable (170,672)
Decrease in notes receivable 77,305
Increase in leasing commissions and costs (283,443)
Increase in loan costs (107,978)
Increase in other assets (21,027)
Increase in accrued interest payable 262,876
Decrease in accounts payable and accrued expenses (184,874)
Increase in tenant security deposits 37,860
Net cash provided by operating activities 378,693
Cash flows from investing activities:
Additions to buildings and improvements (1,208,677)
Proceeds from sales of marketable securities 3,998,594
Net cash provided by investing activities 2,789,917
Cash flows from financing activities:
Capital distributions (190,000)
Net cash used in financing activities (190,000)
Net increase in cash and cash equivalents 2,978,610
Cash and cash equivalents at beginning of year 100,918
Cash and cash equivalents at end of year $3,079,528
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $3,150,752
<FN>
See accompanying notes to financial statements.
/TABLE
<PAGE>
PENINSULA OFFICE PARK
(a California Partnership)
Notes to Financial Statements
December 31, 1994
(1) Organization
Peninsula Office Park (the Partnership) was originally
formed on October 1, 1971 as a limited partnership.
The Partnership was formed to acquire, own, improve,
manage, operate and lease commercial office space in
San Mateo, California.
Under the Partnership Agreement (the Agreement) amended
December 27, 1985, the general partners have a 71.5956%
partnership interest and the limited partners have a
28.4044% partnership interest.
The Agreement provides, among other things, for the
following:
(a) Net Cash Flows as defined in the Agreement
shall be distributed among the partners in
accordance with their partnership interests.
(b) The Partnership's income and losses from
operations (other than capital transactions)
shall be allocated among the partners in
accordance with their partnership interests
provided Peninsula/DW Associates (DW), a
general partner gets allocated the first
$6,248,500 of all net losses.
(c) The net profits arising from capital
transactions shall be allocated among the
partners in the following amount and order of
priority:
(i) Net profits equal to aggregate negative
capital accounts of all partners who have
negative capital accounts shall be
allocated among such partners in
proportion to their respective negative
capital accounts; then
(ii) Any remaining net profits are allocated to
the partners in proportion to their
respective partnership interests in order
to bring their capital account balance up
to an amount equal to the amount of
proceeds distributed in (c)(i) above; then
(iii) Any remaining net profits are allocated to
the partners in proportion to their
respective partnership interests.
(d) The net losses arising from capital
transactions shall be allocated among the
partners in the following amount and order
of priority:
(i) Loss equal to the excess of the aggregate
positive capital accounts of all partners
who have positive capital accounts over
the aggregate capital proceeds to be
distributed to such partners with respect
to (c)(i) above shall be allocated among
such partners in proportion to their
respective places pursuant to (c)(i) of
such excess; and
(ii) Any remaining loss shall be allocated
among partners in accordance with their
partnership interests.
(e) Additional capital contributions may be
required by the partners to fund cost overruns
and certain operating costs in excess of
amounts budgeted in the Agreement.
(2) Summary of Significant Accounting Policies
(a) Basis of Accounting
The accompanying financial statements have been
prepared on the accrual basis of accounting.
(b) Income Taxes
No provision for income taxes has been made in the
accompanying financial statements as the taxable income
or loss of the Partnership is reportable on the returns
of the individual partners based on their respective
interests in the Partnership.
(c) Rental Income
Rental income is recognized on a straight-line basis
over the terms of the respective tenant leases.
(d) Depreciation and Amortization
Depreciation of building, improvements and furniture
and fixtures is computed over the estimated useful
lives of the assets. Tenant improvements, included in
buildings and improvements, are amortized over the
terms of the respective tenant leases.
Leasing commissions and costs are amortized on a
straight-line basis over the terms of the respective
tenant leases. Loan costs are amortized on a straight-
line basis over the terms of the respective loan
agreements.
(e) Cash and Cash Equivalents
For purposes of the statement of cash flows, cash
equivalents include liquid assets purchased with
maturities of three months or less.
(3) Notes Payable
The Partnership obtained financing amounting to
$36,400,000 on various dates detailed in the table
below with the Equitable Life Assurance Society of the
United States (Equitable). The notes matured on
December 1, 1993 but were not repaid and were therefore
in technical default at December 31, 1993. During
1994, the note agreements were modified to waive the
technical defaults and extend the maturity date from
December 1, 1993 to December 1, 1996. The interest
rates were also modified from 9.875% (POP #1 and
POP #3) and 9.0% (POP #5, POP #6 and POP #8) to 9.5%
effective April 28, 1994 for all notes. Although the
current interest rate is 9.5%, only 8.25% is required
to be paid on a monthly basis. The difference is
compounded into the note balance. The amount
compounded into the note balance during 1994 was
$262,876. Effective April 28, 1994, the notes secured
by POP #1, POP #3 and POP #8 were also modified from
monthly principal plus interest payments to monthly
interest only payments.
In accordance with the security agreements to the
Equitable notes payable, a security fund was
established in 1994. The original balance deposited
with Equitable for the security fund was $1,305,146.
The Partnership is also required to deposit into the
security fund any positive cash flow generated by the
properties as defined in the note agreements. The
positive cash flow generated and deposited into the
security fund in 1994 was $436,551. The total amount
of restricted cash held by Equitable of $1,741,697 is
included in the cash and cash equivalents balance.
This restricted cash cannot be disbursed without the
prior approval of Equitable.
The note agreement also requires the Partnership to
advance to Equitable, on a monthly basis the amount of
property taxes due on the properties. The balance in
the property tax impound account as of December 31,
1994 was $41,626.
The notes are secured by a first deed of trust in the
properties, assignment of rents on the properties, the
security fund and the property tax impound account.
<TABLE>
<CAPTION>
Note Inception Original Current Maturity
Property number Payment type Date Balance Balance Date
<C> <C> <S> <C> <C> <C> <C>
POP #1 B-18668 Monthly interest only 11/20/86 $ 3,400,000 3,370,681 12/1/96
POP #3 B-18669 Monthly interest only 11/20/76 5,350,000 5,303,868 12/1/96
POP #5 B-18683 Monthly interest only 10/27/85 8,650,000 8,723,242 12/1/96
POP #6 B-18684 Monthly interest only 10/27/85 6,500,000 6,555,037 12/1/96
POP #8 B-18670 Monthly interest only 11/20/86 12,500,000 12,392,218 12/1/96
$36,400,000 $36,345,046
</TABLE>
(4) Investment in Associated Partnership
The Partnership has a 53.33% interest in Campus Drive Investment Company
(CDIC), a California partnership. The equity method of accounting is
used to record the Partnership's investment in CDIC as the partners hold
joint control. The Partnership's interest in CDIC's net loss for the
year ended December 31, 1994 was $93,457. The assets, liabilities and
partners' deficit of CDIC at December 31, 1994 are summarized as follows:
<TABLE>
<S> <C>
Assets:
Real estate investment, net $ 1,438,913
Other (including cash of $317,727 of which $194,854
is restricted) 590,161
Total assets $ 2,029,074
Liabilities and Partners' Deficit:
Note payable 5,294,453
Other liabilities 774,873
Partners' deficit (4,040,252)
Total liabilities and partners' deficit $ 2,029,074
</TABLE>
Other liabilities includes a payable to the Partnership of $135,888 for
tenant improvement costs expended on behalf of CDIC. The same amount is
included in the Partnership's accounts receivable balance as of December 31,
1994.
The results of operations for CDIC for the year ended December 31, 1994 are
summarized below:
<TABLE>
<S> <C>
Revenues:
Rental $ 789,592
Other 57,635
847,227
Expenses:
Operating 235,211
Interest 552,124
Depreciation and amortization 151,086
Other 84,147
1,022,568
Net loss $ (175,341)
</TABLE>
(5) Management Agreement
The Partnership has a management agreement (the Management Agreement)
with William Wilson and Associates (WWA), an affiliate of the
Partnership, to perform certain duties in connection with the
development and operation of the properties owned by the Partnership.
The Management Agreement continues on a year-to-year basis.
The Partnership is required to pay WWA a management fee of 3% of
gross monthly rental receipts as defined in the Management Agreement.
Total fees during 1994 amounted to $207,698, which is included in
operating expenses. The related management fee payable at
December 31, 1994 was $36,159.
(6) Related Party Transactions
William Wilson III, a partner of the Partnership, has a 3% interest
in Webcor Builders, Inc., the general contractor engaged by the
Partnership for various tenant improvements. The total cost of these
services provided to the Partnership during 1994 was $753,487. The
related payable for these services at December 31, 1994 was $3,818.
The Partnership paid $109,178 to Commercial Interior Contractors
(CIC) for interior improvements during 1994. CIC is a division of
WWA.
WWA performed maintenance engineering, marketing and promotion, and
leasing services for the Partnership. The total cost of these
services provided to the Partnership for the year ended December 31,
1994 was $224,817. WWA also leased space from the Partnership and
made rental payments of $199,596 during 1994.
As specified in the Agreement, the Partnership shall pay RMS/Liberty
Street Associates, an affiliate of DW, an investment management fee
equal to 1% of the gross income of the Partnership. The total fee
during 1994 amounted to $59,842. The related payable for this fee at
December 31, 1994 was $10,418.
(7) Leases
The Partnership's operations consist of the leasing of space in
office buildings, in which all of the Partnership's leases are
classified as operating leases.
The minimum future rental receipts under noncancelable operating
leases in effect on December 31, 1994 are as follows:
<TABLE>
Year ending December 31:
<S> <C>
1995 $5,706,280
1996 5,128,021
1997 4,512,097
1998 2,768,202
1999 1,272,254
Thereafter 679,658
$20,066,512
</TABLE>
Rental income for the year ended December 31, 1994 includes $89,252
of step rents receivable.
