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, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file Number 0-18151
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 (sec. 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
(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)(a) Partnership Agreement of TWC Ten, Ltd. was filed as
Exhibit 10(b) to Registration Statement No. 2-96767 and is
incorporated herein by reference.
(b) Partnership Agreement of TWC Eleven, Ltd. was filed as
Exhibit 10(c) to Registration Statement No. 2-96767 and is
incorporated herein by reference.
(c) Amended and Restated Partnership Agreement of Bayport,
Ltd. filed as Exhibit b to Registrant's report on Form 8-
K, dated July 15, 1985 (Commission File No. 0-18151), is
incorporated herein by reference.
(d) General Partnership Agreement of TWC Eleven, Ltd. dated as
of August 29, 1985.
(e) First Amendment to the General Partnership Agreement of
TWC Eleven, Ltd. dated as of June 19, 1987.
(f) Second Amended and Restated Agreement of Limited
Partnership of TWC Ten, Ltd. dated as of July 19, 1993.
(g) Partnership Agreement of Braker Lane III Associates was
filed as Exhibit 10(a) to Registration Statement No. 2-
96767 and is incorporated herein by reference.
(h) Amended and Restated Partnership Agreement of L.S. Braker
Associates filed as Exhibit b to Registrants report on
Form 8-K dated July 15, 1985 (Commission File No 0-18151)
is incorporated herein by reference.
(i) Partnership Agreement of Peninsula/DW Associates dated
December 27, 1985 filed as Exhibit c to Registrants'
report on Form 8-K dated December 27, 1985 (Commission
File No 0-18151) is incorporated herein by reference.
(j) Amended and Restated Agreement of Limited Partnership of
Campus Drive Investment Company, dated as of December 27,
1985.
(k) Amended and Restated Agreement of Limited Partnership of
Peninsula Office Park, dated as of December 27, 1985.
(l) Agreement of Sale, dated August 3, 1995, with respect to
the sale of the warehouse and the undeveloped land at
Braker Center filed as Exhibit 2 to the Registrant's
report on Form 8-K dated September 1, 1995 (Commission
File No. 0-18151) and is incorporated herein by reference.
(11) Not applicable.
(12) Not applicable.
(13) Not applicable.
(16) Not applicable
(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) No Forms 8-K were filed by the Partnership during the last quarter
of the period covered by this report.
(c) See 3a. above.
(d) 1. Financial Statements of TWC Ten Limited Partnership an
office building located in Tampa, Florida. Filed herein.
2. Financial Statements of Peninsula Office Park, an office
complex located in San Mateo, California. Filed herein.
<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 25, 1996 By: /s/E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
<PAGE>
PENINSULA OFFICE PARK
(A CALIFORNIA LIMITED PARTNERSHIP)
Financial Statements for the Years
Ended December 31, 1995, 1994 and 1993
and Independent Auditors' Report
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
Peninsula Office Park:
We have audited the accompanying balance sheet of Peninsula
Office Park (a California Limited Partnership) as of December 31,
1995, 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, such financial statements present fairly, in all
material respects, the financial position of Peninsula Office
Park as of December 31, 1995, and the results of its operations
and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/Deloitte & Touche LLP
February 2, 1996
<PAGE>
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 each of the
years in the two year period ending December 31, 1994. 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 each of the years in the two year period ending December 31, 1994 in
conformity with generally accepted accounting principles.
/s/KPMG Peat Marwick LLP
February 3, 1995
<PAGE>
<TABLE>
<CAPTION>
PENINSULA OFFICE PARK
(A California Limited Partnership)
BALANCE SHEETS
ASSETS
December 31,
1995 1994
<S> <C> <C>
REAL ESTATE INVESTMENT:
Land $ 1,492,170 $ 1,492,170
Building and improvements 25,423,834 24,117,308
Furniture and fixtures 377,135 368,754
Total 27,293,139 25,978,232
Less accumulated depreciation (18,701,539) (17,672,462)
Net real estate investment 8,591,600 8,305,770
Cash and cash equivalents 1,751,033 1,337,831
Restricted cash 1,461,594 1,741,697
Accounts receivable 373,006 208,644
Step rents receivable 1,743,109 1,795,658
Notes receivable (net of
allowance, $610,051 and
$558,609 in 1995 and 1994,
respectively) 408,169 231,858
Leasing commissions and costs
(net of accumulated
amortization, $1,063,113 and
$1,626,431 in 1995 and 1994,
respectively) 1,125,130 965,823
Loan costs (net of accumulated
amortization, $1,107,388 and
$930,084 in 1995 and 1994,
respectively) 131,028 308,332
Other assets 144,015 326,046
TOTAL ASSETS $15,728,684 $15,221,659
LIABILITIES AND PARTNERS' DEFICIT
LIABILITIES:
Notes payable $ 36,801,971 $36,345,046
Accounts payable and accrued
expenses 743,771 230,139
Tenant security deposits 390,757 373,602
Total liabilities 37,936,499 36,948,787
LOSSES IN EXCESS OF INVESTMENT IN ASSOCIATED
PARTNERSHIP 2,206,370 2,133,585
PARTNERS' DEFICIT (24,414,185) (23,860,713)
TOTAL LIABILITIES AND PARTNERS'
DEFICIT $ 15,728,684 $ 15,221,659
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PENINSULA OFFICE PARK
(A California Limited Partnership)
STATEMENT OF OPERATIONS
Years Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
REVENUES:
Rental income $6,477,041 $6,039,721 $6,862,264
Other income 263,721 269,136 298,163
Interest income 104,813 160,633 196,233
Total revenues 6,845,575 6,469,490 7,356,660
EXPENSES:
Interest expense 3,472,630 3,413,628 3,387,863
Operating 1,737,968 1,802,173 1,552,853
Depreciation and amortization 1,541,425 1,449,439 1,926,401
Real estate taxes 292,044 287,259 282,455
Insurance 147,913 100,776 80,358
Other 134,282 97,008 422,432
Net loss on investment in
associated partnership 72,785 93,457 135,948
Total expenses 7,399,047 7,243,740 7,788,310
NET LOSS $ (553,472) $ (774,250) $ (431,650)
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PENINSULA OFFICE PARK
(A California Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
YEARS ENDED DECEMBER 31, 1995, 1994 and 1993
<S> <C>
BALANCE AT JANUARY 1, 1993 $ (22,464,813)
NET LOSS (431,650)
BALANCE AT DECEMBER 31, 1993 (22,896,463)
NET LOSS (774,250)
CAPITAL DISTRIBUTIONS (190,000)
BALANCE AT December 31, 1994 (23,860,713)
NET LOSS (553,472)
BALANCE AT DECEMBER 31, 1995 $ (24,414,185)
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PENINSULA OFFICE PARK
(A California Limited Partnership)
STATEMENT OF CASH FLOWS
Year Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(553,472) $(774,250) $(431,650)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,541,425 1,449,439 1,926,401
Accrued interest added to notes payable 456,925 - -
Equity in net loss of associated partnership 72,785 93,457 135,948
Change in assets and liabilities:
Decrease (increase) in restricted cash 280,103 (1,741,697) 100,918
Increase in accounts receivable (111,813) (170,672) (273,317)
Decrease (increase) in notes receivable 1,501 77,305 (309,163)
Increase in leasing commissions and costs (460,280) (283,443) -
Increase other assets (29,852) (21,027) (948,286)
Increase (decrease) in accounts payable
and accrued expenses 513,632 (184,874) (13,446)
Increase in loan costs - (107,978) -
Increase in accrued interest payable - 262,876 -
Increase in tenant security deposits 17,155 37,860 82,497
Net cash provided by (used in) operating
activities 1,728,109 (1,363,004) 269,902
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to buildings and improvements (1,314,907) (1,208,677) (314,946)
Proceeds from sales of marketable securities - 3,998,594 -
Purchase of marketable securities - - (2,500,000)
Net cash provided by (used in) investing
activities (1,314,907) 2,789,917 (2,814,946)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital distributions - (190,000) -
Principal payment of long-term debt - - (159,972)
Net cash used in financing
activities - (190,000) (159,972)
Net increase (decrease) in cash and
cash equivalents 413,202 1,236,913 (2,705,016)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 1,337,831 100,918 2,805,934
CASH AND CASH EQUIVALENTS AT END OF
YEAR $1,751,033 $1,337,831 100,918
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION -
Cash paid during the year for interest $ 3,015,705 $3,150,752 $3,387,863
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PENINSULA OFFICE PARK
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. ORGANIZATION
Peninsula Office Park (the "Partnership") was 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 Associate ("DW"), a general partner
is allocated the first $6,248,500 of all net losses.
(c)The net profit 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)The 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. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The accompanying financial statements
have been prepared on the accrual basis of accounting.
Cash and cash equivalents include liquid assets purchased
with maturities of three months or less.
Depreciation and Amortization - Depreciation of building,
improvements and furniture and fixtures is computed over the
estimated useful lives of the assets. Depreciable lives
range from three to 40 years. Tenant improvements, included
in buildings and improvements, are amortized over the terms
of the respective tenant leases.
At least annually, and more often if circumstances dictate,
the Partnership evaluates the recoverability of the net
carrying value of its real estate. As part of this
evaluation, the fair values of each of the properties are
estimated (in some cases with the assistance of outside real
estate consultants) based on discounted cash flows. The fair
values are compared to the properties' carrying amounts in
the financial statements. A deficiency in fair value
relative to carrying amount is an indication of the need for
a writedown due to impairment. In such case, the expected
future net cash flows from the property are estimated for a
period of approximately five years, along with estimated
sales proceeds at the end of the period. If the total of these
future undiscounted cash flows were less than the carrying
amount of the property, the property would be written down to
its fair value, and a loss on impairment recognized by a
charge to earnings. The Partnership's accounting policy
complies with Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of long-lived Assets and
for long-lived Assets to be Disposed Of".
Because the determination of fair value is based upon
projections of future economic events such as property
occupancy rates, rental rates, operating costs, inflation,
and market capitalization rates which are inherently
subjective, the amounts ultimately realized at disposition
may differ materially from the net carrying value as of
December 31, 1995. The cash flows used to determine fair
value and net realizable value are based on good faith
estimates and assumptions developed by the General Partner.
Unanticipated events and circumstances may occur and some
assumptions may not materialize; therefore, actual results
may vary from the estimates and the variance may be material.
The Partnership may provide writedowns which could be
material in subsequent years if real estate markets or local
economic conditions change.
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.
Rental income is recognized on a straight-line basis over the
terms of the respective tenant leases. Rental revenue
recognized in excess of rents currently due is reported as
step rents receivable in the accompanying balance sheet.
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.
Accounting Estimates - The preparation of financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
3. NOTES PAYABLE
The Partnership obtained financing totaling $36,400,000 in
1985 and 1986 with the Equitable Life Assurance Society of
the United States ("Equitable"). Although the interest rate
is 9.5% for all of the notes, 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 was $456,925 and $262,876 during 1995 and 1994,
respectively.
In accordance with the security agreements, a security fund
is maintained with Equitable. The Partnership is required to
deposit into the security fund any positive cash flow
generated by the properties as defined in the note
agreements. This cash is restricted and 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 was $239,174 and $41,626 during December 31,
1995 and 1994, respectively, and is included in accounts
receivable.
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. Details
of notes are as follows:
<TABLE>
<CAPTION>
Note Inception Original Current Maturity
Property Number Payment Type Date Balance Balance Date
<S> <S> <S> <C> <C> <C> <C>
POP #1 B-18668 Monthly interest only 11/20/86 $3,400,000 $3,413,057 12/1/96
POP #3 B-18669 Monthly interest only 11/20/86 5,350,000 5,370,547 12/1/96
POP #5 B-18683 Monthly interest only 10/27/85 8,650,000 8,832,909 12/1/96
POP #6 B-18684 Monthly interest only 10/27/85 6,500,000 6,637,446 12/1/96
POP #8 B-18670 Monthly interest only 11/20/86 12,500,000 12,548,012 12/1/96
$36,400,000 $36,801,971
</TABLE>
The carrying value of the notes payable approximates fair
value due to the short period of time until the notes mature.
The Partnership expects to be successful in refinancing or
obtaining alternative financing for the notes prior to their
maturity dates.
4. INVESTMENT IN ASSOCIATED PARTNERSHIP
The Partnership has a 53.33% interest in Campus Drive
Investment Company ("CDIC"), a California limited
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, 1995, 1994 and 1993 was
$72,785, $93,509 and $135,948, respectively. The assets,
liabilities and partners' deficit of CDIC are summarized as
follows:
<TABLE>
<CAPTION>
December 31,
1995 1994
<S> <C> <C>
Assets:
Real estate investment, net $ 1,474,971 $1,438,913
Other (including cash of $357,961,
$317,727 and $398,181 in 1995,
1994 and 1993, respectively 657,699 590,161
Total assets $ 2,132,670 $2,029,074
Liabilities and Partners' Deficit:
Note payable $ 5,361,014 5,294,453
Other liabilities 948,388 774,873
Partners' deficit (4,176,732) (4,040,252)
Total liabilities and partners' deficit $ 2,132,670 $2,029,074
</TABLE>
Other liabilities includes a payable to the Partnership of $295,400 for a
shortfall note made to CDIC and related accrued interest of $105,545.
Interest expense related to the shortfall note for 1995 was $24,119.
Corresponding amounts are included in the Partnership's note receivable
balance as of December 31, 1995 and interest income for 1995.
The results of operations for CDIC are summarized below:
<TABLE>
December 31,
1995 1994 1993
<S> <C> <C> <C>
Revenues:
Rental $ 968,379 $789,592 $828,661
Other 14,953 57,635 69,939
Total 983,332 847,227 898,660
Expenses:
Interest 573,116 552,124 554,303
Operating 268,323 235,211 282,777
Depreciation and amortization 212,090 151,086 238,606
Other 66,283 84,147 75,538
Total 1,119,812 1,022,568 1,151,224
Net loss $ (136,480) $ (175,341) $ (252,624)
</TABLE>
5. MANAGEMENT AGREEMENT
The Partnership has a management agreement (the "Management
Agreement") with William Wilson and Associates ("WA"), 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 1995, 1994 and 1993 were
$253,476, $207,698 and $191,868 which is included in
operating expenses. The related management fee payable at
December 31, 1995 was $17,508.
6. OTHER 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
was $75,306, $753,487 and $251,808 for the years ended
December 31, 1995, 1994 and 1993, respectively.
The Partnership paid $948,778, $109,178 and $212,465 for the
years ended December 31, 1995, 1994 and 1993, respectively to
Commercial Interior Contractors ("CIC") for interior
improvements. 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 were
$115,196, $224,817 and $514,720 for the years ended December
31, 1995, 1994 and 1993, respectively. WWA also leased space
from the Partnership and made rental payments of $258,911,
and $199,596 during 1995 and 1994, respectively.
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 amounted to $68,152, $59,824
and $65,746 for the years ended December 31, 1995, 1994 and
1993, respectively. The related payable for this fee at
December 31, 1995 was $16,609.
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 are as follows:
<TABLE>
<C> <C>
Year ending December 31:
1996 $ 5,967,339
1997 5,387,843
1998 3,621,759
1999 2,273,938
2000 1,517,183
Thereafter 2,036,918
Total $20,804,980
</TABLE>
<PAGE>
TWC TEN, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
Financial Statements for the
Years Ended December 31, 1995, 1994 and 1993
and Independent Auditors' Report
INDEPENDENT AUDITORS' REPORT
To the Partners of
TWC Ten, Ltd.:
We have audited the accompanying balance sheets of TWC Ten,
Ltd. (a Florida Limited Partnership) as of December 31, 1995
and 1994 and the related statements of operations, partners' capital
(deficit), and cash flows for the years then ended. These financial
statements are the responsibility of the management of the Partnership.
Our responsibility is to express an opinion on these financial statements
based on our audits. 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 audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by the Partners, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of TWC Ten, Ltd. at
December 31, 1995 and 1994, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.
February 16, 1996
<PAGE>
<TABLE>
<CAPTION>
TWC TEN, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS 1995 1994
<S> <C> <C>
Cash and cash equivalents $ 200 $ 209,260
Rent receivable, net of allowance for doubtful accounts
of $13,505 in 1995 and 1994 (Note 1) 1,249,157 1,438,577
Deferred lease commissions, net of accumulated amortization
of $1,494,581 in 1995 and $1,237,871 in 1994 (Note 1) 988,894 631,408
Deferred loan costs, net of accumulated amortization of
$493,316 in 1995 and $422,328 in 1994 (Note 1) 94,437 165,425
Organizational costs, net of accumulated amortization of
$27,514 in 1995 and $16,278 in 1994 (Note 1) 28,667 39,903
Prepaid expenses and other assets 75,230 112,014
Real estate and improvements (Notes 1 and 2) 19,786,585 20,055,060
$ 22,223,170 $ 22,651,647
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Mortgage note payable (Notes 1 and 3) $ 20,000,000 $ 20,000,000
Accounts payable and accrued expenses 496,375 338,218
Accrued interest payable (Note 3) 197,114 141,666
Due to bank 48,304 -
Total liabilities 20,741,793 20,479,884
COMMITMENTS AND RELATED PARTY
TRANSACTIONS (Notes 4 and 5) - -
PARTNERS' CAPITAL (DEFICIT) (Notes 1 and 6):
Taylor Simpson Group 5,331,939 6,022,325
Existing Partners (3,850,562) (3,850,562)
Total partners' capital 1,481,377 2,171,763
$ 22,223,170 $ 22,651,647
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TWC TEN, LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
<S> <C> <C> <C>
RENTAL REVENUES (Notes 1 and 4) $ 4,343,102 $ 4,174,012 $ 3,489,860
OPERATING EXPENSES:
Depreciation and amortization
(Notes 1 and 2) 1,509,063 1,389,200 1,191,803
Building services 387,605 365,030 381,491
Utilities 376,239 361,862 312,063
Repairs and maintenance 85,022 61,381 130,764
Real estate taxes 652,100 424,816 429,140
Management fees (Note 5) 127,966 125,730 104,784
Administrative and other 173,698 158,093 303,519
Total operating expenses 3,311,693 2,886,112 2,853,564
OPERATING INCOME 1,031,409 1,287,900 636,296
INTEREST EXPENSE, NET 1,677,016 1,694,223 2,718,415
NET LOSS $ (645,607) $ (406,323) $ (2,082,119)
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TWC TEN, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
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
Capital contribution 509,260 - 509,260 - - - - 509,260
Capital distribution (554,039) - (554,039) - - - - (554,039)
Net loss - (645,607) (645,607) - - - - (645,607)
Balance, December 31,
1995 $ 6,814,502 $(1,482,563) $(5,331,939) 16,971,626 - $(20,822,188) $(3,850,562) $1,481,377
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TWC TEN, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS PROVIDED FROM (USED IN)
OPERATING ACTIVITIES:
Net loss $ (645,607) $(406,323) $(2,082,119)
Adjustments to reconcile net loss to net cash
provided from operating activities:
Depreciation and amortization 1,509,063 1,389,200 1,191,803
Provision for doubtful accounts - 11,679 13,550
Cash provided from (used in) changes in:
Rent receivable 189,420 226,457 621,509
Deferred lease commissions (614,196) (306,721) (144,181)
Deferred loan costs - - (133,198)
Organizational costs - - (56,181)
Prepaid expenses and other assets 36,784 (17,077) (32,814)
Accounts payable and accrued expenses 158,157 (218,343) (1,035,487)
Accrued interest payable 55,448 - 161,641
Due to bank 48,304 - -
Net cash provided from (used in)
operating activities 737,373 678,872 (1,495,477)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Expenditures for improvements (901,654) (960,537) (447,704)
Net cash used in investing activities (901,654) (960,537) (447,704)
CASH FLOWS PROVIDED FROM (USED IN)
FINANCING ACTIVITIES:
Repayments of mortgage note - - (4,607,271)
Capital distributions - Taylor Simpson Group (554,039) (431,436) (184,615)
Capital contributions - Bayport, Ltd. - - 152,325
Capital contributions - Taylor Simpson Group 509,260 621,428 6,853,904
Net cash (used in) provided from
financing activities (44,779) 189,992 2,214,343
Net (decrease) increase in cash and
cash equivalents (209,060) (91,673) 271,162
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 209,260 300,933 29,771
CASH AND CASH EQUIVALENTS, END OF YEAR $ 200 $ 209,260 $ 300,933
SUPPLEMENTAL CASH FLOW INFORMATION:
The partnership paid interest of approximately $1,700,000 in both 1995 and 1994 and $2,453,000 in 1993.
See Note 6 for summary of noncash transactions.
</TABLE>
TWC TEN, LTD.
( A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
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, 1995,
$5,339,068 has been contributed as an initial capital contribution and
$2,645,524 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 the two
years, beginning with the year ended December 31, 1993. The return on
capital is 8.5% for the year ended December 31, 1995. The return on
capital paid to TSG was $554,039, $431,436 and $184,615 for the years
ended December 31, 1995, 1994 and 1993, respectively.
Cash Equivalents - For purposes of reporting cash flows, cash and cash
equivalents include cash on hand, and cash on deposit and short-term
investments with original maturities less than 90 days.
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, which is 3 to 15 years.
At least annually, and more often if circumstances dictate, the Partnership
evaluates the recoverability of the net carrying value of its real estate.
As part of this evaluation, the fair values of each of the properties are
estimated (in some cases with the assistance of outside real estate
consultants) based on discounted cash flows. The fair values are compared
to the properties' carrying amounts in the financial statements. A deficiency
in fair value relative to carrying amount is an indication of the need for a
writedown due to impairment. In such case, the expected future net cash
flows from the property are estimated for a period of approximately five
years, along with estimated sales proceeds at the end of the period. If the
total of these future undiscounted cash flows were less than the carrying
amount of the property, the property would be written down to its fair value,
and a loss on impairment recognized by a charge to earnings. The Partnership's
accounting policy complies with Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of."
Because the determination of fair value is based upon projections of future
economic events such as property occupancy rates, rental rates, operating
costs, inflation, and market capitalization rates which are inherently
subjective, the amounts ultimately realized at disposition may differ
materially from the net carrying value as of December 31, 1995. The cash
flows used to determine fair value and net realizable value are based on
good faith estimates and assumptions developed by the General Partner.
Unanticipated events and circumstances may occur and some assumptions
may not materialize; therefore, actual results may vary from the estimates
and the variances may be material. The Partnership may provide write-downs
which could be material in subsequent years if real estate markets or local
economic conditions change.
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.
Fair Value of Financial Instruments - The estimated fair value of amounts
reported in the financial statements have been determined by using available
market information and appropriate valuation methodologies. The carrying
value of all current assets and current liabilities approximates fair value
because of their short-term nature. The fair value of long-term investments
and long-term debt approximate their carrying value.
2. REAL ESTATE AND IMPROVEMENTS
<TABLE>
Real estate and improvements at December 31, 1995 and 1994 consists of the
following:
<CAPTION>
1995 1994
<S> <C> <C>
Land and improvements $ 3,013,100 $ 3,013,100
Building and improvements 26,031,100 25,129,445
29,044,200 28,142,545
Less accumulated depreciation
and amortization (9,257,615) (8,087,485)
$ 19,786,585 $ 20,055,060
</TABLE>
Depreciation and amortization expense on real estate and improvements was
$1,170,130, $1,117,892 and $963,450 for the years ended December 31, 1995,
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.
4. LEASE COMMITMENTS
Tenant leases specify minimum rentals and, in some cases, annual fixed
increases. Lease terms range from 3 to 10 years.
Future minimum rental receipts due for succeeding fiscal years under
noncancelable operating leases are as follows:
<TABLE>
<CAPTION>
Year Amount
<C> <C>
1996 $ 4,474,149
1997 4,033,821
1998 3,687,134
1999 3,080,514
2000 2,004,744
Thereafter 4,055,109
Total $ 21,335,471
</TABLE>
5. RELATED PARTY TRANSACTIONS
Interest on shortfall loans was compounded monthly at a rate of prime plus
1% (9.5% at December 31, 1995) 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 $346,400 in 1995, $227,400
in 1994, and $164,300 in 1993. The Wilson Management Company was also
reimbursed approximately $92,300, $92,500 and $100,000 in 1995, 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 $195,000 in 1995, $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 1995, 1994 and 1993 totaled $554,039,
$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 $407,035 in 1995, $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 $1,092 and
$257,845 during 1995 and 1994, respectively. 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
Acrued interest payable 2,331,831
Due to TWC Eleven, Ltd. 813,404
Total noncash activiity $ 7,673,010
</TABLE>
