UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
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 its charter)
Delaware 13-3286866
(State of organization) (IRS Employer 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 Interest
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 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 non-affiliates of
the registrant. Not Applicable
DOCUMENTS INCORPORATED BY REFERENCE
None
Page 1 of 35
<PAGE>
ITEM 1. BUSINESS
The Registrant, Dean Witter Realty Growth Properties, L.P. (the
"Partnership") is a limited partnership formed in March 1985 under
the Uniform Limited Partnership Act of the State of Delaware for the
purpose of investing primarily in income-producing properties.
The Managing General Partner of the Partnership is Dean Witter
Realty Growth Properties Inc., a Delaware corporation (the "Managing
General Partner"), which is wholly-owned by Dean Witter Realty Inc.
("Realty"). The Associate General Partner is Dean Witter Realty
Growth Associates, L.P., a Delaware limited partnership (the
"Associate General Partner"), the general partner of which is the
Managing General Partner. The Managing General Partner manages and
controls all aspects of the Partnership's operations. The terms of
transactions between the Partnership and its affiliates are set
forth in Item 8 and Item 13 below.
The Partnership issued 78,594 units of limited partnership interest
(the "Units") with gross proceeds from the offering of $78,594,000.
The offering has been terminated and no additional Units will be
sold. The proceeds from the offering were used to make leveraged
investments in three office properties (one of which was lost
through foreclosure in 1992, and one of which was sold in 1996), an
industrial park (which was disposed of in 1995 and 1996) and a hotel
(which was sold in 1996). The properties are described in Item 2
below.
The Partnership considers its business to include one industry
segment, investment in real property. Financial information
regarding the Partnership is set forth in the Partnership's
financial statements in Item 8 below.
The Partnership's real property investments are subject to
competition from similar types of properties in the vicinities in
which they are located. Further information regarding competition
and market conditions where the Partnership's properties are located
is set forth in Item 7 below.
The Partnership has no employees.
All of the Partnership's business is conducted in the United States.
ITEM 2. PROPERTIES
The Partnership's principal offices are located at Two World Trade
Center, New York, New York 10048. The Partnership has no other
offices.
During the year ended December 31, 1996, the Partnership owned,
through partnership interests, the following property interests.
Except for the hotel, the leases pertaining to the properties
generally provide for pass-throughs to the tenants of their pro-rata
share of certain operating expenses. In the opinion of the Managing
General Partner, the property owned at December 31, 1996 is
adequately covered by insurance.
<TABLE>
<CAPTION>
Net Rentable Year(s) Acquisition
Property, Area Completed/ Cost Type of ownership of
Location and Type (000 sq.ft.) Acquired ($000) land and improvements
<S> <C> <C> <C> <C>
Bayport Plaza
Tampa, FL
Office building1 259 1984/1985 $11,178 46.25% indirect General
Partnership interest in
a partnership which owns
the building.
Hotel2 448 rooms 1985/1985 $26,206 91.6% indirect general
partnership interest in
a partnership which owned
the hotel.
Braker Center, Phase III
North Austin, TX
Land2 28 acres NA/1985 $2,021 99% general partnership
interest.
Peninsula Office Park
San Mateo, CA
Six office buildings
and restaurant3 379 1972-82/1985 $6,026 49.9% indirect general
partnership interest in
two limited partnerships
which own the buildings.
</TABLE>
1. The property is subject to a mortgage loan. See note 5 to the
consolidated financial statements in Item 8.
2. Sold in 1996. See Note 4 to the consolidated financial
statements.
3. Sold in 1996. See Note 5 to the consolidated financial
statements.
Each improved property was built with on-site parking facilities.
Further information relating to the Partnership's properties is
included in Item 7 and Notes 4 and 5 to the Consolidated Financial
Statements in Item 8 below.
ITEM 3. LEGAL PROCEEDINGS
On December 27, 1995, a purported class action lawsuit (the "Grigsby
Action") naming various public real estate partnerships sponsored by
Realty (including the Partnership and its Managing General Partner
and Associate General Partner), Realty, Dean Witter Reynolds Inc.
("DWR") and others as defendants was filed in Superior Court in
California. The complaint alleged fraud, negligent
misrepresentation, intentional and negligent breach of fiduciary
duty, unjust enrichment and related claims and sought compensatory
and punitive damages in unspecified amounts and injunctive and other
equitable relief. The defendants removed the case to the United
States District Court for the Southern District of California.
Pursuant to an order of the U.S. District Court for the Southern
District of California entered May 24, 1996, the Grigsby Action was
transferred to the U.S. District Court for the Southern District of
New York.
On February 14, 1996, a purported class action lawsuit (the
"Schectman Action") naming various public real estate partnerships
sponsored by Realty (including the Partnership and its Managing
General Partner), Realty, Dean Witter, Discover & Co. ("DWD") and
DWR as defendants was filed in the Chancery Court of Delaware for
New Castle County (the "Delaware Chancery Court"). On February 23,
1996, a purported class action lawsuit (the "Dosky Action") naming
various public real estate partnerships sponsored by Realty
(including the Partnership and its Managing General Partner),
Realty, DWD, DWR and others as defendants was filed in the Delaware
Chancery Court. On February 29, 1996, a purported class action
lawsuit (the "Segal Action') naming various public real estate
partnerships sponsored by Realty (including the Partnership and its
Managing General Partner), Realty, DWR, DWD and others as defendants
was filed in the Delaware Chancery Court. On March 13, 1996, a
purported class action lawsuit (the "Young Action") naming the
partnership, other unidentified limited partnerships, DWD, DWR and
others as defendants was filed in the Circuit Court for Baltimore
City in Baltimore, Maryland. The defendants removed the Young
Action to the United States District Court for the District of
Maryland.
Thereafter, the Schectman Action, the Dosky Action and the Segal
Action were consolidated in a single action (the "Consolidated
Action") in the Delaware Chancery Court. The Young Action was
dismissed without prejudice. The plaintiffs in the Young Action and
the Grigsby Action joined the Consolidated Action. The Grigsby
Action remains stayed indefinitely subject to being reopened for
good cause.
On October 7, 1996, the plaintiffs in the Consolidated Action filed
a First Consolidated and Amended Class Action Complaint naming
various public real estate partnerships sponsored by Realty
(including the Partnership and its Managing General Partner),
Realty, DWD, DWR and others as defendants. This complaint alleges
breach of fiduciary duty and seeks an accounting of profits,
compensatory damages in an unspecified amount, possible liquidation
of the Partnership under a receiver's supervision and other
equitable relief. The defendants filed a motion to dismiss this
complaint on December 10, 1996.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the fiscal year
to a vote of Unit holders.
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER
An established public trading market for the Units does not exist,
and it is not anticipated that such a market will develop in the
future. Accordingly, information as to the market value of a Unit
at any given date is not available. However, the Partnership does
allow its limited partners (the "Limited Partners") to transfer
their Units, if a suitable buyer can be located.
As of March 17, 1997 there were 6,124 holders of limited partnership
interests.
The Partnership is a limited partnership and, accordingly, does not
pay dividends. However, the Partnership Agreement permits
distributions of "Distributable Cash", as defined, to its partners.
Pursuant to the Partnership Agreement, Distributable Cash is to be
paid 96% to the Limited Partners, after the Managing General Partner
has received a management fee of 6.25% of Distributable Cash. The
Managing General Partner did not receive a management fee in 1996,
1995 or 1994 because the Partnership did not make a cash
distribution of Distributable Cash in any of those years.
Sale or refinancing proceeds will generally be distributed (i) to
the Limited Partners until they have received a return of their
capital contributions; (ii) to the General Partners until they have
received 1.01% of the amount distributed to the Limited Partners;
(iii) 99% of any remaining amounts to the Limited Partners and 1% to
the General Partners until the Limited Partners have received
cumulative distributions in an amount sufficient to provide a 6%
cumulative annual return on their adjusted capital contributions;
and (iv) 85% to the Limited Partners and 15% to the General Partners
after the Managing General Partner receives a brokerage fee, if
earned, not in excess of 3% of the aggregate gross sales prices of
all properties. In 1996, the Partnership distributed approximately
$29.3 million ($373 per Unit) of proceeds primarily from the sale of
the Bayport Hyatt Hotel; the distribution was paid 100% to the
Limited Partners. During the year ended December 31, 1995, the
Partnership did not distribute any sale or refinancing proceeds.
In January 1997, the Partnership made a distribution to Limited
Partners of approximately $10.7 million ($136 per Unit) from the net
proceeds from the sale of the joint venture interest in Peninsula
Office Park, the sale of land at Braker Center and the remaining
proceeds from the sale of the Hotel.
The Partnership does not anticipate making regular distributions to
its partners until the Partnership's remaining property is sold or
refinanced.
Taxable income and tax loss generally are allocated to the partners
in proportion to the distribution of Distributable Cash (after
payment of the Managing General Partner's management fee) or sale or
financing proceeds (or 96% to the Limited Partners and 4% to the
General Partners if there is no Distributable Cash).
ITEM 6. SELECTED FINANCIAL DATA
The following sets forth a summary of selected financial data for
the Partnership:
<TABLE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
Years ended December 31, 1996, 1995, 1994, 1993 and 1992
<CAPTION>
19961 19952 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Total revenues $76,022,162 $27,481,867 $28,095,985 $27,391,611 $28,243,603
Income (loss) before
extraordinary item $58,556,334 $(2,387,229) $(1,105,050) $(5,550,240)3 $(6,421,433)
Extraordinary item $ - $ 1,938,4654 $ - $ - $ 422,1234
Net income (loss) $58,556,334 $ (448,584) $(1,105,050) $(5,520,240)3 $(5,999,310)
Per unit of Limited
Partnership interest:
Income (loss)
before extra-
ordinary item $ 744,64 $ (29.64) $ (13.50) $ (67.79) $ (78.44)
Extraordinary gain $ - $ 24.42 $ - $ - $ 5.16
Net income (loss) $ 744.64 $ (5.22) $ (13.50) $ (67.79) $ (73.28)
Cash distribution $ 372.98 $ - $ - $ - $ -
Total assets $12,253,161 $41,836,913 $55,097,988 $58,385,005 $87,483,150
Long-term debt due
after one year $ - $ - $54,936,984 $57,844,135 $84,193,991
</TABLE>
1Revenues and income include gains on sale of real estate and
partnership interests totaling approximately $58 million. See Notes
4 and 5 to the consolidated financial statements in Item 8. The
cash distribution represents a return of capital.
2Revenues and losses include a loss on sale of real estate of
approximately $1.2 million. See Note 4 to the consolidated
financial statements.
3Includes a $334,988 loss on the sale of real estate.
4Gain on extinguishment of debt due to foreclosure of a property.
Note: The above financial data should be read in conjunction
with the consolidated financials statements and the
related notes in Item 8.
ITEM 7. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Liquidity and Capital Resources
The Partnership raised $78,594,000 in a public offering which
terminated in 1986. The Partnership has no plans to raise
additional capital.
The Partnership used the proceeds from the offering to make
leveraged investments in five properties. One of the properties was
lost through foreclosure in 1992; all of the remaining properties
other than the Bayport office building were sold prior to December
31, 1996. No additional investments are planned.
In July 1996, the Partnership sold, for $72.2 million, the Bayport
Plaza Hyatt hotel (the "Hotel"). See Note 4 to the consolidated
financial statements in Item 8. $42 million of the sales proceeds
were used to repay the mortgage note encumbering the Hotel. The
Managing General Partner believes that the timing of the sale took
advantage of both the Hotel's improved operating performance and the
current investment environment for hotel properties.
The closings of the sales of the remaining parcels of land at Braker
Center, for approximately $1.4 million (net of closing costs),
occurred in April and November 1996.
In May 1996, the Partnership repaid approximately $2.8 million of
loans from affiliates from the proceeds from the sales of Braker
Center properties and, in July 1996, repaid the remaining $3.4
million due to affiliates from the proceeds from the sale of the
Hotel. See Note 6 to the consolidated financial statements.
In December 1996, the Partnership sold its interest in the joint
venture which owns Peninsula Office Park, for approximately $9.4
million, to entities controlled by its joint venture partner. The
Partnership believes that the sale occurred at an opportune time,
given the property's current occupancy and improvement in the San
Mateo office market. See Note 5 to the consolidated financial
statements.
As of December 31, 1996, the Partnership was due approximately
$1,632,000 of proceeds from the sale of the joint venture interest
in Peninsula Office Park. This amount was received in January 1997.
Prior to the foregoing sales, the Partnership's liquidity depended
upon cash flow from operations of its properties and capital
expenditures. During 1996, the Hotel generated positive cash flow
from operations prior to its sale. The parcels of land at Braker
Center did not generate any cash flow. Although the Peninsula
office Park property generated cash flow from operations, it was
prohibited from distributing cash from operations to its partners by
its loan agreement.
The Partnership's remaining investment consists of its 46.25%
interest in the Bayport office building joint venture. The timing
of the disposition of this investment is uncertain.
The Partnership does not expect that the Bayport office building
joint venture will produce significant operating cash flow for the
Partnership in the near future because it is likely such cash flow
will be distributed 100% to another partner in accordance with the
provisions of the joint venture agreement. Accordingly, subsequent
to December 31, 1996, the Partnership will not realize any cash from
its remaining investment until it is sold or refinanced. The
Partnership expects to incur minimal operating expenses until then,
and believes it has sufficient cash reserves to fund such expenses.
The Partnership does not anticipate making regular distributions to
its partners until the Partnership's remaining property is sold or
refinanced.
The Partnership believes that the total cash distributed to the
Limited Partners (including estimated cash to be realized from
disposition of the Bayport office building) will be less than the
capital contributed by the Limited Partners.
The decreases in the Partnership's real estate, deferred expenses,
accounts payable and minority interests are primarily attributable
to the Hotel sale. In addition, the sale resulted in the release of
previously restricted cash balances to the Partnership.
The decrease in real estate held for sale is attributable to the
sale of land at Braker Center, and the decrease in the excess of
distributions and losses over cost of investment in partnership is
attributable to the sale of the joint venture interest in Peninsula
Office Park.
In August 1996, the Partnership made a distribution to Limited
Partners of approximately $29.3 million ($373 per Unit) primarily
from the net proceeds from the sale of the Hotel.
In January 1997, the Partnership made a distribution to Limited
Partners of approximately $10.7 million ($136 per Unit) from the net
proceeds from the sale of the joint venture interest in Peninsula
Office Park, the sale of land at Braker Center and the remaining
proceeds from the sale of the Hotel.
Except as discussed herein and in the consolidated financial
statements, the Managing General Partner is not aware of any trends,
or events, commitments or uncertainties that may have a material
impact on liquidity.
Operations
Fluctuations in the Partnership's operating results for the year
ended December 31, 1996 compared to 1995 and 1995 compared to 1994
are primarily attributable to the following:
The sale of the Hotel in the third quarter of 1996 caused the
decrease in hotel operating revenues and expenses in 1996 compared
to 1995. Hotel room revenue increased in 1995 compared to 1994
because increases in room rates offset the slight decrease in
occupancy from 69% in 1994 to 67% in 1995. Food, beverage and other
revenue increased because of increases in banquet and in-room dining
sales. The increases in food and beverage sales led to a
corresponding increase in related expenses. Room expenses decreased
in 1995 compared to 1994 because of reduced management fees due to
the renegotiated management contract with Hyatt.
Rental income and property operating expenses decreased in 1995
compared to 1994 because of the disposition of the Partnership's
interests in the properties at Braker Center in 1995. There was no
rental income and only minor property operating expenses in 1996.
The gain on sale of real estate in 1996 resulted from the sale of
the Hotel. The loss on sale of real estate in 1995 resulted from
sales of properties at Braker Center. See Note 4 to the
consolidated financial statements.
The gain on sale of partnership interest in 1996 resulted from the
sale of the joint venture interest in Peninsula Office Park. See
Note 5 to the consolidated financial statements.
Interest expense, depreciation and amortization decreased in 1996
compared to 1995 as a result of sales of real estate and repayment
of loans. See Notes 4 and 6 to the consolidated financial
statements. Interest expense increased in 1995 compared to 1994
primarily because the interest rate on the Bayport Plaza hotel
mortgage increased to 9% in 1995 from 7.75% in 1994.
Equity in net losses of partnerships in 1996 compared to 1995
decreased primarily because of higher rents on new leases at
Peninsula Office Park.
General and administrative expenses were higher in 1995 compared to
1994 as a result of legal fees incurred in connection with the
modification of the Hyatt management agreement and the bankruptcy
reorganization at the Braker Center properties.
A summary of the office market in which the Partnership's remaining
property interest is located and the performance of the property is
as follows:
Although the market vacancy rate for Class A buildings in the
Westshore market in Tampa, Florida, the location of the Bayport
office building, improved to approximately 8% from 13% at the prior
year-end, rental rates have not increased significantly. Office
buildings in this market also compete for quality tenants with an
improving downtown Tampa market; however, the Bayport office
building's accessibility to the Tampa airport and its ability to
offer free parking are competitive advantages. During 1996, average
occupancy at the property was 95%, and at December 31, 1996,
occupancy was 94% vs. 96% at the prior year-end. The leases of
Prudential Insurance Company (for approximately 13% of the
property's space), Butler & Burnette (for approximately 13% of the
space), Federal Insurance Company (for approximately 11% of the
space) and Nokia Mobile Phones (for approximately 10% of the space)
expire in 2001, 2005, 2000 and 2000, respectively. Other leases
totalling approximately 17% and 11% of the space are scheduled to
expire in 1998 and 1999, respectively.
Inflation
Inflation has been consistently low during the periods presented in
the financial statements and, as a result, has not had a significant
effect on the operations of the Partnership or its properties.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
DEAN WITTER REALTY GROWTH PROPERTIES L.P.
INDEX
Page
(a) Financial Statements
Independent Auditors' Report 12
Consolidated Balance Sheets at December 31, 1996 and 1995 13
Consolidated Statements of Operations for the years ended
December 31, 1996, 1995 and 1994 14
Consolidated Statements of Partners' Capital (Deficiency)
for the years ended December 31, 1996, 1995 and 1994 15
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 16-17
Notes to Consolidated Financial Statements 18-27
(b) Financial Statement Schedule
Real Estate and Accumulated Depreciation III 34
All other schedules have been omitted because either the required
information is not applicable or the information is shown in the
consolidated financial statements or notes thereto.
<PAGE>
Independent Auditors' Report
To the Partners of
Dean Witter Realty Growth Properties, L.P.:
We have audited the accompanying consolidated balance sheets of Dean
Witter Realty Growth Properties, L.P. and consolidated partnerships
(the "Partnership") as of December 31, 1996 and 1995, and the
related consolidated statements of operations, partners' capital
(deficiency) and cash flows for each of the three years in the
period ended December 31, 1996. Our audits also included financial
statement schedule III. These financial statements and the financial
statement schedule are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on the
financial statements and the financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of Dean
Witter Realty Growth Properties, L.P. and consolidated partnerships
as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the
period ended December 31, 1996 in conformity with generally accepted
accounting principles. Also, in our opinion, financial statement
schedule III, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
Deloitte & Touche LLP
/s/Deloitte & Touche LLP
New York, New York
March 26, 1997
<PAGE>
<TABLE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
<CAPTION>
1996 1995
ASSETS
<S> <C> <C>
Real estate:
Buildings and improvements $ $ 47,253,598
Land and land improvements - 4,658,353
- 51,911,951
Accumulated depreciation - 20,984,839
- 30,927,112
Real estate held for sale - 2,021,342
Cash and cash equivalents 10,273,472 2,072,917
Accounts receivable 1,661,039 1,671,728
Deferred expenses, net 204,832 1,277,687
Restricted cash - 3,570,238
Other assets 113,818 295,889
$ 12,253,161 $ 41,836,913
LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY)
Mortgage notes payable $ - $ 42,000,000
Due to affiliates - 6,385,499
Accounts payable and accrued expenses 552,519 3,085,982
Excess of distributions and losses over cost
of investments in partnerships 1,186,283 7,510,575
Minority interests - 1,583,135
1,738,802 60,565,191
Partners' capital (deficiency):
General partners (3,267,091) (3,298,849)
Limited partners ($1,000 per Unit,
78,594 Units issued) 13,781,450 (15,429,429)
Total partners' capital (deficiency) 10,514,359 (18,728,278)
$ 12,253,161 $ 41,836,913
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 1996, 1995 and 1994
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Revenues:
Hotel:
Room $ 9,347,359 $13,455,469 $13,329,447
Food, beverage and other 8,587,010 13,895,927 12,864,869
Total 17,934,369 27,351,396 26,194,316
Rental - 1,236,740 1,698,704
Interest and other 325,414 143,188 202,965
Gain (loss) on sale of real estate 41,992,437 (1,249,457) -
Gain on sale of partnership interest 15,769,942 - -
76,022,162 27,481,867 28,095,985
Expenses:
Hotel:
Room 1,830,999 3,696,484 4,090,932
Food and beverage 5,979,018 9,201,086 8,335,717
Administrative and other 4,794,603 7,586,269 7,598,825
Total 12,604,620 20,483,839 20,025,474
Interest 2,567,985 5,327,001 4,994,853
Property operating 40,394 381,262 537,138
Amortization 151,353 246,841 281,710
Depreciation 1,063,723 2,119,206 2,129,520
Equity in net losses of partnerships 672,973 845,578 985,769
General and administrative 378,240 464,415 274,198
17,479,288 29,868,142 29,228,662
Income (loss) before minority interest 58,542,874 (2,386,275) (1,132,677)
Minority interest in (income) loss of
consolidated partnerships 13,460 (954) 27,627
Income (loss) before extraordinary item 58,556,334 (2,387,229) (1,105,050)
Extraordinary item:
Gain on extinguishment of debt due to
foreclosure (Note 4) - 1,938,645 -
Net income (loss) $58,556,334 $ (448,584) $(1,105,050)
Net income (loss) allocated to:
Limited partners $58,524,576 $ (409,965) $(1,060,848)
General partners 31,758 (38,619) (44,202)
$58,556,334 $ (448,584) $(1,105,050)
Net income (loss) per Unit of limited
partnership interest $ 744.64 $ (5.22) $ (13.50)
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIENCY)
Years ended December 31, 1996, 1995 and 1994
<CAPTION>
General Limited
Partners Partners Total
<S> <C> <C> <C>
Partners' capital (deficiency)
at January 1, 1994 $(3,216,028) $(13,958,616) $(17,174,644)
Net loss (44,202) (1,060,848) (1,105,050)
Partners' capital (deficiency)
at December 31, 1994 (3,260,230) (15,019,464) (18,279,694)
Net loss (38,619) (409,965) (448,584)
Partners' capital (deficiency)
at December 31, 1995 (3,298,849) (15,429,429) (18,728,278)
Net income 31,758 58,524,576 58,556,334
Cash distributions - (29,313,697) (29,313,697)
Partners' capital (deficiency)
at December 31, 1996 $(3,267,091) $ 13,781,450 $ 10,514,359
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1996, 1995 and 1994
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 58,556,334 $ (448,584) $(1,105,050)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization 1,215,076 2,366,047 2,411,230
Minority interests in (income) loss
of consolidated partnerships (13,460) 954 (27,627)
Equity in net losses of partnerships 672,973 845,578 985,769
Gain (loss) on sale of real estate and
partnership interests (57,762,379) 1,249,457 -
Gain on extinguishment of debt - (1,938,645) -
Decrease (increase) in operating assets:
Accounts receivable 10,689 (576,390) (695,414)
Restricted cash 3,570,238 472,542 (1,621,411)
Deferred expenses - (559,339) (253,181)
Other assets 182,071 603,915 (91,132)
(Decrease) increase in operating liabilities:
Accounts payable and accrued expenses (2,533,463) 205,461 377,391
Due to affiliates - (327,166) 344,732
Minority interests - - (350,795)
Net cash provided by (used in) operating activities 3,898,079 1,893,830 (25,488)
Cash flows from investing activities:
Proceeds from sale of real estate and
partnership interests 82,108,022 6,594,399 -
Investment in real estate (106,350) (671,880) (589,225)
(Investment in) distributions from unconsolidated
partnerships - (39,784) 94,810
Effect of change in cash from exchange of
partnership interests (Note 4) - - (25,932)
Net cash provided by (used in) investing activities 82,001,672 5,882,735 (520,347)
Cash flows from financing activities:
Repayment of mortgage notes payable (42,000,000) (6,367,035) (57,151)
Minority interests in joint ventures'
distributions - - (46,000)
Additional investment by minority interests - - 90,800
Cash distributions (29,313,697) - -
Repayment of due to affiliates (6,385,499) - -
Net cash used in financing activities (77,699,196) (6,367,035) (12,351)
Increase (decrease) in cash and cash equivalents 8,200,555 1,409,530 (558,186)
Cash and cash equivalents at beginning of year 2,072,917 663,387 1,221,573
Cash and cash equivalents at end of year $ 10,273,472 $ 2,072,917 $ 663,387
Supplemental disclosure of cash flow information:
Cash paid for interest $ 2,567,985 $ 4,086,567 $ 4,854,870
See accompanying notes to consolidated financial statements.
(continued)
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1996, 1995 and 1994
(continued)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Supplemental disclosure of non-cash investing
activities:
Transfer of partnership interests:
Real estate, net $ - $ - $ 2,963,174
Deferred expenses, net - - 139,683
Accounts receivable - - 9,002
Mortgage note payable - - (2,850,000)
Accounts payable - - (151,588)
Minority interests - - (136,203)
Effect of change in cash from exchange of
partnership interests $ - $ - $ (25,932)
Foreclosure of Partnership interests (Note 4):
Balance due on mortgage loan $ - $ (6,569,949) $ -
Writeoff of:
Real estate - 4,160,145 -
Accounts receivable and deferred expenses - 926,441 -
Minority interest - 338,641 -
Other assets - 105,268 -
Accounts payable and other liabilities - (899,191) -
Gain on extinguishment of debt due
to foreclosure $ - $ (1,938,645) $ -
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
Notes to Consolidated Financial Statements
December 31, 1996, 1995 and 1994
1. The Partnership
Dean Witter Realty Growth Properties, L.P. (the "Partnership") is a
limited partnership formed in 1985 under the laws of the State of
Delaware to invest primarily in income-producing properties. The
Managing General Partner of the Partnership is Dean Witter Realty
Growth Properties Inc., which is wholly-owned by Dean Witter Realty
Inc. ("Realty").
In 1986, the Partnership issued 78,594 units of limited partnership
interest (the "Units") for $78,594,000. No additional Units will be
sold.
2. Summary of Significant Accounting Policies
The financial statements include the accounts of the Partnership,
Bayport Ltd.'s investment in the Bayport hotel, and Braker
Associates on a consolidated basis. The Partnership's interest in
Peninsula/DW Associates and Bayport Ltd's investment in the Bayport
office building are accounted for on the equity method.
The Partnership's records are maintained on the accrual basis of
accounting for financial reporting and tax purposes. 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.
The carrying value of real estate included the purchase price paid
by the Partnership and acquisition fees and expenses. Costs of
improvements to the properties were capitalized, and repairs were
expensed. Depreciation was recorded on the straight-line method.
Effective January 1, 1995, the Partnership adopted the provisions of
Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of" ("SFAS 121"); adoption was not required prior to 1995.
Pursuant to SFAS 121, at least annually, and more often if
circumstances dictate, the Partnership evaluates the recoverability
of the net carrying value of its real estate and any related assets,
including the real estate and related assets owned by the
partnerships in which the Partnership has an equity investment. As
part of this evaluation, the Partnership assesses, among other
things, whether there has been a significant decrease in the market
value of any of its properties. If events or circumstances indicate
that the net carrying value of a property may not be recoverable,
the expected future net cash flows from the property are estimated
for a period of approximately five years (or a shorter period if the
Partnership expects that the property may be disposed of sooner),
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 as determined (in some cases with the assistance
of outside real estate consultants) based on discounted cash flows,
and a loss on impairment recognized by a charge to earnings.
Because the determination of fair value is based upon projections of
future economic events such as property occupancy rates, rental
rates, operating cost inflation and market capitalization rates
which are inherently subjective, the amounts ultimately realized
when the property owned by the Partnership's remaining investment in
partnership is disposed of may differ materially from its net
carrying value as of December 31, 1996. The cash flows used to
evaluate the recoverability of the assets and to determine fair
value are based on good faith estimates and assumptions developed by
the Managing 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. This could result in a writedown of the
investment in the future if real estate markets or local economic
conditions change.
If the provisions of SFAS 121 had been effective for the year ended
December 31, 1994, the Partnership would have recognized a loss on
impairment of land and a warehouse building at Braker Center of
approximately $1 million in 1994. As more fully described in Note
4, the Partnership recognized a loss on such land and warehouse
building in the second quarter of 1995, when it determined to sell
them and reduced their carrying values to fair value net of selling
costs.
Cash and cash equivalents consist of cash and highly liquid
investments with maturities, when purchased, of three months or
less.
Deferred expenses consisted of deferred asset supervisory fees,
which were amortized over the terms of the related agreements,
deferred commitment fees, which were amortized over the related
commitment periods, and deferred leasing commissions, which were
amortized over the applicable lease terms.
Rental income was accrued on a straight-line basis over the terms of
the leases. Accruals in excess of amounts payable by tenants
pursuant to their leases (resulting from rent concessions or rents
which periodically increase over the term of a lease) were recorded
as receivables and included in other assets.
Pursuant to the Bayport hotel loan and management agreements,
restricted cash balances were reserved primarily for debt service,
working capital, and the replacement of certain furniture, fixtures
and equipment at the hotel.
Net income (loss) per Unit amounts are calculated by dividing net
income (loss) allocated to Limited Partners, in accordance with the
Partnership Agreement, by the weighted average number of Units
outstanding.
No provision for income taxes has been made in the financial
statements, since the liability for such taxes is that of the
partners rather than the Partnership.
The accounting policies used for tax reporting purposes differ from
those used for financial reporting as follows: (a) depreciation is
calculated using accelerated methods and (b) losses on impairment of
real estate are not deductible until realized. In addition,
offering costs are treated differently for tax and financial
reporting purposes. The tax basis of the Partnership's assets and
liabilities is approximately $880,000 higher than the amounts
reported for financial statement purposes.
3. Partnership Agreement
The Partnership agreement provides that the Limited Partners will
receive 96% of distributable cash (as defined) remaining after the
Managing General Partner has received a management fee of 6.25% of
distributable cash.
Sale or refinancing proceeds will generally be distributed (i) to
the Limited Partners until they have received a return of their
capital contributions; (ii) to the General Partners until the
General Partners have received 1.01% of the amount distributed to
the Limited Partners: (iii) 99% of any remaining amounts to the
Limited Partnerss and 1% to the General Partners until the Limited
Partners have received cumulative distributions sufficient to
provide a 6% cumulative annual return on their adjusted capital
contributions; and (iv) 85% to the Limited Partners and 15% to the
General Partners after the Managing General Partner receives a
brokerage fee, if earned, not in excess of 3% of the aggregate gross
sales prices of all properties.
Taxable income (loss) generally will be allocated to the partners in
proportion to the distribution of distributable cash or sale or
financing proceeds (or 96% to the Limited Partners and 4% to the
General Partners if there is no distributable cash).
The Partnership did not make a distribution of distributable cash to
the Partners in 1996, 1995 or 1994. In 1996, the Partnership
distributed approximately $29.3 million ($373 per Unit) of proceeds
from the sale of the Bayport Hyatt hotel. In January 1997, the
Partnership distributed approximately $10.7 million ($136 per unit)
of proceeds from the sale of the Partnership's investment in
Peninsula Office Park, the land sold at Braker Center and additional
proceeds from the sale of the Bayport Hyatt hotel. Both
distributions were returns of capital paid 100% to the Limited
Partners.
4. Investments in Real Estate
Braker Center, Austin, Texas
The Partnership owns a 99% general partnership interest in L.S.
Braker Associates ("Braker Associates"); a partnership consisting of
current and former officers of Realty holds the remaining 1%
interest. At December 31, 1993, Braker Associates owned 50%
interests in partnerships which owned two warehouses, four
office/R&D buildings, and undeveloped land.
In October 1994, Braker Associates exchanged its partnership
interest in one of the remaining warehouses for the interests of its
joint venture partner in the other warehouse and the undeveloped
land. The exchange was accounted for at the book value of the
interest given up, and no gain or loss was recognized. Thus, at
December 31, 1994, Braker Associates owned one warehouse, six
parcels of undeveloped land, and a 50% interest in the partnership
(the "Office/R&D Building Partnership") which owned the four
office/R&D buildings.
In 1995, the Partnership entered into an Agreement with Hill
Partners, Inc., an unaffiliated party, to sell the warehouse and
land for approximately $8.2 million. The sale resulted in a loss of
approximately $1.2 million.
The closings of the sale of the warehouse and four parcels of land,
for a net purchase price of approximately $6,594,000 took place in
September and November 1995. At the September closing, the
Partnership repaid the $3.7 million mortgage debt encumbering the
property. (Earlier in 1995, the Partnership paid a fee of
approximately $165,000 (included in interest expense) for an
extension of the maturity of the loan.) The remaining proceeds were
used to repay borrowings from an affiliate of Realty and for
reserves.
The closings of the sales of the remaining parcels of land, for an
aggregate purchase price of approximately $1.4 million occurred in
April and November 1996.
The buildings owned by the Office/R&D Building Partnership were
encumbered by a mortgage loan which was cross-collateralized and
cross-defaulted with loans on approximately 94 projects owned by the
Partnership's joint venture partner. Because certain of the
projects failed to make scheduled principal payments, in December
1994, the lender declared a default. In January 1995, the
Partnership's joint venture partner placed 46 of its properties,
including the Office/R&D Partnership, under bankruptcy protection.
The Partnership did not consent to the bankruptcy filing. The joint
venture partner subsequently submitted a plan of reorganization
which was approved by the bankruptcy court in November. The
reorganization plan required the Partnership to contribute
additional equity to the joint venture in order to retain its
interest in the Office/R&D Building Partnership. The Managing
General Partner believed that several terms of the plan of
reorganization were not favorable to the Partnership and that
additional investment was not justified and, accordingly did not
contribute additional equity. As a result, the Partnership lost its
interest in the buildings and the Office/R&D Building Partnership in
1995. The mortgage loan (which was non-recourse to the Partnership)
on the four office/R&D buildings exceeded their carrying value.
Accordingly, the loss of the buildings resulted in a non-cash gain
of $1,938,645, which was reported as an extraordinary item.
Bayport Plaza Hyatt Hotel, Tampa, Florida
Bayport Plaza is a mixed-use development consisting of an office
building and a Hyatt hotel (the "Hotel"). The Partnership owns a
99% general partnership interest in Bayport, Ltd.; a partnership
consisting of current and former officers of Realty holds the
remaining 1% interest. Bayport, Ltd. owns (after a preferential
return as described below) a 91.6% partnership interest in the
partnership which owned the hotel (the "Hotel Partnership");
affiliates of the developer of Bayport Plaza (the "Developer") own
the remaining 8.4%. Bayport Ltd. also owns a 46.25% interest in a
partnership which owns the office building (the "Office
Partnership") (see Note 5).
In May 1995, the Partnership and Hyatt Hotel Corporation ("Hyatt")
modified the management agreement for the Hotel. Under the terms of
the modified agreement, Hyatt was entitled to an annual fee equal to
a percentage of the hotel's net revenues in excess of annual debt
service, not to exceed an overall percentage cap, and Hyatt agreed
to certain expense reductions that increased the Hotel's cash flow.
During the second quarter of 1995, the Partnership prepaid $3
million of the hotel mortgage loan from restricted cash reserves.
In July 1996, the Hotel Partnership sold the Hotel, for $72.2
million, to Hyatt, pursuant to Hyatt's right of first offer
contained in the management agreement. The purchase price was paid
in cash at closing. A portion of the sales proceeds was used to
repay the $42 million mortgage note (which bore interest at 9%)
encumbering the Hotel and certain balances due to affiliates (see
Note 6). The remaining proceeds were allocated 100% to Bayport Ltd.
An affiliate of Realty had provided a partial loan principal and
operating deficit guarantee to the first mortgage lender on the
Hotel. See Note 6.
5. Investments in and Advances to Partnerships
Bayport Plaza Office Building, Tampa, Florida
The Office Partnership is owned 46.25% by Bayport, Ltd., 3.75% by
affiliates of the Developer and 50% by a third-party investor (the
"Investor"). Bayport, Ltd. is the managing general partner of the
Office Partnership, but the Investor has the right to approve
certain major decisions and financial policies of the partnership
and, under certain circumstances, has the right to cause the
partnership to sell the property after 1998.
The Investor was entitled to a monthly minimum distribution from net
cash flow equal to a 6% annual return on its invested capital until
June 1995, and an 8.5% annual return on its invested capital
thereafter. Net cash flow in excess of the minimum distribution
will be distributed, first: 20% to Bayport Ltd. and the Developer,
based on their respective interests, and 80% to the Investor, until
the Investor has received an annual return (including the minimum
distribution) of 12% on average capital; and thereafter, 50% to
Bayport, Ltd. and the Developer, based on their respective
interests, and 50% to the Investor. Capital proceeds will generally
be distributed: first, 100% to the Investor until it has received
its capital and a 14% annual return thereon; second, to Bayport,
Ltd. and the Developer until they have received distributions
calculated to be equal to a 2% return on the Investor's Capital; and
thereafter, to Bayport, Ltd., the Developer and the Investor in
proportion to their interests. Taxable income and losses will
generally be allocated in accordance with distributions of net cash
flow and capital proceeds.
The Investor committed to make capital contributions up to $9
million. As of December 31, 1996, the Investor contributed a total
of $8,267,338, the remaining balance is to be contributed to fund
future operating deficits and tenant-related capital expenditures.
During 1996, 1995 and 1994, the Investor contributed approximately
$283,000, $509,000 and $621,000 respectively pursuant to its
commitment.
As of December 31, 1996 and 1995, the Partnership has contributed
$9,145,691 to the Office Partnership.
The assets, liabilities and partners' capital of the Office
Partnership are summarized as follows:
<TABLE>
December 31,
1996 1995
<CAPTION>
ASSETS
<S> <C> <C>
Real estate and improvements $ 29,852,064 $29,044,200
Accumulated depreciation (10,496,484) (9,257,615)
19,355,580 19,786,585
Other (including cash and cash equivalents
of $97,559 and $200) 2,287,571 2,436,585
Total assets $ 21,643,151 $22,223,170
LIABILITIES AND PARTNERS' CAPITAL
Mortgage note payable $20,000,000 $20,000,000
Other liabilities 503,643 741,793
Partners' capital 1,139,508 1,481,377
$21,643,151 $22,223,170
The results of operations are summarized as follows:
1996 1995 1994
Rental Revenues $5,275,305 $4,343,102 $4,174,012
Expenses:
Operating 1,920,979 1,802,630 1,496,912
Interest 1,688,643 1,677,016 1,694,223
Depreciation and amortization 1,610,226 1,509,063 1,389,200
5,219,848 4,988,709 4,580,335
Net income (loss) $ 55,457 $ (645,607) $ (406,323)
</TABLE>
The accounting policies of the Office Partnership are consistent
with those of the Partnership.
The property is subject to a $20,000,000 mortgage loan which is due
September 1, 1999 and requires monthly payments of interest-only at
8.5% per annum. The loan is secured by substantially all of the real
estate and improvements, rents, leases and profits from the
property.
The Office Partnership has determined that all leases relating to
its properties are operating leases. The lease terms range from
three to five years, and generally require tenants to pay their pro
rata share of increases in operating expenses.
Peninsula Office Park, San Mateo, California
Peninsula/DW Associates, a general partnership owned 98% by the
Partnership and 2% by former and current Realty officers and
executives, owned a 49.9% general partnership interest in two
limited partnerships (the "Joint Venture") which owns Peninsula
Office Park, a corporate office park located in San Mateo,
California. The remaining 50.1% interest in the Joint Venture was
owned by the developer of Peninsula Office Park.
On December 19, 1996, Peninsula/DW Associates sold its interests in
the Joint Venture, for approximately $9.4 million, to entities
controlled by the developer. The Partnership received $7.7 million
in cash at the closing and the remainder in January 1997.
The assets, liabilities and partners' capital (deficit) of the Joint
Venture as of December 31, 1995 are summarized as follows:
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Land and building, net $31,561,713
Other (including cash and cash equivalents of $3,829,280) 7,794,464
Total assets $39,356,177
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
<S> <C>
Mortgage notes payable $42,162,985
Other liabilities 2,043,192
Partners' (deficit) (4,850,000)
Total liabilities and partners' (deficit) $39,356,177
</TABLE>
The results of operations of the Joint Venture are summarized as
follows:
<TABLE>
<CAPTION>
For the
Period from
January 1, 1996 to Years ended December 31,
December 19, 1996 1995 1994
<S> <C> <C> <C>
Revenues:
Rental $7,760,518 $ 7,683,063 $ 7,139,299
Other 117,935 90,522 173,956
7,878,453 7,773,585 7,313,255
Expenses:
Operating 2,537,023 2,591,492 2,606,631
Interest 3,974,925 4,045,746 3,965,753
Depreciation and amortization* 2,173,015 2,291,124 2,158,136
8,684,963 8,928,362 8,730,520
Net loss $ (806,510) $(1,154,777) $(1,417,265)
</TABLE>
* Includes $540,000, $558,000, and $558,000 in 1996, 1995 and
1994, respectively, representing depreciation of the excess of
the costs of the Partnership's investment in the Joint Venture
over the underlying equity in net assets at the date of
acquisition.
The accounting policies of the Joint Venture are consistent with
those of the Partnership.
The Joint Venture determined that all leases relating to its
properties are operating leases. The lease terms range from three
to eleven years, and generally require tenants to pay their pro rata
share of increases in operating expenses, including real estate
taxes and maintenance costs over base year expenses.
In May 1994, the Joint Venture completed a modification of the
mortgage loans (which matured in December 1993) on the Peninsula
Office Park properties. The interest accrual and pay rates under
the loans were reduced from 9.875% to 9.5%, and from 9% to 8.25%,
respectively, and the maturity date was extended. During the loan
term, the Joint Venture was prohibited from making cash
distributions to its partners. The Partnership paid a $400,000 fee
to the lender as part of the restructuring.
Activity in the Excess of Distributions and Losses over Cost of
Investments in Partnerships is as follows:
<TABLE>
<CAPTION>
Year ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Investment at beginning of year $ 7,510,575 $6,704,781 $5,624,202
Equity in losses 672,973 845,578 985,769
Distributions - - 94,810
Contributions - (39,784) -
Sale of investment in partnership (6,997,265) - -
Investment at end of year $ 1,186,283 $7,510,575 $6,704,781
</TABLE>
The Partnership was not entitled to any equity in losses of the
Office Partnership in 1996, 1995 or 1994. Accordingly, equity in
losses includes only the Partnership's 49.9% share of the losses of
the Joint Venture, adjusted to include 100% of the depreciation of
the excess of the cost of the Partnership's investment in the Joint
Venture over the underlying equity in net assets at the date of
acquisition.
6. Related Party Transactions
Prior to 1991, the Partnership borrowed funds from an affiliate of
Realty to fund working capital needs and capital expenditures at
certain properties. In May 1996, the Partnership repaid $2,770,000
from the proceeds of the sale of certain of the Braker Center
properties. In July 1996, the remaining balance, approximately
$400,000, was repaid from the proceeds from the sale of the Hotel.
Interest expense, calculated at the prime rate, was $101,927,
$263,976 and $196,923 in 1996, 1995 and 1994, respectively.
Additionally, in conjunction with the Hotel mortgage note payable,
an affiliate of Realty guaranteed a maximum of $5,350,000 of the
first mortgage debt. Advances (all of which were made prior to
1994) by the guarantor to the first mortgage lender under this
guaranty (which constituted loans from the guarantor to the
Partnership) totaling approximately $3.2 million (including
approximately $900,000 of accrued interest) were repaid from the
proceeds from the sale of the Hotel. Interest expense, calculated
at the prime rate, was $136,723, $244,619 and $182,771 in 1996, 1995
and 1994, respectively.
The Managing General Partner is entitled to receive a management fee
based on a percentage of distributable cash (as defined in the
Partnership Agreement). Because there was no distributable cash,
the Managing General Partner did not receive a fee for the years
ended December 31, 1996, 1995 or 1994. Prior to 1996, $422,987 of
pre-1991 management fees remained unpaid and the General Partners
deferred receipt of pre-1991 cash distributions totalling $262,316.
In the third quarter of 1996, the Managing General Partner
determined that such amounts should not be paid and the General
Partners waived any claims thereto.
Realty performs administrative functions, processes investor
transactions and prepares tax information for the Partnership. For
1996, 1995 and 1994, the Partnership incurred fees of approximately
$179,000, $204,000 and $178,000, respectively. These amounts are
included in general and administrative expense.
An affiliate of the Partnership's joint venture partner at Braker
Center had funded shortfall loans to the property. In 1994, the
balance due to the affiliate of $19,200 was repaid.
Entities controlled by officers of Realty earned approximately
$36,000 in 1994, for providing asset management services. In May
1994, such entities agreed to terminate these fees.
7. Litigation
Various public partnerships sponsored by Realty (including the
Partnership and its Managing General Partner) are defendants in
purported class action lawsuits pending in state and federal courts.
The complaints allege a number of claims, including breach of
fiduciary duty, fraud and misrepresentation, and seek an accounting
of profits, compensatory and other damages in an unspecified amount,
possible liquidation of the Partnership under a receiver's
supervision and other equitable relief. The defendants are
vigorously defending these actions. It is impossible to predict the
effect, if any, the outcome of these actions might have on the
Partnership's financial statements.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership is a limited partnership which has no directors or
executive officers.
The directors and executive officers of the Managing General Partner
are as follows:
Position with the
Name Managing General Partner
William B. Smith Chairman of the Board of Directors
E. Davisson Hardman, Jr. President and Director
Lawrence Volpe Controller and Director
Ronald T. Carman Secretary and Director
All of the directors have been elected to serve until the next
annual meeting of the Shareholders of the Managing General Partner
or until their successors are elected and qualify. Each of the
officers has been elected to serve until his successor is elected
and qualifies.
William B. Smith, age 53, is a Managing Director of Dean Witter
Realty Inc. and has been with Dean Witter Realty Inc. since 1982.
He is an Executive Vice President of Dean Witter Reynolds Inc.
E. Davisson Hardman, Jr., age 47, is a Managing Director of Dean
Witter Realty Inc, and has been with Dean Witter Realty Inc. since
1982.
Lawrence Volpe, age 49, is a Director and the Controller of Dean
Witter Realty Inc. He is a Senior Vice President and Controller of
Dean Witter Reynolds Inc., which he joined in 1983.
Ronald T. Carman, age 45, is a Director and the Secretary of Dean
Witter Realty Inc. He is a Senior Vice President and Associate
General Counsel of Dean Witter, Discover & Co. and of Dean Witter
Reynolds Inc., which he joined in 1984.
There is no family relationship among any of the foregoing persons.
ITEM 11. EXECUTIVE COMPENSATION
The General Partners are entitled to receive a share of cash
distributions, when and as cash distributions are made to the
Limited Partners, and a share of taxable income or tax loss.
Descriptions of such distributions and allocations are contained in
Item 5 above. The General Partners have not received cash
distributions for the period 1988 through 1996. Prior to 1996,
$422,987 of pre-1991 management fees remained unpaid and the General
Partners deferred receipt of pre-1991 cash distributions totalling
$262,316. In the third quarter of 1996, the Managing General
Partner determined that such amounts should not be paid and the
General Partners waived any claims thereto.
The General Partners and their affiliates were paid certain fees and
reimbursed for certain expenses. Information concerning such fees
and reimbursements are contained in Note 6 to the Consolidated
Financial Statements in Item 8 above.
The directors and executive officers of the Partnership's Managing
General Partner received no renumeration from the Partnership.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) No person is known to the Partnership to be the beneficial
owner of more than five percent of the Units.
(b) The executive officers and directors of the Managing
General Partner own the following Units as of March 17, 1997:
(3)
Amount of
(1) (2) Nature of Name
Title of Class Owner Beneficial Ownership of Beneficial
Limited Partnership All directors and executive *
Interests officers of the Managing
General Partner, as a group
*Own, by virtue of ownership of limited partnership interests in the
Associate General Partner, less than 1% of the Units of the
Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As a result of their being partners of a limited partnership which
is the limited partner of the Associate General Partner, certain
current and former officers and directors of the Managing General
Partner also own indirect general partnership interests in the
Partnership. The Partnership Agreement of the Partnership provides
that cash distributions and allocations of income and loss to the
general partners be distributed or allocated 50% to the Managing
General Partner and 50% to the Associate General Partner. The
general partners' share of cash distributions and income or loss is
described in Item 5 above.
All of the outstanding shares of common stock of the Managing
General Partner are owned by Dean Witter Realty Inc. ("Realty"), a
Delaware corporation which is a wholly-owned subsidiary of Dean
Witter, Discover & Co. The general partner of the Associate General
Partner is Dean Witter Realty Growth Properties Inc., which is a
wholly-owned subsidiary of Realty. The limited partner of the
Associate General Partner is LSP, L.P., a Delaware limited
partnership. Realty and certain current and former officers and
directors of the Managing General Partner are partners of LSP, L.P.
Additional information with respect to the directors and executive
officers and compensation of the Managing General Partner and
affiliates is contained in Items 10 and 11 above.
The General Partners and their affiliates were paid certain fees and
reimbursed for certain expenses. In addition, affiliates of the
General Partners have ownership interest in certain properties.
Information concerning these transactions is contained in the Notes
to Consolidated Financial Statements in Item 8 above. The
Partnership believes that the payment of fees and the reimbursement
of expenses to the General Partners and their affiliates are on
terms as favorable as would be obtained from unrelated third
parties.
The Managing General Partner is entitled to receive a management fee
based on a percentage of distributable cash (as defined in the
Partnership Agreement). Because there was no distributable cash,
the Managing General Partner did not receive a fee for the years
ended December 31, 1996, 1995 or 1994. Prior to 1996, $422,987 and
pre-1991 management fees remained unpaid and the General Partners
deferred receipt of pre-1991 cash distributions totalling $262,316.
In the third quarter of 1996, the Managing General Partner
determined that such amounts should not be paid and the General
Partners waived any claims thereto.
<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.
(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 current 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 filed as Exhibit 10(d) to
Registrant's Annual Report Form 10-K for the year ended
December 31, 1995 is incorporated herein by reference.
(e) First Amendment to the General Partnership Agreement of
TWC Eleven, Ltd. dated as of June 19, 1987 filed as
Exhibit 10(e) to Registrant's Annual Report Form 10-K
for the year ended December 31, 1995 is incorporated
herein by reference.
(f) Second Amended and Restated Agreement of Limited
Partnership of TWC Ten, Ltd. dated as of July 19, 1993
filed as Exhibit 10(f) to Registrant's Annual Report
Form 10-K for the year ended December 31, 1995 is
incorporated herein by reference.
(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
current 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'
current 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 filed as Exhibit 10(j) to Registrant's Annual
Report Form 10-K for the year ended December 31, 1995 is
incorporated herein by reference.
(k) Amended and Restated Agreement of Limited Partnership of
Peninsula Office Park, dated as of December 27, 1985
filed as Exhibit 10(k) to Registrant's Annual Report
Form 10-K for the year ended December 31, 1995 is
incorporated herein by reference.
(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
current report on Form 8-K dated September 1, 1995
(Commission File No. 0-18151) and is incorporated herein
by reference.
(m) Second Amended and Restated Management Agreement, dated
January 26, 1995, between TWC Eleven, Ltd. and Hyatt
Corporation filed as Exhibit 1 to Registrant's current
report on Form 8-K dated July 18, 1996 (Commission File
No. 0-18151) and is incorporated herein by reference.
(n) Purchase and Sale Agreement dated as of September 30,
1996 by and among Peninsula/DW Associates, William
Wilson III, Peninsula Office Park and Campus Drive
Investment Company filed as Exhibit 2 to Registrants
current report on Form 8-K dated December 19, 1996
(Commission File No. 0-18151) and is incorporated herein
by reference.
(21) Subsidiaries:
TWC Eleven Limited Partnership, a Florida Limited
Partnership.
L.S. Braker Associates, a Texas Limited Partnership.
(27) Financial Data Schedule.
(c) See 3a. above.
(d) 1. Financial Statements of TWC Ten Limited Partnership
which owns the office building located in Tampa,
Florida.<PAGE>
<TABLE>
SCHEDULE III
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
Real Estate and Accumulated Depreciation
December 31, 1996
<CAPTION>
Note:
(A) Reconciliation of real estate owned at December 31:
1996 1995 1994
<S> <C> <C> <C>
Balance at beginning of period $ 51,911,951 $68,852,278 $72,046,998
Additions (deletions) during period:
Improvements 106,350 671,880 589,225
Write-offs - (1,212,412) -
Real estate lost through transfer of
Partnership interest - - (3,783,945)
Sale of real estate (52,018,301) - -
Transfer to real estate held for sale - (11,127,564) -
Change from consolidation to equity
accounting - (5,272,231) -
Balance at end of period $ - $ 51,911,951 $68,852,278
(B) Reconciliation of accumulated depreciation:
1996 1995 1994
Balance at beginning of period $ 20,984,839 $22,452,497 $20,687,639
Depreciation expense 1,063,723 2,119,206 2,129,520
Retirements - (1,212,412) -
Write-off due to transfer of Partnership
interest - - (364,662)
Write-off due to sale of real estate (22,048,562) (1,262,366) -
Change from consolidation to equity
accounting - (1,112,086) -
Balance at end of period $ - $20,984,839 $22,452,497
/TABLE
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
By: Dean Witter Realty Growth Properties Inc.
Managing General Partner
By: /s/E. Davisson Hardman, Jr. Date: March 26, 1997
E. Davisson Hardman, Jr.
President
By: /s/Lawrence Volpe Date: March 26, 1997
Lawrence Volpe
Controller
(Principal Financial and Accounting Officer)
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.
DEAN WITTER REALTY GROWTH PROPERTIES INC.
Managing General Partner
/s/William B. Smith Date: March 26, 1997
William B. Smith
Chairman of the Board of Directors
/s/E. Davisson Hardman, Jr. Date: March 26, 1997
E. Davisson Hardman, Jr.
Director
/s/Lawrence Volpe Date: March 26, 1997
Lawrence Volpe
Director
/s/Ronald T. Carman Date: March 26, 1997
Ronald T. Carman
Director
35
<PAGE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
Year Ended December 31, 1996
Exhibit Index
Exhibit
No. Description
(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.
(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
current 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 filed as Exhibit 10(d)
to Registrant's Annual Report Form 10-K for the
year ended December 31, 1995 is incorporated
herein by reference.
E1
<PAGE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
Year Ended December 31, 1997
Exhibit Index
(continued)
Exhibit
No. Description
(e) First Amendment to the General Partnership
Agreement of TWC Eleven, Ltd. dated as of June 19,
1987 filed as Exhibit 10(e) to Registrant's Annual
Report Form 10-K for the year ended December 31,
1995 is incorporated herein by reference.
(f) Second Amended and Restated Agreement of Limited
Partnership of TWC Ten, Ltd. dated as of July 19,
1993 filed as Exhibit 10(f) to Registrant's Annual
Report Form 10-K for the year ended December 31,
1995 is incorporated herein by reference.
(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 current 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' current 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 filed as Exhibit
10(j) to Registrant's Annual Report Form 10-K for
the year ended December 31, 1995 is incorporated
herein by reference.
E-2
<PAGE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
Year Ended December 31, 1997
Exhibit Index
(continued)
Exhibit
No. Description
(k) Amended and Restated Agreement of Limited
Partnership of Peninsula Office Park, dated as of
December 27, 1985 filed as Exhibit 10(k) to
Registrant's Annual Report Form 10-K for the year
ended December 31, 1995 is incorporated herein by
reference.
(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 current report on Form 8-K
dated September 1, 1995 (Commission File No. 0-
18151) and is incorporated herein by reference.
(m) Second Amended and Restated Management Agreement,
dated January 26, 1995, between TWC Eleven, Ltd.
and Hyatt Corporation filed as Exhibit 1 to
Registrant's current report on Form 8-K dated July
18, 1996 (Commission File No. 0-18151) and is
incorporated herein by reference.
(n) Purchase and Sale Agreement dated as of September
30, 1996 by and among Peninsula/DW Associates,
William Wilson III, Peninsula Office Park and
Campus Drive Investment Company filed as Exhibit
2 to Registrants current report on Form 8-K dated
December 19, 1996 (Commission File No. 0-18151)
and is incorporated herein by reference.
(27) Financial Data Schedule
E3
TWC TEN, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
Financial Statements as of December 31, 1996 and for each of the
three years in the period ended December 31, 1996 and Independent
Auditor's Report
<PAGE>
TWC TEN, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
TABLE OF CONTENTS
Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND 1995 AND FOR EACH
OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
Balance Sheets 2
Statement of Operations 3
Statements of Partners' Capital (Deficit) 4
Statements of Cash Flows 5
Notes to Financial Statements 6-10
<PAGE>
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, 1996 and 1995 and
the related statements of operations, partners' capital (deficit),
and cash flows for each of the three years in the period ended
December 31, 1996. 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.
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, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the
period ended December 31, 1996 in conformity with generally accepted
accounting principles.
February 14, 1997
<PAGE>
<TABLE>
TWC TEN, LTD.
(A Florida Limited Partnership)
Balance Sheets
December 31, 1996 and 1995
<CAPTION>
ASSETS 1996 1995
<S> <C> <C>
Cash and cash equivalents $ 97,559 $ 200
Rent receivable, net of allowance for doubtful
doubtful accounts of $13,505 in both 1996 and
1995 respectively (Note 1) 1,172,726 1,249,157
Deferred lease commissions, net of accumulated
amortization of $1,783,713 in 1996 and
$1,494,581 in 1995 (Note 1) 765,140 988,894
Deferred loan costs, net of accumulated
amortization of $564,305 in 1996 and
$493,316 in 1995 (Note 1) 23,448 94,437
Organization costs, net of accumulated amortization
of $38,750 in 1996 and $27,514 in 1995 (Note 1) 17,431 28,667
Prepaid expenses and other assest 211,267 75,230
Real estate and improvements, net (Notes 1 and 2) 19,355,580 19,786,585
$21,643,151 $22,223,170
LIABILITIES AND PARTNERS CAPITAL
LIABILITIES
Mortgage note payable (Notes 1 and 3) $20,000,000 $20,000,000
Accounts payable and accrued expenses 503,643 496,375
Accrued interest payable (Note 3) - 197,114
Due to bank - 48,304
Total liabilities 20,503,543 20,741,793
COMMITMENTS AND RELATED PARTY
TRANSACTIONS (Notes 4 and 5)
PARTNER'S CAPITAL (DEFICIT) (Note 1)
Taylor Simpson Group $ 4,990,070 $ 5,331,939
Existing Partners (3,850,562) (3,850,562)
Total partners' capital 1,139,508 1,481,377
$21,643,151 $22,223,170
See accompanying notes to financial statements
/TABLE
<PAGE>
<TABLE>
TWC TEN, LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
RENTAL REVENUES (Notes 1 and 4) $5,275,305 $4,343,102 $4,174,012
OPERATING EXPENSES:
Depreciation and amortization (Notes 1 and 2) 1,610,226 1,509,063 1,389,200
Building services 433,916 387,605 365,030
Utilities 403,245 376,239 361,862
Repairs and maintenance 93,452 85,022 61,381
Real estate taxes 647,745 652,100 424,816
Management fees (Note 5) 164,558 127,966 125,730
Administration and other 178,063 173,698 158,093
Total operating expenses 3,531,205 3,311,693 2,886,112
OPERATING INCOME 1,744,100 1,031,409 1,287,900
INTEREST EXPENSE, NET 1,688,643 1,677,016 1,694,223
NET INCOME (LOSS) $ 55,457 $ (645,607) $ (406,323)
See accompanying notes to financial statements.
/TABLE
<PAGE>
<TABLE>
TWC TEN, LTD.
(A Florida Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
Taylor Simpson Group Existing Partners
Allocated Preferred Allocated
Capital (Loss) Net Capital Capital (Loss) Net Net
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 $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
Capital contribution 282,746 - 282,746 - - - - 282,746
Capital distribution (680,072) - (680,072) - - - - (680,072)
Net income - 55,457 55,457 - - - - 55,457
Balance, December 31, 1996$6,417,176 $(1,427,106) $4,990,070 $16,971,626 $ - $(20,822,188)$(3,850,562)$1,139,508
See accompanying notes to financial statements.
/TABLE
<PAGE>
<TABLE>
TWC TEN, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS PROVIDED FROM OPERATING ACTIVITIES
Net income (loss) $ 55,457 $ (645,607) $ (406,323)
Adjustments to reconcile net loss to net
cash provided from operating activities:
Depreciation and amortization 1,610,226 1,509,063 1,389,200
Provision for doubtful accounts - - 11,679
Cash provided from (used in) changes in:
Rent receivable 76,431 189,420 226,457
Deferred lease commissions (65,377) (614,196) (306,721)
Prepaid expenses and other assets (136,037) 36,784 (17,077)
Accounts payable and accrued expenses 7,268 158,157 (218,343)
Accrued interest payable (197,114) 55,448 -
Due to bank (48,304) 48,304 -
Net cash provided from operating
activities 1,302,550 737,373 678,872
CASH FLOWS USED IN INVESTING ACTIVITIES:
Expenditures for improvements (807,865) (901,654) (960,537)
Net cash used in investing activities (807,865) (901,654) (960,537)
CASH FLOWS PROVIDED FROM (USED IN) FINANCING
ACTIVITIES:
Capital distributions - Taylor Simpson Group (680,072) (554,039) (431,436)
Capital contributions - Taylor Simpson Group 282,746 509,260 621,428
Net cash (used in) provided from
financing activities (397,326) (44,779) 189,992
Net increase (decrease) in cash and
cash equivalents 97,359 (209,060) (91,673)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 200 209,260 300,933
CASH AND CASH EQUIVALENTS, END OF YEAR $ 97,559 $ 200 $ 209,260
SUPPLEMENTAL CASH FLOW INFORMATION:
The partnership paid interest of approximately $1,700,000 in 1996, 1995 and 1994.
See accompanying notes to financial statements. table 1
/TABLE
<PAGE>
TWC TEN, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
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 Amended and Restated 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, 1996, $5,339,068 has been contributed as an
initial capital contribution and $2,928,270 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 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 Restated Partnership also includes a provision whereby
TSG is to receive guaranteed payments on the amount of TSG's
unrecovered capital. TSG's unrecovered capital is 6% for the two
years, beginning with the year ended December 31, 1993. The return
on capital is 8.5% thereafter. Guaranteed payments made to TSG were
$680,072, $554,039 and $431,436 for the years ended December 31,
1996, 1995 and 1994, respectively.
Use of Estimates - The Partnership's records are maintained on the
accrual basis of accounting for financial reporting and tax
purposes. The preparation of the 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 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.
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 of 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 my differ materially from the net carrying value as of
December 31, 1996. 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 totalling 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 debt approximates the carrying
value.
<PAGE>
2. REAL ESTATE AND IMPROVEMENTS
Real estate and improvements at December 31, 1996 and 1995 consists
of the following:
<TABLE>
<CAPTION>
1996 1995
<S> <C>
Building and improvements $26,838,927 $26,031,100
Land and improvements 3,013,137 3,013,100
29,852,064 29,044,200
Less accumulated depreciation and amortization (10,496,484) (9,257,615)
$19,355,580 $19,786,585
</TABLE>
Depreciation and amortization expense on real estate and
improvements was $1,234,406, $1,170,130 and $1,117,892 for the years
ended December 31, 1996, 1995 and 1994, 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 5 years.
Future minimum rental receipts due to succeeding fiscal years under
noncancelable operating leases are as follows:
<TABLE>
<CAPTION>
Year Amount
<S> <C>
1997 $ 4,624,179
1998 4,139,969
1999 3,389,252
2000 2,164,057
Thereafter 3,760,033
Total $18,077,490
</TABLE>
5. RELATED PARTY TRANSACTIONS
Interest on shortfall loans was compounded monthly at a rate of
prime plus 1% (9.25% at December 31, 1996) 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 $829,711 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.
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 $176,732 in 1996, $346,400 in 1995 and $227,400 in
1994. The Wilson Management Company was also reimbursed
approximately $151,834, $92,300 and $92,500 in 1996, 1995 and 1994,
respectively, primarily for salary costs incurred on behalf of the
Partnership.
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
$219,574 in 1996, $195,000 in 1995 and $196,000 in 1994.
The Amended and Restated Partnership Agreement as of July 19, 1993
requires the Partnership to pay guarantee payments to TSG equaling
6% to TSG's unrecovered capital for two years, beginning with the
year ended December 31, 1993 and 8.5% thereafter. Guaranteed
payments to the TSG for 1996, 1995 and 1994 totaled $680,072,
$554,039 and $431,436, respectively.
Solutions, Inc., an affiliate of The Wilson Company, performed
construction work, primarily tenant improvements, on a cost-plus
basis totaling approximately $257,051 in 1996, $407,035 in 1995 and
$775,687 in 1994. 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.
There was no work performed by the Wilson Construction Company
during the year ended December 31, 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Registrant is a limited partnership which invests in real estate and real
estate joint ventures. In accordance with industry practice, its balance
sheet is unclassified. For full information, refer to the accompanying
audited financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 10,273,472
<SECURITIES> 0
<RECEIVABLES> 1,661,039
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,253,161<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 10,514,359<F2>
<TOTAL-LIABILITY-AND-EQUITY> 12,253,161<F3>
<SALES> 0
<TOTAL-REVENUES> 76,022,162<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 14,897,843
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,567,985
<INCOME-PRETAX> 58,556,334
<INCOME-TAX> 0
<INCOME-CONTINUING> 58,556,334
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,556,334
<EPS-PRIMARY> 744.64<F5>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include net deferred
expenses of $204,832 and other assets of $113,818.
<F2>Represents partners' capital.
<F3>Liabilities include investments in unconsolidated partnerships of
$1,186,283 and accounts payable and other liabilities of $552,519.
<F4>Total revenue includes hotel operating revenue of $17,934,369, gain on
sale of real estate of $41,992,437, gain on sale of partnership interest of
$15,769,942 and interest and other revenue of $325,414.
<F5>Represents net loss per Unit of limited partnership interest.
</FN>
</TABLE>
