United States
Securities and Exchange Commission
Washington, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 1999
Commission File Number 0-15256
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
- -----------------------------------------------
(Exact Name of Registrant)
A MARYLAND LIMITED PARTNERSHIP 52-1425166
- ------------------------------ ----------
(State of Organization) IRS Employer ID
C/O AMHERST PROPERTIES, INC.; 7900 SUDLEY ROAD, SUITE 900,
- -----------------------------------------------------------
MANASSAS, VIRGINIA 22110
- ------------------------
Registrant's Telephone Number, including area code (703) 368-2415
Securities Registered Pursuant to Section 12(b) of the Act;
None
Securities Registered Pursuant to Section 12(g) of the Act;
LIMITED PARTNERSHIP INTEREST (FILED ON DECEMBER 17, 1986)
- ---------------------------------------------------------
(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.
X Yes No
--- ---
At September 30, 1999, the registrant had outstanding 6,505 units of limited
partnership interest. The units are not readily marketable and have a stated
value of $1,000 per unit.
1
<PAGE>
Amherst Properties, Inc. has signed a contract for management of the office
building, and previously for the shopping center, with management fees currently
based on 6% of gross revenues, starting October 1, 1990. Amherst Properties,
Inc. had subcontracted with Center Association, Inc., an unrelated entity, to
provide certain management services for the shopping center only. In accordance
with the Partnership Agreement, Amherst Properties, Inc. is responsible for all
third party management expenses.
The Partnership's property competes with other similar type properties in the
geographic market.
ITEM 2 - PROPERTIES
OFFICE BUILDING
The Partnership owns a nine-story, air-conditioned, multi-tenant office building
with three self-service elevators located in Manassas, Virginia, on Sudley Road
(State Route 234), a six lane median highway, just south of I-66, which provides
direct access to Washington, DC, and points in Northern Virginia. Completed in
1974, the office building has a gross area of approximately 93,787 square feet
of which approximately 90,933 square feet are rentable. The office building is
located on approximately 4.9 acres and has on-site parking for 337 cars, which
exceeds the applicable zoning requirements.
As of September 30, 1999, the office building was approximately 95% leased with
one tenant leasing in excess of 10% of the office building.
Because of the loan restructuring, the debt service requirements have been
reduced. This reduction is now reflected in the rental structure which has been
lowered to be more competitive in the marketplace. The completed renovation of
the lobby gives the building a more inviting look for the 1990's.
The office building has been known as the First Virginia Building until First
Virginia Bank terminated its lease in November, 1990. The building name was then
changed to The Sudley Tower.
SHOPPING CENTER
Sheridan Hills Plaza, a one-story shopping center completed in 1980, had
approximately 117,000 square feet of rental space, 652 sparking spaces and was
located on approximately 15 acres in Amherst, New York (a suburb of Buffalo, New
York). On September 12, 1996, the shopping center was sold for $3,625,000. The
outstanding principal balance on the mortgage of $2,962,361 was paid from the
gross proceeds, as well as $295,791 in selling expenses and other related
disbursements. The proceeds to the Partnership were $366,888, less additional
legal fees of $16,000, resulting in net proceeds of $350,888.
2
<PAGE>
ITEM 3 - LEGAL PROCEEDINGS
Chapter 11 filing - see Note 4 to financial statements at Item 8.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On August 2, 1990, Amherst Properties, Inc. sent voting materials to limited
partners of Gran-Mark Income Properties Limited Partnership and by August 24,
1990, had received written consents from a 60% majority of the units in favor of
the removal of the former general partners and the substitution of Amherst
Properties, Inc. as the new general partner.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED PARTNERS MATTERS
There is no established public trading market for the class of limited
partnership units. The most recent price that the current general partner is
aware of is $100 per $1,000 unit paid in early 1991 paid by an officer of the
current general partner of the units owned by a third party.
ITEM 6 - SELECTED FINANCIAL DATA
FOR THE YEAR ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Total Revenue $ 1,530,773 $ 1,392,978 $ 1,385,802 $ 2,002,248 $ 1,870,121
Net Loss (64,905) (85,283) (28,705) (46,830) (217,247)
Net Loss per weighted average
limited partnership unit (9.98) (12.98) (4.37) (7.13) (33.06)
Total Assets $ 5,651,496 $ 4,786,078 $ 5,958,162 $ 6,447,761 $ 9,646,798
Mortgages payable $ 4,076,960 $ 4,242,143 $ 4,161,492 $ 4,634,915 $ 7,673,367
</TABLE>
The sale of the New York shopping center on September 12, 1996, materially
affects the comparability of the information reflected in the selected financial
data.
3
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
During the fiscal year ended September 30, 1999, the Partnership's cash position
changed from $576,670 to $541,278.
The occupancy of the Manassas office building was approximately 95% on September
30, 1999, as compared to 88% of September 30, 1998.
Partners' equity totaled $1,320,226 as of September 30, 1999, a decrease of
$64,905 from September 30, 1998.
The partnership's net loss for the fiscal year ended September 30, 1999, was
$64,905; a decrease of $20,378 from a loss of $85,283 for the fiscal year ended
September 30, 1998.
RESULTS OF OPERATIONS
The office building was approximately 95% leased on September 30, 1999, an
increase from 88% for the year ended September 30, 1998. The office building
continues to generate a positive cash flow.
During the 12 months ended September 30, 1999 total revenue has increased
$137,795 or 10% from the prior year; total expenses have increased $117,417 or
8% from the prior year; and the net income has increased by $20,378 as compared
$7,176 to the same period last fiscal year.
The increase in total revenue is due primarily to increase rental rates in new
leases and built-in increases in existing leases and the billing for tenant
reimbursements during the current quarter. The decrease on total expenses is due
primarily to the reduction in interest paid on the mortgage; the reduction in
utility costs due to the mild winter; the reduction in general and
administrative costs; and the reduction in management fees due to delays in
receiving antenna rents. These savings were offset by the increase in
depreciation and amortization of capitalized improvements and leasing costs; and
an increase in real estate taxes and property maintenance and repair costs.
Modernization of the eighth floor resulted in a speedy lease-up of tenants
engaged in finance, healthcare and high-tech.
Current management expects that planned capital improvements will continue to
improve the appearance of the property, thus successfully competing with
existing office buildings and maintaining a high rate of occupancy.
For further information see Notes to Financial Statement - Note 11: Management
Plans.
4
<PAGE>
ECONOMIC CONDITIONS AND GROWTH PROSPECTS
The office rental market in Prince William County continues to be strong with a
vacancy rate of approximately 4%.
Both the increasing demand and the slow rate of new construction continue to
push office rental rates higher in Prince William County.
Several factors contribute to the rising demand for office space in Prince
William County. These are:
1. The presence of AOL with a major facility costing millions of dollars.
The AOL development of a 220,000 square foot Data Technology Center
will employ 125 workers and is expected to be operational by April
2000.
2. Dominion Semiconductor continues its expansion program under its 100%
owner, Toshiba. Toshiba, a 50% owner, bought the other 50% ownership
from IBM. Toshiba, now a 100% owner of Dominion Semiconductor announced
plans for new and additional product development.
3. Other businesses expanding or relocating in Prince William County
include:
A. Atlantic and Pacific Telecom, Inc.
B. Earthwalk Communications, Inc.
C. UTD Incorporated
D. Infinity Computer Technology, USA (Source: Prince William
County Department of Economic Development, Winter 1999)
4. Construction and soon to be completed Route 234 bypass connecting Route
66 to US 95 thereby creating another major North/South Road in Prince
William County.
5. A change in Prince William County Policy from slow growth to rapid
growth and a county construction permit review and response within 30
days.
6. High tech companies attracted to Prince William County by such majors
as AOL and Dominion Semiconductor.
7. More activity by roof-top antenna users for paging, mobile telephone,
internet connection and video teleconferencing.
At present, Prince William County, Manassas area rents for completed new
construction are at the $16.00 - $18.50 range per square foot. It is estimated
that new construction to be built for first class office space will require a
rental rate of $22.00 - $25.00 per square foot. Manassas is not yet ready to pay
rent in that higher range. However, as demand increases, rental rates will be
pushed higher for existing space until it reaches a level to make new
construction economically feasible.
We are posturing the Sudley Tower to be competitive with newly built office
space by upgrading the building functionally and aesthetically. Ongoing and
planned improvements include:
1. Elevator modernization
2. Renovation of the lobby
3. Upgrade bathrooms on Floors 2, 3, 4, 6, 7, 8 and 9
4. Reseal the parking lot
5
<PAGE>
5. Replace existing power motors with more efficient, lower cost, motors
which power the heating and hot water systems
6. Web site development for use as a marketing tool
These improvements are to be paid out of the cash flow from current operations
and proceeds from refinancing the existing mortgage which bears a high interest
rate and falls due within 27 months.
For further information, see Notes to Financial Statement - Note 11: Management
Plans.
LIQUIDITY
At the present time current rental income covers the expenditures for the
property.
During the twelve months period ended September 30, 1999, $292,467 of cash was
provided by operations. This reflects an increase in cash flow from operations
of $57,535 over the previous twelve month period ended September 30, 1998, due
primarily to the increase in net income. The increase in net income is offset by
the increase in tenant rents receivable, prepaid expenses and the increase in
the mortgage escrow account.
Payments of $159,700 were made to the general partner during the year ended
September 30, 1999, for current and past management fees of $93,973, $25,081 in
reimbursements and accounts payable and $7,865 in interest. Payments of $32,651
were made to Skyway Communications, LLC for commissions on antenna rents.
Funds were also used to acquire additional office equipment of $11,900, make
building improvements of $118,669, start upgrade of elevators for $152,500 and
pay deferred costs of $10,902.
CAPITAL RESOURCES
Current management estimates the current market value to be more than
$6,000,000. An improvement in the commercial rental real estate market and an
increase in the occupancy of the Manassas office building would have a major
effect on the market value of the property.
The mortgage payable on the Manassas property, which was due April 30, 1997, was
refinanced.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Independent Auditor's Report............................................F7
Balance Sheets..........................................................F8 - 9
Statements of Income....................................................F10
Statements of Changes in Partners' Equity...............................F11
Statements of Cash Flows................................................F12 - 13
Notes to Financial Statements...........................................F14 - 24
Accompanying schedules are omitted since they are included in the Notes.
6
<PAGE>
SIMON KROWITZ BOLIN & ASSOCIATES, P.A.
11300 ROCKVILLE PIKE, SUITE 800
ROCKVILLE, MARYLAND 20852
INDEPENDENT AUDITORS' REPORT
To the Partners
Gran-Mark Income Properties Limited Partnership
Manassas, Virginia
We have audited the balance sheet of Gran-Mark Income Properties Limited
Partnership as of September 30, 1999 and the related statements of income,
changes in partners' capital and cash flows for the year then ended. Our
responsibility is to express an opinion on those financial statements based on
our audit. The financial statements of Gran-Mark Income Properties Limited
Partnership as of September 30, 1998 and the statements of income, changes in
partners' equity and cash flows for the year ended September 30, 1997 were
audited by another auditor whose report dated December, 1998, expressed an
unqualified opinion on those statements.
We conducted an audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. As audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the September 30, 1999, financial statements referred to above
present fairly, in all material respects, the financial position of Gran-Mark
Income Properties Limited Partnership as of September 30, 1999 and the results
of its operations and its cash flows for the initial period then ended in
conformity with generally accepted accounting principles.
January 5, 2000
F-7
<PAGE>
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
BALANCE SHEETS
SEPTEMBER 30,
----------------------------
1999 1998
- --------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 541,278 $ 576,670
Accounts Receivable - Tenants 98,380 80,930
Accounts Receivable - Other 7,898 6,137
Prepaid Expenses 150 1,398
Mortgage Escrow Accounts 26,786 41,189
- --------------------------------------------------------------------------------- ----------- -----------
TOTAL CURRENT ASSETS 674,492 706,324
- --------------------------------------------------------------------------------- ----------- -----------
FIXED ASSETS
Land 418,598 418,598
Buildings 6,594,998 6,594,998
Building Improvements 936,551 817,882
Office Equipment 71,241 59,342
Less: Accumulated Depreciation (3,308,177) (2,985,865)
- --------------------------------------------------------------------------------- ----------- -----------
TOTAL BOOK VALUE OF FIXED ASSETS 4,713,211 4,904,955
- --------------------------------------------------------------------------------- ----------- -----------
OTHER ASSETS
Building Improvements in Process 152,500 0
Deferred Costs net of accumulated amortization of $120,132 and
$149,371 as of September 30, 1999 and 1998, respectively 111,293 174,799
- --------------------------------------------------------------------------------- ----------- -----------
TOTAL OTHER ASSETS 263,763 174,799
- --------------------------------------------------------------------------------- ----------- -----------
TOTAL ASSETS $ 5,651,496 $ 5,786,078
- --------------------------------------------------------------------------------- ----------- -----------
SEE AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS
</TABLE>
F-8
<PAGE>
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
BALANCE SHEETS (CONTINUED)
SEPTEMBER 30,
----------------------------
1999 1998
- --------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 73,998 $ 61,855
Accrued Interest 133 123
Accrued Expenses 35,224 79,865
Unearned Rental Income 32,129 16,961
Current Portion of Mortgage Payable 53,781 46,827
- --------------------------------------------------------------------------------- ----------- -----------
TOTAL CURRENT LIABILITIES 195,265 205,631
- --------------------------------------------------------------------------------- ----------- -----------
LONG-TERM LIABILITIES
Tenant Security Deposits Payable 42,407 48,549
Management Fees Payable to Amherst Properties, Inc. 70,419 72,342
Mortgage Payable - Office Building 4,023,179 4,074,425
- --------------------------------------------------------------------------------- ----------- -----------
TOTAL LONG-TERM LIABILITIES 4,136,005 4,195,316
- --------------------------------------------------------------------------------- ----------- -----------
TOTAL LIABILITIES 4,331,270 4,400,947
- --------------------------------------------------------------------------------- ----------- -----------
CONTINGENCIES AND COMMITMENTS (NOTES 3 THROUGH 10)
PARTNERS' EQUITY
General Partner (22,105) (21,456)
Limited Partners (12,000 Units authorized; 6,505 issued and
outstanding) 1,342,331 1,406,587
- --------------------------------------------------------------------------------- ----------- -----------
TOTAL PARTNERS' EQUITY 1,320,226 1,385,131
- --------------------------------------------------------------------------------- ----------- -----------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 5,651,496 $ 5,786,078
- --------------------------------------------------------------------------------- ----------- -----------
SEE AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS
</TABLE>
F-9
<PAGE>
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
FOR THE YEARS ENDED SEPTEMBER 30,
----------- ----------- -----------
1999 1998 1997
- ------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
REVENUE
Rental $ 1,431,177 $ 1,311,872 $ 1,202,577
Tenant Reimbursements 82,101 62,713 152,536
Interest 17,234 17,184 9,466
Other 261 1,209 21,223
- ------------------------------------------------------- ----------- ----------- -----------
TOTAL REVENUE 1,530,773 1,392,978 1,385,802
- ------------------------------------------------------- ----------- ----------- -----------
EXPENSES
Interest 400,408 404,578 384,541
Depreciation and Amortization 374,033 332,529 321,017
Utilities 163,472 173,935 170,709
Real Estate Taxes and Licenses 80,625 49,046 49,128
Property Maintenance and Repairs 167,954 174,703 193,316
Management Fees 89,354 85,247 84,753
General and Administration Expenses 319,832 258,223 211,043
- ------------------------------------------------------- ----------- ----------- -----------
TOTAL EXPENSES 1,595,678 1,478,261 1,414,507
- ------------------------------------------------------- ----------- ----------- -----------
NET LOSS $ (64,905) $ (85,283) $ (28,705)
- ------------------------------------------------------- ----------- ----------- -----------
ALLOCATION OF NET LOSS
General Partner $ (649) $ (853) $ (288)
Limited Partners (64,256) (84,430) (28,417)
- ------------------------------------------------------- ----------- ----------- -----------
NET LOSS PER WEIGHTED AVERAGE
LIMITED PARTNERSHIP UNIT
(6,505 UNITS) $ (9.98) $ (12.98) $ (4.37)
- ------------------------------------------------------- ----------- ----------- -----------
SEE AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS
</TABLE>
F-10
<PAGE>
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30,1999, 1998 AND 1997
----------- ----------- -----------
GENERAL LIMITED
PARTNER PARTNERS TOTAL
- ---------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Balance, September 30, 1996 $ (20,315) $ 1,519,434 $ 1,499,119
Net Loss Fiscal Year Ended 1997 (288) (28,417) (28,705)
- ---------------------------------------------------------- ----------- ----------- -----------
Balance, September 30, 1997 (20,603) 1,491,017 1,470,414
Net Loss Fiscal Year Ended 1998 (853) (84,430) (85,283)
- ---------------------------------------------------------- ----------- ----------- -----------
Balance, September 30, 1998 (21,456) 1,406,587 1,385,131
Net Loss Fiscal Year Ended 1999 (649) (64,256) (64,905)
- ---------------------------------------------------------- ----------- ----------- -----------
Balance, September 30, 1999 $ (22,105) $ 1,342,331 $ 1,320,226
- ---------------------------------------------------------- ----------- ----------- -----------
SEE AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS
</TABLE>
F-11
<PAGE>
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30,
--------- --------- ---------
1999 1998 1997
- ------------------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income or Loss from Statements of Income $ (64,905) $ (85,283) $ (28,705)
Adjustments to Reconcile Net Loss to Cash Provided by
(Used in) Operating Activities:
Depreciation and Amortization 374,033 332,529 321,017
(Increase) Decrease in:
Tenant Rents Receivable (17,450) 30,748 15,528
Accounts Receivable - Other (1,761) 0 0
Prepaid Expenses and Other 1,248 6,490 22,314
Mortgage Escrow Accounts 14,403 (2,991) (7,382)
Increase (Decrease) in:
Accounts Payable 12,143 (25,730) 32,242
Accrued Interest 10 (16,494) (29,862)
Accrued Expenses (44,641) (7,061) 3,727
Unearned Rental Income 15,168 7,849 559
Tenant Security Deposits Payable 6,142 (5,279) 9,082
Management Fees Payable to Amherst Properties, Inc. (1,923) 154 (3,218)
- ------------------------------------------------------------------------- --------- --------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 292,467 234,932 335,302
- ------------------------------------------------------------------------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Improvements in Process (152,500) 0 0
Book Value Deferred Costs Removed 10,404 0 0
Additions to Office Equipment (11,900) (17,260) (6,703)
Additions to Building Improvements (118,669) (71,154) (121,988)
Additions to Deferred Costs (10,902) (15,376) (210,438)
- ------------------------------------------------------------------------- --------- --------- ---------
NET CASH USED IN INVESTING ACTIVITIES (283,567) (103,790) (339,129)
- ------------------------------------------------------------------------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of Mortgage Payable (44,292) (40,240) (473,424)
- ------------------------------------------------------------------------- --------- --------- ---------
</TABLE>
F-12
<PAGE>
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30,
--------- --------- ---------
1999 1998 1997
- ---------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
NET CHANGE IN CASH $ (35,392) $ (90,902) $(477,251)
CASH AT BEGINNING OF YEAR 576,670 485,768 963,019
- ---------------------------------------------------------- --------- --------- ---------
CASH AT END OF YEAR $ 541,278 $ 576,670 $ 485,768
- ---------------------------------------------------------- --------- --------- ---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid During the Period for Interest $ 395,030 $ 421,072 $ 414,402
- ---------------------------------------------------------- --------- --------- ---------
SEE AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS
</TABLE>
F-13
<PAGE>
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENT
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS - The Partnership owns and operates an office
building in Manassas, Virginia which contains approximately 91,000
gross rentable square feet.
SIGNIFICANT ACCOUNTING POLICIES - The following accounting policies
conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
REVENUE RECOGNITION - Rental income is reported as earned over the
lives of the related leases. Tenant reimbursements are accrued based on
annual or quarterly expenses and included pro-rata payments under
certain leases for increases in property taxes, insurance, depreciation
and direct operating expenses. Such amounts are calculated annually on
a calendar year basis or quarterly with pro-rata portions based upon
square footage leased during the year.
RENTAL PROPERTY AND DEPRECIATION - Building is stated at cost and
depreciated over an estimated thirty-year useful life. Leasehold
improvements, also stated at cost, are depreciated over the lesser of
the length of the related leases or the estimated useful lives. The
improvements generally have a useful life from one to fifteen years.
Depreciation is computed on the straight-line method for financial
reporting purposes. For income tax purposes depreciation is computed on
both accelerated and straight-line methods. Improvements and major
renovations are capitalized, while expenditures for maintenance,
repairs and minor renovations are expensed when the cost in incurred.
DEFERRED COSTS AND AMORTIZATION - Financing costs are amortized over
the terms of the related loans using the straight-line method. Leasing
costs are amortized over the terms of the lease using the straight-line
method.
CASH AND CASH EQUIVALENTS - For balance sheet and cash flow purposes,
the Partnership considers all cash accounts, which are not subject to
withdrawal restrictions or penalties, and all highly liquid financial
instruments purchased with a maturity of three months or less to be
cash and cash equivalents.
ADVERTISING - Advertising costs are expensed as incurred.
F-14
<PAGE>
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENT
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NET LOSS PER WEIGHTED AVERAGE LIMITED PARTNERSHIP UNIT - The
computation of net income (loss) per weighted average limited
partnership units is based on the weighted average number of units
outstanding during the year. The weighted average number of units for
each period is 6,505.
INCOME TAXES - Partnerships are not subject to income taxes. The
partners are required to report their respective shares of partnership
income or loss on their individual income tax returns.
CONCENTRATION OF CREDIT RISK - Financial instruments that potentially
subject the Partnership to credit risk include cash on deposit with
financial institutions amounting to $541,278 and $576,670 at September
30, 1999 and 1998, respectively, which was insured up to $300,000 and
$300,000, respectively, by the Federal Deposit Insurance Corporation.
ALLOWANCE FOR DOUBTFUL ACCOUNTS - The Partnership considers accounts
receivable to be fully collectible; accordingly, no allowance for
doubtful accounts is required.
FINANCIAL INSTRUMENTS - The Partnership used the following methods and
assumptions to estimate the fair values of financial instruments:
Cash and Cash Equivalents - the carrying amount approximates
fair value because of the short period to maturity of the
instruments.
Receivables and Payables - the carrying amount approximates fair
value because of the short period to maturity of the
instruments.
Short and Long-Term Debt - the carrying amount approximates fair
value based on discounting the projected cash flows using market
rates available for similar maturities.
None of the financial instruments are held for trading purposes.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires the
use of estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
F-15
<PAGE>
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENT
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
NOTE 2 - RENTAL PROPERTY
Land, buildings, improvements and other capital expenditures and their
related accumulated depreciation accounts are summarized as follows:
<TABLE>
<CAPTION>
OFFICE BUILDING OFFICE
MANASSAS, VA EQUIPMENT TOTAL
----------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Date of Construction 1974
Date Acquired August 1986 Various
Land $ 418,598 $ 0 $ 418,598
Buildings 6,594,998 0 6,594,998
Other 0 66,452 66,452
----------------------------------------------- ---------- ---------- ----------
Total Initial Cost to Partnership 7,013,596 66,452 7,080,048
Improvements capitalized subsequent
to acquisition less disposals 936,551 4,789 941,340
----------------------------------------------- ---------- ---------- ----------
Total accumulated cost 7,950,147 71,241 8,021,388
----------------------------------------------- ---------- ---------- ----------
Accumulated Depreciation 3,271,236 36,941 3,308,177
----------------------------------------------- ---------- ---------- ----------
Net Book Value, September 30, 1999 $4,678,911 $ 34,300 $4,713,211
----------------------------------------------- ---------- ---------- ----------
</TABLE>
The following is a summary of activity for the land, buildings and
improvements, for the years ended September 30, 1997, 1998 and 1999:
<TABLE>
<CAPTION>
RENTAL ACCUMULATED
PROPERTY DEPRECIATION
----------------------------------------------- ----------- ------------
<S> <C> <C>
Balance, September 30, 1996 $ 7,668,454 $(2,446,793)
October 1, 1996 through September 30, 1997
additions during the period:
Improvements capitalized 121,988
Depreciation expense (273,041)
Deletions during the period 0 0
----------------------------------------------- ----------- -----------
</TABLE>
F-16
<PAGE>
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENT
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
NOTE 2 - RENTAL PROPERTY (CONTINUED)
<TABLE>
<CAPTION>
RENTAL ACCUMULATED
PROPERTY DEPRECIATION
- ----------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Balance, September 30, 1997 $ 7,790,442 $(2,719,834)
October 1, 1997 through September 30, 1998
additions during the period:
Improvements capitalized 71,154
Depreciation expense (269,960)
Deletions during the period (30,118) 30,118
- ----------------------------------------------------------------------- ----------- -----------
Balance, September 30, 1998 7,831,478 (2,959,676)
October 1, 1998 through September 30, 1999
additions during the period:
Improvements capitalized 118,669
Depreciation expense (311,966)
Deletions during the period 0 40,725
- ----------------------------------------------------------------------- ----------- -----------
Balance, September 30, 1999 $ 7,950,147 $ 3,230,917
- ----------------------------------------------------------------------- ----------- -----------
</TABLE>
NOTE 3 - COMMITMENT
As part of the building renovation, the Partnership entered into a
contract for elevator upgrading. The total contract amount is $305,000
of which $152,500 has been paid. The amount paid represents the
materials needed for the upgrade. The remaining $152,500 is for labor
and is paid as the work progresses. All of these amounts are being
capitalized until all work is completed.
F-17
<PAGE>
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENT
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
NOTE 4 - PLAN OF REORGANIZATION UNDER CHAPTER 11
By August 24, 1990, limited partners owning more than 60% of the
Partnership's units voted to remove Gran-Mark Properties, Inc. and
Fourth Coast Properties Ltd. as the general partners and replace the
former general partners with Amherst Properties, Inc., the current
general partner. The effective date of removal in accordance with the
Partnership Agreement was September 30, 1990. On September 28, 1990,
two days prior to the effective date of removal, the former managing
general partner filed a petition for relief under Chapter 11 of the
federal bankruptcy laws on behalf of Gran-Mark Income Properties
Limited Partnership (the "Debtor") in the United States Bankruptcy
Court for Eastern District of Virginia - Alexandria Division.
A Plan of Reorganization dated March 27, 1992, a First Amended Plan of
Reorganization dated April 13, 1992, and a Second Amended Plan of
Reorganization dated June 2, 1992 were filed with the Court for
approval.
On June 24, 1992, the U.S. Bankruptcy Court for the Eastern District of
Virginia, Alexandria Division, approved a Disclosure Statement in
connection with the Plan or Reorganization and the Plan was confirmed.
The effective date of the Plan was August 28, 1992.
Under the plan, which was also approved by the mortgage holder, all
creditors were completely paid in full. In 1997, the property was
refinanced under better terms and at a lower mortgage balance.
Based upon a review of past income and expenses, it is the opinion of
current management that the filing for relief under Chapter 11 could
have been avoided.
When an entity emerges from a Chapter 11 reorganization, it must
determine if the reorganization value of its assets before the date of
confirmation is less than the total of all post-petition liabilities
and allowed claims, and if the holders of existing voting shares
immediately before confirmation receive less than fifty percent (50%)
of the voting shares of the emerging entity. If these conditions exist,
then the entity adopts fresh-start reporting which adjusts the
historical amounts of individual assets and liabilities, reports
forgiveness of debt and creates a new reporting entity.
These conditions did not exist and the partnership did not adopt
fresh-start reporting.
F-18
<PAGE>
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENT
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
NOTE 5 - CAPITAL CONTRIBUTIONS
Under the provisions of the Plan of Reorganization, the general partner
notified all limited partners of their right to make a capital
contribution and the consequences of any failure to make the required
capital contribution. The new capital raised under the Plan was
$480,400: $300,250 from the 5% contribution due July 19 1992, (25 days
after the date of approval of the Disclosure Statement by the
Bankruptcy Court) and $180,150 from the 3% contribution due July 28,
1993 (the first anniversary of the date of confirmation of the Plan or
Reorganization).
The partnership received $480,400 related to the cash call and the
partnership issued 6,005 units.
Under the Plan, the Amended Partnership Agreement was further modified
to provide for future cash calls as deemed appropriate by the General
Partner. Such cash calls shall not cause a forfeiture of Partnership
interest for any Equity Security Holder who has made the subscriptions
required by the Plan, however, any future cash call may result in a
dilution in Partnership Interest.
Under the Plan of Reorganization, the general partner, Amherst
Properties, Inc. had the right to convert its approved claim of $50,000
represented by a Note dated August 28, 1992, into a partnership
interest in the reorganized partnership at the conversion price of
$100.00 per partnership unit. On August 1, 1993, Amherst Properties,
Inc. exercised that right and 500 units were issued.
As of September 30, 1998, a total of 6,505 units had been issued.
NOTE 6 - SECURED CLAIMS
Secured claims as of September 30, 1999 and 1998, which are
collateralized by liens on the Partnership's rental property, including
their related leases and accounts receivable are summarized below:
<TABLE>
<CAPTION>
LENDER PROPERTY SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
------------------------------ ----------------------- ------------------------- ---------------------------
<S> <C> <C> <C>
Sudley Tower
Regency Savings Bank Manassas, VA $ 4,076,960 $ 4,121,251
</TABLE>
F-19
<PAGE>
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENT
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
NOTE 6 - SECURED CLAIMS (CONTINUED)
Scheduled maturities of secured claims at September 30, 1999, are as
follows:
FYE 2000 $ 53,781
FYE 2001 61,379
FYE 2002 3,961,800
FYE 2003 0
------------
$ 4,076,960
============
REGENCY SAVINGS BANK - On February 18, 1997, Gran-Mark Income
Properties Limited Partnership and Regency Savings Bank entered into a
Loan Extension and Modification Agreement to extend the maturity date
and to modify the promissory note dated May 29, 1987. The maturity date
of the note was extended to February 18, 2002, at which time a balloon
payment of approximately $3,926,800 is due. As of February 18, 1997,
the outstanding principal balance was $4,190,256. The mortgage bears
interest at the rate of 9.5%. Fixed monthly payments of principal and
interest of $36,610 are due through February 2002. In addition to
monthly payments of principal and interest, a monthly escrow deposit
for the real estate taxes is required. Pursuant to the terms of the
Modification Agreement and Allonge to Promissory Note dated June 30,
1992, the sum of $421,184 was required as payment of deferred interest
and unpaid fees. In addition, an extension fee of $41,903 was payable
by February 18, 1998. Interest charged to operations during the years
ended September 30, 1999, 1998 and 1997 was $395,030, $399,082 and
$247,851, respectively.
NOTE 7 - RELATED PARTY TRANSACTIONS
MANAGEMENT AGREEMENTS - The Partnership maintains a management
agreement with Amherst Company, Inc. which provides for a monthly
payment of management fees in the amount of six percent (6%) of gross
rents collected and reimbursement of out-of-pocket expenses incurred in
connection with the property.
On December 4, 1997, the partnership executed an Amendment to
Management Agreement with Amherst Properties, Inc. extending the
expiration date to December 3, 2007. All other terms and conditions
remain the same.
Accordingly, aggregate management fees charged to operations for the
years ended September 30, 1999, 1998 and 1997 were $89,354, $85,247 and
$84,754, respectively.
F-20
<PAGE>
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENT
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
NOTE 7 - RELATED PARTY TRANSACTIONS (CONTINUED)
As of July 1, 1999, the Partnership leased the rooftop and building
space to Skyway Communications, LLC, to market, install and maintain
antenna usage and collect rents. Operating expenses for technical
support personnel will be paid by Skyway. The lease provides for
monthly rent equal to 63% of gross antenna rents collected. Skyway
Communications, LLC collects the rent on a monthly basis and makes a
quarterly rent distribution to the Partnership based on rents
collected.
REIMBURSEMENT OF PARTNERSHIP OPERATING EXPENSES - The Partnership
agreement provides for reimbursing the general partner and its
affiliates for costs of providing administrative services to the
partnership. Reimbursements charged to operations or capitalized for
the years ended September 30, 1999, 1998 and 1997 were $16,386, $23,871
and $21,557, respectively.
During the period from October 1990 through December 1990, the general
partner paid $79,994 in various costs for the Partnership. During prior
periods, $35,174 of these costs have been reimbursed to the general
partner, leaving a balance of unreimbursed costs of $44,820 as of
September 30, 1999. These unreimbursed costs are included in management
fees payable to Amherst Properties, Inc. In December 1995, the
Partnership agreed to pay interest at the rate of 12% on these
unreuimbursed costs from December 31, 1990, until paid. Interest
charged to operations for the years ended September 30, 1999, 1998 and
1997, were $5,378, $5,496 and $5,378, respectively.
Certain administrative and operating expenses and certain capitalized
costs incurred on the Partnership's behalf by Amherst Properties, Inc.
are billed to Amherst Properties, Inc. but are paid directly by the
Partnership.
During the fiscal year ended September 30, 1999, the Partnership paid
$9,206 for the monthly loan payment and other expenses related to a
vehicle owned by Amherst Properties, Inc. Both the vehicle and loan are
in Amherst Properties, Inc.'s name. These payments are included in the
interest paid to Amherst Properties, Inc.
F-21
<PAGE>
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENT
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
NOTE 8 - OPERATING LEASES
Minimum future rentals to be received under noncancellable operating
leases from tenants in effect at September 30, 1999, are as follows:
Year ending September 30,
2000 $ 1,166,175
2001 856,132
2002 378,904
2003 251,822
2004 130,053
-----------
$ 2,783,086
===========
General leasing arrangements include a remaining fixed rental term with
annual increases, pro rata share of increases in property expenses and
various renewal options.
NOTE 9 - INCOME TAXES
A basic requirement of federal tax law requires that a partnership's
general partners assume unlimited liability. Requirements, among
others, in determining whether a limited partnership will be recognized
as a partnership or if it will be recognized as a corporation are as
follows:
A. Limited partners may not own directly or indirectly more than
20 percent of the corporation or its affiliates.
B. The net worth of the corporation must at all times be a
minimum of 10 percent of total partnership contribution.
F-22
<PAGE>
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENT
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
NOTE 9 - INCOME TAXES (CONTINUED)
Affiliates of one of the Partnership's limited partners own a
two-thirds interest in Amherst Properties, Inc. and Amherst Properties'
net worth is less than the guidelines suggest. Accordingly, the
possibility exists that the Partnership could be classified as an
association and be subject to corporate tax laws, which could result in
the disallowance of previous deductions taken by limited partners on
their individual returns.
As previously noted in Securities and Exchange Commission filings, the
previous managing general partner has not met the net worth
requirements since 1987.
The Tax Reform Act of 1986 required the Partnership to change its
reporting period for income tax purposes to a calendar year. The change
became effective for the three month period ended December 31, 1988.
NOTE 10 - PARTNERSHIP ALLOCATIONS
Partnership income and net cash from operations are allocated 99% to
the limited partners and 1% to the general partner until the limited
partners have received their cumulative 7% priority return. After this
return has been achieved, the general partner will then be allocated
its annual incentive management fee so that total distribution will
aggregate 10% to the general partner and 90% to the limited partners in
accordance with the Partnership Agreement. The general partner will
then receive its deferred incentive management fee, if any, and any
remaining income. Net cash from operations is allocated 90% to the
limited partners and 10% to the general partner. Losses are allocate
99% to the limited partners and 1% to the general partner.
NOTE 11 - MANAGEMENT PLANS
During the past year Prince William County experienced business growth
and real estate development which impacted favorably on the Sudley
Tower. Our occupancy continues to remain high with increasing base
rental rates. We are also attracting larger companies with more
diversity such as insurance, temporary personnel staffing and service
organizations. With high tech more in demand, we are offering a high
transmission data line for lease to existing and new tenants.
Although the real estate market slowed some during the third quarter of
1998 we are continuing to upgrade the building to position ourselves in
the real estate market and to become more attractive for new tenants.
F-23
<PAGE>
GRAN-MARK INCOME PROPERTIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENT
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
NOTE 11 - MANAGEMENT PLANS (CONTINUED)
Our capital improvement program continues to be implements, as funds
become available. The scheduled improvements include the following: 1)
installation of a T-1 data transmission line; 2) renovation of
bathrooms on Floors 2, 3, 4, 6, 7, 8 and 9; 3) modernization of the
elevators; 4) installation of energy efficient motors, which power the
heating and hot water systems; and 5) replacement of ceiling tiles
throughout the building.
Our efforts to sell the Sudley Tower during the early part of 1998 were
not successful in bringing any favorable results due to the conditions
caused by the uncertainty in the stock market and the money market
changes in Europe and Asia. These events dulled the enthusiasm of the
real estate investment trusts and other institutional investors to
acquire real estate. In addition, the Sudley Tower itself has little
appeal to institutions as a stand-alone property.
In view of this experience and the volatile market conditions we are
now seeking ways to enhance the value of the property. Methods under
consideration are development of a rooftop management program with
aggressive marketing on a web site as well as E-mail advertising and
distribution. In this regard we have engaged a technical analyst to
prepare a report and design for rooftop antenna.
Also under consideration is the installation of a T-1 line in the
conference room, Jackson Hall, for transient visitors and temporary
offices for people moving into the area or people doing business in the
area for several days. Additional avenues of property value enhancement
are also under consideration.
The Prince William County Board of Supervisors have initiated a new
policy of business growth in order to stimulate the economy of the
County. Under the plan, permit processing for new construction will be
quicker and more land rezoning will be done for business development.
The effect of these policy changes will bring new businesses into the
County and favorably impact the value and saleability of the Sudley
Tower. Accordingly, marketing will be more aggressive in the year 2000.
F-24
<PAGE>
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
In May, 1999 Simon Krowitz Bolin & Associates, P.A. were appointed certified
public accountants for the Partnership, replacing Jennifer A. Jones, CPA, Ltd.
Jennifer A. Jones, CPA, Ltd. had replaced Charles M. Terry & Company. Charles M.
Terry & Company had replaced Charles H. Schnepfe, Certified Public Accountant in
1990. Charles H. Schnepfe had replaced Roberts, Halt and Company in 1989, and
Roberts, Halts and Company had replaced Price Waterhouse in 1988.
Part III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The partnership has no directors or officers under the Partnership Agreement and
the General Partner is solely responsible for the operation of the Partnership
and its properties. The Limited Partners have no right to participate in the
control of the Partnership. The current General Partner is solely responsible
for the operation of the Partnership and its properties. The Limited Partners
have no right to participate in the control of the Partnership. The current
General Partner is Amherst Properties, Inc., located at 7900 Sudley Road, Suite
900, Manassas, Virginia 20109 ([703] 368-2415).
For information concerning the former general partners, see previous SEC
filings.
Louis J. Marin, age 64, is the President of Amherst Properties, Inc. He received
his B.B.A. in Business from City College, New York (1957), his MBA from Cornell
University (1959) and his law degree from George Washington University (1964).
He worked in the regulatory field for the Securities & Exchange Commission and
the Office of the Comptroller of the Currency for 6 years. For the last 26 years
he has worked as a lawyer specializing in real estate. During this time he has
been a developer, investor and manager of real estate.
Dr. Lionel Felsen, age 63, is the Executive Vice President of Amherst
Properties, Inc. He did his undergraduate at Brooklyn College and graduate work
at Georgetown University Medical and Dental School, D.D.S. (1964). He managed a
professional office from 1964 until 1993. He has been an active investor in
commercial and residential real estate for 28 years and is the major investor in
Sher-Man Real Estate Partnership.
ITEM 11- EXECUTIVE COMPENSATION
The Partnership has no directors or officers. The Partnership will pay the costs
incurred by the General Partners or their affiliates in performing
administrative services necessary to the prudent operation of the Partnership;
provided, however, that the amounts charged to the Partnership for services
performed shall not exceed the lessor of (1) the actual cost of the services, or
(b) 90% of the competitive price which would be charged by non-affiliated
persons rendering services in the same or a comparable geographic location.
Costs of the services as used herein means the pro
25
<PAGE>
rata cost of personnel including an allocation of overhead directly attributable
to such services. See Note 6 of the Notes to Financial Statements (Item 8) for
Management fees and other payments to the Managing General Partner and its
affiliates.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of September 30, 1999, Lou Marin, President of Amherst Properties, Inc., was
a beneficial owner of 629.7438 units or 9.58% of the Partnership; Lionel Felsen,
Executive Vice-President of Amherst Properties, Inc., was a beneficial owner of
1116.5596 units or 16.99% of the Partnership and Amherst Properties, Inc. was a
beneficial owner of 500 units or 7.61% of the Partnership, in addition to its
general partnership interest. To the knowledge of the Partnership's management
there are no other beneficial owners of more than 5% of the Partnership.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See Note 6 of the Notes to Financial Statements at Item 8.
Part IV
(A) (1) Financial Statements - See Item 8
(B) Reports on Form 8-K: None
(C) Exhibits: None
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 undersigned, thereunto duly authorized.
Gran-Mark Income Properties Limited Partnership
By: Amherst Properties, Inc.
General Partner
By: Louis J. Marin January 27, 2000
Louis J. Marin Date
President
26
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> SEP-30-1999
<CASH> 541,278
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 674,492
<PP&E> 8,021,388
<DEPRECIATION> 3,308,177
<TOTAL-ASSETS> 5,651,496
<CURRENT-LIABILITIES> 195,265
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,320,226
<TOTAL-LIABILITY-AND-EQUITY> 5,651,496
<SALES> 1,513,278
<TOTAL-REVENUES> 1,530,773
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,195,270
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 400,408
<INCOME-PRETAX> (64,905)
<INCOME-TAX> 0
<INCOME-CONTINUING> (64,905)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (64,905)
<EPS-BASIC> (9.98)
<EPS-DILUTED> (9.98)
</TABLE>
