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 (fee required)
For the fiscal year ended December 31, 1995
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (no fee required)
For the Transition period from to
Commission file number: 0-16024
EASTPOINT MALL LIMITED PARTNERSHIP
Exact name of Registrant as specified in its charter
Delaware 13-3314601
State or other jurisdiction of I.R.S. Employer Identification No.
incorporation or organization
3 World Financial Center, New York,
New York 29th Floor
Attn: Andre Anderson 10285-2900
Address of principal executive offices Zip Code
Registrant's telephone number, including area code: (212) 526-3237
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
DEPOSITARY 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 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 is not contained herein, and will not be contained, to the
best of the 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)
Aggregate market value of voting stock held by non-affiliates of the
Registrants: Not applicable
Documents Incorporated by Reference: See Exhibit Index in Part IV to this Form
10-K.
PART I
Item 1. Business
(a) General Development of Business
Eastpoint Mall Limited Partnership (the "Partnership"), a Delaware limited
partnership, was formed on June 26, 1985. The affairs of the Partnership are
conducted by Eastern Avenue Inc. (the "General Partner," formerly Shearson
Lehman Eastern Avenue Inc.), a Delaware corporation and affiliate of Lehman
Brothers Inc. ("Lehman"). The Partnership was formed to acquire a general
partnership interest in Bellwether Properties, L.P., a New York limited
partnership, from Corporate Property Investors, the sole asset of which is
Eastpoint Mall (the "Mall") located in Baltimore County, Maryland. Concurrent
with the acquisition, Bellwether Properties, L.P. was reconstituted under the
name of Eastpoint Partners L.P. (the "Owner Partnership"), and the Partnership
became the managing general partner of the Owner Partnership. The Owner
Partnership consists of the Partnership which holds a 90.9% interest in the
Owner Partnership, the General Partner which holds a .1% interest and SFN
Limited Partner ship ("SFN"), a Maryland limited partnership which is an
affiliate of The Shopco Company which holds a 9% interest in the Mall
(collectively the "Owner Partners"). Shopco Management Corp. has been retained
by the Owner Partnership as managing and leasing agent for the Mall.
On November 22, 1985, the Partnership commenced investment operations with the
acceptance of subscriptions of 4,575 limited partnership units, the maximum
authorized by the limited partnership agreement ("Limited Partnership
Agreement"). Upon the admittance of the additional limited partners, the
initial limited partner withdrew from the Partnership.
On November 29, 1985, the Owner Partnership acquired the Mall by purchasing all
of the general partnership interests in Bellwether Properties, L.P., for a
purchase price of $28,634,598.
In December 1989, the Partnership obtained first mortgage financing (the "First
Mortgage Note") in the maximum amount of $50,000,000 secured by the Mall to:
(1) repay the existing indebtedness of the Owner Partnership, (ii) make certain
capital improvements to the Mall, including the construction of a Sears
department store and the acquisition of the underlying real estate, the
creation of additional Mall shops in the area previously occupied by Hutzler's,
a former anchor tenant, and an overall renovation of the Mall, and (iii) make a
cash distribution to each limited partner on February 1, 1990 of $2,500 for
each $5,000 interest owned. The renovation of the Mall and construction of the
Sears store were completed during 1991.
The First Mortgage Note was scheduled to mature on December 28, 1994. In
December 1993, the Partnership obtained new first mortgage financing in the
amount of $51,000,000 from CBA Associates, Inc., an entity which placed the new
mortgage into a pool of mortgages to be held by a Real Estate Mortgage
Investment Conduit (the "REMIC Lender" or "CBA Conduit, Inc."). For the terms
of the new financing, see Note 5 to the Notes to the Consolidated Financial
Statements.
(b) Financial Information About Industry Segments
All of the Partnership's revenues, operating profit or loss and assets relate
solely to its interest as the general partner of the Owner Partnership. All of
the Owner Partnership's revenues, operating profit or losses and assets relate
solely to its ownership interest in and operation of the Mall.
(c) Narrative Description of Business
The Partnership's sole business is acting as the managing general partner of
the Owner Partnership. The Owner Partnership's sole business is the ownership
and operation of the Mall. See Item 2 for a description of the Mall and its
operations. The Partnership's investment objectives are to:
(i) provide cash distributions from operations of the Mall;
(ii) achieve long-term appreciation in the value of the Mall; and
(iii) preserve and protect Partnership capital and the Owner Partnership
capital.
There is no guarantee that the Partnership's objectives will be achieved.
The Mall is managed on a day-to-day basis by Shopco Management Corp., a New
York corporation (the "Property Manager"). The Property Manager is responsible
for rent collection, leasing and day-to-day on-site management of the Mall.
The Owner Partnership has the right to terminate the Property Manager, without
cause, at any time during the term of the Property Management and Leasing
Agreement. The Property Manager receives 4.5% per annum of all fixed rents,
minimum rents, and percentage rents (as such terms are defined in the
respective leases) collected from operations of the Mall for providing property
management and leasing services. In the event that the Property Manager ceases
to act as management and leasing agent of the Mall, SFN's limited partnership
interest in the income, profits, and cash distributions of the Owner
Partnership will be reduced to 7%. For the years ended December 31, 1995,
1994, and 1993, the management fee earned by the Property Manager amounted to
$349,16 6, $389,631, and $370,812, respectively. Please refer to Note 7 to the
Notes to the Consolidated Financial Statements for additional discussion
regarding the Partnership's management agreement with the Property Manager.
The Owner Partnership's business, as owner and operator of the Mall, is
seasonal since a portion of its revenue is derived from a percentage of the
retail sales of certain tenants at the Mall. Generally such sales are higher
in November and December during the holiday season.
Employees
The Partnership has no employees. The affairs of the Partnership are conducted
by the General Partner. See Item 11 and Item 13 for a discussion of the
management of the Mall.
Item 2. Properties
Eastpoint Mall is an enclosed regional shopping center located on approximately
67.1 acres in Baltimore County, Maryland, approximately one mile east of the
city limits of Baltimore. The Mall consists of a central enclosed mall
anchored by four major department stores - J.C Penney, Inc. ("J.C. Penney"),
Schottenstein Stores Corporation, doing business as Value City ("Value City"),
Sears, Roebuck, and Co. ("Sears") and Ames Department Stores, Inc. ("Ames").
The retail space in the Mall is contained on one level; J.C Penney and Value
City are multi-level and there are five freestanding buildings. Office and
storage areas are contained in the lower level of existing mall space, and in
the lower and upper floor levels of the expansion mall space. Parking is
provided for over 4,500 cars.
The Mall currently has gross leasable space totalling 864,993 square feet. Of
this leasable space, 637,582 is owned by the Owner Partnership and 227,411
square feet of gross leasable space area is owned by the tenants who have
leased portions of land pursuant to ground leases with the Owner Partnership.
Upon expiration of such ground leases, ownership of the buildings thereon will
revert to the Owner Partnership.
On December 28, 1989, the Partnership purchased 5.1 acres of land adjacent to
the Mall for a contract sales price of $640,125 on which a one-story, 79,000
square foot Sears Department store and an 8,734 square foot automotive center
were constructed. The Sears department store and automotive center, located
adjacent to the new food court, opened in October 1991. As described below,
the Partnership owns the store and leases it to Sears, which serves as a
replacement anchor tenant for Hutzler's, which vacated the Mall on January 22,
1990, after expiration of its lease on July 31, 1989. The space previously
occupied by Hutzler's was converted into new mall shops, a food court and
seating area, and office space. The construction of the new space was
completed in 1991, as was a renovation program at the Mall which replaced
skylights and floors and refurbished mall common areas.
The total building area of the Mall is allocated as shown in the table below.
Percent of
Square Feet Total Area
Anchors:
J.C. Penney 168,969 20%
Value City 140,000 16
Sears 87,734 10
Ames 58,442 7
Specialty Retailers(1) 344,688 39
Atrium and Office Space 65,160 8
Total 864,993 100%
(1) Includes outparcel stores and outdoor tenants.
Anchor Tenants
J.C. Penney leases a parcel of land pursuant to a ground lease on which it has
constructed the largest of the Mall's four anchor stores, together with a
freestanding store, containing an aggregate of approximately 168,969 square
feet of building area, or 20% of the gross leasable building area of the Mall.
Ownership of the anchor store, currently owned and occupied by J.C. Penney, and
ownership of the freestanding store, currently owned by J.C. Penney and
subleased to Firestone Tire and Rubber Co. and Sherwin-Williams, will revert to
the Owner Partnership upon the expiration of the ground lease. The initial
term of the J.C. Penney ground lease expires on August 31, 2001. Four 5-year
renewal options and two 10-year renewal options are available on the same terms
and conditions. The minimum rent payable thereunder is $1,500 annually plus a
percentage rent of .5% of gross sales.
The ground lease with J.C. Penney provides that J.C. Penney does not have to
operate if (i) at least 250,000 square feet of the total retail space of the
Mall, including the space occupied by Value City, the space previously occupied
by Hutzler's and certain other space, is not being used for retail use, or
(ii) neither Schottenstein Stores Corporation (or any successor) nor Hutzler's
(or any successor) are operating retail department stores in their premises.
If at any time, J.C. Penney discontinues the use of its anchor store as a
retail department store and assigns its lease or sublets the premises within a
certain period of time, the Owner Partnership, as landlord, has the right to
purchase the lease at fair market value.
Value City, the second largest anchor store, leases approximately 140,000
square feet, or 16% of the gross leasable building area of the Mall, and is
located at the western end of the Mall. The initial term of the Value City
lease was scheduled to expire on November 30, 1999. On September 14, 1995, the
expiration date of the lease was extended until November 30, 2009. A 10-year
renewal option is available on the same terms and conditions. Per the terms of
the September 14, 1995 amendment to the lease, the minimum rent payable
thereunder was increased from $220,000 to $585,000 per annum, with increases
based on the following increments in annual sales: 3 1/2% of the first 4.2
million in sales; 3 1/4% of sales in excess of $4.2 million but not in excess
of $7 million; 3% of sales in excess of $7 million but not exceeding $8.4
million, and 2 1/2% of sales in excess of $8.4 million.
Ames (previously G.C. Murphy) leases a parcel of land pursuant to a ground
lease on which it has constructed a building containing approximately 58,442
square feet of building area, or 7% of the gross leasable building area of the
Mall. The initial term of the Ames ground lease expires on May 30, 2004. One
10-year renewal option is available on the same terms and conditions.
Ownership of the building now owned and occupied by Ames will revert to the
Owner Partnership upon the expiration of the ground lease. The minimum rent
payable under the Ames ground lease is $204,000 annually with a percentage rent
of .5% of gross sales above the breakpoint of $4,800,000 until January 31,
1999. Commencing on February 1, 1999, minimum rent payable will increase to
$257,000 per annum. In the event that Ames exercises its renewal option, the
minimum rent payable is $257,000 per year with a percentage rent of .5% of
gross sales above the breakpoint of $6,000,000. Ames is not required to
operate if (i) less than 150,000 square feet in the Mall is used for retail
use, or (ii) any two of Value City, Hutzler's or J.C. Penney (or any successor)
cease operations as an anchor store in the Mall.
On April 26, 1990, Ames filed for bankruptcy protection under Chapter 11 of the
Federal Bankruptcy Code. By filing its bankruptcy petition, Ames was in
default under the deed of trust held by Consolidated Fidelity Life Insurance
Company ("Consolidated") and secured by the Ames parcel. In July 1994, the
Partnership entered into a settlement agreement with Consolidated regarding the
Ames parcel. Please refer to Item 3, Item 7 and Note 3 to the Notes to the
Consolidated Financial Statements for a description of the Ames bankruptcy and
the Release Agreement negotiated by the Partnership and Consolidated.
Sears leases approximately 79,000 square feet of gross leasable area in a new
anchor store opened in October 1991, together with a freestanding store,
containing an aggregate of approximately 87,734 square feet of building area or
10% of the gross leasable building area of the Mall. The initial term of the
lease expires on October 16, 2006. The tenant has the right to extend the
lease term for seven additional periods of five years each under the same
terms, by providing the landlord written notice no less than twelve months
prior to the end of the lease term. Rent is based on a percentage of net
sales, with the tenant paying a sum equal to 1.75% of net sales in excess of $1
but less than $16,000,000 and a sum equal to 1.5% of net sales that exceed
$16,000,000.
The lease with Sears provides that Sears does not have to operate if (i) less
than 60% of the gross leasable area of the Mall (excluding anchor stores) is
not operating and (ii) at least two of the anchor stores are not operating. If
such events occurred, the landlord has twelve months in which to remedy any
condition which would enable Sears to terminate the lease agreement.
Mall, Outparcel Tenants and Atrium Space
During 1995, 18 leases totalling 27,323 square feet of space were executed with
new and existing tenants. During the third quarter of 1995, the Partnership
executed a lease with H&R Block for 2,500 square feet in the Atrium office
space. During the fourth quarter of 1995, the Partnership executed a lease
with Ultrazone, a laser-tag entertainment concept for approximately 9,000
square feet in the lower level of the Atrium office space. Prior to the
execution of these leases, the Atrium office space was unoccupied. Due to the
sluggish commercial real estate market in eastern Baltimore County, the leasing
of additional Atrium office space is anticipated to be a lengthy and capital
intensive process. Costs associated with maintaining the space consist
primarily of utility expenses which are included in property operating
expenses. These costs, as well as costs associated with marketing the space
for lease, are funded from the Partnership's cash flow and cash reserves.
Staples leases an outparcel store with 36,000 square feet of building area or
4.2% of the gross leasable building area of the Mall. The primary lease term
runs through the year 2004, plus two lease renewal options for five years each.
The fixed minimum rent during the primary term begins at $7.50 per square foot
and escalates throughout the term of the lease reaching $8.25 per square foot
for years eleven through fifteen, subject to certain cost-of-living
adjustments.
During 1995, the retail industry, particularly apparel merchants and other
mall-based retail chains, continued to suffer from changes in shoppers' buying
patterns which have primarily benefitted discount retailers and superstores.
The continuing difficulties in the retail industry are evidenced by the
increasing number of bankruptcy filings by many companies. As of the date for
which this report is filed, six tenants, or their parent corporations, at the
Mall have filed for protection under the U.S. Federal Bankruptcy Code. These
tenants currently occupy approximately 5% of the Mall's leasable area
(exclusive of anchor tenants), and at this point their plans to remain at the
Mall remain uncertain. Please refer to Item 7 for a listing of Mall tenants
which have filed for bankruptcy protection.
Competition
Eastpoint Mall is the only regional shopping center located within a 3 mile
radius from the center (the primary geographical area from which the Mall
derives its repeat sales and regular customers). However, two shopping centers
are directly competitive with the Mall. Golden Ring Mall, located slightly
over three miles northeast of Eastpoint Mall, represents its principal
competition. Golden Ring Mall is a two-story center containing 737,476 square
feet of gross leasable area. Golden Ring has three anchor tenants, Hecht's,
Caldor and Montgomery Ward, as well as approximately 80 smaller mall stores.
Golden Ring completed a cosmetic renovation of both the interior and exterior
of the center during 1992.
White Marsh Mall is located approximately six miles north of the Mall and
contains approximately 1,105,000 square feet of gross leasable space on two
levels. Anchor stores include Macy's, J.C. Penney and Sears. There is an
empty anchor space in the former site of Woodward & Lothrup. Ikea is located
on a site at the mall. White Marsh contains approximately 180 stores.
Temporary Tenants
A formal temporary tenant program was instituted in November 1992 in which
kiosks and vacant spaces are used as temporary retail locations. The program
generated revenues of $302,815 in 1995. The temporary tenant program is
managed by Shopco Management Corp., the Mall's property manager.
Item 3. Legal Proceedings
Land leased to Ames by the Owner Partnership together with the building
constructed thereon by Ames, secured a deed of trust held by Consolidated
Fidelity Life Insurance Company ("Consolidated"). In 1990, Ames filed for
bankruptcy protection under Chapter 11 of the Federal Bankruptcy Code, thereby
defaulting on the Consolidated deed of trust. On December 18, 1992, the
Bankruptcy Court confirmed a Plan of Reorganization for Ames (the "Plan") and
the plan was subsequently consummated. Pursuant to the Plan, Ames assumed the
lease of its store at the Mall and continues its operations there. In July
1994, the Partnership executed a Compromise and Mutual Release (the "Release
Agreement") with Consolidated. Pursuant to the terms of the Release Agreement
, the Partnership paid Consolidated $2 million in return for the assignment of
the deed of trust and related Ames promissory note, as well as Consolidated's
claim in the Ames bankruptcy case relating to such promissory note.
Consolidated 's total claims, in the face amount of approximately $2.3 million,
consist of the balances due on the Ames promissory note, totaling $1.7 million,
and another promissory note. Pursuant to the Release Agreement, the
Partnership is entitled to any recovery based on the Ames promissory note;
Consolidated will receive any recovery on the other note. The trustee in
bankruptcy in the Ames bankruptcy case has entered an objection to this claim,
however, the Partnership is pursuing legal action to collect the claimed
amount. For the year ended December 31, 1994, the Partnership recorded a note
receivable in the amount of $816,000. In 1995, the note receivable was
written-down by $78,000 to $738,000 which represents the amount the Partnership
expects to receive from the claim pending bankruptcy court approval.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted for a vote of the Unit Holders during the fourth
quarter of the year for which this report has been filed.
PART II
Item 5. Market for the Partnership's Limited Partnership Units and Related
Security Holder Matters
(a) Market Price Information
There is no established trading market for the Units of the Partnership. The
Partnership had 4,575 Units outstanding at December 31, 1995.
(b) Holders
There were 1,792 Limited Partners as of December 31, 1995.
(c) Distributions of Cash
Since inception, Limited Partners have received cumulative distributions of
$5,358.27 per unit, including a $2,500 return of capital in 1990.
Cash distributions to limited partners were suspended from the second quarter
of 1991, until the second quarter of 1994, due to: (i) an increasingly
competitive retail environment, which required substantial capital resources
devoted to attracting and leasing space to quality, creditworthy tenants, (ii)
the costs of the 1991 renovation program, (iii) the Sears construction, (iv)
the potential costs of the Ames bankruptcy, and (v) potential costs associated
with refinancing the Mall's First Mortgage Note. As a result of these factors,
it was necessary for the Partnership to maintain increased working capital
reserves. The renovation and Sears construction were completed in 1991, and
the refinancing of the First Mortgage Note was completed in late 1993.
Following the execution of the Consolidated Release Agreement (see Item 7), the
Partnership reinstated quarterly distributions to the Limited Partners
commencing with the second quarter of 1994 in the amount of $62.50 per Unit.
This quarterly level was maintained through the year ended December 31, 1995.
In addition the Partnership paid a special cash distribution of $218.50 per
Unit on June 7, 1995 from excess cash reserves. The level, timing, and amount
of future distributions, including special distributions, will be reviewed at a
minimum on a quarterly basis after an evaluation of the Mall's performance and
the Partnership's current and future cash needs. No assurances can be made
regarding the size or continuance of future distributions.
Quarterly Cash Distributions Per Limited Partnership Unit
1995* 1994*
First Quarter $ 62.50 $ -
Second Quarter 281.00** 62.50
Third Quarter 62.50 62.50
Fourth Quarter 62.50 62.50
TOTAL $ 468.50 $ 187.50
* Distribution amounts are reflected in the period for which they are
declared. The record date is the last day of the respective
quarter and the actual cash distributions are paid approximately 45
days after the record date.
** Includes the $218.50 per Unit special cash distribution paid on June
7, 1995.
Item 6. Selected Financial Data.
The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and related Notes
appearing elsewhere in this Form 10-K.
(in thousands except per Unit data)
As of and for the years ended December 31,
1995 1994 1993 1992 1991
Total Rental and
Percentage Income $ 8,104 $ 7,907 $ 7,404 $ 6,424 $ 5,935
Escalation Income 3,585 3,143 3,049 2,898 1,940
Interest Income 406 265 80 25 133
Miscellaneous Income 113 150 210 73 5
Total Income 12,209 11,465 10,743 9,420 8,013
Net Income(Loss) 1,934 915 (658) (372) 669
Net Income(Loss)
per Unit (a) 418.44 198.00 (142.30) (80.40) 144.76
Cash Distributions
per Unit (a)(b) 468.50(c) 187.50 - - 18.75
Total Assets 55,367 55,625 56,458 49,689 47,329
Long-term Obligations 51,000 51,000 51,000 44,650 41,295
(a) There are 4,575 Units outstanding.
(b) Distribution amounts are reflected in the period for which they are
declared. Actual cash distributions are paid subsequent to such
periods.
(c) Includes a $ 218.50 per unit special distribution paid on June 7, 1995.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
At December 31, 1995 the Partnership had a cash balance of $6,254,501, compared
to $5,661,047 at December 31, 1994. The increase is primarily due to cash
provided by operating activities exceeding cash distributions paid during 1995
and additions to real estate. The Partnership maintains a restricted cash
account representing a loan reserve of $2,100,000 as established under the
terms of its first mortgage loan. Of this balance, $1.1 million represents a
portion of the proceeds of the Partnership's first mortgage loan which was
withheld pending resolution of the Consolidated dispute (see "Ames Parcel and
Consolidated Release Agreement" below). The remaining balance constitutes
additional collateral which can be used for capital improvements and leasing
commissions. Cash-held in escrow totaled $443,811 at December 31, 1995
compared with $370,993 at December 31, 1994. The increase is primarily
attributable to additional fundings made to the insurance escrow as specified
under the terms of the Partnership's first mortgage loan.
Accounts receivable increased from $549,542 at December 31, 1994 to $638,436 at
December 31, 1995. The increase during 1995 primarily reflects a decrease in
allowances for doubtful accounts.
Accrued interest receivable increased from $90,197 at December 31, 1994 to
$224,567 at December 31, 1995 representing an accrual for interest earned on
the loan reserve in 1995.
As of the filing date of this report, the following tenants, or their parent
corporations, at the Mall have filed for protection under the U.S. Bankruptcy
Code:
Tenant Square Footage Leased
Merry Go 'Round* 4,130
No Name** 2,000
Marianne 3,750
Marianne Plus 3,000
Jean Nicole* 4,700
Jeans West 2,400
Rave 2,000
* tenant vacated in early 1996
** anticipates vacating in early 1996
As of December 31, 1995, these tenants occupied 21,980 square feet, or
approximately 6% of the Mall's leasable area (exclusive of anchor tenants and
office space). Pursuant to the provisions of the U.S. Federal Bankruptcy Code,
these tenants may, with court approval, choose to reject or accept the terms of
their leases. Should any of these tenants exercise the right to reject their
leases, this could have an adverse impact on cash flow generated by the Mall
and revenues received by the Partnership depending on the Partnership's ability
to replace them with new tenants at comparable rents.
Ames Parcel and Consolidated Release Agreement
On April 26, 1990, Ames filed for bankruptcy protection under Chapter 11 of the
Federal Bankruptcy Code. On December 18, 1992, the Bankruptcy Court confirmed
a Plan of Reorganization for Ames (the "Plan") pursuant to which Ames has
assumed its lease at the Mall. Land leased to Ames by the Owner Partnership
together with the building constructed thereon by Ames secured a deed of trust
held by Consolidated, as successor to Southwestern Life Insurance Company. By
filing its bankruptcy petition, Ames was in default under the Consolidated deed
of trust.
On July 14, 1994, the Partnership executed a Release Agreement with
Consolidated. Pursuant to the terms of the Release Agreement, the Partnership
paid Consolidated $2 million in return for the assignment of the deed of trust
and related Ames promissory note, as well as Consolidated's claim in the Ames
bankruptcy case relating to such promissory note. Consolidated's total claims,
in the face amount of approximately $2.3 million, consist of the balances due
on the Ames promissory note, totaling $1.7 million, and another promissory
note. Pursuant to the Release Agreement, the Partnership is entitled to any
recovery based on the Ames promissory note; Consolidated will receive any
recovery on the other note. The bankruptcy trustee in the Ames bankruptcy case
has entered an objection to this claim; however, the Partnership is pursuing
legal action to collect the claimed amount. For the year ended December 31,
1994, the Partnership recorded a note receivable in the amount of $816,000. In
1995, the note receivable was written-down by $78,000 to $738,000 which
represents the amount the Partnership expects to receive from the claim pending
bankruptcy court approval.
The Partnership's mortgage lender withheld certain of the proceeds of the first
mortgage loan until the Partnership resolved the Consolidated dispute. It is
anticipated that these funds, which total $1.1 million, will be released to the
Partnership in 1996 when the first mortgage secured by the Ames parcel, which
has been retained by the Partnership pending a final decision on Consolidated's
claims, is extinguished. These funds are held in escrow with interest payable
to the Partnership.
Cash Distributions
The Partnership reinstated quarterly distributions to the limited partners,
commencing with the second quarter of 1994. On June 7, 1995, the Partnership
paid a special cash distribution, funded by its cash reserves, in the amount of
$218.50 per unit. A distribution for the fourth quarter of 1995, in the amount
of $62.50 per Unit, was paid on February 9, 1996. The level, timing, and
amount of future distributions will be reviewed on a quarterly basis after an
evaluation of the Mall's performance and the Partnership's current and future
cash needs.
On February 16, 1996, based upon, among other things, the advice of Partnership
counsel, Skadden, Arps, Slate, Meagher & Flom, the General Partner adopted a
resolution that states, among other things, if a Change of Control (as defined
below) occurs, the General Partner may distribute the Partnership's cash
balances not required for its ordinary course day-to-day operations. "Change
of Control" means any purchase or offer to purchase more than 10% of the Units
that is not approved in advance by the General Partner. In determining the
amount of the distribution, the General Partner may take into account all
material factors. In addition, the Partnership will not be obligated to make
any distribution to any partner and no partner will be entitled to receive any
distribution until the General Partner has declared the distribution and
established a record date and distribution date for the distribution. The
Partnership filed a Form 8-K disclosing this resolution on February 29, 1996.
Results of Operations
1995 versus 1994
Net cash flow from operating activities totalled $3,732,467 in 1995 compared to
$1,721,335 in 1994. The increase is primarily due to higher net income and
increases in accounts payable and amounts due to affiliates partially offset by
a decrease in accrued interest payable. Cash outflows from investing
activities totaled $757,229 in 1995 and $1,618,843 in 1994. The decrease in
cash outflows from investing activities for 1995 is due to the payment made
pursuant to the Release Agreement in 1994.
For the year ended December 31, 1995, the Partnership recognized net income of
$1,933,722 compared to $915,010 during 1994. The increase in net income is
primarily attributable to increases in rental, escalation and interest income.
The Partnership generated total income for the year ended December 31, 1995 of
$12,208,708 compared to $11,464,835 during 1994. Rental income increased for
the year ended December 31, 1995 compared to 1994 reflecting lease renewals at
higher rates and leases with new tenants. Escalation income represents the
income received from Mall tenants for their proportionate share of common area
maintenance and real estate tax expenses. Escalation income increased for the
year ended December 31, 1995 compared to 1994 mainly due to credits issued to
tenants during 1994 for 1993 reimbursable expenses.
Interest income increased for the year ended December 31, 1995 compared to 1994
primarily due to an increase in cash reserves and in interest rates earned on
the Partnership's invested cash.
Total Mall tenant sales (exclusive of anchor tenants) were $64,193,000 for the
year ended December 31, 1995, improved from $63,766,000 for the year ended
December 31, 1994. Sales for tenants (exclusive of anchor tenants) which
operated at the Mall for each of the last two years were $59,778,000 and
$59,691,000, respectively. As of December 31, 1995, the Mall was 94.1%
occupied, excluding anchor tenants and office space, compared to 94.2% at
December 31, 1994.
1994 Versus 1993
Net cash flow from operating activities totaled $1,721,335 in 1994, as compared
to $2,128,506 in 1993. The $407,171 decrease is primarily due to the payment
of accounts payable and amounts due to affiliates which were partially offset
by higher net income. Cash outflows from investing activities totaled
$1,618,843 in 1994 and $888,529 in 1993. The increase in cash outflows from
investing activities for 1994 is due to the payment made pursuant to the
Release Agreement.
For the year ended December 31, 1994, the Partnership recognized net income of
$915,010 compared to a net loss of $657,578 in 1993. The shift from net loss
to net income is primarily due to the recognition of $812,500 in the second
quarter of 1993 compared to $371,500 in 1994 for anticipated settlement costs
to Consolidated attributable to the Ames bankruptcy as well as increases in
rental income, escalation income and interest income, and lower interest and
depreciation expense for 1994.
The Partnership generated total income for the periods ended December 31, 1994
and 1993 of $11,464,835 and $10,743,372, respectively. For the year ended
December 31, 1994, rental and percentage income totalled $7,906,773 compared to
$7,403,961 in 1993. The increase reflects increased base rents due to lease
renewals, new food court tenants and an increase in temporary tenant income.
Percentage rents increased due to higher 1994 tenant sales. Escalation income
totalled $3,143,108 in 1994 compared to $3,049,139 in 1993. Escalation income
represents the income received from Mall tenants for their proportionate share
of common area maintenance and real estate tax expenses. The increase in
escalation income is a result of increased property operating expenses, largely
insurance expense, a portion of which is reimbursable to the Mall from tenants
as escalation income. Interest income for the year ended December 31, 1994 was
$265,117 compared to $79,906 for 1993. The increase in interest income is due
to the Partnership's maintenance of higher average cash balances as well as
increasing interest rates in the last six months of 1994. In addition,
interest is also being accrued on the restricted cash balance. Miscellaneous
income totaled $149,837 in 1994, compared to $210,366 in 1993. The decrease in
miscellaneous income is due to the receipt in 1993 of two tenant receivables
that had previously been written-off.
Total expenses were $10,442,942 in 1994, compared to $11,406,177 in 1993. The
decrease is due primarily to the recognition of $812,500 in 1993 compared to
$371,500 in 1994 for anticipated settlement costs to Consolidated attributable
to the Ames bankruptcy. Additionally, depreciation and amortization decreased
in 1994 to $1,904,981 from $2,312,175 in 1993. The decrease reflects the
write-off of closing costs and fees associated with the old mortgage which was
refinanced in 1993. Interest expense also decreased to $4,090,017 in 1994 as
compared to $4,258,120 in 1993 due to the refinancing of the Partnership's
first mortgage loan at a lower rate.
Total Mall tenant sales (exclusive of anchor tenants) were $63,766,000 for the
year ended December 31, 1994, compared to $63,906,000 for the year ended
December 31, 1993. Sales for tenants (exclusive of anchor tenants) who
operated at the mall for each of the last two years were approximately
$59,778,000 and $53,246,000, respectively. As of December 31, 1994, the Mall
was 94.2% occupied, excluding anchor tenants and office space, compared to
96.7% as of December 31, 1993.
Property Appraisal
The appraised fair market value of the Mall at January 1, 1996, as determined
by Cushman & Wakefield, Inc., an independent third party appraisal firm, was
$81,000,000, compared to $85,000,000 at January 1, 1995. Limited Partners
should note that appraisals are only estimates of current value and actual
values realizable upon sale may be significantly different. A significant
factor in establishing an appraised value is the actual selling price for
properties which the appraiser believes are comparable. Because of the nature
of the Partnership's property and the limited market for such property, there
can be no assurance that the other properties reviewed by the appraiser are
comparable. Additionally, the low level of liquidity as a result of the
current restrictive capital environment has had the effect of limiting the
number of transactions in real estate markets and the availability of financing
to potential purchasers, which may have a negative impact on the value of an
asset. Further, the appraised value does not reflect the actual costs which
could be incurred in selling the property. As a result of these factors and
the illiquid nature of an investment in Units of the Partnership, the variation
between the appraised value of the Partnership's property and the price at
which Units of the Partnership could be sold is likely to be significant.
Fiduciaries of Limited Partners which are subject to ERISA or other provisions
of law requiring valuation of Units should consider all relevant factors,
including, but not limited to the net asset value per Unit, in determining the
fair market value of the investment in the Partnership for such purposes.
Item 8. Financial Statements and Supplementary Data
See Item 14a for a listing of the Consolidated Financial Statements and
Supplementary data in this report.
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 General Partner is an affiliate of Lehman and has offices at the same
location as the Partnership and the Owner Partnership at 3 World Financial
Center, 29th Floor, New York, NY, 10285-2900. All of the executive
officers and directors of the General Partner are also officers and employees
of Lehman.
On July 31, 1993, Shearson Lehman Brothers, Inc. ("Shearson") sold certain of
its domestic retail brokerage and asset management businesses to Smith Barney,
Harris Upham & Co. Incorporated ("Smith Barney"). Subsequent to this sale,
Shearson changed its name to Lehman Brothers Inc. The transaction did not
affect the ownership of the Partnership or the Partnership's General Partner.
However, the assets acquired by Smith Barney included the name "Shearson."
Consequently, the General Partner changed its name to "Eastern Avenue Inc." to
delete any references to "Shearson."
Certain executive officers and directors of the General Partner are now serving
(or in the past have served) as executive officers or directors of entities
which act as general partners of a number of real estate limited partnerships
which have sought protection under the provisions of the Federal Bankruptcy
Code. The partnerships which have filed bankruptcy petitions own real estate
which has been adversely affected by the economic conditions in the markets in
which the real estate is located and, consequently, the partnerships sought the
protection of the bankruptcy laws to protect the partnerships' assets from loss
through foreclosure.
The executive officers and directors of the General Partner as of December 31,
1995 are as follows:
Name Age Office
Paul L. Abbott 50 Director, President,
Chief Executive Officer,
Chief Financial Officer,
and Chief Operating
Officer
Robert J. Hellman 41 Vice President
Elizabeth I. Rubin 29 Vice President
Joan B. Berkowitz 36 Vice President
Paul L. Abbott is a Managing Director of Lehman Brothers. Mr. Abbott joined
Lehman Brothers in August 1988, and is responsible for investment management of
residential, commercial and retail real estate. Prior to joining Lehman
Brothers, Mr. Abbott was a real estate consultant and a senior officer of a
privately held company specializing in the syndication of private real estate
limited partnerships. From 1974 through 1983, Mr. Abbott was an officer of two
life insurance companies and a director of an insurance agency subsidiary. Mr.
Abbott received his formal education in the undergraduate and graduate schools
of Washington University in St. Louis.
Robert J. Hellman is a Senior Vice President of Lehman Brothers and is
responsible for investment management of retail, commercial and residential
real estate. Since joining Lehman Brothers in 1983, Mr. Hellman has been
involved in a wide range of activities involving real estate and direct
investments including origination of new investment products, restructurings,
asset management and the sale of commercial, retail and residential properties.
Prior to joining Lehman Brothers, Mr. Hellman worked in strategic planning for
Mobil Oil Corporation and was an associate with an international consulting
firm. Mr. Hellman received a bachelor's degree from Cornell University, a
master's degree from Columbia University, and a law degree from Fordham
University.
Elizabeth I. Rubin is a Vice President of Lehman Brothers in the Diversified
Asset Group. Ms. Rubin joined Lehman Brothers in April 1992. Prior to joining
Lehman Brothers, she was employed from September 1988 to April 1992 by the
accounting firm of Kenneth Leventhal and Co. Ms. Rubin is a Certified Public
Accountant and received a B.S. degree from the State University of New York at
Binghamton in 1988.
Joan B. Berkowitz, is a Vice President of Lehman Brothers, responsible for
asset management within the Diversified Asset Group. Ms. Berkowitz joined
Lehman Brothers in May 1986 as an accountant in the Realty Investment Group.
From October 1984 to May 1986, she was an Assistant Controller to the Patrician
Group. From November 1983 to October 1984, she was employed by Diversified
Holdings Corporation. From September 1981 to November 1983, she was employed
by Deloitte Haskins & Sells. Ms. Berkowitz, a Certified Public Accountant,
received a B.S. degree from Syracuse University in 1981.
Item 11. Executive Compensation
The directors and executive officers of the General Partner do not receive any
salaries or other compensation from the Partnership. See Item 13 with respect
to a description of certain transactions between the General Partner or its
affiliates and the Registrant.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security ownership of certain beneficial owners
The Partnership knows of no person who beneficially owns more than 5% of its
Units.
(b) Security ownership of management
As of December 31, 1995, neither the General Partner, nor any executive officer
or director thereof, was the beneficial owner of any Units.
(c) Changes in control
There were no changes in control during the year ended December 31, 1995.
Item 13. Certain Relationships and Related Transactions
The Partnership has no directors or executive officers. Its affairs are
managed by the General Partner, which receives 1% of the distributions of
income, profits, cash distributions and losses of the 90.9% received from the
Owner Partnership each year.
The Limited Partnership Agreement specifies the allocation of operating income,
profits, losses and cash distributions. For a description of such terms,
please refer to Note 4 to the Notes to the Consolidated Financial Statements of
this report.
The General Partner and affiliates may be reimbursed by the Partnership for
certain costs as described on page 10 and 11 of the Partnership's prospectus,
which description is incorporated herein by reference thereto. First Data
Investor Services Group, formerly The Shareholder Services Group, provides
accounting and investor relations services for the Partnership. Prior to May
1993, these services were provided by an affiliate of the General Partner. The
Partnership's transfer agent and certain tax reporting services are provided by
Service Data Corporation. Both First Data Investor Services Group and Service
Data Corporation are unaffiliated companies. Under the terms of the
Partnership Agreement, the Partnership reimbursed the General Partner, at cost
for the performance of certain administrative services provided by a third
party. For the year ended December 31, 1995, costs for such services were
$83,357.
CPR Realty Brokerage, Inc. ("CPR"), formerly Shearson Realty Brokerage, Inc.,
was paid $510,000 in 1994 in conjunction with the Partnership's 1993
refinancing. CPR is an affiliate of the General Partner.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(i) Index to Consolidated Financial Statements
Page
Independent Auditors' Report F-1
Consolidated Balance Sheets at December 31, 1995 and 1994 F-2
Consolidated Statements of Operations for the years ended
December 31, 1995, 1994 and 1993 F-3
Consolidated Statements of Partners' Capital
(Deficit) for the years ended December 31, 1995,
1994 and 1993 F-3
Consolidated Statements of Cash Flows for
the years ended December 31, 1995, 1994 and 1993 F-4
Notes to the Consolidated Financial Statements F-5
(a)(ii) Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts F-11
Schedule III - Real Estate and Accumulated
Depreciation F-12
(a)(iii) Exhibits
Subject to Rule 12b-32 under the Securities Exchange Act of 1934 on
incorporation by reference, listed below are the exhibits that are filed as
part of this report:
No. Title
3.1 Restated Agreement and Certificate of Limited Partnership of the
Partnership dated as of June 25, 1985 is hereby incorporated by
reference to Exhibit B to the Prospectus (the "Prospectus") contained
in Registration Statement No. 2-98786, as amended (the "Registration
Statement"), which Registration Statement was declared effective on
August 19, 1985.
3.2 Form of Restated Agreement and Certificate of the Partnership is hereby
incorporated reference to Exhibit B to the Prospectus.
3.3 Certificate of Limited Partnership of Bellwether Properties, L.P.
("Bellwether"), as amended, is hereby incorporated by
reference to the Registration Statement.
3.4 Form of Amendment to Certificate of Limited Partnership of Bellwether
is hereby incorporated by reference to the Registration Statement.
3.5 Form of Amended and Restated Agreement of Limited Partnership of the
Owner Partnership is hereby incorporated by reference to
Exhibit C to the Prospectus.
4.1 Form of certificate representing a limited partnership interest in the
Partnership is hereby incorporated by reference to the Registration
Statement.
10.1 Subscription Agreement and Signature Page is hereby incorporated by
reference to Exhibit D to the Prospectus.
10.2 Escrow Agreement between the Partnership, Shearson Lehman Brothers Inc.
("Shearson") and Manufacturers Hanover Trust Company, dated as of
August 12, 1985, is hereby incorporated by reference to the
Registration Statement.
10.3 Form of Property Management and Leasing Agreement dated as of November
29, 1985, between the Owner Partnership and Shopco Management
Corporation is hereby incorporated by reference to the Registration
Statement.
10.4 Capital Contribution Agreement dated as of August 7, 1985, between
Shearson Lehman Brothers Group Inc. and the General Partner is hereby
incorporated by reference to the Registration Statement.
10.5 Letter Agreement, dated as of June 6, 1985, amending the Contract of
Sale is hereby incorporated by reference to the Registration
Statement.
10.6 Indemnification Agreement between Shearson, Shearson Holdings and the
officers and directors of the General Partner is hereby incorporated
by reference to the Registration Statement.
10.7 Amended and Restated Deed of Trust and Security Agreement between
Eastpoint Partners, L.P. and CBA Associates, Inc. dated December 1,
1993, is hereby incorporated by reference to Exhibit 10.14 to the
Partnership's Annual Report on Form 10-K for the year ended December
31, 1993.
10.8 Compromise and Mutual Release Agreement dated as of July 14, 1994 by
and between Eastpoint Partners, L.P. and Southwestern Life Insurance
Company is hereby incorporated by reference to Exhibit 10.1 to the
Partnership's report on Form 10-Q for the period ended June 30, 1994
27 Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of 1995.
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.
Dated: March 28, 1996
EASTPOINT MALL LIMITED PARTNERSHIP
BY: Eastern Avenue, Inc.
General Partner
BY: /s/ Paul L. Abbott
Name: Paul L. Abbott
Title: Director, President, Chief Executive
Officer, Chief Financial
Officer and Chief Operating 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 in the capacities and on the dates indicated.
EASTERN AVENUE INC.
General Partner
Date: March 28, 1996 BY: /s/ Paul L. Abbott
Paul L. Abbott
Director, President, Chief Executive
Officer, Chief Financial Officer and
Chief Operating Officer
Date: March 28, 1996 BY: /s/ Robert J. Hellman
Robert J. Hellman
Vice President
Date: March 28, 1996 BY: /s/ Joan Berkowitz
Joan Berkowitz
Vice President
Date: March 28, 1996 BY: /s/ Elizabeth Rubin
Elizabeth Rubin
Vice President
Independent Auditors' Report
The Partners
Eastpoint Mall Limited Partnership:
We have audited the consolidated financial statements of Eastpoint Mall Limited
Partnership and Consolidated Partnership (a Delaware limited partnership) as
listed in the accompanying index. In connection with our audits of the
consolidated financial statements, we also have audited the financial statement
schedules as listed in the accompanying index. These consolidated financial
statements and financial statement schedules are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedules 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 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, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Eastpoint Mall
Limited Partnership and Consolidated Partnership as of December 31, 1995 and
1994, and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1995 in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedules, when considered in relation to the consolidated
financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
KPMG PEAT MARWICK LLP
Boston, Massachusetts
February 16, 1996
Consolidated Balance Sheets
December 31, 1995 and 1994
Assets 1995 1994
Real estate, at cost
(notes 2, 3 and 5):
Land $ 4,166,230 $ 4,166,230
Building 43,241,060 43,241,060
Improvements 7,050,087 6,354,635
54,457,377 53,761,925
Less accumulated depreciation
and amortization (11,738,595) (9,997,420)
42,718,782 43,764,505
Cash and cash equivalents 6,254,501 5,661,047
Restricted cash (note 5) 2,100,000 2,100,000
Cash-held in escrow (note 5) 443,811 370,993
Accounts receivable, net of
allowance of $80,405 in 1995
and $294,059 in 1994 638,436 549,542
Accrued interest receivable 224,567 90,197
Deferred rent receivable 356,656 257,901
Note receivable (note 3) 738,000 816,000
Deferred charges, net of accumulated
amortization of $423,597 in 1995
and $230,023 in 1994 1,510,981 1,671,299
Prepaid expenses 381,278 343,516
Total Assets $ 55,367,012 $ 55,625,000
Liabilities, Minority Interest and Partners' Capital
Liabilities:
Accounts payable and
accrued expenses $ 192,779 $ 169,474
Mortgage loan payable (note 5) 51,000,000 51,000,000
Accrued interest payable 340,425 340,425
Due to affiliates (notes 6 and 7) 22,226 40,251
Security deposits payable 46,819 59,656
Deferred income 415,081 417,989
Distribution payable 288,826 288,826
Total Liabilities 52,306,156 52,316,621
Minority interest (344,786) (328,580)
Partners' Capital (Deficit)
(notes 4 and 9):
General Partner (80,211) (77,899)
Limited Partners (4,575 limited
partnership units authorized,
issued and outstanding) 3,485,853 3,714,858
Total Partners' Capital 3,405,642 3,636,959
Total Liabilities, Minority Interest
and Partners' Capital $ 55,367,012 $ 55,625,000
Consolidated Statements of Operations
For the years ended December 31, 1995, 1994 and 1993
Income 1995 1994 1993
Rental income (note 3) $ 6,894,097 $ 6,724,625 $ 6,310,996
Percentage rent 1,209,752 1,182,148 1,092,965
Escalation income (note 3) 3,585,193 3,143,108 3,049,139
Interest income 406,292 265,117 79,906
Miscellaneous income 113,374 149,837 210,366
Total Income 12,208,708 11,464,835 10,743,372
Expenses
Interest expense 4,071,472 4,090,017 4,258,120
Property operating expenses 3,160,271 3,305,981 3,296,665
Settlement costs (note 3) 78,000 371,500 812,500
Depreciation and amortization 2,001,526 1,904,981 2,312,175
Real estate taxes 576,674 563,423 535,350
General and administrative 186,504 207,040 191,367
Total Expenses 10,074,447 10,442,942 11,406,177
Income (loss) before
minority interest 2,134,261 1,021,893 (662,805)
Minority interest (200,539) (106,883) 5,227
Net Income (Loss) $ 1,933,722 $ 915,010 $ (657,578)
Net Income (Loss) Allocated:
To the General Partner $ 19,337 $ 9,150 $ (6,576)
To the Limited Partners 1,914,385 905,860 (651,002)
$ 1,933,722 $ 915,010 $ (657,578)
Per limited partnership unit
(4,575 outstanding) $ 418.44 $ 198.00 $ (142.30)
Consolidated Statement of Partners' Capital (Deficit)
For the years ended December 31, 1995, 1994 and 1993
Limited General
Partners Partner Total
Balance at December 31, 1992 $ 4,317,814 $ (71,809) $ 4,246,005
Net loss (651,002) (6,576) (657,578)
Balance at December 31, 1993 3,666,812 (78,385) 3,588,427
Net income 905,860 9,150 915,010
Distributions (857,814) (8,664) (866,478)
Balance at December 31, 1994 3,714,858 (77,899) 3,636,959
Net income 1,914,385 19,337 1,933,722
Distributions (2,143,390) (21,649) (2,165,039)
Balance at December 31, 1995 $ 3,485,853 $ (80,211) $ 3,405,642
Consolidated Statements of Cash Flows
For the years ended December 31, 1995, 1994 and 1993
Cash Flows from Operating Activities: 1995 1994 1993
Net income (loss) $ 1,933,722 $ 915,010 $ (657,578)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Minority interest 200,539 106,883 (5,227)
Depreciation and amortization 2,001,526 1,904,981 2,312,175
Settlement costs 78,000 - -
Increase (decrease) in cash
arising from changes in operating
assets and liabilities:
Cash-held in escrow (72,818) (75,070) (295,923)
Accounts receivable (88,894) (119,708) 434,853
Accrued interest receivable (134,370) (90,197) -
Deferred rent receivable (98,755) (131,105) (109,595)
Deferred charges (38,256) (30,413) (96,668)
Prepaid expenses (37,762) (49,515) (25,257)
Accounts payable and
accrued expenses 23,305 (842,241) 922,584
Accrued interest payable - 340,425 (363,893)
Due to affiliates (18,025) (230,352) (13,853)
Security deposits payable (12,837) 9,788 -
Deferred income (2,908) 12,849 26,888
Net cash provided by operating
activities 3,732,467 1,721,335 2,128,506
Cash Flows from Investing Activities:
Additions to real estate (757,229) (802,843) (888,529)
Purchase of note receivable - (816,000) -
Net cash used for investing activities (757,229) (1,618,843) (888,529)
Cash Flows from Financing Activities:
Restricted cash - - (2,100,000)
Deferred charges - (530,552) (1,129,655)
Proceeds from mortgage loan payable - - 51,000,000
Repayment of mortgage loan payable - - (44,650,051)
Distributions paid (2,165,039) (577,652) -
Distributions paid-minority interest (216,745) (57,831) -
Net cash provided by (used for)
financing activities (2,381,784) (1,166,035) 3,120,294
Net increase (decrease) in cash
and cash equivalents 593,454 (1,063,543) 4,360,271
Cash and cash equivalents at
beginning of period 5,661,047 6,724,590 2,364,319
Cash and cash equivalents
at end of period $ 6,254,501 $ 5,661,047 $ 6,724,590
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for
interest, net of amounts
capitalized $ 4,071,472 $ 3,749,592 $ 4,622,013
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
A finance charge and liability of $510,000 was recognized in the fourth quarter
of 1993 in connection with the mortgage payable.
Notes to the Consolidated Financial Statements
December 31, 1995, 1994 and 1993
1. Organization
Eastpoint Mall Limited Partnership (the "Partnership") was formed as a limited
partnership on June 26, 1985 under the laws of the State of Delaware. The
Partnership is the managing general partner of Eastpoint Partners L.P. (the
"Owner Partnership") a New York limited partnership, which owns Eastpoint Mall
(the "Mall").
The general partner of the Partnership is Eastern Avenue Inc., (the "General
Partner"), formerly Shearson Lehman Eastern Avenue Inc. (see below), an
affiliate of Lehman Brothers Inc., formerly Shearson Lehman Brothers, Inc.
On July 31, 1993, Shearson Lehman Brothers, Inc. ("Shearson") sold certain of
its domestic retail brokerage and asset management businesses to Smith Barney,
Harris Upham & Co. Incorporated ("Smith Barney"). Subsequent to the sale,
Shearson changed its name to Lehman Brothers, Inc. ("Lehman Brothers"). The
transaction did not affect the ownership of the General Partner. However, the
assets acquired by Smith Barney included the name "Shearson." Consequently,
effective January 13, 1994, Shearson Lehman Eastern Avenue Inc., the General
Partner, changed its name to Eastern Avenue Inc.
The Partnership commenced investment operations on November 22, 1985, with the
acceptance of subscriptions for 4,575 limited partnership units, the maximum
authorized by the limited partnership agreement ("Limited Partnership
Agreement"). Upon the admittance of the additional limited partners, the
initial limited partner withdrew from the Partnership.
On February 16, 1996, based upon, among other things, the advice of Partnership
counsel, Skadden, Arps, Slate, Meagher & Flom, the General Partner adopted a
resolution that states, among other things, if a Change of Control (as defined
below) occurs, the General Partner may distribute the Partnership's cash
balances not required for its ordinary course day-to-day operations. "Change
of Control" means any purchase or offer to purchase more than 10% of the Units
that is not approved in advance by the General Partner. In determining the
amount of the distribution, the General Partner may take into account all
material factors. In addition, the Partnership will not be obligated to make
any distribution to any partner and no partner will be entitled to receive any
distribution until the General Partner has declared the distribution and
established a record date and distribution date for the distribution. The
Partnership filed a Form 8-K disclosing this resolution on February 29, 1996.
2. Summary of Significant Accounting Policies
Basis of Accounting
The consolidated financial statements of the Partnership have been prepared on
the accrual basis of accounting and include the accounts of the Partnership and
Eastpoint Partners L.P. All significant intercompany accounts and transactions
have been eliminated.
Real Estate
Real estate investments, which consist of land, building and improvements, are
recorded at cost less accumulated depreciation and amortization. Cost includes
the initial purchase price of the property plus closing costs, acquisition and
legal fees and capital improvements, including capitalized interest.
Depreciation of building and improvements is computed using the straight-line
method based on an estimated useful life of 40 years. Depreciation of fixtures
and equipment is computed using the straight-line method over an estimated
useful life of 12 years. Amortization of tenant leasehold improvements is
computed using the straight-line method over the lease term.
Accounting for Impairment
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("FAS 121"),
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. FAS 121 also addresses the accounting for long-lived assets
that are expected to be disposed of. The Partnership has adopted FAS 121 in
the fourth quarter of 1995. Based on current circumstances, the adoption had
no impact on the consolidated financial statements.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments" ("FAS 107"), requires that the Partnership
disclose the estimated fair values of its financial instruments. Fair values
generally represent estimates of amounts at which a financial instrument could
be exchanged between willing parties in a current transaction other than in
forced liquidation.
Fair value estimates are subjective and are dependent on a number of
significant assumptions based on management's judgment regarding future
expected loss experience, current economic conditions, risk characteristics of
various financial instruments, and other factors. In addition, FAS 107 allows
a wide range of valuation techniques, therefore, comparisons between entities,
however similar, may be difficult.
Deferred Charges Deferred charges are amortized using the straight-line method
over the following periods:
Period
Fee for negotiating the acquisition
of the ownership of the Mall 40 years
Financing fees 10 years
Fees paid in connection with the acquisition of the property have been included
in the purchase price of the property. Accordingly, such fees have been
allocated to the basis of the land, building and improvements and are being
depreciated over the estimated useful lives of the depreciable assets. Leasing
commissions are amortized using the straight-line method over the lease term.
Offering Costs
Offering costs are non-amortizable and have been deducted from partners'
capital.
Transfer of Units and Distributions
Net income or loss from operations is allocated to registered holders ("Unit
Holder"). Upon the transfer of a unit, net income (loss) from operations
attributable to such unit generally is allocated between the transferor and the
transferee based on the number of days during the year of transfer that each is
deemed to have owned the unit. The Unit Holder of record on the first day of
the calendar month is deemed to have transferred their interest on the first
day of such month.
Distributions of operating cash flow, as defined in the Partnership Agreement,
will be paid on a quarterly basis to registered Unit Holders on record dates
established by the Partnership, which generally fall 45 days after quarter end.
Income Taxes
No provision is made for income taxes since such liability is the liability of
the individual partners.
Net Income Per Limited Partnership Unit
Net income per limited partnership unit is calculated based upon the number of
limited partnership units outstanding during the year.
Rental Income and Deferred Rent
The Partnership rents its property to tenants under operating leases with
various terms. Deferred rent receivable consists of rental income which is
recognized on the straight-line basis over the lease terms, but will not be
received until later periods as a result of scheduled rent increases.
Cash and Cash Equivalents
Cash and cash equivalents consist of money market investment accounts which
invest in short-term highly liquid investments with maturities of three months
or less from the date of issuance. The carrying amount approximates fair value
because of the short maturity of those investments.
Concentration of Credit Risk
Financial instruments which potentially subject the Partnership to a
concentration of credit risk principally consist of cash and cash equivalents
in excess of the financial institutions' insurance limits. The Partnership
invests available cash with high credit quality financial institutions.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. Real Estate
The Owner Partnership's real estate which was purchased on November 29, 1985,
consists of a central enclosed mall plus five free standing buildings and is
located on approximately 67.1 acres in Baltimore County, Maryland. The Mall
consists of a central enclosed mall anchored by four major department stores -
J.C. Penney, Inc. ("J.C. Penney"), Schottenstein Stores Corporation, doing
business as Value City ("Value City"), Sears, Roebuck, and Co. ("Sears") and
Ames Department Store, Inc. (two of which are subject to ground leases),
improvements and land. The retail space in the Mall is contained on one level;
J.C. Penney and Value City are multi-level. Office and storage areas are
contained in the basement level and on the second floor levels of the mall.
Parking is provided for over 4,500 cars.
The Mall currently has gross leasable space totalling 864,993 square feet. Of
this leasable space, 637,582 is owned by the Owner Partnership and 227,411
square feet of the gross leasable space is owned by the tenants who have leased
portions of land pursuant to ground leases with the Owner Partnership. Upon
expiration of such ground leases, ownership of the buildings thereon will
revert to the Owner Partnership.
J.C. Penney leases a parcel of land pursuant to a ground lease on which it
constructed the largest of the Mall's anchor stores containing approximately
168,969 square feet of the gross leasable area. The initial term of the J.C.
Penney ground lease expires on August 31, 2001.
Value City leases approximately 140,000 square feet of the gross leasable area
of the Mall. The initial term of the lease was scheduled to expire on November
30, 1999 but has been extended until November 30, 2009.
Sears leases approximately 87,734 square feet of the gross leasable area of the
Mall. The initial term of the lease expires on October 16, 2006.
Ames leases a parcel of land pursuant to a ground lease on which it has
constructed a building containing approximately 58,442 square feet of the gross
leasable area. The initial term of the Ames ground lease expires on May 30,
2004.
The following is a schedule of the remaining minimum lease payments as called
for under the lease agreements:
Years Ending
December 31,
1996 $6,349,081
1997 5,817,842
1998 5,206,305
1999 4,647,395
2000 3,859,623
Thereafter 9,343,612
$35,223,858
In addition to the minimum lease amounts, the leases provide for percentage
rents, and escalation charges to tenants for common area maintenance and real
estate taxes. For the years ended December 31, 1995, 1994 and 1993, temporary
tenant income amounted to $302,815, $296,938 and $228,923, respectively, and
are included in rental income.
For the year ended December 31, 1995, one tenant accounted for approximately
10% of the Partnership's rental and percentage rental income. No single tenant
accounted for 10% or more of such income for the years ended December 31, 1994
and 1993.
On April 26, 1990, Ames Department Store, Inc. ("Ames") filed for bankruptcy
protection under Chapter 11 of the Federal Bankruptcy Code. Land leased to
Ames by the Owner Partnership together with the building constructed thereon by
Ames secured a first priority deed of trust held by Consolidated Fidelity Life
Insurance Company ("Consolidated") as successor to Southwestern Life Insurance
Company. By filing its bankruptcy petition, Ames was in default under the
Consolidated priority deed of trust. On December 18, 1992, the Bankruptcy
Court confirmed a Plan of Reorganization for Ames (the "Plan") and the plan was
subsequently consummated. Pursuant to the Plan, Ames assumed the lease of its
store at the Mall and continues its operations there.
On December 28, 1992, the Partnership received a Notice of Default from
Consolidated. The Partnership and Consolidated negotiated a Settlement
Agreement (the "Settlement Agreement") whereby, upon approval by the Bankruptcy
Court and consummation of certain further agreements reached between
Consolidated and Ames, the Partnership would make a payment of $812,500 to
Consolidated in complete satisfaction of all claims Consolidated may have
against the Ames parcel and the Partnership. As part of the Settlement
Agreement, Consolidated withdrew its Notice of Default. The Settlement
Agreement was effective through December 31, 1993.
The Settlement Agreement expired on December 31, 1993, as Bankruptcy Court
approval of the outstanding claims between Consolidated and Ames had not then
been obtained. Since Consolidated and Ames (and Ames' trustee in bankruptcy)
had not resolved all claims among them, there still existed defaults under the
Consolidated deed of trust and therefore, Consolidated had the right to
foreclose on the Ames parcel. On January 7, 1994, Consolidated delivered
another notice of default to the Partnership.
The delivery to the Partnership by Consolidated of the new Notice of Default
constituted a technical default under the new first mortgage loan of the
Partnership with the REMIC Lender. However, the REMIC Lender was aware of the
Consolidated claim at the time the new first mortgage loan was closed, and the
REMIC Lender held certain proceeds of the new first mortgage loan in escrow
until such time as the Partnership resolved the Consolidated dispute and
provided a release of Consolidated's outstanding deed of trust on the Ames
parcel.
On July 14, 1994, the Partnership executed a Compromise and Mutual Release (the
"Release Agreement") with Consolidated. Pursuant to the terms of the Release
Agreement, the Partnership paid Consolidated $2 million in return for the
assignment of the deed of trust and related Ames promissory note, as well as
Consolidated's claim in the Ames bankruptcy case relating to such promissory
note. Consolidated's total claims, in the face amount of approximately $2.3
million, consist of the balances due on the Ames promissory note, totaling $1.7
million, and another promissory note. Pursuant to the Release Agreement, the
Partnership is entitled to any recovery based on the Ames promissory note;
Consolidated will receive any recovery on the other note. The bankruptcy
trustee in the Ames bankruptcy case has entered an objection to this claim,
however, the Partnership is pursuing legal action to collect the claimed
amount. For the year ended December 31, 1994, the Partnership recorded a note
re ceivable in the amount of $816,000. In 1995, the note receivable was
written-down by $78,000 to $738,000 which represents the amount the Partnership
expects to receive from the claim pending bankruptcy court approval.
In addition, the funds held in escrow by the Partnership's mortgage lender,
which total $1.1 million, are expected to be released to the Partnership
following the completion of certain administrative procedures required by the
first mortgage lender.
The following is a schedule of the remaining minimum lease payments as called
for under the ground lease agreements:
Years Ending
December 31,
199 $ 205,500
1997 205,500
1998 205,500
1999 254,083
2000 258,500
Thereafter 879,083
$ 2,008,166
The appraised fair market value of Eastpoint Mall at January 1, 1996, as
determined by an independent third party appraisal firm, was $81,000,000
compared to $85,000,000 at January 1, 1995.
4. Partnership Agreement
The Partnership has a 90.9% interest in the operating income, profits and cash
distributions, and a 99% interest in the operating losses of the Owner
Partnership. The limited partnership agreement provides that all operating
income, losses, profits, and cash distributions are allocated 1% to the General
Partner and 99% to the limited partners. The proceeds of sale and interim
capital transactions will be distributed 100% to the Partnership (100% to the
limited partners) until the Limited Partners have received distributions equal
to a return of their original capital contribution plus a 10% cumulative return
on capital. Thereafter, any remaining proceeds will be allocated 86% to the
Partnership (1% to the General Partner and 99% to the Limited Partners).
With respect to the Owner Partnership, the General Partner has a .1% interest
and SFN Limited Partnership has a 9% interest in the income, profits, and cash
distributions of the Mall. Losses from operations shall be allocated .1% to
the General Partner, and .9% to the SFN Limited Partnership. Upon sale or
interim capital transaction, the General Partner will receive 5% and SFN
Limited Partnership will receive 9% after the limited partners of the
Partnership receive their original capital contribution plus their 10%
cumulative return.
5. Mortgage Loan Payable
1995 1994
8.01% first five years, thereafter
rate is equal to 2.8% above the current
yield on five-year Treasury Notes.
Mortgage note due December 22, 2003.
Monthly payments of interest only. $ 51,000,000 $ 51,000,000
In December 1993, the Partnership obtained new first mortgage financing from
CBA Conduit, Inc., an entity which placed the new mortgage into a pool of
other mortgages to be held by a Real Estate Mortgage Investment Conduit (the
"REMIC Lender"). The total amount of the new first mortgage is $51,000,000.
After repayment of the Partnership's former first mortgage loan from Kemper
Investors Life Insurance Company and the establishment of certain loan
reserves and payment of expenses, approximately $3,000,000 of the proceeds
were available to the Partnership for tenant improvements, leasing
commissions, capital improvements and costs attributable to leasing and
releasing. Escrow accounts were also established for the collection of real
estate taxes and various insurance expenses. They are currently presented on
the Consolidated Balance Sheet as Cash-held in escrow. Certain proceeds of
the new first mortgage loan were placed into a Restricted cash account to be
funded to the Partnership at such time as the Partnership obtains a release of
the first mortgage outstanding to Consolidated Fidelity Life Insurance Company
on the parcel of real estate currently occupied by Ames. Additionally,
$1,000,000 of the loan proceeds has been placed into the Restricted cash
account which constitutes additional collateral for the new first mortgage and
can be used by the Partnership for leasing expenses and capital improvements.
The loan is secured by a first mortgage and an assignment of leases on
Eastpoint Mall.
Based on the borrowing rates currently available to the Partnership for
mortgage loans with similar terms and average maturities, the fair value of
long-term debt approximates carrying value.
6. Transactions with Related Parties
CPR Realty Brokerage, Inc. ("CPR, Inc.") formerly Shearson Realty Brokerage,
Inc. was paid $510,000 in 1994 in conjunction with the Partnership's financing.
The General Partner was reimbursed $99,007 during 1994 from the Partnership and
$138,900 from the Owner Partnership, for professional fees paid at inception.
Under the terms of the Partnership Agreement, the Partnership reimburses the
General Partner, at cost, for the performance of certain administrative
services provided by a third party. For the years ended December 31, 1995,
1994 and 1993, costs of such services were $83,357, $76,606, and $95,452,
respectively. At December 31, 1995 and 1994, $22,226 and $40,251 were due to
the General Partner for the performance of these services.
Cash and Cash Equivalents Certain cash accounts reflected on the Partnership's
consolidated balance sheets at December 31, 1995 and 1994 were on deposit with
an affiliate of the General Partner.
7. Management Agreement
On November 29, 1985, the Partnership entered into an agreement with Shopco
Management Corporation, an affiliate of SFN Limited Partnership, for the
management of the property. The agreement, which expired on December 31, 1990,
provided for an annual fee equal to 3.0% of the gross rents collected from the
Mall, as defined, payable monthly. The Partnership and Shopco Management
Corporation agreed to the terms of the new management agreement effective
January 1, 1991 through December 31, 1993, which included an increase in the
annual fee to 4.5% of gross rents collected from the Mall. The new management
agreement which expired on December 31, 1993 is automatically renewed for
successive periods of one year. The management agreement has been renewed
through December 31, 1996. For the years ended December 31, 1995, 1994 and
1993, management fee expense amounted to $349,166, $389,631 and $370,812,
respectively.
8. Distributions to Limited Partners
In 1995 and 1994, distributions to Limited Partners totalled $2,143,390,
($468.50 per limited partnership unit) and $857,814, ($187.50 per limited
partnership unit), respectively. For the year ended December 31, 1993,
distributions to Limited Partners were suspended.
9. Reconciliation of Consolidated Financial Statement Net Income (Loss) and
Partners' Capital to Federal Income Tax Basis Net Income (Loss) and Partners'
Capital (Deficit)
Reconciliations of consolidated financial statement net income (loss) and
partners' capital to federal income tax basis net income (loss) and partners'
capital (deficit) at December 31, follow:
1995 1994 1993
Financial statement net
income (loss) $ 1,933,722 $ 915,010 $ (657,578)
Tax basis recognition of
deferred charges
under (over) financial statement
recognition of deferred charges (37,875) (46,334) 62,746
Tax basis recognition of
deferred income over
(under) financial statement
recognition of deferred income (115,321) (119,650) 11,083
Tax basis depreciation over financial
statement depreciation (456,095) (522,536) (683,217)
Tax basis recognition of recording fees
under financial statement
recognition of recording fees - - 90,900
Tax basis recognition of lease
retention payment under
financial statements - - 738,562
Financial statement basis recognition
of Settlement cost over tax basis 70,902 337,695 -
Other - - 42,438
Federal income tax basis net
income (loss) $ 1,395,333 $ 564,185 $ (395,066)
1995 1994 1993
Financial statement basis
partners' capital $ 3,405,642 $ 3,636,959 $ 3,588,427
Current year financial statement
net income (loss) over federal
income tax basis net
income (loss) (538,389) (350,825) 262,512
Cumulative federal income tax
basis net income (loss) over
cumulative financial statement
net income (loss) (2,934,199) (2,583,374) (2,845,886)
Federal income tax basis
partners' capital (deficit) $ (66,946) $ 702,760 $ 1,005,053
Because many types of transactions are susceptible to varying interpretations
under Federal and State income tax laws and regulations, the amounts reported
above may be subject to change at a later date upon final determination by the
respective taxing authorities.
Schedule II Valuation and Qualifying Accounts
Balance at Charged to Balance at
Beginning Costs and End of
of Period Expenses Deductions Period
Allowance for doubtful accounts:
Year ended December 31, 1993: $ 193,094 $ 132,139 $ 16,405 $ 308,828
Year ended December 31, 1994: 308,828 129,193 143,962 294,059
Year ended December 31, 1995: $ 294,059 $ 19,852 $ 233,506 $ 80,405
EASTPOINT MALL LIMITED PARTNERSHIP AND CONSOLIDATED PARTNERSHIP
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1995
Costs Capitalized
Initial Cost to Subsequent
Partnership (A) To Aquisition
Land,
Building and Building and
Description Encumbrances Land Improvements Improvements
Eastpoint Shopping
Center, Baltimore
County, MD $ 51,000,000 $ 3,497,465 $ 26,254,002 $ 24,705,910
$ 51,000,000 $ 3,497,465 $ 26,254,002 $ 24,705,910
EASTPOINT MALL LIMITED PARTNERSHIP AND CONSOLIDATED PARTNERSHIP
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1995
Gross Amount at Which Carried at Close of Period (B)
Building and Accumulated
Description Land Improvements Total Depreciation
Eastpoint Shopping
Center, Baltimore
County, MD $ 4,166,230 $ 50,291,147 $ 54,457,377 $ 11,738,595
$ 4,166,230 $ 50,291,147 $ 54,457,377 $ 11,738,595
EASTPOINT MALL LIMITED PARTNERSHIP AND CONSOLIDATED PARTNERSHIP
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1995
Life on which
Depreciation
in Latest
Date of Date Income Statements
Description Construction Acquired is Computed
Eastpoint Shopping
Center, Baltimore
County, MD 1956-1981 11/29/85 Building 40 years
Improvements 12 years
(A) The initial cost of the Partnership represents the original purchase price
of the property.
(B) For Federal income tax purposes, the cost basis for the land, building and
improvements at December 31, 1995 is $50,762,351.
A reconciliation of the carrying amount of real estate and accumulated
depreciation for the years ended December 31, 1995, 1994 and 1993 follows:
Real Estate Investments: 1995 1994 1993
Beginning of year $ 53,761,925 $ 52,996,871 $ 52,108,342
Additions 757,229 802,843 888,529
Dispositions (61,777) (37,789) -
End of year $ 54,457,377 $ 53,761,925 $ 52,996,871
Accumulated Depreciation:
Beginning of year $ 9,997,420 $ 8,335,792 $ 6,760,764
Depreciation expense 1,802,952 1,699,417 1,575,028
Dispositions (61,777) (37,789) -
End of year $ 11,738,595 $ 9,997,420 $ 8,335,792
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 6,254,501
<SECURITIES> 0
<RECEIVABLES> 1,300,064
<ALLOWANCES> 80,405
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 54,457,377
<DEPRECIATION> 11,738,595
<TOTAL-ASSETS> 55,367,012
<CURRENT-LIABILITIES> 0
<BONDS> 51,000,000
<COMMON> 0
0
0
<OTHER-SE> 3,405,642
<TOTAL-LIABILITY-AND-EQUITY> 55,367,012
<SALES> 0
<TOTAL-REVENUES> 12,208,708
<CGS> 0
<TOTAL-COSTS> 3,736,945
<OTHER-EXPENSES> 2,266,030
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,071,472
<INCOME-PRETAX> 0
<INCOME-TAX> 0
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,933,722
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