UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
[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
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[ ] 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
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Commission file 2-99171
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THE METROPOLITAN FUND: DOVER PENSION INVESTORS - 1986
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(Exact name of registrant as specified in its charter)
Pennsylvania 51-0283765
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
SUITE 500, 1521 LOCUST STREET, PHILADELPHIA, PA 19102
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 735-5001
------------------------------
Securities registered pursuant to Section 12(b) of the Act: NONE
----------------
Securities registered pursuant to Section 12(g) of the Act: 8,592.5 Units
----------------
UNITS OF LIMITED PARTNERSHIP INTEREST
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No X
--- ---
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 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. [ ]
Aggregate market value of Units held by non-affiliates of the
Registrant: Not Applicable*
* Securities not quoted in any trading market to Registrant's knowledge.
<PAGE>
PART I
Item 1. Business
a. General Development of Business
The Metropolitan Fund: Dover Pension Investors - 1986
("Registrant") is a limited partnership formed in 1985 under the Pennsylvania
Uniform Limited Partnership Act. As of December 31, 1995, Registrant had
outstanding 8,592.5 units of limited partnership interest (the "Units").
b. Financial Information about Industry Segments
The Registrant operates in one industry segment.
c. Narrative Description of Business
Registrant is in the business of making, acquiring, holding,
selling, exchanging and otherwise dealing in mortgage loans with respect to real
property and interests therein, and to engage in any and all activities related
or incidental thereto.
The Registrant has made six loans; one of such loans has been
paid in full, including additional interest. A second loan was satisfied in 1993
(see 1. Canton Cove). The loans are described below:
1. Canton Cove - On October 7, 1987, Registrant entered into a
loan transaction with Canton Cove Corporation, Enterprise Development Company
and Struever Bros. Realty, Inc., (together referred to as Canton Cove Joint
Venture or "CCJV") all of Baltimore, Maryland, to provide a credit facility of
$2,000,000 with respect to a condominium project in Baltimore. The loan was
nonrecourse and was collateralized by a third lien on the project. Prior liens
on the condominium project had been placed to secure a construction loan from
Signet Bank/Maryland in the amount of $18,400,000 and a purchase money mortgage
in the amount of $248,380 from the Mayor and Council of Baltimore. A party
related to the borrowers (James W. Rouse) had advanced $1,500,000 (the "Rouse
Loan") on a parity with, and on substantially the same terms as the Registrant's
loan.
On May 31, 1990, Registrant entered into an agreement with
CCJV to amend the October 1987 loan documents. The agreement provided for the
following: (1) the $1,500,000 Rouse Loan was subordinated in all respects to the
Registrant's loan; (2) at such time as the aggregate of the purchase prices (as
specified in the agreement) of all unsold units equaled $1,000,000, a deed to
all unsold units would be transferred to the Registrant, and (3) the Signet Bank
and Council of Baltimore loans would be paid in full by the borrower so that the
property would be free of all liens. In order to properly account for this
transaction, the Registrant established a loan loss reserve in the amount of
$1,222,333 to be applied against the Canton Cove loan and the related accrued
interest in order to reduce its carrying value to $1,000,000. In addition, the
Registrant ceased accruing interest at that time.
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<PAGE>
As of October 1992, the remaining unsold units had an
aggregate purchase price of $1,098,000. At that time, Registrant requested the
transfer of the deeds to the unsold units in accordance with the May 1990
agreement. Shortly thereafter, the Registrant was named as a defendant in a
complaint filed November 20, 1992 by CCJV and the stockholders of Canton Cove
Corporation. The complaint alleged that the Registrant economically coerced CCJV
to enter the agreement dated May 31, 1990 and asked that the agreement be
rescinded. The complaint also claimed unspecified monetary damages and asked
that the remaining condominium units be released for sale by CCJV.
The Registrant responded to the complaint and also
asserted its counterclaims against CCJV. Shortly thereafter, settlement
discussions between the partnership and CCJV commenced. On December 3, 1993, a
settlement agreement was reached whereby the Registrant took title to three
condominium units and ten boat slips located at the Canton Cove Condominium,
subject to the mortgages on the condominium units. The Registrant satisfied the
underlying mortgages and paid the closing costs of the transaction by borrowing
$395,000, subject to a note collateralized by a Deed of Trust covering the three
condominium units and ten boat slips. The principal balance of the note is
$391,136 at December 31, 1994, bears interest at 9.25% and is payable monthly in
the amount of $3,382.71 (principal and interest). The note matures on January 1,
1999.
On October 18, 1995, the Registrant sold one of the
condominium units at a sales price of $400,000. The sales proceeds went to pay a
portion of the principal balance of the note, settlement costs, administrative
expenses of the Registrant and repay an advance to the Registrant. The
Registrant recognized a loss of $45,929 on the sale based on the difference
between the book value of the unit and the sales price less the selling costs.
The Registrant intends to sell the remaining condominium units and boat slips,
but until such time as those sales occur, they have been triple-net leased to
CCJV for a monthly rental of $2,583.33.
2. Axewood - On October 31, 1988, Registrant entered
into a loan agreement in the amount of $1,600,000 with Axewood Associates, a
Pennsylvania limited partnership, that owned the Axewood Office Complex in
Ambler, Pennsylvania. The loan accrued interest at a rate of 12% per year with
interest payable at a rate of 9% per year. The loan matured fifteen years from
loan closing or upon earlier sale or refinancing, and was payable interest only
to maturity. The loan was nonrecourse, secured by a third mortgage on the
property. A party affiliated with an affiliate of Registrant, Diversified
Pension Investors ("DPI") has advanced $900,000 on a parity with, and on
substantially the same terms as, Registrant. In the event of a sale or
refinancing of the property, Registrant will receive additional interest equal
to its proportionate share of 5% of the difference between (i) the sale price of
fair market value of the property and (ii) $5,000,000.
In February 1991, Registrant entered into an amendment
of the loan agreement increasing the interest accrual rate to 13% with interest
payable at 5%. On May 21, 1991, Registrant and DPI exercised their rights under
the Collateral Assignment of Leases and Rents delivered in connection with these
loans and directed all tenants of the borrower to make monthly payments to DPI.
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<PAGE>
The first and second mortgages with an approximate aggregate balance of
$1,690,770 have been kept current with rent income received from tenants. In
August 1992, the Registrant and DPI formed a corporation, Skippack Pike
Properties, Inc. ("Skippack"), to act as their joint agent and straw party for
the purpose of holding all documents relating to the Axewood loans. Skippack
executed a judgment against Axewood Associates, began collecting the rents of
the property, and scheduled a foreclosure sale for May 1993. However, in May
1993, Axewood Associates filed for protection under Chapter 11 of the U.S.
Bankruptcy Code. In October 1993, after a lengthy trial in which Registrant and
DPI's rights were affirmed by the Bankruptcy Court, the bankruptcy was dismissed
and another foreclosure sale was scheduled. In anticipation of the foreclosure
sale, the Registrant and DPI sold all their right, title and interest in their
mortgages to Skippack SLC Associates ("SLC") in consideration for new notes on
terms virtually identical to the existing notes from Axewood. The new notes were
secured by interests in the assigned mortgage documents. SLC, DPI and the
Registrant agreed that, upon completion of the foreclosure sale, SLC would
execute and deliver new mortgages to secure the new notes. Skippack continued to
hold legal title to the assigned mortgage documents, and became agent and straw
party for SLC, which owned the equitable interests therein. On February 16,
1994, Skippack foreclosed on the property. Skippack, as agent, holds legal title
to the property and is the agent for SLC, which has the beneficial ownership of
the property. At that time, SLC also delivered new mortgages to the Registrant
and DPI. In January 1996, the bank holding the first and second mortgages made
an additional loan of $360,000 to be used for capital and tenant improvements.
At the present time, the property generates approximately break even cash flow.
As of December 31, 1995, the outstanding loan balance plus accrued interest
equals approximately $1,892,000. Due to the non-performing status of the loan,
interest accrual ceased on January 1, 1991.
3. Stein - On November 25, 1988, Registrant entered into a
loan agreement in the amount of $2,000,000 with Mr. Richard Stein, as principal
and representative of a group of foreign investors. The borrower entered into a
contract with the partners of Washington Properties Limited Partnership
("WPLP"), a District of Columbia limited partnership, to purchase certain of the
issued and outstanding partnership interests of WPLP. The loan is secured by a
pledge of the WPLP partnership interests. WPLP owns 1301 Connecticut Avenue,
N.W. a retail/office building on DuPont Circle in Washington, DC (the
"Property"). The loan accrued interest at a rate of 12% per year.
In January 1992, WPLP terminated the ground lease with the
owner of the office building. On March 20, 1992, WPLP granted to Registrant an
absolute assignment of leases which Registrant exercised immediately thus
becoming mortgagee-in-possession. Also on March 20, 1992, WPLP filed a petition
of reorganization pursuant to Chapter 11 of the U.S. Bankruptcy Code. From that
time until July 2, 1992, all rents from the property were collected by the
Registrant, all expenses of the property were paid from the rents, and the net
cash flow remaining (approximately $295,000) was applied against accrued
interest receivable on the Stein loan. On July 2, 1992, a Consent Order was
issued regarding rent collections. From that day forward, all rents were to be
collected by WPLP and deposited in a Debtor-In-Possession account, and all
expenditures were to be approved by both the entity ("CAT I") which claims to
hold the first mortgage on the office building, and the Registrant. Since that
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<PAGE>
time, CAT I has only approved three payments of the monthly debt service due to
the Registrant. In 1993, on the advice of counsel, the Registrant deposited the
net cash flow collected from the property from March 20, 1992 until June 30,
1992 into a court-supervised, WPLP Debtor-In-Possession account. However, the
Registrant reserved all of its rights to assert that it was entitled to the
collection of those funds.
After a lengthy trial in Bankruptcy Court, in November
30, 1994, WPLP's Second Amended Plan of Reorganization ("the Plan") was
confirmed. The Plan provided for, among other things, the payment to CAT I in
cash of $7,750,000 together with a subordinated note of $275,000 from WPLP which
will bear interest at 9.5% per annum, payable from available cash and will
mature on November 30, 1998. The funds needed for the CAT I payments were
provided by RAI Financial, Inc. ("RFI"). The terms of the RFI loan are as
follows: the RFI loan will be a wrap-around mortgage loan in the amount of
$12,000,000 which will include (i) a restated first mortgage loan in the amount
of $9,000,000 and (ii) a restated second mortgage in favor of the Registrant in
the amount of $3,000,000. The Registrant and RFI entered into an agreement
whereby the Registrant irrevocably and unconditionally agreed that RFI will hold
the note and security documents in its name and that the note and security
documents shall evidence, encompass, secure and include both RFI's and the
Registrant's indebtedness. All interest received on account of the Note will be
payable first to RFI until RFI receives interest in an amount equal to 12% per
annum. After RFI receives this, all additional interest received shall be
apportioned between the Registrant and RFI, with (i) Registrant receiving
interest at 2/3 of the 30 day U.S. Treasury Bill Rate in effect on the most
recent June 8, (ii) RFI receiving the balance of such interest. Interest
payments of $84,473 were made in 1995. As of December 31, 1995, the outstanding
loan balance plus accrued interest equals $3,018,334.
4. St. Julien - On May 31, 1989, Registrant entered into a
loan commitment in the amount of $300,000 with St. Julien Corp. ("St. Julien"),
a District of Columbia corporation; on May 31, 1989, Registrant disbursed
$300,000 under such commitment. On September 15, 1989, the amount of principal
outstanding was increased by an additional $300,000. On March 24, 1992, the
amount of principal outstanding was increased by an additional $372,000. The
loan accrues interest at the rate of 14% per year with interest payable
currently at the minimum rate of 0% and a maximum rate of 10% per year to the
extent of cash flow and matures on December 31, 1998 or upon earlier sale or
refinancing. The loan is payable interest only to maturity. This loan is secured
by property located at 1606 New Hampshire Avenue, Washington, DC. If at any time
this property is sold or refinanced, Registrant is also entitled to 5% of the
proceeds receivable by the owner of the property, in excess of $3,000,000. In
the case of a transfer, Registrant is entitled to 5% of the excess fair market
value of the property over $3,000,000.
The first mortgage on the property was scheduled to
mature on March 24, 1994. The first mortgage holder notified St. Julien that
without a substantial paydown of the outstanding loan balance, the loan would
not be renewed. Also, the Registrant discovered that St. Julien was not paying
its bills as they became due and, as a result, became concerned that such
non-payment could adversely affect the value of the property. In order to
forestall the threatened demand by the first mortgage lender for payment in full
on the loan, and avoid any deterioration in the value of the property, the
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<PAGE>
Registrant filed an involuntary petition under Chapter 11 of the U.S. Bankruptcy
Code against St. Julien on February 22, 1994. St. Julien pursued settlement
discussions with the first mortgage holder, however in October 1994, the
mortgage note was sold. An agreement was entered into with the new holder of the
mortgage whereby the note maturity was extended to September 1999 and monthly
payments of interest are to be made in an amount equal to net operating income,
with a minimum of $8,000 per month. As of December 31, 1995, the outstanding
loan balance plus accrued interest equals $1,246,298. Interest accrual ceased as
of August 1, 1992, in order that the carrying value of the loan does not exceed
its net realizable value. No interest payments were made in 1995.
5. St. Julien IV - On November 17, 1989, Registrant entered
into a loan commitment in the amount of $235,000 with St. Julien IV Corp., a
Pennsylvania corporation. The loan accrues interest at a rate of 13% per year
with interest only payable currently at a rate of 8% per year and matures
December 31, 2004. Repayment of this note is secured in part by (i) a Deed of
Trust secured against real property located in Winston-Salem, North Carolina;
and (ii) a collateral assignment of rents and leases with respect to leases,
sublease or rights of use of all or any portion of the property. In addition,
the borrower granted the Registrant a security interest in any personalty,
fixtures or equipment installed or situated in or on the property. Interest
payments of $17,250 were made in 1995. As of December 31, 1995, the outstanding
loan balance plus accrued interest equals approximately $383,316.
d. Financial Information about Foreign and Domestic Operations
and Export Sales
See Item 8, Financial Statements and Supplementary Data
Item 2. Properties
As described in Item 1.c.1 Canton Cove, the Registrant
owns two condominium units and ten boat slips located in Baltimore, Maryland.
The property is fully leased (on a triple-net basis) to CCJV.
Item 3. Legal Proceedings
For a description of the legal proceedings involving
Registrant's holdings, See Item 1. Part c.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the fiscal years covered
by this report to a vote of security holders.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
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<PAGE>
a. There is no established public trading market for the
Units. Registrant does not anticipate any such market will develop. Trading in
the units occurs solely through private transactions. Registrant's records
indicate that 6 units were sold or exchanged of record in 1995.
b. As of December 31, 1995, there were 130 record holders
of Units.
c. Registrant did not declare any cash dividends in 1995 or
1994.
Item 6. Selected Financial Data
The following selected financial data are for the five
years ended December 31, 1995. The data should be read in conjunction with the
consolidated financial statements included elsewhere herein. This data is not
covered by the independent auditors' report.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Interest income $ 308,667 $ 43,686 $ 356,231 $ 446,276 $ 505,862
Rental income 46,127 50,000 4,232 -0- -0-
Net income (loss) 111,052 (233,731) 184,079 260,297 449,776
Net income (loss) per Unit 12.02 (25.30) 19.92 28.17 48.68
Total assets (net of deprecia-
tion and amortization) 7,510,243 7,682,934 7,772,347 7,006,525 7,842,260
Debt obligations 239,748 391,136 395,000 -0- -0-
Distributions to Partners -0- -0- -0- 1,073,600 108,946
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
(1) Liquidity
At December 31, 1995, Registrant had cash of
approximately $43,324. The Registrant will have to rely on rental payments from
the Canton Cove property and debt service payments from the St. Julien IV and
Stein loans to service the first mortgage on the Canton Cove property and the
administrative expenses of the Registrant. The Registrant is not aware of any
additional sources of liquidity.
(2) Notes Receivable
The balance sheet caption "Notes Receivable" includes
the outstanding principal balance of the loans. The increase of $1,000,00 from
1994 to 1995 relates to the restructuring of the Stein loan which added accrued
interest to the principal balance. See Item 1. Part c. The Registrant believes
that as of December 31, 1995, all notes receivable are stated at their net
realizable value.
(3) Results of Operations
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<PAGE>
In 1995, Registrant earned $308,667 of interest income,
of which $415 was earned on deposits with banks and $308,252 was earned from
lending transactions, compared to $43,686 of interest income in 1994 of which $0
was earned on deposits with banks and $43,686 was earned from lending
transactions, compared to $356,200 of interest income in 1993, of which $31,700
was earned on deposits with banks and $324,500 was earned from lending
transactions. The increase in earnings from lending transactions from 1994 to
1995 relates to the accrual of interest on the Stein loan as a result of the
restructuring of the loan. The decrease in earnings from lending transactions
from 1993 to 1994 relates to the non-accrual of interest in 1994 on the Stein
loan, as the only earnings in 1994 resulted from the St. Julien IV loan. The
decrease in interest income earned on deposits with banks from 1993 to 1994
resulted from lower cash balances.
Rental income increased from $4,232 in 1993 to $50,000
in 1994 and decreased to $46,127 in 1995. Rental income relates to the
Registrant's ownership of condominium units and boat slips at Canton Cove
Condominiums which are triple-net leased. The decrease from 1994 to 1995 results
from the sale of one unit in October 1995. The increase from 1993 to 1994 is the
result of one month's rent earned in 1993 compared to twelve month's rent earned
in 1994.
General and administrative expenses increased from
$179,822 in 1993 to $228,306 in 1994 and decreased to $103,374 in 1995. The
decrease from 1994 to 1995 and the increase from 1993 to 1994 is mainly the
result of an increase in legal fees associated with the foreclosure of the
Axewood property, and the bankruptcies and related litigation of both the Stein
and St. Julien loans in 1994.
Depreciation expense increased from $4,690 in 1993 to
$56,280 in 1994 and decreased to $53,036 in 1995. The decrease from 1994 to 1995
results from the sale of the condominium unit in October 1995. The increase from
1993 to 1994 is the result of a full year's worth of depreciation in 1994 on the
Canton Cove condominium units and boat slips compared to one month's worth in
1993.
Interest expense increased from $3,871 in 1993 to
$42,831 in 1994 and decreased to $41,403. The increase from 1993 to 1994 is the
result of a full year's worth of interest expense charged on the Canton Cove
loan in 1994 compared to one month's worth charged in 1993.
The loss on sale of unit relates to the sale of one of
the condominium units at Canton Cove in 1995 at a sales price of $400,000. The
sales proceeds went to pay a portion of the principal balance of the note,
settlement costs, administrative expenses of the Registrant and repay an advance
to the Registrant. The Registrant recognized a loss of $45,929 on the sale based
on the difference between the book value of the unit and the sales price less
the selling costs.
Item 8. Financial Statements and Supplementary Data
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<PAGE>
Registrant is not required to furnish the supplementary financial
information referred to in Item 302 of Regulation S-K.
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<PAGE>
Independent Auditor's Report
To the Partners
The Metropolitan Fund: Dover Pension Investors - 1986
We have audited the accompanying balance sheets of The Metropolitan Fund: Dover
Pension Investors - 1986 (a Pennsylvania Limited Partnership) as of December 31,
1995 and 1994 and the related statements of operations, changes in partners'
equity and cash flows for the years ended December 31, 1995, 1994 and 1993.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to in the first paragraph
present fairly, in all material respects, the financial position of The
Metropolitan Fund: Dover Pension Investors - 1986 as of December 31, 1995 and
1994, and the results of its operations and its cash flows for the years
December 31, 1995, 1994 and 1993 in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Schedule of Real Estate and
Accumulated Depreciation on page 20 is presented for the purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
Gross, Kreger and Passio
Philadelphia, Pennsylvania
January 18, 1996
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<PAGE>
METROPOLITAN FUND:
------------------
DOVER PENSION INVESTORS - 1986
------------------------------
(a limited partnership)
INDEX TO FINANCIAL STATEMENTS
-----------------------------
AND FINANCIAL STATEMENT SCHEDULES
---------------------------------
Financial statements: Page
----
Balance Sheets at December 31, 1995 and 1994 12
Statements of Operations for the Years Ended December 31, 1995,
1994, and 1993 13
Statements of Changes in Partners' Equity for the Years
Ended December 31, 1995, 1994, and 1993 14
Statements of Cash Flows for the years ended December 31, 1995,
1994, and 1993 15
Notes to financial statements 16-18
Financial statement schedules:
Schedule XI - Real Estate and Accumulated Depreciation 20
Notes to Schedule XI 21
All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
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<PAGE>
THE METROPOLITAN FUND:
----------------------
DOVER PENSION INVESTORS - 1986
------------------------------
(a limited partnership)
BALANCE SHEETS
--------------
December 31, 1995 and 1994
Assets
------
1995 1994
----------- -----------
Rental properties at cost:
Building and improvements $ 1,006,999 $ 1,406,999
Less: accumulated depreciation (83,917) (60,970)
----------- -----------
923,082 1,346,029
Cash and cash equivalents 43,324 4,800
Accounts and notes receivable 5,810,833 4,810,833
Interest receivable 733,004 1,521,272
----------- -----------
Total $ 7,510,243 $ 7,682,934
=========== ===========
Liabilities and Partners' Equity
--------------------------------
Liabilities:
Debt obligations $ 239,748 $ 391,136
Accounts payable:
Trade 146,971 190,687
Related parties 80,927 175,566
Other liabilities 32,000 26,000
----------- -----------
Total liabilities 499,646 783,389
Partners' equity 7,010,597 6,899,545
----------- -----------
Total $ 7,510,243 $ 7,682,934
=========== ===========
The accompanying notes are an integral part of these financial statements.
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<PAGE>
THE METROPOLITAN FUND:
----------------------
DOVER PENSION INVESTORS - 1986
------------------------------
(a limited partnership)
STATEMENTS OF OPERATIONS
------------------------
For the Years Ended December 31, 1995, 1994 and 1993
1995 1994 1993
--------- --------- ---------
Revenues:
Rental income $ 46,127 $ 50,000 $ 4,232
Interest income 308,667 43,686 356,231
--------- --------- ---------
Total revenues 354,794 93,686 360,463
--------- --------- ---------
Costs and expenses:
General and administrative 103,374 228,306 179,822
Depreciation 53,036 56,280 4,690
Interest 41,403 42,831 3,871
Loss on sale of unit 45,929 0 0
--------- --------- ---------
Total costs and expenses 243,742 327,417 188,383
--------- --------- ---------
Income (loss) before extraordinary item 111,052 (233,731) 172,080
Extraordinary gain on foreclosure -0- -0- 11,999
--------- --------- ---------
Net income (loss) $ 111,052 ($233,731) $ 184,079
========= ========= =========
Net income (loss) per limited partnership
unit:
Income (loss) before extraordinary item $ 12.02 ($ 25.30) $ 18.62
Extraordinary item -0- -0- 1.30
--------- --------- ---------
$ 12.02 ($ 25.30) $ 19.92
========= ========= =========
The accompanying notes are an integral part of these financial statements.
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<PAGE>
THE METROPOLITAN FUND:
----------------------
DOVER PENSION INVESTORS - 1986
------------------------------
(a limited partnership)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
-----------------------------------------
For the Years Ended December 31, 1995, 1994 and 1993
Dover
1986 Limited
Advisors(1) Partners(2) Total
----------- ----------- -----------
Percentage participation in profit or loss 7% 93% 100%
== === ====
Balance at December 31, 1992 42,776 6,906,421 6,949,197
Net income 12,886 171,193 184,079
----------- ----------- -----------
Balance at December 31, 1993 55,662 7,077,614 7,133,276
Net loss (16,361) (217,370) (233,731)
----------- ----------- -----------
Balance at December 31, 1994 39,301 6,860,244 6,899,545
Net income 7,774 103,278 111,052
----------- ----------- -----------
Balance at December 31, 1995 $ 47,075 $ 6,963,522 $ 7,010,597
=========== =========== ===========
(1) General Partner.
(2) 8,592.5 limited partnership units outstanding at December 31, 1995,
1994, and 1993.
The accompanying notes are an integral part of these financial statements.
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<PAGE>
<TABLE>
THE METROPOLITAN FUND:
----------------------
DOVER PENSION INVESTORS - 1986
------------------------------
(a limited partnership)
STATEMENTS OF CASH FLOWS
------------------------
For the Years Ended December 31, 1995, 1994 and 1993
<CAPTION>
1995 1994 1993
--------- --------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 111,052 ($ 233,731) $ 184,079
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Loss on sale of unit 45,929 -0- -0-
Depreciation 53,036 56,280 4,690
Extraordinary gain on foreclosure -0- -0- (11,999)
Changes in assets and liabilities:
(Decrease) increase in accounts payable - trade (43,716) 104,037 29,322
(Decrease) increase in accounts payable - related
parties (94,639) 18,145 157,421
Increase in other liabilities 6,000 26,000 -0-
---------- ---------- ----------
Net cash provided by (used in) operating activities: 77,662 (29,269) 363,513
---------- ---------- ----------
Cash flows from investing activities:
(Increase) decrease in accounts and note
receivable (1,000,000) 3,350 5,000
Decrease (increase) in interest receivable 788,268 34,192 (602,553)
---------- ---------- ----------
Net cash (used in) provided by investing activities: (211,732) 37,542 (597,553)
---------- ---------- ----------
Cash flows from financing activities:
Principal payments (151,388) (3,864) -0-
Proceeds from sale of unit 323,982 -0- -0-
---------- ---------- ----------
Net cash provided by (used in) financing activities: 172,594 (3,864) -0-
---------- ---------- ----------
Increase (decrease) in cash and cash equivalents 38,524 4,409 (234,040)
Cash and cash equivalents at beginning of year 4,800 391 234,431
---------- ---------- ----------
Cash and cash equivalents at end of year $ 43,324 $ 4,800 $ 391
========== ========== ==========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for interest $ 33,722 $ 33,346 $ 3,871
Supplemental Schedule of Non-Cash
Investing and Financing Activities:
Net assets assumed from debt restructuring:
Fair value of assets acquired in
exchange for note receivable $ -0- $ -0- $ 379,000
Liability created $ -0- $ -0- ($ 395,000)
The accompanying notes are an integral part of these financial statements.
-15-
</TABLE>
<PAGE>
THE METROPOLITAN FUND:
----------------------
DOVER PENSION INVESTORS - 1986
------------------------------
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE A - ORGANIZATION
Metropolitan Fund: Dover Pension Investors - 1986 (the "Partnership") is a
Pennsylvania limited partnership formed in May 1985 to serve as an investment
vehicle for qualified profit-sharing, pension, and other investment trusts,
HR-10 (Keogh) Plans, Individual Retirement Accounts, and other entities exempt
from Federal income taxation. The Partnership intends to make, acquire, hold,
sell, exchange, and otherwise deal in mortgage loans with respect to real
property and interests therein, and to engage in any and all activities related
or incidental thereto.
The General Partner of the Partnership, Dover 1986 Advisors (a general
partnership), whose partners are DHP, Inc., (a Pennsylvania corporation,
formerly Dover Historic Properties, Inc., ) and Mr. Gerald Katzoff, has the
exclusive responsibility for all aspects of the Partnership's operations.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied in the
preparation of the accompanying financial statements follows:
1. Issuance Costs
Costs incurred in connection with the offering and sale of limited partnership
units were charged against partners' equity as incurred. The General Partner is
required to reimburse the Partnership for issuance costs to the extent total
issuance costs exceed certain defined limitations.
2. Net Income Per Limited Partnership Unit
Net income per limited partnership unit is based on the weighted average number
of limited partnership units outstanding during the period (8,592.5 in 1995,
1994, and 1993).
3. Income Taxes
Federal and state income taxes are payable by the individual partners or their
beneficiaries; accordingly, no provision or liability for income taxes is
reflected in the financial statements.
4. Cash and Cash Equivalents
-16-
<PAGE>
The Registrant considers all highly liquid investments purchased with a maturity
of three months or less to be cash equivalents.
5. Depreciation
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets. Buildings and improvements are depreciated over 25
years and furniture and fixtures over five years.
6. Revenue Recognition
Revenues are recognized when interest is due on a straight-line basis. Interest
payments received in advance are deferred until earned.
NOTE C - PARTNERSHIP AGREEMENT
The significant terms of the Agreement of Limited Partnership (the "Agreement"),
as they relate to the financial statements, follow:
All distributable cash from operations (as defined in the Agreement of Limited
Partnership) will be distributed 7% to the General Partner and 93% to the
limited partners.
Net income or loss from operations of the Partnership is allocated 7% to the
General Partner and 93% to the limited partners.
NOTE D - DEBT OBLIGATIONS
Debt obligations are as follows:
December 31,
------------
1995 1994
---- ----
Mortgage loan, interest at 9.25%; interest and
principal payable in monthly installments of $2,098.13;
due January 1, 1999; collateralized by the related
rental property $ 239,748 $ 391,136
-------- --------
$ 239,748 $ 391,136
======== ========
Approximate maturities of the mortgage loan obligation at December 31, 1995, for
each of the succeeding four years are as follows:
1996 $ 3,132
1997 3,434
1998 3,765
1999 229,417
--------
$239,748
========
NOTE E - TRANSACTIONS WITH RELATED PARTIES
-17-
<PAGE>
The Partnership is obligated to pay the General Partner a fee equal to
one-quarter of one percent per annum of outstanding loans serviced by the
General Partner. Such fees aggregated $25,259, $22,227, and $22,183 in 1995,
1994, and 1993, respectively.
NOTE F - INCOME TAX BASIS RECONCILIATION
Certain items enter into the determination of the results of operations in
different time periods for financial reporting ("book") purposes and for income
tax ("tax") purposes. The reconciliation of the results of operations follows:
For the Years Ended December 31,
--------------------------------
1995 1994 1993
---- ---- ----
Net income (loss) - book $ 111,052 ($ 233,731) $ 184,079
Excess of tax over book depreciation (10,418) (13,174) (719)
Loss on sale 3,893 0 0
Gain on foreclosure 0 0 (11,999)
Legal fees (63,686) 63,686 (18,465)
Timing differences 0 0 0
----------- ----------- -----------
Net income (loss) - tax $ 40,841 ($ 183,219) $ 142,417
=========== =========== ===========
A reconciliation between partners' equity for book and tax purposes follows:
Partners' equity - book $ 7,010,597 $ 6,899,545 $ 7,133,276
Costs of issuance 658,440 658,440 658,440
Cumulative tax over (under) book income (32,417) 37,794 (12,718)
----------- ----------- -----------
Partners' equity - tax $ 7,636,620 $ 7,595,779 $ 7,778,998
=========== =========== ===========
-18-
<PAGE>
SUPPLEMENTAL INFORMATION
-19-
<PAGE>
<TABLE>
THE METROPOLITAN FUND -
-----------------------
DOVER PENSION INVESTORS - 1986
------------------------------
(a limited partnership)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
Costs
Capitalized
Subsequent Gross Amount at which Carried at
Initial Cost to to
Partnership(b) Acquisition December 31, 1995
-------------- ----------- -----------------
<CAPTION>
Buildings Buildings
and and Accumulated Date of Date
Description Encumbrances(d) Land Improvements Improvements Land Improvements Total(a)(b) Depr.(b)(c) Constr. Acquired
- - ------------ --------------- ----- ------------ ------------ ----- ------------ ----------- ----------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3 condominium units*
and 10 boat slips in
Baltimore, MD $395,000 - $1,406,999 - - $1,006,999 $1,006,999 $83,917 12/3/93 1990
-------------- ---- ------------ ------------ ----- ------------ ------------ -----------
$395,000 $0 $1,406,999 $0 $0 $1,006,999 $1,006,999 $83,917
============== ==== ============ =========== ===== ============ ============ ===========
* As of December 31, 1995 there were 2 remaining condominium units and 10 boat slips.
</TABLE>
-20-
<PAGE>
THE METROPOLITAN FUND:
----------------------
DOVER PENSION INVESTORS - 1986
------------------------------
(a limited partnership)
NOTES TO SCHEDULE XI
--------------------
December 31, 1995
(A) The aggregate cost of real estate for Federal income tax purposes is
approximately $995,000.
(B) Reconciliation of real estate:
1995 1994 1993
----------- ----------- -----------
Balance at beginning of year $ 1,406,999 $ 1,406,999 $ 0
Additions during the year:
Acquisitions through foreclosure 0 0 1,406,999
Deductions during the year:
Sale of unit (400,000) 0 0
----------- ----------- -----------
Balance at end of year $ 1,006,999 $ 1,406,999 $ 1,406,999
=========== =========== ===========
Reconciliation of accumulated depreciation:
1995 1994 1993
----------- ----------- -----------
Balance at beginning of year $ 60,970 $ 4,690 $ 0
Depreciation expense for the year 53,036 56,280 4,690
Sale of unit (30,089) 0 0
----------- ----------- -----------
Balance at end of year $ 83,917 $ 60,970 $ 4,690
=========== =========== ===========
(C) See Note B to the financial statements for depreciation method and lives.
(D) See Note D to the financial statements for further information.
-21-
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of Registrant
a. Identification of Directors - Registrant has no directors.
b. Identification of Executive Officers
The General Partner of the Registrant is Dover 1986 Advisors,
a Pennsylvania general partnership. The partners of Dover 1986 Advisors are as
follows:
Name Age Position Term of Office Period Served
---- --- -------- -------------- -------------
Gerald Katzoff 48 Partner in Dover No fixed term Since
1986 Advisors May 1985
DHP, Inc. -- Partner in Dover No fixed term Since
(Formerly Dover Historic 1986 Advisors May 1985
Properties, Inc.)
For further description of DHP, Inc., see paragraph e. of this Item.
There is no arrangement or understanding between either person named above and
any other person pursuant to which any person was or is to be selected as an
officer.
c. Identification of Certain Significant Employees. Registrant has no
employees. Its administrative and operational functions are carried out by a
property management and partnership administration firm engaged by the
Registrant.
d. Family Relationships. There is no family relationship between or
among the executive officers and/or any person nominated or chosen by Registrant
to become an executive officer.
e. Business Experience. Dover 1986 Advisors is a general partnership
formed in May 1985. The partners of Dover 1986 Advisors are DHP, Inc. and Gerald
Katzoff.
The General Partner is responsible for management and control of
Registrant's affairs and will have general responsibility and authority in
conducting its operations. The General Partner may retain its affiliates to
manage certain of the Properties.
-22-
<PAGE>
Gerald Katzoff (age 48) has been involved in various aspects of the
real estate industry since 1974. Mr. Katzoff is the owner of Katzoff Resorts,
which controls various hotel and spa resorts in the United States. Mr. Katzoff
is a principal in an entity which is the owner of a property in Avalon, New
Jersey which has filed a petition pursuant to Chapter 11 of the U.S. Bankruptcy
Code. Mr. Katzoff is a former President and former director of D, LTD.,
(formerly The Dover Group, Ltd., the corporate parent of DHP, Inc.). In February
1992, The Dover Group Ltd's name was changed to D, Ltd.
Dover Historic Properties, Inc. was incorporated in Pennsylvania in
December 1984 for the purpose of sponsoring investments in, rehabilitating,
developing and managing historic (and other) properties. In February 1992, Dover
Historic Properties, Inc.'s name was changed to DHP, Inc. DHP, Inc. is a
subsidiary of The Dover Group, Ltd., an entity formed in 1985 to act as the
holding company for DHP, Inc. and certain other companies involved in the
development and operation of both historic properties and conventional real
estate as well as in financial (non-banking) services.
The executive officers, directors, and key employees of DHP, Inc. as of
December 31, 1995 are described below.
Michael J. Tuszka (age 49) was appointed Chairman and Director of both
D, LTD and DHP, Inc. on January 27, 1993. Mr. Tuszka been associated with DHP,
Inc. and its affiliates since 1984.
Donna M. Zanghi (age 39) was appointed Secretary and Treasurer of DHP,
Inc. on June 14, 1993. She is also a Director, and Secretary/Treasurer of D,
LTD. She has been associated with DHP, Inc. and its affiliates since 1984 except
for the period from December 1986 to June 1989 and the period from November 1,
1992 to June 14, 1993.
Michele F. Rudoi (age 32) was appointed on January 27, 1993 as
Assistant Secretary and Director of both D, LTD. and DHP, Inc.
Item 11. Executive Compensation
a. Cash Compensation - During 1995, Registrant has paid no cash
compensation to Dover 1986 Advisors, any partner therein or any person named in
paragraph c. of Item 10. Certain fees have been paid to affiliates of DHP, Inc.
by Registrant. See paragraph a. of Item 13.
As of the date hereof, Registrant has paid no cash compensation to the
General Partner, any partner therein or any person named in paragraph c. of Item
10 except as set forth below. Pursuant to Registrant's Amended and Restated
Agreement of Limited Partnership, the General Partner is entitled to 7% of the
Registrant's Net Cash Flow distributed in each year, to 1/4% mortgage servicing
fee, and to reimbursement for administrative salaries and expenses.
-23-
<PAGE>
During 1995, the General Partner received $-0- as a distribution of the
Registrant's net cash flow, and charged $25,259 as a mortgage servicing fee.
b. Compensation Pursuant to Plans - Registrant has no plan pursuant to
which compensation was paid or distributed during 1995, or is proposed to be
paid or distributed in the future, to Dover 1986 Advisors, any partner therein,
or any person named in paragraph c. of Item 10 of this report.
c. Other Compensation - No compensation not referred to in paragraph a.
or paragraph b. of this Item was paid or distributed to date, to Dover 1986
Advisors, any partner therein, or any person named in paragraph c. of Item 10.
d. Compensation of Directors - Registrant has no directors.
e. Termination of Employment and Change of Control Arrangement -
Registrant has no compensatory plan or arrangement, with respect to any
individual, which results or will result from the resignation or retirement of
any individual, or any termination of such individual's employment with
Registrant or from a change in control of Registrant or a change in such
individual's responsibilities following such a change in control.
Item 12. Security Ownership of Certain Beneficial Owners and Management
a. Security Ownership of Certain Beneficial Owners - The City of
Philadelphia Municipal Pension Fund is the beneficial owner of 5,000 units,
constituting 58.19% of the aggregate issued and outstanding units, and The
Philadelphia Gas Works Retirement Fund is the beneficial owner of 2,000 units
constituting 23.28% of the aggregate issued and outstanding units.
b. Security Ownership of Management - No equity securities of
Registrant other than the interest of Dover 1986 Advisors are beneficially owned
by any of Registrant's executive officers or by any person named in paragraph c.
of Item 10.
c. Changes in Control - Registrant does not know of any arrangement,
the operation of which may at a subsequent date result in a change in control of
Registrant.
Item 13. Certain Relationships and Related Transactions
a. Transactions with Management and Others - Registrant is required to
pay the General Partner a mortgage servicing fee of 1/4% per year of the
outstanding loans made by Registrant serviced by the General Partner. In 1995,
Registrant had accrued such fees in the amount of $25,259.
During 1993, the General Partner advanced $123,980 to the Registrant
for working capital needs. Interest accrues on this obligation at 8% per annum.
During 1995, interest accrued was $7,681 and payments of $127,579 were made to
satisfy the obligation.
-24-
<PAGE>
b. Certain Business Relationships - Registrant has no directors. For a
description of business relationships between Registrant and certain affiliated
persons, see paragraph a. of this Item.
c. Indebtedness of Management - No executive officer or significant
employee of Registrant, Registrant's general partner (or any employee thereof),
or any affiliate of any such person, is or has at any time been indebted to
Registrant.
-25-
<PAGE>
PART IV
Item 14. (A) Exhibits, Financial Statement Schedules and Reports on Form 8-K.
1. Financial Statements:
a. Balance Sheets at December 31, 1995 and 1994.
b. Statements of Operations for the Years Ended December 31,
1995, 1994 and 1993.
c. Statements of Changes in Partners' Equity for the Years
Ended December 31, 1995, 1994 and 1993.
d. Statements of Cash Flows for the Years Ended December 31,
1995, 1994 and 1993.
e. Notes to consolidated financial statements.
2. Financial statement schedules:
a. Schedule XI- Real Estate and Accumulated Depreciation.
b. Notes to Schedule XI.
3. Exhibits:
(a) Exhibit Number Document
-------------- --------
3 Registrant's Amended and Restated
Certificate of Limited Partnership
and Agreement of Limited
Partnership, previously filed as
part of Amendment No. 1 of
Registrant's Registration
Statement on Form S-11, are
incorporated herein by reference.
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the
quarter ended December 31, 1995.
-26-
<PAGE>
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
THE METROPOLITAN FUND:
DOVER PENSION INVESTORS - 1986
Date: April 11, 1996 By: Dover 1986 Advisors, General Partner
--------------
By: DHP, Inc., Partner
By: /s/ Michael J. Tuszka
--------------------------------
MICHAEL J. TUSZKA,
Chairman
By: /s/ Donna M. Zanghi
--------------------------------
DONNA M. ZANGHI,
Secretary and Treasurer
By: /s/ Michele F. Rudoi
--------------------------------
MICHELE F. RUDOI,
Assistant Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
Registrant and in the capacities and on the dates indicated.
Signature Capacity Date
--------- -------- ----
DOVER 1986 ADVISORS General Partner
By: DHP, Inc., Partner
By: /s/ Michael J. Tuszka April 11, 1996
------------------------- --------------
MICHAEL J. TUSZKA
Chairman
By: /s/ Donna M. Zanghi April 11, 1996
-------------------------- --------------
DONNA M. ZANGHI,
Secretary and Treasurer
By: /s/ Michele F. Rudoi April 11, 1996
------------------------- --------------
MICHELE F. RUDOI,
Assistant Secretary
-27-
<TABLE> <S> <C>
<ARTICLE>5
<CIK>0000773540
<NAME>MET FUND
<MULTIPLIER>1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 43,324
<SECURITIES> 0
<RECEIVABLES> 6,543,837
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,006,999
<DEPRECIATION> 83,917
<TOTAL-ASSETS> 7,510,243
<CURRENT-LIABILITIES> 259,898
<BONDS> 239,748
0
0
<COMMON> 0
<OTHER-SE> 7,010,597
<TOTAL-LIABILITY-AND-EQUITY> 7,510,243
<SALES> 0
<TOTAL-REVENUES> 354,794
<CGS> 0
<TOTAL-COSTS> 149,303
<OTHER-EXPENSES> 53,036
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41,403
<INCOME-PRETAX> 111,052
<INCOME-TAX> 0
<INCOME-CONTINUING> 111,052
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 111,052
<EPS-PRIMARY> 12.02
<EPS-DILUTED> 0
</TABLE>
