UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
--------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_________________to__________________________
Commission file number
0-15771
GUARANTEED HOTEL INVESTORS 1985, L.P.
and
FFCA INVESTOR SERVICES CORPORATION 85-A
- --------------------------------------------------------------------------------
(Exact name of Co-Registrants as Specified in their
Organizational Documents)
Delaware 86-0537905
- --------------------------------------------------------------------------------
(Partnership State of Organization) (Partnership I.R.S. Employer
Identification Number)
Delaware 86-0537910
- --------------------------------------------------------------------------------
(Corporation State of Incorporation) (Corporation I.R.S. Employer
Identification Number)
The Perimeter Center
17207 North Perimeter Drive
Scottsdale, Arizona 85255
- --------------------------------------------------------------------------------
(Address of principal executive offices) (zip code)
Co-Registrants' telephone number including area code (602) 585-4500
-----------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ ------
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
----------------------------
GUARANTEED HOTEL INVESTORS 1985, L.P.
(A LIMITED PARTNERSHIP IN PROCESS OF LIQUIDATION)
BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- ------------
(Note 1)
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $6,908,083 $ 6,255,398
Funds held in trust (Note 3) 2,500,000 -
Accounts receivable, trade - 718,454
Other receivables 193,356 861,550
Prepaids and other 37,121 412,582
---------- -----------
Total current assets 9,638,560 8,247,984
---------- -----------
PROPERTY AND EQUIPMENT:
Land and improvements - 5,396,153
Buildings and improvements - 41,350,548
Furniture and equipment - 8,038,759
---------- -----------
- 54,785,460
Less - Accumulated depreciation and amortization - (9,013,099)
---------- -----------
- 45,772,361
Operating stock - 337,148
---------- -----------
- 46,109,509
---------- -----------
Total assets $9,638,560 $54,357,493
========== ===========
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
CURRENT LIABILITIES:
Distribution payable to limited partners $ 2,104 $ 1,002,104
Payable to general partner - 10,101
Accounts payable and accrued liabilities 2,534,042 1,724,774
Property taxes payable - 508,630
Current portion of capital lease obligations - 111,689
---------- -----------
Total current liabilities 2,536,146 3,357,298
---------- -----------
PARTNERS' CAPITAL (DEFICIT):
General partner - (324,955)
Limited partners (Note 2) 7,102,414 51,325,150
---------- -----------
Total partners' capital 7,102,414 51,000,195
---------- -----------
Total liabilities and partners' capital $9,638,560 $54,357,493
========== ===========
</TABLE>
<PAGE>
GUARANTEED HOTEL INVESTORS 1985, L.P.
(A LIMITED PARTNERSHIP IN PROCESS OF LIQUIDATION)
STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
6/30/96 (Note 1) 6/30/95 6/30/96 (Note 1) 6/30/95
---------------- ------------ ---------------- ----------
<S> <C> <C> <C>
REVENUE:
Room $ 1,406,612 $4,420,898 $ 7,520,812 $ 9,685,814
Food and beverage 157,049 651,263 792,450 1,682,852
Other revenue 391,890 549,942 957,866 960,677
----------- ---------- ----------- ------------
1,955,551 5,622,103 9,271,128 12,329,343
----------- ---------- ----------- ------------
EXPENSES:
Property operating costs and expenses 485,132 1,756,515 2,309,881 3,831,151
General and administrative 1,541,706 818,856 2,608,831 1,674,215
Advertising and promotion 163,931 548,569 733,503 1,134,744
Utilities 89,958 294,257 382,011 587,442
Repairs and maintenance 70,593 270,792 321,719 544,344
Taxes and insurance 1,075,811 422,874 1,450,423 852,171
Interest expense and other 10,028 30,795 29,723 59,197
Depreciation and amortization - 572,629 623,395 1,232,583
Loss on disposition of property - 1,992 52,120 2,967
----------- ----------- ----------- ------------
3,437,159 4,717,279 8,511,606 9,918,814
----------- ----------- ----------- ------------
NON OPERATING INCOME (EXPENSE):
Gain on sale of hotels (Note 1) 28,003,339 - 28,003,339 -
General partner fee (982,620) - (982,620) -
Financial advisory fee (732,500) - (732,500) -
----------- ----------- ----------- ------------
26,288,219 - 26,288,219 -
----------- ----------- ----------- ------------
NET INCOME $24,806,611 $ 904,824 $27,047,741 $ 2,410,529
=========== =========== =========== ============
NET INCOME ALLOCATED TO:
General partner $ 248,066 $ 9,048 $ 270,477 $ 24,105
Limited partners 24,558,545 895,776 26,777,264 2,386,424
----------- ----------- ----------- ------------
$24,806,611 $ 904,824 $27,047,741 $ 2,410,529
=========== =========== =========== ============
NET INCOME PER LIMITED
PARTNERSHIP UNIT (based on
200,000 units held by limited partners) $122.79 $4.48 $133.89 $11.93
======= ===== ======= ======
</TABLE>
<PAGE>
GUARANTEED HOTEL INVESTORS 1985, L.P.
(A LIMITED PARTNERSHIP IN PROCESS OF LIQUIDATION)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners
General -----------------------------
Partner Number Total
Amount of Units Amount Amount
--------- -------- ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1995 $(324,955) 200,000 $ 51,325,150 $ 51,000,195
Net income 270,477 - 26,777,264 27,047,741
General partner contribution
of deficit in capital account 64,579 - - 64,579
Distribution to partners
from operations (10,101) (1,000,000) (1,010,101)
Initial liquidating distribution
to limited partners (Note 2) - - (70,000,000) (70,000,000)
--------- ------- ------------- -------------
BALANCE, June 30, l996 $ - 200,000 $ 7,102,414 $ 7,102,414
========= ======= ============= =============
</TABLE>
<PAGE>
GUARANTEED HOTEL INVESTORS 1985, L.P.
(A LIMITED PARTNERSHIP IN PROCESS OF LIQUIDATION)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 27,047,741 $ 2,410,529
Adjustments to net income:
Depreciation and amortization 623,395 1,232,583
Gain on sale of hotels (28,003,339) -
Loss on disposition of property 52,120 2,967
Change in assets and liabilities:
Decrease (increase) in accounts receivable, trade 718,454 (306,159)
Decrease in other receivables 764,028 -
Decrease in prepaids and other 375,461 556,664
Decrease in disputed liabilities - (512,714)
Increase in accounts payable and
accrued liabilities 731,953 94,011
Increase (decrease) in property taxes payable (508,630) 49,852
------------ ------------
Net cash provided by operating activities 1,801,183 3,527,733
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions or improvements of property - (374,669)
Proceeds from sale of hotels 73,250,000 -
Establishment of trust fund (2,500,000) -
Proceeds from sale of furniture 125,398 1,652
Decrease in operating stock 30,680 9,200
------------ ------------
Net cash provided by (used in) investing activities 70,906,078 (363,817)
------------ ------------
CASH FLOWS FOR FINANCING ACTIVITIES:
Limited partner initial liquidating distribution (Note 2) (70,000,000) -
Distributions to partners from operations (2,020,202) (2,020,202)
Payments on capital lease obligations (34,374) (89,070)
------------ ------------
Net cash used in financing activities (72,054,576) (2,109,272)
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 652,685 1,054,644
CASH AND CASH EQUIVALENTS, beginning of period 6,255,398 5,652,192
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 6,908,083 $ 6,706,836
============ ============
</TABLE>
<PAGE>
GUARANTEED HOTEL INVESTORS 1985, L.P.
(A LIMITED PARTNERSHIP IN PROCESS OF LIQUIDATION)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(Unaudited)
1) BASIS OF PRESENTATION:
---------------------
On April 26, 1996, the Partnership closed the sale of its three hotel
properties (its only real property assets) for a net cash sales price of
$73,250,000. In connection with the sale, the limited partners approved a formal
plan of liquidation. The General Partner has begun the process of winding down
the affairs of the Partnership, including the liquidation and distribution of
assets to the investors in accordance with the Partnership agreement and,
accordingly, the accompanying financial statements have been presented on the
liquidation basis of accounting. The carrying amounts of the assets at June 30,
1996, have been presented at their estimated realizable values and liabilities
at their settlement amounts.
2) DISTRIBUTION OF PARTNERSHIP ASSETS:
----------------------------------
The Partnership made an initial estimated liquidating distribution
aggregating $70 million to the limited partners in May 1996. The remaining
balance in the limited partners' capital account as reflected in the
accompanying balance sheet will be distributed to the limited partners upon
liquidation of the Partnership which is expected to be completed in 1996, except
for $2.5 million held in trust as discussed below. In preparing the accompanying
financial statements, management has made certain assumptions and estimates
related to the costs of liquidation of the Partnership and distribution of the
assets that will affect the limited partners' capital account balance (and,
therefore, the amount of the final liquidating distribution to the limited
partners). Although management believes its estimates are reasonable, the actual
distribution amounts could differ from those estimates.
3) FUNDS HELD IN TRUST:
-------------------
On April 26, 1996, a trust fund of $2.5 million was established by the
Partnership which will be available only to satisfy claims made by the buyer,
arising from the Partnership's obligations under the sales agreement during the
eighteen-month period ending October 26, 1997. If, as of October 26, 1997, no
claims have been made by the buyer or if final decisions have been rendered for
all disputed claims, the remaining balance of the trust fund will be disbursed
to the investors. If, however, there exist disputed claims as of October 26,
1997, no disbursements will be made from the trust fund until a final decision
has been reached as to all disputed claims; provided, however, that no later
than April 26, 1999 the remaining balance of the trust fund will be disbursed to
the investors, and the buyer will have no further recourse as to such disputed
claims.
<PAGE>
PART I - FINANCIAL INFORMATION
- --------------------------------
Item 2. Management's Discussion and Analysis of
- ------- Financial Condition and Results of Operations
---------------------------------------------
Liquidity and Capital Resources
On April 26, 1996, the Partnership closed a transaction with Starwood
Lodging Trust operating through its affiliate, SLT Realty Limited
Partnership (collectively, the "Buyer"), whereby the Buyer acquired fee
simple title to the Partnership's three hotels located in Irving, Texas;
Fort Lauderdale, Florida; and Tampa, Florida (the "Properties") from the
Partnership for a cash payment to the Partnership of $73,250,000. The
Buyer is not affiliated with the Partnership or its general partner, FFCA
Management Company Limited Partnership, a Delaware limited partnership
(the "General Partner"). The sale of the Properties represents the
disposition of substantially all of the Partnership's assets and the
Partnership has no further liability in connection with any of the
Properties. In connection with the sale, the limited partners approved a
plan of liquidation and the General Partner has begun the process of
winding down the affairs of the Partnership, which includes the
liquidation and distribution of assets to the investors in accordance with
the Partnership agreement. The Partnership made an initial liquidating
distribution aggregating $70 million to the limited partners in May 1996.
The liquidation of the Partnership is expected to be completed in 1996 at
which time the remaining balance in the limited partners' capital account
as reflected in the accompanying balance sheet will be distributed to the
limited partners, except for $2.5 million held in trust as discussed
below. In conjunction with the sales transaction, the investors of the
Partnership also approved the payment of a fee in the amount of $982,620
to the General Partner for substantial and unanticipated services rendered
to the Partnership from January 1, 1991 to the date of liquidation of the
Partnership. This fee was paid to the General Partner in May 1996.
In conjunction with the sale of the Properties, $2.5 million of the sales
price was deposited in trust with a bank (the "Trust Fund"). The Trust
Fund (including interest income) will be available only to satisfy claims
made by the Buyer, arising from the Partnership's obligations under the
sales agreement during an eighteen-month period commencing upon the sale
date. If, at the end of such eighteen-month period, no claims have been
made by the Buyer or if final decisions have been rendered for all
disputed claims, the remaining balance of the Trust Fund will be disbursed
to the investors. If, however, there exist disputed claims at the end of
such eighteen-month period, no disbursements will be made from the Trust
Fund until a final decision has been reached as to all disputed claims;
provided, however, that no later than three years after the acquisition of
the hotels by the Buyer the remaining balance of the Trust Fund will be
disbursed to the investors, and the Buyer will have no further recourse as
to such disputed claims.
The accompanying financial statements have been presented on the
liquidation basis of accounting. The carrying amounts of the assets at
June 30, 1996, have been presented at their estimated realizable values
and liabilities at their settlement amounts. In preparing the accompanying
financial statements, management has made certain assumptions and
estimates related to the costs of liquidation of the Partnership and
distribution of the assets that will affect the limited partners' capital
account balance (and, therefore, the amount of the final liquidating
distribution to the limited partners). Although management believes its
estimates are reasonable, the actual distribution amounts could differ
from those estimates.
Results of Operations
The Partnership had 26 days of hotel operations during the quarter ended
June 30, 1996 (the period) due to the sale of the hotel assets on April
26, 1996 as discussed above. Until its liquidation, the Partnership's only
source of revenue will be investment interest income from temporary
investments pending the dissolution of the Partnership and final
distribution to the limited partners. General and administrative costs for
the period
<PAGE>
include estimated costs related to the wind down and liquidation of the
Partnership. The Partnership generated $1.8 million in cash from
operations for the six months ended June 30, 1996, of which $1 million was
paid as a distribution to partners.
The Partnership recorded a gain during the period of $28 million on the
sale of the hotels discussed above. In connection with the sale of the
hotels, the Partnership paid a financial advisory firm a fee in the amount
of $732,500 for their services. In addition, the Partnership paid the
General Partner a $982,620 fee during the period, as discussed above, for
substantial and unanticipated services rendered to the Partnership.
<PAGE>
FFCA INVESTOR SERVICES CORPORATION 85-A
---------------------------------------
BALANCE SHEET - JUNE 30, 1996
-----------------------------
ASSETS
Cash $100
Investment in Guaranteed Hotel Investors 1985, L.P., at cost 100
----
Total Assets $200
====
LIABILITY
Payable to Parent $100
STOCKHOLDER'S EQUITY
Common Stock; $l par value; 100 shares authorized,
issued and outstanding 100
----
Liability and Stockholder's Equity $200
====
Note: FFCA Investor Services Corporation 85-A (85-A) was organized on June
28, 1985 to act as the assignor limited partner in Guaranteed Hotel
Investors 1985, L.P. (GHI-85). The assignor limited partner is the
owner of record of the limited partnership units of GHI-85. All rights
and powers of 85-A have been assigned to the holders, who are the
registered and beneficial owners of the units. Other than to serve as
assignor limited partner, 85-A has no other business purpose and will
not engage in any other activity or incur any debt.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
co-registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
GUARANTEED HOTEL INVESTORS 1985, L.P.
By FFCA MANAGEMENT COMPANY, L.P.
General Partner
By PERIMETER CENTER MANAGEMENT COMPANY
Corporate General Partner
Date: July 31, 1996 By /s/ John R. Barravecchia
---------------------------------------------
John R. Barravecchia, Chief Financial Officer
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
co-registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
FFCA INVESTOR SERVICES CORPORATION 85-A
Date: July 31, 1996 By /s/ John R. Barravecchia
---------------------------------------------
John R. Barravecchia, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE BALANCE SHEET AS
OF JUNE 30, 1996 AND THE STATEMENT OF INCOME FOR
THE SIX MONTHS ENDED JUNE 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000773933
<NAME> GUARANTEED HOTEL INVESTORS 1985, L.P.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 6,908,083
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,638,560
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,638,560
<CURRENT-LIABILITIES> 2,536,146
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,102,414
<TOTAL-LIABILITY-AND-EQUITY> 9,638,560
<SALES> 0
<TOTAL-REVENUES> 9,271,128
<CGS> 0
<TOTAL-COSTS> 4,464,034
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,723
<INCOME-PRETAX> 27,047,741
<INCOME-TAX> 0
<INCOME-CONTINUING> 27,047,741
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,047,741
<EPS-PRIMARY> 133.89
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE BALANCE SHEET AS
OF JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH BALANCE SHEET.
</LEGEND>
<CIK> 0000778969
<NAME> FFCA INVESTOR SERVICES CORPORATION 85-A
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 100
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 200
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 100
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 200
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
