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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d)
of Securities Exchange Act of 1934
Commission File
For the fiscal year ended December 31, 1999 Number 0-14536
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WINTHROP CALIFORNIA INVESTORS LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
Delaware 04-2869812
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(State of organization) (IRS Employer Identification No.)
Five Cambridge Center, 9th Floor, Cambridge, Massachusetts 02142
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (617) 234-3000
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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to Section 12(g) of the Act:
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-B 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-KSB or any amendment to
this Form 10-KSB. [ ]
Registrant's revenues for its most recent fiscal year were $2,303,000
No market exists for the limited partnership interests of the Registrant, and,
therefore, no aggregate market value can be determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
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The most significant asset of Winthrop California Investors Limited
Partnership (the "Registrant") is its 25% limited partnership interest in the
Development Partnership. Due to a dispute with the general partner of the
Development Partnership, the Registrant has been unable to obtain the necessary
information with which to complete audited financial statements as well as
provide full disclosure regarding the Development Partnership's operations. See
"Item 3. Litigation." Although, the Registrant has been provided with audited
financial statements for the Development Partnership for the year ended December
31, 1998, the auditors for the Development Partnership have informed the
Registrant and its auditors that they will not consent to the Registrant relying
on the Development Partnership's audited financial statements in connection with
the completion of the Registrant's audited financial statements. Further, the
financial information relating to the Development Partnership necessary to
generate financial statements for the Registrant for the year ended December 31,
1999 has not been provided. Accordingly, (i) the information set forth in Item 2
regarding the Development Partnership may be incomplete, (ii) this Form 10-KSB
contains no information with respect to the Development Partnership's operations
and (iii) the financial statements required by Item 7 have been omitted in
reliance on Rule 12b-21 promulgated under the Securities Exchange Act of 1934.
Attached hereto as Exhibit 99.2 is the audited financial statements of the
Operating Partnership for the year ended December 31, 1999.
PART I
Item 1.Description of Business.
Organization
Winthrop California Investors Limited Partnership (the "Registrant") was
originally organized on January 24, 1985 as a Maryland limited partnership. On
October 16, 1985, the Registrant was reorganized as a Delaware limited
partnership in accordance with the provisions of the Delaware Revised Uniform
Limited Partnership Act. The Registrant was organized for the purpose of owning
(i) a general partnership interest in, and serving as a general partner of, Crow
Winthrop Operating Partnership, a Maryland general partnership (the "Operating
Partnership") which was originally organized on January 24, 1985 to acquire, own
and operate an approximately 1.6 million square foot office facility known as
the Fluor Corporation World Headquarters Facility in Irvine (Orange County),
California (the "Headquarters Facility"), and (ii) a limited partnership
interest in Crow Winthrop Development Limited Partnership, a Maryland limited
partnership (the "Development Partnership" and, collectively with the Registrant
and the Operating Partnership, the "Partnerships") which was organized on
January 24, 1985 to acquire and own in excess of 120 acres of land surrounding
the Headquarters Facility (the "Excess Land" and, collectively with the
Headquarters Facility, the "Properties") and to develop such Excess Land with
office, hotel, retail and entertainment complexes. In March 1992, the Registrant
acquired a 99% limited partnership interest in Winthrop California Management
Limited Partnership, a Maryland limited partnership ("WC Management"), which has
the right to perform management and leasing functions at the Headquarters
Facility.
The general partners of the Registrant (the "General Partners") are
Winthrop Financial Associates, A Limited Partnership ("WFA") and Three Winthrop
Properties, Inc. ("Three Winthrop").
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The Registrant was initially capitalized with nominal capital
contributions from the General Partners. In December 1986, the Registrant
completed an offering of 3,500 units of limited partnership interest ("Units")
in the Registrant to limited partners ("Limited Partners"), raising capital
contributions of $217,780,500. One of the Limited Partners is WILCAP Limited
Partnership, a Massachusetts limited partnership which is wholly-owned by WFA
and its affiliates ("WILCAP"). On May 9, 1986, WILCAP purchased 1,000 Units for
an aggregate price of $54 million, or $54,000 per Unit, payable in cash upon its
admission to the Registrant. The purchase price equaled the purchase price paid
by other Limited Partners in the offering less brokerage commissions which
otherwise would have been payable to an affiliate of WFA and a pro rata portion
of certain acquisitions fees which otherwise would have been payable to WFA. Of
the total capital contributions raised, $151,194,500 was paid upon admission of
the Limited Partners, and the balance was payable in installments pursuant to
the terms of promissory notes. As of May 1, 1988, the Limited Partners' capital
contributions had been paid in full.
Business
Until 1997, the only business of the Registrant was investing as a 99%
general partner in the Operating Partnership, as a 25% limited partner in the
Development Partnership and as a 99% limited partner in WC Management. The other
partner of the Operating Partnership is Crow Irvine #2, a California limited
partnership ("Crow Irvine"). Pursuant to an amendment to the partnership
agreement of the Operating Partnership entered into in February 1992, the
Registrant assumed sole responsibility for the management of the business of the
Operating Partnership. Crow Irvine is also the general partner of the
Development Partnership. The general partner of Crow Irvine is Crow Irvine #1, a
Texas limited partnership, and the limited partner is the Fluor Corporation. The
general and limited partners of Crow Irvine #1 are certain partners and an
affiliate of Trammel Crow Company. Trammel Crow Company is one of the largest
private real estate development and investment firms in the United States.
In exchange for its interests in the Operating Partnership and the
Development Partnership, the Registrant agreed to contribute as capital $138
million and $45 million, respectively, payable in installments. As of May 1988,
the Registrant had fully funded the capital contributions. The Registrant is
entitled to (i) 97% (of which the Limited Partners receive 98%) of the profits,
losses and cash flow of the Operating Partnership and (ii) after certain
priorities, 90% (of which the Limited Partners receive 90% of the proceeds) from
a sale or refinancing in respect of the Operating Partnership. The Registrant is
entitled to 25% (of which the Limited Partners receive 60%) of (i) the profits,
losses and cash flow of the Development Partnership and (ii) after certain
priorities, the proceeds from a sale or refinancing in respect of the
Development Partnership.
Change in Ownership; Mortgage Loan Workout
After the acquisition of the Headquarters Facility, the Orange County
rental market, in general, and the rental market in the area proximate to John
Wayne Airport (the "Greater Airport market") weakened dramatically as supply of
office space outpaced demand. In addition, in the late 1980s an affiliate of
Fluor Corporation ("Fluor"), which originally occupied 100% of the Headquarters
Facility, began exercising its right to cancel its lease with respect to
significant portions of space at the Headquarters Facility. While much of the
vacated space was re-let and vacancy rates remained low at the Headquarters
Facility, the Headquarters Facility suffered a decline in achievable rents. The
decline in rents was due to significantly lower rental rates for the re-let
Fluor space, which were consistent with the then current market rates.
Furthermore,
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Fluor notified the Registrant in 1996 that it intended to construct
a new facility to serve as its headquarters and vacated the Headquarters
Facility upon its lease expiration in 1998.
As a result of the adverse events described above, the Operating
Partnership was unable to satisfy the approximately $198 million due under a
Secured Promissory Note (the "Existing Secured Note") at its April 1, 1996
maturity. Prior to the maturity of the Existing Secured Note, the Operating
Partnership and the holders of the Existing Secured Note (the
"Certificateholders") commenced negotiations to restructure the Existing Secured
Note. On April 10, 1996, Pacific Mutual Realty Finance, Inc. ("Pacific Mutual"),
the agent for the Certificateholders, notified the Operating Partnership that it
had received the requisite consents from the Certificateholders to extend the
maturity date through June 1996. Although the Operating Partnership was unable
to repay the principal amount outstanding on the Existing Secured Note at such
extended maturity date, the Operating Partnership continued to pay interest at
the non-default rate after such maturity date. As a result of its inability to
satisfy the Existing Secured Note at maturity, a notice of default against the
Headquarters Facility was filed in June 1996 and in July 1996, Pacific Mutual
took possession of approximately $1.3 million in cash that was held in a pledged
account. Nonetheless, negotiations among the parties continued, and in August
1996 the parties reached an agreement providing for the payment of excess cash
to the Certificateholders pursuant to a monthly cash sweep of the Operating
Partnership's rent account.
On November 27, 1996, the Certificateholders and the Operating Partnership
reached an agreement (the "Agreement of Understanding") in principle on the
terms of a plan of reorganization. Under the Agreement of Understanding, the
Certificateholders agreed to support a pre-arranged bankruptcy plan of
reorganization for the Operating Partnership on certain terms and conditions.
The Certificateholders also agreed to forbear from exercising any remedies so
long as the Agreement of Understanding was in effect.
In connection with, and as contemplated by, the Agreement of
Understanding, the Operating Partnership filed a voluntary petition under
Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") on March
28, 1997. As a condition to the transfer of the Headquarters Facility as
contemplated by the Operating Partnership's Second Amended and Restated Plan of
Reorganization dated June 27, 1997 (the "Plan"), the requisite consent of the
Limited Partner to the Plan was sought and subsequently obtained. The Plan was
approved by the Bankruptcy Court on October 3, 1997.
Pursuant to the terms of the Plan, the Operating Partnership contributed
all of its assets and liabilities, including all of its right, title and
interest in the Headquarters Facility and $500,000 of unencumbered cash, to
Jamboree LLC, a newly formed Delaware limited liability company, in exchange for
an initial 10% ownership interest in Jamboree LLC. In addition, Jamboree LLC
paid to the Registrant a $500,000 fee in connection with the Plan. Immediately
prior to the transfer by the Operating Partnership of its assets and liabilities
to Jamboree LLC, the Existing Secured Note was satisfied by (i) the forgiveness
of approximately $93 million of the debt plus interest accrued thereon and (ii)
the issuance by the Operating Partnership of two intermediate notes, one in the
original principal amount of $4.5 million (the "First Intermediate Note") and
the second in the original principal amount of $100 million (the "Second
Intermediate Note"). Subsequent to the contribution by the Operating Partnership
of all of its assets and liabilities to Jamboree LLC, the Certificateholders
contributed the First and Second Intermediate Notes to Jamboree Office REIT (a
newly formed real estate investment trust, the initial stockholders of which
were the Certificateholders) and Jamboree Office REIT, in turn, contributed the
First Intermediate Note to Jamboree LLC in exchange for the remaining 90%
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interest in Jamboree LLC. Jamboree LLC satisfied the Second Intermediate Note by
issuing the New Notes (as defined below) in the original principal amount of
$100 million in satisfaction of the $100 million outstanding balance.
Pursuant to the terms of the Operating Agreement of Jamboree LLC, Jamboree
LLC will terminate on the earlier to occur of (i) one year after the sale or
transfer of the Headquarters Facility, provided that the Jamboree LLC Board (as
defined below) does not vote to continue the company, (ii) September 28, 2002,
(iii) the consent of the members of Jamboree LLC or (iv) as required by
applicable law. Jamboree LLC is governed by a five person board of member
representatives (the "Jamboree LLC Board"). The board of members consist of one
member designated by the Operating Partnership and four members designated by
Jamboree Office REIT. A majority of the members of the Jamboree LLC Board must
approve (i) all operating decisions not designated as requiring unanimous
approval in Jamboree LLC's Limited Liability Company Agreement (the "LLC
Agreement") and (ii) termination for cause of the Management Agreement (as
hereinafter defined). Unanimous approval of the Jamboree LLC Board is required
to (i) commence a voluntary case under the Bankruptcy Code, (ii) terminate the
Management Agreement without cause, (iii) sell all or any material portion of
the Headquarters Facility prior to three years after the effective date of the
Plan, (iv) except as otherwise provided in the LLC Agreement, issue additional
units representing membership interests (v) authorize business activities other
than the ownership and operation of the Headquarters Facility within three years
of the Effective Date, (vi) following the sale of the Headquarters Facility,
authorize the continued existence of Jamboree LLC for more than one year, and
(vii) authorize certain other matters as provided in the LLC Agreement.
In addition, the Operating Partnership was granted the right (the
"Exchange Right") to exchange its interest in Jamboree LLC at any time after one
year from the effectiveness of the Plan (subject to certain exceptions) through
March 27, 2002 for shares in Jamboree Office REIT ("REIT Shares"). In general,
the Operating Partnership may exchange its 10% interest in Jamboree LLC for a
fixed number of REIT Shares (on a one-for-one basis) in Jamboree Office REIT,
subject to adjustment, equal to 900,000 multiplied by the Operating
Partnership's then ownership percentage in Jamboree LLC. All REIT Shares
received by the Operating Partnership either upon the exchange of its interest
in Jamboree LLC or as payment for the Property Appreciation Right (as defined
below) will be "Registerable Securities" pursuant to the provisions of the
Property Appreciation and Put Right. In general, upon the occurrence of certain
events, the Operating Partnership can request that Jamboree Office REIT prepare
a registration statement to effect the registration of the shares held by the
Operating Partnership in Jamboree Office REIT.
Furthermore, the Operating Partnership has the right to acquire additional
equity interests in, or receive cash payments from, Jamboree Office REIT (the
"Property Appreciation Rights"). The Property Appreciation Rights will be
exercisable, if at all, at any time until the close of business on March 27,
2002. In general, the Property Appreciation Rights entitle the Operating
Partnership to purchase (i) REIT Shares representing 10% of the equity value of
Jamboree LLC for a purchase price of $10,888,888.89 in the aggregate, if the
fair market value of all of the issued and outstanding REIT Shares equals or
exceeds $98 million divided by Jamboree Office REIT's interest in Jamboree LLC
and (ii) REIT Shares representing 55% of the equity value of Jamboree LLC for a
purchase price of $152,777,777.78 in the aggregate, if the fair market value of
the issued and outstanding REIT Shares equals or exceeds $125 million divided by
Jamboree Office REIT's interest in Jamboree LLC. Alternatively, the Operating
Partnership can purchase such additional REIT Shares on a "cashless basis" by
surrendering a portion of the REIT Shares
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to be purchased in payment of the applicable purchase price. If the Operating
Partnership elects to exercise either of the property appreciation rights,
Jamboree Office REIT has the option to deliver to the Operating Partnership in
lieu of the issuance of REIT Shares a cash payment equal to the difference
between the then current market value of the REIT Shares which would otherwise
be issued and the exercise price for such REIT Shares.
The fair market value of the REIT Shares for the purpose of the Property
Appreciation Right will be determined by an appraisal obtained by Jamboree
Office REIT. If the Operating Partnership disputes the appraisal obtained by
Jamboree Office REIT, it may obtain a second appraisal. If the appraisals differ
by less than 10%, then the value will be deemed to be the average of the two
determinations. If the appraisals differ by 10% or more, then the two appraisers
will select a third appraiser to perform a third appraisal, and the value will
be deemed to be the value that constitutes the mid-point of the range between
the two determinations that are closest in amount.
To satisfy the Second Intermediate Note, Jamboree LLC issued promissory
notes (the "New Notes") having an aggregate principal amount of $100,000,000 to
the Certificateholders. The New Notes are divided into two tranches, the Class A
Notes and the Class B Notes. The Class A Tranche had an initial principal
balance of $80,000,000, bears interest at 2.25% above the interest rate on
United States Treasury Bonds or Notes with a maturity date closest to the Class
A Notes and is payable in interest only for the first 36 months (provided,
however, that payments of interest for a the first 12 month period may be made
by issuing additional Class A Notes) and thereafter, monthly payments of
interest and principal based on a 25-year amortization schedule. In this regard,
additional Class A Notes in the original principal amount of approximately
$2,633,000 were issued to satisfy a portion of the interest payments due on the
Class A Notes. No additional Class A Notes were issued in 1999 to satisfy
interest due on the Class A Notes. The Class B Tranche had an initial principal
balance of $20,000,000, bears interest at 3.0% above the interest rate on United
States Treasury Bonds or Notes with a maturity date closest to the Class B Notes
and is payable in interest only for the first 36 months (provided, however, that
payments of interest for the first 48 months may be made by issuing additional
Class B Notes) and thereafter, monthly payments of interest and principal based
on a 25-year amortization schedule. In this regard, additional Class A Notes in
the original principal amount of approximately $3,882,000 were issued as of
December 31, 1999 to satisfy a portion of the interest payments due on the Class
B Notes.
As security for the New Notes, among other things, Jamboree LLC granted
the Certificateholders a security interest on the Headquarters Facility and the
Operating Partnership executed a Pledge and Security Agreement pursuant to which
the Operating Partnership pledged its interest in Jamboree LLC to the Class A
Noteholders and the Class B Noteholders as collateral for the payment in full of
all amounts evidenced by the New Notes. If Jamboree LLC were to default on its
obligations under the New Notes, the Class A Noteholders and the Class B
Noteholders will have the right to foreclose on the Registrant's interest in
Jamboree LLC. If this were to occur, the Registrant would lose its entire
ownership interest in the Headquarters Facility. There can be no assurance that
the Headquarters Facility will be able to generate sufficient cash flow to
enable it to satisfy its obligations under the New Notes.
Change in Management
Pursuant to a series of transactions which were consummated in February
1992, the following changes in management were effected: (i) in consideration of
the payment of approximately $4 million to Crow Management, effective March 10,
1992, Crow Management
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transferred its rights under the Management Contract to a newly organized
affiliate of the Registrant, WC Management (see "Property Management" below);
(ii) the partnership agreement of the Operating Partnership was amended to give
the Registrant the right to manage the business of the Operating Partnership;
(iii) the partnership agreement for the Development Partnership and the
agreement with respect to the development of the Excess Land were amended to
afford greater flexibility to Crow Irvine and its principals in modifying the
master plan for the development of the Excess Land; and (iv) the Operating
Partnership agreed to provide Crow Management with 3,000 square feet of rent
free space until April 1, 1996 and to perform tenant improvements therein
costing $36,000.
In connection with the transaction described above, the Registrant and WFA
agreed to indemnify Crow Irvine for any liability it may incur, on a going
forward basis, as a result of it remaining a general partner of the Operating
Partnership. In addition, Crow Irvine gave up its right of first offer in the
event of a sale of the Headquarters Facility, and the buy-sell arrangement
originally included in the partnership agreement as a mechanism to resolve
disputes was eliminated. The amendment to the partnership agreement for the
Development Partnership eliminated the Registrant's right of first offer in the
event of a sale of the land. The buy/sell rights in the partnership agreement
for the Development Partnership remained unchanged. In addition, the provisions
in the partnership agreement of the Operating Partnership which restricted the
ability of the principals of Crow Irvine to transfer their interests were
amended. As amended, the principals may transfer their interests so long as
there is no change in control. Transfers which would cause a change in control
require the prior consent of the Registrant, which consent will not be
unreasonably withheld. Such consent will be given so long as the transferee has
net worth and experience comparable to the present principals and the transferee
is of sound moral character (i.e., not known to engage in criminal conduct) and
has a good business reputation.
Exercise of Development Partnership Buy/Sell
On March 3, 2000, the Registrant solicited the consent of Limited Partners
to the exercise by the Registrant of the buy/sell right set forth in the
Partnership Agreement for the Development Partnership. On April 3, 2000, the
requisite consent of the Limited Partners was obtained and the Registrant sent a
buy/sell notice (the "Buy/Sell Notice") to Crow Irvine, the general partner of
the Development Partnership, which notice was consistent with the terms of the
Solicitation Statement. In general, the Development Partnership's Partnership
Agreement provides that if a partner believes that irreconcilable differences
exist between the partners which inhibit the Development Partnership from
achieving its goals, a partner may make an offer to acquire the other partners
interest in the Development Partnership. The non-exercising partner then has the
right to either acquire the exercising partner's interest for the price set
forth in the Buy/Sell Notice or sell its interest to the exercising partner for
the price set forth in the Buy/Sell Notice. On April 7, 2000, Crow Irving
brought an action seeking declaratory relief that the Registrant's exercise of
the buy/sell right was wrongful. See "Item 3. Litigation." At this time, it is
not possible to predict the outcome of such litigation or whether Crow Irvine
will accept the Registrant's offer or exercise its right to acquire the
Registrant's interest in the Development Partnership.
Employees
The Registrant does not have any employees. Services are performed for the
Registrant by the General Partners and agents retained by them.
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Property Management
Winthrop Management LLC, an affiliate of WFA, has, since 1992, been
retained by WC Management to actually perform management and leasing functions
at the Headquarters Facility. Winthrop Management LLC is reimbursed at cost by
WC Management for the compensation paid by Winthrop Management LLC to certain
senior level on-site employees as well as for accounting and other support
functions performed off-site by Winthrop Management LLC. The compensation paid
to other Winthrop Management LLC employees as well as the costs associated with
the office space occupied by Winthrop Management LLC and other administrative
expenses are reimbursed to Winthrop Management LLC, at cost, by the Operating
Partnership. WC Management and Winthrop Management LLC occupy approximately
13,000 and 2,000 square feet of space, respectively, at the Headquarters
Facility. Under the terms of its Management Agreement, WC Management was, until
the March 1997 loan restructuring, entitled to a fee of 5% of gross receipts
from the Headquarters Facility. As a result of, and as a condition to, the Plan,
WC Management's fee has been reduced to 2% of gross receipts. Additionally, WC
Management will receive certain incentive fees based on reductions it is able to
achieve, if any, in certain operating and other expenses. Leasing commission
payments, consistent with prevailing market rates, will be paid to WC Management
for all third-party leases it procures for the Headquarters Facility. All
payments under the Management Agreement will be paid to WC Management and the
Registrant will have no rights to any payments thereunder.
Partnership Agreement Amendment
In August 1995, the General Partner amended the Registrant's partnership
agreement to clarify and remove certain ambiguities pertaining to the
requirements for calling and voting at a meeting of limited partners, or taking
action by written consent of partners in lieu thereof. Such requirements
include, among other matters, that any action by written consent may be
initiated only by the General Partner or by one or more Limited Partners holding
not less than 10% of the outstanding Units.
Tender Offer
On November 24, 1999, Sutter/Jamboree Acquisition Fund, LLC
("Sutter/Jamboree") commenced a tender offer to purchase up to 1,000 Units at a
purchase price of $1,500 per Unit, pursuant to the terms and conditions of an
Offer to Purchase dated November 24, 1999, and the related Letter of Transmittal
(together, the "Sutter Offer"). On November 30, 1999, the Registrant received a
letter from counsel to Sutter/Jamboree in the Sutter Offer notifying it of the
Sutter Offer and providing a copy of the offering materials related thereto. The
letter also contained a request that the Registrant comply with certain
provisions of the Securities and Exchange Act of 1934, as amended (the "Exchange
Act") by either providing Sutter/Jamboree with a list of the name and address
of, and the number of units held by, each limited partner of your partnership,
or agreeing to mail the Sutter Offer offering materials to limited partners.
On December 2, 1999, a representative of the Registrant telephoned a
representative of Sutter/Jamboree and stated that the Registrant would neither
provide the requested list of limited partner information nor agree to mail the
Sutter Offer offering materials, and that a letter from the Registrant's legal
counsel would be forthcoming.
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On December 2, 1999, the Registrant's legal counsel mailed a letter
written on behalf of the Registrant to counsel for Sutter/Jamboree. In the
letter counsel indicated that (i) the Registrant's agreement of limited
partnership required (A) the prior written consent of WFA to any assignment or
transfer of units and (B) that any transfer of units comply with applicable
Federal securities laws, (ii) as a result of the absence of current financial
information with respect to the Registrant, WFA will not consent to any transfer
of units made pursuant to the Sutter Offer, and (iii) the Sutter Offer does not
comply with the disclosure requirements of the Exchange Act applicable to tender
offers for limited partnership units, and, accordingly, the Registrant is not
required to comply with the request received on November 30.
On December 7, 1999, a representative of Sutter Opportunity Fund, LLC, an
affiliate of Sutter/Jamboree, appeared at the Registrant's office and delivered
a letter demanding that they be permitted to inspect and copy the register of
holders of units pursuant to the provisions of the Registrant's limited
partnership agreement and Delaware law. A representative of the Registrant
advised them that counsel needed to be consulted with before responding to the
request.
On December 8, 1999, Sutter Opportunity Fund, LLC commenced an action in
the Delaware Chancery Court against the Registrant and WFA to obtain a list of
the limited partners of your partnership. In a letter to limited partners dated
December 9, 1999, the Registrant indicated that, in accordance with the
provisions of the Registrant's partnership agreement, it had decided to restrict
transfers of units under the Sutter Offer based on its belief that the Sutter
Offer violates certain provisions of applicable securities laws and the absence
of current financial information on the Registrant sufficient to enable limited
partners to make an informed decision as to whether to sell units. The
Registrant also recommended that limited partners reject the Sutter Offer and
disclosed that an affiliate of WFA may be making an offer to purchase units at a
price substantially above the price provided for in the Sutter Offer.
On December 14, 1999, the Registrant sent a letter to counsel for Sutter
Opportunity Fund, LLC rejecting the request to provide a list of limited
partners.
On December 21, 1999, a representative of the Registrant contacted a
representative of Sutter/Jamboree to inform them that in light of the
anticipated filing of this Annual Report on Form 10-K, the Registrant would mail
Sutter/Jamboree's offering materials. However, the Registrant's representative
further stated that no transfers of Units would be affected until the
Registrant's audited financial statements for the year ended December 31, 1998
is made available to the Limited Partners. A letter was sent from counsel to the
Registrant to Sutter/Jamboree to this effect on December 21, 1999.
On December 21, 1999, the Registrant's legal counsel informed Sutter that
(i) in view of the anticipated filing of the Registrant's Form 10-K for 1998,
the Registrant had agreed to mail the Sutter Offer offering materials to Limited
Partners and (ii) the Registrant will not consent to any transfer of Units
unless Limited Partners have previously received the 1998 audited financial
statements of the Registrant.
On December 22, 1999, the Registrant agreed to provide Sutter Opportunity
Fund, LLC with a list of the Registrant's limited partners and the Registrant
and Sutter Opportunity Fund,
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LLC agreed to file a stipulation (the "Stipulation") with the Delaware Chancery
Court dismissing with prejudice the action which Sutter Opportunity Fund, LLC
had commenced. On December 23, 1999, the Registrant forwarded the list to Sutter
Opportunity Fund, LLC.
On January 3, 2000, Quadrangle Associates II L.L.C. ("Quadrangle"), an
affiliate of the General Partners, commenced a tender offer to acquire up to
1,384 (39.5%) of the total outstanding units of the Registrant for a purchase
price of $2,000 per unit.
A number of amendments to each offer were made in which the expiration
date of the Sutter Offer and the Quadrangle Offer were extended and the prices
offered ultimately increased to $5,000 per Unit, with respect to the Sutter
Offer, and $5,100 per unit, with respect to the Quadrangle Offer. Upon
expiration of the offers, Sutter received no Units and Quadrangle acquired
586.89 units, representing approximately 16,77% of the total outstanding units.
Item 2. Description of Properties.
The Registrant owns no property other than its interests in the Operating
Partnership, the Development Partnership and WC Management.
The Operating Partnership
The Operating Partnership's sole asset is its 10% ownership interest in
Jamboree LLC. Jamboree LLC, in turn, owns title in fee simple to the
Headquarters Facility. The Headquarters Facility consists of eight buildings; a
10-story tower, a single story concourse and six four-story buildings;
containing, in the aggregate, approximately 1,692,219 rentable square feet of
space and approximately 15 acres of land. The property is located in the Greater
Airport area of Irvine, California and is used principally as various tenants'
corporate headquarters.
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The following table sets forth those tenants at the Headquarters Facility
that occupy 10% or more of the rentable square footage, business conducted by
the tenant, expiration date of the lease term, renewal options and the 1999
annual rent for the leases:
Lease Renewal 1999 Monthly
Tenant/Business Square Footage (%) Expiration Option (1) Base Rent
- --------------- ------------------ ---------- ---------- ---------
ConAgra, Inc.(2) 390,326 (23.1%) 8/31/10 2-5 yr. (3)
AirTouch Cellular 189,265 (11.18%) 11/30/00 2-5 yr.(4) $246,045
Communication Services
Denny's, Inc. 158,362 (9.36%) 7/24/04 3-5 yr. $214,841
Food service
company(5)
Waban, Inc.(6) 57,208 (3.39%) 7/24/04 3-5 yr. $62,035
Home improvement
retailer
Caltrans District 12 208,156 (12.3%) 3/31/11 None $251,804
State transportation
agency (7)
(1) The first number represents the number of renewal options. The second
number represents the length of each option.
(2) According to tenant's Annual Report on Form 10-K, ConAgra is a diversified
food company that operates across the food chain, from basic agricultural
inputs to production and sale of branded consumer products. Tenant entered
into lease on November 19, 1999.
(3) Tenant improvements are now under construction. Tenant is not required to
commence paying rent until September 2000 with respect to 262,648 square
feet of space and December 1, 2000 with respect to 127,678 square feet of
space. Lease provides for the following rental payments:
262,648 Square Feet 127,678 Square Feet
------------------- -------------------
Rent Dates Monthly Rate Rent Dates Monthly Rate
---------- ------------ ---------- ------------
9/1/00 to 8/31/01 $422,863 12/1/00 to 8/31/03 $185,133
9/1/01 to 2/28/03 $467,513 9/1/03 to 8/31/05 $203,008
3/1/03 to 8/31/05 $491,152 9/1/05 to 2/29/08 $213,222
9/1/05 to 2/29/08 $514,790 3/1/08 to 8/31/10 $224,713
3/1/08 to 8/31/10 $541,055
11
<PAGE>
(4) Tenant has advised WC Management that it does not intend to exercise its
renewal option.
(5) Tenant has subleased 106,676 square feet of space to Waban and the
remainder of the space to an unaffiliated company.
(6) The space listed is in addition to the space subleased from Denny's, Inc.
(7) Tenant agreed to terms in December 1999 for expansion space with lease term
effective January 1, 2000 for 58,448 square feet. Lease amendment executed
in January 2000.
The following table sets forth the occupancy rates for the last five years
and the associated gross rental per square foot amount, as footnoted. At March
31, 2000, 97% (including the ConAgra lease) at the Headquarters Facility was
leased under leases with an average rental rate (exclusive of ConAgra) of $21.50
per square foot.
Percentage Average Annual Total
Occupancy Gross Rental Per SF
Year Rate(1) of Occupied Space (2)
---- ------- ---------------------
1995 95.0% 23.08
1996 91.5% 23.34
1997 97.5% 20.51
1998 88.0% 21.33
1999 92.0% 21.50
(1) Occupancy rates are based on December 31 of indicated year and are not
yearly averages.
(2) Calculated using operating revenues, including rent escalations and other
revenues, for the entire year divided by the total square footage of
occupied space (based on the occupancy rates reported in this table).
12
<PAGE>
The following table sets forth certain information concerning lease
expirations as of January 1, 2000 (assuming no renewals for this property for
the period from January 1, 2000 through December 31, 2009).
<TABLE>
<CAPTION>
Number of Aggregate SF Annualized Percentage of
Tenants Whose Covered By Rentals for Leases Total Annualized
Leases Expire Expiring Leases Expiring($) Rental
------------- --------------- ----------- ------
<S> <C> <C> <C> <C>
2000 10 230,850 3,049,827 12.49
2001 6 61,376 475,836 1.75
2002 11 70,882 588,104 2.28
2003 6 136,214 1,613,271 6.69
2004 4 153,525 1,924,774 10.53
2005 4 133,167 2,485,124 15.80
2006 0 0 0 0
2007 0 0 0 0
2008 0 0 0 0
2009 0 0 0 0
</TABLE>
In the opinion of the General Partners, as of March 31, 2000 the
properties comprising the Headquarters Facility are adequately covered by
insurance.
The Development Partnership.
The following information relating to the Development Partnership is based
solely on information provided to the Partnership by the general partner of the
Development Partnership. As stated earlier, due to disputes with the general
partner of the Development Partnership, the Partnership makes no representation
or warranty as to the accuracy thereof.
The Development Partnership was formed in 1985 for the purpose of
acquiring, owning and developing approximately 120 acres of land in Orange
County, California. The general partner is Crow Irvine #2, a California limited
partnership and the limited partner is The Registrant.
The Development Partnership sold 32 acres of the Excess Land in 1989. In
accordance with the sale of that parcel of land, there were certain requirements
of the purchase concerning land-use, which were not met. As such, ownership of
that 32 acres reverted back to the Development Partnership. As discussed below,
in 1998 the Development Partnership again sold this 32-acre parcel of land owned
by the Development Partnership.
In 1994, a 36,400 square foot parcel of land was sold to Edwards Theaters
Circuit, Inc. for $3,500,000. The Registrant did not receive any proceeds from
the sale of the land. The Registrant was informed by the general partner of the
Development Partnership that such proceeds were used to pay certain debts and
obligations of the Development Partnership, pursuant to the Development
Partnership's partnership agreement.
13
<PAGE>
During 1997, the Development Partnership formed Shops at Park Place LLC
for the purpose of owning and operating a retail center. The Development
Partnership is the managing and sole member of Shops at Park Place LLC. During
1998, the Development Partnership formed Park Place Residential Realty LLC and
Park Place Residential Realty-Land LLC, for the purpose of reacquiring and
reselling the approximately 32 acres of residential property originally sold in
1989. The 32 acres were sold in 1998 for a gross sales price of $50,000,000. In
addition, during 1998, the Development Partnership formed 3121 Michelson Drive
LLC and Park Place Hotel Company LLC and, in January 1998 formed Park Place
Parking Company LLC for the purposes of developing, owning and operating a
150,000 square foot Class A office building, a luxury hotel and parking
structures, respectively. In 1999, Park Place Hotel signed a 20-year operating
agreement with a hotel operator. The Development Partnership is the managing and
sole member of each of these limited liability companies.
Item 3. Legal Proceedings.
To the best of the Registrant's knowledge, there are no material pending
legal proceedings to which it is a party or to which its properties are subject
except as follows:
Pursuant to an Assignment and Assumption Agreement entered into as of
October 3, 1997 in connection with the bankruptcy proceeding for the Operating
Partnership, In re Crow Winthrop Operating Partnership, U.S. Bankruptcy Court
(C.D. Cal.), Docket No. SA97-14512-JR, Jamboree LLC assumed the Operating
Partnership's obligation to indemnify WFA, the Registrant, the Operating
Partnership and WC Management (the "Subject Entities"), for all expenses,
including reasonable attorneys' fees and costs, incurred by Winthrop in
connection with or arising out of its participation in the Operating
Partnership.
1. Crow Winthrop Development Limited Partnership, et al. v. Winthrop
California Investors Limited Partnership, et al., Civil Action No. 174570,
Circuit Court of Montgomery County, Maryland. In August 1997, the Development
Partnership and its general partner Crow Irvine #2 ("Crow") sued the Registrant
and its general partners seeking a declaratory judgment and injunctive relief to
prevent the Registrant from converting the Operating Partnership, in which the
Registrant and Crow were partners, from a general partnership to a limited
partnership and from converting Crow to a limited partner. The plaintiffs also
sought unspecified damages. Upon the filing of the action, the Court granted a
temporary restraining order in favor of the plaintiffs. In October 1997, after
hearing, the Court refused to grant a preliminary injunction in favor of the
plaintiffs and the temporary restraining order expired. The Operating
Partnership thereafter was converted to a limited partnership with Crow as its
limited partner.
An answer was filed and each of the parties served written discovery. The
Court thereafter stayed the action due to the pendency of actions in California
involving the parties or their affiliates. Upon the expiration of the stay, the
plaintiffs moved to dismiss the action without prejudice. On November 3, 1999,
the Court dismissed the action without prejudice.
14
<PAGE>
2. Crow Winthrop Development Limited Partnership and Crow Orange County
Management Company, Inc. v. Winthrop California Management Limited Partnership,
et al., Superior Court of California, County of Orange, Docket No. 789429. In
January 1998, WC Management was named as a defendant in an action seeking
declaratory relief that certain agreements between the parties have been
terminated and that plaintiff has the exclusive right to manage the common areas
of certain contiguous parcels of real estate containing office and retail space
located in Irvine, California. In the alternative, the plaintiffs seek a
declaration that WC Management perform certain tasks and be prevented from
assessing certain charges in connection with its management of the common areas.
The action was removed to federal court and transferred to the Bankruptcy Court
which, in April 1998, granted summary adjudication in favor of WC Management on
plaintiffs' termination claims. The plaintiffs did not appeal from that
decision.
The remainder of the claims were thereafter remanded to state court.
Plaintiffs' alternative claims for declaratory relief concerning performance
issues related to the management of the subject property remain pending. The
case was transferred to the complex litigation panel of the Orange County
Superior Court and deemed related to two other actions which involve the same
subject property. WC Management is not a party to those other actions.
On or about September 24, 1999, the plaintiffs were granted the right to
file an amended complaint. The amended complaint is not substantively different
from the original complaint, and the only relief sought is declaratory relief.
An Answer was filed on behalf of WC Management on or about October 22, 1999. On
January 7, 2000, the court, without opposition from WC Management, consolidated
this action with four other pending actions which involve the same subject
property namely, Crow Winthrop Development Limited Partnership, a Maryland
limited partnership, and Crow Orange County Management Company, Inc., a Texas
corporation vs. Jamboree LLC, a Delaware limited liability company, OCSC Case
No. 813915; Crow Winthrop Development Limited Partnership v. Jamboree LLC, et
al., OCSC Case No. 789562; Crow` Winthrop Development Limited Partnership v.
Jamboree LLC, et al., OCSC Case No. 791662; and Jamboree LLC v. Crow Winthrop
Development Limited Partnership, Crow Orange County Management Company, Inc., et
al., OCSC Case No. 806526. WC Management is not named as a party in any of these
four other actions.
Discovery is ongoing, and several of the plaintiffs' claims are now moot.
Although it is not possible to predict the likely outcome of the action at this
time, no monetary damages are sought from WC Management.
3. Winthrop California Investors Limited Partnership v. Crow Winthrop
Development Limited Partnership, Civil Action No. 178303, Circuit Court of
Montgomery County, Maryland. In October 1997, the Registrant brought suit
against the Development Partnership and its general partner seeking declaratory
and injunctive relief to allow the Registrant to exercise its rights as a
limited partner in the Development Partnership to audit the Development
Partnership's books and records and seeking damages for the Development
Partnership's past refusals to allow such access. In January 1998, the Court
granted partial summary judgment in favor of the Registrant, declaring and
ordering that the Registrant has the
15
<PAGE>
right to inspect and audit the Development Partnership's books, records and
files. The Registrant's auditors thereafter reviewed the Development
Partnership's books and records. After obtaining access to the Development
Partnership's books and records, the Registrant voluntarily dismissed its claim
for breach of fiduciary duty based on the Development Partnership's past
refusals to allow the Registrant access.
4. Winthrop California Investors Limited Partnership v. Crow Winthrop
Development Limited Partnership, et al., Superior Court of California, County of
Orange, Case No. 812346. In January 1999, the Registrant, a 25% limited partner
in the Development Partnership, brought suit in Maryland against defendant the
Development Partnership, its general partner, the general partner of the
Development Partnership's general partner, and the general partner of that
entity alleging claims for breach of the Development Partnership partnership's
agreement, breach of fiduciary duty, and conversion and requested that a
receiver be appointed to conduct the business of the Development Partnership.
The Registrant sought approximately $9 million in damages resulting from
wrongful distributions of capital proceeds of the Development Partnership in
connection with a 1998 sale of real estate by the Development Partnership.
The defendants filed a motion to dismiss the action claiming that they are
not subject to personal jurisdiction in Maryland and that Maryland is an
inconvenient forum. Defendants argued that the action should proceed in
California, if at all. The court in Maryland granted the defendants' motion on
the ground of inconvenient forum in July 1999.
The Registrant thereafter filed substantially the same claims in
California, with the above-caption. The defendants filed a demurrer to the
complaint, arguing that it should be dismissed for a variety of reasons. The
court overruled the defendants' demurrer on September 24, 1999. On or about
November 5, 1999, the defendants filed their answer in which they alleged a
general denial to the allegations of the complaint. The case is now in
discovery.
The Registrant has filed a motion for leave to amend its complaint to
allege additional causes of action against the defendants. The defendants have
filed papers indicating that they do not oppose the Registrant's motion for
leave to file an amend complaint. The defendants also have filed a motion for
summary adjudication on the Registrant's first cause of action for breach of
agreement asking the court to enter judgment in favor of the defendant's on that
cause of action. The Registrant has opposed the defendants motion for summary
adjudication which is scheduled for hearing on April 14, 2000.
5. Winthrop California Investors Limited Partnership v. Crow Winthrop
Development Limited Partnership, et al.,/Crow Winthrop Development Limited
Partnership and Crow Irvine #2 v. Winthrop California Investors Limited
Partnership, et al., United States District Court for the Central District of
California, Southern Division, Case No. SACV99-1519 GLT (ANx). On or about
November 5, 1999, defendants, the Development Partnership and its general
partner, filed a cross-complaint in the action described in numbered paragraph 4
above, purporting to allege claims for breach of fiduciary duty, aiding and
abetting breach of fiduciary duty and unfair business practices. The Registrant
and certain affiliates, as well as several unaffiliated entities are named as
cross-defendants in the cross-complaint. In summary, the
16
<PAGE>
cross-complaint appears to allege that the cross-defendants have engaged in a
conspiracy to fraudulently acquire and manipulate the management positions of
numerous partnerships to their benefit and in particular have done so with
respect to the Operating Partnership, which the cross-claimants allege was
improperly forced into bankruptcy to the alleged detriment of the
cross-claimants. The cross-claimants also allege that the Registrant in its
capacity as a limited partner in the Development Partnership has breached its
alleged fiduciary duties to the Development Partnership by allegedly
participating in or filing lawsuits, in order to hinder the development of the
Development Partnership's land; failing to abide by agreements; and by
disclosing proprietary information concerning the Development Partnership.
On December 8, 1999, the Registrant and others removed the cross-complaint
to the United States District Court for the Central District of California,
Southern Division which transferred the cross-complaint to the United States
Bankruptcy Court for the Central District of California where the Operating
Partnership's bankruptcy proceeding remains open. On December 13, 1999, the
cross-claimants filed a motion to remand the cross-complaint back to state court
which the Registrant and the other defendants opposed. On December 15, 1999, the
Registrant filed a motion to dismiss the cross-complaint on the grounds that it
raises issues already decided in the Operating Partnership's bankruptcy
proceeding.
Hearings on the motions were held on January 11, 2000 and February 17,
2000. On March 14, 2000, the Bankruptcy Court entered an order granting the
motions to dismiss and the motion to strike filed by the Registrant and the
other defendants. The Bankruptcy Court ruled that the cross-claimants were
barred by the doctrine of res judicata from asserting claims based on
allegations that the Operating Partnership's bankruptcy case has been conducted
in anything other than good faith and that the doctrine of res judicata barred
the cross-claimants from asserting all claims alleged in the cross-complaint
that relate to or arise from the filing of the Operating Partnership's
bankruptcy case and in processing the bankruptcy case to plan confirmation and
granted the motions to dismiss to that extent only.
On March 24, 2000, the cross-claimants filed a notice of appeal by which
they appealed to the United States District Court for the Central District of
California from the Bankruptcy Court's March 14, 2000, order granting the
motions to dismiss and the motion to strike filed by the Registrant and the
other defendants.
On March 31, 2000, the Bankruptcy Court entered an order remanding the
proceeding to state court in California.
7. Crow Irvine #2 v. Winthrop California Investors Limited Partnership,
Superior Court for the State of California, County of Orange, Case No.
00CC04296. On or about April 7, 2000, Crow Irvine #2, the general partner of the
Development Partnership, brought an action against the Registrant seeking
declaratory relief with respect to the Registrant's exercise of the buy/sell
right set forth in the partnership agreement of the Development Partnership. In
general, Crow Irvine #2 alleges that (i) there can be no reasonable basis for a
good faith belief that irreconcilable differences exist between Crow Irvine #2
and the Registrant so as to prevent the Development Partnership from achieving
its purposes, (ii) the buy/sell right can not be invoked,
17
<PAGE>
(iii) the Development Partnership is achieving its purpose and, accordingly, the
buy/sell notice cannot be invoked, (iv) the formula used by the Registrant in
the Buy/Sell Notice is no longer viable, (v) the amount set forth in the
Buy/Sell Notice as being required to be paid to Crow Irvine #2 was incorrectly
calculated, and (vi) the amount set forth in the Buy/Sell Notice as being
required to be paid to the Registrant if Crow Irvine #2 elects to acquire the
Registrant's interest in the Development Partnership was incorrectly calculated.
The Registrant believes that it correctly complied with the provisions of the
partnership agreement of the Development Partnership, that it has a good faith
belief that irreconcilable differences exist between Crow Irvine #2 and the
Registrant so as to prevent the Development Partnership from achieving its
purposes and that the methodology used to calculate the buy/sell prices is
accurate.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
18
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
There is no established public trading market for the Units in the
Registrant. Trading in the Units is sporadic and occurs solely through private
transactions. In addition, transfers of Units are subject to limitations set
forth in the Registrant's partnership agreement which require the prior written
consent of WFA of any such transfer, which consent may be granted or denied in
WFA's sole discretion. As of April 1, 2000, there were 1,316 holders of 3,500
Units.
The Registrant's partnership agreement requires that Cash Flow (as defined
therein) be distributed to the partners in specified proportions at reasonable
intervals during the fiscal year and in any event no later than 60 days after
the close of each fiscal year. The Registrant's ability to make distributions of
Cash Flow is limited by the extent to which (i) it receives distributions of
Cash Flow from the Operating Partnership, the Development Partnership and, from
WC Management, (ii) it earns income from other sources and (iii) its receipts of
Cash Flow and income are not sufficient to meet its expenses and current
obligations including fees payable to the General Partners. In addition, the
General Partners have the right to establish, maintain and replenish reserves
from available cash prior to making distributions to partners.
No cash distributions were paid or accrued to the Limited Partners for the
years ended December 31, 1997 and 1998. Although the Registrant received
distributions from WC Management in 1997 and 1998, these distributions have been
applied to replenish unrestricted reserves previously held by the Registrant and
to pay certain accrued but unpaid fees to WFA. In 1999, $1,176,000 ($336 per
unit) was distributed to limited partners from reserves. It is not anticipated
that that there will be any additional distributions from operations in the near
future.
Over the past few years many companies have begun making "mini-tenders"
(offers to purchase an aggregate of less than 5% of the total outstanding units)
for limited partnership interests in the Registrant. Pursuant to the rules of
the Securities and Exchange Commission, when a tender offer is commenced for
Units the Registrant is required to provide limited partners with a statement
setting forth whether it believes limited partners should tender or whether it
is remaining neutral with respect to the offer. Unfortunately, the rules of the
Securities and Exchange Commission do not require that the bidders in certain
tender offers provide the Registrant with a copy of their offer. As a result,
the General Partner often does not become aware of such offers until shortly
before they are scheduled to expire or even after they have expired.
Accordingly, the General Partner does not have sufficient time to advise you of
its position on the tender. In this regard, please be advised that pursuant to
the discretionary right granted to the General Partner of your partnership in
the Partnership Agreement to reject any transfers of units, the General Partner
will not permit the transfer of any Unit in connection with a tender offer
unless: (i) the Registrant is provided with a copy of the bidder's offering
materials, including amendments thereto, simultaneously with their distribution
to the limited partners; (ii) the offer provides for withdrawal rights at any
time prior to the expiration date of the offer and, if payment is not made by
the bidder within 60 days of the date of the offer, after such 60 day period;
and (iii) the offer must be open for at least 20 business days and, if a
material change is made to the offer, for at least 10 business days following
such change.
19
<PAGE>
Item 6 Management's Discussion and Analysis or Plan of Operation.
The most significant asset of the Registrant is its 25% limited
partnership interest in the Development Partnership. Due to a dispute with the
general partner of the Development Partnership, the Registrant has been unable
to obtain the necessary information with which to complete audited financial
statements as well as provide full disclosure regarding the Development
Partnership's operations. See "Item 3. Litigation." Although, the Registrant has
been provided with audited financial statements for the Development Partnership
for the year ended December 31, 1998, the auditors for the Development
Partnership have informed the Registrant and its auditors that they will not
consent to the Registrant relying on the Development Partnership's audited
financial statements in connection with the completion of the Registrant's
audited financial statements. Further, the financial information relating to the
Development Partnership necessary to generate financial statements for the
Registrant for the year ended December 31, 1999 has not been provided.
Accordingly, the Registrant does not have the information required to be set
forth in this Item 6 and has omitted this Item 6 in reliance on Rule 12b-21
promulgated under the Securities Exchange Act of 1934.
20
<PAGE>
Item 7. Financial Statements.
The most significant asset of the Registrant is its 25% limited
partnership interest in the Development Partnership. Due to a dispute with the
general partner of the Development Partnership, the Registrant has been unable
to obtain the necessary information with which to complete audited financial
statements as well as provide full disclosure regarding the Development
Partnership's operations. See "Item 3. Litigation." Although, the Registrant has
been provided with audited financial statements for the Development Partnership
for the year ended December 31, 1998, the auditors for the Development
Partnership have informed the Registrant and its auditors that they will not
consent to the Registrant relying on the Development Partnership's audited
financial statements in connection with the completion of the Registrant's
audited financial statements. Further, the financial information relating to the
Development Partnership necessary to generate financial statements for the
Registrant for the year ended December 31, 1999 has not been provided.
Accordingly, the Registrant's financial statements have been omitted in reliance
on Rule 12b-21 promulgated under the Securities Exchange Act of 1934.
F-1
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
26
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act
The Registrant has no directors or executive officers. The managing
general partner of the Registrant is WFA. WFA manages and controls substantially
all of Registrant's affairs and has general responsibility and ultimate
authority in all matters affecting its business. As of March 1, 2000, the names
of the executive officers of WFA and the position held by each of them, are as
follows:
Position Held with the Has Served as a Director
Name Managing General Partner or Officer Since
- ---- ------------------------ -------------------
Michael L. Ashner Chief Executive Officer 1-96
and Director
Thomas C. Staples Chief Financial Officer 1-99
Peter Braverman Executive Vice President 1-96
and Director
Carolyn Tiffany Chief Operating Officer and 10-95
Clerk
Michael L. Ashner, age 47, has been the Chief Executive Officer of WFA
since January 15, 1996. From June 1994 until January 1996, Mr. Ashner was a
Director, President and Co-chairman of National Property Investors, Inc., a real
estate investment company ("NPI"). Mr. Ashner was also a Director and executive
officer of NPI Property Management Corporation ("NPI Management") from April
1984 until January 1996. In addition, since 1981 Mr. Ashner has been President
of Exeter Capital Corporation, a firm which has organized and administered real
estate limited partnerships.
Thomas C. Staples, age 43, has been the Chief Financial Officer of WFA
since January 1, 1999. From March 1996 through December 1998, Mr. Staples was
Vice President/Corporate Controller of WFA. From May 1994 through February 1996,
Mr. Staples was the Controller of the Residential Division of Winthrop
Management.
Peter Braverman, age 48, has been a Vice President of WFA since January
1996. From June 1995 until January 1996, Mr. Braverman was a Vice President of
NPI and NPI Management. From June 1991 until March 1994, Mr. Braverman was
President of the Braverman Group, a firm specializing in management consulting
for the real estate and construction industries. From 1988 to 1991, Mr.
Braverman was a Vice President and Assistant Secretary of Fischbach Corporation,
a publicly traded, international real estate and construction firm.
Carolyn Tiffany, age 33, has been employed with WFA since January 1993.
From 1993 to September 1995, Ms. Tiffany was a Senior Analyst and Associate in
WFA's accounting and
23
<PAGE>
asset management departments. Ms. Tiffany was a Vice President in the asset
management and investor relations departments of WFA from October 1995 to
December 1997, at which time she became the Chief Operating Officer of WFA.
One or more of the above persons are also directors or officers of a
general partner (or general partner of a general partner) of the following
limited partnerships which either have a class of securities registered pursuant
to Section 12(g) of the Securities and Exchange Act of 1934, or are subject to
the reporting requirements of Section 15(d) of such Act: Winthrop Partners 79
Limited Partnership; Winthrop Partners 80 Limited Partnership; Winthrop
Residential Associates I, A Limited Partnership; Winthrop Residential Associates
II, A Limited Partnership; Winthrop Residential Associates III, A Limited
Partnership; 1626 New York Associates Limited Partnership; 1999 Broadway
Associates Limited Partnership; Riverside Park Associates Limited Partnership;
Springhill Lake Investors Limited Partnership; Twelve AMH Associates Limited
Partnership; Winthrop Growth Investors I Limited Partnership; and Winthrop
Interim Partners I, A Limited Partnership;.
Except as indicated above, neither the Registrant nor the General Partner
has any significant employees within the meaning of Item 401(b) of Regulation
S-K. There are no family relationships among the officers and directors of WFA.
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Registrant under Rule 16a-3(e) during the Registrant's most
recent fiscal year and Forms 5 and amendments thereto furnished to the
Registrant with respect to its most recent fiscal year, the Registrant is not
aware of any director, officer or beneficial owner of more than ten percent of
the units of limited partnership interest in the Registrant that failed to file
on a timely basis, as disclosed in the above Forms, reports required by section
16(a) of the Exchange Act during the most recent fiscal year or prior fiscal
years.
(f) Involvement in Certain Legal Proceedings. None.
Item 10. Executive Compensation.
Registrant is not required to and did not pay any compensation to the
officers or partners of the General Partner. The General Partner does not
presently pay any compensation to any of its officers or partners (See "Item 12,
Certain Relationships and Related Transactions").
24
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management.
(a) Security Ownership of Certain Beneficial Owners.
WFA and Three Winthrop own all the outstanding general partnership
interests in the Registrant. The following table sets forth certain information
regarding Units of the Registrant owned by each person who is known by the
Registrant to own beneficially or exercise voting or dispositive control over
more than 5% of the Registrant's limited partnership assignee units, by each of
the directors of the General Partners of the Registrant and by all directors and
executive officers of the General Partners as a group as of March 1, 2000.
Name and address of Beneficial Amount and nature of
Owner Beneficial Owner % of Class
------------------------------ -------------------- ----------
Quadrangle Associates II LLC(1)(2) 586.89 16.77
WILCAP Limited Partnership (1)(2) 1,000 28.6
WILCAP Holdings Co., Inc. 18 *
(1)(2)(3)
Winthrop Financial Associates, A 5 *
Limited Partnership (1)(2)
All directors and executive -- --
officers as a group (five persons)
* Less than one percent
(1) The business address for Quadrangle Associates II LLC, WILCAP Limited
Partnership WILCAP Holdings Co., Inc. and WFA is Five Cambridge Center, 9th
Floor, Cambridge, Massachusetts 02142.
(2) Based upon information supplied to the Registrant by WILCAP Limited
Partnership.
(3) WILCAP Holdings Co., Inc. is the general partner of WILCAP Limited
Partnership.
There exists no arrangements known to the Registrant the operation of
which may at a subsequent date result in a change in control of the Registrant.
Item 12. Certain Relationships and Related Transactions.
(a) Transactions with Management and Others.
The directors, officers and general partners of the General Partners and
their affiliates receive no remuneration or other compensation from the
Registrants.
Under the terms of the Partnership Agreement, the General Partners and
their affiliates are entitled to receive certain cash distributions from, and
allocations of taxable profits and losses from the Registrant. In addition, the
General Partners and their affiliates receive certain fees and compensation paid
by the Partnership for services rendered in connection with the operations of
the Partnership.
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<PAGE>
The fees, commissions and cash distributions which the Registrant paid
or accrued for the account of the General Partners and their affiliates for the
years ended December 31, 1999 and 1998 are an annual asset management fee
payable to WFA of $750,000 per annum. The Registrant paid to the General
Partners $750,000 during each of the years ended December 31, 1999 and 1998. In
addition, the Management Partnership reimbursed approximately $33,500 and
$70,600 in 1998 and 1999, respectively, for costs incurred by an affiliate of
the General Partners in connection with the operations of the Management
Partnership. The Partnership reimbursed approximately $27,000 and $46,700 in
1998 and 1999, respectively, of costs incurred by an affiliate of the General
Partners in connection with investor servicing for the Partnership. The
Operating Partnership reimbursed approximately $12,000 in 1998 and 1999 of costs
incurred by an affiliate of the General Partners in connection with the
operation of the Operating Partnership.
The Registrant paid a $24,000 distribution to the General Partners in
1999.
There were no other material transactions between the General Partners
or their affiliates and the Registrant during 1997, 1998 or 1999, except as
follows:
In February 1992, WC Management was organized for the purpose of buying
out Crow Management's interest in the Management Contract. A wholly-owned
subsidiary of WFA contributed $100 to the capital of this partnership in
exchange for a 1% general partnership interest. The Registrant contributed
approximately $4 million to the capital of WC Management in exchange for a 99%
limited partnership interest. In 1997, 1998 and 1999, the WFA affiliate which is
the general partner of WC Management received a distribution of $16,076, $12,380
and $12,464, respectively, in respect of its 1.0% interest. Others than the
distribution in respect of its 1% interest, the general partner of WC Management
received no compensation for its services as general partner.
WC Management has engaged Winthrop Management LLC, an affiliate of WFA,
to perform the services required under the Management Contract. Winthrop
Management LLC is reimbursed for payroll and other expenses associated with
discharging these duties. Winthrop Management LLC also occupies approximately
2,000 square feet of office space in the Headquarters Facility and receives
reimbursement from the Operating Partnership for the expenses associated with
this space. Other than these reimbursements, Winthrop Management LLC receives no
fees for the services it performs for WC Management.
In January 2000, Quadrangle Associates II LLC (Quadrangle), an
affiliate of the WFA, commenced a tender offer for units of limited partnership
interest in the Registrant. Upon expiration of the offer, Quadrangle acquired a
total of 586.89 units (16.77%) for a purchase price of $5,100 per unit.
(b) Certain Business Relationships.
The Registrant's response to Item 13(a) hereof is incorporated herein
by this reference. The Registrant has no other business relationship with
entities of which the officers, directors or general partners of the General
Partners or its affiliates are officers, directors or 10 percent shareholders
other than as discussed in Item 12(a), Security Ownership of Certain Beneficial
Owners".
(c) Indebtedness of the Management.
There is no indebtedness to the Registrant by the General Partners or
their affiliates, or any of their officers, directors or general partners.
(d) Transactions with Promoters. None.
26
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8-K.
(a) The following documents are filed as part of this Report:
1. The exhibits listed in the accompanying Index to Exhibits are
filed as part of this Report.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the last quarter covered by
this report.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf of the undersigned, thereunto duly authorized.
WINTHROP CALIFORNIA INVESTORS LIMITED PARTNERSHIP
By: WINTHROP FINANCIAL ASSOCIATES, A LIMITED PARTNERSHIP,
Managing General Partner
By: /s/Michael L. Ashner
--------------------------
Michael L. Ashner
Chief Executive Officer
Date: April 13, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature/Name Title Date
- -------------- ----- ----
/s/ Michael Ashner Chief Executive Officer April 13, 2000
- ------------------ and Director
Michael Ashner
/s/ Thomas Staples Chief Financial Officer April 13, 2000
- -------------------
Thomas Staples
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit
Number Document
------ --------
<S> <C> <C>
3,4 Limited Partnership Agreement of Winthrop California Investors Limited Partnership, (1)
dated October 16, 1988, Agreement of Merger, dated October 16, 1985
3,4 Amendment to Limited Partnership Agreement of Winthrop California Investors Limited (2)
Partnership, dated November 15, 1995
10 (a) Form of Amended and Restated Partnership Agreement of Crow Winthrop Operating (3)
Partnership
(b) Form of Limited Partnership Agreement and Certificate of Amendment of Crow Winthrop (3)
Development Limited Partnership
(c) Amended and Restated Agreement of Purchase and Sale, dated October 31, 1984, by and (3)
among Fluor Corporation, as Seller, and Crow Irvine #1, as Buyer
(d) Assignment of Amended and Restated Agreement of Purchase and Sale, dated as of May (3)
24, 1985, by and among Fluor Corporation and Crow Irvine #1, as Assignors, and Crow
Winthrop Operating Partnership and Crow Winthrop Development Limited Partnership, as
Assignees
(e) Management and Leasing Agreement, dated as of May 24, 1985, between Crow Winthrop (3)
Operating Partnership, as Owner and Crow Orange County Management Company, as Manager
(f) First Amendment to Limited Partnership Agreement and Certificate of Amendment of Crow (3)
Winthrop Development Limited Partnership, dated as of July 26, 1985, by and between
Crow Irvine #2, as General Partner, and Winthrop California Investors Limited
Partnership, as Limited Partner
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
(g) First Amendment to Amended and Restated Agreement of Purchase and Sale, dated as of (3)
July 26, 1985, by and among Fluor Corporation, as Seller, and Crow Winthrop Operating
Partnership and Crow Winthrop Development Limited Partnership, as Buyer
(h) Contingent Purchase Price Agreement, dated as of July 26, 1985, by and between Fluor (3)
Corporation, as Seller, and Crow Winthrop Development Limited Partnership, as Buyer
(i) Subordinated Short Form Deed of Trust and Assignment of Rents, dated as of July 26, (3)
1985, by and among Crow Winthrop\Development Limited Partnership, as Trustor, Ticor
Title Insurance Company of California, as Trustee, and Fluor Corporation, as
Beneficiary
(j) Security Agreement, dated as of July 30, 1985, by and between Crow Winthrop (3)
Development Limited Partnership, as Secured Party, and Winthrop California Investors
Limited Partnership, as Debtor
(k) Assignment of Master Leases, executed as of July 26, 1985, by and between Fluor (3)
Corporation, as Assignor, and Crow Winthrop Operating Partnership, as Assignee, and
Consent, dated as of July 26, 1985, by Crow Winthrop Development Limited Partnership,
covering the following leases between Fluor Corporation, as Landlord, and Fluor
Engineers, Inc., as Tenant
(k)(i) Corporate Tower Lease (3)
(k)(ii) Concourse Lease (3)
(k)(iii) Building Pod Lease (3)
(l) Guaranty of Leases, dated as of July 26, 1985 by and among Fluor Corporation, as (3)
Guarantor, Crow Winthrop Operating Partnership, as Landlord, and Crow Winthrop
Development Limited Partnership, as Developer
(m) Concourse Management Agreement, dated as of July 26, 1985, by and between Fluor (3)
Engineers, Inc., as Manager, and Crow Winthrop Operating Partnership, as Owner
(n) License Agreement dated as of July 26, 1985, by and between Crow Winthrop Development (3)
Limited Partnership, as Licensor, and Fluor Engineers, Inc., as Licensee to Exhibit
10(n) to the Registration Statement)
(o) Construction, Operation and Reciprocal Easement Agreement, dated as of July 26, 1985, (3)
by and between Crow Winthrop Development Limited Partnership
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
(p) Amendment to Management and Leasing Agreement, dated as of July 26, 1985, by and (3)
between Crow Winthrop Operating Partnership, as Owner, and Crow Orange County
Management Company, as Manager
(q) Air Space Lease, dated as of July 26, 1985, by and between Crow Winthrop Operating (3)
Partnership, as Lessor, and Crow Winthrop Development Limited Partnership, as Lessee
(r) Air Space Easement Agreement, dated as of July 26, 1985, by and between Crow Winthrop (3)
Operating Partnership, as Grantor, and Crow Winthrop Development Limited Partnership,
as Grantee
(s) Amended and Restated Development Agreement, dated as of February 28, 1992, by and (1)
among Crow Winthrop Operating Partnership, Crow Winthrop Development Limited
Partnership, Winthrop California Investors Limited Partnership and Crow Irvine #2
(t) Management Agreement, dated as of July 26, 1985, by and among Crow Winthrop Operating (3)
Partnership and Crow Winthrop Development Limited Partnership, as Owners, and Crow
Orange County Management Company, as Manager
(u) Bank Loan Agreement, dated as of September 19, 1986, by and
between Winthrop (4) California Investors Limited
Partnership, as Borrower, and Mellon Bank, N.A.
(v) Pledge and Security Agreement, dated as of September 19,
1986, by and between (4) Winthrop California Investors
Limited Partnership, as Debtor, and Mellon Bank, N.A.
(w) Revolving Credit Note, dated September 19, 1986, by Winthrop California Investors (4)
Limited Partnership in favor of Mellon Bank, N.A. (incorporated by reference to
Exhibit 10(w) to
(x) Lease between Crow Winthrop Operating Partnership and Denny's Inc., dated December (5)
30, 1988
(y) Sublease between Crow Winthrop Operating Partnership and AT&T dated December 20, 1988 (5)
(z) Assignment and Assumption of Management Agreement, dated February 28, 1992, by and (1)
between Crow Orange County Management Company, Inc. and Winthrop California
Management Limited Partnership
(aa) Second Amendment to Partnership Agreement, dated February 28, 1992, by and between (1)
Crow Irvine #2 and Winthrop California Investors Limited Partnership
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
(bb) Fourth Amendment to Limited Partnership Agreement and Certificate of Amendment, dated (1)
February 28, 1992, by and between Crow Irvine #2 and Winthrop California Investors
Limited Partnership
99.1 Audited Financial Statements of Crow Winthrop Development Limited Partnership for the (6)
years ended December 31, 1998 and 1997
</TABLE>
(1) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended 1991, filed on August 28, 1992
(2) Incorporated by reference to the Registrant's Current Report on Form 8-K
filed November 15, 1995
(3) Incorporated by reference to Registrant's Registration Statement
(4) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year 1986, filed on March 31, 1987
(5) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year 1988, filed on March 31, 1989
(6) Incorporated by reference to the Registrant's Current Report on Form 8-K
filed January 10, 2000.
32
