<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 10, 2000
WINTHROP CALIFORNIA INVESTORS LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 0-14536 04-2869812
- --------------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
Five Cambridge Center, 9th Floor, Cambridge, MA 02142
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (617) 234-3000
Former name or former address, if changed since last report: Not applicable.
<PAGE>
Item 5. Other Events.
The Registrant recently received copies of the audited financial statements of
Crow Winthrop Development Limited Partnership (the "Development Partnership"), a
limited partnership in which the Registrant holds a 25% limited partnership
interest, for the years ended December 31, 1998 and 1997. Due to a number of
disputes between the Registrant and the general partner of the Development
Partnership, the Registrant had not previously been provided with these
financial statements.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99. Audited Financial Statements of Crow Winthrop Development Limited
Partnership for the years ended December 31, 1998 and 1997.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
WINTHROP CALIFORNIA INVESTORS LIMITED
PARTNERSHIP
By: Winthrop Financial Associates,
A Limited Partnership, as
Managing General Partner
By: /s/ Michael L. Ashner
---------------------------
Michael L. Ashner
Chief Executive Officer
DATED: January 10, 2000
3
<PAGE>
EXHIBIT INDEX
Exhibit Page
------- ----
99. Audited Financial Statements of Crow Winthrop Development 5
Limited Partnership for the years ended December 31, 1998
and 1997.
4
<PAGE>
[LETTERHEAD OF DELOITTE & TOUCHE]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Crow Winthrop Development Limited Partnership:
We have audited the accompanying consolidated balance sheets of Crow Winthrop
Development Limited Partnership (a Maryland limited partnership) and affiliates
(the Company) as of December 31, 1998 and 1997, and the related consolidated
statements of operations, partners capital (deficiency), and cash flows for the
years then ended. These financial statements are the responsibility of the
Company s management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis. evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects. the financial position of Crow Winthrop Development Limited
Partnership and affiliates as of December 31. 1998 and 1997, and the results of
their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.
/s/ Deloitte & Touche
July 2, 1999
<PAGE>
CROW WINTHROP DEVELOPMENT
LIMITED PARTNERSHIP AND AFFILIATES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
ASSETS
REAL ESTATE, net (Notes 2 and 3) $ 76,003,777 $ 72,366,678
CASH AND CASH EQUIVALENTS 26,563,075 4,727,101
RECEIVABLES:
Accounts receivable 515,992 261,505
Deferred rents receivable (Note 2) 952,275 611,537
------------------ -----------------
Total receivables 1,468,267 873,042
DEFERRED COSTS, net of accumulated amortization
of $145,034 in 1998 and $92,270 in 1997 (Notes 2 and 8) 793,750 852,193
PREPAID EXPENSES AND OTHER ASSETS 849,457 215,953
================== =================
$105,678,326 $79,034,967
================== =================
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Long-term debt (Note 4) $ 29,554,999 $ 29,694,400
Loans from general partner (Note 5) 7,701,841
Accrued interest (Notes 4 and 5) 8,103,712 9,958,698
Accounts payable and accrued expenses 2,447,272 956,070
Unearned rental revenue 111,592 125,824
Security deposits 281,167 287,635
Other liabilities (Note 6) 3,340,200
------------------ -----------------
Total liabilities 40,498,742 52,064,668
COMMITMENTS AND CONTINGENCIES (Note 7)
PARTNERS' CAPITAL (Note 1):
Winthrop California Investors Limited Partnership 42,719,405 31,859,588
Crow Irvine #2 22,460,179 (4,889,289)
------------------ -----------------
Total partners' capital 65,179,584 26,970,299
================== =================
$ 105,678,326 $ 79,034,967
================== =================
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
CROW WINTHROP DEVELOPMENT
LIMITED PARTNERSHIP AND AFFILIATES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
REVENUES (Notes 2, 7, and 8):
Minimum rents $ 2,779,455 $ 2,435,791
Operating expense recoveries 1,999,927 1,915,451
Percentage rents 285,285 225,759
Parking 139,502 207,576
Other 21,542 31,872
---------------------- -----------------
Total revenues 5,225,711 4,816,449
OPERATING COSTS & EXPENSES:
General operating expenses 536,779 594,137
Real estate taxes 881,456 1,333,725
Management fee (Note 8) 508,938 91,657
General and administrative expenses 3,068,223 1,949,488
Depreciation and amortization 1,081,366 968,383
---------------------- -----------------
Total operating costs and expenses 6,076,762 4,937,390
---------------------- -----------------
OPERATING LOSS (851,051) (120,941)
OTHER INCOME (EXPENSE):
Interest expense (Notes 4 and 5) (1,703,505) (1,490,415)
Interest income 934,993 307,533
Gain on sale of residential property (Note 9) 42,951,865
Other (Note 6) 3,340,200
---------------------- -----------------
Total other income (expense), net 45,523,553 (1,182,882)
---------------------- -----------------
NET INCOME (LOSS) $44,672,502 $ (1,303,823)
====================== =================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
CROW WINTHROP DEVELOPMENT
LIMITED PARTNERSHIP AND AFFILIATES
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
Winthrop
California
Investors
Crow Limited
Irvine #2 Partnership Total
<S> <C> <C> <C>
BALANCE, January 1, 1997 $ (3,911,422) $32,185,544 $28,274,122
Net loss (Note 1) (977,867) (325,956) (1,303,823)
------------------ ------------------ -----------------
BALANCE, December31, 1997 (4,889,289) 31,859,588 26,970,299
Distributions (6,154,909) (308,308) (6,463,217)
Net income (Note 1) 33,504,377 11,168,125 44,672,502
------------------ ------------------ -----------------
BALANCE, December 31, 1998 $ 22,460,179 $ 42,719,405 $ 65,179,584
================== ================== =================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
CROW WINTHROP DEVELOPMENT
LIMITED PARTNERSHIP AND AFFILIATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $44,672,502 $(1,303,823)
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities:
Depreciation and amortization 1,081,366 968,383
Gain on sale of residential property (42,951,865)
Settlement of letter of credit (3,340,200)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (254,487) 58,681
Increase in deferred rents receivable (340,738) (469,822)
Increase in prepaid expenses and other assets (633,504) (97,454)
Increase (decrease) in accounts payable and accrued expenses 1,491,202 (209,628)
(Decrease) increase in accrued interest (1,854,986) 1,675,242
(Decrease) increase in unearned rental revenue (14,232) 46,933
(Decrease) increase in tenant security deposits (6,468) 62,415
----------------- -----------------
Net cash (used in) provided by operating activities (2,151,410) 730,927
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate (9,223,913) (3,919,547)
Additions to deferred costs (36,109) (503,131)
Net proceeds from sale of residential property 47,551,865
----------------- -----------------
Net cash provided by (used in) investing activities 38,391,843 (4,422,678)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (139,401) (15,227,383)
Repayment of loans from general partner (7,701,841)
Partner distributions (6,463,217)
Proceeds from issuance of long-term debt 20,000,000
----------------- -----------------
Net cash (used in) provided by financing activities (14,304,459) 4,772,617
----------------- -----------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 21,835,974 1,080,866
CASH AND CASH EQUIVALENTS, beginning of year 4,727,101 3,646,235
----------------- -----------------
CASH AND CASH EQUIVALENTS, end of year $26,563,075 $4,727,101
================= =================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION -
Cash paid during the year for interest, net of amounts capitalized $3,558,491 $1,600,619
================= =================
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
CROW WINTHROP DEVELOPMENT
LIMITED PARTNERSHIP AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
1. ORGANIZATION
Crow Winthrop Development Limited Partnership (the Partnership) was
formed in 1985 for the purpose of acquiring owning and developing
approximately 122 acres of land in Orange County, California. The
general partner is Crow Irvine #2, a California limited partnership,
and the limited partner is Winthrop California Investors Limited
Partnership, a Delaware limited partnership (Winthrop).
Pursuant to the Partnership Agreement (the Agreement), operating
profits and losses of the Partnership are allocated to the partners in
accordance with the provisions of the Agreement, generally 75% to Crow
Irvine #2 and 25% to Winthrop.
Distributions of available cash flow, as defined in the Agreement, will
be made first to Crow Irvine #2 for the repayment of principal and
accrued interest of any outstanding loans from the general partner, and
then 75% to Crow Irvine #2 and 25% to Winthrop. Distributions and gains
and losses from capital transactions, as defined in the Agreement, will
be allocated to the partners in the priorities defined in the
Agreement.
During 1997 the Partnership formed Shops at Park Place LLC for the
purpose of owning and operating a retail center. The Partnership is the
managing and sole member of Shops at Park Place LLC
During 1998, the Partnership formed Park Place Residential Realty LLC
(Park Place Realty) and Park Place Residential Realty -Land LLC (Park
Place Land), for the purpose of reacquiring and reselling approximately
32 acres of residential property located in Orange County, California.
In addition, during 1998 the Partnership formed 3121 Michelson Drive
LLC (3121 Michelson), Park Place Hotel Company LLC (Park Place Hotel),
and, in January 1999, formed Park Place Parking Company LLC (Park Place
Parking) for the purposes of developing, owning, and operating a
150,000-square-foot Class A office building, a luxury hotel, and
parking structures, respectively. The Partnership is the managing and
sole member of each of these limited liability companies.
The Partnership, together with Shops at Park Place LLC, Park Place
Realty Park Place Land, 3121 Michelson and Park Place Hotel, are
referred to herein as the Company
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The accompanying consolidated financial
statements of the Company include all of the accounts of Crow Winthrop
Development Limited Partnership and its wholly owned affiliates, Shops
at Park Place LLC, Park Place Realty, Park Place Land, 3121 Michelson,
and Park Place Hotel. All significant intercompany accounts and
transactions have been eliminated.
6
<PAGE>
CROW WINTHROP DEVELOPMENT
LIMITED PARTNERSHIP AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (Continued)
Revenue Recognition - Minimum rents are recognized on the
straight-line basis over the terms of the leases, which generally
range from three to 20 years. Differences between minimum rents
recognized on the straight-line basis and minimum rents actually
received under the terms of the lease agreements are recorded as
deferred rents receivable in the accompanying consolidated balance
sheet. Percentage rents are recognized as earned. Recoveries from
tenants for taxes, insurance, and other property operating expenses
are recognized as revenues in the period when the corresponding costs
are- incurred.
Cash Equivalents - The Company considers all highly liquid instruments
purchased with original maturities of three months or less to be cash
equivalents.
Real Estate - Real estate is recorded at cost. The cost of property
and equipment, other than tenant improvements, is depreciated on a
straight-line basis over the estimated useful lives of the related
assets (generally from 10 to 39 years). Tenant improvements are
amortized on a straight-line basis over the lesser of their estimated
useful lives or the term of the related lease.
Capitalization of Construction Costs - The Company capitalizes all
direct costs relating to development of the property during the
construction period. In addition, certain indirect costs, including
interest, are capitalized during the construction period. After
construction is complete, these indirect costs are expensed in the
period incurred.
Deferred Costs - Costs incurred in obtaining tenant leases are
deferred and amortized over the terms of the related leases. Costs
incurred in obtaining loans are deferred and amortized over the terms
of the related loans.
Long-Lived Assets - The Company accounts for its long-lived assets in
accordance with Statement of Financial Accounting Standards (SFAS) No.
121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of. In accordance with SFAS No. 121,
1ong-lived assets to be held are reviewed for events or changes in
circumstances which indicate that their carrying value may not be
recoverable. The Company periodically reviews the carrying value of
long-lived assets to determine whether impairment to such value has
occurred. At December 31, 1998 and 1997, no provision for impairment
was considered necessary.
Use of estimates - The preparation of the consolidated financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
Income Taxes - The Partnership is not considered a taxable entity for
federal and state income tax purposes. Any taxable income or loss is
reported by the partners on their individual tax returns. All of the
affiliated companies are taxed as limited liability companies under
the provisions of federal and state tax codes. Under federal laws,
taxes based on income of a limited
7
<PAGE>
CROW WINTHROP DEVELOPMENT
LIMITED PARTNERSHIP AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
liability company are payable by the members individually. For the
years ended December 31, 1998 and 1997, a provision for California
franchise tax of $7,000 and $800, respectively, has been provided in
the accompanying consolidated financial statements at statutory rates
based on gross receipts (revenues) under California laws.
3. REAL ESTATE
Real estate consists of the following at December 31:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Land and land improvements $28,975,192 $28,975,192
Buildings 22,039,122 21,761,541
Tenant improvements 1,602,433 1,060,544
Furniture and equipment 73,614 73,614
Construction in progress 25,609,195 21,804,752
----------- -----------
78,299,556 73,675,643
Less accumulated depreciation (2,295,779) (1,308,965)
----------- -----------
$76,003,777 $72,366,678
=========== ===========
4. LONG-TERM DEBT
Long-term debt consists of the following at December 31:
<CAPTION>
1998 1997
<S> <C> <C>
First trust deed note payable to financial
institution, due in monthly installments of
$ 151,803, including interest at 8.36% per
annum, unpaid principal and interest due on
June 11, 2027 $19,815,107 $19,954,508
Loan payable to Fluor Corporation, bearing
interest at 5% per annum, unpaid principal
and interest due July 31, 2001
9,739,892 9,739,892
----------- -----------
$29,554,999 $29,694,400
=========== ===========
</TABLE>
8
<PAGE>
CROW WINTHROP DEVELOPMENT
LIMITED PARTNERSHIP AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
On June 25, 1997, the Company entered into a loan agreement with a
financial institution (the Loan Agreement) for a $20,000,000 loan. The
proceeds from the loan were used primarily to refinance a construction
loan with another financial institution. The loan is collateralized by
the Shops at Park Place LLC property, assignment of related rents, and
other security agreements. The Loan Agreement provides, among other
things, for optional prepayment of the loan on June 11, 2007, without
penalty.
In August 1986, the Company entered into an agreement with Fluor
Corporation (Fluor) (the Fluor Agreement) whereby Fluor loaned the
Company $ 10,000,000 to pay development fees to the City of Irvine. In
February 1987, development fees in the amount of $9,836,115 were paid
to the City of Irvine. In accordance with the Fluor Agreement, the
excess funds were returned to Fluor. Pursuant to the Fluor Agreement,
principal payments are due upon the use or sale of office development
entitlements as granted by the City of Irvine. As of December 31,
1998, principal payments of $96,223 have been repaid to Fluor in
accordance with the terms of the Fluor Agreement. Interest on the
Fluor loan accrues at 5% compounded annually and is payable pro rata
upon the repayment of each portion of the principal, as defined in the
Fluor Agreement. The unpaid principal balance of the Fluor loan and
all accrued and unpaid interest is due on July 31, 2001. At December
31, 1998 and 1997, accrued and unpaid interest on the Fluor loan was
$8,103,712 and $7,254,016, respectively.
Long-term debt at December 31, 1998, is due in aggregate annual
amounts as follows:
1999 $ 126,355
2000 137,622
2001 9,889,780
2002 163,252
2003 177,812
Thereafter 19,060,178
-----------
$29,554,999
===========
5. LOANS FROM GENERAL PARTNER
From time to time, Crow Irvine #2 has advanced funds to the
Partnership, as required, to enable the Partnership to meet its
obligations. Such unsecured advances bear interest at the prime rate
(8.25% at December 31, 1998) plus 1% per annum and are repayable from
cash flow or sale or refinancing proceeds of the Partnership before
any distributions to partners. At December 31, 1997, unpaid principal
was $7,701,841 and accrued interest was $2,704,682.
As of December 31, 1998, all unpaid principal and accrued interest on
the loans from general partner had been repaid in full.
9
<PAGE>
CROW WINTHROP DEVELOPMENT
LIMITED PARTNERSHIP AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
6. OTHER LIABILITIES
In February 1989, the Company entered into a real property option
agreement, as amended (the Option Agreement) with a third party, and
subsequently its successor in ownership (the Buyer), whereby the
Company granted the Buyer an option to acquire approximately 32 acres
of residential property (the Residential Property). In October 1989,
the Buyer exercised its option and acquired the Residential Property
from the Company. In connection with the Option Agreement, the Company
and the Buyer entered into additional agreements which imposed certain
development obligations on the Buyer for completion of various on-site
and off-site improvements (the Development Agreements).
Pursuant to the provisions of the Option Agreement and the Development
Agreements, the Buyer caused a financial institution to issue an
irrevocable letter of credit in the amount of $3,340,200, representing
the estimated cost of the on-site and off-site improvements to the
Residential Property, to secure the performance of certain development
obligations of the Buyer. In September 1994, as a result of
nonperformance of these certain development obligations by the Buyer,
the Company drew the $3,340,200 proceeds under the letter of credit.
Subsequently, litigation was undertaken related to the nonperformance
by the Buyer and the rights to the proceeds from the letter of credit.
During the time of this litigation, the Company recorded the $3,340,200
as a liability. In August 1998, the Company and the Buyer entered into
a settlement agreement (the Settlement Agreement) whereby, among other
things, the Buyer waived all of its rights to and assigned to the
Company the letter of credit proceeds. As a result, the Company
recorded the letter of credit proceeds as other income in 1998.
7. COMMITMENTS AND CONTINGENCIES
Lease Revenues - The Company owns and leases space in real property
located in a shopping center complex. All of the leases are classified
as operating leases. Substantially all such leases expire over the next
18 years and provide for reimbursement of certain operating expenses.
Reimbursement of operating expenses amounted to $ 1,999,927 and $
1,915,451 for the years ended December 31, 1998 and 1997, respectively.
In addition, certain leases provide for additional rents based on
tenants' gross sales. Additional rents amounted to $285,285 and
$225,759 for the years ended December 31, 1998 and 1997, respectively.
10
<PAGE>
CROW WINTHROP DEVELOPMENT
LIMITED PARTNERSHIP AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
Future minimum lease revenues under noncancelable operating leases at
December 31, 1998, are summarized as follows:
Year ending December 31:
1999 $ 2,817,212
2000 2,876,400
2001 2,983,951
2002 2,923,418
2003 2,811,898
Thereafter 23,166,550
------------
$37,579,429
============
Litigation - The Company is subject to various legal proceedings and
claims that arise in the ordinary course of business. While the
resolution of these matters cannot be predicted with certainty,
management believes that the final outcome of such matters will not
have a material adverse effect on the financial position or results of
operations of the Company.
8. RELATED-PARTY TRANSACTIONS
Crow Orange County Management Company, Inc. (Crow Management), an
affiliated company, provides management services to the Company for a
monthly fee equal to 15% of expenses incurred by the Company for
managing, operating, and maintaining its real estate properties.
Management fees earned by Crow Management amounted to $508,938 and
$91,657 for the years ended December 31, 1998 and 1997, respectively.
In addition, Crow Management is entitled to an annual incentive
management fee of 5% of the excess of gross revenues over projected
revenues, as defined in the management agreement. There were no
incentive management fees earned during 1998 and 1997. Crow Management
also provides leasing services to the Company in connection with
leasing activity at its real estate properties. Leasing commissions
paid to Crow Management amounted to $6,844 and $89,924 during the years
ended December 31, 1998 and 1997, respectively, and are included in
deferred costs in the accompanying balance sheets.
In addition to its management and leasing responsibilities, Crow
Management supervises the conversion of tenant space and certain other
capital improvements at the retail center. Crow Management is entitled
to a construction management fee of 10% of the conversion and tenant
improvement costs. There were no construction management fees earned
during 1998 and 1997.
In connection with the sale of the residential property in 1998 (Note
9), the Company paid Crow Management sales commissions of $1,250,000,
which are included in gain on sale of residential property in the
accompanying statement of operations.
11
<PAGE>
CROW WINTHROP DEVELOPMENT
LIMITED PARTNERSHIP AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
Crow Winthrop Operating Partnership (CWOP), an affiliated partnership
owned by Crow Irvine #2 and Winthrop, was formed to acquire, own, and
operate a building located in the center of the Company's real estate
properties. Crow Irvine #2 has a 1% limited partnership interest in the
profits and losses of CWOP. During 1997 Jamboree LLC (Jamboree)
succeeded to the interest of CWOP in the building. The Company
reimburses Jamboree for certain common area expenses. Such
reimbursements amounted to $57,776 and $54,935 during 1998 and 1997,
respectively. The Company's receives monthly payments from Jamboree for
reserved parking spaces on the Company's land. Such receipts amounted
to $139,502 and $174,279 during 1998 and 1997, respectively.
The Company reimburses an affiliated company for administrative
expenses related to the development of the real estate owned by the
Company. During 1998 and 1997, the Company accrued or reimbursed the
affiliated companies $ 1,292,870 and $699,548, respectively, for such
administrative expenses. In addition, the Company receives
reimbursements from an affiliated company to offset certain common area
operating expenses. Such reimbursements amounted to $763 and $3,572
during 1998 and 1997, respectively.
9. GAIN ON SALE OF RESIDENTIAL PROPERTY
In connection with the Settlement Agreement (Note 6), the Company
reacquired the Residential Properties from the Buyer for a settlement
price of $4,600,000 and simultaneously sold the Residential Properties
to an unrelated party for a gross sales price of $50,000,000. As a
result, the Company recorded a gain on sale of the Residential Property
of $42,951,865 during 1998.
10. SUBSEQUENT EVENTS
In 1999, Park Place Hotel signed a 20-year operating agreement with a
hotel operator
12
