SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________________ to ________________
Commission File No. 0-15511
Development Partners
(A Massachusetts Limited Partnership)
(Exact name of registrant as specified in its charter)
Massachusetts 04-2895800
(State or other jurisdiction of (I.R.S. Employer incorporation
or organization) Identification No.)
5110 Langdale Way, Colorado Springs, CO 80906
(Address of principal executive offices) (Zip Code)
(719) 527-0544
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interests
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 and 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
Aggregate market value of voting securities held by non-affiliates: Not
applicable, since securities are not actively traded on any exchange.
Documents incorporated by reference: Portions of the Prospectus of Registrant
dated March 27, 1986 are incorporated by reference into Part III.
The Exhibit Index is located on page ____
<PAGE>
PART I
ITEM 1. BUSINESS
This form 10-K contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors, including those
identified herein.
Development Partners (A Massachusetts Limited Partnership) (the "Partnership"),
formerly Berry and Boyle Development Partners, was formed on October 23, 1985.
The General Partners are L'Auberge Realty Advisors (A Massachusetts Limited
Partnership), formerly Berry and Boyle Realty Advisors, and GP L'Auberge
Communities, L.P., a California Limited Partnership (formerly Berry and Boyle
Management).
The primary business of the Partnership is to invest in, operate and ultimately
dispose of a diversified portfolio of income-producing residential real
properties through its joint venture partner interest in such properties.
Descriptions of such properties are included below in Item 2. as well as in Note
5 of the Notes to the Consolidated Financial Statements included in this report
and incorporated herein by reference thereto.
From time to time, the Partnership expects to sell its properties taking into
consideration such factors as the amount of appreciation in value, if any, to be
realized, the possible risks of continued ownership and the anticipated
advantages to be gained for the partners. Proceeds from the sale, financing or
refinancing of the properties will not be reinvested by the Partnership or its
joint ventures, but will ultimately be distributed to the partners so that the
Partnership will, in effect, be self-liquidating. Under the terms of the various
joint venture agreements, the Partnership has control over the decision to sell
a property.
The success of the Partnership will depend upon factors which are difficult to
predict and many of which are beyond the control of the Partnership. Such
factors include, among others, general economic and real estate market
conditions, both on a national basis and in those areas where the Partnership's
investments are located, competitive factors, the availability and cost of
borrowed funds, real estate tax rates, federal and state income tax laws,
operating expenses (including maintenance and insurance), energy costs,
government regulations, and potential liability under and changes in
environmental and other laws, as well as the successful management of the
properties.
On-site management of two of the Partnership's properties, L'Auberge Broadmoor
("Broadmoor"), formerly Broadmoor Pines, and L'Auberge Canyon View ("Canyon
View), is currently provided by an affiliate of the General Partners. On-site
management of Casabella is currently provided by the developer/joint venture
partner and supervised by the General Partners. The terms of such property
management services between the Partnership and property managers are embodied
in a written management agreement with respect to each property. The property
manager in each case receives management fees which are competitive with those
obtainable in arm's-length negotiations with independent parties providing
comparable services in the localities in which the properties are located. These
fees do not exceed 5% of the gross revenues from each property.
It is the responsibility of the General Partners to select or approve property
managers and to supervise their performance. Property managers are responsible
for on-site operations and maintenance, generation and collection of rental
income, and payment of operating expenses.
The difference between rental income and expenses related to operations,
including items such as local taxes and assessments, utilities, insurance
premiums, maintenance, repairs and improvements (and reserves therefor),
bookkeeping and payroll expenses, legal and accounting fees, property management
fees and other expenses incurred, constitute the properties' operating cash
flow. The Partnership's administrative expenses are paid out of the
Partnership's share of such cash flow from the various joint ventures and from
interest income which the Partnership earns on its short-term investments.
The Partnership's investments in real estate are also subject to certain
additional risks including, but not limited to, (i) competition from existing
and future projects held by other owners in the areas of the Partnership's
properties, (ii) possible reduction in rental income due to an inability to
maintain high occupancy levels, (iii) adverse changes in mortgage interest
rates, (iv) possible adverse changes in general economic conditions and adverse
local conditions, such as competitive overbuilding, or a decrease in employment
or adverse changes in real estate zoning laws, (v) the possible future adoption
of rent control legislation which would not permit the full amount of increased
costs to be passed on to tenants in the form of rent increases, and (vi) other
circumstances over which the Partnership may have little or no control.
The Partnership's investments are subject to competition in the rental, lease
and sale of similar types of properties in the localities in which the
Partnership's real property investments are located, and the Partnership
competes with other real property owners and developers in the rental, leasing
and sale of such properties. Furthermore, the General Partners of the
Partnership are affiliated with other partnerships owning similar properties in
the vicinity in which the Partnership's properties are located. In addition,
other limited partnerships may be formed by affiliates of the General Partners
which will compete with the Partnership.
The Partnership considers itself to be engaged in only one industry segment,
real estate investment.
The Partnership has no employees. Accounting, property management and other
administrative functions are performed by employees of an affiliate of the
General Partners.
ITEM 2. PROPERTIES
The Partnership owns a majority joint venture interest in two joint ventures the
"Joint Ventures"): (1) the Canyon View Joint Venture, an Arizona joint venture
that owns and operates Canyon View, a 168-unit multifamily rental property in
Tucson, Arizona, subject to first mortgage financing in the original principal
amount of $5,300,000; and, (2) the Broadmoor Pines Joint Venture, a Colorado
joint venture that owns and operates Broadmoor, a 108-unit multifamily rental
property in Colorado Springs, Colorado, subject to first mortgage financing in
the original principal amount of $3,650,000. The Partnership also owns a
minority interest in Casabella Associates, which in turn, owns a majority
interest in the Casabella Joint Venture, an Arizona joint venture which owns and
operates Casabella, a 154-unit multifamily rental property in Scottsdale,
Arizona, subject to first mortgage financing in the original amount of
$7,320,000. With regard to the proposed termination of the Casabella Joint
Venture, see Note 11 of the Notes to Consolidated Financial Statements.
Canyon View
On September 29, 1987, the Partnership acquired a majority interest in the
Canyon View Joint Venture which owns and operates a 168-unit multifamily rental
property located in Tucson, Arizona, known as Canyon View. The Partnership has
been designated as the managing joint venture partner and will control all
decisions regarding the operation and sale of the property. In accordance with
the terms of the purchase agreement and the joint venture agreement, through
December 31, 1995, the Partnership has contributed total capital of $6,715,984
to the Canyon View Joint Venture which was used to repay a portion of the
construction loan from a third party lender, to pay certain costs related to the
refinancing of the permanent loan, to cover operating deficits and to fund
certain capital improvements. In addition to the contributions above, the
Partnership also incurred $745,902 of property acquisition and organization
costs which were subsequently treated as a capital contribution to the joint
venture.
As of February 29, 1996, the property was 92% occupied, compared to 90%
approximately one year ago. At December 31, 1995 and 1994, the market rents for
the various unit types were as follows:
Unit Type .................................. 1995 1994
One bedroom one bath ............................. $725 $725
Two bedroom two bath ............................. 810 810
Two bedroom two bath w/den ....................... 980 980
Broadmoor
On October 12, 1988, the Partnership acquired Broadmoor, a 108-unit multifamily
rental property located in Colorado Springs, Colorado, and simultaneously
contributed the property to a joint venture comprised of the Partnership and the
developer of the property. The Partnership has been designated as the managing
joint venture partner and will control all decisions regarding the operation and
sale of the property. In accordance with the terms of the purchase agreement and
the joint venture agreement, through December 31, 1995, the Partnership has
contributed total capital of $5,959,862 to the Broadmoor Pines Joint Venture
which was used to repay a portion of the construction loan from a third party
lender, to pay certain costs related to the refinancing of the permanent loan,
to cover operating deficits incurred during the lease up period and to fund
certain capital improvements. In addition to the contributions above, the
Partnership also incurred $684,879 of property acquisition and organization
costs which were subsequently treated as a capital contribution to the joint
venture.
As of February 29, 1996, the property was 86% occupied, compared to 74%
approximately one year ago. At December 31, 1995 and 1994, the market rents for
the various unit types were as follows:
Unit Type ............................. 1995 1994
One bedroom two bath w/den ................... $ 864 $ 864
Two bedroom two bath ......................... 975 975
Two bedroom two bath w/den ................... 1,175 1,175
Casabella
On November 5, 1990, the Partnership purchased an approximate 8% interest in
Casabella Associates ("Associates"), a general partnership consisting of the
Partnership and two other partnerships affiliated with the General Partners.
Under the terms of the purchase, the Partnership contributed $400,000 to
Associates. Associates was formed to acquire a majority interest in the
Casabella Joint Venture which owns and operates a 154-unit multifamily rental
property located in Scottsdale, Arizona, known as Casabella.
Associates has been designated as the managing joint venture partner and will
control all decisions regarding the operation and sale of the property. In
addition to its $400,000 contribution to Associates, the Partnership has
incurred $83,668 of acquisition expenses.
As of February 29, 1996, the property was 98% occupied, compared to 97%
approximately one year ago. At December 31, 1995 and 1994, the market rents for
the various unit types were as follows:
Unit Type ............................. 1995 1994
One bedroom two bath w/den ................... $ 820 $ 790
Two bedroom two bath ......................... 943 915
Two bedroom two bath w/den ................... 1,170 1,118
ITEM 3. LEGAL PROCEEDINGS
There are no pending material legal proceedings to which the Partnership or any
joint venture in which it owns an interest is a party, or of which any of the
properties is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
The transfer of Units is subject to certain limitations contained in the
Partnership Agreement. There is no public market for the Units and it is not
anticipated that any such public market will develop.
The number of holders of Units as of December 31, 1995 was 2,042.
Distributions are made to the Partners on a quarterly basis based upon Net Cash
from Operations, as calculated under Section 10 of the Partnership Agreement.
Total cash distributions to the Limited Partners for 1995 and 1994 were paid as
follows:
Calendar .......................... Date of
Quarter Ended ....................... Payment Amount
March 31, 1994 ....................... May 15, 1994 136,541
June 30, 1994 ........................ August 15, 1994 136,541
September 30, 1994 ................... November 15, 1994 136,541
December 31, 1994 .................... February 15, 1995 136,541
March 31, 1995 ....................... May 15, 1995 136,541
June 30, 1995 ........................ August 15, 1995 136,541
September 30, 1995 ................... November 15, 1995 91,028
December 31, 1995 .................... February 15, 1996 63,719
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
Year Ended
--------------------------------------------------------------------------
-----------------------------------------------------------
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
<S> <C> <C> <C> <C> <C>
Rental income $2,444,585 $2,598,360 $2,441,256 $2,199,937 $1,972,589
Net income (loss) $54,619 $227,996 $25,664 ($369,802) ($578,526)
Net income (loss) allocated to Partners:
Limited Partners - Per Unit
Aggregate 36,411 Units $1.47 $6.14 $0.69 ($10.05) ($15.73)
General Partners $1,092 $4,560 $513 ($3,698) ($5,785)
Net cash provided by operations $509,171 $687,162 $543,208 $401,369 $186,287
Cash distributions to Partners:
Limited Partners - Per Unit
Aggregate 36,411 Units $13.75 $19.25 $9.50 $5.25 $2.55
General Partners $10,217 $14,304 $7,059 $3,901 $1,895
Total assets $19,144,374 $19,675,617 $20,241,217 $20,640,755 $21,099,686
Long term obligations $8,732,151 $8,838,924 $8,935,644 $9,006,141 $8,922,252
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements including those concerning
Management's expectations regarding future financial performance and future
events. These forward-looking statements involve significant risk and
uncertainties, including those described herein. Actual results may differ
materially from those anticipated by such forward-looking statements.
Liquidity; Capital Resources
At the close of the offering on February 26, 1987, the Partnership had admitted
2,033 Limited Partners who contributed capital of $18,205,500 to the
Partnership. These offering proceeds, net of organizational and offering costs
of $2,730,825, provided $15,474,675 of net proceeds to be used for the purchase
of income-producing residential properties, including related fees and expenses,
and working capital reserves. The Partnership has expended $14,277,559 to (i)
acquire its joint venture interests in the Canyon View Joint Venture, Broadmoor
Pines Joint Venture and Casabella Associates, (ii) pay acquisition expenses,
including acquisition fees to one of the General Partners, and (iii) pay certain
costs associated with the refinancing of the Canyon View and Broadmoor permanent
loans. The Partnership distributed $56,437 to the Limited Partners as a return
of capital resulting from excess reserves. The remaining net proceeds of
$1,140,679 were used to establish initial working capital reserves. These
reserves are used periodically to enable the Partnership to meet its various
financial obligations including contributions to the various joint ventures that
may be required. Through December 31, 1995, $312,736 cumulatively was
contributed to the joint ventures for this purpose.
In addition to the proceeds generated from the public offering, the Partnership
utilized external sources of financing at the joint venture level to purchase
properties. The Partnership Agreement limits the aggregate mortgage indebtedness
which may be incurred in connection with the acquisition of Partnership
properties to 80% of the purchase price of such properties.
The Partnership's future ability to generate cash adequate to meet its needs is
dependent primarily on the successful operations of its real estate investments.
Such ability may also be dependent upon the future availability of bank
borrowings, and upon the future refinancing and sale of the Partnership's real
estate investments and the collection of any mortgage receivables which may
result from such sales. These sources of liquidity will be used by the
Partnership for payment of expenses related to real estate operations, debt
service and professional and management fees and expenses. Net Cash From
Operations and Net Proceeds, if any, as defined in the Partnership Agreement,
will then be available for distribution to the Partners in accordance with
Section 10 of the Partnership Agreement. The General Partners believe that the
current working capital reserves together with projected cash flows for 1996 are
adequate to meet the Partnership's cash needs in the coming year. With regard to
certain balloon payments on existing first mortgage debt on the Partnership's
properties, see Note 7 of Notes to Consolidated Financial Statements.
The working capital reserves of the Partnership consisted of cash and cash
equivalents and short-term investments. Together these amounts provide the
Partnership with the necessary liquidity to carry on its day-to-day operations
and to make necessary contributions to the various joint ventures. In 1995, the
aggregate net decrease in working capital reserves was $189,776. This decrease
resulted primarily from cash provided by operations of $508,779 and $15,640 of
distributions from Casabella, offset by $98,858 of fixed asset additions,
distributions to partners of $510,868 and $106,773 of principal payments on
mortgage notes payable.
In 1994, the aggregate net decrease in working capital reserves was $107,529.
This decrease resulted primarily from cash provided by operations of $687,162
and $31,450 of distributions from Casabella, offset by $7,652 of fixed asset
additions, distributions to partners of $715,215 and $96,720 of principal
payments on mortgage notes payable.
In 1993, the aggregate net increase in working capital reserves was $117,351.
This increase resulted primarily from cash provided by operations of $543,208
and $19,975 of distributions from Casabella, offset by $22,371 of fixed asset
additions, distributions to partners of $352,964 and $70,497 of principal
payments on mortgage notes payable.
Results of Operations
For the year ended December 31, 1995, the Partnership's operating results were
comprised of its share of the income and expenses from the Canyon View and
Broadmoor Pines joint ventures, the Partnership's share of the income from
Casabella Associates, as well as partnership level interest income earned on
short term investments, reduced by administrative expenses. A summary of these
operating results appears below:
<TABLE>
Canyon Investment Consolidated
View Broadmoor Partnership Totals
<S> <C> <C> <C>
Rental income $1,303,305 $1,141,280 $2,444,585
Rental operating expenses 597,918 422,394 1,020,312
--------------------------------------------------------
Net operating income (exclusive of items
shown separately below) 705,387 718,886 1,424,273
Interest expense 473,776 350,428 824,204
Depreciation and amortization 239,665 183,868 423,533
Other (income) and expenses:
Interest income (301) (670) ($51,697) (52,668)
General and administrative 7,208 7,021 163,439 177,668
Equity in (income) loss from partnership (3,083) (3,083)
--------------------------------------------------------
6,907 6,351 108,659 121,917
--------------------------------------------------------
Net income (loss) ($14,961) $178,239 ($108,659) $54,619
========================================================
</TABLE>
For the year ended December 31, 1994, the Partnership's operating results were
comprised of the income and expenses from the Canyon View and Broadmoor Pines
joint ventures, the Partnership's share of the income from Casabella Associates,
as well as partnership level interest income earned on short term investments,
reduced by administrative expenses. A summary of these operating results appears
below:
<TABLE>
Canyon Investment Consolidated
View Broadmoor Partnership Totals
<S> <C> <C> <C>
Rental income $1,431,740 $1,166,620 $2,598,360
Rental operating expenses 578,062 425,718 1,003,780
--------------------------------------------------------
Net operating income (exclusive of items
shown separately below) 853,678 740,902 1,594,580
Interest expense 480,210 353,776 833,986
Depreciation and amortization 234,919 187,035 421,954
Other (income) and expenses:
Interest income (726) (937) ($41,302) (42,965)
General and administrative 7,679 7,534 140,286 155,499
Equity in (income) loss from partnership (1,890) (1,890)
--------------------------------------------------------
6,953 6,597 97,094 110,644
--------------------------------------------------------
Net income (loss) $131,596 $193,494 ($97,094) $227,996
========================================================
</TABLE>
For the year ended December 31, 1993, the Partnership's operating results were
comprised of the income and expenses from the Canyon View and Broadmoor Pines
joint ventures, the Partnership's share of the loss from Casabella Associates,
as well as partnership level interest income earned on short term investments,
reduced by administrative expenses. A summary of these operating results appears
below:
<TABLE>
Canyon Investment Consolidated
View Broadmoor Partnership Totals
<S> <C> <C> <C>
Rental income $1,346,412 $1,094,844 $2,441,256
Rental operating expenses 596,829 367,278 964,107
--------------------------------------------------------
Net operating income (exclusive of items
shown separately below) 749,583 727,566 1,477,149
Interest expense 486,003 315,801 801,804
Depreciation and amortization 234,515 304,447 538,962
Other (income) and expenses:
Interest income (1,017) (1,271) ($34,845) (37,133)
General and administrative 6,578 6,926 131,699 145,203
Equity in (income) loss from partnership 2,649 2,649
--------------------------------------------------------
5,561 5,655 99,503 110,719
--------------------------------------------------------
Net income (loss) $23,504 $101,663 ($99,503) $25,664
========================================================
</TABLE>
Comparison of 1995 and 1994 Operating Results:
Rental income decreased $153,775, or 6% from the prior year, primarily as a
result of lower occupancy at Canyon View and Broadmoor. Broadmoor's occupancy
declined during the first quarter of 1995 and improved steadily during the
remainder of the year. Canyon View occupancy declined as a result of increased
competition from newly developed properties in its immediate market area. This
lower occupancy existed through most of 1995, but has now improved to its
present level of 92%. Interest income increased $9,703 or 23% in 1995, as a
result of higher interest rates earned on money market accounts and short-term
investments. General and administrative expenses increased $22,169 or 14%, due
primarily to increased salary expense allocations and printing and mailing
costs. Fixed asset purchases increased $91,206 from $7,652 in 1994 to $98,858 in
1995 and included such items as carpet, floor tile and other replacements. As a
result of the factors described above, distributions to partners decreased
$204,347 from $715,215 in 1994 to $510,868 in 1995.
Comparison of 1994 and 1993 Operating Results:
Rental income increased $157,104 or 6% over the prior year, primarily as a
result of high occupancy and rent increases. Rental operating expenses increased
$39,673, or 4%, due primarily to increased maintenance and advertising and
promotion costs. Interest income increased $5,832 or 16% in 1994, as a result of
higher interest rates earned on money market accounts and short-term
investments. Distributions to partners increased $362,251 from $352,964 in 1994
to $715,215 in 1995, due in part to the factors described above.
Projected 1996 Operating Results:
Operating results for 1996 are not anticipated to vary significantly from those
of 1995. However, such forward-looking expectations involve significant risks
and uncertainties, including those described herein.
Actual results may differ materially from those anticipated.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Appendix A to this Report.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership has no directors or executive officers. Information as to the
General Partners is set forth below:
L'Auberge Realty Advisors
Stephen B. Boyle, age 55, is President, Executive Officer and Director of
L'Auberge Communities, Inc. (formerly Berry and Boyle Inc.) and a general
partner and co-founder of LP L'Auberge Communities, a California Limited
Partnership (formerly Berry and Boyle), a limited partnership formed in 1983 to
provide funds to various affiliated general partners of real estate limited
partnerships, one of which is GP L'Auberge Communities, L.P.
In September, 1995, with the consent of Limited Partners holding a majority of
the outstanding Units, as well as the consent of the mortgage lenders for the
Partnership's three properties, Richard G. Berry resigned as a general partner
of the Partnership.
GP L'Auberge Communities, L.P.
Information as to the directors and executive officers of L'Auberge Communities,
Inc., a general partner of GP L'Auberge Communities, L.P., which is a general
partner of the Partnership, and its affiliates, is set forth below. There are no
familial relationships between or among any officer and any other officer or
director.
Name Position
Stephen B. Boyle See above
J. Michael McDonald Executive Vice President and
Chief Financial Officer
Earl O. Robertson Executive Vice President
Donna Popke Vice President and Secretary
J. Michael McDonald, age 53, is Executive Vice President and Chief Financial
Officer of L'Auberge Communities, Inc. He is a certified public accountant and a
business school graduate of California State University. He began his real
estate career with the firm of Kenneth Leventhal and Company. Mr. McDonald held
senior finance positions with publicly traded Arlen Realty and Christiana
Companies. He was a senior operations officer with Lehman Brothers real estate
affiliates. Prior to joining L'Auberge Communities, Inc. in August, 1995, he was
a consultant for the FDIC, acting as a real estate asset disposition strategist.
Earl O. Robertson, age 47, has been a senior development officer, partner and
consultant in several prominent real estate development companies for over
twenty years, including Potomac Investment Associates, developers of planned
golf course communities nationwide. Mr. Robertson was also a key member of the
management team that developed the nationally acclaimed Inn at the Market in
Seattle. He joined L'Auberge Communities, Inc. in June 1995 and holds the
position of Executive Vice President.
Donna Popke, age 36, joined L'Auberge Communities, Inc. in July, 1995 and holds
the title of Vice President and Secretary.. Prior to joining L'Auberge
Communities, Inc., Ms. Popke was employed in the field of public accounting for
six years and later with David R. Sellon & Company, a Colorado Springs land
development company.
ITEM 11. EXECUTIVE COMPENSATION
None of the General Partners or any of their officers or directors received any
compensation from the Partnership. See Item 13 below with respect to a
description of certain transactions of the General Partners and their affiliates
with the Partnership.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of March 29, 1996, no person of record owned or was known by the General
Partners to own beneficially more than 5% of the Partnership's outstanding
Units. Neither of the General Partners nor any of their directors and officers
owns Units.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended December 31, 1995, the Partnership paid or accrued
remuneration to the General Partners or their affiliates as set forth below. In
addition to the information provided herein, certain transactions are described
in Notes 8 and 9 in the Notes to Consolidated Financial Statements appearing in
Appendix A, which are included in this report and are incorporated herein by
reference thereto.
<TABLE>
Net Cash From Operations distributed during 1995
<S> <C>
to the General Partners $10,217
Allocation of Income (Loss) to the General Partners $1,092
(For a description of the share of Net Cash From
Operations and the allocation of Income and Loss
to which the General Partners are entitled, reference
is made to the discussion under the caption
"Distributions and Allocations" contained on
pages 35 through 39 of the Prospectus of the
Partnership dated March 27, 1986 (the "Prospectus"),
which discussion is incorporated herein by reference.)
Property management fees paid to an affiliate of the
General Partners $121,209
Reimbursements to General Partners $75,552
(For a description of the costs reimbursable to the
General Partners, reference is made to the discussion under the caption
"Compensation and Fees" contained on pages 11 through 12 of the
Prospectus, which discussion is incorporated herein by reference.)
</TABLE>
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1,2 See Page F-2
3 See Exhibit Index contained herein.
(b) Reports on Form 8-K
The Partnership has not filed, and was not required to file, any
reports on Form 8-K during the last quarter of 1995.
(c) See Exhibit Index contained herein.
(d) See Page F-2.
<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 by the undersigned, thereunto duly authorized.
DEVELOPMENT PARTNERS
(A Massachusetts Limited Partnership)
By: GP L'Auberge Communities, L.P., a California Limited Partnership,
General Partner
By: L'Auberge Communities, Inc., its General Partner
By: ____/s/ J. Michael McDonald________________
J. Michael McDonald, Executive Vice President and
Chief Financial Officer
Date: March 25, 1996
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 Title Date
___/s/ Stephen B. Boyle_ Director, President and March 25, 1996
STEPHEN B. BOYLE Principal Executive
Officer of L'Auberge
Communities, Inc.
_/s/ J. Michael McDonald_ Executive Vice President and March 25, 1996
J. MICHAEL McDONALD Principal Financial and
Accounting Officer of
L'Auberge Communities, Inc.
<PAGE>
APPENDIX A
DEVELOPMENT PARTNERS
(A Massachusetts Limited Partnership)
AND SUBSIDIARIES
---------
CONSOLIDATED FINANCIAL STATEMENTS
ITEM 8, ITEM 14(a)(1) and (2), and ITEM 14(d) OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
For the Year Ended December 31, 1995
<PAGE>
DEVELOPMENT PARTNERS
(A Massachusetts Limited Partnership)
AND SUBSIDIARIES
-------------
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants F-3
Consolidated Balance Sheets at December 31, 1995 and 1994 F-4
Consolidated Statements of Operations for the years ended
December 31, 1995, 1994 and 1993 F-5
Consolidated Statements of Partners' Equity (Deficit) for the
years ended December 31, 1995, 1994 and 1993 F-6
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993 F-7 -- F-8
Notes to Consolidated Financial Statements F-9 -- F-16
All Schedules are omitted as they are not applicable, not required, or the
information is provided in the financial statements or the notes thereto.
<PAGE>
Report of Independent Accountants
To the Partners of
Development Partners
(A Massachusetts Limited Partnership):
We have audited the accompanying consolidated balance sheets of
Development Partners (A Massachusetts Limited Partnership) and subsidiaries as
of December 31, 1995 and 1994, and the related consolidated statements of
operations, partners' equity (deficit) and cash flows for each of the three
years in the period ended December 31, 1995. These financial statements are the
responsibility of the General Partners of the Partnership. 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 the
General Partners of the Partnership, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Development Partners (A Massachusetts Limited Partnership) and subsidiaries as
of December 31, 1995 and 1994 and the consolidated results of their operations
and their cash flows for each of the three years in the period ended December
31, 1995 in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts February 21, 1996, except for the information presented in
Note 11 for which the date is March 22, 1996
<PAGE>
<TABLE>
DEVELOPMENT PARTNERS
(A Massachusetts Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
---------------
ASSETS
Property, at cost (Notes 2, 3, 5, and 7): 1995 1994
<S> <C> <C>
Land $5,110,277 $5,110,277
Buildings and improvements 15,561,584 15,561,584
Equipment, furnishings and fixtures 1,404,195 1,305,337
--------------- ---------------
22,076,056 21,977,198
Less accumulated depreciation (4,322,133) (3,923,245)
--------------- ---------------
17,753,923 18,053,953
Cash and cash equivalents (Notes 2 and 4) 532,019 176,028
Short-term investments (Note 2) 437,688 983,455
Real estate tax escrows 29,457 28,115
Deposits and prepaid expenses 4,168 10,138
Due from affiliates (Note 9) 392 -
Investment in partnership (Notes 2 and 6) 348,504 361,061
Deferred expenses, net of accumulated
amortization of $276,093 and $251,449 (Note 2) 38,223 62,867
=============== ===============
Total assets $19,144,374 $19,675,617
=============== ===============
LIABILITIES AND PARTNERS' EQUITY
Mortgage notes payable (Note 7) 8,732,151 8,838,924
Accounts payable 88,062 31,192
Accrued expenses 171,283 178,740
Due to affiliates (Note 9) 9,210 10,928
Rents received in advance - 6,483
Tenant security deposits 67,430 76,863
--------------- ---------------
Total liabilities 9,068,136 9,143,130
Commitments and contingencies (Note 11)
Partners' equity (Note 8) 10,076,238 10,532,487
--------------- ---------------
Total liabilities and partners' equity $19,144,374 $19,675,617
=============== ===============
</TABLE>
<PAGE>
<TABLE>
DEVELOPMENT PARTNERS
(A Massachusetts Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended December 31, 1995, 1994 and 1993
-------------
1995 1994 1993
<S> <C> <C> <C>
Rental income $2,444,585 $2,598,360 $2,441,256
Rental operating expenses 1,020,312 1,003,780 964,107
--------------- --------------- ---------------
Net rental operating income (exclusive of items
shown separately below) 1,424,273 1,594,580 1,477,149
Interest 824,204 833,986 801,804
Depreciation and amortization 423,533 421,954 538,962
Other (income) and expenses:
Interest income (52,668) (42,965) (37,133)
General and administrative (Note 9) 177,668 155,499 145,203
Equity in (income) loss from partnership (Note 6) (3,083) (1,890) 2,649
--------------- --------------- ---------------
121,917 110,644 110,719
--------------- --------------- ---------------
Net income $54,619 $227,996 $25,664
=============== =============== ===============
Net income allocated to:
General Partners $1,092 $4,560 $513
Per unit of Investor Limited
Partner interest:
36,411 units issued 1.47 6.14 0.69
</TABLE>
<PAGE>
<TABLE>
DEVELOPMENT PARTNERS
(A Massachusetts Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
for the years ended December 31, 1995, 1994 and 1993
-------------
Investor Total
General Limited Partners'
Partners Partners Equity
<S> <C> <C> <C>
Balance at December 31, 1992 (50,727) 11,397,733 11,347,006
Cash distributions (7,059) (345,905) (352,964)
Net income 513 25,151 25,664
--------------- --------------- ---------------
Balance at December 31, 1993 (57,273) 11,076,979 11,019,706
Cash distributions (14,304) (700,911) (715,215)
Net income 4,560 223,436 227,996
--------------- --------------- ---------------
Balance at December 31, 1994 (67,017) 10,599,504 10,532,487
Cash distributions (10,217) (500,651) (510,868)
Net income 1,092 53,527 54,619
--------------- --------------- ---------------
Balance at December 31, 1995 ($76,142) $10,152,380 $10,076,238
=============== =============== ===============
</TABLE>
<PAGE>
<TABLE>
DEVELOPMENT PARTNERS
(A Massachusetts Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1995, 1994 and 1993
Increase (decrease) in cash and cash equivalents
-------------
1995 1994 1993
Cash flows from operating activities:
<S> <C> <C> <C>
Interest received $56,334 $43,454 $35,634
Cash received from operating revenue 2,428,669 2,595,917 2,441,824
Administrative expenses (178,114) (147,020) (141,779)
Rental operations expenses (973,100) (970,827) (993,057)
Interest paid (824,618) (834,362) (799,414)
--------------------------------------------------
Net cash provided by operating activities 509,171 687,162 543,208
Cash flows from investing activities:
Purchase of fixed assets (98,858) (7,652) (22,371)
Purchases of short-term investments (427,091) (969,192) (1,037,674)
Proceeds from maturities of short-term investments 969,192 1,037,674 951,298
Deposits 5,970 (6,065) -
Distributions from partnership 15,640 31,450 19,975
--------------------------------------------------
Net cash provided (used) by investing activities 464,853 86,215 (88,772)
Cash flows from financing activities:
Distributions to partners (510,868) (715,215) (352,964)
Principal payments on mortgage note payable (106,773) (96,720) (70,497)
--------------- --------------- ---------------
Net cash used by financing activities (617,641) (811,935) (423,461)
--------------- --------------- ---------------
Net increase (decrease) in cash and cash equivalents 356,383 (38,558) 30,975
Cash and cash equivalents at beginning of year 176,028 214,586 183,611
--------------- --------------- ---------------
Cash and cash equivalents at end of year $532,411 $176,028 $214,586
=============== =============== ===============
</TABLE>
<PAGE>
<TABLE>
DEVELOPMENT PARTNERS
(A Massachusetts Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1995, 1994 and 1993
Increase (decrease) in cash and cash equivalents
-------------
Reconciliation of net income to net cash provided by operating activities:
1995 1994 1993
<S> <C> <C> <C>
Net income $54,619 $227,996 $25,664
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 423,533 421,954 538,962
Equity in (income) loss from partnership (3,083) (1,890) 2,649
Change in assets and liabilities net of effects from investing and financing
activities:
(Increase) in real estate tax escrow (1,342) (168) (1,485)
Decrease (increase) in accounts
and interest receivable 3,666 4,669 (1,499)
(Increase) decrease in prepaid expenses 821 (9)
-
Increase (decrease) in accounts
payable and accrued expenses 49,412 29,199 (17,089)
(Decrease) increase in due to (from) affiliates (1,718) 22,464 (19,994)
(Decrease) increase in rents received in advance (6,483) (3,440) 9,923
(Decrease) increase in tenant security deposits (9,433) (14,443) 6,086
--------------- --------------- ---------------
Net cash provided by operating activities $509,171 $687,162 $543,208
=============== =============== ===============
</TABLE>
<PAGE>
DEVELOPMENT PARTNERS
(A Massachusetts Limited Partnership)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------
1. Organization of Partnership:
Development Partners (A Massachusetts Limited Partnership), (the "Partnership"),
formerly Berry and Boyle Development Partners, was formed on October 23, 1985.
GP L'Auberge Communities, L.P., a California Limited Partnership, (formerly
Berry and Boyle Management) and Berry and Boyle Realty Advisors ("Advisors") (A
Massachusetts Limited Partnership), are the General Partners. A total of 2,033
individual Limited Partners owning 36,411 Units have contributed $18,205,500 of
capital to the Partnership. At December 31, 1995, the total number of Limited
Partners was 2,042. Except under certain limited circumstances upon termination
of the Partnership, the General Partners are not required to make any additional
capital contributions. The General Partners or their affiliates will receive
various fees for services and reimbursement for various organizational and
selling costs incurred on behalf of the Partnership.
The accompanying consolidated financial statements present the activity of the
Partnership for the years ended December 31, 1995, 1994 and 1993.
The Partnership will continue until December 31, 2010, unless earlier terminated
by the sale of all or substantially all of the assets of the Partnership, or by
the dissolution and liquidation of the joint ventures.
2. Significant Accounting Policies:
A. Basis of Presentation
The consolidated financial statements include the accounts of the
Partnership and its subsidiaries: Canyon View Joint Venture and
Broadmoor Pines Joint Venture. All intercompany accounts and
transactions have been eliminated in consolidation. The Partnership
accounts for its investment in Casabella Associates utilizing the
equity method of accounting. The Partnership's investment account is
adjusted to reflect its pro rata share of profits, losses and
distributions from Casabella Associates.
The Partnership follows the accrual method of accounting.
B. Cash and Cash Equivalents
The Partnership considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents. The
carrying value of cash and cash equivalents approximates fair value. It
is the Partnership's policy to invest cash in income-producing
temporary cash investments. The Partnership mitigates any potential
risk from such concentration of credit by placing investments with high
quality financial institutions.
C. Short-term Investments
At December 31, 1995, short term investments consist solely of various
forms of U. S. Government backed securities, with an aggregate par
value of $440,000, which mature in February, 1996. In 1994, the
Partnership adopted Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity
Securities". The Partnership has the intent and ability to hold its
short term investments to maturity. Accordingly, these securities have
been recorded at amortized cost, which approximates market value. There
was no cumulative effect recorded as a result of this accounting
change.
D. Significant Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
E. Depreciation
Depreciation is provided for by the use of the straight-line method
over estimated useful lives as follows:
Buildings and improvements 40 years
Equipment, furnishings and fixtures 5-15 years
F. Deferred Expenses
Costs of obtaining various mortgages on the properties are being
amortized over the term of the related mortgage notes payable using the
straight-line method. Buy down fees relating to permanent loan
refinancings (see Note 7) are being amortized over a three year period.
Any unamortized costs remaining at the date of a refinancing are
expensed in the year of refinancing.
G. Income Taxes
No provision is made for income taxes since the Partners are required
to include on their tax returns their pro rata share of the
Partnership's taxable income or loss. If the Partnership's tax returns
are examined by the Internal Revenue Service or a state taxing
authority, and such an examination results in a change in partnership
taxable income or loss, such change will be reported to the Partners.
H. Rental Income
Leases require the payment of rent in advance, however, rental income
is recorded as earned.
I. Reclassification
Certain items in the financial statements for the years ended December
31, 1994 and 1993 have been reclassified to conform to the 1995
presentation.
J. Long-Lived Assets
The Partnership's long-lived assets include property and equipment and
deferred expenses. The Partnership will evaluate the possible
impairment of long-lived assets whenever events or circumstances
indicate that the carrying value of the assets may not be recoverable.
<PAGE>
3. Property:
Property, at cost, consisted of the following at December 31, 1995:
<TABLE>
Initial Cost
to Partnership
---------------------------------------------------------
Buildings Equipment,
Property and Furnishings
Description Land Improv. & Fixtures Land
- --------------------------------------------------------------------------------
Canyon View at Ventana,
a 168-unit residential
rental complex located
<S> <C> <C> <C> <C>
in Tucson, AZ $2,932,796 $8,591,969 $719,461 $15,947
Broadmoor, a 108-unit
residential rental
complex located in
Colorado Springs, CO 2,148,811 6,891,420 559,282 12,723
---------------------------------------------------------
$5,081,607 $15,483,389 $1,278,743 $28,670
=========================================================
Depreciation expense for the years ended December 31, 1995, 1994 and 1993 and accumulated depreciation
at December 31, 1995 and 1994 consisted of the following:
Depreciation Expense
1995 1994 1993
<S> <C> <C> <C>
Buildings and improvements $389,282 $389,039 $388,778
Equip., furnishings and fixtures 9,606 8,270 86,428
-------------------------------------------
$398,888 $397,309 $475,206
===========================================
</TABLE>
<TABLE>
3. Property Continued:
Property, at cost, consisted of the following at December 31, 1995:
Costs Capitalized Gross Amount at Which Carried
Subsequent to Acquisition at Close of Period
-----------------------------------------------------------------------------------------
Buildings Equipment, Buildings Equipment,
Property and Furnishings and Furnishings Accumulated
Description Improv. & Fixtures Land Improv. & Fixtures Total Depreciation
- -------------------------------------- -----------------------------------------------------------------------------------------
Canyon View at Ventana,
a 168-unit residential
rental complex located
<S> <C> <C> <C> <C> <C> <C> <C>
in Tucson, AZ $10,095 $84,609 $2,948,743 $8,602,064 $804,070 $12,354,877 $2,511,758
Broadmoor, a 108-unit
residential rental
complex located in
Colorado Springs, CO 68,100 40,843 2,161,534 6,959,520 600,125 9,721,179 1,810,375
-------------- -----------------------------------------------------------------------------------------
$78,195 $125,452 $5,110,277 $15,561,584 $1,404,195 $22,076,056 $4,322,133
============== =========================================================================================
Depreciation expense for the years ended December 31, 1995, 1994 and 1993 and accumulated depreciation
at December 31, 1995 and 1994 consisted of the following:
Accumulated Depreciation
December 31,
1995 1994
<S> <C> <C>
Buildings and improvements $3,021,131 $2,631,849
Equip., furnishings and fixt1,301,002 1,291,396
- -------------------------------------- --------------
$4,322,133 $3,923,245
============== ==============
Each of the properties is encumbered by a nonrecourse mortgage note payable (see Note 7).
</TABLE>
<PAGE>
4. Cash and Cash Equivalents:
Cash and cash equivalents at December 31, 1995 and 1994 consisted of the
following:
1995 1994
Cash on hand ............................. $130,805 $ 26,000
Certificate of deposit ................... 100,000 --
Money market accounts .................... 301,214 150,028
$532,019 $176,028
5. Joint Venture and Property Acquisitions:
The Partnership has invested in three properties located in Scottsdale and
Tucson, Arizona and Colorado Springs, Colorado. The success of the Partnership
will depend upon factors which are difficult to predict including general
economic and real estate market conditions, both on a national basis and in the
areas where the Partnership's investments are located.
Canyon View
On September 29, 1987, the Partnership acquired a majority interest in the
Canyon View Joint Venture which owns and operates a 168-unit multifamily
residential property located in Tucson, Arizona. The Partnership has been
designated as the managing joint venture partner and will control all decisions
regarding the operation and sale of the property.
In accordance with the terms of the purchase agreement and the joint venture
agreement, through December 31, 1995, the Partnership has contributed total
capital of $6,715,984 to the Canyon View Joint Venture, which was used to repay
a portion of the construction loan from a third party lender, to pay certain
costs related to the refinancing of the permanent loan, to cover operating
deficits incurred during the lease up period and to fund certain capital
improvements. In addition, the Partnership funded $745,902 of property
acquisition costs which were subsequently treated as a capital contribution to
the joint venture.
For the years ended December 31, 1995, 1994 and 1993, the Canyon View Joint
Venture had a net loss of $14,961 and net income of $131,596 and $23,504,
respectively.
Net cash from operations (as defined in the joint venture agreement) will be
distributed as available to each joint venture partner not less often than
quarterly, as follows:
First, to the Partnership until it has received an annual
non-cumulative 11.25% priority return on its capital contribution for
such year.
Second, the balance 75% to the Partnership and 25% to the other joint
venture partner.
Income from operations will be allocated to the Partnership and the other joint
venture partner generally in accordance with the distribution of net cash from
operations.
Losses from operations will generally be allocated 100% to the Partnership.
In the case of certain capital transactions and distributions, as defined in the
joint venture agreement, the allocation of related profits, losses and cash
distributions, if any, would be different than as described above and would be
effected by the relative balances in the individual partners' capital accounts.
Broadmoor
On October 12, 1988, the Partnership acquired L'Auberge Broadmoor ("Broadmoor")
(formerly Broadmoor Pines), a 108-unit residential property located in Colorado
Springs, Colorado and simultaneously contributed the property to a joint venture
comprised of the Partnership and the property developer (the "Broadmoor Pines
Joint Venture"). The Partnership owns a majority interest in the Broadmoor Pines
Joint Venture and, therefore, the accounts and operations of the Broadmoor Pines
Joint Venture have been consolidated into those of the Partnership.
Through December 31, 1995, the Partnership has made cash payments in the form of
capital contributions totaling $5,959,862 and has funded $684,879 of property
acquisition costs which were treated as a capital contribution to the joint
venture.
For the years ended December 31, 1995 1994 and 1993, the Broadmoor Pines Joint
Venture had net income of $178,239, $193,494 and $101,663, respectively.
The Partnership has been designated the managing joint venture partner of the
Broadmoor Pines Joint Venture and will have control over all decisions affecting
the Broadmoor Pines Joint Venture and the property.
Net cash from operations (as defined in the joint venture agreement) is to be
distributed as available to each joint venture partner quarterly, as follows:
First, to the Partnership an amount equal to 11.25% per annum,
noncumulative (computed daily on a simple noncompounded basis from the
date of completion funding) of its respective capital investment, as
defined in the joint venture agreement;
Second, the balance 80% to the Partnership, and 20% to the property
developer.
Losses from operations and depreciation for the Broadmoor Pines Joint Venture
are allocated 100% to the Partnership.
All profits from operations to the extent of cash distributions shall first be
allocated to the Partnership and the property developer in the same proportion
as the cash distributions. Any remaining profits are allocated 80% to the
Partnership and 20% to the property developer.
In the case of certain capital transactions and distributions as defined in the
joint venture agreement, the allocation of related profits, losses and cash
distributions, if any, would be different than as described above and would be
effected by the relative balances in the individual partners' capital accounts.
6. Investment in Partnership:
On November 5, 1990, the Partnership contributed $400,000 to purchase an
approximate 8% interest in Casabella Associates, a general partnership among the
Partnership, Development Partners II (A Massachusetts Limited Partnership)
("DPII") and Development Partners III (A Massachusetts Limited Partnership)
("DPIII"). In addition to its contribution referred to above, the Partnership
incurred $83,668 of acquisition costs, including $41,400 in acquisition fees
paid to the General Partners. The difference between the partnership's carrying
value of the investment in Casabella Associates and the amount of underlying
equity in net assets is $65,345, representing a portion of the acquisition costs
stated above that were not recorded on the books of Casabella Associates.
On September 28, 1990, Casabella Associates purchased a majority interest in the
Casabella I Joint Venture, an Arizona joint venture that owned and operated
Casabella Phase I, a 61-unit residential property located in Scottsdale,
Arizona. On April 23, 1991, Casabella Associates, acquired a majority interest
in the Casabella Joint Venture which owned Casabella Phase II, a 93-unit
residential community, located adjacent to Casabella Phase I. On that date,
Casabella Associates and EW Casabella I Limited Partnership contributed their
interests in the Casabella I Joint Venture to the Casabella Joint Venture. In
addition, the permanent lender funded a $7,320,000 permanent loan, the proceeds
of which were used to refinance the $2,700,000 loan pertaining to Phase I and,
together with cash contributions of Casabella Associates, to repay the
construction loan for Phase II. As a result of such transactions, by operation
of law, Casabella Joint Venture, which is comprised of Casabella Associates and
EW Casabella I Limited Partnership, now owns both Phases I and II of Casabella.
Casabella is now managed and operated as one single 154-unit residential
community.
On June 30, 1992, Casabella Joint Venture refinanced its original $7,320,000
permanent loan using the proceeds of a new first mortgage loan in the amount of
$7,300,000. Under the terms of the new note, monthly principal and interest
payments of $61,887, based on a fixed interest rate of 9.125%, are required over
the term of the loan.
The balance of the note will be due on July 15, 1997.
During 1995, 1994 and 1993, the Partnership received $15,640, $31,450 and
$19,975, respectively, of cash distributions from Casabella Associates.
The consolidated balance sheets of Casabella Associates and Casabella Joint
Venture at December 31, 1995 and 1994 are summarized as follows:
<TABLE>
Assets: 1995 1994
<S> <C> <C>
Property, plant and equipment $11,297,805 $11,250,034
Accumulated depreciation (1,752,197) (1,399,386)
Property, plant and equipment, net 9,545,608 9,850,648
Other assets 889,237 834,668
Total assets $10,434,845 $10,685,316
Liabilities and partners' equity:
Mortgage note payable 6,994,549 7,093,963
Other liabilities 125,170 126,735
Total liabilities 7,119,719 7,220,698
Partners' equity 3,315,126 3,464,618
Total liabilities and partners' equity $10,434,845 $10,685,316
</TABLE>
The elements of the consolidated net income (loss) from Casabella Associates and
Casabella Joint Venture for the years ended December 31, 1995, 1994 and 1993 are
summarized as follows:
<TABLE>
Income: 1995 1994 1993
<S> <C> <C> <C>
Rental income $1,520,905 1,486,525 $1,416,184
Other income 103,410 88,580 78,055
1,624,315 1,575,105 1,494,239
Expenses and other deductions:
General and administrative 10,200 10,052 12,357
Operations 561,516 521,969 485,226
Depreciation and amortization 375,234 371,172 370,229
Interest 642,857 651,528 659,443
1,589,807 1,554,721 1,527,255
Net income (loss) $ 34,508 $ 20,384 ($ 33,016)
</TABLE>
<PAGE>
7. Mortgage Notes Payable:
<PAGE>
All of the property owned by the Partnership is pledged as collateral for the
mortgage notes payable outstanding at December 31, 1995 and 1994, which
consisted of the following:
1995 1994
Canyon View ........................ $5,154,887 $5,228,197
Broadmoor .......................... 3,577,264 3,610,727
$8,732,151 $8,838,924
Canyon View is subject to a nonrecourse first mortgage in the original principal
amount of $5,380,000. Under the terms of the note, monthly principal and
interest payments of $45,610, based on a fixed interest rate of 9.125%, are
required over the term of the loan. The balance of the note will be due on July
15, 1997.
Broadmoor is subject to a nonrecourse first mortgage in the principal amount of
$3,650,000. Interest only at the rate of 8% was payable monthly for the first
three years of the loan term. Commencing on September 15, 1993 monthly payments
of $31,980 including principal and interest, at the rate of 9.75%, were payable.
The balance of the note is payable on September 15, 1997.
Interest accrued at December 31, 1995 and 1994 consisted of $34,132 and $34,546,
respectively, relating to the Canyon View and Broadmoor Pines Joint Ventures.
The aggregate principal amounts of long term borrowings due during the calendar
years 1996 and 1997, respectively, are $116,824 and $8,615,327.
The principal balance of the mortgage notes payable appearing on the
consolidated balance sheet approximates the fair value of such notes.
8. Partners' Equity:
Under the terms of the Partnership Agreement profits are generally allocated 98%
to the Limited Partners and 2% to the General Partners; losses are allocated 99%
to the Limited Partners and 1% to the General Partners.
Cash distributions to the partners are governed by the Partnership Agreement and
are made, to the extent available, 98% to the Limited Partners and 2% to the
General Partners.
The allocation of the related profits, losses, and distributions, if any, would
be different than described above in the case of certain events defined in the
Partnership Agreement, such as the sale of an investment property or an interest
in a joint venture partnership.
9. Related Party Transactions:
Due to affiliates at December 31, 1995 and 1994 consisted of $9,210 and $10,928,
respectively, relating to reimbursable costs due to L'Auberge Communities, Inc.
Due from affiliates of $392 consisted of expense reimbursements due from The
Pines on Cheyenne Creek Joint venture, an affiliate of the general partners.
In 1995, 1994 and 1993, general and administrative expenses included $75,552,
$63,300 and $61,555, respectively, of salary reimbursements paid to the General
Partners for certain administrative and accounting personnel who performed
services for the Partnership.
During the years ended December 31, 1995, 1994 and 1993, $121,209, $129,737 and
$122,662 of property management fees had been paid or accrued to L'Auberge
Management, formerly Berry and Boyle Residential Services, an affiliate of the
General Partners of the Partnership.
Rental payments of $15,800 were paid by L'Auberge Communities, Inc. to
Broadmoor for two employee apartments.
10. Book-Tax reconciliation of Net Income (Loss):
The reconciliation of the net income reported in the accompanying consolidated
statements of operations to the net loss reported in the Partnership's 1995 U.S.
Partnership Return of Income is as follows:
Net income per consolidated statements of operations $54,619
Additional depreciation (246,644)
Deferred rental income ( 6,492)
Net loss per federal tax return ($198,516)
11. Subsequent Event:
On March 22, 1996, the Partnership and certain affiliates entered into a letter
of intent with Evans Withycombe, Inc. and certain of its affiliates ("EWI"). The
transactions contemplated by the letter of intent, which are subject to the
execution of definitive agreements, the receipt of any necessary lender consents
and satisfaction of certain other conditions, as to which there can be no
assurance, are intended to more definitively separate the interests of EWI and
the Partnership, thus affording the Partnership greater flexibility in the
operation and disposition of Casabella. The letter of intent provides, among
other things, in consideration of a payment by the Partnership, DPII and DPIII
to EWI totaling $71,009 ($5,681 of which would be the Partnership's portion),
for EWI (i) to relinquish its contract to manage Casabella and its option to
exercise its rights of first refusal with regard to the sale of the property and
(ii) to assign all of its interest in the Casabella Joint Venture to the
Partnership, DPII and DPIII (while preserving the economic interests of the
venturer in these Joint Ventures), resulting in the dissolution of the Casabella
Joint Venture.
<PAGE>
Exhibit No.
(4)(a)(1) Amended and Restated Certificate and Agreement of Limited Partnership
(filed as Exhibit 3.3 to the Partnership's Registration Statement
No. 33-02101, filed December 12, 1985 and incorporated herein by
reference).
(4)(a)(2) Fourteenth Amendment to the Amended and Restated Certificate and
Agreement of Limited Partnership dated May 31, 1990 (filed as
Exhibit 4(a)(2) to the Partnership's Annual Report on Form 10-K
for the year ended December 31, 1990 and incorporated herein by
reference).
(4)(a)(3) Fifteenth Amendment to the Amended and Restated Certificate and
Agreement of Limited Partnership dated October 29, 1990.(filed as
Exhibit 4(a)(3) to the Partnership's Annual Report on Form 10-K
for the year ended December 31, 1990 and incorporated herein by
reference).
(4)(b) Form of Subscription Agreement (filed as Exhibit 3.1 to the
Partnership's Registration Statement No. 33-02101, filed
December 12, 1985 and incorporated herein by reference).
(28) Portions of the Partnership's Prospectus dated March 27, 1986
(filed as Exhibit 28 to the Partnership's Annual Report on Form
10-K for the year ended December 31, 1987 and incorporated herein
by reference).
(10)(a) Development Agreement among the Partnership, Epoch Properties, Inc.
and the Canyon View Joint Venture and exhibits thereto (filed as
Exhibit 10.2 to Amendment No. 1 to the Partnership's Registration
Statement No. 33-02101, filed March 26, 1986 and incorporated herein
by reference).
(10)(b) Development Agreement among the Partnership, Highland Properties,
Inc. and exhibits thereto for the acquisition of the Broadmoor
Pines Joint Venture (filed as Exhibit 10(b) to the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1987
and incorporated herein by reference).
(10)(c) Documents pertaining to the permanent loan for the Canyon View
Joint Venture (filed as Exhibit 10(c) to the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1989 and
incorporated herein by reference).
(10)(d) Documents pertaining to the permanent loan for the Broadmoor Pines
Joint Venture (filed as Exhibit 10(d) to the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1989 and
incorporated herein by reference).
(10)(e) Documents pertaining to the permanent loan refinancing for the
Broadmoor Pines Joint Venture (filed as Exhibit 10(e) to the
Partnership's Annual Report on Form 10-K for the year ended
December 31, 1990 and incorporated herein by reference).
(10)(f) Agreement of Joint Venture of Casabella Associates dated September
27, 1990 (filed as Exhibit 10(f) to the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1990 and
incorporated herein by reference).
(10)(g) Amended and Restated Joint Venture Agreement of Casabella I Joint
Venture dated September 28, 1990 (filed as Exhibit 10(g) to the
Partnership's Annual Report on Form 10-K for the year ended
December 31, 1990 and incorporated herein by reference).
(10)(h) First Amendment to the Amended and Restated Joint Venture Agreement of
Casabella I Joint Venture dated October 1, 1990 (filed as Exhibit 10(h) to
the Partnership's Annual Report on Form 10-K for the year ended
December 31, 1990 and incorporated herein by reference).
(10)(i) Documents pertaining to permanent loan for Casabella I Joint
Venture (filed as Exhibit 10(i) to the Partnership's Annual Report
on Form 10-K for the year ended December 31, 1990 and incorporated
herein by reference).
(10)(j) Property Management Agreement between Canyon View Joint Venture
and Berry and Boyle Residential Services dated August 1, 1990
(filed as Exhibit 10(j) to the Partnership's Annual Report on Form
10-K for the year ended December 31, 1990 and incorporated herein
by reference).
(10)(k) Property Management Agreement between Broadmoor Pines Joint
Venture and Berry and Boyle Residential Services dated August 1,
1990 (filed as Exhibit 10(k) to the Partnership's Annual Report on
Form 10-K for the year ended December 31, 1990 and incorporated
herein by reference).
(10)(l) Amended and Restated Joint Venture Agreement of the Casabella
Joint Venture dated April 22, 1991, filed as Exhibit 10(f) to the
Annual Report on Form 10K for the year ended December 31, 1991 for
Berry and Boyle Development Partners III and incorporated herein
by reference.
(10)(m) Documents pertaining to the $7,320,000 permanent loan for
Casabella Joint Venture filed as Exhibit 10(g) to the Annual
Report on Form 10K for the year ended December 31, 1991 for Berry
and Boyle Development Partners III and incorporated herein by
reference.
(10)(n) Partnership Merger Agreement dated April 22, 1991 between
Casabella I Joint Venture and Casabella Joint Venture filed as
Exhibit 10(h) to the Annual Report on Form 10K for the year ended
December 31, 1991 for Berry and Boyle Development Partners III and
incorporated herein by reference.
(10)(o) Documents pertaining to the permanent loan refinancing for the Canyon
View Joint Venture.
(10)(p) Documents pertaining to the permanent loan refinancing for the
Casabella Joint Venture filed as Exhibit 10(i) to the Annual
Report on Form 10K for the year ended December 31, 1992 for Berry
and Boyle Development Partners III and incorporated herein by
reference
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 532,019
<SECURITIES> 437,688
<RECEIVABLES> 392
<ALLOWANCES> 0
<INVENTORY> 0
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<PP&E> 22,076,056
<DEPRECIATION> (4,322,133)
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0
0
<COMMON> 0
<OTHER-SE> 10,076,238
<TOTAL-LIABILITY-AND-EQUITY> 19,144,374
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<CGS> 0
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<NET-INCOME> 54,619
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