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, 1996
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: None
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.
From time to time, the Partnership expects to sell its properties taking into
consideration such factors as the price 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 July 3, 1996, the Partnership and certain affiliates consummated an agreement
with Highland Properties, Inc. ("Highland"), a Colorado based residential
development, construction and management firm and developer of the property
known as L'Auberge Broadmoor, which separated the interests of Highland and the
Partnership, thus affording the Partnership greater flexibility in the operation
and disposition of the property. In consideration of a payment by the
Partnership, to Highland totaling $8,683, and delivery of certain mutual
releases, Highland (i) relinquished its option to exercise its rights of first
refusal with regard to the sale of the property and (ii) assigned all of its
interest in the L'Auberge Broadmoor Joint Venture to the Partnership (while
preserving the economic interests of the venturer in these Joint Ventures),
which resulted in the dissolution of the L'Auberge Broadmoor Joint Venture.
Highland may still share in cash flow distributions or proceeds from sales if
certain performance levels are met.
On-site management of two of the Partnership's properties, L'Auberge Broadmoor
("Broadmoor"), formerly Broadmoor Pines, and L'Auberge Canyon View ("Canyon
View), as well as Casabella is currently provided by an affiliate of 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 4% 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, 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 over-bidding, 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.
ITEM 2. PROPERTIES
The Partnership owns a majority joint venture interest in 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. The Partnership 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 ownership of Broadmoor was formerly structured as a
Joint Venture of which the Partnership owned a majority interest. With regard to
the termination of the Broadmoor Joint Venture, see Note 5 of the Notes to
Consolidated Financial Statements. The Partnership also owns a minority interest
in Casabella Associates, 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 termination
of the Casabella Joint Venture, see Note 6 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, 1996, the Partnership has contributed total capital of $6,889,588
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.
<PAGE>
As of February 25, 1997, the property was 96% occupied, compared to 92%
approximately one year ago. At December 31, 1996 and 1995, the market rents for
the various unit types were as follows:
Unit Type .......... 1996 1995
- -------------------------- ---- ----
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, 1996, the Partnership has
contributed total capital of $6,051,022 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 25, 1997, the property was 92% occupied, compared to 86%
approximately one year ago. At December 31, 1996 and 1995, the market rents for
the various unit types were as follows:
Unit Type ......... 1996 1995
- -------------------------- ------ ------
One bedroom two bath w/den $ 875 $ 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 25, 1997, the property was 99% occupied, compared to 98%
approximately one year ago. At December 31, 1996 and 1995, the market rents for
the various unit types were as follows:
Unit Type ......... 1996 1995
- -------------------------- ------ ------
One bedroom two bath w/den $ 820 $ 820
Two bedroom two bath ..... 950 943
Two bedroom two bath w/den 1,185 1,170
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, 1996 was 2,030.
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 1996 and 1995 were paid as
follows:
Date of
Quarter Ended ... Payment Amount
- ------------------ ----------------- --------
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
March 31, 1996 ... May 15, 1996 $ 63,719
June 30, 1996 .... August 15, 1996 $ 63,719
September 30, 1996 November 15, 1996 $ 63,719
December 31, 1996 February 28, 1997 $ 63,719
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data of the Partnership and consolidated
subsidiaries has been derived from consolidated financial statements audited by
Coopers & Lybrand, LLP, whose reports for the periods ended December 31, 1996,
1995 and 1994 are included elsewhere in the Form 10K and should be read in
conjunction with the full consolidated financial statements of the Partnership
including the Notes thereto.
<TABLE>
Year Ended
--------------------------------------------------------------------------
-----------------------------------------------------------
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C> <C>
Rental income $2,427,779 $2,444,585 $2,598,360 $2,441,256 $2,199,937
Net income (loss) $(217,956) $54,619 $227,996 $25,664 ($369,802)
Net income (loss) allocated to Partners:
Limited Partners - Per Unit
Aggregate 36,411 Units $(5.93) $1.47 $6.14 $0.69 ($10.05)
General Partners $(2,180) $1,092 $4,560 $513 ($3,698)
Cash distributions to Partners:
Limited Partners - Per Unit
Aggregate 36,411 Units $7.00 $13.75 $19.25 $9.50 $5.25
General Partners $5,202 $10,217 $14,304 $7,059 $3,901
Total assets $18,518,721 $19,144,374 $19,675,617 $20,241,217 $20,640,755
Long term obligations $8,615,326 $8,732,151 $8,838,924 $8,935,644 $9,006,141
</TABLE>
Long term obligations become due in 1997. The Partnership intends to refinance
this debt prior to the due date.
<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, 1996, $577,499 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 receivable 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 1997 are
adequate to meet the Partnership's operating cash needs in the coming year. With
regard to certain balloon payments on existing first mortgage debt on the
Partnership's properties, the General Partners do not anticipate having
sufficient cash flow to retire this debt. As these mortgage notes payable are
due in fiscal 1997, the Partnership will seek to renegotiate these mortgage
notes with its existing lenders or seek new sources of financing for these
properties on a long term basis. The General Partners believe that existing cash
flows from the properties will be sufficient to support a level of borrowing
that is at least equal to amounts outstanding as of December 31, 1996. If the
general economic climate for real estate in these respective locations were to
deteriorate resulting in an increase in interest rates for mortgage financing or
a reduction in the availability of real estate mortgage financing or a decline
in the market values of real estate it may affect the Partnership's ability to
complete these refinancings.
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 properties. In 1996, the
aggregate net decrease in working capital reserves was $431,972. This decrease
resulted primarily from cash provided by operations of $200,326 and $40,017 of
distributions from Casabella, offset by $287,833 of fixed asset additions,
distributions to partners of $260,079 and $116,825 of principal payments on
mortgage notes payable
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.
For the year ended December 31, 1996, 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 Broadmoor Investment Consolidated
View Pines Partnership Totals
<S> <C> <C> <C> <C>
Total revenue $1,212,061 $1,218,002 $29,545 $2,459,608
Expenses:
General and administrative 10 0 245,117 245,127
Operations 684,240 477,662 1,161,902
-
Depreciation and amortization 251,459 189,993 441,452
-
Interest 466,778 347,028 813,806
-
Equity in (income) loss from partnership - - 15,277 15,277
------------- --------------- ---------------
-------------
1,402,487 1,014,683 260,394 2,677,564
------------- --------------- --------------- -------------
Net income (loss) ($190,426) $203,319 ($230,849) ($217,956)
============= =============== =============== =============
</TABLE>
For the year ended December 31, 1995, 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 Broadmoor Partnership Consolidated
View Pines Level Totals
<S> <C> <C> <C> <C>
Total revenue $1,303,606 $1,141,950 $51,697 $2,497,253
Expenses:
General and administrative 7,208 7,021 163,439 177,668
Operations 597,918 422,394 - 1,020,312
Depreciation and amortization 239,665 183,868 - 423,533
Interest 473,776 350,428 - 824,204
Equity in (income) loss from partnership - - (3,083) (3,083)
-------------- --------------
--------------- -------------
1,318,567 963,711 160,356 2,442,634
-------------- -------------- --------------- -------------
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 Broadmoor Partnership Consolidated
View Pines Level Totals
<S> <C> <C> <C> <C>
Total revenue $1,432,466 $1,167,557 $41,302 $2,641,325
Expenses:
General and administrative 7,679 7,534 140,286 $155,499
Operations 578,062 425,718 - $1,003,780
Depreciation and amortization 234,919 187,035 - $421,954
Interest 480,210 353,776 - $833,986
Equity in (income) loss from - - (1,890) ($1,890)
partnership
------------ -------------------------------------------
1,300,870 974,063 138,396 2,413,329
------------ ------------------------ ----------------
Net income (loss) $131,596 $193,494 ($97,094) $227,996
============ ======================== ================
</TABLE>
Comparison of 1996 and 1995 Operating Results:
The total revenue decreased by 2% (37,645),of which $20,839 was due to lower
interest income. Rental operating expenses increased $141,590 (14%) due
primarily to increases in advertising and promotion, salaries and maintenance
and repair costs. Transition costs associated with the outsourcing of much of
the Partnership's administration work to an administration agent and the
relocation of the remaining administration, financial and investor services
functions to a more cost efficient location in Colorado Springs, Colorado has
temporarily increased the Partnerships costs. Consequently, the general and
administrative expenses of the Partnership increased 38% or $67,459 in 1996 as
compared with 1995. Included is a one-time cost of the Evans Withycombe
termination ($5,681) and the cost of the Highland termination ($8,683) and its
related legal cost were incurred in May, June and July of 1996. (Refer to Note 5
and Note 6 of the Notes to Consolidated Financial Statements).
Comparison of 1995 and 1994 Operating Results:
The total revenue decreased $144,072, or 5% 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 improved to 92% occupancy.
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.
Projected 1997 Operating Results:
Although there can be no assurance that the Partnership will dispose of any or
all of its properties during 1997, consistent with the Partnership's disposition
strategy the Partnership will continue to seek to do so. In the event that the
Partnership were to dispose of any property during 1997, operating results of
the Partnership would vary significantly from those achieved in prior periods.
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 56, 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
Earl C. Robertson Executive Vice President and
Chief Financial Officer
Donna Popke Vice President and Secretary
Earl C. Robertson, age 48, 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.
Donna Popke, age 37, 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 with Olive & Associates in Denver,
Colorado in the field of public accounting for six years and later from 1989 to
1995 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 21, 1997, 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, 1996, 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.
Net Cash From Operations distributed during 1996
to the General Partners $5,202
Allocation of Income (Loss) to the General Partners $(2,180)
Property management fees paid to an affiliate of the
General Partners $103,969
Reimbursements to General Partners $65,879
<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 1996.
(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/ Earl C. Robertson________________
Earl C. Robertson, Executive Vice President and
Chief Financial Officer
Date: March 26, 1997
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 26, 1997
--------------------
STEPHEN B. BOYLE Principal Executive
Officer of L'Auberge
Communities, Inc.
___/s/ Earl C. Robertson _ Executive Vice President and March 26, 1997
---------------------
EARL C. ROBERTSON Principal Financial Officer of
L'Auberge Communities, Inc.
<PAGE>
APPENDIX A
DEVELOPMENT PARTNERS
(A Massachusetts Limited Partnership)
AND SUBSIDIARIES
---------
CONSOLIDATED FINANCIAL STATEMENTS
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
For the Year Ended December 31, 1996
<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, 1996 and 1995 F-4
Consolidated Statements of Operations for the years ended
December 31, 1996, 1995 and 1994 F-5
Consolidated Statements of Partners' Equity (Deficit) for the
years ended December 31, 1996, 1995 and 1994 F-6
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 F-7 -- F-8
Notes to Consolidated Financial Statements F-9 -- F-17
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 of
December 31, 1996 and 1995, 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, 1996. 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, 1996 and 1995 and the consolidated results of their operations
and their cash flows for each of the three years in the period ended December
31, 1996 in conformity with generally accepted accounting principles.
Denver, Colorado
February 28, 1997
<PAGE>
DEVELOPMENT PARTNERS
(A Massachusetts Limited Partnership)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------
F-26
DEVELOPMENT PARTNERS
(A Massachusetts Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
---------------
ASSETS
<TABLE>
Property, at cost 1996 1995
---- ----
<S> <C> <C>
Land $5,114,512 $5,110,277
Buildings and improvements 15,561,584 15,561,584
Equipment, furnishings and fixtures 1,687,793 1,404,195
-------------- -------------
22,363,889 22,076,056
Less accumulated depreciation (4,741,203) (4,322,133)
-------------- -------------
17,622,686 17,753,923
Cash and cash equivalents 537,735 532,019
Short-term investments 437,688
-
Real estate tax escrows 27,976 29,457
Deposits and prepaid expenses 639 4,168
Due from affiliates (Note 9) 20,631 392
Investment in partnership 293,210 348,504
Deferred expenses, net of accumulated
amortization of $298,472 and $276,093 15,844 38,223
-------------- -------------
Total assets $18,518,721 $19,144,374
============== =============
LIABILITIES AND PARTNERS' EQUITY
Mortgage notes payable $8,615,326 $8,732,151
Accounts payable 57,602 88,062
Accrued expenses 164,447 171,283
Due to affiliates (Note 9) 10,680 9,210
Rents received in advance 6,158 0
Tenant security deposits 66,305 67,430
-------------- -------------
Total liabilities 8,920,518 9,068,136
Partners' equity 9,598,203 10,076,238
-------------- -------------
Total liabilities and partners' $18,518,721 $19,144,374
equity
============== =============
</TABLE>
<PAGE>
DEVELOPMENT PARTNERS
(A Massachusetts Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended December 31, 1996, 1995 and 1994
-------------
<TABLE>
1996 1995 1994
---- ---- ----
Revenue:
<S> <C> <C> <C>
Rental income $2,427,779 $2,444,585 $2,598,360
Interest Income
31,829 52,668 42,965
-------------- -------------- -------------
2,459,608 2,497,253 2,641,325
Expenses:
Operating Expenses 1,161,902 1,020,312 1,003,780
Interest 813,806 824,204 833,986
Depreciation and amortization 441,452 423,533 421,954
General and administrative 245,127 177,668 155,499
Equity in (income) loss from 15,277 (3,083) (1,890)
partnership
-------------- -------------- -------------
2,677,564 2,442,634 2,413,329
-------------- -------------- -------------
Net income (loss) ($217,956) $54,619 $227,996
============== ============== =============
Net income (loss) allocated to:
General Partners ($2,180) $1,092 $4,560
Per unit net income (loss) allocated to Investor
Limited
Partner interest:
36,411 units issued ($5.93) $1.47 $6.14
</TABLE>
<PAGE>
DEVELOPMENT PARTNERS
(A Massachusetts Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
for the years ended December 31, 1996, 1995 and 1994
-------------
<TABLE>
Investor Total
General Limited Partners'
Partners Partners Equity
<S> <C> <C> <C>
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
Cash distributions (5,202) (254,877) (260,079)
Net income (loss) (2,180) (215,776) (217,956)
-------------- -------------- -------------
Balance at December 30, 1996 ($83,524) $9,681,727 $9,598,203
============== ============== =============
</TABLE>
<PAGE>
DEVELOPMENT PARTNERS
(A Massachusetts Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1996, 1995 and 1994
-------------
<TABLE>
1996 1995 1994
---- ---- ----
Cash flows from operating activities:
<S> <C> <C> <C>
Interest received $39,411 $56,334 $43,454
Cash received from operating revenue 2,432,812 2,428,669 2,595,917
General and administrative expenses (236,943) (178,114) (147,020)
Operating expense (1,220,694) (973,492) (970,827)
Interest paid (814,260) (824,618) (834,362)
--------------------------------------------
Net cash provided by operating 200,326 508,779 687,162
activities
Cash flows from investing activities:
Purchase of fixed assets (287,833) (98,858) (7,652)
Proceeds from maturities of short-term 430,110 542,101 68,482
investments
Deposits 0 5,970 (6,065)
Distributions from partnership 40,017 15,640 31,450
--------------------------------------------
Net cash provided by investing 182,294 464,853 86,215
activities
Cash flows from financing activities:
Distributions to partners (260,079) (510,868) (715,215)
Principal payments on mortgage note payable (116,825) (106,773) (96,720)
-------------- -------------- -------------
Net cash used by financing activities (376,904) (617,641) (811,935)
-------------- -------------- -------------
Net increase (decrease) in cash and cash 5,716 355,991 (38,558)
equivalents
Cash and cash equivalents at beginning of year 532,019 176,028 214,586
-------------- -------------- -------------
Cash and cash equivalents at end of year $537,735 $532,019 $176,028
============== ============== =============
</TABLE>
<PAGE>
DEVELOPMENT PARTNERS
(A Massachusetts Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1996, 1995 and 1994
-------------
Reconciliation of net income (loss) to net cash provided by operating
activities:
<TABLE>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net income (loss) ($217,956) $54,619 $227,996
Adjustments to reconcile net income (loss) to net
cash
provided by operating activities:
Depreciation and amortization 441,452 423,533 421,954
Equity in (income) loss from partnership 15,277 (3,083) (1,890)
Change in assets and liabilities net of effects of investing and financing
activities:
Decrease (increase) in real estate tax escrow 1,481 (1,342) (168)
Decrease in interest receivable 7,575 3,666 4,669
Decrease in prepaid expenses 3,529 821
-
Increase in accounts payable and accrued (37,296) 49,412 29,199
expenses
(Decrease) increase in due to (from) affiliates (18,769) (1,718) 22,464
(Decrease) increase in rents received in 6,158 (6,483) (3,440)
advance
Decrease in tenant security deposits (1,125) (9,433) (14,443)
-------------- -------------- -------------
Net cash provided by operating $200,326 $509,171 $687,162
activities
============== ============== =============
</TABLE>
<PAGE>
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, 1996, the total number of Limited
Partners was 2,030. 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 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 as
otherwise provided in the Partnership Agreement.
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. Refer to Note 5 regarding the
termination of the Broadmoor Pines Joint Venture, and Note 6 regarding
the termination of the Casabella Joint Venture.
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 consisted solely of
various forms of U. S. Government backed securities, with an aggregate
par value of $440,000, which matured in February, 1996. As of December
31, 1996, there were no short term investments. Investments are
recorded at amortized costs which approximates market value.
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 mortgage term using the straight line method, which
approximates the effective interest method.
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. Long-Lived Assets
The Partnership's long-lived assets include property and equipment. On
a quarterly basis, the Partnership evaluates the recoverability of the
rental property using undiscounted cash flow from operation.
J. Reclassification
Certain items in the financial statements for the years ended December
31, 1995, and December 31, 1994, have been reclassified to conform to
the 1996 presentation.
<PAGE>
3. Property, at Cost:
Property, at cost, consisted of the following at December 31, 1996:
<TABLE>
Initial Cost Costs Capitalized Gross Amount at
Which Carried
to Partnership Subsequent to at Close of Period
Acquisition
-------------------------------------- -------------------------------------------------------------------
Buildings Equipment, Buildings Equipment, Buildings Equipment,
Property and Furnishings and Furnishings and Furnishings
Description Land Improv. & Fixtures Land Improv. & Fixtures Land Improv. & Fixtures Total
- ----------------------------------------------------------- -----------------------------------------------------------------------
Canyon View at Ventana,
a 168-unit residential
rental complex located
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
in Tucson, AZ $2,932,796 $8,591,969 $719,461 $20,181 $10,095 $189,722 $2,952,977 $8,602,064 $909,183 $12,464,224
Broadmoor, a 108-unit
residential rental
complex located in
Colorado Springs, CO 2,148,811 6,891,420 559,282 12,724 68,100 219,328 2,161,535 6,959,520 778,610 9,899,665
-------------------------------------- ---------------------------------------------------------------------
$5,081,607 $15,483,389 $1,278,743 $32,905 $78,195 $409,050 $5,114,512 $15,561,584$1,687,793 $22,363,889
==================================== =======================================================================
Depreciation expense for the years ended December 31, 1996, 1995 and 1994 and
accumulated depreciation at December 31, 1996 and 1995 consisted of the
following:
Depreciation Accumulated
Expense Depreciation
1996 1995 1994 1996 1995
-- ---- ---- ---- ---- ----- ---- ----
<S> <C> <C> <C> <C>
Buildings and improvements $379,938 $389,282 $389,039 $3,401,069$3,021,131
Equip., furnishings and fixtures 39,132 9,606 8,270 1,340,134 1,301,002
------------------------------ ------------------------
$419,070 $398,888 $397,309 $4,741,203$4,322,133
============================== ========================
</TABLE>
Each of the properties is encumbered by a nonrecourse mortgage note payable (see
Note 7).
<PAGE>
4. Cash and Cash Equivalents:
Cash and cash equivalents at December 31, 1996 and 1995 consisted of the
following:
1996 1995
-------- --------
Cash on hand .......... $326,649 $130,805
Certificate of deposits 211,086 100,000
Money market accounts . ________ 301,214
--------
$537,735 $532,019
======== ========
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. The Broadmoor Joint
Venture was effectively terminated on December 31, 1996. The Partnership has
eliminated the minority interest related to this joint venture, as such, the
Partnership owns 100% of the underlying assets as of December 31, 1996.
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, 1996, the Partnership has contributed total
capital of $6,889,588 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, 1996, 1995 and 1994, the Canyon View Joint
Venture had a net loss of $190,426 and $14,961 and net income of $131,596,
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.
The co-venture partner was Highland Properties, Inc. ("Highland"), a Colorado
based residential development, construction and management firm. Highland
developed the property known as L'Auberge Broadmoor.
Through December 31, 1996, the Partnership has made cash payments in the form of
capital contributions totaling $6,051,022 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, 1996 1995 and 1994, the Broadmoor Pines Joint
Venture had net income of $203,319, $178,239 and $193,494, 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.
JANUARY 1, 1996, THROUGH JULY 2, 1996
Net cash from operations (as defined in the joint venture agreement) was 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
were 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.
<PAGE>
JULY 3, 1996, THROUGH DECEMBER 31, 1996
On July 3, 1996, the Partnership and certain affiliates consummated an agreement
with Highland Properties, Inc. ("Highland") which separated the interests of
Highland and the Partnership, thus affording the Partnership greater flexibility
in the operation and disposition of the property. In consideration of a payment
by the Partnership, to Highland totaling $8,683, and delivery of certain mutual
releases, Highland (i) relinquished its option to exercise its rights of first
refusal with regard to the sale of the property and (ii) assigned all of its
interest in the L'Auberge Broadmoor Joint Venture to the Partnership (while
preserving the economic interests of the venturer in these Joint Ventures),
which resulted in the dissolution of the L'Auberge Broadmoor Joint Venture.
Highland may still share in cash flow distributions or proceeds from the sale of
the property if certain performance levels are met.
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 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. As this
mortgage note payable is due in fiscal 1997, the Partnership of Casabella will
seek to renegotiate this mortgage note with its existing lender or seek new
sources of financing for this property on a long term basis. The General
Partners of Casabella believe that existing cash flows from the property will be
sufficient to support a level of borrowing that is at least equal to the amount
outstanding as of December 31, 1996. If the general economic climate for real
estate in this location were to deteriorate resulting in an increase in interest
rates for mortgage financing or a reduction in the availability of real estate
mortgage financing or a decline in the market values of real estate it may
affect the Partnership's ability to complete this refinancing.
The co-venture partner was an affiliate of Evans Withycombe, Inc. ("EWI"), a
Phoenix based residential development, construction and management firm. EWI is
also the developer of the Casabella property.
During 1996, 1995 and 1994, the Partnership received $40,017, $15,640 and
$31,450, respectively, of cash distributions from Casabella Associates.
The consolidated balance sheets of Casabella Associates and Casabella Joint
Venture at December 31, 1996 and 1995, are summarized as follows:
<TABLE>
Assets: 1996 1995
---- ----
<S> <C> <C>
Property, plant and equipment $11,453,820 $11,297,805
Accumulated depreciation (1,996,504) (1,752,197)
----------- -----------
Property, plant and equipment, net 9,457,316 9,545,608
Other assets 294,840 889,237
----------- -----------
Total assets $9,752,156 $10,434,845
========= ==========
Liabilities and partners' equity:
Mortgage note payable 6,885,673 6,994,549
Other liabilities 202,487 125,170
---------- ----------
Total liabilities 7,088,160 7,119,719
Partners' equity 2,663,996 3,315,126
--------- ---------
Total liabilities and partners' equity $9,752,156 $10,434,845
========= ==========
</TABLE>
The elements of the consolidated net income (loss) from Casabella Associates and
Casabella Joint Venture for the years ended December 31, 1996, 1995 and 1994 are
summarized as follows:
<TABLE>
Income: 1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Rental income $1,341,037 1,520,905 $1,486,525
Other income 50,811 103,410 88,580
------------ ----------- ------------
1,391,848 1,624,315 1,575,105
Expenses and other deductions:
General and administrative 6,223 10,200 10,052
Operations 665,878 561,516 521,969
Depreciation and amortization 266,730 375,234 371,172
Interest 633,360 642,857 651,528
------------ ---------- -----------
1,572,191 1,589,807 1,554,721
----------- --------- ---------
Net income (loss) ($ 180,343) $ 34,508 ($ 20,384)
============= =========== ==========
</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, 1996 and 1995, which
consisted of the following:
<PAGE>
1996 1995
---------- ----------
Canyon View $5,074,647 $5,154,887
Broadmoor . 3,540,679 3,577,264
---------- ----------
$8,615,326 $8,732,151
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 included in accrued expenses on the Balance Sheets of the Consolidated
Financial Statements at December 31, 1996 and 1995 consisted of $33,678 and
$34,132, respectively.
As these mortgage notes payable are due in fiscal 1997, the Partnership will
seek to renegotiate these mortgage notes with its existing lenders or seek new
sources of financing for these properties on a long term basis. The General
Partners believe that existing cash flows from the properties will be sufficient
to support a level of borrowing that is at least equal to amounts outstanding as
of December 31, 1996. If the general economic climate for real estate in these
respective locations were to deteriorate resulting in an increase in interest
rates for mortgage financing or a reduction in the availability of real estate
mortgage financing or a decline in the market values of real estate it may
affect the Partnership's ability to complete these refinancings.
The principal balance of the mortgage notes payable appearing on the
consolidated balance sheets at December 31, 1996 and 1995 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, 1996 and 1995 consisted of $10,680 and $9,210,
respectively, relating to reimbursable costs due to L'Auberge Communities, Inc.
Due from affiliates of $20,631, of which $6,802 consisted of expense
reimbursements due from Canyon View West, an affiliate of the general partners.
In addition, $13,828 of expense reimbursement is due from Lincoln Residential
Services, property manager of an affiliate of the general partners.
In 1996, 1995 and 1994, general and administrative expenses included $65,879,
$75,552 and $63,300, 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, 1996, 1995 and 1994, property management
fees of $103,969, $121,209 and $129,737, respectively, had been paid to
Residential Services-L'Auberge, formerly Berry and Boyle Residential Services,
an affiliate of the General Partners of the Partnership. These fees are 4% of
rental revenue in 1996 and 5% of the rental revenue in 1995 and 1994.
Rental payments of $18,275 were paid by L'Auberge Communities, Inc. to Broadmoor
for two employee apartments.
<PAGE>
EXHIBIT INDEX
Exhibit No.
(4)(a)(1) Amended and Restated Certificate and Agreement of Limited Partnership
(filed as an exhibit to the Partnership's Registration Statement
No. 33-02101, filed December 12, 1985 (the "Registration Statement")
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 an exhibit to the
Registration Statement 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
an exhibit to the Registration Statement and incorporated herein
by reference).
(10)(b) Documents pertaining to the $4,00,000 permanent loan for the
Canyon View Joint Venture (filed as an exhibit to the
Partnership's Annual Report on Form 10-K for the year ended
December 31, 1989 and incorporated herein by reference).
(10)(c) Documents pertaining to the $3,650,000 permanent loan for the
Broadmoor Pines Joint Venture (filed as an exhibit to the
Partnership's Annual Report on Form 10-K for the year ended
December 31, 1990 and incorporated herein by reference).
(10)(d) 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)(e) 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)(f) Documents pertaining to the $7,300,000 permanent loan for
Casabella Joint Venture filed as an exhibit 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)(g) First Amendment to Joint Venture Agreement of L'Auberge Broadmoor
Joint Venture and Related Assignment of Joint Venture Interest.
(10)(h) Agreement regarding Casabella Joint Venture
(10)(i) Property Management Agreement (Canyon View) dated May 15, 1996,
between L'Auberge Communities Inc. and Canyon View Joint Venture.
(10)(j) Property Management Agreement (Casabella) dated November 1, 1996,
between L'Auberge Communities Inc. and Casabella Associates.
(27) Financial Data Schedule
<PAGE>
ASSIGNMENT OF JOINT VENTURE INTEREST
(L'Auberge Broadmoor)
This Assignment of Joint Venture Interest (this "Assignment")
is made as of June __, 1996, by and between Highland Properties, Inc., a
Colorado corporation (the "Assigning Venturer"), and Development Partners (A
Massachusetts Limited Partnership) formerly known as Berry and Boyle Development
Partners (A Massachusetts Limited Partnership) (the "L'Auberge Venturer"), with
reference to the following:
A. The Assigning Venturer and the L'Auberge Venturer are joint
venture partners in that certain Colorado joint venture partnership known as
Broadmoor Pines Joint Venture (the "Joint Venture") formed pursuant to that
certain Joint Venture Agreement of Broadmoor Pines Joint Venture dated October
12, 1988 (as amended, the "Joint Venture Agreement").
B. The Assigning Venturer desires to assign its entire right,
title and interest in the Joint Venture to the L'Auberge Venturer, and the
L'Auberge Venturer desires to accept such assignment, on the terms and
conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing and other
valuable consideration (the receipt of which is hereby acknowledged), the
parties hereto agree as follows:
1. Assignment of Joint Venture Interest. The Assigning
Venturer hereby sells, transfers and assigns to the L'Auberge Venturer, and the
L'Auberge Venturer hereby accepts from the Assigning Venturer, all of the
Assigning Venturer's right, title and interest in and to its interest in the
Joint Venture and in, to and under the Joint Venture Agreement, together with
any and all rights (including without limitation all rights to distributions and
allocations arising from and after the date hereof) incidental thereto
(collectively, the "Interest"). By their execution hereof, the Assigning
Venturer and the L'Auberge Venturer waive their respective rights to receive
notice of the transfer of the Interest, to invoke restrictions on transfer of
such Interest and to withhold approval of such transfer.
2. Acceptance of Assignment. Subject to the provisions of
Paragraph 3 below, the L'Auberge Venturer hereby accepts such assignment and
assumes and agrees to perform and discharge all joint venture partnership
obligations of the Assigning Venturer with respect to the Interest as set forth
in the Joint Venture Agreement arising from and after the date hereof.
3. Indemnification.
(a) The Assigning Venturer hereby agrees to
protect, defend, indemnify and hold the L'Auberge Venturer and the Joint
Venture harmless from and against any and all losses, claims, expenses
(including reasonable attorneys' fees), damages, liabilities or obligations
relating to any act or omission of the Assigning Venturer with respect to the
Joint Venture, its business or property, including the multi-family
residential project which has been constructed thereon, which arose on or
before the effective date of this Assignment.
(b) The L'Auberge Venturer hereby agrees to protect, defend, indemnify
and hold the Assigning Venturer harmless from and against any and all losses,
claims, expenses (including reasonable attorneys' fees), damages, liabilities or
obligations relating to any act or omission of the L'Auberge Venturer with
respect to the Joint Venture, its business or property, including the
multi-family residential project which has been constructed thereon, which
arises after the effective date of this Assignment.
4. Representations and Warranties of the Assigning Venturer. The
Assigning Venturer hereby represents and warrants as follows:
(a) The Assigning Venturer has the legal right and power to enter into this
Assignment and, as of the date hereof, has valid title to the Interest, free and
clear of any liens, claims or encumbrances.
(b)The Assigning Venturer has the legal right and power to sell, assign and
transfer the Interest to the L'Auberge Venturer without obtaining the consent of
any other person, entity or governmental authority.
5. Representations and Warranties of the L'Auberge Venturer. The L'Auberge
Venturer hereby represents and warrants as follows:
(a) The L'Auberge Venturer has the legal right and power to enter into this
Assignment.
(b) The L'Auberge Venturer has the legal right and power to accept the
assignment of the Interest and to assume the obligations pertaining thereto
without obtaining the consent of any other person, entity or governmental
authority.
6. General Terms.
(a) The Assigning Venturer hereby agrees to execute and deliver, upon the
request of the L'Auberge Venturer, any additional documents or instruments which
may be necessary or appropriate to effectuate the transfer of the Interest to
the L'Auberge Venturer.
(b) All representations, warranties, covenants and agreements of the parties
contained in this Assignment or any other document referred to herein shall
survive the execution and delivery of this Assignment.
(c) This Assignment shall be governed by and construed in accordance with
the laws of the State of Colorado, without giving effect to the conflict of laws
or choice of law rules or laws of such jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment effective as of the date and year first set forth above.
"L'Auberge Venturer" "Assigning Venturer"
DEVELOPMENT PARTNERS HIGHLAND PROPERTIES, INC.,
(A Massachusetts Limited Partnership), a Colorado corporation
formerly known as
Berry and Boyle Development Partners,
(A Massachusetts Limited Partnership) By: ______________________
Its: ___________________
By: GP L'Auberge Communities, L.P.,
a California limited partnership By: ______________________
formerly known as Its: ___________________
Berry and Boyle Management,
a General Partner
By: L'Auberge Communities Inc.,
a California corporation
formerly known as
Berry and Boyle Inc.,
a General Partner
of GP L'Auberge Communities, L.P.
By: _____________________
Authorized Representative
AGREEMENT
(Casabella)
This Agreement is made and entered into as of March 29, 1996, by and
among Casabella Joint Venture, an Arizona joint venture partnership (the "Joint
Venture"), Casabella Associates, an Arizona joint venture partnership (the
"L'Auberge Venturer"), EW Casabella I Limited Partnership, an Arizona limited
partnership (the "EW Venturer") and Evans Withycombe Management, Inc., an
Arizona corporation ("Manager"), with reference to the following:
A. The L'Auberge Venturer and the EW Venturer formed the Joint Venture
by entering into that certain Joint Venture Agreement of Casabella Joint Venture
dated October 1, 1990 (as amended, the "Joint Venture Agreement"). The Joint
Venture owns that certain multi-family residential project (the "Project")
located at 10101 North Arabian Trail, Scottsdale, Arizona, and commonly known as
Casabella Apartments. Each of the L'Auberge Venturer and the EW Venturer now
desires to effectuate the amicable and mutual dissolution and termination of the
Joint Venture through an assignment by the EW Venturer of all of its right,
title and interest in the Joint Venture to the L'Auberge Venturer on the terms
and conditions hereinafter set forth.
B. The Joint Venture and Manager entered into those certain Property
Management Agreements (as they may have been amended, the "Property Management
Agreement") dated December 29, 1989, and October 3, 1990, with respect to the
Project whereby the Joint Venture engaged Manager to manage the Project on the
terms and conditions more particularly set forth therein. Each of the Joint
Venture and Manager now desires to effectuate the termination of the Property
Management Agreement on the terms and conditions hereinafter set forth.
C. The Project is encumbered by a Deed of Trust and Security Agreement
dated June 25, 1993 (the "Deed of Trust"), securing certain indebtedness of the
Joint Venture in favor of The Lincoln National Life Insurance Company
("Lender"). Under the provisions of the Deed of Trust, the Joint Venture is
required to obtain Lender's consent to the termination of Manager, and the
appointment of a successor, as manager of the Project.
D. The L'Auberge Venturer has inspected the Project in order to
determine the physical, operational and financial condition thereof and
acknowledges that it has approved the result of such inspection except as
otherwise provided in Paragraph 4(b) below.
E. Concurrently herewith, various other entities affiliated with the
L'Auberge Venturer and the EW Venturer are entering into other agreements
(collectively, the "Other Agreements") pertaining to other joint ventures and
containing substantially the same provisions as this Agreement. The Other
Agreements and this Agreement are collectively referred to herein as the
"Agreements." The parties contemplate that the closings with respect to each of
the Agreements shall be conditions concurrent and shall occur simultaneously.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows:
1. Termination of Property Management Agreement.
(a) At the Closing (hereinafter defined), Manager, on the one hand, and
the Joint Venture and the L'Auberge Venturer, on the other hand, shall enter
into a Termination Agreement in the form attached hereto as Exhibit A and
incorporated herein by this reference, and the Joint Venture shall pay to
Manager accrued compensation in accordance with the provisions of the
Termination Agreement.
(b) Prior to the Closing, Manager shall continue to manage the Project
in the same manner and with the same quality as the Project has been managed
prior to the execution hereof (and in any event in compliance with the terms and
conditions of the Property Management Agreement) and shall be entitled to
receive a Property Management Fee in accordance therewith.
2. Termination of Right of First Refusal.
At the Closing, the EW Venturer shall terminate its right of first
refusal with respect to the Project by executing and delivering that certain
First Amendment to Joint Venture Agreement of Casabella Joint Venture (the
"Amendment"), in the form attached hereto as Exhibit B and incorporated herein
by this reference.
3. Assignment of Joint Venture Interest; Dissolution and Termination of
Joint Venture.
(a) At the Closing, the EW Venturer shall assign all of its right,
title and interest in and to its interest in and to the Joint Venture and in, to
and under the Joint Venture Agreement to the L'Auberge Venturer by executing and
delivering that certain Assignment of Joint Venture Interest (the "Assignment")
in the form attached hereto as Exhibit C and incorporated herein by this
reference, except as provided in Paragraph 4(a) below. Following such
assignment, the EW Venturer shall have no right to participate in any manner in
the management or control of the Joint Venture or the Project and shall be
released from any liability with respect to the ownership or operation of the
Project accruing and arising from and after the Closing, notwithstanding the
provisions of Paragraph 3(b) below.
(b) Concurrently with such assignment, the L'Auberge Venturer and the
Joint Venture, on the one hand, and the EW Venturer, on the other hand, shall
execute and deliver that certain Partnership Interest Payment Agreement in the
form attached hereto as Exhibit D and incorporated herein by this reference.
(c) Immediately following such assignment, the L'Auberge Venturer shall
hold one hundred percent (100%) of the interest in the Joint Venture and shall
cause the dissolution and termination thereof by filing or recording such
documents (including without limitation a Termination of Certificate of
Fictitious Name and Notice of Dissolution of Casabella Joint Venture (the
"Termination") in the form attached hereto as Exhibit E and incorporated herein
by this reference) and/or taking such other steps as may be necessary or
appropriate in that regard.
4. Conditions to Closing.
(a)No later than the execution of this Agreement, the Joint Venture
shall solicit the consent of Lender to the transactions contemplated
hereby to the extent that such consent is required under the Deed of
Trust. The Joint Venture and the L'Auberge Venturer shall use
reasonable efforts (but shall not be required thereby to incur any
material cost or expense) to obtain such consent, to furnish Lender
with all required financial or other information requested by Lender in
connection with such consent and to obtain a written acknowledgment
from Lender that the loan with respect to which such consent is being
sought will not continue to apply against Lender's lending limit
applicable to Evans Withycombe Management, Inc., an Arizona corporation
("EWM"), or its affiliates following the assignment of the EW
Venturer's interest in the Joint Venture to the L'Auberge Venturer and
the dissolution of the Joint Venture. The Closing shall be subject to
receipt of Lender's written consent pursuant to such solicitation for
consent and the written consent of Lender and John Hancock Mutual Life
Insurance Company ("John Hancock") pursuant to all similar
solicitations being made concurrently herewith by various affiliates of
the Joint Venture under the Other Agreements. If such consents shall
not have been received by the Joint Venture on or before October 1,
1996 (the "Outside Closing Date"), this Agreement shall terminate
without liability of any party to the other hereunder on account of
such termination; provided, however, that in the event John Hancock
shall have failed or refused to give its consent to any of the other
transactions under one or more of the Other Agreements on or before the
Outside Closing Date but all other conditions to the Closing hereunder
shall have been satisfied, the transactions contemplated hereby shall
be consummated as set forth elsewhere in this Agreement.
(b) Prior to the execution hereof, the Joint Venture has commenced an
evaluation of the environmental condition of the Project. The approval by the
Joint Venture of the environmental condition of the Project as disclosed in such
evaluation shall be a condition to the Closing unless the Joint Venture waives
such condition in writing on or before March 31, 1996. Failure by the Joint
Venture to approve the evaluation or waive the condition on or before March 31,
1996, in either case in writing, shall be deemed a disapproval and shall result
in a termination of this Agreement without liability of any party to the other
hereunder on account of such termination. No partial or condition waivers or
approvals shall be made or given. In the event such condition is neither
satisfied nor waived on or before March 31,
<PAGE>
1996, the Joint Venture shall immediately notify Lender thereof and withdraw its
request for consent described in Paragraph 4(a) above.
5. Payment of Settlement Amount.
At the Closing, the Joint Venture and the L'Auberge Joint Venturer
shall pay, or cause to be paid, to the EW Venturer and to Manager an amount (the
"Settlement Amount") which shall be equal to the excess of $500,000 over the
aggregate of the Settlement Amounts payable to the EW Venturer and Manager so
denominated in the Other Agreements; provided, however, that the total amount
payable to EWM under all of the Agreements shall be $500,000. The payment of the
Settlement Amount shall be made by confirmed wired funds or cashier's check to
EWM, as collection agent for the EW Venturer and Manager. The EW Venturer and
Manager, by their execution of this Agreement, hereby appoint EWM to act as
their agent for purposes of collecting and distributing the Settlement Amount,
and EWM, by its execution of this Agreement, hereby accepts such appointment.
6. Mutual Release.
At the Closing, the Joint Venture and the L'Auberge Venturer, on the
one hand, and the EW Venturer and Manager, on the other hand, shall execute and
deliver that certain Mutual Release in the form attached hereto as Exhibit F and
incorporated herein by this reference.
7. Closing.
(a) The Closing shall take place at the offices of Ryley, Carlock &
Applewhite, at 101 North First Avenue, Suite 2700, Phoenix, Arizona 85003, on
the third (3rd) business day following the satisfaction of the conditions to the
Closing enumerated in Paragraph 4 above (or waiver of the condition in Paragraph
4(b) above if such condition shall have been waived on or before March 31, 1996)
or on such earlier date as may be mutually agreeable to the parties hereto. If
such conditions are not satisfied or waived on or before the Outside Closing
Date, this Agreement and all obligations of the parties hereto shall
automatically terminate and be of no further force and effect.
(b) At the Closing, the parties shall cause the following to occur:
(i) The Joint Venture, the L'Auberge Joint Venturer and
Manager shall each execute and deliver the Termination Agreement.
(ii) The L'Auberge Venturer and the EW Venturer shall each
execute and deliver the Amendment.
(iii) The EW Venture and the L'Auberge Venturer shall each
execute and deliver the Assignment.
(iv) The L'Auberge Venturer shall execute and deliver the
Termination for recordation.
(v) The EW Venturer and the L'Auberge Venturer shall each
execute and deliver the Partnership Interest Payment Agreement.
(vi) The Joint Venture and the L'Auberge Venturer shall
deliver or cause to be delivered the Settlement Amount to EWM for the
benefit of the EW Venturer and Manager.
(vii) The Joint Venture, the L'Auberge Venturer, the EW
Venturer and Manager shall each execute and deliver the Mutual Release.
8. Representations and Warranties.
(a) The L'Auberge Venturer, for itself and the Joint Venture,
represents and warrants to the EW Venturer as follows:
(i) Each of the recitals set forth above is true and correct.
(ii) The L'Auberge Venturer is the Managing Venturer of the
Joint Venture and has not assigned, transferred, encumbered or
hypothecated all or any portion of its interest in the Joint Venture.
(iii) The Joint Venture and the L'Auberge Venturer each has the
legal power and authority, by and through those persons executing this
Agreement, to enter into this Agreement and to consummate the
transactions contemplated hereby, subject to the receipt of the consent
of Lender as provided in Paragraph 4 above.
(iv) Each of the Agreements contemplated hereby will when
executed be a valid and binding obligation of the Joint Venture and the
L'Auberge Venturer and will be enforceable in accordance with its
terms, subject to and limited by the effect of applicable bankruptcy,
insolvency, fraudulent transfer or conveyance, reorganization,
receivership, moratorium or other similar laws now or hereafter in
effect relating to or affecting the rights of creditors generally.
(v) No consent of any person related to or affiliated with
the L'Auberge Venturer which is not party to this Agreement, no consent
of any governmental authority and no additional consent other than
those which have already been or prior to the Closing will be obtained
is required to be obtained in connection with or resulting from the
execution, delivery or performance of this Agreement or the agreements
contemplated hereby by the L'Auberge Venturer.
(vi) The L'Auberge Venturer has not filed nor had filed
against it a petition in bankruptcy, made an assignment for the benefit
of creditors or had a receiver appointed to take custody of all or
substantially all of its assets.
(b) The EW Venturer and Manager each represent and warrant to the
Joint Venture and the L'Auberge Venturer as follows:
(i) Each of the recitals set forth above is true and correct.
(ii) The EW Venturer has not assigned, transferred,
encumbered or hypothecated all or any portion of its
interest in the Joint Venture.
(iii) Manager and the L'Auberge Venturer each has the legal
power and authority, by and through those persons executing this
Agreement, to enter into this Agreement and to consummate the
transactions contemplated hereby, subject to the receipt of the consent
of Lender as provided in Paragraph 4 above.
(iv) Each of the Agreements contemplated hereby will when
executed be a valid and binding obligation of Manager and the EW
Venturer and will be enforceable in accordance with its terms, subject
to and limited by the effect of applicable bankruptcy, insolvency,
fraudulent transfer or conveyance, reorganization, receivership,
moratorium or other similar laws now or hereafter in effect relating to
or affecting the rights of creditors generally.
(v) No consent of any person related to or affiliated with
the EW Venturer or Manager which is not party to this Agreement, no
consent of any governmental authority and no additional consent other
than those which have already been or prior to the Closing will be
obtained is required to be obtained in connection with or resulting
from the execution, delivery or performance of this Agreement or the
agreements contemplated hereby by the EW Venturer or Manager.
(vi) The EW Venturer has not filed nor had filed against it a
petition in bankruptcy, made an assignment for the benefit of creditors
or had a receiver appointed to take custody of all or substantially all
of its assets.
(vii) Neither the EW Venturer nor Manager has any actual
knowledge of any fact, condition or circumstance related to the
physical, environmental, operational and/or financial condition of the
Project that has not been disclosed in previous physical,
environmental, operational and/or financial reports prepared for or on
behalf of, and delivered to, the Joint Venture. Notwithstanding the
foregoing sentence, the representations and warranties of Manager and
the EW Venturer contained in this subparagraph (vii) shall not be
deemed to modify the provisions of the Property Management Agreement
between Manager and the Joint Venture or modify the provisions of any
development agreement, development obligations agreement or
construction agreement relating to the Project between the EW Venturer,
on the one hand, and the Joint Venture or the L'Auberge Joint Venturer,
on the other hand, including any express or implied warranties or
statutes of limitation relating thereto.
(c) The representations and warranties set forth herein have been made
as of the date hereof and shall be deemed to have been made as of the Closing
and shall survive the Closing.
9. General Provisions.
(a) Severability. The provisions of this Agreement shall be deemed
severable. If any provision hereof shall be found invalid, illegal, void or
unenforceable, in whole or in part, the remaining provisions or portions thereof
shall remain in full force and effect to the maximum extent permitted by
applicable law. To the maximum extent permitted by applicable law, each party
hereby waives any provision of law which renders any provision of this Agreement
invalid, illegal, void or unenforceable.
(b) Governing Law. This Agreement and all relations of the parties in
connection herewith shall be governed by and construed in accordance with the
laws of the State of Arizona, without giving effect to the conflict of laws or
choice of law rules or laws of such jurisdiction.
(c) Attorneys' Fees and Costs. In the event any party fails to perform
any of its obligations under this Agreement or in the event a dispute arises
concerning the meaning or interpretation of any provision of this Agreement, the
defaulting party or the party not prevailing in such dispute, as the case may
be, shall pay any and all costs and expenses incurred by the other party in
enforcing or establishing its rights hereunder, including, without limitation,
court costs and reasonable attorneys' fees. The prevailing party shall include,
without limitation, (i) a party who dismisses an action in exchange for sums
allegedly due, (ii) the party who received performance from the other party
where such performance is substantially equivalent to the relief sought in an
action, or (iii) the party determined to be the prevailing party by a court of
law, and the "party not prevailing" shall be the other party.
(d) Successors and Assigns. This Agreement set forth herein shall
be binding upon, and inure to the benefit of, any successors
and assigns of the parties.
(e) Entire Agreement; Modification. This Agreement set forth herein,
together with the schedules and exhibits attached hereto, shall constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior negotiations and agreements with respect to the
subject matter hereof. This Agreement may be modified only by an instrument in
writing duly executed by the party sought to be bound by such modification.
(f) Waivers. No breach of any covenant, condition, agreement, warranty
or representation made in this Agreement shall be deemed waived unless expressly
waived in writing by the party who might assert such breach. Any such waiver may
be made in advance or after the right waived has arisen or the breach or default
waived has occurred. Any such waiver may be conditional. No such waiver shall be
deemed to be a waiver of any other matter, whenever occurring and whether
identical, similar or dissimilar to the matter waived.
(g) Notices. All notices required or permitted by this Agreement shall
be in writing and may be delivered in person (by hand or by messenger or courier
service) or may be sent by regular certified or registered mail or U.S. Postal
Service Express Mail, with postage prepaid, or by facsimile transmission, and
shall be deemed sufficiently given if served in a manner specified in this
Paragraph 9(g). The address of the L'Auberge Venturer and the Joint
<PAGE>
Venture for notice purposes shall be as follows:
Mr. Stephen B. Boyle
Canyon View Apartments
6655 Canyon Crest Drive
Tucson, Arizona 85750
Attention: Rental Office
Facsimile No.: (520) 577-6703
With a copy to:
Hughes Hubbard & Reed
350 South Grand Avenue, Suite 3600
Los Angeles, California 90071-3442
Attention: George A. Furst, Esq.
Facsimile No.: (213) 613-2950
The address for the EW Venturer and Manager for notice purposes is as follows:
Evans Withycombe Management, Inc.
6991 East Camelback Road, Suite 200A
Scottsdale, Arizona 85251
Attention: Stephen Evans
Facsimile No.: (602) 423-8843
With a copy to:
Ryley, Carlock & Applewhite
101 First Avenue, Suite 2600
Phoenix, Arizona 85003-1973
Attention: Lynn T. Ziolko, Esq.
Facsimile No.: (602) 257-9582
Either party may by written notice to the other specify a different address for
notice purposes. A copy of all notices required or permitted to be given to
either party hereunder shall be concurrently transmitted to such party or
parties at such addresses as either party may from time to time hereafter
designate by written notice to the other.
Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark thereon. If sent by regular
mail the notice shall be deemed given forty-eight (48) hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by U.S. Postal Service Express Mail or overnight courier that guarantees next
day delivery shall be deemed given twenty-four (24) hours after delivery of the
same to the United States Postal Service or courier. If any notice is
transmitted by facsimile transmission or similar means, the same shall be deemed
served or delivered upon telephone confirmation of receipt of the transmission
thereof, provided that a copy is also delivered by delivery or mail. If any
notice is received on a Saturday, Sunday or legal holiday, it shall be deemed
received on the next business day.
(h) Further Agreements and Assurances. Each party agrees promptly to
execute and deliver such other documents and to do such other acts as may be
requested by any other party and are in the reasonable judgment of the
requesting party necessary or appropriate to effectuate the purposes of this
Agreement.
(i) Headings; Gender; Number. The headings of the sections and
subsections herein are inserted for convenience of reference only and are not
intended to be a part of, or to affect the meaning or interpretation of, this
Agreement. As used herein and as the context requires, a reference to the male,
female or neutral gender includes a reference to each other gender, and a
reference to the singular or plural number includes a reference to the other
number.
(j) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed to constitute an original.
(k) Default; Specific Performance. In the event that a party shall
default in the performance of any of its obligations or agreements hereunder,
the other party shall be entitled to specific performance of such obligations
and agreements by the defaulting party, in addition to any and all other
equitable and legal rights and remedies which such non-defaulting party may
have.
(l) No Admission. The parties hereto have entered into this Agreement
and entered into the negotiations that led to this Agreement, solely for the
purpose of compromising and settling various matters in dispute among the
parties. This Agreement, and the settlement negotiations that led to this
Agreement, however, shall not constitute an admission of any liability or
responsibility by any party as to any matter relating to the Joint Venture or
the Project.
(m) Nondisclosure of Terms. Each of the parties hereto hereby agrees
not to disclose the terms of this Agreement or the transactions contemplated
hereby to any person or entity (other than its respective partners, affiliates,
underwriters, agents, advisors, officers or employees who need to know such
information for the purpose of entering into and performing the obligations
under this Agreement or any other person or entity to whom such disclosure is
required by law), except (i) with the prior written consent of each of the other
parties hereto, (ii) in connection with any required financial accounting or
other required reporting or legal proceedings brought by any of the parties
hereto or their respective affiliates to enforce this Agreement or (iii) in
compliance with applicable legal requirements.
(n) Simultaneous Closing. Notwithstanding anything contained in
this Agreement or any of the Other Agreements to the contrary, the Closing shall
not occur unless there occurs the simultaneous closing of the transactions
described in the Other Agreements.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
CASABELLA JOINT VENTURE,
an Arizona joint venture partnership
By: Casabella Associates,
Managing Venturer
By: Development Partners III
(A Massachusetts Limited Partnership)
By: GP L'Auberge Communities, L.P.,
a California limited partnership,
General Partner
By: L'Auberge Communities Inc.,
General Partner
By: ____________________
Stephen B. Boyle
President
CASABELLA ASSOCIATES,
an Arizona joint venture partnership
By: Development Partners III
(A Massachusetts Limited Partnership)
By: GP L'Auberge Communities, L.P.,
a California limited partnership,
General Partner
By: L'Auberge Communities Inc.,
General Partner
By: ____________________
Stephen B. Boyle
President
[signatures continued.]
<PAGE>
EW CASABELLA I LIMITED PARTNERSHIP,
an Arizona limited partnership
By: EWI Management, Inc.,
an Arizona corporation,
its general partner
By: ________________________
Name: __________________
Title:__________________
EVANS WITHYCOMBE MANAGEMENT, INC., an Arizona corporation formerly known as
Evans Withycombe, Inc.
By: ____________________________
Name: ______________________
Title:______________________
The undersigned accepts its appointment as collection agent pursuant to
Paragraph 5 above:
EVANS WITHYCOMBE MANAGEMENT, INC.,
an Arizona corporation
By:
Name:
Title:
PROPERTY MANAGEMENT AGREEMENT
(Casabella)
THIS AGREEMENT is made as of this 1st day of November, 1996, by and
between L'AUBERGE COMMUNITIES INC., a California corporation ("Agent"), and
CASABELLA ASSOCIATES, an Arizona joint venture partnership ("Owner"), with
reference to the following:
A. Owner owns certain real property located in Scottsdale, Arizona, as
more particularly described on Exhibit "A" attached hereto (the "Site"), upon
which 154 apartment units (the "Units") have been constructed. (The Site, Units
and all improvements relating to or connected with the Units, together with all
appurtenances, fixtures and equipment and all rights and privileges now or
hereafter contained in, belonging to or in any way pertaining or beneficial to
any of the foregoing, whether or not attached to the Site or the Units, are
sometimes hereinafter collectively referred to as the "Property.")
B. Agent possesses the organization and skills necessary to discharge
its obligations hereunder.
C. Owner desires to employ Agent, and Agent desires to be
employed by Owner, for the orderly management and operation of the Property
on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Appointment of Manager.
Owner hereby appoints Agent as Owner's exclusive
representative, manager and agent for the purposes of managing, maintaining, and
operating the Property for the account of Owner during the term of this
Agreement and upon the terms and conditions set forth below.
2. Term.
The term of this Agreement shall commence on the date first
set forth above (the "Commencement Date") and Agent's obligations ("Agent's
Management Obligations") pursuant to this Agreement shall expire in accordance
with the provisions of Paragraph 9 below.
<PAGE>
3. Agent's Duties.
a. Agent agrees to perform the following duties on behalf
of Owner:
(i) To accept and does hereby accept the management
of the Property for the period and upon the terms herein provided, and
agrees to furnish the services of its organization for the renting,
operating and managing of the Property, and to do and perform any and
all things in and about the management, maintenance and operation of
the Property customarily performed by agents of similar properties, in
a professional, reasonable, effective and efficient manner, subject
however to the provisions of Section 3(d) below;
(ii) [Intentionally deleted];
(iii) To aid, assist and cooperate in the matter
of real property taxes and insurance claim adjustments;
(iv) Subject to the provisions of Paragraph 8
below, to care for, place and supervise all insurance coverage;
(v) Subject to the provisions of Paragraph 8 below,
to render on or before the tenth (10th) day of each calendar month
during the term hereof, statements of receipts, expenses and charges
for the previous calendar month;
(vi) [Intentionally deleted];
(vii) To hire, discharge and supervise all labor and
employees ("Project Personnel") required for the operation and
maintenance of the Property (exclusive of employees retained to
undertake the activities described in Section 3(d) below), it being
agreed that all employees shall be deemed to be employees of Agent and
not of Owner, and that Agent may perform its duties through its
attorneys, agents and employees holding such licenses as may be
necessary or appropriate for the performance of such duties, but shall
not be responsible for their acts, defaults and negligence if
reasonable care has been exercised in their appointment, supervision
and retention;
(viii) To pay all expenses, including without limitation
mortgage payments, real estate and personal property taxes, insurance
premiums, licenses, fees and payroll taxes and other obligations of
Owner, incurred in connection with the Property during the term of this
Agreement, prior to their due dates;
(ix) To account for all deposits received from
tenants, and the excess of operating revenues over the sum of operating
expenses plus reserves established by Owner (or as otherwise approved
from time to time by Owner, provided that in any event such amount
shall not be less than the amount reasonably sufficient to pay all
accounts payable of the Property), to Owner; and
(x) To enter into any laundry, laundry machine and/or
vending machine leases and other personal property leases.
b. Agent shall establish operating procedures and
policies necessary to perform Agent's Management Obligations under this
Agreement.
c. Agent shall be authorized to make contracts for
electricity, gas, fuel, water, telephone, sweeping, cleaning and other similar
services or such of them as Agent, in its discretion, shall deem advisable.
d. Notwithstanding anything contained in this Section 3 or
elsewhere in this Agreement to the contrary, Agent shall not be responsible for,
nor shall Agent perform, any of the activities described in Arizona Revised
Statute ss. 32-2101.32, or any successor statute, which activities require an
Arizona real estate broker's or salesperson's license. These activities
presently include without limitation renting, offering to rent, or negotiating
the rental of real estate and collecting rents for the use of real estate. Owner
acknowledges that Agent does not have a real estate license in Arizona. Owner
and Agent further acknowledge that any natural person hired to undertake such
activities for the Property pursuant to A.R.S. ss. 32-2121.A.7 shall be employed
directly by Owner and shall be compensated directly by Owner.
4. Compensation.
During the term hereof, Owner agrees to pay to Agent on the
first day of each month a management fee (the "Property Management Fee") equal
to 4% of rents collected in the preceding month (including forfeited security
deposits and nonrefundable deposits and fees) as long as Agent's Management
Obligations have not been terminated, as compensation for Agent's management
services hereunder.
5. Operating Budget; Accounting.
a. Agent shall prepare an operating budget for the Property
for each calendar year during the term of this Agreement. Such operating budget
shall be prepared in consultation with Owner.
b. All monthly accounting functions for the Property,
including without limitation rent collection and the processing and payment of
accounts payable of the Property but excluding rent collection, shall be the
responsibility of Agent at Agent's sole cost and expense.
6. Bank Account.
Agent shall establish and maintain a separate trust account in
the name of Owner for the deposit of all monies collected from or in connection
with the operation of the Property. Agent shall have the authority to draw on
this account for any payments which Agent may make solely for the discharge of
any liabilities or obligations incurred pursuant to this Agreement, and for the
payment of the Property Management Fee, all of which payments shall be subject
to the limitations of this Agreement.
7. Records; Reports; Meetings; Remittance.
a. Agent shall maintain books of account on all receipts and
disbursements incurred in the management and operation of the Property, which
records shall, at all reasonable times, be open to inspection by Owner without
prior notice.
b. During the term of this Agreement, Agent shall
furnish to Owner, the following written reports:
(i) On a monthly basis, not later than ten (10) days
following the end of each calendar month, a detailed cash operating
report, showing all receipts and disbursements for the previous month;
and
(ii) On a monthly basis, not later than ten (10) days
following the end of each calendar month, a recapitulation of
delinquent rents and a rent roll.
c. All net cash flow from operations of the Property, after
establishment of Property operating reserves, shall be remitted to Owner by the
tenth (10th) day of the following calendar month.
8. Property Personnel; Insurance.
a. Subject to the provisions of Paragraph 3(a)(vii) above,
Agent shall hire or discharge on behalf of Owner all Property Personnel required
for the operation and maintenance of the Property exclusive of employees
retained to undertake the activities described in Section 3(d) above.
b. Owner shall maintain public liability insurance and have
Agent named as an additional insured in all such policies. The maintenance of
other insurance in connection with the Property shall be the responsibility of
Owner, but, upon the request of Owner, shall be supervised and implemented by
Agent, as hereinabove provided.
9. Termination.
Agent's Management Obligations may be terminated or modified
at any time as provided below:
a. If Owner shall sell or otherwise transfer title to
the Property (except in connection with a reorganization of Owner):
(i) Agent's Management Obligations shall
automatically terminate as of the date of closing of such sale or transfer; and
(ii) Owner shall pay to Agent any accrued but unpaid
Property Management Fees owing to Agent pursuant to this Agreement up
to the date of closing of such sale or transfer.
b. Either party shall have the right, by giving written notice
to the other party, to terminate Agent's Management Obligations without cause
effective upon thirty (30) days prior written notice and with cause effective
immediately upon delivery.
c. In the event Agent's Management Obligations are terminated
pursuant to Paragraph 9.b. above, Agent's right to receive the Property
Management Fee shall terminate as of the effective date of such termination. For
purposes hereof, "cause" shall mean, in addition to any material default or
breach by Agent under this Agreement, any act or omission which constitutes
negligence, willful malfeasance or fraud.
10. Settlement.
Upon the expiration or sooner termination of Agent's
Management Obligations, or in the event that, by mutual agreement of the
parties, on-site management of the Property is delegated to a third party:
a. Agent shall deliver and transfer to Owner or Owner's
designee all books, records, agreements, documents and instruments of whatsoever
nature pertaining to the Property maintained by Agent on behalf of Owner other
than those maintained by Agent in the course of its own day-to-day business, and
shall pay over to Owner or its designee all sums arising out of the operation of
the Property from the commencement of business operations thereat, including,
without limitation, all advance rent, security deposits, unused cleaning fees
and the like, less permitted expenses actually paid by such transferring party;
b. Owner shall pay to Agent any sums for which Agent is then
entitled to reimbursement hereunder, including those which Agent may have
theretofore advanced on behalf of Owner and for which Agent shall not have
theretofore received reimbursement.
11. Reimbursement.
Owner agrees to promptly reimburse Agent for any monies that
Agent may advance on behalf of or for the benefit of the Property or Owner if
such reimbursement may not reasonably be made from funds from the Property.
Notwithstanding the foregoing, Agent shall not be obligated to make any such
advances for the benefit of the Property or Owner.
12. Indemnity.
Owner hereby indemnifies and agrees to hold Agent harmless
from and against any and all suits, claims or costs incurred by Agent in any
actions brought by third parties in connection with the management of the
Property or this Agreement, and from any liability or injury suffered by third
parties in or on the Property, except for any such suits, claims or costs which
arise from or relate to any act or omission of Agent or its employees which
constitutes negligence, willful malfeasance or fraud, as to which Agent shall
indemnify and hold Owner harmless.
13. Notices.
All notices required to be given by either party to the other
shall be in writing and shall be deemed to have been properly given and
delivered when deposited in the United States mail, sent certified or
registered, return receipt requested, postage prepaid, or by commercial air
courier, addressed to the parties as follows:
If to Owner:
c/o L'Auberge Communities Inc.
5110 Langdale Way
Colorado Springs, Colorado 80906
Attention: Stephen B. Boyle
With a copy to:
Hughes Hubbard & Reed LLP
350 South Grand Avenue, Suite 3600
Los Angeles, California 90071-3442
Attention: George A. Furst, Esq.
If to Agent:
L'Auberge Communities Inc.
5110 Langdale Way
Colorado Springs, Colorado 80906
Attention: Stephen B. Boyle
With a copy to:
Hughes Hubbard & Reed LLP
350 South Grand Avenue, Suite 3600
Los Angeles, California 90071-3442
Attention: George A. Furst, Esq.
Such notices shall be effective upon delivery if delivered in person and either
upon actual receipt or three (3) days after mailing, whichever is earlier, if
delivered by mail.
14. Entire Agreement.
Except as otherwise specifically set forth herein, this
Agreement is the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements between the parties
with respect thereto. There have been no representations or warranties by either
party to the other except as expressly contained herein. No claim of waiver,
modification, consent or acquiescence with respect to any provision of this
Agreement shall be made against either party except on the basis of a written
instrument executed by or on behalf of such party.
15. Successors and Assigns.
This Agreement shall be binding upon and shall inure to the
benefit of the successors and assigns of the parties hereto. Agent may not
assign any of its rights, or delegate any of its duties, under this Agreement
without the prior written consent of Owner.
16. Exhibits.
All Exhibits referred to in this Agreement are expressly
incorporated herein by reference as though set forth in full.
17. Paragraph Headings.
The headings of the several paragraphs of this Agreement are
inserted solely for convenience of reference and are not a part of and are not
intended to govern, limit or aid in the construction of any term or provision
thereof.
18. Time.
Time is of the essence in the performance of this Agreement.
19. Authority.
All parties to this Agreement warrant and represent that they
have the power and authority to enter into this Agreement in the names, titles
and capacities herein stated and on behalf of any entities, persons, estates or
firms represented or purported to be represented by such persons, and shall
deliver to the other party such corporate resolutions, powers of attorney and
such other documents or instruments as shall be reasonably necessary to evidence
such authority.
<PAGE>
20. Governing Law.
This Agreement is to be governed by and construed in
accordance with the laws of the State of Arizona.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
effective the day and year first above written.
AGENT: OWNER:
L'AUBERGE COMMUNITIES INC., CASABELLA ASSOCIATES,
a California corporation An Arizona Joint Venture Partnership
By: By: Development Partners III
Stephen B. Boyle (A Massachusetts Limited Partnership)
President
By: GP L'Auberge Communities II L.P.,
a California limited partnership,
General Partner
By: L'Auberge Communities Inc.,
General Partner
By: ___________________
Stephen B. Boyle
President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 537,735
<SECURITIES> 0
<RECEIVABLES> 20,631
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 22,363,889
<DEPRECIATION> (4,741,203)
<TOTAL-ASSETS> 18,518,721
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<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,598,203
<TOTAL-LIABILITY-AND-EQUITY> 18,518,721
<SALES> 0
<TOTAL-REVENUES> 2,427,779
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,863,758
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 813,806
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<CHANGES> 0
<NET-INCOME> (217,956)
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</TABLE>
