SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
[] 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 number 0-14986
AETNA REAL ESTATE ASSOCIATES, L.P.
(Exact name of registrant as specified in its charter)
Delaware 11-2827907
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
242 Trumbull Street, Hartford, Connecticut 06156
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (203) 275-2178
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Depositary Units
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __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]
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant: $193,901,738 (1)
________________
(1) This statement relates to Units which represent limited partnership
interests in the Registrant. The amount above is calculated based on the Net
Asset Value of Units of $15.24 at December 31, 1995.
PART 1
Item 1. Business.
Aetna Real Estate Associates, L.P. (the "Registrant") is a limited partnership
organized under the laws of the State of Delaware on September 11, 1986. The
general partners of the Registrant (the "General Partners") are Aetna/AREA
Corporation ("Aetna/AREA"), a Connecticut corporation that is an affiliate of
Aetna Life and Casualty Company ("Aetna"), and AREA GP Corporation ("AREA GP"),
a Delaware corporation that is an affiliate of Lehman Brothers Inc. ("Lehman").
From March 1986 through December 31, 1990, the Registrant offered up to
$300,000,000 of units which represent the economic rights attributable to
limited partnership interests in the Registrant ("Units") through an ongoing
public offering (the "Primary Offering") and an additional $30,000,000 of Units
pursuant to the Registrant's Distribution Reinvestment Plan (the "DRIP"). In
addition, in conjunction with the Primary Offering, certain holders of Units
(the "Selling Unitholders") offered up to $30,000,000 of Units (the
"Remarketing Opportunity"). Since January 1, 1991, the Registrant has not
offered Units for sale in the Primary Offering, the Remarketing Opportunity, or
the DRIP. The Registrant received an aggregate of $265,521,423 of capital
contributions from the sale of 12,724,547 Units. The Registrant does not
anticipate raising additional capital through the sale of Units.
The Registrant is engaged in the business of investing in income-producing
apartment complexes, office buildings, shopping centers and other commercial
real estate offered by non-affiliated sellers ("Properties"). All investments
in Properties that the Registrant has made are referred to herein collectively
as "Investments in Properties". The Registrant acquired its interests in
Investments in Properties either directly or through joint ventures or other
partnerships that own Properties. The Registrant has acquired all of its
interests in Properties entirely with cash.
As of December 31, 1995, the Registrant held 13 Investments in Properties at a
total cost of approximately $239.9 million. (See Item 2 in this report for a
further description of the Investments in Properties.) Such Investments in
Properties have been funded from the proceeds of the sale of Units and from
cash retained by the Registrant from operations and from sales of Investments
in Properties.
The Registrant's principal objectives are to invest in Properties with the
goals of obtaining:
(1) cash distributions from rental and interest income;
(2) capital appreciation; and
(3) preservation and protection of capital.
In 1995, the Registrant made distributions of cash generated from operations of
$.18 per Unit per quarter. (See Item 5 below for additional information
regarding recent quarterly distributions.) The General Partners anticipate
that quarterly cash distributions will continue throughout 1996. The level and
timing of future distributions will be reviewed on a quarterly basis by the
General Partners.
Net Asset Value per Unit increased to $15.24 at December 31, 1995 from $14.96
at December 31, 1994. The increase in Net Asset Value per Unit is attributable
to the increases in the appraised values of certain of the Registrant's
properties, primarily Cross Pointe Centre and Powell Street Plaza. The
increase in value in Cross Pointe Centre is a result of an increase in leased
percentage, from 82% to approximately 90%, in conjunction with a stronger
tenant mix, including an expansion of a proven anchor tenant and a reduced
vacancy allowance. Powell Street Plaza's increase in value is primarily due to
an increase in percentage rent with stable cash flow and modest lease
expirations projected over the next few years. These value increases were
partially offset by decreases in the appraised value of Village Square Shopping
Center and Oakland Pointe Shopping Center. The decrease in appraised value of
Village Square Shopping Center is a result of a significant decrease in its
occupancy rate. The General Partners are currently considering options for the
future strategy of this property. Part of this strategy includes a change in
the property management firm, effective in April 1996. The majority of the
decrease in appraised value of Oakland Pointe Shopping Center is a result of a
change in renewal assumptions associated with a major tenant and an increase in
the vacancy assumptions.
Competition
The Registrant competes with other real estate owners and developers for
tenants and potential buyers in the rental and sale of its Investments in
Properties. Each of the Investments in Properties faces competition from
similar properties within the same vicinity. Increases in the availability of
properties competitive with the Registrant's Investments in Properties may have
an adverse affect on the occupancy levels, revenues and marketability of the
Registrant's Investments in Properties. Should the Registrant be in the market
to acquire new or sell existing Investments in Properties, it would face
competition in connection with such acquisitions or sales from businesses,
individuals, fiduciary accounts and plans and other entities engaged in real
estate investment, which may include certain affiliates of the General
Partners. The number of entities interested and the amount of funds available
for investment in properties of a type suitable for investment by the
Registrant may change.
Employees
The Registrant has no employees. The officers, directors and employees of the
General Partners and their affiliates perform services for the benefit of the
Registrant. These services are provided in consideration of the fees paid to
the General Partners as described under Item 13 below and the expense of
providing these services is not separately charged to the Registrant. First
Data Investor Services Group, Inc., formerly The Shareholder Services Group,
has been retained by AREA GP to provide accounting and investor communications
services to the Registrant.
Item 2. Properties.
As of December 31, 1995, the Registrant held 13 Investments in Properties.
(in thousands)
Historical
Property Cost (1)
Cross Pointe Centre $ 22,261
Lincoln Square Apartments 13,458
Gateway Square 7,346
Summit Village 37,183
Village Square Shopping Center 8,109
Marina Bay Industrial Park 10,880
Town Center Business Park 41,865
Oakland Pointe Shopping Center 22,643
115 & 117 Flanders Road 12,267
Three Riverside Drive 10,122
Windmont Apartments 7,834
Powell Street Plaza 31,829
Westgate Distribution Center 14,146
Total $239,943
(1) Historical cost is before accumulated depreciation and may not equal cash
invested because of certain adjustments based on the application of
generally accepted accounting principles. For historical cost purposes,
properties are recorded at the lower of cost net of impairment write-down
or estimated fair value. At December 31, 1995, an impairment loss was
recorded for approximately $4,408,000. (See Footnote 3 to the consolidated
financial statements.)
The Registrant determines the current value of each of its Investments in
Properties quarterly based on independent appraisals of the underlying real
estate using generally accepted valuation techniques. These appraisals are
used to determine Net Asset Value per Unit on a quarterly basis and to prepare
the Registrant's current value financial statements.
Each appraisal is based on numerous assumptions, limiting conditions and
valuation techniques utilized by the independent appraisers retained by the
Registrant. Two of the many assumptions utilized by the appraisers are the
terminal capitalization rate and the discount rate. The terminal
capitalization rate is used to estimate the reversionary proceeds to be
received from the assumed sale of an investment at the end of a typical holding
period. The discount rate is used to determine the net present value of the
estimated annual cash flows of an investment, including the residual proceeds,
over the holding period. Terminal capitalization rates utilized in the
appraisals of the Investments in Properties at December 31, 1995 ranged from
9.00% to 10.00%. Discount rates utilized in the appraisals of the Investments
in Properties at December 31, 1995 ranged from 11.50% to 13.00%.
Current Properties
A brief description of all Investments in Properties is set forth below.
Neither the Registrant, if it owns a Property directly, nor any joint venture
or partnership in which the Registrant has invested, have incurred any debt to
acquire or maintain any of the Properties.
Cross Pointe Centre
The Registrant owns Cross Pointe Centre, a community shopping center with
approximately 211,345 square feet of net rentable space, located on a 25.8-acre
site in Centerville, Ohio. As of December 31, 1995, the shopping center was
90% leased and 85% occupied.
Lincoln Square Apartments
On November 14, 1986, the Registrant acquired a controlling general partnership
interest in a limited partnership which owns the Lincoln Square Apartments, a
240-unit apartment project on a 12.7-acre site located in Arlington Heights,
Illinois. Effective December 1, 1993 the Registrant acquired its partner's
interest in Lincoln Square Apartments and now owns 100% of the property. As of
December 31, 1995, the project was 97% leased and 95% occupied.
Gateway Square
The Registrant owns Gateway Square, a specialty retail center located in
Hinsdale, Illinois. The center contains approximately 40,366 square feet of
rentable space on a 3.7-acre site. As of December 31, 1995, the retail center
was 98% leased and occupied.
Summit Village
The Registrant owns Summit Village, a 366-unit apartment complex built in two
phases on a 6.2-acre site in the Rosslyn area of Arlington County, Virginia.
Historical leasing and occupancy information with respect to Summit Village for
the five most recent years is as follows:
Leased Occupied
12/31/91 94% 92%
12/31/92 99% 96%
12/31/93 96% 94%
12/31/94 99% 98%
12/31/95 99% 99%
The current leases generally have terms of seven or twelve months at monthly
rental rates ranging from $945 to $1,349 per unit.
There are plans to construct a second phase to Meridian Courthouse, an indirect
competitor, which is located less than one mile from Summit Village. The
proposed midrise will include 316 additional apartment units. Construction has
begun and completion is scheduled for the end of 1996. Rents will be the same
as the existing tower at Meridian, which are significantly higher than Summit
Village. Leasing is anticipated to begin in late spring 1996.
Marina Bay Industrial Park
The Registrant owns a controlling general partnership interest in a limited
partnership that owns the Marina Bay Industrial Park, a 165,780 square foot
industrial park located in Richmond, California on an 8.6-acre site. The
Marina Bay Industrial Park is a four-building complex that includes a
rehabilitated industrial distribution building (approximately 103,680 square
feet) and three newer research/development/light industrial buildings
(approximately 62,100 square feet). As of December 31, 1995, the complex was
98% leased and occupied.
Village Square Shopping Center
The Registrant owns Village Square Shopping Center, a community shopping center
in Hazelwood, Missouri containing approximately 207,304 square feet of net
rentable area on approximately 20 acres of land. As of December 31, 1995, the
shopping center was 63% leased and 35% occupied.
A tenant with a lease totaling 22,282 square feet, included in the leased
percentage above, vacated the property during 1992 but continues to pay rent
until 1997 when the lease expires. Another tenant, who occupied approximately
36,000 square feet vacated its space during 1995. At this time, the General
Partner is considering options for the future strategy of this property. Part
of this strategy includes a change in the property management firm, effective
in April 1996.
Town Center Business Park
The Registrant owns a controlling interest in a general partnership which owns
and operates the Town Center Business Park, totaling approximately 456,700
square feet of net rentable area on approximately 28 acres in Santa Fe Springs,
California. Town Center Business Park was developed in two phases. Phase I
consists of a three-story office building and six industrial buildings totaling
approximately 322,700 rentable square feet. Phase II, which opened in February
1990, consists of a two-story office/service building and two industrial
buildings containing approximately 134,000 square feet.
During 1996, ten leases covering 10% of the space in Town Center Business Park
are scheduled to expire. Contact has been made with all tenants and renewal
discussions are currently underway with five of them. The Registrant
anticipates that tenants holding leases for 6% of the space will renew their
leases and 4% will vacate the property. Also the Registrant is currently
negotiating a lease with a current tenant in the park to expand into
approximately 1% of space in Town Center Business Park.
Town Center Business Park has no single tenant which occupies 10% or more of
the rentable square footage. During 1997 and 1998, twelve and eight leases,
respectively, are scheduled to expire covering 18% and 6%, respectively, of the
space in Town Center Business Park.
Historical leasing and occupancy information with respect to Town Center
Business Park for the five most recent years is as follows:
Leased Occupied
12/31/91 81% 71%
12/31/92 87% 66%
12/31/93 67% 62%
12/31/94 76% 74%
12/31/95 84% 72%
Average annualized rental rates for December 1995 were $10.87 per square foot
as compared to $10.75 per square foot in December 1994 and $10.62 per square
foot for December 1993.
Oakland Pointe Shopping Center
The Registrant owns a portion of the Oakland Pointe Shopping Center, a shopping
center containing approximately 434,150 square feet located on 49.8 acres in
Pontiac, Michigan. The portion owned by the Registrant (the "Oakland Project")
contains approximately 213,350 square feet of rentable area on approximately
32.1 acres. As of December 31, 1995, the Oakland Project was approximately 89%
leased and occupied.
During 1996, three leases covering 4% of the space in Oakland Pointe Shopping
Center are scheduled to expire. Contact has been made with each of the
tenants. One is expected to terminate, one has executed a renewal and final
negotiations are underway with the last tenant. The Registrant is also
negotiating a lease with one new tenant to occupy approximately 1% of the space
in Oakland Pointe Shopping Center.
During 1997 and 1998 three and eleven leases, respectively, are scheduled to
expire covering 9% and 33% of the space, respectively.
Oakland Pointe Shopping Center has two tenants which occupy 10% or more of the
rentable square footage. A lease for 27,001 square feet expires in 1998 and
provides annual base rent of $189,007 (10% of total base rent) in 1996. Another
lease for 27,060 square feet expires in 2004 and provides annual base rent of
$216,480 (11% of total base rent) in 1996.
Historical leasing and occupancy information with respect to Oakland Pointe
Shopping Center for the five most recent years is as follows:
Leased Occupied
12/31/91 83% 81%
12/31/92 84% 84%
12/31/93 74% 74%
12/31/94 90% 90%
12/31/95 89% 88%
Average annualized rental rates for December 1995 were $13.45 per square foot.
115 and 117 Flanders Road
The Registrant owns 115 and 117 Flanders Road, two buildings containing
approximately 115,175 square feet of net rentable area and located on
approximately 26.6 acres in Westborough, Massachusetts. Each building has a
two-story office/research and development section and a one-story
office/warehouse section. As of December 31, 1995, 115 Flanders was 100%
leased and occupied, while 117 Flanders was 30% leased and occupied. The low
occupancy at 117 Flanders Road is attributable to the early termination of a
lease for a major tenant occupying 70% of the property. As a result, a lease
termination fee of approximately $115,000 was received in November 1995. The
space is currently being marketed to potential replacement tenants however, no
lease negotiations have commenced as of March 15, 1996.
Three Riverside Drive
The Registrant owns Three Riverside Drive, an office/research and development
building containing approximately 91,350 square feet of rentable area located
on approximately 8.8 acres in Andover, Massachusetts. As of December 31, 1995,
the building was 79% leased and occupied. The change in occupancy from 95% as
of December 31, 1994 to the current 79% is attributable to the early
termination of a lease for a tenant. As a result, a lease termination fee of
approximately $171,000 was received in September 1995. The space is currently
being marketed to potential replacement tenants however, no lease negotiations
have commenced as of March 15, 1996.
Windmont Apartments
The Registrant owns Windmont Apartments, a 178-unit apartment complex which is
located on 6.8 acres in DeKalb County, Georgia. As of December 31, 1995, the
complex was approximately 99% leased and 97% occupied.
Powell Street Plaza
The Registrant owns Powell Street Plaza, a shopping center with approximately
169,551 square feet of rentable space, located on approximately 12.9 acres in
Emeryville, California.
Certain governmental agencies in California, led by the Alameda County
Healthcare Services Agency, delivered a letter (the "Request Letter") to the
Registrant on June 4, 1993 requiring that it remediate certain soil and ground
water contamination by petroleum hydrocarbons existing on the Powell Street
property. The contamination is the result of a use of the property prior to its
acquisition by the Registrant in 1990. Pursuant to the agreement under which
the Registrant acquired Powell Street Plaza, the Registrant has made a demand
on the former owner from which it acquired the property (the "Former Owner") to
remediate the contamination. The Former Owner has agreed to respond to the
governmental agencies. The Former Owner prepared a site characterization and
submitted a remediation plan to the Alameda County Healthcare Services Agency,
which have been approved. The Registrant is monitoring the process and
anticipates that all costs of complying with the Request Letter will be borne
by the Former Owner. The Registrant has hired their own consultant to analyze
the extent of the pollution and the most likely method to perform the cleanup.
The consultant's analysis will be used as a benchmark for gauging future
progress by the Former Owner.
In each of the years 1996 and 1997 there is one lease scheduled to expire
covering 1.4% and .1%, respectively, of the space in Powell Street Plaza. Six
leases expire in 1998 covering 13% of the space in Powell Street Plaza.
Additionally, subsequent to December 31, 1995, one tenant, occupying 3.7% of
the space, terminated its lease. Negotiations have commenced with potential
replacement tenants for this space, including potential expansion by existing
tenants.
Powell Street Plaza has two tenants with leases covering 10% or more of the
rentable square footage of the property. The first lease, for 27,275 square
feet, expires in 2009 and provides annual base rent of $358,666 (13% of total
rent) in 1996. The lease contains two consecutive five-year options to renew.
The second lease, for 25,025 square feet, expires in 2003 and provides annual
base rent of $287,788 (11% of total rent) in 1996. The lease contains four
consecutive five-year options to renew.
Historical leasing and occupancy information with respect to Powell Street
Plaza for the five most recent years is as follows:
Leased Occupied
12/31/91 100% 95%
12/31/92 100% 100%
12/31/93 100% 86%
12/31/94 100% 100%
12/31/95 100% 100%
Average annualized rental rates for December 1995 were $15.67 per square foot
as compared to $15.28 per square foot for December 1994 and $14.20 per square
foot for December 1993.
The trade area gained a major new development at the East Bay Bridge site, a
450,000 square foot power center about one mile from Powell Street. The
property opened with a Home Depot, Sportmart and Toys R Us. The only direct
competition is with Powell Street Plaza's Copeland Sports.
On December 21, 1995 approximately 12,100 square feet of land at Powell Street
Plaza was condemned, for purposes of road construction, by the State of
California Department of Transportation. Net proceeds to the Registrant were
approximately $271,000, after paydown of a portion of the City's special
assessment. Loss on the sale included in the consolidated financial statements
was approximately $23,000 for the year ended December 31, 1995.
Westgate Distribution Center
The Registrant owns Westgate Distribution Center, which consists of three
warehouse/distribution buildings totaling approximately 430,300 rentable square
feet on 20.6 acres in Corona, California. Westgate Distribution Center was
developed in two phases. Phase One consists of two buildings containing
approximately 226,200 rentable square feet. Phase Two consisted of two
parcels, one containing a 98,000 square foot building constructed during 1994
and the other containing a 96,400 square foot building constructed in December
1992, and sold to its tenant in October 1994. The three remaining buildings
were 100% leased and occupied as of December 31, 1995.
Properties Sold During 1995
On December 21, 1995 approximately 12,100 square feet of land at Powell Street
Plaza was condemned, for the purpose of road construction, by the State of
California Department of Transportation. Net proceeds to the Partnership were
approximately $271,000, after paydown of a portion of the City's special
assessment. Loss on the sale included in the consolidated financial statements
was approximately $23,000 for the year ended December 31, 1995.
Item 3. Legal Proceedings.
Neither the Registrant nor any of the Registrant's Investments in Properties
are subject to any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
During the fourth quarter of the fiscal year ended December 31, 1995, no matter
was submitted to a vote of security holders, through the solicitation of
proxies or otherwise.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
The Units represent the economic rights attributable to limited partnership
interests in the Registrant. There is no established public trading market for
the Units. The Registrant's Units are listed on certain matching services (the
"Matching Programs") currently maintained by various broker-dealers. These
Matching Programs are computerized listing systems that put individuals who
wish to sell listed securities in contact with persons who wish to buy such
securities. Neither the broker-dealers nor the General Partners are required
to list the Registrant's Units on the Matching Program. There can be no
assurance that any Units listed on the Matching Program will be sold.
As of March 1, 1996, the number of Unitholders was approximately 19,657.
The Revised Limited Partnership Agreement dated December 1, 1988 by and among
Aetna/AREA Corporation, AREA GP Corporation and AREA Depositary Corporation
(the "Partnership Agreement") provides for distributions of net cash from
operations, if any, to be paid quarterly to Unitholders. Net cash from
operations, according to the Partnership Agreement, is equal to net income,
before depreciation, less any amounts set aside to increase or create reserves.
In the last two years, quarterly cash distributions of $.18 per Unit have been
paid to Unitholders. In addition the Registrant made special cash
distributions of $.19 per Unit on December 29, 1994, of which $.16 represents a
return of capital, from proceeds from the sale of the building at Westgate
Distribution Center.
Item 6. Selected Financial Data.
The following selected financial data of the Registrant have been selected by
the General Partners and derived from the consolidated financial statements for
the indicated periods, which have been audited by Coopers & Lybrand L.L.P.,
independent certified public accountants, whose report thereon is included
elsewhere herein. The information set forth below should be read in
conjunction with the Registrant's consolidated financial statements and notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" also included elsewhere herein.
(Dollars in thousands, except per Unit data)
Years Ended December 31,
1995 1994 1993 1992 1991
Revenue . . . . . . . . . $ 28,438 $ 26,454 $ 26,389 $ 29,507 $ 30,948
Operating Income before
impairment of investment in
real estate . . . . . . . 5,002 4,144 4,492 4,457 4,258
Impairment of investment
in real estate . . . . . . 4,408 -- -- -- --
Operating Income . . . 594 4,144 4,492 4,457 4,258
Gain (Loss) on Sale of
Property . . . . . . . . . (23) 355 2,358 4,111 --
Cash and Cash
Equivalents . . . . . 8,971 9,373 13,234 13,299 9,258
Total Assets (Historical
Cost Basis) . . . . . . 209,334 217,854 225,248 244,264 254,299
Total Assets (Current
Value Basis) . . . . . 199,709 195,916 190,237 214,807 255,452
Rental Income . . . . . 27,455 25,831 25,782 28,681 30,174
Interest Income . . . . 367 301 339 372 336
Earnings per Weighted
Average Unit . . . . .04 .35 .54 .67 .33
Cash Distributions per
Unit . . . . . . . . . . . . .72 .91 1.92 1.31 .50
Net Asset Value per
Unit . . . . . . . . . . . . 15.24 14.96 14.50 16.32 19.39
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Liquidity and Capital Resources
On December 21, 1995 approximately 12,100 square feet of land at Powell Street
Plaza was condemned, for purposes of road construction, by the State of
California Department of Transportation. Net proceeds to the Partnership were
approximately $271,000, after paydown of a portion of the City's special
assessment.
The Registrant has current Reserves of $4.5 million, including approximately
$3.8 million retained from cash generated from operations in 1995 and $.3
million from the proceeds for the land condemned at Powell Street Plaza. During
the year ended December 31, 1995, the Partnership expended approximately $4.5
million for capital improvements. At December 31, 1995, the Registrant had
approximately $.9 million of outstanding commitments for capital improvements
and approximately $4.8 million of projected capital improvements (collectively
"Capital Costs") related to existing Investments in Properties. The projected
capital improvements consist primarily of estimated tenant improvements and
leasing commissions for speculative leasing activity at certain properties,
which, based on activity in the marketplace, may or may not materialize. The
Registrant expects to fund Capital Costs throughout 1996 from existing Reserves
and the retention of a portion of cash generated from operations. The General
Partners will continue to review the Reserves quarterly to determine whether
cash distributions should be adjusted.
If sufficient capital is not available at the time of a funding of Capital
Costs, the General Partners will review such Capital Costs and take such steps
as they consider appropriate, including decreasing future cash distributions
from operations, negotiating a delay or other restructuring of the capital
funding requirements related to an Investment in Properties or borrowing money,
as provided in the Partnership Agreement, on a short-term basis to pay Capital
Costs.
Results of Operations
1995 versus 1994
Operating income for the year ended December 31, 1995 decreased approximately
$3,550,000 from 1994 resulting primarily from an impairment loss of
approximately $4,408,000 reflected in the 1995 Statement of Income. Revenue
increased approximately $1,984,000 from 1994, resulting primarily from an
increase in rental revenue at the majority of the properties. The most
significant increases in rental revenue occurred at Oakland Pointe and Marina
Bay Industrial Park, as a result of increased occupancy, and at Summit Village,
as a result of an increase in rental rates. The increase in other income of
approximately $294,000 for the year ended December 1995 is attributable to
receipt of lease termination fees at Three Riverside Drive and 117 Flanders
Road.
Property operating expenses for the year ended December 31, 1995 decreased
approximately $200,000 in comparison to 1994, primarily as a result of
decreases in operating expenses at certain retail and office and industrial
properties. The majority of the decrease is due to decreased operating expenses
at Town Center Business Park and Oakland Pointe. The increase in depreciation
and amortization expense is primarily a result of the write-off of the
unamortized cost of the tenant improvements and leasing commissions associated
with a tenant that vacated Village Square Shopping Center. The investment
portfolio fee increased slightly due to an increase in net assets at current
value as discussed below. Based on an analysis performed on each property, it
was necessary to increase the allowance for doubtful accounts at certain
properties, including approximately $319,000 related to the tenant that vacated
Village Square and approximately $140,000 related to Town Center Business Park.
Cash generated from operations per Unit, excluding the proceeds from the sale
of the building at Westgate Distribution Center, for 1995 and 1994 was $1.02
and $.90, respectively. The Registrant made cash distributions of $.72 and
$.91 per Unit to Unitholders for the years ended December 31, 1995 and 1994,
respectively, including the $.19 per Unit special distribution made in December
1994 from the proceeds from the sale of the building at Westgate Distribution
Center.
Net Asset Value per Unit increased to $15.24 at December 31, 1995 from $14.96
at December 31, 1994. The increase in Net Asset Value per Unit is attributable
to the increases in the appraised values of certain of the Registrant's
properties, primarily Cross Pointe Centre and Powell Street Plaza. The
increase in value in Cross Pointe Centre is a result of an increase in leased
percentage, from 82% to approximately 90%, in conjunction with a stronger
tenant mix, including an expansion of a proven anchor tenant and a reduced
vacancy allowance. Powell Street Plaza's increase in value is primarily due to
an increase in percentage rent with stable cash flow and modest lease
expirations projected over the next few years. These value increases were
partially offset by decreases in the appraised value of Village Square Shopping
Center and Oakland Pointe Shopping Center. The decrease in appraised value of
Village Square Shopping Center is a result of a significant decrease in its
occupancy rate. The General Partners are currently considering options for the
future strategy of this property. Part of this strategy includes a change in
the property management firm, effective in April 1996. The majority of the
decrease in appraised value of Oakland Pointe Shopping Center is a result of a
change in renewal assumptions associated with a major tenant and an increase in
the vacancy assumptions.
1994 versus 1993
Operating income for the year ended December 31, 1994 decreased approximately
$348,000 from 1993, resulting primarily from the increased amortization expense
due to the write-off of the unamortized cost of certain tenant improvements and
leasing commissions for certain retail properties. Rental revenue increased
slightly for the year ended 1994. Increases in revenues at certain residential
and retail properties, in particular Powell Street and Village Square, were
partially offset by reduced revenues at certain of the office/industrial
properties, primarily Town Center and Marina Bay. The effect of the loss of
income at Westgate Distribution Center due to the sale of the building was more
than offset by the increase in operating income from 1993, partially
attributable to the completion of the third building in Phase II. Other income
increased approximately $54,000 for the year ended December 1994 due mainly to
increases at the residential properties partially offset by a decrease in other
income due to the sale of Lincoln Harbour in January 1993.
Property operating expenses for the year ended December 31, 1994 remained
stable in comparison to 1993; increases in operating expenses at certain
residential and office/industrial properties were offset by decreases at most
of the retail properties and, to a lesser extent, a decrease due to the sale of
Lincoln Harbour in January 1993.
Cash generated from operations per Unit, excluding the proceeds from the sales
of the building at Westgate Distribution Center and Lincoln Harbour, for 1994
and 1993 was $.90 and $.89, respectively. The Registrant made cash
distributions of $.91 and $1.92 per Unit to Unitholders for the years ended
December 31, 1994 and 1993, respectively, including the $.19 per Unit special
distribution made in December 1994 and the $1.20 per Unit special distribution
made in February 1993 from the proceeds from the sales of the building at
Westgate Distribution Center and Lincoln Harbour, respectively.
The net asset value of the Registrant's Units, based upon quarterly independent
appraisals, increased to $14.96 at December 31, 1994 from $14.50 at December
31, 1993. The increase in Net Asset Value per Unit is attributable to the
increases in the appraised values of certain of the Registrant's properties,
primarily Oakland Pointe and Powell Street. The increase in appraised value in
Oakland Pointe is a result of improved occupancy, from 74% to 90%, capital
costs incurred, a reduced vacancy allowance and a reduction in operating
expenses, primarily real estate taxes, for future years. Powell Street's
increase in appraised value is primarily due to an increase in percentage rent
with stable cash flow and modest lease expirations over the next few years.
These increases were partially offset by a decrease in Net Asset Value per Unit
attributable to the special distribution of a portion of the sale proceeds
related to the sale of a building at Westgate Distribution Center in December
1994. Although there was no significant impact on net asset value, Town
Center's occupancy continues to be low. Town Center saw some improvement in
occupancy, from 62% to 74%, however market rents were adjusted, resulting in
lower effective rents and a slight decrease in appraised value. While efforts
to secure tenants for the property are ongoing, the weak economic conditions in
Southern California have made it difficult to attract qualified lessees.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The Registrant has no officers or directors. Aetna/AREA and AREA GP, the
General Partners of the Registrant, jointly manage and control the affairs of
the Registrant and have general responsibility and authority in all matters
affecting its business.
Certain officers and directors of AREA GP are now serving (or in the past have
served) as officers or directors of entities which act as general partners of a
number of real estate limited partnerships, unrelated to the Registrant, which
have sought protection under the provisions of the Federal Bankruptcy Code. The
partnerships which have filed bankruptcy petitions own real estate which has
been adversely affected by the economic conditions in the markets in which the
real estate is located and, consequently, the partnerships sought protection of
the bankruptcy laws to protect the partnerships' assets from loss through
foreclosure. As compared to the Registrant, many of these partnerships had
different investment objectives, including the use of leverage.
Certain Matters Involving Affiliates of AREA GP Corporation
On July 31, 1993 Shearson Lehman Brothers Inc. ("Shearson") sold certain of its
domestic retail brokerage and asset management businesses to Smith Barney,
Harris Upham & Co. Incorporated ("Smith Barney"). Subsequent to this sale
Shearson changed its name to Lehman Brothers, Inc. The transaction did not
affect the ownership of AREA GP. However as a result of this transaction, the
general partner changed its name from Hutton/AREA Corporation to AREA GP
Corporation.
Item 11. Executive Compensation.
No compensation was paid by the Registrant to the officers or directors of
either of the General Partners. See Item 13 below for a description of the
compensation and fees paid to the General Partners and their Affiliates by the
Registrant.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
As of March 15, 1996, no person was known by the Registrant to be the
beneficial owner of more than five percent of the Units of the Registrant. The
Registrant has no directors or officers, and as of March 15, 1996, neither of
the General Partners of the Registrant owns any Units, though together they own
a 1% general partnership interest in the Registrant. As of March 15, 1996, no
directors or officers of AREA GP owned or beneficially owned any Units. As of
March 15, 1996, no directors of Aetna/AREA owned any Units, and as of such
date, officers of Aetna/AREA as a group beneficially owned approximately 340
Units, which constituted less than 1% of the outstanding Units. The Registrant
knows of no arrangements, the operation or the terms of which may at a
subsequent date result in a change in control of the Registrant.
Item 13. Certain Relationships and Related Transactions.
The General Partners and their Affiliates have received or will receive certain
types of compensation, fees, or other distributions in connection with the
operations of the Registrant. The arrangements for payment of compensation and
fees were not determined in arms-length negotiations with the Registrant. The
General Partners are entitled to receive an investment portfolio fee based on
the net asset value of the Registrant's investments. The fee is payable
quarterly from available cash flow and may not exceed 2.5% per annum of net
asset value. For the year ended December 31, 1995, Aetna/AREA and AREA GP were
entitled to fees of $1,925,626 and $2,888,439, respectively, totaling
$4,814,066.
During the year ended December 31, 1995, $403,479 was paid to Aetna Life
Insurance Company, an affiliate of Aetna/AREA, primarily as reimbursement for
insurance expense previously paid on behalf of the Registrant by Aetna Life
Insurance Company to persons not affiliated with the Registrant.
As required by the Registrant's Revised Limited Partnership Agreement, the
General Partners' distributions aggregating $92,542 which pertain to operations
for the quarters ended September 30, 1995, June 30, 1995, March 31, 1995 and
December 31, 1994, were withheld by the Registrant since funds of equal amount
would have to be contributed to the Registrant at the end of the year.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K.
The following documents are filed as part of this report:
(a) 1. Financial Statements:
See List of Financial Statements and Financial Statement
Schedule in Item 8.
2. Financial Statement Schedules:
See List of Financial Statements and Financial Statement
Schedule in Item 8.
3. Exhibits:
3.1 Form of Subscription Agreement (incorporated by
reference to Post-Effective Amendment No. 15 to the
Registrant's Registration Statement on Form S-11,
File No. 33-2264).
3.2 Revised Limited Partnership Agreement of the
Registrant (incorporated by reference to
Post-Effective Amendment No. 15 to the Registrant's
Registration Statement on Form S-11, File No.
33-2264).
3.3 Form of Certificate of Limited Partnership Interest
(incorporated by reference to Post-Effective
Amendment No. 14 to the Registrant's Registration
Statement on Form S-11, File No. 33-2264).
3.4 Form of Distribution Reinvestment Plan Election Card
(incorporated by reference to Post-Effective
Amendment No. 15 to the Registrant's Registration
Statement on Form S-11, File No. 33-2264).
4.1 Revised Depositary Agreement of the Registrant
(incorporated by reference to Post-Effective
Amendment No. 14 to the Registrant's Registration
Statement on Form S-11, File No. 33-2264).
4.2 See Exhibits 3.1, 3.2, 3.3, and 3.4.
4.3 Distribution Reinvestment Plan of the Registrant
(incorporated by reference to Post-Effective
Amendment No. 2 to the Registrant's Registration
Statement on Form S-11, File No. 33-2264).
4.4 Revised Form of Depositary Receipt of the Registrant
(incorporated by reference to Post-Effective
Amendment No. 17 to the Registrant's Registration
Statement on Form S-11, File No. 33-2264).
4.5 Form of Distribution Reinvestment Plan
Administration Agreement (incorporated by reference
to Post-Effective Amendment No. 8 to the
Registrant's Registration Statement on Form S-11,
File No. 33-2264).
10.1 Revised Escrow Agreement (incorporated by reference
to Post-Effective Amendment No. 15 to the
Registrant's Registration Statement on Form S-11,
File No. 33-2264).
10.2 See Exhibits 4.1 and 4.5.
10.3 Custody Agreement (incorporated by reference to
Post-Effective Amendment No. 15 to the Registrant's
Registration Statement on Form S-11, File No.
33-2264).
10.4 Processing Agreement (incorporated by reference to
Post-Effective Amendment No. 15 to the Registrant's
Registration Statement on Form S-11, File No.
33-2264).
10.5 Amendment to Revised Escrow Agreement, dated March
4, 1991 (incorporated by reference to Form 10-K for
the year ended December 31, 1990).
10.6 Amendment to Custody Agreement, dated March 4, 1991
(incorporated by reference to Form 10-K for the year
ended December 31, 1990).
10.7 Amendment to Processing Agreement, dated March 4,
1991 (incorporated by reference to Form 10-K for the
year ended December 31, 1990).
22 Subsidiaries of the Registrant (incorporated by
reference to Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on Form S-11,
File No. 33-2264).
(b) There were no reports on Form 8-K filed in the fourth quarter of fiscal
year 1995.
(c) See Exhibit Index contained herein.
(d) See List of Financial Statements and Financial Statement Schedule
included in Item 8.
INDEX TO EXHIBITS
Exhibit Page
3.1 Form of Subscription Agreement (incorporated by reference to
Post-Effective Amendment No. 15 to the Registrant's Registration
Statement on Form S-11, File No. 33-2264) *
3.2 Revised Limited Partnership Agreement of the Registrant (incorporated
by reference to Post-Effective Amendment No. 15 to the Registrant's
Registration Statement on Form S-11, File No. 33-2264) *
3.3 Form of Certificate of Limited Partnership Interest (incorporated by
reference to Post-Effective Amendment No. 14 to the Registrant's
Registration Statement on Form S-11, File No. 33-2264) *
3.4 Form of Distribution Reinvestment Plan Election Card (incorporated by
reference to Post-Effective Amendment No. 15 to the Registrant's
Registration Statement on Form S-11, File No. 33-2264) *
4.1 Revised Depositary Agreement of the Registrant (incorporated by
reference to Post-Effective Amendment No. 14 to the Registrant's
Registration Statement on Form S-11, File No. 33-2264) *
4.2 See Exhibits 3.1, 3.2, 3.3, and 3.4 *
4.3 Distribution Reinvestment Plan of the Registrant (incorporated by
reference to Post-Effective Amendment No. 2 to the Registrant's
Registration Statement on Form S-11, File No. 33-2264) *
4.4 Revised Form of Depositary Receipt of the Registrant (incorporated by
reference to Post-Effective Amendment No. 17 to the Registrant's
Registration Statement on Form S-11, File No. 33-2264) *
4.5 Form of Distribution Reinvestment Plan Administration Agreement
(incorporated by reference to Post-Effective Amendment No. 8 to the
Registrant's Registration Statement on Form S-11, File No. 33-2264) *
10.1 Revised Escrow Agreement (incorporated by reference to Post-Effective
Amendment No. 15 to the Registrant's Registration Statement on Form
S-11, File No. 33-2264) *
10.2 See Exhibits 4.1 and 4.5 *
10.3 Custody Agreement (incorporated by reference to Post-Effective
Amendment No. 15 to the Registrant's Registration Statement on Form
S-11, File No. 33-2264) *
10.4 Processing Agreement (incorporated by reference to Post-Effective
Amendment No. 15 to the Registrant's Registration Statement on Form
S-11, File No. 33-2264) *
10.5 Amendment to Revised Escrow Agreement, dated March 4, 1991
(incorporated by reference to Form 10-K for the year ended December
31, 1990) *
10.6 Amendment to Custody Agreement, dated March 4, 1991 (incorporated by
reference to Form 10-K for the year ended December 31, 1990) *
10.7 Amendment to Processing Agreement, dated March 4, 1991 (incorporated by
reference to Form 10-K for the year ended December 31, 1990) *
22 Subsidiaries of the Registrant (incorporated by reference to
Post-Effective Amendment No. 11 to the Registrant's Registration
Statement on Form S-11, File No. 33-2264) *
*Incorporated by reference
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 this 27th day of
March 1996.
Aetna Real Estate Associates, L.P.
By: Aetna/AREA Corporation,
General Partner
By: /s/Daniel R. Leary
Daniel R. Leary
President
By: AREA GP Corporation,
General Partner
By: /s/Paul L. Abbott
Paul L. Abbott
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 27th, 1996, by the following persons on
behalf of the Registrant and in the capacities indicated.
Signature Title
/s/Daniel R. Leary President (Principal Executive Officer)
Daniel R. Leary and Director of Aetna/AREA Corporation
/s/Lee M. Farland Treasurer (Chief Financial Officer) of
Lee M. Farland Aetna/AREA Corporation
/s/Carol M. Kuta Comptroller of Aetna/AREA Corporation
Carol M. Kuta
/s/James W. O'Keefe Vice President and Director of
James W. O'Keefe Aetna/AREA Corporation
/s/Dean A. Lindquist Assistant Comptroller of Aetna/AREA
Dean A. Lindquist Corporation
/s/Paul L. Abbott Director, Chief Executive
Paul L. Abbott Officer, President and Chief
Financial Officer of AREA GP
Corporation
Item 8. Financial Statements and Supplementary Data.
AETNA REAL ESTATE ASSOCIATES, L.P.
(a Delaware limited partnership)
List of Financial Statements and Financial
Statement Schedule
Page
Report of Independent Accountants F-2
Report of Landauer Associates, Inc. F-3
Consolidated Balance Sheets (Historical Cost and
Current Value) December 31, 1995 and 1994 F-4
Consolidated Statements of Income (Historical
Cost) for the years ended December 31, 1995, 1994
and 1993 F-5
Consolidated Statements of Partners' Capital
(Deficiency) (Historical Cost) for the years ended
December 31, 1995, 1994 and 1993 F-6
Consolidated Statements of Partners' Capital
(Deficiency) (Current Value) for the years ended
December 31, 1995, 1994 and 1993 F-7
Consolidated Statements of Cash Flows (Historical
Cost) for the years ended December 31, 1995, 1994
and 1993 F-8
Consolidated Current Value Basis Statements of
Changes in Excess (Deficiency) of Current Value over
Historical Cost for the years ended December 31, 1995,
1994 and 1993 F-9
Notes to Consolidated Financial Statements F-10 - F-18
Report of Independent Accountants-
Supplementary Information F-19
The following financial statement schedule of
Aetna Real Estate Associates, L.P. required by Item
14 (d) is included in this Item 8:
Schedule III -- Real Estate and Accumulated
Depreciation F-20 - F-26
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission have been
omitted since: (1) the information required is disclosed in the financial
statements and notes thereto; (2) the schedules are not required under the
related instructions; or (3) the schedules are inapplicable.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Unitholders of
Aetna Real Estate Associates, L.P.:
We have audited the accompanying consolidated historical cost balance sheets of
Aetna Real Estate Associates, L.P. (the "Partnership") as of December 31, 1995
and 1994, and the related consolidated historical cost statements of income,
partners' capital and cash flows for each of the three years in the period
ended December 31, 1995. We have also audited the supplemental consolidated
current value basis balance sheets of Aetna Real Estate Associates, L.P. as
of December 31, 1995 and 1994, and the supplemental consolidated current value
basis statements of partners' capital and changes in the excess of current
value over historical cost for each of the three years in the period ended
December 31, 1995. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. Am audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principals used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the historical cost financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Aetna Real Estate Associates, L.P. at December 31, 1995 and 1994, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
As described in Note 3, during 1995, the Partnership adopted Financial
Accounting Standards Board Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of".
As described in Note 2, the supplemental consolidated current value financial
statements have been prepared by management to present relevant financial
information that is not provided by the consolidated historical cost financial
statements and are not intended to be a presentation in conformity with
generally accepted accounting principles. In addition, the supplemental
consolidated current value financial statements do not purport to present the
net realizable, liquidation, or market value of the Partnership as a whole.
Furthermore, amounts ultimately realized by the Partnership from the disposal
of properties may vary significantly from the current values presented.
In our opinion, the supplemental consolidated current value financial
statements referred to above present fairly, in all material respects, the
information set forth in them on the basis of accounting described in Note 2.
Coopers & Lybrand L.L.P.
Hartford, Connecticut
February 14, 1996
REPORT OF LANDAUER ASSOCIATES, INC.
LANDAUER ASSOCIATES, INC.
225 West Washington Street
Suite 1500
Chicago, IL 60606
(312) 899-0100
March 14, 1996 FAX (312) 899-0006
Coopers & Lybrand
and the Unitholders of Aetna
Real Estate Associates, L.P.
We have estimated the market value of certain real property (the
"Properties") owned by Aetna Real Estate Associates, L.P. (the
"Partnership") as of December 31, 1995. The Properties consist of the 14
properties identified in the Partnership's Form 10-K for the fiscal year
ended December 31, 1995.
Full annual valuation reports and three quarterly update reports were
performed for each of the Properties during 1995. In accordance with an
on-going schedule, the dates of the full annual valuations varied from
property to property during the course of the year. The quarterly
valuations, which were more limited in scope, were based on and subject to
the most recent full valuation. Each property was inspected at least once
during the course of the assignment. The reports were prepared in
accordance with the Code of Professional Ethics and Standards of
Professional Practice of the Appraisal Institute.
The aggregate market value estimate reported below is subject to the
detailed assumptions and limiting conditions with respect to each Property
contained, or incorporated by reference, in the Appraisal with respect to
such Property. The aggregate market value estimate is the sum of the
individual property market values and does not reflect any premium or
discount for the properties as a whole.
In our opinion, the aggregate market value of the Properties, as of
December 31, 1995 was:
ONE HUNDRED EIGHTY-NINE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS
$189,250,000
Landauer was not employed to provide legal analysis and assumes no
responsibility for any matters of a legal nature. Landauer was also not
employed to perform engineering inspections and assumes no responsibility
for structural and mechanical, electrical or any other construction
matters, or the ability of the underlying properties to withstand
climatic or seismic disruptions.
Neither Landauer Associates, Inc., its officers, or any staff employed on
the valuations have any present or contemplated future interests in the
Properties. We have no personal interest or bias with respect to the
subject matter or the parties involved. To the best of our knowledge and
belief, the facts upon which the analyses and conclusions are based are true
and correct. Landauer's fee for the assignment was in no way contingent
upon the values reported.
LANDAUER ASSOCIATES, INC.
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Balance Sheets
(Historical Cost and Current Value)
As of December 31, 1995 and 1994
(in thousands)
1995 1994
Current Current
Value Historical Value Historical
(Note 2) Cost (Note 2) Cost
Assets
Investments in real estate:
Properties $189,415 $244,351 $185,269 $241,333
Less write-down of property
for permanent impairment -- (4,408) -- --
Less accumulated depreciation
and amortization -- (43,761) -- (36,979)
Total investments in
real estate 189,415 196,182 185,269 204,354
Cash and cash equivalents 8,971 8,971 9,373 9,373
Rent and other receivables 1,310 4,168 1,261 4,114
Other 13 13 13 13
Total assets $199,709 $209,334 $195,916 $217,854
Liabilities and Partners' Capital
Liabilities:
Investment portfolio fee
payable to related
parties $ 1,212 $ 1,212 $ 1,188 $ 1,188
Accounts payable and
accrued expenses 451 451 566 566
Accrued property taxes 815 815 755 755
Security deposits 824 824 814 814
Unearned income 226 226 134 134
Total liabilities 3,528 3,528 3,457 3,457
Commitments (Note 14)
Partners' capital (deficiency):
General Partners (11) 85 (140) 79
Limited Partners 196,192 205,721 192,599 214,318
Total partners' capital 196,181 205,806 192,459 214,397
Total liabilities and
partners' capital $199,709 $209,334 $195,916 $217,854
The accompanying notes are an integral part of
these consolidated financial statements.
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Statements of Income (Historical Cost)
For the Years Ended December 31, 1995, 1994 and 1993
(in thousands, except units and per unit amounts)
1995 1994 1993
Revenue:
Rental $ 27,455 $ 25,831 $ 25,782
Interest 367 301 339
Other income 616 322 268
28,438 26,454 26,389
Expenses:
Property operating 9,179 9,379 9,355
Depreciation and
amortization 8,004 7,237 6,915
Investment portfolio fee
- related parties 4,814 4,712 4,662
General and administrative 725 749 692
Bad debt 714 233 273
23,436 22,310 21,897
Impairment of investment in
real estate (4,408) -- --
Operating income 594 4,144 4,492
(Loss) gain on sale of property (23) 355 2,358
Net income $ 571 $ 4,499 $ 6,850
Net income allocated:
To the General Partners $ 6 $ 45 $ 68
To the Limited Partners 565 4,454 6,782
$ 571 $ 4,499 $ 6,850
Weighted average number of
limited partnership units
outstanding 12,724,547 12,724,547 12,724,547
Earnings per limited
partnership unit $ .04 $ .35 $ .54
The accompanying notes are an integral part of
these consolidated financial statements.
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Statements of Partners' Capital (Deficiency) (Historical Cost)
For the Years Ended December 31, 1995, 1994 and 1993
(in thousands)
General Limited
Partners Partners Total
Balance at January 1, 1993 $(266) $239,075 $238,809
Capital contributions 478 -- 478
Net income 68 6,782 6,850
Cash distributions (246) (24,431) (24,677)
Balance at December 31, 1993 34 221,426 221,460
Capital contributions 117 -- 117
Net income 45 4,454 4,499
Cash distributions (117) (11,562) (11,679)
Balance at December 31, 1994 79 214,318 214,397
Capital contributions 92 -- 92
Net income 6 565 571
Cash distributions (92) (9,162) (9,254)
Balance at December 31, 1995 $ 85 $205,721 $205,806
The accompanying notes are an integral part of
these consolidated financial statements.
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Statements of Partners' Capital (Deficiency) (Current Value)
For the Years Ended December 31, 1995, 1994 and 1993
(in thousands)
General Limited
Partners Partners Total
Balance at January 1, 1993 $(560) $209,912 $209,352
Capital contributions 478 -- 478
Net income 68 6,782 6,850
Increase in deficiency of
current value over
historical cost (56) (5,498) (5,554)
Cash distributions (246) (24,431) (24,677)
Balance at December 31, 1993 (316) 186,765 186,449
Capital contributions 117 -- 117
Net income 45 4,454 4,499
Decrease in deficiency of
current value over
historical cost 131 12,942 13,073
Cash distributions (117) (11,562) (11,679)
Balance at December 31, 1994 $(140) $192,599 $192,459
Capital contributions 92 -- 92
Net income 6 565 571
Decrease in deficiency of
current value over
historical cost 123 12,190 12,313
Cash distributions (92) (9,162) (9,254)
Balance at December 31, 1995 $ (11) $196,192 $196,181
The accompanying notes are an integral part of
these consolidated financial statements.
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Statements of Cash Flows (Historical Cost)
For the Years Ended December 31, 1995, 1994 and 1993
(in thousands)
1995 1994 1993
Cash flows from operating activities:
Net income $ 571 $ 4,499 $ 6,850
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 8,004 7,237 6,915
Impairment of investment in real estate 4,408 -- --
Loss (gain) on sale of property 23 (355) (2,358)
Bad debt expense 714 233 273
Deferred (accrued) rental income (5) 52 (98)
Increase (decrease) in cash arising from
changes in operating assets and
liabilities:
Rent and other receivables (763) (678) 205
Investment portfolio fee payable
to related parties 24 37 (1,487)
Accounts payable and accrued expenses (115) (49) (109)
Accrued property taxes 60 18 (33)
Security deposits 10 (152) (163)
Unearned income 92 (37) (45)
Other liabilities -- (4) (64)
Net cash provided by operating
activities 13,023 10,801 9,886
Cash flows from investing activities:
Investments in real estate (4,534) (7,967) (3,804)
Proceeds from sale of property 271 4,867 18,052
Net cash (used in) provided by
investing activities (4,263) (3,100) 14,248
Cash flows from financing activities:
Cash distributions (9,254) (11,679) (24,677)
Partners' capital contributions 92 117 478
Net cash used in financing
activities (9,162) (11,562) (24,199)
Net decrease in cash and cash equivalents (402) (3,861) (65)
Cash and cash equivalents at beginning of year 9,373 13,234 13,299
Cash and cash equivalents at end of year $ 8,971 $ 9,373 $13,234
The accompanying notes are an integral part of
these consolidated financial statements.
AETNA REAL ESTATE ASSOCIATES, L.P.
Consolidated Current Value Basis Statements of Changes in
Excess (Deficiency) of Current Value Over Historical Cost
For the Years Ended December 31, 1995, 1994 and 1993
(in thousands)
Deficiency of current value over historical
cost at January 1, 1993 $(29,457)
Current value decrease in properties (3,250)
Increase in deficiency of current value over
historical cost resulting from sale of
property (2,206)
Increase in accrued rent (98)
(5,554)
Deficiency of current value over historical
cost at December 31, 1993 (35,011)
Current value increase in properties 11,913
Decrease in deficiency of current value over
historical cost resulting from sale of property 1,108
Decrease in accrued rent 52
13,073
Deficiency of current value over historical
cost at December 31, 1994 (21,938)
Current value increase in properties 7,910
Write-down of property for permanent impairment 4,408
Increase in accrued rent (5)
12,313
Deficiency of current value over historical
cost at December 31, 1995 $ (9,625)
The accompanying notes are an integral part of
these consolidated financial statements.
AETNA REAL ESTATE ASSOCIATES, L.P.
(a Delaware limited partnership)
Notes to Consolidated Financial Statements
1. ORGANIZATION
Aetna Real Estate Associates, L.P. ("the Partnership") was organized on
September 11, 1986 as a limited partnership under the laws of the State
of Delaware pursuant to a Certificate and Agreement of Limited
Partnership (the "Partnership Agreement"), as amended and restated. The
Partnership was formed for the purpose of making acquisitions in and
operating certain types of residential and commercial real estate,
either directly or through joint venture arrangements and, subject to
certain limitations, making participating investments, construction
loans and conventional mortgage loans. The General Partners of the
Partnership are Aetna/AREA Corporation ("Aetna/AREA"), an affiliate of
Aetna Life and Casualty Company, and AREA GP Corporation ("AREA GP"),
an affiliate of Lehman Brothers Inc., which, during 1993, changed its
name from Hutton/AREA Corporation. The Partnership will continue until
December 31, 2015 unless sooner terminated by law or in accordance with
the terms of the Partnership Agreement.
2. CURRENT VALUE BASIS FINANCIAL STATEMENTS
Current Value Reporting
The consolidated current value basis financial statements are presented
to provide supplementary information about the Partnership's financial
position and changes in partners' capital which is not provided by the
historical cost basis financial statements. The Partnership's
investments in real estate are subject to changes in value and,
therefore, their current values differ from their historical cost basis
net book values determined in conformity with generally accepted
accounting principles. The General Partners believe that reporting the
financial position on a current value basis is a more realistic basis
for reporting the Partnership's activities because of the changing
economic conditions affecting the real estate market.
As more fully explained below, estimates of the current values of the
Partnership's assets and liabilities are determined by the General
Partners. The estimates of current values of the Partnership's
investments in real estate are based upon independent appraisals of the
underlying real estate using generally accepted valuation techniques.
Such estimates of current value represent the value of real estate
assets held as investments for purposes of obtaining the benefit of
appreciation and operating cash flows.
The estimates do not necessarily represent the realizable sales values
of these assets at the date of valuation. Additionally, partners'
capital on a current value basis is not intended to represent the
liquidation value of the Partnership or the market value of its net
assets taken as a whole.
Bases of Valuation
The following describes the bases of the General Partners' estimates of
current values:
- The current values of the Partnership's operating properties
are determined by independent appraisers. Independent
appraisals of each property are performed at the date of
purchase and on a quarterly basis thereafter. The value of
future cash payments from joint venture partners or developers
and additional capital costs, if any, are determined by the
General Partners to the extent they have not been considered in
the independent appraisals.
- All other assets and liabilities are carried in the current
value basis balance sheets at the lower of cost or net
realizable value. Accrued rent related to scheduled rent
increases and tenant concessions, included in rent and other
receivables on the historical cost basis balance sheets, is
deemed to have a net realizable value of zero on a current
value basis.
- The aggregate difference between the current value basis and
historical cost basis of the Partnership's assets and
liabilities is reflected in the partners' capital accounts in
the current value basis balance sheets. The components of this
difference at December 31, 1995 and 1994 are as follows:
1995 1994
(in thousands)
Properties $(6,767) $(19,085)
Accrued rent (2,858) (2,853)
Deficiency of current value
over historical cost $(9,625) $(21,938)
3. SIGNIFICANT ACCOUNTING POLICIES
Financial Statements
The Partnership has a controlling interest in each of its joint venture
investments and, therefore, has consolidated the accounts of such joint
ventures in the financial statements. The consolidated financial
statements for 1995, 1994 and 1993 include the accounts of the
Partnership and its joint ventures Lincoln Marina Bay and Town Center
Associates. During 1993, the Partnership accepted its joint venture
partner's interest in Lincoln Square Associates, terminating the joint
venture effective December 1, 1993. All significant intercompany
accounts and transactions have been eliminated in consolidation.
Properties
The Partnership regularly evaluates the carrying value of its
properties. In 1995 the Partnership adopted Financial Accounting
Standards No. 121 (FAS 121), Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, which
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. FAS 121 also addresses the
accounting for long-lived assets that are expected to be disposed of.
During the fourth quarter of 1995, a permanent impairment write- down
of one investment property to bring the property's carrying value to
its estimated fair value resulted in a reduction of operating income of
approximately $4,408,000, and is reflected in the 1995 Statement of
Income. The property has experienced high vacancy with no new tenant
prospects in the near future thus causing the estimated undiscounted
cash flows to be less than the asset's carrying value. The estimated
fair value represents the property's current value, as discussed in
Note 2.
Investments in properties, which the Partnership has the intent to hold
for the production of income, are carried at depreciated cost, which
includes the initial purchase price of the property, plus closing
costs, acquisition and legal fees, and other miscellaneous acquisition
costs, net of impairment write-downs. Properties to be disposed of are
carried at the lower of depreciated cost or fair value less estimated
selling costs. Leases are accounted for under the operating method
where rental income is recognized on a straight-line basis. Expenses
including advertising, maintenance and repairs are charged to
operations as incurred. Significant betterments and improvements are
capitalized and depreciated over their estimated useful lives.
Depreciation is computed using the straight-line method based upon the
estimated useful lives, ranging from 5 to 50 years, of the respective
depreciable properties and improvements. Leasing commissions and tenant
improvements are amortized over the life of the respective leases or
the lives of the improvements, whichever is shorter. Properties to be
disposed of are not depreciated.
Use of Estimates
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 expense during the reporting period. Actual results could differ
from those estimates.
Cash Equivalents
For purposes of the consolidated statements of cash flows, the
Partnership considers all highly liquid debt instruments purchased with
a maturity of three months or less to be cash equivalents. Included in
cash and cash equivalents are restricted security deposits of $90,140
and $92,574 at December 31, 1995 and 1994, respectively. Also,
included in cash and cash equivalents at December 31, 1995 and 1994 was
$6,152,203 and $4,603,114, respectively, held in a mutual fund
utilizing investments such as commercial paper, certificates of deposit
and government obligations, which are carried at market value. The
cost of cash equivalents approximates fair value at December 31, 1995
and 1994.
At December 31, 1995 and 1994, approximately $927,000 and $960,000,
respectively, of the bank balances of the Partnership's checking and
money market accounts were insured by the Federal Deposit Insurance
Corporation ("FDIC") while approximately $2,760,000 and $4,406,000,
respectively, were uninsured. Included in the uninsured bank balances
was approximately $1,738,000 and $3,847,000 held at one major financial
institution at December 31, 1995 and December 31, 1994 respectively.
The remainder of the uninsured balances were held in multiple banks,
minimizing the risk of an isolated bank failure.
Income Taxes
No provision for income taxes has been made in the financial statements
since income, losses and tax credits are passed through to the
individual partners.
Earnings Per Limited Partnership Unit
Earnings per unit is based upon net income allocated to the Limited
Partners and their weighted average number of units outstanding during
the year.
Reclassifications
Certain 1994 and 1993 items have been reclassified to conform to the
1995 presentation.
4. SALE OF INVESTMENT IN REAL ESTATE
On December 21, 1995 approximately 12,100 square feet of land at Powell
Street Plaza was condemned, for the purpose of road construction, by
the State of California Department of Transportation. Net proceeds to
the Partnership were approximately $271,000. Loss on the sale included
in these consolidated financial statements was approximately $23,000
for the year ended December 31, 1995.
On October 18, 1994, one building at Westgate Distribution Center was
sold to its tenant at a gross sales price of $5,000,000. The current
value of this building at December 31, 1993 was approximately
$3,500,000. After closing costs and adjustments aggregating $133,162
and $43,246 respectively, net cash proceeds to the Partnership were
approximately $4,824,000. Gain on the sale included in these
consolidated financial statements was approximately $355,000 for the
year ended December 31, 1994.
On January 13, 1993, Lincoln Harbour Apartments was sold to an
unaffiliated party. The gross sales price of $18,270,000, paid in
cash, was approximately $370,000 greater than the property's appraised
value. After closing costs and adjustments aggregating $218,000 and
$286,000, respectively, net cash proceeds to the Partnership were
approximately $17,766,000. Gain on the sale included in these
consolidated financial statements was approximately $2,358,000 for the
year ended December 31, 1993.
5. RENT AND OTHER RECEIVABLES
Rent and other receivables at December 31, 1995 and 1994 are summarized
as follows:
1995 1994
Current Historical Current Historical
Value Cost Value Cost
Rent and reimbursements
receivable $2,033,809 $2,033,809 $1,453,129 $1,453,129
Prepaids and other
receivables 121,642 121,642 221,454 221,454
Accrued rent -- 2,857,756 -- 2,853,794
2,155,451 5,013,207 1,674,583 4,528,377
Less: allowance for
doubtful accounts (845,141) (845,141) (413,910) (413,910)
Total rent and other
receivables $1,310,310 $4,168,066 $1,260,673 $4,114,467
6. PARTNERSHIP ALLOCATIONS
Generally, net income and losses for any fiscal year and gains and
losses from sales are allocated 99% to the Limited Partners and 1% to
the General Partners.
The Partnership Agreement provides that net cash from operations, as
defined therein, and distributable proceeds from sale of investments
(other than from the sale of investments pursuant to the liquidation of
the Partnership) generally will be distributed, on a quarterly basis,
99% to the Limited Partners and 1% to the General Partners.
Distributable proceeds from the sale of investments in liquidation of
the Partnership will be distributed in accordance with the partners'
capital accounts after all allocations of income and loss. The
Partnership Agreement also provides for potentially substantial
compensation to be paid to the General Partners in the event the
Limited Partners elect to remove the General Partners.
7. JOINT VENTURES
The Partnership was a general partner in two consolidated joint
ventures as of December 31, 1995, 1994 and 1993. The joint venture
agreements in existence as of December 31, 1995 provide the Partnership
with priority cash payments from operations of the joint ventures
ranging from 9% to 13% per annum on all funds contributed by the
Partnership to the extent sufficient cash flows are generated by the
underlying properties. Any cash flows in excess of these payments to
the Partnership will be distributed to the Partnership and its joint
venture partners in accordance with their joint venture interests. The
Partnership's interests in its joint ventures range from 50% to 80%.
8. CAPITAL CONTRIBUTIONS/DISTRIBUTIONS
The Partnership initially offered up to $300,000,000 of depositary
partnership units representing units of limited partnership interests
and an additional $30,000,000 of units pursuant to the Partnership's
Distribution Reinvestment Plan ("DRIP"). Pursuant to such Plan,
Unitholders were entitled to elect to have their Partnership
distributions reinvested in new units.
Effective January 1, 1991, the Partnership suspended its initial
offering of $300,000,000 of units. In March 1992, the Partnership
terminated the offering and suspended sales of units pursuant to the
DRIP. During 1993, the Partnership received a favorable response to a
no-action request submitted to the Securities and Exchange Commission
regarding its ability to continue to sell units pursuant to the DRIP
without registration of such units under the Securities Act of 1933, as
amended. As of December 31, 1995, the Partnership had not reopened
sales of units pursuant to the DRIP. No additional units were issued
since 1991. Information related to Unitholders' distributions for the
years ended December 31, 1995, 1994 and 1993 is as follows:
Cash Distributions
Paid Per Unit
1995 $ 9,161,674 $ .72
1994 11,561,674 .91
1993 24,431,130 1.92
Cash distributions paid to Unitholders in 1994 and 1993 included
special distributions from the sale of properties discussed in Note 4.
Distributions paid during 1994 included $2,400,000 which resulted from
the sale of one building at Westgate Distribution Center. The cash
distributions paid to Unitholders in 1993 included a special
distribution of $15,269,456 from the sale of Lincoln Harbour.
The General Partners' distributions aggregating $92,542 and $116,785
for the years ended December 31, 1995 and 1994, respectively, were
withheld by the Partnership, since funds of an equal amount may have to
be contributed to the Partnership at the end of the year as required by
the Partnership's Revised Limited Partnership Agreement.
In addition, as required by the Partnership's Revised Limited
Partnership Agreement, during 1993 the General Partners contributed
$232,618 to the Partnership, which represents the General Partners'
distributions from 1992 of $168,376 and distributions from 1991 of
$64,242.
9. TRANSACTIONS WITH AFFILIATES
Investment Portfolio Fee
The General Partners are entitled to receive an investment portfolio fee
based on the net asset value of the Partnership's investments. The fee
is determined by applying various percentages, as specified in the
Partnership Agreement, to the portion of net asset value attributable to
committed and uncommitted funds available for investment. The fee is
payable quarterly from available cash flow and may not exceed 2.5% per
annum of net asset value. For the years ended December 31, 1995, 1994
and 1993, Aetna/AREA and AREA GP were entitled to fees as follows:
Aetna/AREA AREA GP
1995 $1,925,626 $2,888,440
1994 1,884,718 2,827,077
1993 1,864,681 2,797,021
Other
The General Partners are entitled to reimbursement of expenses paid on
behalf of the Partnership incurred in connection with the investments
and operation of the Partnership. Reimbursable expenses of $403,479,
$319,687 and $259,966, which consist primarily of insurance expense,
were charged during 1995, 1994 and 1993 respectively, by an affiliate of
Aetna/AREA.
10. LEASE AGREEMENTS
At December 31, 1995, the Partnership's principal assets subject to
lease agreements consisted of shopping centers, apartment complexes,
business parks and industrial parks. Apartment leases generally have
terms of 6 to 12 months and provide for a fixed minimum rent. Leases
with shopping center, industrial park and business park tenants
generally range in term from 1 to 10 years and provide for fixed minimum
rent and reimbursement of their proportionate share of operating
expenses. One lease at Westgate Distribution Center provides the lessee
the option to purchase the building within a specified period of time.
Included in rental revenue are $4,109,685, $3,455,573 and $3,771,471
primarily consisting of expense reimbursements for the years ended
December 31, 1995, 1994 and 1993, respectively. In addition, various
leases with shopping center tenants provide for additional rent based
upon percentages of tenants' sales volume. Percentage rent included in
rental revenue is $426,272, $270,561 and $73,913 for the years ended
December 31, 1995, 1994 and 1993, respectively. The following table is
a schedule of minimum future rents to be received under noncancelable
operating leases:
Year ending December 31,
1996 $17,634,727
1997 12,115,416
1998 9,810,328
1999 8,165,184
2000 6,396,935
Thereafter 21,263,705
Total $75,386,295
11. NET ASSET VALUE PER UNIT
Prior to the termination of the Offering and the Remarketing
Opportunity and the suspension of the DRIP in 1992, units offered to
new Unitholders or issued pursuant to the DRIP were purchased at net
asset value per unit as defined in the Partnership Agreement. As
discussed in Note 8, the Partnership had not reopened sales of units
pursuant to the DRIP as of December 31, 1995. The net asset value per
unit calculated in accordance with the Partnership Agreement, is
summarized as of December 31, 1995 and 1994 as follows:
1995 1994
Limited Partners' capital -
current value basis $196,192,156 $192,598,338
Cash to be distributed to
Limited Partners (2,290,418) (2,290,418)
$193,901,738 $190,307,920
Units outstanding 12,724,547 12,724,547
Net asset value per unit $ 15.24 $ 14.96
12. SUPPLEMENTARY INFORMATION
Maintenance and repairs, real estate taxes and advertising costs
included in property operating expenses for the years ended December
31, 1995, 1994 and 1993 are as follows:
1995 1994 1993
Maintenance and repairs $ 983,635 $1,065,895 $ 984,540
Real estate taxes 2,990,923 2,885,617 2,863,151
Advertising costs 255,119 349,185 407,545
13. RECONCILIATION OF FINANCIAL STATEMENT AND TAX INFORMATION
The following is a reconciliation of net income for financial statement
purposes to net income for federal income tax purposes for the years
ended December 31, 1995, 1994 and 1993:
1995 1994 1993
Net income per financial
statements $ 570,340 $4,499,375 $6,849,779
Gain on sale of property for
tax purposes less than gain
on sale of property per
financial statements -- (1,445) (277,517)
Joint venture net income for
tax purposes in excess of
joint venture net income per
financial statements 298,224 466,802 480,458
Depreciation deducted for tax
purposes less than depreciation
expense per financial
statements 1,591,245 644,077 756,799
Permanent impairment not
deductible for tax purposes 4,407,851 -- --
Rental income related to accrued
rent on wholly owned properties 109,766 (56,883) (367,264)
Bad debt expense deducted per
financial statements in excess
of (less than) bad debt expense
deducted for tax purposes 431,230 203,361 (179,658)
Other (58,719) (34,797) (24,021)
Taxable net income $7,349,937 $5,720,490 $7,238,576
The following is a reconciliation of partners' capital (historical
cost) for financial statement purposes to partners' capital for federal
income tax purposes as of December 31, 1995, 1994 and 1993:
1995 1994 1993
Partners' capital per
financial statements $205,806,275 $214,397,608 $221,460,155
Adjustment for cumulative
difference between tax
basis net income and net
income per financial
statements 10,846,661 4,067,064 2,845,949
Partners' capital per tax
return $216,652,936 $218,464,672 $224,306,104
14.COMMITMENTS
As of December 31, 1995, the Partnership had outstanding commitments of
approximately $.9 million relating to previously acquired investments.
Of this amount, $.7 million relates to the Partnership's commitment to
make additional capital contributions to a joint venture to complete
construction of tenant improvements and for leasing commissions.
15.SUBSEQUENT EVENTS
Capital Contributions/Distributions
In February 1996, the Partnership declared cash distributions of
$2,313,553 pertaining to the period from October 1, 1995 to December 31,
1995 of which $2,290,418, representing the Limited Partners' share, was
distributed on February 14, 1996.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Unitholders of
Aetna Real Estate Associates, L.P.
In connection with our audits of the consolidated financial statements of Aetna
Real Estate Associates, L.P. as of December 31, 1995 and 1994 and for each of
the three years in the period ended December 31, 1995, which financial
statements are included herein, we have also audited the related financial
statements schedule listed in the index on page F-1 herein.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
Coopers & Lybrand L.L.P.
Hartford, Connecticut
February 14, 1996
AETNA REAL ESTATE ASSOCIATES, L.P.
Schedule III - Real Estate and Accumulated Depreciation
As of December 31, 1995
Initial Cost
Buildings and
Description Encumbrances Land Improvements
Partnership Owned:
Cross Pointe
Shopping Center $ -- $3,300,000 $12,200,000
Centerville, OH
Gateway Square
Shopping Center -- 1,516,679 5,377,320
Hinsdale, IL
Lincoln Square
Apartment Complex -- 1,859,283 11,102,944
Arlington Hgts., IL
Oakland Pointe
Shopping Center -- 3,412,062 16,981,319
Pontiac, MI
Summit Village
Apartment Complex -- 5,395,408 30,154,302
Rosslyn, VA
Three Riverside Drive
Office/R&D Bldg. -- 1,722,156 7,389,779
Andover, MA
Village Square (b)
Shopping Center -- 2,710,355 4,103,802
Hazelwood, MO
Windmont Apartments
Apartment Complex -- 1,429,226 6,093,017
Atlanta, GA
115 & 117 Flanders Road
R&D Warehouse Bldgs. -- 2,369,342 8,947,868
Westborough, MA
Powell Street Plaza (c)
Shopping Center -- 9,196,813 20,167,160
Emeryville, CA
Westgate Distribution
Center (d) -- 3,916,801 6,047,987
Industrial Park
Corona, CA
Consolidated Ventures:
Marina Bay
Industrial Park -- 1,777,110 5,212,740
Richmond, CA
Town Center
Business Park -- 10,880,641 19,198,867
Santa Fe Springs, CA
$ -- $49,485,876 $152,977,105
See notes to Schedule III
AETNA REAL ESTATE ASSOCIATES, L.P.
Schedule III - Real Estate and Accumulated Depreciation (continued)
As of December 31, 1995
Costs Capitalized
Subsequent to Acquisition
Buildings and
Description Land Improvements
Partnership Owned:
Cross Pointe
Shopping Center $ 10,409 $ 6,750,403
Centerville, OH
Gateway Square
Shopping Center 799 451,627
Hinsdale, IL
Lincoln Square
Apartment Complex 1,660 494,567
Arlington Hgts., IL
Oakland Pointe
Shopping Center 7,112 2,242,508
Pontiac, MI
Summit Village
Apartment Complex 116,350 1,516,844
Rosslyn, VA
Three Riverside Drive
Office/R&D Bldg. (22,892) 1,032,705
Andover, MA
Village Square (b)
Shopping Center 285,346 1,009,703
Hazelwood, MO
Windmont Apartments
Apartment Complex 28,430 283,647
Atlanta, GA
115 & 117 Flanders Road
R&D Warehouse Bldgs. 7,016 942,758
Westborough, MA
Powell Street Plaza (c)
Shopping Center (68,973) 2,533,818
Emeryville, CA
Westgate Distribution
Center (d) 18,474 4,162,320
Industrial Park
Corona, CA
Consolidated Ventures:
Marina Bay
Industrial Park 166,987 3,723,034
Richmond, CA
Town Center
Business Park 94,939 11,690,293
Santa Fe Springs, CA
$ 645,657 $ 36,834,227
See notes to Schedule III
AETNA REAL ESTATE ASSOCIATES, L.P.
Schedule III - Real Estate and Accumulated Depreciation (continued)
As of December 31, 1995
Gross Amount at Which
Carried at End of Year
Buildings and
Description Land Improvements Total (a)
Partnership Owned:
Cross Pointe
Shopping Center $ 3,310,409 $18,950,403 $22,260,812
Centerville, OH
Gateway Square
Shopping Center 1,517,478 5,828,947 7,346,425
Hinsdale, IL
Lincoln Square
Apartment Complex 1,860,943 11,597,511 13,458,454
Arlington Hgts., IL
Oakland Pointe
Shopping Center 3,419,174 19,223,827 22,643,001
Pontiac, MI
Summit Village
Apartment Complex 5,511,758 31,671,146 37,182,904
Rosslyn, VA
Three Riverside Drive
Office/R&D Bldg. 1,699,264 8,422,484 10,121,748
Andover, MA
Village Square (b)
Shopping Center 2,995,701 5,113,505 8,109,206
Hazelwood, MO
Windmont Apartments
Apartment Complex 1,457,656 6,376,664 7,834,320
Atlanta, GA
115 & 117 Flanders Road
R&D Warehouse Bldgs. 2,376,358 9,890,626 12,266,984
Westborough, MA
Powell Street Plaza (c)
Shopping Center 9,127,840 22,700,978 31,828,818
Emeryville, CA
Westgate Distribution
Center (d) 3,935,275 10,210,307 14,145,582
Industrial Park
Corona, CA
Consolidated Ventures:
Marina Bay
Industrial Park 1,944,097 8,935,774 10,879,871
Richmond, CA
Town Center
Business Park 10,975,580 30,889,160 41,864,740
Santa Fe Springs, CA
$ 50,131,533 $189,811,332 $239,942,865 (d)
See notes to Schedule III
AETNA REAL ESTATE ASSOCIATES, L.P.
Schedule III - Real Estate and Accumulated Depreciation (continued)
As of December 31, 1995
Accumulated Date of
Description Depreciation (a) Construction
Partnership Owned:
Cross Pointe
Shopping Center $ 2,529,590 1985
Centerville, OH
Gateway Square
Shopping Center 1,682,385 1986
Hinsdale, IL
Lincoln Square
Apartment Complex 3,541,578 1986
Arlington Hgts., IL
Oakland Pointe
Shopping Center 5,888,573 1987
Pontiac, MI
Summit Village
Apartment Complex 6,878,001 1987/1989
Rosslyn, VA
Three Riverside Drive
Office/R&D Bldg. 2,406,371 1986
Andover, MA
Village Square (b)
Shopping Center 2,609,207 1961/1988
Hazelwood, MO
Windmont Apartments
Apartment Complex 1,530,177 1989
Atlanta, GA
115 & 117 Flanders Road
R&D Warehouse Bldgs. 2,537,033 1986/1988
Westborough, MA
Powell Street Plaza
Shopping Center 4,163,006 1988
Emeryville, CA
Westgate Distribution
Center 1,434,421 1989
Industrial Park
Corona, CA
Consolidated Ventures:
Marina Bay
Industrial Park 2,157,427 1962/1987
Richmond, CA
Town Center
Business Park 6,403,447 1982
Santa Fe Springs, CA
$ 43,761,216 (e)
See notes to Schedule III
AETNA REAL ESTATE ASSOCIATES, L.P.
Schedule III - Real Estate and Accumulated Depreciation (continued)
As of December 31, 1995
Life on which
Depreciation in
Latest Income
Date Statement
Description Acquired is Computed
Partnership Owned:
Cross Pointe
Shopping Center 10/3/86 40 years
Centerville, OH
Gateway Square
Shopping Center 11/21/86 33 years
Hinsdale, IL
Lincoln Square
Apartment Complex 11/14/86 33 years
Arlington Hgts., IL
Oakland Pointe
Shopping Center 1/26/88 33 years
Pontiac, MI
Summit Village 6/09/87 and
Apartment Complex 8/31/89 40 years
Rosslyn, VA
Three Riverside Drive
Office/R&D Bldg. 2/8/88 33 years
Andover, MA
Village Square
Shopping Center 6/24/87 33 years
Hazelwood, MO
Windmont Apartments
Apartment Complex 7/18/89 33 years
Atlanta, GA
115 & 117 Flanders Road 2/8/88 and
R&D Warehouse Bldgs. 8/31/89 33 years
Westborough, MA
Powell Street Plaza
Shopping Center 2/16/90 33 years
Emeryville, CA
Westgate Distribution
Center 2/22/90 50 years
Industrial Park
Corona, CA
Consolidated Ventures:
Marina Bay
Industrial Park 6/30/87 50 years
Richmond, CA
Town Center
Business Park 12/18/87 33 years
Santa Fe Springs, CA
See notes to Schedule III
AETNA REAL ESTATE ASSOCIATES, L.P.
Notes to Schedule III
(a) Reconciliation of the carrying amount of real estate investments and
accumulated depreciation for the years ended December 31, 1995, 1994
and 1993 is as follows:
1995 1994 1993
Balance of real estate investments
at beginning of year $241,332,804 $239,880,898 $254,401,946
Additions during year:
Improvements and additions 4,532,853 7,822,401 4,039,812
Deductions during year:
Costs of real estate sold (293,615) (4,646,536) (17,707,268)
Impairment (b) (4,407,851) -- --
Other (1) (1,221,326) (1,723,959) (853,592)
Balance of real estate investments
at close of year $239,942,865 $241,332,804 $239,880,898
Balance of accumulated depreciation
at beginning of year $36,978,911 $31,600,606 $27,551,440
Depreciation expense 8,003,631 7,236,999 6,915,536
Accumulated depreciation of real
estate sold -- (134,735) (2,012,778)
Other (1) (1,221,326) (1,723,959) (853,592)
Balance of accumulated depreciation
at close of year $43,761,216 $36,978,911 $31,600,606
(1) Write-off of tenant improvements and leasing commissions for vacated
tenants.
(b) In 1995, the cost of Village Square Shopping Center was written-down by
$4,407,851 for permanent impairment.
(c) In 1995, approximately 12,100 square feet of land was condemned at
Powell Street Plaza for the purpose of road construction. The initial
cost of land was reduced by $293,615.
(d) One of four buildings at Westgate Distribution Center was sold October
18, 1994. The Building was constructed subsequent to the initial
purchase of land and two other buildings. As a result of removing the
cost of real estate sold the initial purchase of the land was reduced
by $1,645,801 and subsequent cost of building and improvements was
reduced by $3,000,735.
(e) For Federal income tax purposes, the aggregate cost of land, buildings
and improvements is $241,963,476. The amount of accumulated
depreciation on real property for Federal income tax purposes is
$40,165,016.
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 8,971,000
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<RECEIVABLES> 5,013,000
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