<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 7, 1997
U.S. RESTAURANT PROPERTIES MASTER L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-9079 41-1541631
(STATE OF OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION OR IDENTIFICATION NO.)
ORGANIZATION)
5310 Harvest Hill Rd.
Suite 270, LB 168
Dallas, Texas 75230
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
972-387-1487
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
1
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U.S. RESTAURANT PROPERTIES MASTER L.P.
--------------------------------------
Item 2. Acquisition or Disposition of Assets............................... 3
Item 7. Financial Statements, Pro Forma Information and Exhibits........... 5
Charleston's of Norman, Inc. Statement of Revenues and Certain
Expenses for the fifty-two week period ended March 23, 1997...... 7
Statement of Revenues and Certain Expenses of the Property Sold to
U.S. Restaurant Properties Master L.P. by David E. Rodgers -
Trustee for the year ended December 31, 1996...................... 10
Statement of Revenues and Certain Expenses of Magazine Company
Property Sold to U.S. Restaurant Properties Master L.P. for the
year ended December 31, 1996...................................... 13
Statement of Revenues and Certain Expenses of Ribbit Holdings, Inc.
Property Sold to U.S. Restaurant Properties Master L.P. for the
nine months ended June 30, 1997................................... 17
Combined Statement of Revenues and Certain Expenses of Selected
Properties Sold to U.S. Restaurant Properties Master L.P. (Taco
Cabana Acquisition) for the year ended December 31, 1996.......... 20
Combined Statement of Revenues and Certain Expenses of BCL II,
L.P. Properties Sold to U.S. Restaurant Properties Master L.P.
for the year ended December 31, 1996.............................. 24
Combined Statement of Revenues and Certain Expenses of Selected
Properties Sold to U.S. Restaurant Properties Master L.P.
(Midon Acquisition) for the year ended December 31, 1996.......... 28
Financial information related to the acquisition of 16 restaurant
properties by U.S. Restaurant Properties Master L.P. from QSR
Income Properties, LTD............................................ 33
Pro forma Financial Information.................................... 34
2
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 7, 1997, U.S. Restaurant Properties Master L.P. (the "Registrant")
acquired one Charleston's restaurant property located in Oklahoma from
Charleston's of Norman, Inc., an Oklahoma corporation. The acquisition was done
pursuant to one purchase and sale agreement. The purchase price equaled
$1,750,000 in cash and other capitalized costs of approximately $25,000. The
Registrant used funds from operations to fund this acquisition.
On May 9, 1997, U.S. Restaurant Properties Master L.P. acquired one Wendy's
restaurant property located in Tennessee from David E. Rodgers - Trustee. The
acquisition was done pursuant to one purchase and sales agreement. The purchase
price equaled $648,000 in cash and other capitalized costs of approximately
$17,000. The selling entity was David E. Rodgers - Trustee. The Registrant used
funds from operations to fund this acquisition.
On May 20, 1997, U.S. Restaurant Properties Master L.P. acquired one Popeye's
restaurant property located in Louisiana from Magazine Company, a California
limited partnership. The acquisition was done pursuant to one purchase and sale
agreement. The purchase price equaled $253,204 in cash and other capitalized
costs of approximately $8,000. The Registrant used funds from operations to fund
this acquisition.
On July 2, 1997, U.S. Restaurant Properties Master L.P. acquired one Melvyn &
Elmo's Bagel and Caribou Coffee restaurant property located in Georgia from
Ribbit Holdings, Inc., a George corporation. The acquisition was done pursuant
to one purchase and sale agreement. The purchase price equaled $913,000 in cash
and other capitalized costs of approximately $18,000. The acquisition was funded
by the Registrant's bank line of credit.
On July 2, 1997, U.S. Restaurant Properties Master L.P. acquired five Taco
Cabana restaurant properties located in Texas. The acquisition was done pursuant
to three purchase and sale agreements and is collectively referred to as the
("Taco Cabana Acquisition"). The sellers to this transaction included three
Texas Joint ventures which consist of Friesenhahn-Stehling J.V., Friesenhahn-
Brundage J.V., and Friesenhahn Brundage J.V. II. The purchase price equaled
$5,559,384 in cash and other capitalized costs of approximately $97,000. The
acquisition was funded by the Registrant's bank line of credit.
On July 31, 1997, the Registrant acquired two restaurant properties with one
located in Oklahoma and one in Missouri. The acquisition was done pursuant to
one purchase and sale agreement from BCL II, L.P. a Missouri limited
partnership. The purchase price equaled $1,526,320 in cash and other capitalized
costs of approximately $46,000. The acquisition was funded by the Registrant's
bank line of credit.
On July 31, 1997, U.S. Restaurant Properties Master L.P. acquired 17 restaurant
properties located in New York. These restaurants are collectively referred to
as the "Midon Acquisition". The acquisition was done pursuant to one purchase
and sale agreement from The Midon Companies identified as Home Run associates, a
New York general partnership, Lathpar Corporation, a New York corporation,
Delpar Corporation, a New York corporation, Schenecpar Corporation, a New York
corporation, M & D Development, a New York general partnership, Westmere
Associates, a New York general partnership, Wolf Road Enterprises, a New York
general partnership, and 1041 Central Avenue Associates, a New York, general
partnership. The acquisition was done pursuant to one purchase and sale
agreement. The purchase price for the Midon acquisition equaled $2,600,000 in
cash and 335,218 partnership units (valued at $34.21 per unit on the closing
statement). The other capitalized costs on this acquisition were
3
<PAGE>
approximately $372,000. The partnership units market value on the closing date
equaled $31.25 per unit. The partnership units are guaranteed to have a market
value of $36.00 two years from the transaction date. The registrant funded the
cash portion of this transaction with the proceeds from the sale of 172,882
partnership units on July 30, 1997.
On July 31, 1997, U.S. Restaurant Properties Master L.P. acquired 16 restaurant
properties located in Colorado, Indiana, Illinois, Missouri, and Wisconsin and
promissory notes of $175,750. The restaurants are collectively referred to as
("QSR"). The acquisition was done pursuant to one purchase and sale agreement
from QSR Income Properties LTD, a California limited partnership. The purchase
price equaled $7,896,984 in cash and other capitalized costs of approximately
$183,000. The acquisition was funded by the Registrant's bank line of credit.
On various dates from May 1, 1997 through July 31, 1997 the Registrant acquired
six restaurant properties consisting of one Charleston's, one Caribou Coffee,
two Carlos O'Kelly's, and two Schlotzsky's/TM/. The properties are located in
Colorado, Iowa, North Carolina, and Oklahoma. The acquisitions were done
pursuant to six separate purchase and sale agreements. The restaurants were
acquired from HS-Real Estate, Inc., an Oklahoma corporation, Caribou Coffee
Company, Inc., a Minnesota corporation, Carlos O'Kelly's, Inc., a Kansas
corporation, and Schlotzsky's Real Estate, Inc., a Texas corporation. These
restaurant properties represent newly developed properties which do not have any
historical operations. The purchase price for these restaurant properties
equaled $6,665,601 in cash and other capitalized costs of approximately $81,000.
The acquisitions were funded by the Registrant's bank line of credit and funds
from operations.
In addition to the above acquisitions, one other property (the "Other Property")
was acquired on July 25, 1997. The property was purchased from TW South, Inc.,
a Texas corporation, for an aggregate cash purchase price of approximately
$1,250,000 and approximately $21,000 in other closing costs. The property
consists of one El Chico restaurant property located in Arkansas. The
acquisition was funded by the Registrant's bank line of credit.
The two newly constructed Carlos O'Kelly's restaurant properties were acquired
from Carlos O'Kelly's, Inc., which is owned by a director of the Managing
General Partner. The other sellers are not affiliated with the Registrant, any
director or officer of the Registrant or any associate of any such director or
officer.
The purchase prices, which were negotiated with the Sellers, were determined
through internal analysis by the Registrant of historical cash flows and fair
market values of the acquired Properties.
4
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
a)(3) Charleston's of Norman, Inc. Statement of Revenues and Certain
Expenses for the fifty-two week period ended March 23, 1997
Statement of Revenues and Certain Expenses of the Property Sold
to U.S. Restaurant Properties Master L.P. by David E. Rodgers
- Trustee for the year ended December 31, 1996
Statement of Revenues and Certain Expenses of Magazine Company
Property Sold to U.S. Restaurant Properties Master L.P. for
the year ended December 31, 1996
Statement of Revenues and Certain Expenses of Ribbit Holdings,
Inc. Property Sold to U.S. Restaurant Properties Master L.P.
for the nine months ended June 30, 1997
Combined Statement of Revenues and Certain Expenses of Selected
Properties Sold to U.S. Restaurant Properties Master L.P.
(Taco Cabana Acquisition) for the year ended December 31, 1996
Combined Statement of Revenues and Certain Expenses of BCL II,
L.P. Properties Sold to U.S. Restaurant Properties Master
L.P. for the year ended December 31, 1996.
Combined Statement of Revenues and Certain Expenses of Selected
Properties Sold to U.S. Restaurant Properties Master L.P.
(Midon Acquisition) for the year ended December 31, 1996.
Financial information related to the acquisition of 16
restaurant properties by U.S. Restaurant Properties Master
L.P. from QSR Income Properties, LTD.
b) Pro forma Financial Information
5
<PAGE>
INDEPENDENT AUDITORS' REPORT
U.S. Restaurant Properties Master L.P.
We have audited the Statement of Revenues and Certain Expenses (defined as being
operating revenues less direct operating expenses) of Charleston's of Norman,
Inc. acquired by U.S. Restaurant Properties Master L.P. for the fifty-two week
period ended March 23, 1997. This financial statement is the responsibility of
U.S. Restaurant Properties Master L.P.. Our responsibility is to express an
opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with rules and regulations of the Securities and Exchange
Commission for inclusion in the Form 8-K of U.S. Restaurant Properties Master
L.P. As described in Note 1 to the accompanying statement of revenues and
certain expenses, such statement is not intended to be a complete presentation
of revenues and expenses of the restaurant.
In our opinion, such statement of revenues and certain expenses presents fairly,
in all material respects, the revenues and certain expenses, as defined above,
of the Charleston's of Norman, Inc. acquired by U.S. Restaurant Properties
Master L.P. for the fifty-two week period ended March 23, 1997, in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Dallas, Texas
August 14, 1997
6
<PAGE>
CHARLESTON'S OF NORMAN, INC.
STATEMENT OF REVENUES AND CERTAIN EXPENSES
FIFTY-TWO WEEK PERIOD ENDED MARCH 23, 1997
<TABLE>
<CAPTION>
<S> <C>
SALES $2,977,544
DIRECT COSTS AND EXPENSES:
Cost of Food 1,015,988
Labor 849,732
Other Direct Operating Expenses 444,615
Management Fees 121,474
----------
TOTAL COSTS AND EXPENSES 2,431,809
----------
EXCESS OF STORE SALES OVER
CERTAIN DIRECT OPERATING EXPENSES $ 545,735
==========
</TABLE>
See Accompanying Notes to Statement of Revenues and Certain Expenses.
7
<PAGE>
CHARLESTON'S OF NORMAN, INC.
STATEMENT OF REVENUES AND CERTAIN EXPENSES
FIFTY-TWO WEEK PERIOD ENDED MARCH 23, 1997
1. BASIS OF PRESENTATION
The accompanying Statement of Revenues and Certain Expenses include the
operating results of the Charleston's of Norman, Inc. restaurant, which
property was acquired by U.S. Restaurant Properties Master L.P. ("USRP").
USRP did not purchase the restaurant operations. This statement does not
include any revenues or expenses related to any other properties owned by
Charleston's Enterprises, Inc. In accordance with the Securities and
Exchange Commission Rule 3.14, the statement does not include expenses not
comparable to the proposed future operations of the property such as
depreciation, interest, or any other costs that are directly associated with
the property.
2. SIGNIFICANT ACCOUNTING POLICIES
Sales are recorded at the time of the retail sale.
Other direct operating expenses represent kitchen and restaurant supplies,
linens, uniforms, utilities, advertising, licenses and other costs directly
associated with the restaurant operations.
The preparation of the statement in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the expected amounts of revenues and certain expenses during a
reporting period. Actual results could differ from those estimates.
3. MANAGEMENT FEES
Management fees are paid to Charleston's Enterprises, Inc., the owner of
Charleston's restaurants and represent the restaurants allocable share of
corporate office payroll for management and accounting and other corporate
operating costs.
4. LEASE ON PROPERTY
USRP entered into a lease with Charleston's of Norman, Inc. for the rental
of the restaurant property it purchased. The term of the lease is 14 years
expiring on May 6, 2011 with the option to renew the lease for two
additional terms of 10 years each. The annual base rent is $201,250 per year
through lease year four. On the first day of lease year five the annual rent
will be increased by nine percent of the immediately preceding annual base
rent. The base rent will increase every fifth anniversary thereafter
including renewal option years by nine percent over the immediately
preceding annual base rent. There is no percentage rent due under this
lease.
8
<PAGE>
INDEPENDENT AUDITORS' REPORT
U.S. Restaurant Properties Master L.P.
We have audited the accompanying statement of revenues and certain expenses of
the Property Sold to U.S. Restaurant Properties Master L.P. (the "Partnership")
by David E. Rodgers - Trustee for the year ended December 31, 1996. This
financial statement is the responsibility of the Partnership's management. Our
responsibility is to express an opinion on this statement based on our audit.
We conducted our audit 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 statement of revenues and certain expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Form 8-K of U.S. Restaurant Properties
Master L.P.. Material amounts, described in Note 1 to the statement of revenues
and certain expenses, that would not be comparable to those resulting from the
proposed future operations of the property sold to U.S. Restaurant Properties
Master L.P. are excluded and the statement is not intended to be a complete
presentation of the revenues and expenses of this property.
In our opinion, such statement of revenues and certain expenses presents fairly,
in all material respects, the revenues and certain expenses, as defined above,
of the Property Sold to U.S. Restaurant Properties Master L.P. by David E.
Rodgers -Trustee for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
June 25, 1997
9
<PAGE>
PROPERTY SOLD TO U.S. RESTAURANT PROPERTIES
MASTER L.P. BY DAVID E. RODGERS - TRUSTEE
STATEMENT OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
RENTAL INCOME
Minimum $ 42,000
Percentage 39,388
------------
TOTAL RENTAL INCOME 81,388
DIRECT EXPENSES 0
------------
NET RENTAL INCOME $ 81,388
============
</TABLE>
See Accompanying Notes to Financial Statement.
10
<PAGE>
NOTES TO THE PROPERTY SOLD TO U.S. RESTAURANT PROPERTIES MASTER L.P. BY DAVID E.
RODGERS - TRUSTEE FINANCIAL STATEMENT
1. Summary Of Significant Accounting Policies
Nature Of Operations
The accompanying Statement of Revenues and Certain Expenses includes one
property acquired by U.S. Restaurant Properties Master L.P. from David E.
Rodgers - Trustee (the "Trustee"). The statement does not include any
revenues or expenses related to any other properties owned or managed by the
Trustee. The property acquired is operated as a Wendy's restaurant. In
accordance with the Securities and Exchange Commission Rule 3.14 the
statement does not include expenses not comparable to the proposed future
operations of the property such as depreciation, interest, or any other
costs that are not directly associated with the property.
2. Use Of Estimates
The preparation of this financial statement in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and certain
expenses during a reporting period. Actual results could differ from those
estimates.
3. Rental Income
The property lease is a "triple net" lease which requires the lessee to pay
all taxes, assessments, insurance, maintenance costs and other charges
related to maintenance, repair and operation of the property. Certain
information regarding the property lease is set forth in the table below.
<TABLE>
<CAPTION>
MINIMUM
ANNUAL PERCENTAGE TERMINATION
LOCATION RENTAL RENTALS DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Blount County, TN $42,000 per year 5.0% of sales July 2007
through in excess of
7/22/07 $350,000
</TABLE>
The following is a schedule of minimum rental income on the non-cancelable lease
as of December 31, 1996:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 42,000
1998 42,000
1999 42,000
2000 42,000
2001 42,000
Thereafter 233,567
--------
$443,567
========
</TABLE>
11
<PAGE>
INDEPENDENT AUDITORS' REPORT
U.S. Restaurant Properties Master L.P.
We have audited the accompanying statement of revenues and certain expenses of
the Magazine Company Property Sold to U.S. Restaurant Properties Master L.P.
(the "Partnership") for the year ended December 31, 1996. This financial
statement is the responsibility of the Partnership's management. Our
responsibility is to express an opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Form 8-K of U.S. Restaurant Properties
Master L.P.. Material amounts, described in Note 1 to the statement of revenues
and certain expenses, that would not be comparable to those resulting from the
proposed future operations of the property sold to U.S. Restaurant Properties
Master L.P. are excluded and the statement is not intended to be a complete
presentation of the revenues and expenses of this property.
In our opinion, such statement of revenues and certain expenses presents fairly,
in all material respects, the revenues and certain expenses, as defined above,
of the Magazine Company Property Sold to U.S. Restaurant Properties Master L.P.
for the year ended December 31, 1996, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
June 25, 1997
12
<PAGE>
MAGAZINE COMPANY PROPERTY SOLD TO U.S. RESTAURANT PROPERTIES MASTER L.P.
STATEMENT OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
RENTAL INCOME
Minimum $ 36,515
------------
TOTAL RENTAL INCOME 36,515
DIRECT EXPENSE - MANAGEMENT FEES 1,102
------------
NET RENTAL INCOME $ 35,413
============
</TABLE>
See Accompanying Notes to Financial Statement.
13
<PAGE>
NOTES TO THE MAGAZINE COMPANY PROPERTY SOLD TO U.S. RESTAURANT PROPERTIES
MASTER L.P. FINANCIAL STATEMENT
1. Summary Of Significant Accounting Policies
Nature Of Operations
The accompanying Statement of Revenues and Certain Expenses includes one
property acquired by U.S. Restaurant Properties Master L.P. from Magazine
Company, a California limited partnership (the "Limited Partnership"). The
statement does not include any revenues or expenses related to any other
properties owned by the Limited Partnership. The property acquired is
operated as a Popeye's restaurant. In accordance with the Securities and
Exchange Commission Rule 3.14, the statement does not include expenses not
comparable to the proposed future operations of the property such as
depreciation, interest, or any other costs that are not directly associated
with the property.
2. Use Of Estimates
The preparation of this financial statement in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and certain expenses
during a reporting period. Actual results could differ from those estimates.
3. Rental Income
The property lease is a "triple net" lease which requires the lessee to pay
all taxes, assessments, insurance, maintenance costs and other charges
related to maintenance, repair and operation of the property. The lease
specifies increases in lease payments. The recognition of rental income has
been straight-lined over the lease term in accordance with generally accepted
accounting principles. Certain information regarding the property lease is
set forth in the table below.
<TABLE>
<CAPTION>
MINIMUM
ANNUAL PERCENTAGE TERMINATION
LOCATION RENTAL RENTALS DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New Orleans, LA $36,750 per year 5% of sales March 1999
through in excess of with two
3/15/99 $735,000 five-year
renewal
options
</TABLE>
The following is a schedule of minimum rental income on the non-cancelable
lease as of December 31,1996:
<TABLE>
<CAPTION>
<S> <C>
1997 $36,750
1998 36,750
1999 7,656
-------
$81,156
=======
</TABLE>
4. Management Fees and Related Parties
Management Fees are based upon 3 percent of the gross operating income
collected in the period from January 1, 1996 to December 31, 1996. These
fees were paid to Grammercy Enterprises, the general partner.
14
<PAGE>
NOTES TO THE MAGAZINE COMPANY PROPERTY SOLD TO U.S. RESTAURANT PROPERTIES MASTER
L.P. FINANCIAL STATEMENT (CONTINUED)
5. Subsequent Event
On May 20, 1997 the lease on this property was extended for an additional 10
years, with the expiration being March 15, 2009. The minimum rent was fixed
at $32,227 per year and two five-year renewal option periods were added to
the lease.
15
<PAGE>
INDEPENDENT AUDITORS' REPORT
U.S. Restaurant Properties Master L.P.
We have audited the accompanying statement of revenues and certain expenses of
the Ribbit Holdings, Inc. Property Sold to U.S. Restaurant Properties Master
L.P. (the "Partnership") for the nine months ended June 30, 1997. This financial
statement is the responsibility of the Partnership's management. Our
responsibility is to express an opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Form 8-K of U.S. Restaurant Properties
Master L.P.. Material amounts, described in Note 1 to the statement of revenues
and certain expenses, that would not be comparable to those resulting from the
proposed future operations of the property sold to U.S. Restaurant Properties
Master L.P. are excluded and the statement is not intended to be a complete
presentation of the revenues and expenses of this property.
In our opinion, such statement of revenues and certain expenses presents fairly,
in all material respects, the revenues and certain expenses, as defined above,
of the Ribbit Holdings, Inc. Property Sold to U.S. Restaurant Properties Master
L.P. for the nine months ended June 30, 1997, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
August 18, 1997
16
<PAGE>
RIBBIT HOLDINGS, INC. PROPERTY SOLD TO U.S. RESTAURANT PROPERTIES MASTER L.P.
STATEMENT OF REVENUES AND CERTAIN EXPENSES
FOR THE NINE MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
JUNE 30,
1997
------------
<S> <C>
RENTAL INCOME
Minimum $26,250
-------
TOTAL RENTAL INCOME 26,250
DIRECT EXPENSES
Insurance costs 2,261
Real estate taxes 4,958
-------
TOTAL DIRECT EXPENSES 7,219
-------
NET RENTAL INCOME $19,031
=======
</TABLE>
See Accompanying Notes to Financial Statement.
17
<PAGE>
NOTES TO THE RIBBIT HOLDINGS, INC. PROPERTY SOLD TO U.S. RESTAURANT PROPERTIES
MASTER L.P. FINANCIAL STATEMENT
1. Summary Of Significant Accounting Policies
Nature Of Operations
The accompanying Statement of Revenues and Certain Expenses includes one
property acquired by U.S. Restaurant Properties Master L.P. from Ribbit
Holdings, Inc., a Georgia corporation (the "Company"). The statement does
not include any revenues or expenses related to any other properties owned
by the Company and is presented after the elimination of all intercompany
balances as they pertain to the acquired property. The property acquired is
operated as a Melvyn & Elmo's Bagel and Caribou Coffee restaurant. The
property was vacant from October 1996 to April 1997 during which time the
owner was responsible for insurance and real estate taxes. A lease was
signed by the current tenant effective January 1997. Rent revenues were due
under such lease after completion of the renovations of the premises for its
current use which occurred April 1, 1997. In accordance with the Securities
and Exchange Commission Rule 3.14, the statement does not include expenses
not comparable to the proposed future operations of the property such as
depreciation, interest, or any other costs that are not directly associated
with the property.
2. Use Of Estimates
The preparation of this financial statement in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and certain
expenses during a reporting period. Actual results could differ from those
estimates.
3. Rental Income
The property lease is a "triple net" lease which requires the lessee to pay
all taxes, assessments, insurance, maintenance costs and other charges
related to maintenance, repair and operation of the property. Certain
information regarding the property lease is set forth in the table below.
<TABLE>
<CAPTION>
MINIMUM
ANNUAL PERCENTAGE TERMINATION
LOCATION RENTAL RENTAL DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Atlanta, GA $105,000 per year through 3/31/12 None March 31, 2012
with three five-
year renewal
options
</TABLE>
The following is a schedule of minimum rental income on
the non-cancelable lease as of June 30, 1997:
<TABLE>
<CAPTION>
<S> <C>
1998 $ 105,000
1999 105,000
2000 105,000
2001 105,000
2002 105,000
Thereafter 1,023,750
----------
$1,548,750
==========
</TABLE>
18
<PAGE>
INDEPENDENT AUDITORS' REPORT
U.S. Restaurant Properties Master L.P.
We have audited the accompanying combined statement of revenues and certain
expenses of Selected Properties Sold to U.S. Restaurant Properties Master L.P.
(Taco Cabana Acquisition) for the year ended December 31, 1996. This financial
statement is the responsibility of the management of U.S. Restaurant Properties
Master L.P.. Our responsibility is to express an opinion on this statement based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined statement of revenues and certain expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying combined statement of revenues and certain expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the Form 8-K of U.S.
Restaurant Properties Master L.P.. Material amounts, described in Note 1 to the
combined statement of revenues and certain expenses, that would not be
comparable to those resulting from the proposed future operations of the
properties sold to U.S. Restaurant Properties Master L.P. are excluded and the
statement is not intended to be a complete presentation of the revenues and
expenses of these properties.
In our opinion, such combined statement of revenues and certain expenses
presents fairly, in all material respects, the combined revenues and certain
expenses, as defined above, of Selected Properties Sold to U.S. Restaurant
Properties Master L.P. (Taco Cabana Acquisition) for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
July 2, 1997
19
<PAGE>
SELECTED PROPERTIES SOLD TO U.S. RESTAURANT PROPERTIES MASTER L.P.
(TACO CABANA ACQUISITION)
COMBINED STATEMENT OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
RENTAL INCOME
Minimum $ 673,172
Percentage 8,782
Cost reimbursement revenue 74,387
----------
TOTAL RENTAL INCOME 756,341
DIRECT EXPENSES
Real estate taxes 68,172
Other costs 6,215
----------
TOTAL DIRECT EXPENSES 74,387
----------
NET RENTAL INCOME $ 681,954
==========
</TABLE>
See Accompanying Notes to Financial Statement.
20
<PAGE>
NOTES TO THE SELECTED PROPERTIES SOLD TO U.S. RESTAURANT PROPERTIES MASTER L.P.
(TACO CABANA ACQUISITION) FINANCIAL STATEMENT
1. Summary Of Significant Accounting Policies
Nature Of Operations
The accompanying Combined Statement of Revenues and Certain Expenses
includes five properties acquired by U.S. Restaurant Properties Master L.P.
from Friesenhahn - Stehling, J.V., Friesenhahn - Brundage J.V., and
Friesenhahn Brundage J.V., II. Collectively the above entities are referred
to as (the "Company"). The properties are operated as Taco Cabana and
Sombrero Rosa restaurants. The statement does not include any revenues or
expenses related to any other properties owned by the Company. In accordance
with the Securities and Exchange Commission Rule 3.14 the statement does not
include expenses not comparable to the proposed future operations of the
properties such as depreciation, interest, or any other costs that are not
directly associated with the properties.
2. Use Of Estimates
The preparation of this financial statement in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and certain
expenses during a reporting period. Actual results could differ from those
estimates.
3. Rental Income
Certain leases during fiscal year 1996 were subject to floor amounts and
other variables as they pertained to percentage rents and other reimbursable
revenues. The properties are "triple net" leases which require the lessee to
pay all taxes, assessments, insurance, maintenance costs, and other charges
related to the maintenance, repair, and operation of the properties. Cost
reimbursement revenue represents amounts reimbursed by the tenants to the
Company for real estate taxes and insurance costs incurred. Certain
information regarding each property lease is set forth in the table below.
<TABLE>
<CAPTION>
MINIMUM
ANNUAL PERCENTAGE TERMINATION
LOCATION RENTAL RENTALS DATE
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
San Pedro Ave. $96,000 per year through 8/31/98 6.0% of August 2010
San Antonio, TX with increases every sales (in with two
three years equal to the excess of five-year
lesser of 1.09 times the minimum renewal
rent of the prior period rent) options.
or 637 times the Consumer
Price Index for September
of the year of the
increase.
</TABLE>
21
<PAGE>
NOTES TO THE SELECTED PROPERTIES SOLD TO U.S. RESTAURANT PROPERTIES MASTER L.P.
(TACO CABANA ACQUISITION) FINANCIAL STATEMENT (CONTINUED)
<TABLE>
<CAPTION>
MINIMUM
ANNUAL PERCENTAGE TERMINATION
LOCATION RENTAL RENTALS DATE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fredericksburg Rd $120,000 per year through 5/31/98 6.0% of May 2010
San Antonio, TX with increases every sales (in with two
three years equal to the excess of five-year
lesser of 1.09 times the minimum renewal
rent of the prior period rent) options.
or 801 times the Consumer
Price Index for June of
the year of the increase.
Perrin Beitel Rd 144,000 per year through 2/28/97 6.0% of February 2009
San Antonio, TX with increases every sales (in with two
three years equal to the excess of five-year
lesser of 1.09 times the minimum renewal
rent of the prior period rent) options.
or 997 times the Consumer
Price Index for March of
the year of the increase.
WurzBach Rd 156,586 per year through 3/31/98 6.0% of March 2007
San Antonio, TX with increases every sales (in with two
three years equal to the excess of five-year
lesser of 1.09 times the minimum renewal
rent of the prior period rent) options.
or 1,049 times the Consumer
Price Index for April of
the year of the increase.
Blanco Rd 156,586 per year through 3/31/98 6.0% of March 2007
San Antonio, TX with increases every sales (in with two
three years equal to the excess of five-year
lesser of 1.09 times the minimum renewal
rent of the prior period rent) options.
or 1,049 times the Consumer
Price Index for April of
the year of the increase.
</TABLE>
The following is a schedule of minimum rental income on the
non-cancelable leases as of December 31, 1996:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 673,171
1998 673,171
1999 673,171
2000 673,171
2001 673,171
Thereafter 4,518,149
----------
$7,884,004
==========
</TABLE>
22
<PAGE>
INDEPENDENT AUDITORS' REPORT
U.S. Restaurant Properties Master L.P.
We have audited the accompanying combined statement of revenues and certain
expenses of BCL II, L.P. Properties Sold to U.S. Restaurant Properties Master
L.P. (the "Partnership") for the year ended December 31, 1996. This financial
statement is the responsibility of the Partnership's management. Our
responsibility is to express an opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined statement of revenues and certain expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying combined statement of revenues and certain expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the Form 8-K of U.S.
Restaurant Properties Master L.P.. Material amounts, described in Note 1 to the
combined statement of revenues and certain expenses, that would not be
comparable to those resulting from the proposed future operations of the
properties sold to U.S. Restaurant Properties Master L.P. are excluded and the
statement is not intended to be a complete presentation of the revenues and
expenses of these properties.
In our opinion, such combined statement of revenues and certain expenses
presents fairly, in all material respects, the revenues and certain expenses, as
defined above, of BCL II, L.P. Properties Sold to U.S. Restaurant Properties
Master L.P. for the year ended December 31, 1996, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
August 19, 1997
23
<PAGE>
BCL II, L.P. PROPERTIES SOLD TO U.S. RESTAURANT PROPERTIES MASTER L.P.
COMBINED STATEMENT OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
RENTAL INCOME
<S> <C>
Minimum $313,867
Percentage 30,206
--------
TOTAL RENTAL INCOME 344,073
DIRECT EXPENSE - RENT EXPENSE 35,617
--------
NET RENTAL INCOME $308,456
========
</TABLE>
See Accompanying Notes to Financial Statement.
24
<PAGE>
NOTES TO THE BCL II, L.P. PROPERTIES SOLD TO U.S. RESTAURANT PROPERTIES
MASTER L.P. FINANCIAL STATEMENT
1) Summary of Significant Accounting Policies
Nature of Operations
The accompanying Combined Statement of Revenues and Certain Expenses
includes two properties acquired by U.S. Restaurant Properties Master L.P.
from BCL II, L.P., a Missouri limited partnership (the "Limited
Partnership"). The statement does not include any revenues or expenses
related to any other properties owned by the Limited Partnership. The
properties acquired are operated as Tippins restaurants. In accordance with
the Securities and Exchange Commission Rule 3.14 the statement does not
include expenses not comparable to the proposed future operations of the
property such as depreciation, interest, or any other costs that are not
directly associated with the properties.
2) Use of Estimates
The preparation of this financial statement in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and certain
expenses during a reporting period. Actual results could differ from those
estimates.
3) Rental Income
The properties are "triple net" leases which require the lessee to pay all
taxes, assessments, insurance, maintenance costs and other charges related
to maintenance, repair and operation of the property. One lease specifies
lease payment increases. The recognition of rental income has been straight-
lined over the lease term in accordance with generally accepted accounting
principles. Certain information regarding each of the property leases is set
forth in the table below.
<TABLE>
<CAPTION>
MINIMUM
ANNUAL PERCENTAGE TERMINATION
LOCATION RENTAL RENTAL DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Oklahoma City, OK $173,250 per year 4% of sales June 2004
through in excess of with three
6/03/04 $3,000,000 five-year
renewal
options
Independence, MO 139,931 per year 1% of sales February
through in excess 2007 with
2/9/97 of $1.25 to five
145,171 per year $1.5 million five-year
through 2% of sales renewal
2/9/02 in excess of options
151,196 per year $1.5 to $1.75
through million
2/9/07 3% of sales
in excess
of $1.75 to
$2.0 million
4% of sales
in excess
of $2.0 to
$2.5 million
1% of sales
in excess
of $2.5 million
</TABLE>
25
<PAGE>
NOTES TO THE BCL II, L.P. PROPERTIES SOLD TO U.S. RESTAURANT PROPERTIES
MASTER L.P. FINANCIAL STATEMENT (CONTINUED)
The following is a schedule of minimum rental income on the non-cancelable
leases as of December 31, 1996:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 317,984
1998 318,421
1999 318,421
2000 318,421
2001 318,421
Thereafter 1,201,203
----------
$2,792,871
==========
</TABLE>
4) Rental Expense
The land for one of the properties is leased from a third party. The lease
specifies lease payment increases. The recognition of rent expense has been
straight-lined over the lease term in accordance with generally accepted
accounting principles. Certain information regarding the property lease is
set forth in the table below.
<TABLE>
<CAPTION>
MINIMUM
ANNUAL PERCENTAGE TERMINATION
LOCATION RENTAL RENTAL DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Independence, MO $34,931 per year None February 2007 with
through five five-year
2/9/97 renewal options
40,171 per year
through
2/9/02
46,196 per year
through
2/9/07
The following is a schedule of minimum rental expense on the non-cancelable
lease as of December 31, 1996:
<S> <C>
1997 $ 39,734
1998 40,171
1999 40,171
2000 40,171
2001 40,171
Thereafter 234,328
--------
$434,746
========
</TABLE>
26
<PAGE>
INDEPENDENT AUDITORS' REPORT
U.S. Restaurant Properties Master L.P.
We have audited the accompanying combined statement of revenues and certain
expenses of Selected Properties Sold to U.S. Restaurant Properties Master
L.P.(the "Partnership") (Midon Acquisition) for the year ended December 31,
1996. This financial statement is the responsibility of the Partnership. Our
responsibility is to express an opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined statement of revenues and certain expenses
is free of material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the financial statement. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying combined statement of revenues and certain expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the Form 8-K of U.S.
Restaurant Properties Master L.P.. Material amounts, described in Note 1 to the
combined statement of revenues and certain expenses, that would not be
comparable to those resulting from the proposed future operations of the
properties sold to U.S. Restaurant Properties Master L.P. are excluded and the
statement is not intended to be a complete presentation of the revenues and
expenses of these properties.
In our opinion, such combined statement of revenues and certain expenses
presents fairly, in all material respects, the combined revenues and certain
expenses, as defined above, of Selected Properties Sold to U.S. Restaurant
Properties Master L.P. (Midon Acquisition) for the year ended December 31, 1996,
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
August 20, 1997
27
<PAGE>
SELECTED PROPERTIES SOLD TO
U.S. RESTAURANT PROPERTIES MASTER L.P. (MIDON ACQUISITION)
COMBINED STATEMENT OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
DECEMBER 31,
1996
---------------
<S> <C>
RENTAL INCOME
Minimum $1,356,758
Percentage 107,388
----------
TOTAL RENTAL INCOME 1,464,146
DIRECT EXPENSE - RENT EXPENSE 29,846
----------
NET RENTAL INCOME $1,434,300
==========
</TABLE>
See Accompanying Notes to Financial Statement.
28
<PAGE>
NOTES TO THE SELECTED PROPERTIES SOLD TO U.S. RESTAURANT PROPERTIES MASTER L.P.
(MIDON ACQUISITION) FINANCIAL STATEMENT
1) Summary of Significant Accounting Policies
Nature of Operations
The accompanying Combined Statement of Revenues and Certain Expenses
includes 17 properties acquired by U.S. Restaurant Properties Master L.P.
from The Midon Companies identified as Home Run Associates, a New York
general partnership, Saratoga Enterprises, a New York general partnership,
Lathpar Corporation, a New York corporation, Delpar Corporation, a New York
corporation, Schenecpar Corporation, a New York corporation, M&D
Development, a New York general partnership, Westmere Associates, a New York
general partnership, Wolf Road Enterprises, a New York general partnership,
and 1041 Central Avenue Associates, a New York partnership. Collectively the
above entities are referred to as (the "Company"). Thirteen of the
properties are operated as Burger King restaurants and four are operated as
Boston Market restaurants. The statement does not include any revenues or
expenses related to any other properties owned by the Company. In accordance
with the Securities and Exchange Commission Rule 3.14 the statement does not
include expenses not comparable to the proposed future operations of the
properties such as depreciation, interest, or any other costs that are not
directly associated with the properties.
2) Use of Estimates
The preparation of this financial statement in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and certain
expenses during a reporting period. Actual results could differ from those
estimates.
3) Rental Income
Certain leases during fiscal year 1996 were subject to floor amounts and
other variables as they pertained to percentage rents. All properties are
"triple net" leases which require the lessee to pay all taxes, assessments,
insurance, maintenance costs and other charges related to maintenance,
repair and operation of the properties. One of the leases specifies
increases in lease payments. The recognition of rental income has been
straight-lined over the lease term in accordance with generally accepted
accounting principles. Certain information regarding each property lease is
set forth in the table below.
<TABLE>
<CAPTION>
MINIMUM
ANNUAL PERCENTAGE TERMINATION
LOCATION RENTAL RENTAL DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Saratoga Springs, NY $36,000 per year None November
through 2000 with
11/19/00 three
five-year
renewal
options
Latham, NY 58,500 per year None November
through 2000 with
11/19/00 three
five-year
renewal
options
Delmar, NY 70,000 per year None November
through 2000 with
11/19/00 three
five-year
renewal
options
1720 Union St. 48,000 per year None November
Schenectady, NY through 2000 with
11/19/00 three
five-year
renewal
options
</TABLE>
29
<PAGE>
NOTES TO THE SELECTED PROPERTIES SOLD TO U.S. RESTAURANT PROPERTIES
MASTER L.P. (MIDON ACQUISITION) FINANCIAL STATEMENT (CONTINUED)
<TABLE>
<CAPTION>
MINIMUM
ANNUAL PERCENTAGE TERMINATION
LOCATION RENTAL RENTAL DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Glen Falls, NY $ 80,871 per year 8.5% of July 2014
through sales up to with four
7/31/14 $1,032,500 five-year
and 7% of renewal
sales over options
$1,032,500
less base
rent
1991 Western 80,518 per year 8.5% of July 2014
Albany, NY through sales up to with four
7/31/14 $1,053,000 five-year
and 7% of renewal
sales over options
$1,053,000
less base
rent
Wilton, NY 101,757 per year 8.5% of July 2014
through sales up to with four
7/31/14 $1,330,000 five-year
and 7% of renewal
sales over options
$1,330,000
less base
rent
901 Erie Blvd. 101,024 per year 8.5% of July 2014
Schenectady, NY through sales up to with four
7/31/14 $1,250,000 five-year
and 7% of renewal
sales over options
$1,250,000
less base
rent
1860 Central 76,018 per year 8.5% of July 2014
Albany, NY through sales up to with four
7/31/99 $850,000 five-year
81,008 per year and 7% of renewal
through sales over options
7/31/04 $850,000
84,161 per year less base
through rent
7/31/09
87,720 per year
through
7/31/14
Clifton Park, NY 122,110 per year 8.5% of July 2014
through sales up to with four
7/31/14 $1,400,000 five-year
and 7% of renewal
sales over options
$1,400,000
less base
rent
1480 Western 92,840 per year 8.5% of July 2014
Albany, NY through sales up to with four
7/31/14 $1,100,000 five-year
and 7% of renewal
sales over options
$1,100,000
less base
rent
439 Central 109,702 per year 8.5% of July 2014
Albany, NY through sales up to with four
7/31/14 $1,434,000 five-year
and 7% of renewal
sales over options
$1,434,000
less base
rent
158 Wolf Rd. 73,197 per year 8.5% of July 2014
Albany, NY through sales up to with four
7/31/14 $957,000 five-year
and 7% of renewal
sales over options
$957,000
less base
rent
</TABLE>
30
<PAGE>
NOTES TO THE SELECTED PROPERTIES SOLD TO U.S. RESTAURANT
PROPERTIES MASTER L.P. (MIDON ACQUISITION) FINANCIAL STATEMENT (CONTINUED)
<TABLE>
<CAPTION>
MINIMUM
ANNUAL PERCENTAGE TERMINATION
LOCATION RENTAL RENTAL DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cohoes, NY $80,358 per year 8.5% of July 2014
through sales up to with four
7/31/14 $1,025,000 five-year
and 7% of renewal
sales over options
$1,025,000
less base
rent
1041 Central 72,000 per year 8.5% of July 2014
Albany, NY through sales up to with four
7/31/14 $925,000 five-year
and 7% of renewal
sales over options
$925,000
less base
rent
Menands, NY 78,210 per year 8.5% of July 2014
through sales up to with four
7/31/14 $925,000 five-year
and 7% of renewal
sales over options
$925,000
less base
rent
Glenville, NY 69,444 per year 8.5% of July 2014
through sales up to with four
7/31/14 $925,000 five-year
and 7% of renewal
sales over options
$925,000
less base
rent
The following is a schedule of minimum rental income on the
non-cancelable leases as of December 31, 1996:
<S> <C>
1997 $ 1,350,549
1998 1,350,549
1999 1,352,628
2000 1,337,831
2001 1,143,039
Thereafter 14,432,563
-----------
$20,967,159
===========
</TABLE>
31
<PAGE>
NOTES TO THE SELECTED PROPERTIES SOLD TO U.S. RESTAURANT PROPERTIES
MASTER L.P. (MIDON ACQUISITION) FINANCIAL STATEMENT (CONTINUED)
4) Rental Expense
The land for one of the properties is leased from a third party. The lease
specifies increases in lease payments. The recognition of rent expense has
been straight-lined over the lease term in accordance with generally
accepted accounting principles. Certain information regarding the property
lease is set forth in the table below.
<TABLE>
<CAPTION>
MINIMUM
ANNUAL PERCENTAGE TERMINATION
LOCATION RENTAL RENTAL DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1860 Central $29,540 per year None May 2005
Albany, NY through with two
5/31/00 five-year
34,444 per year renewal
through options
5/31/05
The following is a schedule of minimum rental expense on the
non-cancelable lease as of December 31, 1996:
<S> <C>
1997 $ 29,540
1998 29,540
1999 29,540
2000 32,401
2001 34,444
Thereafter 117,684
--------
$273,149
========
</TABLE>
5) Related Parties
Midon Corporation, the lessee on three of the Burger King restaurants, is a
related party to the entities from which the above properties were
purchased.
32
<PAGE>
Financial information related to the acquisition of 16 restaurant properties by
U.S. Restaurant Master L.P. from QSR Income Properties LTD.
QSR Income Properties LTD is a publicly owned California limited partnership
("QSR"). With respect to QSR, as reported by its management, a net loss totaled
$1,484,000 for the year ended December 31, 1996 and net income of $465,000 for
the six months ended June 30, 1997. QSR reported total assets of $9,400,000 and
partners' equity of $9,243,000 as of December 31, 1996 and total assets of
$8,203,000 and partners' equity of $8,038,000 as of June 30, 1997. Persons
interested in receiving copies of QSR's publicly issued financial statements for
the year ended December 31, 1996 and for the six months ended June 30, 1997 can
do so by contacting QSR Income Properties at: 701 Western Avenue, Suite 200,
Glendale, California 91201-2397 or by accessing the Securities and Exchange
Commission's EDGAR archives through their web site located at:
http://www.sec.gov.
33
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following June 30, 1997 unaudited Pro Forma Consolidated Balance Sheet of
U.S. Restaurant Properties Master L.P. (the "Partnership") consists of the
Partnership's June 30, 1997 historical balance sheet adjusted on a pro forma
basis to reflect as of June 30, 1997: (a) the purchase of 42 properties for
$30,771,000 and notes and accounts receivable of $190,000 acquired between July
1, and July 31, 1997; and (b) the additional borrowings required to purchase the
properties acquired. The unaudited Pro Forma Consolidated Balance Sheet is not
necessarily indicative of what the actual financial position of the Partnership
would have been at June 30, 1997 had all of these transactions occurred as of
such date and it does not purport to represent the future financial position of
the Partnership.
The unaudited Pro Forma Condensed Consolidated Statements of Income for the
year ended December 31, 1996 and the six months ended June 30, 1997 are
presented as if the following had occurred as of January 1, 1996: (a) the
purchase of 345 properties for $208,964,000 including the fair value of 838,633
Units valued at $21,699,000 completed since December 31, 1995; (b) the
acquisition of 12 newly constructed properties for $11,604,000, between January
1 and July 31, 1997; (c) the sale of one property for $1,175,000 between January
1 and July 31, 1997; (d) the issuance of 1,800,000 units in June 1996 with net
proceeds of $40,203,000; (e) the issuance of 956,554 units in five separate
transactions to individual investors with net proceeds of $25,000,000 and; (f)
the additional borrowings of $78,652,000 required to purchase the properties
acquired. The unaudited Pro Forma Condensed Consolidated Statements of Income
are not necessarily indicative of what the actual results of operations of the
Partnership would have been assuming the transactions described above had been
completed as of January 1, 1996 and 1997, respectively, nor do they purport to
represent the results of operations for future periods.
34
<PAGE>
U.S. RESTAURANT PROPERTIES MASTER L.P.
PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Operating
Property
Historical Acquisitions (a) Pro Forma
---------- ---------------- ---------
<S> <C> <C> <C>
Cash and equivalents $ 1,777 $ $ 1,777
Receivables, net 2,340 14 2,354
Deferred rent receivable 1,137 1,137
Purchase deposits and escrows 1,090 (400) 690
Prepaid expenses 924 12 936
Notes receivable 1,321 176 1,497
Notes receivable - related parties 3,411 3,411
Net investments in direct financing 15,679 15,679
leases
Land 78,679 8,084 86,763
Buildings and leasehold improvements, 139,298 22,687 161,985
net
Machinery and equipment, net 3,743 3,743
Intangibles, net 12,116 12,116
-------- ------- --------
$261,515 $30,573 $292,088
======== ======= ========
Accounts payable $ 3,173 $ 53 $ 3,226
Deferred rent payable 88 88
Deferred gain on sale of property 590 590
Lines of credit 92,313 15,293 107,606
Notes payable 40,000 40,000
Capitalized lease obligations 263 263
General Partner's capital 1,093 1,093
Limited Partner's capital 123,995 15,227 139,222
-------- ------- --------
$261,515 $30,573 $292,088
======== ======= ========
</TABLE>
See Notes to Pro Forma Consolidated Balance Sheet.
35
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
a) Reflects pro forma adjustments for 1997 acquisitions completed since June
30, 1997 which consist of the purchase of 42 operating properties and the
borrowings required to complete the purchase of these properties as follows:
<TABLE>
<CAPTION>
Number of
Properties Operating
---------- ---------
<S> <C> <C>
Midon Acquisition 17 $ 13,449
QSR Acquisition 16 7,904
Taco Cabana 5 5,657
Ribbit Holdings 1 931
BCL II, L.P. 2 1,559
Other Property 1 1,271
--- --------
42 30,771
===
Plus notes ($176) and other ($14)
receivable 190
--------
$ 30,961
--------
Add prepaid assets 12
Less purchase deposits paid from cash flow
from operations (400)
Less security deposit escrow received (53)
Less value of 335,218 units issued for
property (10,477)
Less proceeds from sale of stock (4,750)
--------
Increase in line of credit and notes
payable $ 15,293
========
Costs of the acquisitions are allocated
as follows:
Land $ 8,084
Buildings and leasehold improvements 22,687
--------
$ 30,771
========
</TABLE>
The respective purchase price for the properties has been allocated between land
and building, and leasehold improvements, on a preliminary basis. Final
determination of the proper allocation between these accounts will be made prior
to finalizing the financial statements for the year ended December 31, 1997.
Management does not expect material adjustments to occur.
36
<PAGE>
U.S. RESTAURANT PROPERTIES MASTER L.P.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited)
(In thousands, except per unit data)
<TABLE>
<CAPTION>
David
Jan - Apr E.
1997 Rodgers Magazine Ribbit Taco
Historical Acquisitions Acquisitions Sales Charleston's Trustee Company Holdings Cabana
(a) (b) (d) (e) (f) (g) (h) (i)
---------- ------------ ------------ ----- ------------ ------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TOTAL REVENUES $18,324 $7,365 $8,957 (c) $(102) $218 $81 $32 $105 $695
EXPENSES
Rent 2,080 232 - - - - - - -
Depreciation and
amortization 3,978 1,855 (o) 2,981 (o) (6)(o) 80 (o) 27 (o) 10 (o) 32 (o) 183 (o)
Taxes, general and
administrative 2,461 684 (p) 727 (p) - (p) 18 (p) 6 (p) 3 (p) 9 (p) 56 (p)
Interest expense, net 2,364 3,038 (q) 4,151 (q) - (q) 61 (q) 23 (q) 9 (q) 32 (q) 194 (q)
------- ------ ------ ----- ---- --- --- ---- ----
TOTAL EXPENSES 10,883 5,809 7,859 (6) 159 56 22 73 433
Gain on sale of
equipment 32 - - - - - - - -
------- ------ ------ ----- ---- --- --- ---- ----
NET INCOME $ 7,473 $1,556 $1,098 $ (96) $ 59 $25 $10 $ 32 $262
======= ====== ====== ===== ==== === === ===== ====
Net income allocable to
unitholders 7,325 $1,525 $1,076 $ (94) $ 58 $25 $10 $ 31 $257
======= ====== ====== ===== ==== === === ==== ====
Average number of
outstanding units 6,107 341
=======
NET INCOME PER UNIT $ 1.20
=======
</TABLE>
See Notes to Pro Forma Consolidated Statement of Income
continued on next page
37
<PAGE>
U.S. RESTAURANT PROPERTIES MASTER L.P.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited)
(In thousands, except per unit data)
<TABLE>
<CAPTION>
Newly Constructed Other
BCL, II Midon QSR Properties Property
(j) (k) (l) (m) (n) Pro Forma
------- ------ ------ ----------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
TOTAL REVENUES $351 $1,465 $1,219 $829 $159 $39,698
EXPENSES
Rent 43 33 135 - - 2,523
Depreciation and amortization 63 (o) 539 (o) 301 (o) 247 (o) 46 (o) 10,336
Taxes, general and administrative 15 (p) 141 (p) 79 (p) 67 (p) 13 (p) 4,279
Interest expense, net 53 (q) 513 (q) 289 (q) 231 (q) 44 (q) 11,002
---- ------ ------ ---- ---- -------
TOTAL EXPENSES 174 1,226 804 545 103 28,140
---- ------ ------ ---- ---- -------
Gain on sale of equipment - - - - - 32
---- ------ ------ ---- ---- -------
NET INCOME $177 $ 239 $ 415 $284 $ 56 $11,590
==== ====== ====== ==== ==== =======
Net income allocable to unitholders $173 $ 234 $ 407 $278 $ 55 $11,361
==== ====== ====== ==== ==== =======
Average number of outstanding units 335 8,453
=======
NET INCOME PER UNIT $ 1.34
=======
</TABLE>
See Notes to Pro Forma Consolidated Statement of Income.
38
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(a) Reflects pro forma adjustments to operations relating to the period between
January 1, 1996 and the date of acquisition for the 1996 acquisitions,
comprised of 184 properties acquired on various dates from January 1, 1996
through December 31, 1996.
(b) Reflects pro forma adjustment to operations relating to base and percentage
rent for the 1997 acquisitions comprised of 122 properties acquired on
various dates from January 1, 1997 through April 30, 1997.
(c) Revised from previously reported estimate of $9,106 in the Company's 8-K/A
dated March 31, 1997 and filed on May 30, 1997. The revised amount
represents actual revenues on 122 properties acquired from January 1, 1997
through April 30, 1997.
(d) Reflects pro forma adjustment to operations based on historical financial
information on property sold.
(e) Reflects pro forma adjustments to operations relating to base rent based on
historical financial information for the Charleston's of Norman, Inc.
acquisition comprised of one property acquired on May 7, 1997.
(f) Reflects pro forma adjustments to operations relating to base and
percentage rent based on historical financial information for the David E.
Rodgers -Trustee acquisition comprised of one property acquired on May 9,
1997.
(g) Reflects pro forma adjustments to operations relating to base and
percentage rent based on historical financial information for the Magazine
Company acquisition comprised of one property acquired on May 20, 1997.
(h) Reflects pro forma adjustments to operations relating to the base rent of
the new lease for the Ribbit Holdings acquisition comprised of one property
acquired on July 2, 1997.
(i) Reflects pro forma adjustments to operations relating to base and
percentage rent based on historical financial information for the Taco
Cabana acquisition comprised of five properties acquired on July 2, 1997.
(j) Reflects pro forma adjustments to operations relating to base and
percentage rent based on historical financial information for the BCL II,
L.P. acquisition comprised of two properties acquired on July 31, 1997.
(k) Reflects pro forma adjustments to operations relating to base and
percentage rent based on historical financial information for the Midon
acquisition comprised of 17 properties acquired on July 31, 1997.
(l) Reflects pro forma adjustments to operations relating to base and
percentage rent based on historical financial information for the QSR
Income Properties LTD acquisition comprised of 16 properties acquired on
July 31, 1997.
(m) Reflects pro forma adjustments to operations based on executed lease
information for the newly constructed acquisitions comprised of six
properties acquired on various dates from May 1, 1997 through July 31,
1997.
(n) Reflects pro forma adjustments to operations relating to base and
percentage rent based on historical financial information for one other
property acquired on July 25, 1997.
(o) Reflects pro forma increase in depreciation expense related to the purchase
price of the respective properties. Depreciation is computed using the
straight-line method over the estimated useful lives of building, leasehold
improvements, machinery and equipment which range from 10 to 20 years.
39
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(p) Reflects pro forma increase in general and administrative expense
attributable to the increase in fees due to the managing general partner.
Such increase is comprised of 1% of the contracted purchase price for the
respective properties and 25% of the cash flow received with respect to
such additional properties in excess of the cash flow representing a 12%
rate of return.
(q) Reflects the pro forma adjustment to interest expense as a result of the
purchase of the respective properties. Pro forma interest expense is based
on the increase in debt outstanding and borrowings for payment of
distributions on units issued on a pro forma basis using interest rates
based on the Partnership's credit arrangements which are as follows:
<TABLE>
<CAPTION>
Principal Interest Rate
<S> <C> <C>
Series A Senior Secured Guaranteed Notes $ 12,500,000 8.06%
Series B Senior Secured Guaranteed Notes 27,500,000 8.30%
Line of credit 108,138,000 7.20%
</TABLE>
40
<PAGE>
U.S. RESTAURANT PROPERTIES MASTER L.P.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Unaudited)
(In thousands, except per unit data)
<TABLE>
<CAPTION>
Jan-Apr 1997 David E. Rodgers
Historical Acquisitions (a) Sales (b) Charleston's (c) Trustee (d)
---------- ------------ ----- ------------ ----------------
<S> <C> <C> <C> <C> <C>
TOTAL REVENUES $14,544 $2,547 $(30) $77 $29
EXPENSES
Rent 1,189 - - - -
Depreciation and amortization 3,366 891 (m) (2) (m) 28 (m) 10 (m)
Taxes, general and administrative 1,987 211 (n) - (n) 6 (n) 2 (n)
Interest expense, net 3,425 1,286 (o) - (o) 30 (o) 11 (o)
------- ------ ---- --- ---
TOTAL EXPENSES 9,967 2,388 (2) 64 23
------- ------ ---- --- ---
Income before unusual items 4,577 159 (28) 13 6
Gain on sale of property 266 - - - -
REIT conversion costs (744) - - - -
------- ------ ---- --- ---
NET INCOME $ 4,099 $ 159 $(28) $13 $ 6
======= ====== ==== === ===
Net income allocable to unitholders $ 4,018 $ 156 $(27) $13 $ 6
======= ====== ==== === ===
Average number of outstanding units 7,409 341
=======
NET INCOME PER UNIT $ 0.54
=======
</TABLE>
<TABLE>
<CAPTION>
Magazine Ribbit Taco
Company (e) Holdings (f) Cabana (g)
------- -------- ------
<S> <C> <C> <C>
TOTAL REVENUES $12 $53 $347
EXPENSES
Rent - - -
Depreciation and amortization 4 (m) 16 (m) 91 (m)
Taxes, general and administrative 1 (n) 5 (n) 28 (n)
Interest expense, net 4 (o) 16 (o) 97 (o)
--- --- ----
TOTAL EXPENSES 9 37 216
--- --- ----
Income before unusual items 3 16 131
Gain on sale of property - - -
REIT conversion costs - - -
--- --- ----
NET INCOME $ 3 $16 $131
=== === ====
Net income allocable to unitholders $ 3 $16 $128
=== === ====
Average number of outstanding units
NET INCOME PER UNIT
</TABLE>
See Notes to Pro Forma Consolidated Statement of Income.
continued on next page
41
<PAGE>
U.S. RESTAURANT PROPERTIES MASTER L.P.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Unaudited)
(In thousands, except per unit data)
<TABLE>
<CAPTION>
Newly Constructed Other
BCL, II (h) Midon (i) QSR (j) Properties (k) Properties (l) Pro Forma
------- ----- ---- ----------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
TOTAL REVENUES $176 $733 $610 $363 $79 $19,540
EXPENSES
Rent 22 17 66 - - 1,294
Depreciation and amortization 31 (m) 270 (m) 151 (m) 106 (m) 23 (m) 4,985
Taxes, general and administrative 8 (n) 70 (n) 39 (n) 31 (n) 6 (n) 2,394
Interest expense, net 27 (o) 246 (o) 138 (o) 116 (o) 22 (o) 5,418
---- ---- ---- ---- --- -------
TOTAL EXPENSES 88 603 394 253 51 14,091
---- ---- ---- ---- --- -------
Income before unusual items 88 130 216 110 28 5,449
Gain on sale of property - - - - - 266
REIT conversion costs - - - - - (744)
---- ---- ---- ---- --- -------
NET INCOME $ 88 $130 $216 $110 $28 $ 4,971
==== ==== ==== ==== === =======
Net income allocable to unitholders $ 86 $127 $212 $108 $27 $ 4,873
==== ==== ==== ==== === =======
Average number of outstanding units 335 8,513
=======
NET INCOME PER UNIT $ 0.57
=======
</TABLE>
See Notes to Pro Forma Consolidated Statement of Income.
42
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(a) Reflects pro forma adjustment to operations relating to the period between
January 1, 1997 and the date of acquisition for base and percentage rent
for the 1997 acquisitions comprised of 122 properties acquired on various
dates from January 1, 1997 through April 30, 1997.
(b) Reflects pro forma adjustments to operations relating to the sale of one
property.
(c) Reflects pro forma adjustments to operations relating to the period between
January 1, 1997 and the date of acquisition for base and percentage rent
based on historical financial information for the Charleston's of Norman,
Inc. acquisition comprised of one property acquired on May 7, 1997.
(d) Reflects pro forma adjustments to operations relating to the period between
January 1, 1997 and the date of acquisition for base and percentage rent
based on historical financial information for the David E. Rodgers -
Trustee acquisition comprised of one property acquired on May 9, 1997.
(e) Reflects pro forma adjustments to operations relating to the period between
January 1, 1997 and the date of acquisition for base and percentage rent
based on historical financial information for the Magazine Company
acquisition comprised of one property acquired on May 20, 1997.
(f) Reflects pro forma adjustments to operations relating to the period between
January 1, 1997 and the date of acquisition for base rent based on
historical financial information for the Ribbit Holdings acquisition
comprised of one property acquired on July 2, 1997.
(g) Reflects pro forma adjustments to operations relating to base and
percentage rent based on historical financial information for the Taco
Cabana acquisition comprised of five properties acquired on July 2, 1997.
(h) Reflects pro forma adjustments to operations relating to base and
percentage rent based on historical financial information for the BCL II,
L.P. acquisition comprised of two properties acquired on July 31, 1997.
(i) Reflects pro forma adjustments to operations relating to base and
percentage rent based on historical financial information for the Midon
acquisition comprised of 17 properties acquired on July 31, 1997.
(j) Reflects pro forma adjustments to operations relating to base and
percentage rent based on historical financial information for the QSR
Income Properties LTD acquisition comprised of 16 properties acquired on
July 31, 1997.
(k) Reflects pro forma adjustments to operations based on executed lease
information for the period from January 1, 1997 to the earlier of the date
of acquisition or June 30, 1997 for the newly constructed acquisitions
comprised of six properties acquired on various dates from May 1, 1997
through July 31, 1997.
(l) Reflects pro forma adjustments to operations relating to base and
percentage rent based on historical financial information for one other
property acquired on July 25, 1997.
(m) Reflects pro forma increase in depreciation expense related to the purchase
price of the respective properties. Depreciation is computed using the
straight-line method over the estimated useful lives of building, leasehold
improvements, machinery and equipment which range from 10 to 20 years.
(n) Reflects pro forma increase in general and administrative expense
attributable to the increase in fees due to the managing general partner.
Such increase is comprised of 1% of the contracted purchase price for the
respective properties and 25% of the cash flow received with respect to
such additional properties in excess of the cash flow representing a 12%
rate of return.
43
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(o) Reflects the pro forma adjustment to interest expense as a result of the
purchase of the respective properties. Pro forma interest expense is based
on the increase in debt outstanding and borrowings for payment of
distributions on units issued on a pro forma basis using interest rates
based on the Partnership's credit arrangements which are as follows:
<TABLE>
<CAPTION>
Principal Interest Rate
<S> <C> <C>
Series A Senior Secured Guaranteed Notes $ 12,500,000 8.06%
Series B Senior Secured Guaranteed Notes 27,500,000 8.30%
Line of credit 108,138,000 7.20%
</TABLE>
44
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 20, 1997 U.S. RESTAURANT PROPERTIES MASTER L.P.
By: QSV PROPERTIES, INC.
its Managing General Partner
By: /s/ ROBERT J. STETSON
----------------------------------------
Robert J. Stetson
President, Chief Executive Officer
45
