FORM 10-KSB - ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(d)
(As last amended by 34-31905, eff. 4/26/93)
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [No Fee Required]
For the fiscal year ended December 31, 1996
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [No Fee Required]
For the transition period.........to.........
Commission file number 0-15656
U.S. REALTY PARTNERS LIMITED PARTNERSHIP
(Name of small business issuer in its charter)
South Carolina 57-0814502
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
None
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 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
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $5,266,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of December 31, 1996. Market value information for the
Registrant's partnership interests is not available. Should a trading market
develop for these interests, it is management's belief that such trading would
not exceed $25,000,000.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
Item 1. Description of Business
U.S. Realty Partners Limited Partnership (the "Partnership" or the "Registrant")
was formed on January 23, 1986. It is engaged in the business of acquiring,
operating and holding real properties for investment. The Registrant commenced
operations on August 26, 1986, and acquired its first property, a newly
constructed apartment property, on August 28, 1986. Prior to September 5, 1986,
it acquired an existing apartment property, a newly constructed shopping center
and an existing shopping center.
On August 26, 1986, the Registrant delivered 1,222,000 Depositary Unit
Certificates, representing assignments of limited partnership interests
("DUCs"), to Wheat First Securities, Inc. and received $30,550,000 ($25.00 per
DUC) in proceeds. The DUCs were offered by several underwriters in minimum
investment amounts of 100 DUCs ($25.00 per DUC). The Registrant also received
$16,369,000 as proceeds from a contemporaneous private bond offering. The
Registrant used substantially all of the proceeds from these offerings to
acquire the four operating properties.
The DUCs were registered under the Securities Act of 1933 via Registration
Statement No. 33-2996 (the "Registration Statement").
On April 1, 1993, the Partnership filed for protection under Chapter 11 of the
Federal Bankruptcy Code. The filing was made due to the Partnership's inability
to repay its secured debt due to an insurance company (see "Note C" of
financial statements). On April 23, 1993, the Partnership filed a
Reorganization Plan ("the Plan") with the United States Bankruptcy Court for the
District of South Carolina. The significant provision of the Plan was the
refinancing of the secured debt. On July 23, 1993, the Court entered an order
confirming the Partnership's Plan. On January 27, 1994, the Court closed the
case.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation" included in "Item 6" of this Form
10-KSB.
The Registrant has no full-time employees. Management and administrative
services are performed by U.S. Realty I Corporation, the Corporate General
Partner, and by affiliates of Insignia Financial Group, Inc. ("Insignia"), the
ultimate parent company of the Corporate General Partner. Pursuant to a
management agreement between them, Insignia provides property management
services to the Registrant.
The real estate business of leasing commercial and residential properties is
highly competitive and the Partnership is not a significant factor in this
industry. The Registrant's real property investments are subject to competition
from similar types of properties in the vicinities in which they are located.
In addition, various limited partnerships have been formed by the General
Partners and/or their affiliates to engage in business which may be competitive
with the Registrant.
Item 2.Description of Properties
The following table sets forth the Registrant's investments in properties:
Date of
Property Purchase Type of Ownership Use
The Gallery - Huntsville 08/29/86 Fee ownership subject to Retail
Huntsville, Alabama first mortgage 101,258 s.f.
The Gallery - Knoxville 09/04/86 Fee ownership subject to Retail
Knoxville, Tennessee first mortgage 100,403 s.f.
Governor's Park Apartments 08/29/86 Fee ownership subject to Apartment
Little Rock, Arkansas first mortgage 154 units
Twin Lakes Apartments 08/28/86 Fee ownership subject to Apartment
Palm Harbor, Florida first mortgage 262 units
Schedule of Properties:
(in thousands)
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
The Gallery -
Huntsville $ 7,379 $1,972 5-35 S/L $ 8,260
The Gallery -
Knoxville 9,021 2,354 5-35 S/L 8,114
Governor's Park 5,981 2,262 5-35 S/L 2,352
Twin Lakes 10,779 3,088 5-35 S/L 5,391
$33,160 $9,676 $24,117
See "Note A" of the financial statements included in "Item 7" for a description
of the Partnership's depreciation policy.
Schedule of Mortgages:
(in thousands)
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
1996 Rate Amortized Date Maturity
U.S. Realty
Partnership $21,607 10.00% 95 months 08/01/01 (1)
(1) The balance at maturity is directly related to the ability of the
Partnership to make cash flow payments per the mortgage agreement.
Schedule of Rental Rates and Occupancy:
Average annual rental rate and occupancy for 1996 and 1995 for each property:
Average Annual Average Annual
Rental Rates Occupancy
Property 1996 1995 1996 1995
The Gallery - Huntsville $ 8.99/s.f. $ 9.18/s.f. 93% 94%
The Gallery - Knoxville 11.82/s.f. 11.60/s.f. 96% 95%
Governor's Park 6,534/unit 6,371/unit 93% 95%
Twin Lakes 7,032/unit 6,873/unit 95% 94%
As noted under "Item 1. Description of Business," the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other residential apartment complexes and commercial buildings
in the area. The Corporate General Partner believes that all of the properties
are adequately insured. The multi-family residential properties' lease terms are
for one year or less. No residential tenant leases 10% or more of the available
rental space.
The following schedule reflects information on commercial tenants occupying 10%
or more of the leasable square feet for each property:
Nature of Square Footage Annual Rent Lease
Business Leased Per Square Foot Expiration
The Gallery - Huntsville Book Store 12,000 $ 7.50 11/14/01
Shoe Store 13,800 11.25 09/14/04
The Gallery - Knoxville Book Store 13,330 8.73 09/06/01
As noted under "Item 1. Description of Business," the Partnership is in the
business of acquiring, operating and holding real properties for investment.
The Partnership holds two residential properties and two commercial properties.
These properties are fully leveraged and the Partnership is currently paying
principal and interest payments to reduce its liability.
The following is a schedule of the lease expirations for the years 1997-2006
(dollars in thousands):
Number of % of Gross
The Gallery Expirations Square Feet Annual Rent Annual Rent
Knoxville
1997 1 2,514 $ 28 2.34%
1998 6 16,150 194 16.40%
1999 3 14,344 141 11.97%
2000 1 3,600 41 3.51%
2001 6 29,428 342 28.96%
2002 2 7,290 112 9.52%
2003 0 0 0 0%
2004 2 10,917 187 15.86%
2005 0 0 0 0%
2006 0 0 0 0%
The Gallery
Huntsville
1997 2 15,400 $168 19.65%
1998 4 5,400 58 6.74%
1999 7 26,103 228 26.57%
2000 1 3,755 26 2.98%
2001 4 28,800 279 32.60%
2002 0 0 0 0%
2003 0 0 0 0%
2004 1 1,600 17 2.02%
2005 0 0 0 0%
2006 1 1,600 32 3.76%
The principal businesses located at these properties are retail sales outlets.
Real estate taxes and rates in 1996 for each property were (dollars in
thousands):
1996 1996
Billing Rate
The Gallery - Huntsville $ 57 5.80%
The Gallery - Knoxville 138 5.97%
Governor's Park 59 6.68%
Twin Lakes 171 2.08%
Item 3. Legal Proceedings
The Registrant is unaware of any pending or outstanding litigation that is not
of a routine nature. The Managing General Partner of the Registrant believes
that all such pending or outstanding litigation will be resolved without a
material adverse effect upon the business, financial condition, or operations of
the Partnership.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter ended December 31, 1996, no matter was submitted to a
vote of security holders through the solicitation of proxies or otherwise.
PART II
Item 5. Market for Partnership Equity and Related Partnership Matters
The Depositary Unit Certificates were initially listed on the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
under the symbol "USRLZ". As of December 31, 1996, the number of DUC holders of
record was 2,033. Transfer of DUCs is subject to certain suitability and other
requirements. Due to the security being delisted during 1990, no public trading
market has developed and it is not anticipated that such a market will develop
in the future. No distributions were made in 1996 or 1995. Pursuant to the
loan agreement, no distributions can be made until all long-term debt is repaid.
Item 6. Management's Discussion and Analysis or Plan of Operation
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
Results of Operations
The Partnership's net loss as reported in the financial statements for the year
ended December 31, 1996, was approximately $258,000 compared to approximately
$279,000 for the corresponding period in 1995. (See "Note D" of the financial
statements for a reconciliation of these amounts to the Partnership's federal
taxable losses.) The decrease in net loss was primarily due to a decrease in
general and administrative expenses and an increase in rental revenue. General
and administrative expenses decreased due to a decrease in professional fees in
1996. Rental income increased as a result of rent increases at Twin Lakes, as
well as higher occupancy at both Twin Lakes and The Gallery Knoxville.
Furthermore, the percentage of rental income, which is rental income based upon
an agreed percentage of sales from certain commercial tenants, increased during
the year ended December 31, 1996, at both The Gallery Huntsville and The Gallery
Knoxville due to the increase in such sales. Offsetting the decrease in net
loss were increases in maintenance expenses and operating expenses during the
year ended December 31, 1996, compared to the corresponding period in 1995. The
increase in maintenance expenses was due to the completion of an exterior
painting contract at Governor's Park and the installation and repair of gutters
at Twin Lakes. Operating expenses increased due to an increase in utilities
resulting from increased water and sewer rates at Twin Lakes. Also contributing
to the increase in operating expenses was an increase in concessions incurred at
Twin Lakes in response to new competition.
Included in maintenance expenses for the year ended December 31, 1996, is
approximately $144,000 of major repairs and maintenance comprised primarily of
exterior building expenses, painting and landscaping expenses.
As part of the ongoing business plan of the Partnership, the Corporate General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expenses. As part of this plan, the Corporate General Partner attempts to
protect the Partnership from the burden of inflation-related increases in
expenses by increasing rents and maintaining high overall occupancy levels.
However, due to changing market conditions, which can result in the use of
rental concessions and rental reductions to offset softening market conditions,
there is no guarantee that the Corporate General Partner will be able to sustain
such a plan.
Liquidity and Capital Resources
Based upon the terms of the debt structure, all cash is considered restricted.
Net cash provided by operating activities decreased primarily as a result of a
decrease in net cash provided by restricted cash as well as an increase in
escrows for taxes. Net cash used in investing activities increased primarily
due to an increase in deposits to restricted escrows, as well as an increase in
property improvements and replacements. Net cash used in financing activities
decreased due to a decrease in principal payments in 1996, as debt payments are
a factor of the Partnership's cash flow which was lower due to the items
discussed above.
The Partnership has no material capital programs scheduled to be performed in
1997, although certain routine capital expenditures and maintenance expenses
have been budgeted. These capital expenditures and maintenance expenses will be
incurred only if cash is available from operations or is received from the
capital reserve account.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the various properties to adequately maintain the
physical assets and other operating needs of the Partnership. Such assets are
currently thought to be sufficient for any near-term needs of the Partnership.
The total mortgage indebtedness of $21,607,000 requires a balloon payment on
August 1, 2001, at which time the properties will be refinanced or sold.
Pursuant to the loan agreement, Net Cash Flow of the Partnership is required to
be paid to the mortgage holder on a monthly basis to reduce accrued interest and
principal. No distributions can be made until all long-term debt is repaid.
The Corporate General Partner is currently in the process of negotiating a
possible refinancing of the mortgage indebtedness which, if successful, would
reduce both the interest rate and restrictions on future distributions.
As noted in "Item 3. Legal Proceedings," on March 29, 1994, Insignia Financial
Group, Inc., an affiliate of the Corporate General Partner, was served with a
complaint filed in the United States District Court, Eastern District of
Kentucky and styled Kenneth Ogle, et. al., v. U. S. Shelter Corporation, et. al.
The Corporate General Partner was a named defendant in such suit and was served
with such complaint. Such complaint alleged, inter alia, that the Corporate
General Partner engaged in a conspiracy to defraud limited partners in the
Partnership, made certain material misstatements and omissions in the prospectus
relating to the sale of limited partnership interests in the Partnership, and
breached its fiduciary duties to a putative class of limited partners of the
Partnership. The plaintiffs sought the certification by the court that the case
may proceed as a class action. The case was dismissed with prejudice by the
United States District Court for the Eastern District of Kentucky on April 25,
1996.
Plaintiffs appealed the dismissal to the United States Court of Appeals for the
Sixth Circuit. During the appeal process, the Partnership was notified that the
parties had reached an agreement to discontinue the appeal. No payment by the
Partnership has been or will be made as part of the discontinuation of the
appeal. Accordingly, no provision for any resulting liability has been made in
the financial statements.
Item 7. Financial Statements
U.S. REALTY PARTNERS LIMITED PARTNERSHIP
LIST OF FINANCIAL STATEMENTS
Report of Independent Auditors
Balance Sheet - December 31, 1996
Statements of Operations - years ended December 31, 1996 and 1995
Statements of Changes in Partners' Capital (Deficit) - years ended
December 31, 1996 and 1995
Statements of Cash Flows - years ended December 31, 1996 and 1995
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
U. S. Realty Partners Limited Partnership:
We have audited the accompanying balance sheet of U. S. Realty Partners Limited
Partnership as of December 31, 1996, and the related statements of operations,
changes in partners' capital (deficit) and cash flows for each of the two years
in the period ended December 31, 1996. 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. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Partnership's 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 financial statements referred to above present fairly, in
all material respects, the financial position of U. S. Realty Partners Limited
Partnership as of December 31, 1996, and the results of its operations and its
cash flows for each of the two years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 25, 1997
U.S. REALTY PARTNERS LIMITED PARTNERSHIP
BALANCE SHEET
(in thousands, except unit data)
December 31, 1996
Assets
Restricted cash $ 207
Accounts receivable (Note B) 47
Escrows for taxes 256
Restricted escrows 210
Other assets 437
Investment properties (Notes C & F):
Land $ 6,534
Buildings and related personal property 26,626
33,160
Less accumulated depreciation (9,676) 23,484
$24,641
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 55
Tenant security deposits 121
Accrued taxes 62
Other liabilities 408
Due to Corporate General Partner 524
Mortgage note payable (Note C) 21,607
Partners' Capital (Deficit)
General partners $ (444)
Depository unit certificate holders
(2,440,000 units authorized, 1,222,000
units issued and outstanding) 2,308 1,864
$24,641
See Accompanying Notes to Financial Statements
U.S. REALTY PARTNERS LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
Years Ended December 31,
1996 1995
Revenues:
Rental income $5,116 $4,619
Other income 150 561
Total revenues 5,266 5,180
Expenses:
Operating 1,349 1,255
General and administrative 186 267
Maintenance 411 343
Depreciation 842 839
Interest 2,304 2,337
Property taxes 432 417
Total expenses 5,524 5,459
Net loss (Note D) $ (258) $ (279)
Net loss allocated to general partner (1%) $ (3) $ (3)
Net loss allocated to depository unit
certificate holders (99%) (255) (276)
$ (258) $ (279)
Net loss per depository unit certificate $ (.21) $ (.23)
See Accompanying Notes to Financial Statements
U.S. REALTY PARTNERS LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands)
<TABLE>
<CAPTION>
Depository
Limited Unit
Partnership General Certificate
Units Partners Holders Total
<S> <C> <C> <C> <C>
Original capital contributions 1,222,000 $ 2 $30,550 $50,002
Partners' capital (deficit)
at December 31, 1994 1,222,000 $(438) $ 2,839 $ 2,401
Net loss for the year
ended December 31, 1995 (3) (276) (279)
Partners' capital (deficit)
at December 31, 1995 1,222,000 (441) 2,563 2,122
Net loss for the year
ended December 31, 1996 (3) (255) (258)
Partners' capital (deficit)
at December 31, 1996 1,222,000 $(444) $ 2,308 $ 1,864
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
U.S. REALTY PARTNERS LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1996 1995
Cash flows from operating activities:
Net loss $ (258) $ (279)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 842 839
Amortization 58 57
Bad debt expense 71 88
Change in accounts:
Restricted cash 150 253
Accounts receivable (101) (76)
Escrows for taxes (118) 41
Other assets 9 (12)
Accounts payable (32) 13
Tenant security deposit liabilities (17) 14
Accrued taxes -- (80)
Due to Corporate General Partner 24 --
Other liabilities 7 51
Net cash provided by operating activities 635 909
Cash flows from investing activities:
Property improvements and replacements (184) (175)
Deposits to restricted escrows (73) (19)
Receipts from restricted escrows 75 56
Net cash used in investing activities (182) (138)
Cash flows from financing activities:
Payments on mortgage note payable (453) (771)
Net cash used in financing activities (453) (771)
Net change in cash -- --
Cash at beginning of period -- --
Cash at end of period $ -- $ --
Supplemental disclosure of cash flow information:
Cash paid for interest $2,226 $2,246
See Accompanying Notes to Financial Statements
U. S. REALTY PARTNERS LIMITED PARTNERSHIP
Notes to Financial Statements
December 31, 1996
Note A - Organization and Significant Accounting Policies
Organization: U.S. Realty Partners Limited Partnership (the "Partnership" or
"Registrant") was organized as a limited partnership under the laws of the State
of South Carolina pursuant to a Certificate of Limited Partnership filed January
24, 1986, and an Agreement of Limited Partnership dated January 23, 1986. The
partnership agreement terminates December 31, 2005, or earlier upon the sale of
all properties and distributions to the partners of all net proceeds thereof or
certain other events. The Partnership commenced operations on August 26, 1986,
and completed its acquisition of two apartment complexes and two shopping plazas
on September 4, 1986, all of which are located in the South.
The Depositary Unit Certificate ("DUC") holders are assignees of USS Assignor,
Inc. (the Limited Partner), an affiliate of the Corporate General Partner, and
as such will be entitled to receive the economic rights attributable to the
Limited Partnership Interests represented by their DUCs. DUC holders will for
all practical purposes be treated as limited partners of the Partnership.
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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Allocation of Cash Distributions: Cash distributions by the Partnership are
allocated 98% to the DUC holders and 2% to the general partners until the DUC
holders have received annual noncumulative distributions equal to 10% of their
Adjusted Capital Values. Net cash from operations then will be distributed to
the general partners until the general partners collectively have received 7% of
net cash from operations distributed in that fiscal year. Thereafter, (after
repayment of any loans by the general partners to the Partnership), net cash
from operations will be distributed 93% to the DUC holders and 7% to the general
partners. According to the terms of the Partnership's loan agreements, no
distributions may be made until the long term debt is repaid.
During the first eight quarters following the issuance of the DUCs, the
Corporate General Partner was obligated to loan to the Partnership up to
approximately $811,000 to cover any deficiency in the quarterly cash
distributions. The Corporate General Partner loaned the Partnership $300,000
under this guarantee, which expired August 26, 1988. A deficiency arose when
the DUC holders did not receive annualized cash distributions equal to 10% of
the average of their Adjusted Capital Values. The loan bears interest at the
lesser of the rates being paid by the parent company of the Corporate General
Partner or two percentage points over the CitiBank, N.A. prime interest rate.
The repayment of the loan would reduce the amount subsequently available for
distribution to the DUC holders. This loan may not be repaid until the
Partnership's long term debt is repaid. The balance at December 31, 1996,
including accrued interest is $524,000.
Allocation of Profits, Gains and Losses: Profits, gains and losses of the
Partnership are allocated between the Corporate General Partner and DUC holders
in accordance with the provisions of the partnership agreement.
Profits and losses generally will be allocated 99% to the DUC holders and 1% to
the Corporate General Partner. Net loss per DUC for the years ended December
31, 1996 and 1995, was computed as 99% of the net loss divided by 1,222,000
depositary units outstanding.
Investment Properties: During 1995, the Partnership adopted "FASB Statement No.
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. For the years ended December 31, 1996
and 1995, no adjustments for impairment of value were recorded. The impairment
loss is measured by comparing the fair value of the asset to its carrying
amount. The effect of adoption was not material.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the rental properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used: 1)
for real property over periods of 19 years for additions after May 8, 1985, and
before January 1, 1987, and 2) for personal property over 5 years for additions
after December 31, 1986, the modified accelerated cost recovery method is used
for depreciation of 1) real property additions over 27-1/2 years, and 2)
personal property additions over 7 years.
Amortization: Computer software costs are being amortized over six years.
Lease commissions are being amortized over a period of one to ten years using
the straight-line method over the term of the respective leases.
Leases: The Partnership leases certain commercial space to tenants under
various lease terms. The leases are accounted for as operating leases in
accordance with "Financial Accounting Standards Board Statement No. 13." Some
of the leases contain stated rental increases during their term. For leases
with fixed rental increases, rents are recognized on a straight-line basis over
the terms of the lease. This straight-line basis recognized $18,000 less and
$19,000 less rental income than was collected in 1996 and 1995, respectively.
Beginning in 1995, the cash collections under the terms of the leases exceed the
straight-line method of revenue recognition. Additionally, some of the leases
have percentage rent (rental payments based on agreed upon percentage of sale)
clauses. The Partnership recognized $72,000 and $56,000 of such rent in the
years ended December 31, 1996 and 1995, respectively.
For all other leases, minimum rents are recognized over the terms of the leases.
The Partnership generally leases apartment units for twelve-month terms or less.
The Partnership recognizes income as earned on these leases. In addition,
management finds it necessary to offer rental concessions during particularly
slow months or in response to heavy competition from other similar complexes in
the area. Concessions are charged to expense as incurred.
Restricted Cash
Tenant Security Deposits - The Partnership requires security deposits from
all apartment lessees for the duration of the lease. Deposits as refunded when
the tenant vacates the apartment if there has been no damage. The Partnership
held $116,000 of such funds at December 31, 1996.
Net Cash Flow Fund - The Partnership maintains a restricted cash account for
the purpose of repayment of the Partnership's debt. The Partnership held
$91,000 of such funds at December 31, 1996. The Partnership deposits Net Cash
Flow, as defined in the loan agreement, into this account to facilitate "Cash
Sweeps" as defined in the loan agreement. On a monthly basis, the Net Cash Flow
Fund is disbursed or retained as follows:
(a) first, at any time as there shall be a balance of less than $150,000
in the Working Capital Account, an amount equal to the difference between the
actual balance and $150,000 but not in excess of twenty percent (20%) of such
Net Cash Flow shall be paid to the Partnership for deposit into the Working
Capital Account;
(b) second, to the payment of, or the reimbursement to the Partnership
for certain repairs and expenses and Capital Expenditures;
(c) third, to the payment of accrued but unpaid interest;
(d) fourth, to the payment of that portion of the Principal Balance
equal to accrued and unpaid interest therefore added to the Principal Balance
pursuant to the loan agreement;
(e) fifth, to the payment of the remaining Principal Balance and to any
and all other amounts payable to the Surety hereunder, including but not limited
to the additional interest.
Restricted Escrows
Capital Improvement Account - The Partnership established an interest
bearing bank account (see "Note C"), for the purpose of deposit and expenditure
of cash flow for Capital Expenditures. The Partnership shall deposit from time
to time from revenues a reasonable allowance for Capital Expenditures, provided
the amount of such deposit shall have been approved in advance by the Surety.
The Partnership may withdraw any amounts on deposit in the Capital Expenditures
Account to pay for Capital Expenditures as they are made, provided the amount of
such withdrawals shall have been approved in advance by the Surety. At December
31, 1996, the balance was approximately $59,000.
Working Capital Account - The Partnership established the "Working Capital
Account" for the purpose of providing a cash reserve available to the
Partnership (see "Note C"). On September 16, 1993, prior to making the first
deposit into the Net Cash Flow Fund, the Partnership deposited $150,000 into the
Working Capital Account. The bank holds the funds in the Working Capital
Account for the benefit of the Surety. The Partnership has the right to access
these funds without the consent of the Surety under specific guidelines mutually
agreed to by the Partnership and the Surety. Specifically, the Working Capital
Account may be used to fund negative cash flow, or emergency or immediate
funding needs of a property. At December 31, 1996, the balance was
approximately $152,000.
Escrow for Taxes: These escrows are held by the Partnership and are designated
for the payment of real estate taxes.
Fair Value: In 1995, the Partnership implemented "Statement of Financial
Accounting Standards No. 107, Disclosure about Fair Value of Financial
Instruments," which requires disclosure of fair value information about
financial instruments for which it is practicable to estimate that value. The
carrying amount of the Partnership's cash and investments approximates fair
value due to short-term maturities. The Partnership's mortgage debt has
payments due based on Net Cash Flow as defined in the loan agreement, and
therefore it is impractical to estimate the Fair Value of this indebtedness.
Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising expense, included in operating expenses, was approximately $35,000
and $28,000 for the years ended December 31, 1996 and 1995, respectively.
Reclassifications: Certain reclassifications have been made to the 1995
financial statements to conform with 1996 presentation.
Note B - Accounts Receivable
Accounts receivable at December 31, 1996, consisted of the following (in
thousands):
Shopping center tenant rentals $ 151
Apartment tenant rentals 7
Common area maintenance, insurance and taxes 15
173
Less allowance for doubtful accounts (126)
$ 47
An analysis of the allowance for doubtful accounts is set forth below (in
thousands):
Years Ended December 31,
1996 1995
Balance at beginning of period $115 $ 77
Charged to expenses 71 88
Uncollectible amounts written
off against related assets (51) --
Amounts collected (9) (50)
Balance at end of period $126 $115
Note C - Mortgage Note Payable
On October 15, 1993, the Partnership finalized the refinancing of all debt
encumbering its real estate assets. The debt has a stated interest rate of
10%, which shall accrue and, to the extent such interest is not paid currently
out of Net Cash Flow, as defined in the loan agreement, shall be added to the
principal balance on August 16 of each year prior to the maturity date of August
1, 2001; provided, however, that the amount of accrued and unpaid interest,
shall at no time exceed the sum of $1,740,733 and the balances in the Capital
Expenditures Account, the Working Capital Account, and the Tax Escrow Account
established under provisions of the loan agreement. Amounts in excess of this
total must be immediately paid by the Partnership. The loan agreement also
calls for additional interest of approximately $59,000, which accrues annually
on August 1, and is payable on the earlier of the maturity date or the date on
which the principal balance and all accrued interest is paid. The Corporate
General Partner is currently in the process of negotiating a possible
refinancing of the mortgage indebtedness which, if successful, would reduce both
the interest rate and restrictions on future distributions.
The obligations of the Partnership to the Surety in connection with the issuance
of the debt are secured by a first mortgage or deed of trust on each of the
Partnership's properties and are cross-defaulted so that a default with respect
to one property is a default under each mortgage or deed of trust. The mortgage
note payable is non-recourse. The note does not require prepayment penalties if
repaid prior to maturity.
The principal terms of the note payable is as follows (in thousands):
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
1996 Rate Amortized Date Maturity
U.S. Realty
Partnership $21,607 10.00% 95 months 08/01/01 (1)
(1) The balance at maturity is directly related to the ability of the
Partnership to make cash flow payments per the mortgage agreement.
At December 31, 1996 and 1995, approximately $93,000 and $98,000, respectively,
of accrued interest was included in other liabilities.
Note D - Income Taxes
Under the provisions of the Internal Revenue Code, partnerships are not subject
to income taxes. Accordingly, no provision for income taxes is made in the
financial statements of the Partnership. Taxable income or loss of the
Partnership is reported in the income tax returns of its partners.
The following is a reconciliation of reported net loss and Federal taxable loss
(in thousands):
Years Ended December 31,
1996 1995
Net loss as reported $(258) $(279)
Add (deduct):
Depreciation differences (685) (674)
Difference in bad debt expense 3 38
Difference in rents recognized 18 50
Change in prepaid rentals (12) (41)
Other 37 (37)
Federal taxable loss $(897) $(943)
Federal taxable loss per DUC $(.73) $(.76)
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net assets as reported $ 1,864
Land and buildings 10,746
Accumulated depreciation (10,113)
Syndication 2,774
Other (16)
Net assets - tax basis $ 5,255
Note E - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Corporate General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as reimbursements of certain expenses incurred by
affiliates on behalf of the Partnership. Property management fees paid to
affiliates of Insignia Financial Group, Inc. during each of the years ended
December 31, 1996 and 1995, are included in operating expenses on the
Consolidated Statement of Operations and are reflected in the following table.
The Corporate General Partner and its affiliates received reimbursements and
fees as reflected in the following table:
1996 1995
(in thousands)
Property management fees $289 $282
Reimbursement for services of affiliates 138 91
Due to General Partner 524 500
Included in "reimbursements for services of affiliates" for 1996 are
approximately $6,000 in reimbursements for construction oversight costs.
The Partnership insures its properties under a master policy through an agency
and insurer unaffiliated with the Corporate General Partner. An affiliate of
the Corporate General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy. The current agent
assumed the financial obligations to the affiliate of the Corporate General
Partner, who receives payments on these obligations from the agent. The amount
of the Partnership's insurance premiums accruing to the benefit of the affiliate
of the Corporate General Partner by virtue of the agent's obligations is not
significant.
Note F - Real Estate and Accumulated Depreciation
(in thousands)
Initial Cost
To Partnership
Cost
Buildings Capitalized
and Related (Removed)
Personal Subsequent to
Description Land Property Acquisition
The Gallery Shopping Plaza
Huntsville, Alabama $4,070 $ 8,377 $(5,068)
The Gallery Shopping Plaza
Knoxville, Tennessee 3,376 9,037 (3,392)
Governor's Park Apartments
Little Rock, Arkansas 423 5,701 (143)
Twin Lakes Apartments
Palm Harbor, Florida 1,928 9,283 (432)
Totals $9,797 $32,398 $(9,035)
The cost removed, net of additions, subsequent to the acquisition is primarily
due to write-downs and removals in the prior years.
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1996
(in thousands)
Buildings
And
Related
Personal Accumulated Date of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life-Years
<S> <C> <C> <C> <C> <C> <C> <C>
The Gallery -
Huntsville $2,341 $ 5,038 $ 7,379 $1,972 1986 08/29/86 5-35
The Gallery-
Knoxville 2,070 6,951 9,021 2,354 1984 09/04/86 5-35
5-35
Governor's Park 423 5,558 5,981 2,262 1985 08/29/86
5-35
Twin Lakes 1,700 9,079 10,779 3,088 1986 08/28/86
Totals $6,534 $26,626 $33,160 $9,676
</TABLE>
Each of the Partnership's properties is secured by a first mortgage or deed of
trust in connection with the issuance of an Amended and Restated Surety Note,
Bond Notes and Suretyship Agreement.
Reconciliation of "Real Estate and Accumulated Depreciation" (in thousands):
Years Ended December 31,
1996 1995
Real Estate
Balance at beginning of year $32,985 $32,810
Property improvements 184 175
Disposals of property (9) --
Balance at End of Year $33,160 $32,985
Accumulated Depreciation
Balance at beginning of year $ 8,840 $ 8,001
Additions charged to expense 842 839
Disposals of property (6) --
Balance at end of year $ 9,676 $ 8,840
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1996 and 1995, is approximately $43,906,000 and $43,722,000,
respectively. The accumulated depreciation taken for Federal income tax
purposes at December 31, 1996 and 1995, is approximately $19,789,000 and
$18,262,000, respectively.
Note G - Revenues
The future minimum rents to be received from commercial tenants under
noncancelable operating leases, including leases signed or extended by January
31, 1996, are as follows (in thousands):
1997 $1,809
1998 1,598
1999 1,291
2000 1,063
2001 781
Thereafter 1,167
$7,709
Note H - Contingency
The Registrant is unaware of any pending or outstanding litigation that is not
of a routine nature. The Managing General Partner of the Registrant believes
that all such pending or outstanding litigation will be resolved without a
material adverse effect upon the business, financial condition, or operations of
the Partnership.
Item 8. Changes in and Disagreements with Accountant on Accounting and
Financial Disclosure
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons,
Compliance with Section 16(a) of the Exchange Act
The Registrant has no officers or directors. The Individual and Corporate
General Partners are as follows:
Individual General Partner - N. Barton Tuck, Jr., age 58, is the Individual
General Partner of the Registrant. Mr. Tuck is Chairman of GolfSouth
Management, Inc. Until August 1990, he served as Chairman and Chief Executive
Officer of U.S. Shelter Corporation ("Shelter"), the former parent of AmReal
Corporation (parent of the Corporate General Partner of the Partnership). For
six years prior to 1966, Mr. Tuck was employed in Greenville, South Carolina by
the certified public accounting firm of S.D. Leidesdorf & Company. From 1966 to
1970, he was a registered representative with the investment banking firm of
Harris Upham & Co., Inc. in Greenville, South Carolina. Since 1970, Mr. Tuck has
been engaged in arranging equity investments for individuals and partnerships.
Mr. Tuck is a graduate of the University of North Carolina. Mr. Tuck has
delegated to the Corporate General Partner all of his authority, as a general
partner of the Partnership, to manage and control the Partnership and its
business and affairs.
Corporate General Partner - The names and ages of, as well as the positions and
offices held by, the executive officers and directors of U.S. Realty I
Corporation are set forth below. There are no family relationships between or
among any officers or directors.
Name Age Position
William H. Jarrard, Jr. 50 President
Ronald Uretta 41 Vice President and Treasurer
John K. Lines 37 Vice President and Secretary
Kelley M. Buechler 39 Assistant Secretary
Mr. Jarrard, who had previously served as Vice President, became President in
August 1994. In June 1994, Mr. Lines became Vice President and Secretary and Ms.
Buechler, who had previously held the position of Secretary, became Assistant
Secretary.
William H. Jarrard, Jr. has been Managing Director - Partnership Administration
of Insignia since January 1991. Mr. Jarrard served as Managing Director -
Partnership Administration and Asset Management from July 1994 until January
1996.
Ronald Uretta has been Insignia's Treasurer since January 1992. Since August
1996, he has also served as Chief Operating officer. He has also served as
Secretary from January 1992 to June 1994 and as Chief Financial Officer from
January 1992 to August 1996. Since September 1990, Mr. Uretta has also served
as the Chief Financial Officer and Controller of Metropolitan Asset Group.
John K. Lines, Esq. has been Vice President and Secretary of the Corporate
General Partner since August 1994, Insignia's General Counsel since June 1994,
and General Counsel and Secretary since July 1994. From May 1993 until June
1994, Mr. Lines was the Assistant General Counsel and Vice President of Ocwen
Financial Corporation, West Palm Beach, Florida. From October 1991 until May
1993, Mr. Lines was a Senior Attorney with Banc One Corporation, Columbus, Ohio.
From May 1984 until October 1991, Mr. Lines was an attorney with Squire Sanders
& Dempsey, Columbus, Ohio.
Kelley M. Buechler has been Assistant Secretary of the Corporate General Partner
and Assistant Secretary of Insignia since 1991. During the five years prior to
joining Insignia in 1991, she served in similar capacities for U. S. Shelter.
Item 10. Executive Compensation
Neither the Individual General Partner nor any of the directors and officers of
the Corporate General Partner received any remuneration from the Registrant.
Item 11. Security Ownership of Certain Beneficial Owners and Management
As of December 31, 1996, no person was known by the Registrant to be the
beneficial owner of more than 5% of the Limited Partnership Units of the
Registrant.
No director or officer of the Corporate General Partner owns any Units.
Item 12. Certain Relationships and Related Transactions
The Individual General Partner and the Corporate General Partner received no
cash distributions from operations as General or Limited Partners during or with
respect to, the fiscal year ended December 31, 1996. For a description of the
share of cash distributions from operations, if any, to which the general
partners are entitled, reference is made to the material contained in the
Prospectus under the heading PROFITS AND LOSSES AND CASH DISTRIBUTIONS.
During the first eight quarters following the issuance of the DUCs, the
Corporate General Partner was obligated to loan to the Partnership up to
approximately $811,000 to cover any deficiency in the quarterly cash
distributions. The Corporate General Partner loaned the Partnership $300,000
under this guarantee, which expired August 26, 1988. A deficiency arose when
the DUC holders did not receive annualized cash distributions equal to 10% of
the average of their Adjusted Capital Values. The loan bears interest at the
lesser of the rates being paid by the parent company of the Corporate General
Partner or two percentage points over the CitiBank, N.A. prime interest rate.
The repayment of the loan would reduce the amount subsequently available for
distribution to the DUC holders. This loan may not be repaid until the
Partnership's long term debt is repaid. The balance at December 31, 1996,
including accrued interest is approximately $524,000.
The Registrant has a property management agreement with an affiliate of Insignia
for the day-to-day management of the Partnership's properties. This service
includes the supervision of leasing, rent collection, maintenance, budgeting,
employment of personnel and payment of operating expenses. An affiliate of
Insignia receives a property management fee equal to 5% of rental revenues for
residential properties, and 6% for commercial properties. During the fiscal
year ended December 31, 1996, approximately $289,000 was paid for property
management fees.
For a more detailed description of the management fee, see the material
contained in the Prospectus under the heading CONFLICTS OF INTEREST - Property
Management Services.
For a further description of payments made by the Registrant to affiliates for
services and as reimbursement of certain expenses incurred by affiliates on
behalf of the Registrant, see "Note E" of Notes to Financial Statements in this
report.
Item 13. Exhibits, and Reports on Form 8-K
(a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
(b) Reports on Form 8-K filed in the fourth quarter of fiscal year
1995:
None.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
U.S. REALTY PARTNERS LIMITED PARTNERSHIP
By: U.S. Realty I Corporation
Corporate General Partner
By: /s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
Principal Executive Officer
Date: March 27, 1997
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the date indicated.
/s/William H. Jarrard, Jr. President and Director
William H. Jarrard, Jr. Principal Executive Officer
/s/Ronald Uretta Treasurer
Ronald Uretta Principal Financial Officer
and Principal Accounting Officer
EXHIBIT INDEX
Exhibit
3 See Exhibit 4(a)
4 (a) Amended and Restated Certificate and Agreement of Limited Partnership
(included as Exhibit A to the Prospectus of Registrant dated August
19, 1986 contained in Amendment No. 4 Registration Statement, No. 33-
2996, of Registrant filed August 19, 1986 (the "Prospectus") and is
incorporated herein by reference).
(b) Subscription Agreement and Signature Page (included as Exhibit B to
the Prospectus and is incorporated herein by reference).
(c) Instruments governing the Bonds (filed as Exhibit 10C to Amendment No.
4 to Registration Statement, No. 33-2996, of Registrant filed August
19, 1986 and incorporated herein by reference).
(d) First Amendment to U.S. Realty Partners Limited Partnership Amended
and Restated Agreement of Limited of Partnership (dated August 15,
1986) dated October 14, 1993. [Filed as Exhibit 4(c) to Form 10QSB
for the quarter ended September 30, 1993 and incorporated herein by
reference.]
(i) Contracts related to acquisition of properties:
(a) Purchase Agreement dated January 31, 1986 between The Gallery,
Ltd./LNDC Venture and U.S. Realty Partners Limited Partnership to
acquire The Gallery Shopping Plaza, Knoxville, Tennessee (filed as
Exhibit 10D to Amendment No. 1 to Registration Statement, No. 33-2996,
of the Registrant filed August 19, 1986 incorporated herein by
reference).
(b) Form of Purchase Agreement by which U.S. Realty Partners Limited
Partnership expects to acquire The Gallery Shopping Plaza, Huntsville,
Alabama (filed as Exhibit 10E to Amendment No. 2 to Registration
Statement, No. 33-2996, of the Registrant filed August 19, 1986 and
incorporated herein by reference).
ii) Form of Management Agreement with U.S. Shelter Corporation (filed with
Amendment No. 4 to Registration Statement No. 33-2996, of Registrant
filed August 19, 1986 and is incorporated herein by reference).
iii)(a)Form of Master Lease and Management and Leasing Sub-Agreement related to
Purchase Agreement (see 10(b) between Cazana/Huntsville Shopping Center,
Ltd. and U.S. Shelter Corporation) to acquire The Gallery Shopping Plaza,
Huntsville, Alabama (filed as Exhibit 10E to Amendment No. 4 to
Registration Statement, No. 33-2996, of the Registrant filed August 19,
1986 and incorporated herein by reference).
(b) Amended and Restated Surety Note, Bond Notes and Suretyship Agreement by
and between U.S. Realty Partners Limited Partnership and Continental
Casualty Company, dated October 15, 1993. *
(c) First Amended and Restated Mortgage, Assignment of Rents and Security
Agreement dated as of October 15, 1993 from U.S. Realty Partners Limited
Partnership, a Delaware limited partnership, to Continental Casualty
Company, an Illinois insurance company, securing Twin Lakes Apartments,
Palm Harbor, Florida. *
(d) State of Florida Uniform Commercial Code - Statement of Change - Form UCC
- 3 Rev. 11-88 by U.S. Realty Partners Limited Partnership and
Continental Casualty Company. *
(e) First Amended and Restated Mortgage, Assignment of Rents and Security
Agreement dated as of October 15, 1993 from U.S. Realty Partners Limited
Partnership, a Delaware limited partnership, to Continental Casualty
Company, an Illinois insurance company, securing Governor's Park
(formerly St. Croix) Apartments, Little Rock, Arkansas. *
(f) Uniform Commercial Code - Standard Form Pulaski County, Arkansas,
Statements of Continuation, Partial Release, Assignment, etc. - Form UCC-
3 by U.S. Realty Partners Limited Partnership and Continental Casualty
Company. *
(g) First Amended and Restated Mortgage, Assignment of Rents and Security
Agreement dated as of October 15, 1993 from U.S. Realty Partners Limited
Partnership, a Delaware limited partnership, to Continental Casualty
Company, an Illinois insurance company, securing Gallery Shopping Plaza,
Huntsville, Alabama.*
(h) State of Alabama - Uniform Commercial Code, Statements of Continuation,
Partial Release Assignments, etc. - Form UCC-3 by U.S. Realty Partners
Limited Partnership and Continental Casualty Company. *
(i) First Amended and Restated Mortgage, Assignment of Rents and Security
Agreement dated as of October 15, 1993 from U.S. Realty Partners Limited
Partnership, a Delaware limited partnership, to Continental Casualty
Company, an Illinois insurance company, securing Gallery Shopping Plaza,
Knoxville, Tennessee.*
(j) State of Tennessee Uniform Commercial Code Statements of Continuation
Partial Release, Assignment, etc. - Form UCC-3 by U.S. Realty Partners
Limited Partnership and Continental Casualty Company. *
(k) First Amended and Restated Assignment of Rents and Leases dated October
15, 1993 from U.S. Realty Partners Limited Partnership to Continental
Casualty Company, securing Gallery Shopping Plaza, Huntsville, Alabama
and Gallery Shopping Plaza, Knoxville, Tennessee. *
(l) Depositary Agreement dated as of October 15, 1993, among U.S. Realty
Partners Limited Partnership, First Union National Bank of South Carolina
and Continental Casualty Company. *
(m) Financial Statement - Form UCC-1, State of South Carolina, Office of
Secretary of State Jim Miles by US Realty Partners Limited Partnership
and Continental Casualty Company. *
(n) Incumbency Certificate by U.S. Realty I Corporation and U.S. Realty
Partners Limited Partnership. *
* Filed as Exhibits 10iii (a) through (m) to Form 10QSB for the quarter
ended September 30, 1993 and incorporated herein by reference.
99 Prospectus of Registrant dated August 19, 1986 (included in Registration
Statement, No. 33-2996, of Registrant and incorporated herein by
reference).
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from U.S. Realty
Partners Ltd. Partnership 1996 Year-End 10-KSB and is qualified in its entirety
by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000788955
<NAME> U.S. REALTY PARTNERS LTD. PARTNERSHIP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 47
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 33,160
<DEPRECIATION> 9,676
<TOTAL-ASSETS> 24,641
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 21,607
0
0
<COMMON> 0
<OTHER-SE> 1,864
<TOTAL-LIABILITY-AND-EQUITY> 24,641
<SALES> 0
<TOTAL-REVENUES> 5,266
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,524
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,304
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (258)
<EPS-PRIMARY> (.21)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
