<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED).
For the fiscal year ended DECEMBER 31, 1999.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934(NO FEE REQUIRED).
For the transition period from to
WHITEHALL INCOME FUND-86
(Exact name of registrant as specified in its charter)
33-3377 LA
(Commission File Number)
CALIFORNIA 86-053325
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
6418 E. TANQUE VERDE, SUITE 105, TUCSON, AZ 85715
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (602)750-0500
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
LIMITED PARTNERSHIP INTERESTS
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months or (for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No
As of December 31, 1999 all units of registrant's Limited Partnership were
outstanding and held by non-affiliates (the officers, directors and general
partner of the registrant, and owners of over 10% of the registrant's units, are
considered affiliates for purposes of this calculation).
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WHITEHALL INCOME FUND - 86
FORM 10-K
TABLE OF CONTENTS
PART I
ITEM 1. BUSINESS
ITEM 2. PROPERTIES
ITEM 3. LEGAL PROCEEDINGS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON
STOCK AND RELATED SECURITY HOLDER MATTERS
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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ITEM 1. BUSINESS
GENERAL
Whitehall Income Fund-86 Limited (the "Registrant" or the "Partnership") is a
limited partnership formed in 1985 under the Limited Partnership Act of the
State of California to acquire, improve, operate and hold for investment income
producing real property. The Partnership's purpose is to purchase Properties and
to own and operate the Properties for a period of five to ten years. Currently,
the Partnership employs approximately 7 individuals.
The Registrant currently owns a self storage facility, a shopping center, a
restaurant building and one office building for a total cost of $3,880,690 as
further described in Item 2.
COMPETITION AND MARKET CONDITIONS
Occupancy rates and the Partnership's ability to maintain or increase rental
rates are affected by numerous factors. These include seasonal demand and
economic conditions. In seeking tenants, the Partnership relies on both internal
and external sources for its properties. Long-term leases with established
tenants for the Pan American Office Building and The Original Honey Baked Ham
Store and McRae Square Shopping Center have provided steady rental rates and
cash flow from operations. The Capitol Self Storage facility continues to
maintain occupancy levels exceeding 85%.
ITEM 2. PROPERTIES
During 1999, the Registrant owned four income-producing real properties as
described below.
MCRAE SQUARE SHOPPING CENTER
On December 30, 1986, the Partnership purchased, from an unaffiliated third
party, the commercial income project known as McRae Square Shopping Center (the
"Shopping Center") located in the southeastern area of Georgia in McRae for a
total of $793,840. The building has a cost basis of $734,611 and the land was
allocated a cost of $59,229 based upon an independent appraisal dated March
1986. The Shopping Center is located directly across the street from the local
Winn Dixie Shopping Center on U.S. Highway 341-Oak Street, one of the primary
traffic arteries in the area. The Shopping Center is approximately two acres in
size and encompasses approximately 12,630 square feet of leasable area with room
for expansion. The Shopping Center was completed in December of 1985 and
commenced operation on December 31, 1985.
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The Shopping Center's current tenant is Rite Aid Drug, the drugstore chain
subsidiary of Rite Aid Corporation. Another major tenant, Family Dollar Stores,
Inc., a discount variety store vacated the premises on December 31, 1999 at
expiration of its lease term due to poor sales. Family Dollar Store's initial
lease term expired during December 31, 1994, with six (6) five-year options;
Rite Aid Drug's initial lease term expired May 25, 1995, with four (4) five-year
options. Rite Aid Drug has not exercised its second (5) five-year option and is
subject to cancellation of lease if notice is not received by March 30, 2000.
Each tenant exercised its first option for a period of five (5) years. Family
Dollar's annual base rent was $26,000; Rite Aid's is $48,067.50, with no change
during the first option period.
The Partnership, under the terms of the Rite Aid lease and options, is entitled
to receive as additional rental, subject to certain offsets, percentage rental
participation of two percent (2%) to two and one-half percent (2.5%) of annual
gross sales, above certain sales levels.
The Shopping Center is directly across the highway from the Winn Dixie Shopping
Center that contains two department stores similar to the Family Dollar. There
are retail shopping areas in Helens, .5 miles to the west and in McRae .3 miles
east, which contain two drug stores. These retail establishments compete with
the establishments that are lessees of the McRae Square Shopping Center.
Rental income for the Shopping Center was $80,113, $79,841 and $82,887 for 1999,
1998, and 1997, respectively. Operating expenses for the same years were
$41,777, $39,461 and 48,522, respectively.
As of December 31, 1999 the Shopping Center was 53% occupied.
The Partnership paid to, in prior years, an affiliate of the General Partner an
acquisition fee of $44,000 for its efforts in the negotiation, execution and
purchase of the Shopping Center.
The property was unencumbered as of December 31, 1999.
CAPITOL SELF STORAGE
On December 19, 1995, the Partnership exchanged Athens Self Storage for Capitol
Self Storage, a 43,890 square foot storage facility on 1.5 acres in Tucson,
Arizona. The purchase price was $1,925,000, which was accounted for in a
tax-free exchange whereby the land, building and improvements were recorded at
$1,725,108. The property consists of 471 storage units and 43 parking spaces.
The storage buildings are built of block with metal roofs, with perimeter
fencing and electronic gates with touch pads. The driveway areas are of both
asphalt and concrete. The managers are
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a husband and wife who reside at the apartment on site.
The facility, built in 1984 has maintained occupancy of 85% to 95% over the past
three years, as have the four area facilities, which are in direct competition
with Capitol. Partnership rate ranges are similar to those of the competing
facilities. Located on a main east-west thoroughfare with a traffic count of
30,000 per day, the facility attracts customers from a heavy concentration of
apartments in the area, winter visitors and a military base.
Occupancy rates were over 85% and rental income from Capitol Self-Storage was
$330,270, $333,264 and $305,996 for 1999, 1998 and 1997, respectively. Operating
expenses for the same years were $319,721, $284,124 and $279,424, respectively.
Revenue was increased in 1998 due to rental increases and strict collection
policies. Expenses were higher in 1999 due to increased repairs and maintenance
costs related to the office, apartment and parking lot.
The exchange property, known as Capitol Self Storage, was acquired with a debt
of $1,250,000 payable in monthly installments of principle and interest of
$10,490 at nine percent (9%)annually, amortized over a twenty-five (25) year
period with a ten (10) year balloon payment.
The property is held as collateral for a $1,250,000 mortgage with an outstanding
balance of $1,187,451 as of December 31, 1999.
PAN AMERICAN OFFICE BUILDING
The office building is 16,315 square feet on a 1.39 acre tract of land (the "Pan
Am Plaza") in Edinburgh, Texas. The Pan Am Plaza is fully occupied by the
Department of Human Resources of the State of Texas on a five year
noncancellable lease with annual increases. The lease was renewed in August of
1999 for a two-year period and also contains options for future renewal. The
original lease commenced on September 9, 1988.
The office building was built specifically for the State of Texas to meet all
its requirements and includes all systems as dictated by the State of Texas.
Rental revenue for the Pan Am Plaza was $156,998, $107,293 and $83,597 for 1999,
1998 and 1997, respectively. Operating expenses for the same years were $89,034,
$93,086 and $79,811 respectively. Operating expenses include a five percent (5%)
management fee and depreciation of approximately $14,000 annually.
Income increased in 1998 due to the rental rate being increased by $4.51 per
square foot, because the lease term was reduced. Income increased again in 1999
due to the August 1998 lease increase and
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an additional increase in August 1999. Expenses will remain high due to tenant's
continued demands for upgrades and heavy client use.
The property was held as collateral for a mortgage of $317,559 outstanding as of
December 31, 1999, which the Partnership assumed in 1995. The Partnership holds
as collateral against said mortgage a collateral interest in a mortgage note
against a Krogers in Atlanta, Georgia.
THE RAX/HONEY BAKED HAM IN LOUISIANA
On December 29, 1988, the Partnership purchased land and a 3,500 square foot
building in Gretna, Louisiana for a purchase price of $600,000. The building's
cost basis is $455,072 (including improvements totaling $5,072 made subsequent
to acquisition) and the land cost is $150,000. During 1991, The Original Honey
Baked Ham Co. of Georgia signed a three year lease providing for monthly
payments of $3,000. On July 30, 1993, The Original Honey Baked Ham Co. of
Georgia signed a First Amendment to the Lease adding an additional option period
of two years commencing on January 1, 1994 and ending on December 31, 1995 for
$36,000 per year. The amendment also provided the lessee with three options to
extend the lease for additional five year terms, which the tenant did not
exercise for 1996. However, the tenant did extend the lease for a one-year
period at the same rate commencing January 1, 1996 and ending December 31, 1996.
The lessee extended its lease for two years commencing January 1, 1997 and
ending December 31, 1998, then exercised its first five-year option commencing
January 1, 1999 through December 31, 2004 at an annual rental rate of $37,800.
Rental revenue for this property was $43,863, $43,746 and $40,606 for 1999, 1998
and 1997, respectively. Operating expenses for the same years were $25,083,
25,294 and 23,198,respectively.
The property was not held as collateral for any mortgages outstanding as of
December 31, 1999.
ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
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ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
There has not been a public market and it is not anticipated that a public
market for Limited Partnership Interests will develop.
As of December 31, 1999 the number of holders of record of Limited Partnership
Interests of the Registrant was 457.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected operations data with respect to the
Partnership for each of the five years in the period ended December 31, 1999:
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<TABLE>
<CAPTION>
For the Years Ending December 31,
-----------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
TOTAL RENTAL REVENUES $ 611,244 $ 564,144 $ 814,842 $ 834,622 $ 755,653
RENTAL REVENUES LESS
RENTAL OPERATING EXPENSES 128,807 123,237 196,940 137,806 90,439
INTEREST INCOME 27,535 31,852 45,323 46,501 44,629
ADMINISTRATION EXPENSES 74,433 64,567 75,355 115,386 100,347
NET INCOME (LOSS) (79,169) (81,538) 357,132 (8,171) (237,018)
NET INCOME(LOSS)PER
LIMITED PARTNER
UNITS (6.57) (6.77) 29.63 (.68) (19.06)
DISTRIBUTIONS TO
LIMITED PARTNERS 0 0 966,472 83,534 41,762
DISTRIBUTIONS TO
LIMITED PARTNERS
PER LIMITED
PARTNER UNIT 0 0 81.00 7.00 3.50
WEIGHTED AVERAGE
NUMBER OF LIMITED
PARTNER UNITS 11,932 11,932 11,932 11,932 11,932
INVESTMENT PROPERTIES 3,079,805 3,113,601 3,179,037 4,550,355 4,601,517
TOTAL ASSETS 3,652,964 3,821,400 3,845,719 5,504,064 5,630,206
LONG-TERM
OBLIGATIONS 1,505,010 1,526,784 1,548,138 2,509,922 2,537,422
NUMBER OF PROPERTIES
OWNED 4 4 4 5 6
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
A real estate limited partnership passes through four phases during its
life cycle. These phases are:
1. Sale of limited partnership interests (equity-raising).
2. Acquisition of income producing property and property management.
3. Management of acquired property.
4. Sale of appreciated property.
The partnership is currently entering the sale of appreciated property
phase of its life cycle.
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RESULTS OF OPERATIONS
The Partnership commenced its operations January 1, 1987 with the acquisition of
McRae Shopping Center in McRae, Georgia. Since that time, the Partnership has
acquired five additional income producing properties. As of December 31, 1999,
the Partnership has distributed $2,978,943 to the Limited Partners and $9,763 to
the General Partner.
Revenues for the year ended December 31, 1999 increased by $48,401
from the year ended December 31, 1998. The increase was due primarily to the
increased rental income at Pan American Plaza.
Revenues for the year ended December 31, 1998 decreased by $250,698
from the year ended December 31, 1997. The decrease was due primarily to the
sale of Tanque Verde/Kolb Self-Storage. This decrease would have been greater,
but for increases in revenue at three of the four remaining properties.
Rental Operating Expenses for the year ended December 31, 1999 increased by
$40,793 from the year ended December 31, 1998. The increase was primarily due to
the capital improvements made at Capitol Self-Storage.
Rental Operating Expenses for the year ended December 31, 1998 decreased by
$179,995 from the year ended December 31, 1997. The decrease was primarily due
to the elimination of two employees who were previously employed by Tanque
Verde/Kolb Self Storage and the elimination of operating expenses at the
property due to sale of the property.
LIQUIDITY AND CAPITAL RESOURCES
The cash position of the Partnership and distributions to Limited Partners
should remain constant or decrease during 2000 depending on whether sales of
remaining real properties occur.
Net cash provided by operating activities was ($44,360) for the year ended
December 31, 1999 compared to $85,557 for the year ended December 31, 1998. Net
cash provided by investing activities was ($56,344) for the year ended December
31, 1999, compared to $6,747 for the year ended December 31, 1998.
Net cash provided by operating activities was $85, 557 for the year ended
December 31, 1998 compared to $75,899 for the year ended December 31, 1997. Net
cash provided by investing activities was
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$6,747 for the year ended December 31, 1998 compared to $1,778,110 for the year
ended December 31, 1997. The year ended December 31, 1997 net cash consisted of
proceeds from the sale of the investment in the Tanque Verde Self-Storage and
distributions from the investment offset by purchases of property and equipment
and deposits on rental property. Net cash used in financing activities was
$1,938,039 for the year ended December 31, 1997 and consisted of distributions
to partners and repayments of notes payable offset by proceeds from notes
payable.
The liquidity of the Partnership relies almost entirely on the financial market
fluctuation and availability of funds with regard to lending and investing in
commercial property. Funds appear to be more readily available and therefore may
provide greater liquidity to the Partnership in 2000 through the sale of the
Partnership assets.
The Partnership believes that it has adequate cash reserves to meet working
capital requirements as they arise.
Inflation has historically been a contributing factor to the increase in capital
appreciation of income producing real estate and may continue to be a
contributing factor in the future. The Partnership's intention is to own and
operate the properties for a period of five to ten years. At this time it is not
possible to anticipate what the real estate market and capital appreciation will
be in the future. Currently, the properties are generating sufficient cash flow
to cover their own cash operating expenses.
YEAR 2000 ISSUES
The Company has experienced no disruptions in its operations that management can
attribute to Year 2000 software issue. In addition, the Company has seen no Year
2000 related problems itself or received any reports of such problems from its
customers.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Neither the Registrant nor W & C Income Company Ltd., its General Partner,
has a Board of Directors.
(b,c,d,& e) The General Partner of the Registrant is W&C Income Company, Ltd.,
a California Limited Partnership.
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W & C INCOME COMPANY, LTD: a California Limited Partnership, does not have an
operations history; however, the resources from Whitehall Capital Investment
Group, Inc. have been utilized by the Partnership.
JACK C. WEST: MR. West, age 51, a Managing Member, has been a private investor
since 1988. From 1986 to 1988, Mr. West was President and Director of Whitehall
Capital Corporation. Before that time Mr. West was Senior Vice
President/National Marketing Director as well as director of the Whitehall
Capital Corporation's Irvine, California offices, in charge of the company's
marketing programs. Prior to joining Whitehall Capital Corporation in 1982, he
was active from 1977 until 1982 as a Senior Account Manager-portfolio management
with First National Corporation, an asset portfolio management corporation.
WHITEHALL CAPITAL INVESTMENT GROUP: The corporation has an interest in over $500
million of income producing real estate projects. Whitehall Capital Investment
Group's investment portfolio includes an interest in over 100 major credit
tenant commercial projects located primarily throughout the Sun Belt States.
(f) No Managing Members of the General Partner were involved with legal
proceedings.
(g) There were no transactions with promoters or control persons.
ITEM 11. EXECUTIVE COMPENSATION
(a,b,c, & d) The Registrant has not paid and does not propose to pay any
compensation or retirement benefits to members of the General Partner.
(e) There were no termination of employment or change of control arrangements
with members of the General Partner.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) No person owns of record or is known by the Registrant to own
beneficially more than 5% of the outstanding Limited Partnership Interests of
the Registrant:
(b) W & C Income Company, Ltd. and its members own as a group or individually,
1% of the Limited Partnership Interests of the Registrant.
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(c) There were no changes in control or arrangements for changes in control.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to certain relationships and related transactions is
incorporated herein by reference to and is set forth in Note 7 of Notes to the
Financial Statements on page F-14 of this Form 10-K.
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements:
(1) The index to the Financial Statements is included on F-1
of this report.
(2) Financial Statement Schedules - F-15 through F-18.
(b) Reports on Form 8-K:
The Registrant did file a Form 8-K report during the fiscal
year ended December 31, 1997.
(c) Exhibits required by Item 601 of Regulation S-K: The
Financial Data Schedule
(d) Financial Statement Schedules required by Regulation S-X:
All required information is included in the financial
statements or schedules on pages F-13 through F-18.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant had duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Whitehall Income Fund - 86, A California Limited Partnership
(Registrant)
By W & C Income Company, Ltd.
General Partner of the Registrant
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Date: January 28, 2000 By: /S/ Jack C. West
---------------- ---------------------------
Jack C. West
Managing Member
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WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1999, 1998 AND 1997
<PAGE> 15
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEPENDENT AUDITOR'S REPORT....................................................................................... F-2
BALANCE SHEETS - December 31, 1999 and 1998........................................................................ F-3
STATEMENTS OF OPERATIONS - For the Years Ended December 31, 1999, 1998 and 1997.................................... F-4
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) - For the Years Ended December 31, 1999, 1998 and 1997......... F-5
STATEMENTS OF CASH FLOWS - For the Years Ended December 31, 1999, 1998, and 1997................................... F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS......................................................................... F-7
FINANCIAL STATEMENT SCHEDULES:
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION........................................................... F-16
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE...................................................................... F-18
</TABLE>
F-1
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INDEPENDENT AUDITOR'S REPORT
The Partners
Whitehall Income Fund - 86
(A California Limited Partnership)
Tucson, Arizona
We have audited the accompanying balance sheets of Whitehall Income Fund - 86 (a
California limited partnership) as of December 31, 1999 and 1998, and the
related statements of operations, changes in partners' capital (deficit), and
cash flows for each of the years in the three year period ended December 31,
1999. 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 audits 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 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 Whitehall Income Fund - 86 (a
California limited partnership) at December 31, 1999 and 1998, and the results
of its operations and its cash flows for each of the years in the three year
period ended December 31, 1999 in conformity with generally accepted accounting
principles.
Our audits referred to above included audits of the financial statement
schedules listed under Item 14(a)(2) of Form 10-K. In our opinion, these
financial statement schedules present fairly, in all material respects, in
relation to the financial statements taken as a whole, the information required
to be stated therein.
\s\HEIN + ASSOCIATES LLP
- -------------------------------
HEIN + ASSOCIATES LLP
Certified Public Accountants
Orange, California
January 28, 2000
F-2
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WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-----------------------------------------
1999 1998
---------------- -----------------
<S> <C> <C>
ASSETS
Rental properties, net of accumulated depreciation $ 3,079,805 $ 3,113,601
Cash and cash equivalents 377,529 500,005
Accounts receivable 19,077 21,032
Note receivable 149,546 155,140
Loan closing costs, net of accumulated amortization
of $19,145 and $14,530 27,007 31,622
---------------- -----------------
TOTAL ASSETS $ 3,652,964 $ 3,821,400
================ =================
LIABILITIES AND PARTNERS' CAPITAL
Notes payable $ 1,505,010 $ 1,526,782
Accounts payable 19,222 5,515
Accrued property taxes 22,273 19,862
Due to general partner - 10,607
Due to related party 28,328 107,045
Other liabilities 14,250 8,539
---------------- -----------------
Total liabilities 1,589,083 1,678,350
COMMITMENT (Note 6)
PARTNERS' CAPITAL
Limited partners, 11,932 equity units authorized and
outstanding for 1999 and 1998 2,112,187 2,190,564
General partner, 1 equity unit authorized and outstanding for
1999 and 1998 (48,306) (47,514)
----------------- -----------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 3,652,964 $ 3,821,400
================ =================
</TABLE>
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
F-3
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WHITEHALL INCOME FUND -- 86
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Years Ended December 31,
1999 1998 1997
------------ ----------- -------------
<S> <C> <C> <C>
REVENUES:
Rental $ 612,545 $ 564,144 $ 814,842
Gain on sale of rental property -- -- 543,526
Other income 27,534 32,773 54,127
------------ ----------- -------------
Total Revenues 640,079 596,917 1,412,495
------------ ----------- -------------
EXPENSES:
Rental operating:
Depreciation 95,734 95,006 135,676
Payroll and related taxes 38,052 31,889 49,636
Interest 136,463 135,656 198,138
Other rental operating expenses 90,224 76,241 95,857
Taxes other than payroll 71,695 69,860 100,442
Repairs and maintenance 22,335 21,325 25,729
Advertising 12,269 10,930 12,424
Operating Expenses:
General and administrative 74,434 64,567 75,355
Payroll and related taxes 136,999 130,260 126,360
Professional fees 36,429 36,748 35,778
Depreciation and amortization 4,614 5,973 15,156
Write down of note receivable to fair value -- -- 184,812
------------ ----------- -------------
Total expenses 719,248 678,455 1,055,363
------------ ----------- -------------
NET INCOME (LOSS) $ (79,169) $ (81,538) $ 357,132
============ =========== =============
NET INCOME (LOSS) ATTRIBUTED TO:
Limited partners $ (78,377) $ (80,723) $ 353,561
============ =========== =============
General partner $ (792) $ (815) $ 3,571
============ =========== =============
NET INCOME (LOSS) PER LIMITED PARTNER UNIT $ (6.57) $ (6.77) $ 29.63
============ =========== =============
DISTRIBUTIONS PER LIMITED PARTNER UNIT $ -- $ -- $ 81.00
============ =========== =============
WEIGHTED AVERAGE NUMBER OF LIMITED PARTNER UNITS 11,932 11,932 11,932
============ =========== =============
</TABLE>
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
F-4
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WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
--------------- ------------- ---------------
<S> <C> <C> <C>
BALANCE (DEFICIT), December 1996 $ (40,507) $ 2,884,218 $ 2,843,711
Net income for 1997 3,571 353,561 357,132
Capital distributions (9,763) (966,492) (976,255)
--------------- ------------- ---------------
BALANCE (DEFICIT), December 1997 (46,699) 2,271,287 2,224,588
Net loss for 1998 (815) (80,723) (81,538)
--------------- ------------- ---------------
BALANCE (DEFICIT), December 1998 (47,514) 2,190,564 2,143,050
Net loss for 1999 (792) (78,377) (79,169)
--------------- ------------- ---------------
BALANCE (DEFICIT), December 31, 1999 $ (48,306) $ 2,112,187 $ 2,063,881
=============== ============= ===============
</TABLE>
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
F-5
<PAGE> 20
WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (79,169) $ (81,538) $ 357,132
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 100,348 100,979 150,832
Gain on sale of rental property -- -- (543,526)
Write down of note receivable to fair value -- -- 184,812
Changes in assets and liabilities:
Accounts receivable 1,955 (12,458) 4,887
Accounts payable 13,708 (568) (18,398)
Accrued property taxes 2,411 1,184 (34,395)
Due to general partner (10,607) -- 9,763
Due to related party (78,717) 80,217 26,828
Other liabilities 5,711 (2,259) (62,036)
----------- ----------- -----------
Net cash provided by (used in) operating activities (44,360) 85,557 75,899
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of rental properties (61,938) (29,569) (43,116)
Deposit on rental property -- 30,000 --
Proceeds from sale of rental property -- -- 1,821,226
Note receivable 5,594 6,316 --
----------- ----------- -----------
Net cash provided by (used in) investing activities (56,344) 6,747 1,778,110
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution to partners -- -- (976,255)
Repayments of notes payable (21,772) (21,356) (961,784)
----------- ----------- -----------
Net cash used in financing activities (21,772) (21,356) (1,938,039)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH (122,476) 70,948 (84,030)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 500,005 429,057 513,087
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 377,529 $ 500,005 429,057
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 127,557 $ 135,656 207,000
=========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
F-6
<PAGE> 21
WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING POLICIES:
Nature of Business - Whitehall Income Fund - 86 (the "Partnership") was
organized in the State of California on December 15, 1985, for the
purpose of investing in, holding, developing and managing income
producing properties.
Allocations and Distributions - Generally, net losses are allocated 1%
to W&C Income Company, Ltd. (the "General Partner") and 99% to the
Limited Partners. Net income is allocated in the same proportion as net
losses until all such losses have been recaptured, and then in
proportion to distributions of cash from operations until the partners'
capital accounts equal their original invested capital. Finally, the
remaining net income is allocated 15% to the General Partner and 85% to
the Limited Partners.
Distributions of cash from operations, as defined, are divided 1% to
the General Partner and 99% to the Limited Partners until the Limited
Partners have received their priority return. The Limited Partners are
entitled to a non-cumulative, non-compounded return on adjusted
invested capital, as defined in the Partnership Agreement, of 7% in
1986, 8% in 1987, 9% in 1988 and 10% per annum thereafter. After this
priority return is received, distributions are divided 5% to the
General Partner and 95% to the Limited Partners. As of December 31,
1999, the Limited Partners had not received their non-cumulative
priority return.
Fees - The General Partner provides property management and leasing
services to the Partnership and is compensated at the rate of 5% of the
gross receipts from the properties (see Note 7). Such fee was paid and
recognized as an expense for the years ended December 31, 1999, 1998
and 1997. The General Partner is also entitled to a partnership
management fee of 5% of all distributions of cash from operations after
the Limited Partners have received their priority return. As of
December 31, 1999, the Limited Partners had not received their
non-cumulative priority return (see allocations and distributions
above); therefore, the general partner is not entitled to the
partnership management fee.
The Partnership reimburses the General Partner for a portion of payroll
relating to an in-house legal counsel and a managing agent and certain
general and administrative expenses (see Note 7).
Impairment of Long-Lived Assets - In the event that facts and
circumstances indicate that the cost of assets may be impaired, an
evaluation of recoverability would be performed. If an evaluation is
required, the estimated future undiscounted cash flows associated with
the asset would be compared to the asset's carrying amount to determine
if a write-down to market value or discounted cash flow is required.
Rental properties - Rental properties and improvements are recorded at
cost. The Partnership capitalizes and depreciates all buildings used
for investment income over thirty-one to thirty-nine years, the
estimated useful lives of the properties, using an accelerated method
for financial reporting purposes. Depreciation of improvements is
calculated using the same accelerated method over the estimated useful
lives (ranging from 5 to 10 years) of the respective assets. The cost
of normal maintenance and repairs is charged to operating expenses as
incurred. Material expenditures which increase the life of an asset are
capitalized and depreciated over the estimated remaining useful life of
the asset. The cost of properties sold, or otherwise disposed of, and
the related accumulated depreciation or amortization are removed from
the accounts, and any gains or losses are reflected in current
operations.
F-7
<PAGE> 22
WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
Net Income (Loss) Per Limited Partner Unit - Net income (loss) per
limited partner unit has been computed for each fiscal year on the
basis of the weighted average number of Limited Partner units
outstanding.
Amortization - Loan closing costs are amortized over the lives of the
loans using the interest method.
Income Taxes and Other - The activity of the Partnership is included in
the respective tax returns of the partners and no income taxes are
provided or imposed at the Partnership level. These financial
statements do not give effect to any assets that the partners may have
outside their interests in the Partnership, nor to any obligations,
including income taxes, of the partners.
Use of Estimates - The preparation of the Partnership's financial
statements in conformity with generally accepted accounting principles
requires the Partnership's management to make estimates and assumptions
that affect the amounts reported in these financial statements and
accompanying notes. Actual results could differ from those estimates.
The Partnership's financial statements are based upon a number of
significant estimates, including the estimated useful lives selected
for property and equipment and intangible assets. Due to the
uncertainties inherent in the estimation process, it is at least
reasonably possible that these estimates will be further revised in the
near term and such revisions could be material.
Statement of Cash Flows - For purposes of the statement of cash flows,
the Partnership considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents. Cash
equivalents consist of certificates of deposit.
Reclassifications - Certain reclassifications were made to the 1998 and
1997 financial statements in order to conform to the 1999 presentation.
Such reclassifications had no effect on the net income (loss)
previously reported.
2. BASIS OF PRESENTATION
As reflected in the accompanying financial statements, the Company has
incurred net losses the past two years and the cash flow from
operations was negative for 1999. Other factors that could affect the
liquidity of the Company in the near future are the loan balance due in
August 2000 for the PanAm property and the reduction of rental income
due to potential vacancies at the McRae property. Management believes
that the Company will generate sufficient cash flow to fund its
operations through December 31, 2000. In addition, management has taken
the following actions to improve the Company's cash flow and operating
results:
The Company has begun discussions to refinance the PanAm loan
with two lenders.
To reduce the possible vacancies at the McRae property,
management is concentrating their efforts to lease the spaces
and is engaging a leasing agent to assist in obtaining tenants.
The general partner has represented that it has the intent and
means to fund any cash shortfall.
F-8
<PAGE> 23
WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
The Company believes these efforts will enable it to meet its
obligations as they come due and continue as a going concern.
3. RENTAL PROPERTIES AND OTHER SEGMENT INFORMATION:
Each rental property is an operating segment. The Partnership's
management evaluates the performance of each segment based on profit or
loss from operations before allocation of Partnership general and
administrative expenses, unusual and extraordinary items. The
accounting policies of the segments are the same as those described in
the summary of significant accounting policies.
F-9
<PAGE> 24
WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
Below is the segment information:
1999
<TABLE>
<CAPTION>
McRae Pan American Honey Baked Capitol
Partnership Shopping Office Ham In Self
Total Overhead Center Building Louisiana Storage
----------- ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Buildings and improvements $ 3,395,773 $ -- $ 750,731 $ 504,697 $ 468,614 $ 1,671,731
Accumulated depreciation (800,885) -- (302,191) (156,492) (178,496) (163,706)
Land 484,917 -- 59,229 162,850 150,000 112,838
----------- ----------- ----------- ----------- ----------- -----------
Net Property $ 3,079,805 $ -- $ 507,769 $ 511,055 $ 440,118 $ 1,620,863
=========== =========== =========== =========== =========== ===========
Rental Revenue $ 611,244 $ -- $ 80,113 $ 156,998 $ 43,863 $ 330,270
Other income 1,300 1,300 -- -- -- --
Interest Income 27,535 12,863 173 14,499 -- --
----------- ----------- ----------- ----------- ----------- -----------
640,079 14,163 80,286 171,497 43,863 330,270
----------- ----------- ----------- ----------- ----------- -----------
Operating expenses 482,437 243,633 18,043 46,214 10,320 164,227
Interest expense 136,463 -- -- 28,833 -- 107,630
Depreciation and
amortization 100,348 -- 23,734 13,987 14,763 47,864
----------- ----------- ----------- ----------- ----------- -----------
719,248 243,633 41,777 89,034 25,083 319,721
----------- ----------- ----------- ----------- ----------- -----------
Net income (loss) $ (79,169) $ (229,470) $ 38,509 $ 82,463 $ 18,780 $ 10,549
=========== =========== =========== =========== =========== ===========
</TABLE>
F-10
<PAGE> 25
WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1998
<TABLE>
<CAPTION>
McRae Pan American Honey Baked Capitol
Partnership Shopping Office Ham In Self
Total Overhead Center Building Louisiana Storage
----------- ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Buildings and improvements $ 3,333,835 $ -- $ 750,731 $ 477,677 $ 468,614 $ 1,636,813
Accumulated depreciation (705,151) -- (278,457) (141,276) (148,943) (136,475)
Land 484,917 -- 59,229 162,850 150,000 112,838
----------- ----------- ----------- ----------- ----------- -----------
Net property $ 3,113,601 $ -- $ 531,503 $ 499,251 $ 469,671 $ 1,613,176
=========== =========== =========== =========== =========== ===========
Rental revenue $ 564,144 $ -- $ 79,841 $ 107,293 $ 43,746 $ 333,264
Other income 933 933 -- -- -- --
Interest income 31,840 17,874 188 13,778 -- --
----------- ----------- ----------- ----------- ----------- -----------
596,917 18,807 80,029 121,071 43,746 333,264
----------- ----------- ----------- ----------- ----------- -----------
Operating expenses 441,820 230,517 15,933 48,814 10,531 136,025
Interest expense 135,656 -- -- 29,527 -- 106,129
Depreciation and
amortization 100,979 5,973 23,528 14,745 14,763 41,970
----------- ----------- ----------- ----------- ----------- -----------
678,455 236,490 39,461 93,086 25,294 284,124
----------- ----------- ----------- ----------- ----------- -----------
Net income (loss) $ (81,538) $ (217,683) $ 40,568 $ 27,985 $ 18,452 $ 49,140
=========== =========== =========== =========== =========== ===========
</TABLE>
F-11
<PAGE> 26
WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1997
<TABLE>
<CAPTION>
McRae Pan American Honey Baked
Partnership Shopping Tanque Verde Office Ham in Capitol
Total Overhead Center Self-Storage Building Louisiana Self-Storage
----------- ----------- ----------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Buildings and improvements $ 3,304,266 $ -- $ 734,611 $ -- $ 464,228 $ 468,614 $ 1,636,813
Accumulated depreciation (610,146) -- (254,929) -- (126,531) (134,180) (94,506)
Land 484,917 -- 59,229 -- 162,850 150,000 112,838
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net property 3,179,037 $ -- $ 538,911 $ -- $ 500,547 $ 484,434 $ 1,655,145
=========== =========== =========== =========== =========== =========== ===========
Rental revenue $ 814,842 $ -- $ 82,887 $ 301,756 $ 83,597 $ 40,606 $ 305,996
Gain on sale of property 543,526 -- -- 543,526 -- -- --
Other income 10,804 800 -- -- 10,004 -- --
Interest income 43,323 22,183 217 -- 20,923 -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
1,412,495 22,983 83,104 845,282 114,524 40,606 305,996
----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating expenses 521,581 237,493 25,201 94,959 33,939 8,171 121,818
Interest expense 198,138 -- -- 56,545 30,967 -- 110,626
Depreciation and
amortization 150,832 15,156 23,321 35,443 14,905 15,027 46,980
Write down of note
receivable 184,812 184,812 -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
1,055,363 437,461 48,522 186,947 79,811 23,198 279,424
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss) $ 357,132 $ (414,478) $ 34,582 $ 658,335 $ 34,713 $ 17,408 $ 26,572
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
F-12
<PAGE> 27
WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
The Partnership currently owns four rental properties. On August 14,
1997, the Partnership sold Tanque Verde Self Storage for $1,945,000,
net of related expenses. The gain on the sale of the property was
$543,526.
During 1999, two tenants each accounted for approximately 19% of rental
revenue. During 1998 and 1997, two tenants each accounted for
approximately 16% and 10% of the rental revenue, respectively.
4. NOTE RECEIVABLE:
Prior to 1995, one of the properties of the Partnership was held as
collateral for a note payable of the original owner. During 1995, the
Partnership assumed this note payable in exchange for a note receivable
with collateral of a second trust deed on an operating property in
Atlanta from the original note holder. When the note receivable became
due in June 1997, the original owner could not pay the balance due on
the note. The Partnership took the collateral and wrote down the note
receivable to the estimated fair value of the collateral.
The second trust deed has an interest rate of 9.5%. The principal and
interest is received in monthly installments of $14,074 through
November 4, 2004. Since the second trust deed wraps the first trust
deed on the Atlanta property, the monthly installments of the second
trust deed are reduced by the monthly payments of $12,400 to the first
trust deed through February 2004.
5. NOTES PAYABLE:
Notes payable consisted of:
<TABLE>
<CAPTION>
December 31,
-------------------------------
1999 1998
----------- -----------
<S> <C> <C>
$1,250,000 non-recourse note payable to bank with interest at 9% through
February 2006; principal and interest payable in monthly installments of
$10,490 through 2006, at which time the remaining balance becomes due;
collateralized by Capital real and personal property $ 1,187,451 $ 1,204,115
$337,035 note payable to life insurance company with interest at 9%
through August 2000; principal and interest due in monthly installments
of $2,828 through August 2000, at which time the remaining balance
becomes due; collateralized by Pan American real property 317,559 322,667
----------- -----------
$ 1,505,010 $ 1,526,782
=========== ===========
</TABLE>
F-13
<PAGE> 28
WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
Future maturities of notes payable are as follows:
<TABLE>
<CAPTION>
Year Amount
---- -----------------
<S> <C>
2000 $ 337,372
2001 21,672
2002 23,705
2003 25,928
2004 28,360
Thereafter 1,067,973
-----------------
$ 1,505,010
=================
</TABLE>
All interest incurred for the years ending December 31, 1999, 1998 and
1997 was charged to expense.
6. LEASES:
The Partnership has long-term operating lease agreements with
unaffiliated lessees to occupy space in its operating real estate
properties.
Future minimum lease payments to be received on non-cancelable leases
are as follows:
<TABLE>
<CAPTION>
Year Amount
---- -----------------
<S> <C>
2000 $ 222,907
2001 150,931
2002 37,800
2003 37,800
------------------
$ 449,438
==================
</TABLE>
7. RELATED PARTY TRANSACTIONS:
At December 31, 1998 the General Partner was owed $10,607 for
distributions of cash from operations, as defined in the partnership
agreement.
In 1999, 1998 and 1997 the Partnership was charged property management
and leasing fees of $29,404, $26,744 and $36,921 by an affiliate of the
former General Partner. In 1999, 1998 and 1997, the Partnership
incurred payroll expenses relating to certain of the former General
Partner's employees and other administrative expenses totaling
$203,938, $189,217 and $195,728, respectively. Certain amounts of the
administrative expenses paid by a former general Partner are allocated
to the Partnership based upon the former General Partner's estimates.
At December 31, 1999 and 1998, the affiliate of the former General
Partners was owed $28,328 and $107,045, respectively.
F-14
<PAGE> 29
WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
8. FINANCIAL INSTRUMENTS:
Concentrations of Credit Risk - Credit risk represents the accounting
loss that would be recognized at the reporting date if counterparties
failed completely to perform as contracted. Concentrations of credit
risk (whether on or off balance sheet) that arise from financial
instruments exist for groups of customers or counterparties when they
have similar economic characteristics that would cause their ability to
meet contractual obligations to be similarly effected by changes in
economic or other conditions. In accordance with FASB Statement No.
105, Disclosure of Information about Financial Instruments with Off
Balance Sheet Risk and Financial Instruments with Concentrations of
Credit Risk, the credit risk amounts shown do not take into account the
value of any collateral or security.
Financial instruments that subject the Partnership to credit risk
consist principally of a note and accounts receivable and cash on
deposit.
The Partnership's note receivable is described in Note 4.
The Partnership's properties are located in the states of Texas,
Arizona, Georgia and Louisiana. A downturn in the economies in any of
these states could have an adverse impact on the Partnership.
Fair Value of Financial Instruments - The estimated fair values of the
Partnership financial instruments were determined by management using
available market information and appropriate valuation methodologies.
The estimates are not necessarily indicative of the amount the
Partnership could realize in a current market exchange.
At December 31, 1999, cash, accounts receivable, accounts payable, and
notes payable have fair values that approximate book values based on
their short term or demand maturity.
The fair value of the note receivable is based on estimated discounted
cash flows. The fair value of this instrument approximates book value
at December 31, 1999.
F-15
<PAGE> 30
WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 1999
<TABLE>
<CAPTION>
Initial Cost to Partnership Subsequent to Acquisition
-------------------------------------------- ---------------------------
Building and Carrying
Description Incumbrances Land Improvements Improvements Costs
------------ --------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
McRae Shopping
Center $ -- $ 59,229 $ 734,611 $ 16,120 $ --
Pan American
Office Building 322,665 162,850 437,217 67,480 --
Honey Baked Ham
in Louisiana -- 150,000 450,000 18,614 --
Capitol Self Storage 1,204,116 112,838 1,612,270 59,461 --
---------- ---------- ---------- ---------- ----------
$1,526,781 $ 484,917 $3,234,098 $ 161,675 $ --
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Life on Which
Gross Amounts at Which Carried at Close of Period Depreciation
------------------------------------------------------------- In Latest Income
Building and Accumulated Date of Date Statements is
Description Land Improvements Total Depreciation Construction Acquired Computed
---------- ------------ ---------- ------------ ------------ -------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
McRae Shopping
Center $ 59,229 $ 750,731 $ 809,960 $ 302,191 1985 1986 31.5 years
Pan American
Office Building 162,850 504,697 667,547 156,492 1984 1987 31.5 years
Honey Baked Ham
in Louisiana 150,000 468,614 618,614 163,706 1978 1988 31.5 years
Capitol Self Storage 112,838 1,671,731 1,784,569 178,496 1984 1995 39.0 years
---------- ---------- ---------- ----------
$ 484,917 $3,395,773 $3,880,690 $ 800,885
========== ========== ========== ===========
</TABLE>
F-16
<PAGE> 31
WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
The following shows the changes in the total amounts in which real
estate was carried during the periods:
<TABLE>
<S> <C>
Balance at January 1, 1997 $ 5,876,338
Purchases 43,116
Cost of real estate sold (2,130,271)
-----------------
Balance at December 31, 1997 3,789,183
Purchases 29,569
----------------
Balance at December 31, 1998 3,818,752
Purchases 61,938
----------------
Balance at December 31, 1999 $ 3,880,690
================
</TABLE>
The following shows changes in accumulated depreciation during the
periods:
<TABLE>
<CAPTION>
<S> <C>
Balance at January 1, 1997 $ 1,325,983
Depreciation during the period 135,676
Deductions for real estate sold (851,514)
-----------------
Balance at December 31, 1997 610,145
Depreciation during the period 95,006
-----------------
Balance at December 31, 1998 705,151
Depreciation during the period 95,734
-----------------
Balance at December 31, 1999 $ 800,885
================
</TABLE>
F-17
<PAGE> 32
WHITEHALL INCOME FUND - 86
(A CALIFORNIA LIMITED PARTNERSHIP)
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Final Periodic Face Carrying
Interest Maturity Payment Prior Amount of Amount of
Description Rate Date Terms Liens Mortgages Mortgages
- ------------------------------- ----------- ------------- --------------- ----------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Commercial loans:
Capital Self Storage 9% 2006 $ 10,490 -- $ 1,250,000 $ 1,187,451
Pan American Office
Building 9% 2000 2,828 -- 337,035 317,559
</TABLE>
The following shows the changes in the carrying amounts of mortgage
loans during the periods:
<TABLE>
<S> <C>
Balance at January 1, 1997 $ 2,509,922
Payments of principal (961,784)
-----------
Balance at December 31, 1997 1,548,138
Payments of principal (21,356)
-----------
Balance at December 31, 1998 1,526,782
Payments of principal (21,772)
-----------
Balance at December 31, 1999 $ 1,505,010
===========
</TABLE>
F-18
<PAGE> 33
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 377,529
<SECURITIES> 0
<RECEIVABLES> 149,546
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,079,805
<DEPRECIATION> 800,885
<TOTAL-ASSETS> 3,652,964
<CURRENT-LIABILITIES> 0
<BONDS> 1,505,101
0
0
<COMMON> 0
<OTHER-SE> 2,063,981
<TOTAL-LIABILITY-AND-EQUITY> 3,652,964
<SALES> 0
<TOTAL-REVENUES> 640,079
<CGS> 0
<TOTAL-COSTS> 582,785
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 136,463
<INCOME-PRETAX> (79,169)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (79,169)
<EPS-BASIC> (6.57)
<EPS-DILUTED> (6.57)
</TABLE>
