UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION
EXCHANGE ACT OF 1934
Commission file number 0-17651
HIGH CASH PARTNERS, L.P.
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3347257
- -------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Colliers International
5310 Kietzke Lane, Suite 105
RENO, NEVADA 89511
- -------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212-350-9900
------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on which
Title of each class registered
- ------------------------- ----------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
-------------------------------------
(Title of class)
Indicate by check mark whether 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 Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
_ _
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
<PAGE>
PART I
ITEM 1 BUSINESS
High Cash Partners, L.P. (the "Partnership") is a Delaware limited partnership
formed in 1986 for the primary purpose of investing in, holding, operating and
otherwise acting with respect to office buildings, shopping centers and other
commercial and industrial properties.
In 1989, the Partnership used all the net proceeds from its public offering of
units of limited partnership interest ("Units") to acquire Sierra Marketplace, a
community retail shopping center completed in October 1988 and situated on 18.67
acres in the southern portion of Reno, Nevada ( "Sierra Marketplace" or the
"Property". Sierra Marketplace consists of two main buildings and three "out
parcel" structures containing approximately 233,000 square feet of net leasable
area. Sierra Marketplace has [33] tenants. Each of three tenants, Smith's
Management Corp., a grocery and drug store, Good Guys, Inc., a consumer
electronics store, and Bell Furniture, Inc., a furniture store, accounted for
approximately 19%, 18% and 20%, respectively, of the Partnership's total rental
income revenues in 1999. The Property is subject to a mortgage, which is
described in Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources" below.
Until November 1997, Levitz Furniture Corporation ("Levitz") had occupied
approximately 53,000 square feet at Sierra Marketplace under a lease that
extended through 2008. Levitz accounted for approximately 16% of the
Partnership's total rental income revenues in 1997. During 1997, Levitz filed
for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code.
In November 1997, Levitz vacated its premises, and ceased paying rent under the
lease as of April 2, 1998. During 1999, the Partnership entered into a
short-term lease on the Levitz space with a then existing tenant at an annual
rent materially less than under the Levitz lease; this lease is terminable by
the Partnership upon written notice to the tenant, in the event the Partnership
secures a long-term, creditworthy tenant for the space. The Partnership is
continuing to seek such a tenant. See Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources" below.
LOCALE AND COMPETITION
The Partnership believes there are approximately 8.8 million square feet of
retail space in the Reno area, in a total of 72 regional malls and community,
neighborhood and strip centers. Sierra Marketplace is located in the southern
section of Reno, which is well developed commercially along major thoroughfares
with substantial residential development along secondary streets. The primary
trade area is considered affluent to middle class. Although there is little room
for significant new competing development in the immediate geographical vicinity
of the Property, the competition for tenants (including existing tenants whose
leases expire) is strong among existing centers. In addition, a portion of the
land available for development in the immediate geographic vicinity of the
Property recently has been developed by centers predominantly occupied by large
anchor tenants, which has created additional competition for the Property. See
Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Liquidity and Capital Resources" and "- Real Estate Market"
below.
I-1
<PAGE>
EMPLOYEES
The Partnership does not have any employees. Services are performed for the
Partnership by Pembroke HCP, LLC, the Partnership's Managing General Partner
(the "Managing General Partner"), Pembroke Realty Management LLC ("Pembroke
Realty"), an affiliate of the Managing General Partner, and certain other
parties that may be deemed to be affiliated with the Managing General Partner.
Certain services are performed for Pembroke Realty by Colliers Nevada
Management, LLC, an unaffiliated management company ("Colliers"). See Item 10,
"Directors and Executive Officers of Registrant", Item 11, "Executive
Compensation", Item 12, "Security Ownership of Certain Beneficial Owners and
Management" and Item 13, "Certain Relationships and Related Transactions" below.
ITEM 2. PROPERTIES
See Item 1, "Business" above.
ITEM 3. LEGAL PROCEEDINGS
See Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources" below with regard to
Levitz.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 1999.
I-2
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S SECURITIES AND RELATED SECURITY HOLDER MATTERS
There is no established public trading market for the Units, and it is not
anticipated that such a market will develop.
There are certain restrictions in the Partnership's Partnership Agreement that
may limit the ability of a limited partner to transfer Units. Such restrictions
could impair the ability of a limited partner to liquidate its investment in the
event of an emergency or for any other reason.
As of March 22, 2000, there were 1,362 holders of Units, owning an aggregate of
96,472 Units.
There were no distributions made during 1997 or 1998. In May 1999, October 1999
and January 2000, the Partnership effected cash distributions of approximately
$4,100,000, $700,00 and $700,000, respectively, or $42.07, $7.18 and $7.18 per
Unit, respectively, to Unitholders of record on May 11, 1999, October 20, 1999
and January 1, 2000, respectively.
There are no material legal restrictions on distributions in the Partnership's
Partnership Agreement. See, however, Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources" below for a discussion of financial conditions affecting the
Partnership's ability to make distributions.
II-1
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------- ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues $ 2,521,650 $ 2,479,904 $ 2,686,095 $ 2,637,022 $ 2,632,230
Net Loss (1) $ (1,147,548) $ (925,947) $ (7,238,860) $ (640,184) $ (442,098)
Net (Loss) Per Unit (1)(2) $ (11.78) $ ( 9.50) $ (74.29) $ (6.57) $ (4.54)
Distributions Per Unit (2) $ 49.25 $ - $ - $ 12.52 $ 12.52
Long-term Obligations (3) $ 21,935,131 $ 19,617,279 $ 17,540,481 $ 15,691,865 $ 14,030,719
Total Assets $ 16,192,632 $ 19,834,203 $ 18,716,205 $ 24,485,903 $ 24,652,234
</TABLE>
- -----------------
(1) The 1997 amount includes a write-down for impairment of $6,475,500, or
$(66.45) per Unit.
(2) Based upon the weighted average number of Units outstanding.
(3) Consisting of the principal amount of the RAM 2 loan plus deferred interest
on that loan, which are described in Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources" below.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Partnership uses working capital reserves set aside from the proceeds of its
public offering in 1989 and undistributed cash flow from operations as its
primary measure of liquidity. At December 31, 1999, working capital reserves
amounted to approximately $1,000,000. Such reserves may be used to fund capital
expenditures, insurance, real estate taxes and loan payments. All expenditures
during 1999 were funded from cash flow from operations.
At December 31, 1999, the total amount outstanding on the Partnership's mortgage
loan payable to Resources Accrued Mortgage Investors 2 L.P. ("RAM 2") was
$21,935,131, which included deferred interest payable of $15,435,131. From and
after March 1, 1999, the mortgage loan may be prepaid, in whole only, without
penalty or premium. At March 1, 2000, the total amount outstanding on the
mortgage was approximately $22,333,584. The Partnership believes that, in the
present circumstances, it would not be able to refinance the mortgage. The
mortgage matures on February 28, 2001. At that time, the total amount
outstanding on the mortgage is expected to be approximately $25,000,000. If the
value of the Property at that time does not exceed $25,000,000, the Partnership
may lose its entire investment in the Property. At present, the Partnership
believes that, unless conditions change materially, the value of the Property at
February 28, 2001 will be significantly less than $25,000,000. See "Write-Down
for Impairment" below.
The mortgage further requires the Partnership to provide RAM 2 with a current
appraisal of the Property upon RAM 2's request. If it is determined, based upon
the requested appraisal, that the sum of (i) the principal balance of the
mortgage loan plus all other then outstanding indebtedness secured by the
Property and (ii) all accrued and unpaid interest on the mortgage at 6.22% per
annum, compounded monthly (that sum, the "Measurement Amount"), exceeds 85% of
the appraised value, an amount equal to such excess would become immediately due
and payable to RAM 2.
To date, the lender has not requested an appraisal. There can be no assurance
that, if the lender requests an appraisal, 85% of the appraised value will equal
the Measurement Amount. At December 31, 1999, the Measurement Amount was
approximately $12,774,000, which was approximately $720,000 less than 85% of the
$15,875,000 value to which the Property was written down in the first quarter of
1997. As interest on the mortgage accrues, the Measurement Amount will increase,
and, therefore, unless the value of the Property
II-2
<PAGE>
is shown to be greater than the value to which it was written down in the first
quarter of 1997, the Measurement Amount will exceed 85% of the appraised value
of the Property during the year 2000.
Management is evaluating its alternatives with respect to the mortgage loan.
Such alternatives are limited due to the fact that the principal and deferred
interest on the mortgage loan significantly exceed the fair market value of the
Property. There can be no assurance that the Partnership will be successful in
pursuing any of its alternatives. If the Partnership is not successful in
pursuing any of its alternatives, the Partnership will likely lose its entire
interest in the Property.
Until November 1997, Levitz had occupied approximately 23% of the space at the
Property (i.e., approximately 53,000 out of approximately 233,000 square feet of
net leasable area). Rent under the lease for each of 1997 and 1996 was
approximately $412,000, which was approximately 16% of the Partnership's total
rental income revenues in each such period. In November 1997, Levitz, which had
filed for protection under Chapter 11 of the Bankruptcy Code, vacated its space.
Levitz ceased paying rent as of April 2, 1998.
The vacancy at the Levitz space has resulted in a loss of income to the
Partnership. The vacancy at the Levitz space, as well as a vacancy in an
additional, significant space previously occupied by Good Guys, also may have
adversely affected the surrounding tenants and the Partnership's ability to
attract new tenants, particularly in light of the limited visibility those
tenants have to the main thoroughfare. See "Real Estate Market" below. The
Partnership is actively seeking a long-term, creditworthy substitute tenant.
However, there can be no assurance the Partnership will succeed in finding a
long-term, creditworthy substitute tenant promptly or on terms comparable to
those under the Levitz lease. In addition, if a substitute tenant is obtained,
the Partnership expects to make substantial expenditures in order to secure the
substitute tenant and in connection with a new lease.
During 1999, the Partnership entered into a short-term lease for the Levitz
space with a then existing tenant at an annual rent materially less than under
the Levitz lease. The Partnership has the right to terminate this lease upon
written notice in the event that it secures a long-term, creditworthy tenant.
The level of leasing activity cannot be predicted, particularly in light of the
Levitz and Good Guys situations, and, therefore, the amount of further capital
expenditures arising from leasing activity is uncertain. There can be no
assurance the Partnership will have sufficient liquidity both to make such
capital expenditures, and to make the payments that may be required under the
terms of the RAM 2 loan. If there is a default on the RAM 2 loan, the
Partnership would be materially and adversely affected.
REAL ESTATE MARKET
A substantial decline in the market value of the Property reflects real estate
market conditions in the vicinity of Sierra Marketplace. Recently built shopping
centers in the vicinity have increased competition for tenants. This competitive
factor, together with the fact that much of the unleased space at the Property
(including the Levitz space) has only limited visibility to the main
thoroughfare and the fact that the space previously occupied by Good Guys is
vacant and is being marketed for sublet by Good Guys have hindered the lease-up
of new space. As a result, the Partnership's investment in the Property is at
risk.
WRITE-DOWN FOR IMPAIRMENT
The value of the Property is reflected in the Partnership's financial statements
at the lower of depreciated cost or estimated fair value. A write-down for
impairment with respect to the Property may be recorded from time to time based
upon periodic reviews of the Property. In performing this review, management
considers the estimated fair value of the Property based upon cash flows, as
well as other factors, such as the current occupancy, the prospects for the
Property and the economic situation in the region where the Property is located.
Because this determination of estimated fair value is based upon future economic
events, the
II-3
<PAGE>
amounts ultimately reflected in an appraisal or realized upon a disposition of
the Property may differ materially from the value reflected in the Partnership's
financial statements.
A write-down for impairment is inherently subjective and is based upon
management's best estimate of current conditions and assumptions about expected
future conditions. The Partnership may provide for additional write-downs in the
future and such write-downs could be material. In the first quarter of 1997,
management determined that the aggregate undiscounted future cash flows from the
Property over the anticipated holding period were below the value of the
Property reflected in the Partnership's financial statements at March 31, 1997
and, therefore, an impairment existed. At that time, Management performed an
internal analysis of the Property, which indicated an estimated fair value of
approximately $15,875,000. Consequently, a write-down for impairment of
$6,475,500 was recorded at March 31, 1997. No additional write-down for
impairment was required during 1999 or 1998.
RESULTS OF OPERATIONS
1999 VS. 1998
The Partnership realized a net loss of $1,147,548 for 1999, compared with a net
loss of $925,947 for 1998, a change of $221,601. The change primarily resulted
from an increase in mortgage loan interest expense.
Revenues increased from 1998 to 1999 due to an increase in base rentals.
Costs and expenses increased from 1998 to 1999 primarily due to an increase in
mortgage loan interest expense.
Mortgage loan interest expense increased due to the compounding effect of the
deferral of interest expense on the zero coupon mortgage.
1998 VS. 1997
The Partnership realized a net loss of $925,947 for 1998, compared with a net
loss of $7,238,860 for 1997, a change of $6,312,913. The change was primarily a
result of the write-down for impairment recorded in March 1997 with respect to
the Property. See "Write-Down for Impairment" above.
Revenues decreased from 1997 to 1998 due to the loss of Levitz as a tenant, as
well as other decreases in base rentals. See "Liquidity and Capital Resources"
above.
Costs and expenses decreased from 1997 to 1998 primarily due to the write-down
for impairment recorded in March 1997. Decreases in operating and depreciation
expenses were partially offset by an increase in mortgage loan interest expense.
Operating expenses decreased as a result of lower insurance and repairs and
maintenance costs. Depreciation expense decreased as a result of the impairment
recorded in March 1997. Mortgage loan interest expense increased due to the
compounding effect of the deferral of interest expense on the zero coupon
mortgage.
II-4
<PAGE>
INFLATION
Inflation has not had a material impact on the Partnership's operations or
financial condition during the last three years and is not expected to have a
material impact in the future.
YEAR 2000
Costs associated with the year 2000 conversion did not have a material effect on
the Partnership.
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable.
II-5
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX
Page
NUMBER
------
Independent Auditor's Report F-1
Financial statements - years ended
December 31, 1999, 1998 and 1997 =
Balance sheets F-2
Statements of operations F-3
Statement of partners' equity (deficit) F-4
Statements of cash flows F-5
Notes to financial statements F-6
Schedule II:
Valuation and qualifying accounts F-15
Schedule III:
Real estate and accumulated depreciation F-16
All other financial statement schedules are omitted because they are not
applicable or the required information is presented in the financial statements
or notes thereto.
II-6
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
II-7
<PAGE>
To the Partners of
High Cash Partners, L.P.
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of High Cash Partners, L.P. (a
limited partnership) as of December 31, 1999 and 1998, and the related
statements of operations, partners' equity (deficit) and cash flows for each of
the three years in the period ended December 31, 1999. Our audits also included
the financial statement schedules listed in the Index at Item 14(a)2. These
financial statements and the financial statement schedules are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on the financial statements and financial statement schedules 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
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 High Cash Partners, L.P. as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999 in conformity
with generally accepted accounting principles. Also, in our opinion, such
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 5 to the
financial statements, the Partnership's mortgage loan, which had an outstanding
balance of $21,935,131 at December 31, 1999, matures on February 28, 2001. If
the Partnership is unable to refinance or otherwise restructure this outstanding
indebtedness, the Partnership will lose its entire interest in its property.
These circumstances raise substantial doubt as to the Partnership's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 5. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Hays & Company
March 1, 2000
New York, New York
F-1
<PAGE>
HIGH CASH PARTNERS, L.P.
BALANCE SHEETS
December 31,
----------------------------
1999 1998
------------- ------------
ASSETS
Real estate, net $ 15,040,394 $ 15,358,165
Cash and cash equivalents 957,503 4,270,688
Other assets 99,967 114,174
Tenant receivables, net 66,632 63,653
Prepaid insurance premiums 28,136 27,523
------------ ------------
$ 16,192,632 $ 19,834,203
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
LIABILITIES
Mortgage loan payable $ 6,500,000 $ 6,500,000
Deferred interest payable 15,435,131 13,117,279
Accounts payable and accrued expenses 69,681 93,429
Due to affiliates 1,542 --
Tenants' security deposits payable 68,867 58,867
------------ ------------
Total liabilities 22,075,221 19,769,575
------------ ------------
Commitments and contingencies (Notes 3, 4, 5 and 9)
PARTNERS' EQUITY (DEFICIT)
Limited partners' equity (deficit)
(96,472 units issued and outstanding) (5,823,761) 63,981
General partners' equity (deficit) (58,828) 647
------------ ------------
Total partners' equity (deficit) (5,882,589) 64,628
------------ ------------
$ 16,192,632 $ 19,834,203
See notes to financial statements.
F-2
<PAGE>
HIGH CASH PARTNERS, L.P.
STATEMENTS OF OPERATIONS
Year ended December 31,
----------------------------------------
1999 1998 1997
------------ ------------ ------------
REVENUES
Rental income $ 2,420,332 $ 2,306,202 $ 2,573,611
Other income 12,526 2,217 5,966
Interest income 88,792 171,485 106,518
------------ ------------ ------------
2,521,650 2,479,904 2,686,095
------------ ------------ ------------
COST AND EXPENSES
Mortgage loan interest 2,317,852 2,076,798 1,848,616
Operating 510,366 508,467 617,589
Depreciation and amortization 365,510 349,554 495,094
Partnership management fees 301,475 301,475 301,475
Administrative 101,839 101,255 109,507
Property management fees 72,156 68,302 77,174
Write-down for impairment - - 6,475,500
------------ ------------ ------------
3,669,198 3,405,851 9,924,955
------------ ------------ ------------
NET LOSS $(1,147,548) $ ( 925,947) $ (7,238,860)
============ ============ =============
NET LOSS ATTRIBUTABLE TO
Limited partners $(1,136,073) $ (916,688) $ (7,166,471)
General partners (11,475) (9,259) (72,389)
------------ ------------ -------------
$(1,147,548) $ (925,947) $ (7,238,860)
============ ============ =============
Net loss per unit of limited
partnershipinterest
(96,472 units outstanding) $ (11.78) $ (9.50) $ (74.29)
============ ============ =============
See notes to financial statements.
F-3
<PAGE>
HIGH CASH PARTNERS, L.P.
STATEMENT OF PARTNERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
General Limited Total
Partners' Partners' Partners'
Equity (Deficit) Equity (Deficit) Equity (Deficit)
---------------- ---------------- ----------------
BALANCE, JANUARY 1, 1997 $ 82,295 $ 8,147,140 $ 8,229,435
Net loss - 1997 (72,389) (7,166,471) (7,238,860)
---------------- ---------------- ----------------
BALANCE, DECEMBER 31, 1997 9,906 980,669 990,575
Net loss - 1998 (9,259) (916,688) (925,947)
---------------- ---------------- ----------------
BALANCE, DECEMBER 31, 1998 647 63,981 64,628
Net loss - 1999 (11,475) (1,136,073) (1,147,548)
Distributions (48,000) (4,751,669) (4,799,669)
---------------- ---------------- ----------------
BALANCE, DECEMBER 31, 1999 $ (58,828) $ (5,823,761) $ (5,882,589)
================ ================ ================
See notes to financial statements.
F-4
<PAGE>
HIGH CASH PARTNERS, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------------------
1999 1998 1997
------------------ ---------------- --------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,147,548) $ (925,947) $ (7,238,860)
Adjustments to reconcile net loss to net cash
provided by operating activities
Write-down for impairment - - 6,475,500
Deferred interest expense 2,317,852 2,076,798 1,848,616
Depreciation and amortization 365,510 349,554 495,094
Changes in operating assets and liabilities
Other assets (26,182) (84,813) (7,330)
Tenant receivables (2,979) (33,916) 49,192
Prepaid insurance premiums (613) 1,988 43,883
Accounts payable and accrued expenses (23,748) (34,251) 2,160
Due to affiliates 1,542 (2,890) (75,927)
Tenant's security deposits payable 10,000 4,288 (680)
----------------- ---------------- --------------
Net cash provided by operating activities 1,493,834 1,350,811 1,591,648
----------------- ---------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to real estate (7,350) (132,162) (9,167)
----------------- ---------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (4,799,669) - (305,007)
----------------- ---------------- --------------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (3,313,185) 1,218,649 1,277,474
Cash and cash equivalents, beginning of year 4,270,688 3,052,039 1,774,565
----------------- ---------------- --------------
Cash and cash equivalents, end of year $ 957,503 $ 4,270,688 $ 3,052,039
================= ================ ==============
</TABLE>
See notes to financial statements.
F-5
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1 ORGANIZATION
High Cash Partners, L.P. (formerly High Income Partners L.P. - Series 87)
(the "Partnership") was formed in May 1986 pursuant to the Delaware Revised
Uniform Limited Partnership Act for the purpose of acquiring and operating
real estate. The Partnership will terminate on December 31, 2030 or sooner,
in accordance with its Amended and Restated Agreement of Limited
Partnership (the "Limited Partnership Agreement"). The Partnership filed a
Form S-11 registration statement with the Securities and Exchange
Commission, which became effective on June 29, 1988, covering an offering
of 400,000 limited partnership units (subject to increase, if the
Underwriter exercised its right to sell an additional 200,000 units) at
$250 per unit.
The Partnership's public offering terminated on June 29, 1990, at which
time the Partnership had accepted subscriptions for 77,901 limited
partnership units (including those units sold to the initial limited
partner) for aggregate net proceeds of $17,284,566 (gross proceeds of
$19,475,250, less organization and offering costs aggregating $2,190,684).
The Partnership received $2,500 and $1,000 for contributions to the
Partnership from the initial limited partner and the general partners,
respectively. The Partnership had committed 100% of its net proceeds
available for investment to the Sierra Marketplace acquisition, a retail
shopping center.
The Partnership sold 18,571 unregistered limited partnership units to
Integrated Resources, Inc. ("Integrated"), the former parent of the
original Managing General Partner of the Partnership, for aggregate net
proceeds of $4,120,441 (gross proceeds of $4,642,750, less organization and
offering costs aggregating $522,309). Simultaneously, Integrated sold these
units to the Partnership's three bank creditors. The sale of the
aforementioned units, effective January 1, 1991, was part of a transaction
that enabled the Partnership to repay its unsecured loans on December 19,
1990.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
LEASES
The Partnership accounts for its leases under the operating method. Under
this method, revenue is recognized as rentals become due, except for
stepped leases, where revenue is recognized on a straight-line basis over
the life of the lease.
DEPRECIATION
Depreciation is computed using the straight-line method over the estimated
useful life of the property, which is approximately 40 years. The cost of
the property represents the initial cost of the property to the Partnership
plus acquisition and closing costs. Repairs and maintenance are charged to
operations as incurred.
F-6
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
WRITE-DOWN FOR IMPAIRMENT
A write-down for impairment is recorded based upon a periodic review of the
property in the Partnership's portfolio. Real estate property is carried at
the lower of depreciated cost or estimated fair value. In performing this
review, management considers the estimated fair value of the property based
upon cash flows, as well as other factors, such as the current occupancy,
the prospects for the property and the economic situation in the region
where the property is located. Because this determination of estimated fair
value is based upon future economic events, the amounts ultimately
reflected in an appraisal or realized upon a disposition may differ
materially from the carrying value.
A write-down is inherently subjective and is based upon management's best
estimate of current conditions and assumptions about expected future
conditions. The Partnership may provide for write- downs in the future and
such write-downs could be material.
FINANCIAL STATEMENTS
The financial statements include only those assets, liabilities and results
of operations that relate to the business of the Partnership.
CASH AND CASH EQUIVALENTS
For the purpose of the statements of cash flows, the Partnership considers
all short-term investments that have original maturities of three months or
less to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments is determined by reference to
market data and other valuation techniques as appropriate. The
Partnership's financial instruments consist principally of cash and cash
equivalents and a mortgage loan payable. Unless otherwise disclosed, the
fair value of financial instruments approximates their recorded values.
NET LOSS AND DISTRIBUTIONS PER UNIT OF LIMITED PARTNERSHIP INTEREST
Net loss and distributions per unit of limited partnership interest are
computed based upon the number of units outstanding (96,472) during the
years ended December 31, 1999, 1998 and 1997.
INCOME TAXES
No provisions have been made for federal, state and local income taxes,
since they are the personal responsibility of the partners.
The income tax returns of the Partnership are subject to examination by
federal, state and local taxing authorities. Such examinations could result
in adjustments to Partnership losses, which could affect the income tax
liability of the individual partners.
F-7
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
RECLASSIFICATIONS
Certain reclassifications have been made to the financial statements shown
for the prior years in order to conform to the current year's
classifications.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
3 CHANGE IN GENERAL PARTNER OWNERSHIP, CONFLICTS OF INTEREST AND TRANSACTIONS
WITH RELATED PARTIES
Until June 13, 1997, the Managing General Partner of the Partnership was
Resources High Cash, Inc. ("RHC"). RHC was, until November 3, 1994, a
wholly-owned subsidiary of Integrated, at which time, pursuant to the
consummation of Integrated's Plan of Reorganization, substantially all the
assets of Integrated, but not the stock of RHC, were sold to Presidio
Capital Corp. ("Presidio"). RHC is a wholly- owned subsidiary of XRC Corp.
("XRC"), which is a subsidiary of Presidio. The other general partner of
the Partnership was, until June 13, 1997, Presidio AGP Corp. ("AGP"), a
Delaware Corporation that is a wholly-owned subsidiary of Presidio.
Presidio also is the parent of other entities that were, or may have been,
engaged in businesses that may have been in competition with the
Partnership. Accordingly, conflicts of interest may have arisen between the
Partnership and such other businesses.
A partnership affiliated with the predecessor General Partners, Resources
Accrued Mortgage Investors 2 L.P. ("RAM 2"), whose managing general partner
is owned by Presidio, made a zero coupon first mortgage loan to the
Partnership (Note 5).
Effective April 1, 1991, Integrated purchased, in an arms-length
transaction from an unaffiliated third party, 8,361 limited partnership
units ("Units"). Effective January 1, 1995, pursuant to the consummation of
Integrated's Plan of Reorganization, these Units were transferred to XRC.
For the years ended December 31, 1996 and 1995, XRC earned quarterly
distributions from those Units of $104,680. No distributions were declared
during 1997.
On June 13, 1997, RHC and AGP sold their general partnership interests to
Pembroke HCP LLC ("Pembroke HCP") and Pembroke AGP Corp. ("Pembroke AGP"),
respectively. In the same transaction, XRC sold its 8,361 Units to Pembroke
Capital II, LLC, an affiliate of Pembroke HCP and Pembroke AGP.
Subsequently, Pembroke Capital II LLC acquired beneficial ownership of an
aggregate of an additional 5,752 Units in the secondary market.
Prior to the sale of the general partnership interest in the Partnership to
Pembroke HCP and Pembroke AGP, Wexford Management LLC ("Wexford") had
performed management and administrative services for Presidio, XRC and
XRC's direct and indirect subsidiaries, as well as for the Partnership.
Following
F-8
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
the sale, an affiliate of Pembroke HCP was engaged to perform
administrative services for the Partnership. During the years ended
December 31, 1999 and 1998, reimbursable expenses paid to the affiliate by
the Partnership amounted to $42,000 and $36,000, respectively.
The Partnership had been a party to a supervisory management agreement with
Resources Supervisory Management Corp. ("Resources Supervisory"), an
affiliate of RHC and AGP, pursuant to which Resources Supervisory performed
certain property management functions. Resources Supervisory performed such
services through June 13, 1997. Effective June 13, 1997, the Partnership
terminated this agreement and entered into a similar agreement with
Pembroke Realty Management LLC ("Pembroke Realty"), an affiliate of
Pembroke HCP and Pembroke AGP. A portion of the property management fees
payable to Resources Supervisory and Pembroke Realty were paid to
unaffiliated management companies, which had been engaged for the purpose
of performing the property management functions that were the subject of
the supervisory management agreement. For the year ended December 31, 1997,
Resources Supervisory and Pembroke Realty were entitled to receive $35,245
and $41,929, respectively; of these amounts, which aggregated $77,174,
$64,312 was paid to the unaffiliated management companies. For the years
ended December 31, 1999 and 1998, Pembroke Realty was entitled to receive
$72,156 and $68,302, of which $58,513 and $56,918, respectively, was paid
to the unaffiliated management companies. No leasing activity compensation
was paid to Resources Supervisory or Pembroke Realty for the years ended
December 31, 1999, 1998 and 1997.
For managing the affairs of the Partnership, the Managing General Partner
is entitled to receive a partnership management fee in an annual amount
equal to $301,475. For the year ended December 31, 1997, this fee was paid
to the former and current Managing General Partners in their pro-rata
shares. For the year-ended December 31, 1999 and 1998, the current Managing
General Partner was paid this fee.
The General Partners are allocated 1% of the net income or losses of the
Partnership and are also entitled to receive 1% of distributions.
4 REAL ESTATE
Real estate assets represent the Partnership's principal asset. Sierra
Marketplace, a community marketplace located in Reno, Nevada, was purchased
by the Partnership on February 10, 1989, and is summarized as follows:
F-9
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
December 31,
--------------------------------------
1999 1998
------------------ ------------------
Land $ 6,667,189 $ 6,667,189
Building and improvements 12,940,226 12,932,876
------------------ ------------------
19,607,415 19,600,065
Less accumulated depreciation (4,567,021) (4,241,900)
------------------ ------------------
$ 15,040,394 $ 15,358,165
================== ==================
The land, building and improvements are collateralized by the mortgage
payable.
In performing an impairment review of the Property, management
determined that the aggregate undiscounted cash flows from the
Property over the anticipated holding period were below its net
carrying value as of March 31, 1997 and, therefore, an impairment
existed. At that time, management estimated the fair value of the
Property to be approximately $15,875,000. Consequently, a write- down
for impairment of $6,475,500 was recorded as of March 31, 1997.
Depreciation expense for the years ended December 31, 1999, 1998 and
1997 amounted to $325,121, $325,176 and $447,994, respectively.
Included in depreciation expense for the year ended December 31, 1997
is $87,190, which represents the net book value of improvements to the
space formerly occupied by Levitz Furniture Store, which vacated its
space in November 1997.
During 1999, each of three tenants accounted for more than 10% of the
Partnership's rental revenues. Such tenants accounted for
approximately 20%, 19% and 18% of rental revenues, with leases
expiring in 2002, 2008 and 2003, respectively.
During 1998, each of three tenants accounted for more than 10% of the
Partnership's rental revenues. Such tenants accounted for
approximately 22%, 20% and 13% of rental revenues, with leases
expiring in the years 2008, 2003 and 2001, respectively. During 1997,
each of three tenants accounted for more than 10% of the Partnership's
rental revenues. Such tenants accounted for approximately 22%, 22% and
16% of the Partnership's rental revenues. One of those tenants, Levitz
Furniture Store, which accounted for 16% of the Partnership's rental
revenues in 1997, filed for bankruptcy protection under Chapter 11 of
the United States Bankruptcy Code in 1997 and vacated its space in
November 1997. Levitz ceased paying rent as of April 2, 1998.
F-10
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
Minimum future rental payments receivable, excluding operating
escalations and other charges, due from tenants pursuant to the terms
of existing noncancellable leases as of December 31, 1999 are as
follows:
Year ending December 31,
2000 $ 2,051,284
2001 1,816,355
2002 1,422,037
2003 1,331,326
2004 991,766
Thereafter 2,160,949
------------------
$ 9,773,717
==================
5 MORTGAGE LOAN PAYABLE
The mortgage loan payable represents a zero coupon first mortgage loan held
by RAM 2, a public limited partnership sponsored by affiliates of the
former General Partners. The mortgage loan bears interest at the rate of
11.22% per annum, compounded monthly. The principal balance, along with
deferred interest thereon, is approximately $21,935,000 at December 31,
1999, and will aggregate approximately $25,000,000 at maturity on February
28, 2001. From and after March 1, 1999, the mortgage loan may be prepaid,
in whole only, without penalty or premium. However, the principal and
deferred interest on the mortgage loan significantly exceed the estimated
fair market value of the Property.
In accordance with the terms of the mortgage loan, additional interest may
be payable equal to 23.9% of the appreciation in the value of the property
after payment of a specified return to the Partnership. The maximum annual
rate of interest, including the additional interest, is not to exceed 16%
compounded annually and is due on the earlier of the maturity date or the
date the mortgage loan is prepaid. No additional interest has been recorded
by the Partnership.
Additionally, the terms of the mortgage loan require the Partnership to
provide RAM 2 with a current appraisal of the property upon RAM 2's
request. If it is determined, based upon the requested appraisals, that the
sum of (i) the principal balance of the mortgage loan plus all other then
outstanding indebtedness secured by the property and (ii) all accrued and
unpaid interest on the mortgage loan at 6.22% per annum, compounded monthly
(that sum, the "Measurement Amount"), exceeds 85% of the appraised value,
an amount equal to such excess shall become immediately due and payable to
RAM 2. In the event that RAM 2 insisted upon such payment, the Partnership
might not have the liquidity to make such payment. In such event, the
Partnership would attempt to negotiate terms for such payment, but could be
forced to sell the property or seek other relief, including protection
under the bankruptcy laws, and in any event might ultimately lose its
investment in the property.
F-11
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
To date, RAM 2 has not requested an appraisal, and there can be no
assurance that, if the lender requests an appraisal, 85% of the appraised
value at that time will equal the Measurement Amount. At December 31, 1999,
the Measurement Amount was approximately $12,774,000, which was
approximately $720,000 less than 85% of the $15,875,000 value to which the
property was written down in the first quarter of 1997. As interest on the
mortgage accrues, the Measurement Amount will increase, and, therefore,
unless the value of the Property determined by an appraisal is shown to be
greater than the value to which it was written down in the first quarter of
1997, the Measurement Amount will exceed 85% of the appraised value of the
property during the year 2000.
In light of the above circumstances, management has estimated the fair
value of the mortgage loan to approximate the value to which the Property
was written down during 1997.
Management is evaluating its alternatives with respect to the mortgage
loan. Such alternatives are limited due to the fact that the principal and
deferred interest on the mortgage loan significantly exceed the fair market
value of the Property. There can be no assurance that the Partnership will
be successful in pursuing any of its alternatives. If the Partnership is
not successful in pursuing any of its alternatives, the Partnership will
likely lose its entire interest in the Property. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
6 DUE TO AFFILIATES
The amounts due to affiliates are as follows:
December 31,
--------------------------
1999 1998
----------- ----------
Supervisory Management Fee $ 1,542 $ -
=========== ==========
7 DISTRIBUTIONS
In May 1999, the Partnership declared and paid a cash distribution of
approximately $4,100,000 in the aggregate, or $42.07 per Unit, to
Unitholders of record on May 11, 1999. On October 20, 1999, the Partnership
declared and paid a cash distribution of $700,000 in the aggregate, or
$7.18 per Unit, to Unitholders of record on October 20, 1999. On January
28, 2000, the Partnership declared and paid a cash distribution of
approximately $700,000 in the aggregate, or $7.18 per Unit, to Unitholders
of record on January 1, 2000.
8 RECONCILIATION OF NET LOSS AND NET ASSETS PER FINANCIAL STATEMENTS TO TAX
BASIS
The Partnership files its tax return on an accrual basis. The Partnership
has computed depreciation for tax purposes using the Modified Accelerated
Cost Recovery System, which is not in
F-12
<PAGE>
accordance with generally accepted accounting principles. A reconciliation of
net loss per financial statements to the tax basis of accounting is as follows:
Year ended December 31,
------------------------------------------
1999 1998 1997
------------ ------------- -------------
Net loss per financial
statements $(1,147,548) $ (925,947) $(7,238,860)
------------ ------------- -------------
Write-down for impairment - - 6,475,500
Tax depreciation and
amortization in excess
of financial statement
depreciation and
amortization (221,800) (228,353) (76,908)
------------ ------------- -------------
Net loss per tax basis $(1,369,348) $(1,154,300) $ (840,268)
============ ============= =============
The differences between the Partnership's net assets per financial
statements and the tax basis of accounting are as follows:
December 31,
-----------------------------
1999 1998
-------------- -------------
Net assets per financial statements $ (5,882,589) $ 64,628
Cumulative tax depreciation and
amortization in excess of financial
statement depreciation (1,206,097) (984,297)
Write-down for impairment 6,475,500 6,475,500
Syndication costs 2,712,993 2,712,993
-------------- -------------
Net assets per tax basis $ 2,099,807 $ 8,268,824
============== =============
9 TENANT BANKRUPTCY
Until November 1997, Levitz Department Store ("Levitz") had occupied
approximately 23% of the space at the property (i.e., approximately 53,000
out of approximately 233,000 square feet of net leasable area). Rent under
the lease for each of 1997 and 1996 was approximately $412,000, which was
approximately 16% of the Partnership's total rental income revenues in each
such period. In November 1997, Levitz, which had filed for protection under
Chapter 11 of the Bankruptcy Code, vacated its space. Levitz ceased paying
rent as of April 2, 1998.
During 1999, the Partnership entered into a short-term lease with an
existing tenant at an annual rent materially less than under the Levitz
lease; this lease is terminable by the Partnership upon written
F-13
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
notice to the tenant, in the event the Partnership secures a long-term,
creditworthy tenant for the space.
The vacancy at the Levitz space resulted in a loss of income to the
Partnership. The vacancy also may have adversely affected the surrounding
tenants, particularly in light of the limited visibility those tenants have
to the main thoroughfare. The Partnership is actively seeking a substitute
tenant. However, there can be no assurance that the Partnership will
succeed in finding a long-term, creditworthy substitute tenant promptly or
on terms comparable to those under the Levitz lease. In addition, if such a
tenant is obtained, the Partnership may be required to make substantial
expenditures in order to secure the substitute tenant and in connection
with the new lease.
F-14
<PAGE>
HIGH CASH PARTNERS, L.P.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
-----------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING OF COSTS AND OTHER END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ---------------------------- ----------- -------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1999
Reno, Nevada
Sierra Marketplace $ 6,475,500 $ -- $ -- $ -- $ 6,475,500
=========== ============== ========== ========== ===========
Year ended December 31, 1998
Reno, Nevada
Sierra Marketplace $ 6,475,500 $ -- $ -- $ -- $ 6,475,500
=========== ============== ========== ========== ===========
Year ended December 31, 1997
Reno, Nevada
Sierra Marketplace $ -- $ 6,475,500(A) $ -- $ -- $ 6,475,500
=========== ============== ========== ========== ===========
</TABLE>
(A) Represents an allowance for impairment provided on the Sierra Marketplace
property during 1997.
See notes to financial statements.
F-15
<PAGE>
HIGH CASH PARTNERS, L.P.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH CARRIED
INITIAL COST (1) COSTS CAPITALIZED AT
---------------------- ------------------- --------------------------------
BUILDING BUILDING
AND IMPROVE- CARRYING AND
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS MENTS COST LAND IMPROVEMENTS TOTAL
----------- ------------ ---- ------------ ------- -------- ---- ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sierra Marketplace
Retail Shopping
Center
Reno, Nevada $21,935,131 $8,868,859 $16,494,467 $ 719,589 $ -- $6,667,189 $12,940,226 $19,607,415
----------- ---------- ----------- --------- ------- ---------- ----------- -----------
LIFE ON WHICH
DEPRECIATION IN
LATEST INCOME
ACCUMULATED DATE OF DATE STATEMENT IS
DESCRIPTION DEPRECIATION CONSTRUCTION ACQUIRED COMPUTED
----------- ------------ ------------ -------- ---------------
Sierra Marketplace
Retail Shopping Straight-line
Center method 40
Reno, Nevada $4,567,021 10/88 2/89 years
---------- ------------ -------- -------------
</TABLE>
YEAR ENDED DECEMBER 31,
---------------------------------
1997 1998 1999
------ ------ ------
(A) RECONCILIATION OF REAL ESTATE
OWNED
Balance at beginning of year $25,934,236 $19,467,903 19,600,065
Subtractions during year
Write-down for impairment 6,475,500 -- --
----------- ----------- ----------
19,458,736 19,467,903 19,600,065
Additions during year
Improvements 9,167 132,162 7,350
----------- ----------- ----------
Balance at end of
year $19,467,903 $19,600,065 19,607,415
----------- ----------- ----------
F-16
<PAGE>
YEAR ENDED DECEMBER 31,
---------------------------------
1997 1998 1999
------ ------ ------
(B) RECONCILIATION OF
ACCUMULATED DEPRECIATION
Balance at beginning of year $3,468,730 $3,916,724 4,241,900
Additions during the year
Depreciation 447,994 325,176 325,121
----------- ----------- ----------
Balance at end of year $3,916,724 $4,241,900 4,567,021
(1) The aggregate cost for income tax purposes is $26,082,913 at December 31,
1999.
See notes to financial statements.
F-17
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
The Partnership has no officers or directors. Pembroke HCP, LLC, the Managing
General Partner, manages and controls substantially all the Partnership's
affairs and has general responsibility and ultimate authority in all matters
affecting its business. Pembroke AGP Corp., the Associate General Partner, in
its capacity as such, does not devote a material amount of time or attention to
the Partnership's affairs.
Based on a review of the filings under Section 16(a) of Securities Exchange Act
of 1934 (the "Act"), none of the Managing General Partner, the sole member or
the officers of the Managing General Partner or beneficial owners of more than
10% of the Units failed to file on a timely basis reports required by Section
16(a) of the Act during 1999 or prior years, except for the failure by Pembroke
Capital II, LLC ("PC") to file reports on Forms 4 and 5 in respect of
approximately 12 transactions in 1997, 1998 and 1999 resulting in PC's
acquisition of an aggregate of 5,752 Units.
Lawrence J. Cohen, age 44, is, and for more than five years has been, the sole
shareholder and director of Pembroke Companies, Inc., which is the sole member
and the manager of each of the Managing General Partner and the Associate
General Partner. Pembroke Companies, Inc. is a privately-held investment
management company, which makes investments in, and provides management services
to, a variety of real estate-related businesses.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership is not required to pay, and has not paid, the officers, the
manager or the sole member of the Managing General Partner or the Associate
General Partner, or the officers or directors of the sole member of the Managing
General Partner or the Assistant General Partner. Certain officers and directors
of the former managing general partner of the Partnership received compensation
from the former managing general partner or its affiliates (but not from the
Partnership) for services performed for various affiliated entities, which may
have included services performed for the Partnership; in addition, certain
individuals affiliated with the Managing General Partner receive compensation
from the Managing General Partner or its affiliates (but not from the
Partnership) for services performed for various affiliated entities, which may
have included services for the Partnership. See Item 13, "Certain Relationships
and Related Transactions" below.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PC and Equity Resources Fund XIV Limited Partnership ("ERF") are the only
persons known by the Partnership to be the beneficial owners of more than 5% of
the Units. The Partnership believes PC and ERF beneficially own 14,113 Units and
8,998 Units, respectively, which are 14.6% and 9.3%, respectively, of the
outstanding Units. Mr. Cohen is the sole member of PC, and, therefore, he may be
deemed to be the beneficial owner of PC's 14,113 Units. See Item 10, "Directors
and Executive Officers of Registrant" above. The address of each of PC and Mr.
Cohen is Pembroke Companies, Inc., 70 East 55th Street, New York, New York
10022. The address of ERF is 14 Story Street, Cambridge, Massachusetts 02138.
III-1
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1999, the General Partners and their respective affiliates received
compensation or payments for services from or with respect to the Partnership as
follows:
NAME CAPACITY IN WHICH SERVED COMPENSATION
Pembroke HCP, LLC Managing General Partner $ 301,475 (1)
Pembroke AGP, LLC Associate General Partner - (2)
Pembroke Realty Management LLC Supervisory Property Manager $ 13,643 (3)
(1) ____________ Represents a partnership management fee earned by the Managing
General Partner. Under the Partnership's Partnership Agreement, .99% of the
net income, net loss and distributions of the Partnership are allocated to
the Managing General Partner. For 1999, $13,780 of the Partnership's tax
loss and $47,520 of distributions were allocated to the Managing General
Partner.
(2) Under the Partnership Agreement, .01% of the Partnership's net income, net
loss and distributions are allocated to the Associate General Partner. For
1999, $137 of the Partnership's tax loss and $480 of distributions were
allocated to the Associate General Partner.
(3) This amount was earned pursuant to a supervisory management agreement with
the Partnership for performance of certain functions related to property
management. In addition, $58,513 was paid to CB Commercial Real Estate
Group, Inc. and Colliers, unaffiliated property management companies that
performed services for the Partnership.
III-2
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS: SEE "INDEX TO FINANCIAL STATEMENTS" IN ITEM 8
ABOVE.
(a)(2) FINANCIAL STATEMENT SCHEDULES: SEE "INDEX TO FINANCIAL STATEMENTS" IN
ITEM 8 ABOVE.
(a)(3) EXHIBITS:
3. (a) Second Amended and Restated Partnership Agreement ("Partnership
Agreement") of Registrant, incorporated by reference to Exhibit 3D to
Amendment No. 2 to Registrant's Registration Statement on Form S-11
filed on June 24, 1988 (Reg. No. 33-6412) (hereinafter the "Form
S-11").
(b) Amended and Restated Certificate of Limited Partnership of Registrant,
incorporated by reference to Exhibit 3C to the Form S-11.
(c) Amendment to Partnership Agreement, incorporated by reference to
Supplement No. I dated August 19, 1988 to Registrant's Prospectus
filed pursuant to Rules 424(b) and 424(c) (Reg. No. 33-6412).
10. (a) Management Services Agreement between Registrant and Resources
Property Management Corp., incorporated by reference to Exhibit 1 OB
to Amendment No. 2 to the Form S-1 1.
(b) Acquisition and Disposition Services Agreement among Registrant,
Realty Resources Inc., and Resources High Cash, Inc., incorporated by
reference to Exhibit 10.(b) of Registrant's Report on Form 10-K for
the year ended December 31, 1988 (hereinafter the " 1988 10-K").
(c) Agreement among Resources High Cash, Inc., Integrated Resources, Inc.
and Fourth Group Partners, incorporated by reference to Exhibit 1
0.(c) of the 1988 10-K.
(d) Agreement of Purchase and Sale between Sierra Virginia, Inc. and
Nevada Corp., incorporated by reference to Exhibit 10A to Registrant's
Form 8 with respect to Registrant's current report on Form 8-K dated
February 10, 1989.
(e) Registered Note by Registrant to RAM 2 in connection with the purchase
of Sierra Marketplace, incorporated by reference to Exhibit I0B to
Registrant's Form 8 with respect to Registrant's current report on
Form 8-K dated February 10, 1989, incorporated by reference to Exhibit
10(f) of Registrant's Report on Form 10-K for the year ended December
31, 1989 (hereinafter the "1989 10-K").
(f) Settlement Agreement, dated October 17, 1990 among Registrant,
Integrated, First Interstate Bank of Denver N.A., First Interstate
Bank of Washington, N.A. and First American National Bank,
Incorporated, incorporated by reference to Exhibit 10(a) to
Registrant's Current Report on Form 8-K dated December 19, 1990.
IV-1
<PAGE>
(g) Supervisory Management Agreement dated as of November 1, 1991 between
Registrant and Resources Supervisory Management Corporation
incorporated by reference to Exhibit 10 (g) to Registrant's Report on
Form 1 O-K for the year ended December 31, 1991.
(h) Management Agreement dated as of November 1, 1991 among Registrant,
Resources Supervisory Management Corp. and CB Commercial Real Estate
Group, Inc., incorporated by reference to Exhibit 10(h) to
Registrant's Report on Form 10-K for the year ended December 31, 1991.
(i) Exclusive Leasing Listing Agreement dated as of January 1, 1993
between Resources Supervisory Management Corp. and CB Commercial Real
Estate Group, Inc., incorporated by reference to Exhibit 10(i) to
Registrant's Report on Form 10-K for the year ended December 31, 1993.
(j) First Amendment to Exclusive Leasing Listing Agreement dated as of
January 1, 1994 between Resources Supervisory Management Corp. and CB
Commercial Real Estate Group, Inc., incorporated by reference to
Exhibit 100) to Registrant's Report on Form 10-K for the year ended
December 31, 1993.
(k) Second Amendment to Management Agreement dated as of January 1, 1994
between Resources Supervisory Management Corp. and CB Commercial Real
Estate Group, Inc., incorporated by reference to Exhibit 10(k) to
Registrant's Report on Form 10-K for the year ended December 31, 1993.
(l) Management Agreement dated September 22, 1999 between Pembroke
Supervisory Management, LLC and Colliers Nevada Management, LLC,
incorporated by reference to Exhibit 10.1 to Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 1999.
(m) Exclusive Leasing Listing Agreement dated September 9, 1999 between
Pembroke Supervisory Management, LLC and Colliers Nevada Management,
LLC, incorporated by reference to Exhibit 10.2 to Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended September
30, 1999.
(b) REPORT ON FORM 8-K:
-------------------
Registrant filed the following reports on Form 8-K during the last
quarter of the fiscal year:
None.
IV-2
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
HIGH CASH PARTNERS, L.P.
By: Pembroke HCP, LLC
Managing General Partner
Dated: March 30, 2000 By: Pembroke Companies, Inc.
Managing Member
By: /S/ LAWRENCE J. COHEN
----------------------
Lawrence J. Cohen
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Registrant and in
the capacities (with respect to the Managing General Partner) and on the date
indicated.
Dated: March 30, 2000 /S/ LAWRENCE J. COHEN
----------------------
Lawrence J. Cohen
IV-3
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