<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Form 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Act of 1934
For the Fiscal Year Ended Commission File Number
December 31, 1997 #33-06419-A
Condev Land Growth Fund '86, Ltd
--------------------------------
(Exact Name of Registrant as
specified in its charter)
Florida #59-2766359
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(State or other jurisdiction (IRS Employer ID #)
of incorporation or
organization)
2479 Aloma Avenue
Winter Park, Florida 32792
- ------------------------------- ---------------
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code (407) 679-1748
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Securities registered pursuant to Section 12(b) of the Act:
None
----
Securities registered pursuant to Section 12(g) of the Act:
None
----
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by
Section 13 of 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_______
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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 the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant:
Not Applicable
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<PAGE>
CONDEV LAND GROWTH FUND '86, LTD.
Table of Contents
<TABLE>
<CAPTION>
Page No.
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<S> <C> <C>
Part I
Item 1. Business 1
Item 2. Properties 2
Item 3. Legal Proceedings 4
Item 4. Submission of Matters to a Vote of Security
Holders 4
Part II
Item 5. Market for Registrant's Common Equity and Related Security
Holder Matters 5
Item 6. Selected Financial Data 5
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 5
Item 8. Financial Statements and Supplementary Data 9
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 29
Part III
Item 10. Directors and Executive Officers of the Registrant 29
Item 11. Executive Compensation 29
Item 12. Security Ownership of Certain Beneficial Owners and
Management 30
Item 13. Certain Relationships and Related Transactions 30
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K 31
Signatures 32
Annual Report to Limited Partners 33
</TABLE>
<PAGE>
PART I
Item 1.
Business:
--------
Condev Land Growth Fund '86, Ltd. (the "Partnership") is a Florida
limited partnership formed on April 17, 1986 under the Florida Uniform
Partnership Act. The Partnership was formed for the purpose of
acquiring and holding for investment pre-development land in Central
Florida. The Partnership registered with the Securities and Exchange
Commission and sold to investors a total of 7,500 units of limited
partnership interest at an initial offering price of $1,000 per unit.
The partnership had collected $7.5 million in Partnership Capital as
of December 31, 1987.
As provided under the terms of the Partnership Agreement the
Partnership was to be in existence until December 31, 1993. In
accordance with the Florida Limited Partnership Law and the
Partnership Agreement, after December 31, 1993 the Partnership has
been in liquidation with no change in the status of the limited
partners or General Partner.
The Partnership has purchased nine properties to be held for
investment in the Central Florida area. The Partnership purchased the
last parcel on February 6, 1989. Refer to Item 2. Properties for full
details. Properties are sold as market conditions and demand permit.
As of December 31, 1997, the Partnership had sold all of 5 parcels and
part of another parcel. As of the same date, the Partnership had an
interest in 4 remaining parcels of land.
Since the Partnership is in liquidation, the primary objective of the
Partnership is to sell properties at current market prices and
distribute the net proceeds to partners. To this end, the General
Partner is constantly monitoring area developments which are likely to
effect the salability of each property. This includes area commercial
and residential development, comparable sales transactions, road and
highway improvements, requests for zoning or comprehensive land use
changes, and changes in the availability of utilities. The General
Partner or its representatives attend county commission meetings,
planning and zoning hearings and community information meetings as
part of this endeavor. Properties are priced after consideration is
given to all of these factors.
Properties are marketed through a combination of direct advertising,
including "For Sale" signs located on each property, constant contact
with the local, national and international brokerage communities, and
direct contact with potential purchasers. Extensive marketing
materials and relevant development information is maintained and
constantly updated for use by potential buyers.
In addition to trying to sell the portfolio properties, the
Partnership must manage the properties in the best interest of the
partners. This includes traditional property maintenance such as
insuring the property against liability, paying and appealing for
adjustment, when appropriate, real estate taxes, mowing and trash
removal. It also entails reacting promptly to area developments to
insure that vested development rights are preserved or marketability
of the property is enhanced. In some cases, it is necessary to retain
consultants to assist with this effort. In other cases, expenditure of
partnership reserves is required to keep the property properly
positioned for sale.
The Partnership has no employees. Messrs. Robert N. Gardner and Joseph
J. Gardner are the general partners of Condev Associates, a Florida
general partnership, which is the General Partner of the Partnership
(the "General Partner").
1
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Item 2.
Properties:
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Since its inception, the Partnership has acquired nine properties for
investment in the Central Florida Area. Five of these properties and a
portion of one additional property have been sold. As of December 31,
1997, the Partnership owned or had an investment in four remaining
properties.
The following is a summary of all parcels acquired by the Partnership:
Parcel 1:
--------
The Partnership purchased a 1.79-acre commercial parcel of vacant land
in St. Cloud, Florida on November 30, 1987 at a price of $328,100 plus
acquisition costs of $40,741. On the same date it sold this parcel to
Barnett Bank of Central Florida, N.A. for $476,454.
Parcel 2:
--------
This is a 2.83-acre parcel of vacant land located at the southeast
corner of Curry Ford Road and Chickasaw Trail in southeast Orange
County, Florida. In addition to the land purchase price, necessary
sewer capacity was acquired and a sewer lift station was built in
conjunction with neighboring properties.
Date of Purchase: July 1, 1987
Purchase Price: $ 247,250
Additional Capitalized Costs: $ 83,776
On June 27, 1997, the Partnership executed an Option contract
providing for Amoco Oil Company to acquire this parcel. The Option
provides for an inspection period to mature on November 25, 1997, at
which time an additional $2,000 deposit was received extending the
Option to February 24, 1998. Amoco has made an additional $5,000
option payment to further extend the closing date until May 4, 1998.
This additional deposit, together with the previous payments, are non-
refundable to Amoco but will be applied to the purchase price at
closing.
Parcel 3:
--------
This is a 12.54-acre parcel of vacant land located in St. Cloud,
Florida. The Partnership acquired this parcel in November of 1987 for
$871,900. St. Cloud is approximately 20 miles southeast of downtown
Orlando.
On August 3, 1995 the Partnership sold this property to Wal-Mart
Stores. The gross sales price was $1,480,199. After closing expenses,
the Partnership received $1,363,110. A total of $1,350,000 was
distributed to limited partners in October 1995.
Parcel 4:
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In February, 1988, the Partnership acquired a 6.6 acre parcel of
vacant land located at the southwest corner of State Road 50 and
Woodbury Road in East Orange County. The site is approximately 1/2
mile east of Alafaya Trail. The parcel has been zoned for commercial
use and is located near the terminus of the eastern extension of the
East/West Expressway.
Date of Purchase: February 1, 1988
Purchase Price: $ 719,535
Additional Capitalized Costs: $ 60,402
Less: Partial sale: ($ 81,013)
----------
Balance: $ 698,924
On July 26, 1996, the Partnership sold approximately 1-acre of land on
the northeast corner of this parcel. The purchase price for the 1-acre
site was $360,000 or $8.00 per square foot. As part of the sale, the
buyer agreed to construct a master drainage and retention system for
the entire site, as well as access roads both on Colonial Drive and
Woodbury Road to service the entire site. The Partnership agreed to
pay $34,135 as its share of these expenditures which exceeded $104,000
in total. After expenses of the sale, the Partnership realized net
cash proceeds of $284,244, of which $280,000 was distributed to
limited partners in October 1996. The balance was added to Partnership
reserves. The Partnership retains approximately 5.39 acres of land at
this location.
2
<PAGE>
During the third quarter of 1997, the Partnership entered into two
contracts for the sale of the remaining 5.39 acres. Both buyers intend
to develop their portion of the site. These contracts are expected to
close during the second quarter of 1998.
Parcel 5:
--------
In March, 1988, the Partnership acquired a 33.5-acre parcel of vacant
land located on the south side of State Road 50 in East Orange County
for $1,200,000. This site is approximately 1/4 mile east of Alafaya
Trail.
On December 2, 1993, the Partnership sold approximately 15 acres of
this parcel to Cricket Club Affordable Housing Partners, L.P. for a
gross price of $1,068,750. After costs of the sale, the Partnership
received $988,977.38 of net sales proceeds.
During the first quarter of 1994, the Partnership sold the remaining
18.5-acre parcel at a price of $1,400,000. At closing the Partnership
took back a one-year mortgage for the entire purchase price. The
mortgage was subsequently reduced to $1,375,000 and the entire balance
of the note was repaid in May, 1995.
Parcel 6:
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The Partnership acquired a 7-acre parcel of vacant land located
approximately 1,800 feet east of I-95/S.R. 405 interchange on the
south side of State Road 405. The property is zoned for commercial use
in the City of Titusville, Florida. The Kennedy Space Center is 4.5
miles from the property on State Road 405. In early 1995, WalMart
Stores opened a new outlet directly across S. R. 405 from this
property.
Date of Purchase: June 10, 1988
Purchase price: $ 400,000
Additional Capitalized Costs: $ 20,503
In October, 1997, the Partnership entered into a contract for sale of
a 200' x 210' parcel on the corner of this site with a nationally
known fast food restaurant. The inspection period has elapsed, and the
buyer has made an additional deposit on the property. Closing is
anticipated during the second quarter of 1998.
In February, 1998, the Partnership entered into a Sales Contract
providing for the sale of the balance of this property to a nationally
recognized developer of retail shopping centers. The initial deposit
has been received, and the Buyer is currently inspecting the property
for suitability.
Parcel 7:
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The Partnership acquired a 59% interest in West 50 Joint Venture,
which purchased a 132.7-acre parcel located in southeast Lake County.
The property was purchased at a price of $2,518,010. The property is
approximately 1 1/2 miles west of the Florida Turnpike interchange
with State Road 50. The site has 4,700 front feet on State Road 50.
The site is currently zoned commercial (26 acres) and industrial
(106.7 acres).
Date of Purchase: June 1, 1988
Total Purchase Price: $2,518,010
Additional Capitalized Costs: $ 80,354
Partnership Share (59% Interest): $1,533,035
During 1997, the Partnership focused its attention on grading this
site and bringing sewer and water utilities to the site to better
position the property for sale. Grading permits are anticipated in
early 1998, and the City of Clermont has advised the Partnership that
it intends to extend sewer and water service to the site in the same
time frame. The General Partner has reached an agreement with the City
of Clermont whereby these facilities will be upgraded to serve the
Joint Venture's property for future development. West 50 Joint Venture
has arranged a $500,000 secured line of credit with a commercial bank
to finance the necessary improvements in anticipation of future sales.
It is felt that these improvements will make the property more
attractive to prospective purchasers at higher selling prices. West 50
Joint Venture's termination date was December 31, 1998. In February
1998, the termination date was extended by action of the venturers to
December 31, 2003.
Parcel 8:
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The Partnership purchased a 1.04-acre parcel of vacant land located in
Seminole County, Florida for $300,000.
3
<PAGE>
During the first quarter of 1994 the Florida Department of
Transportation (FDOT) condemned and took title to this entire parcel.
The FDOT paid $455,000 for the parcel. The Partnership filed suit
against the FDOT for additional compensation for the taking of the
property and for legal fees. This suit was settled by mediation which
resulted in an additional $230,000 cash payment by FDOT to the
Partnership. Of this amount $57,500 was used to pay legal fees and
$172,500 was retained by the Partnership. Legal fees totaling $103,000
were recovered in the first quarter of 1995.
Parcel 9:
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On February 6, 1989, the Partnership purchased, in joint venture with
an affiliated partnership, Condev Land Fund II, Ltd., a 19+ acre tract
-
located immediately north of the University of Central Florida for
$737,355.
On April 22, 1996, the joint venture sold this property to Royal
Apartments USA based in Champaign, Illinois. The purchase price for
this parcel was $1,190,000, which included $35,000 paid by the
purchaser as additional consideration to extend the closing date.
After expenses of the sale, the net proceeds realized by the Joint
Venture were $1,104,330. A total of $1,080,000 was distributed to
limited partners in May, 1993, $540,000 to limited partners of Condev
Land Growth Fund '86, Ltd., and $540,000 to limited partners of Condev
Land Fund II, Ltd. The balance was added to Partnership reserves.
Item 3.
Legal Proceedings:
-----------------
As of December 31, 1997, the Partnership is not subject to any pending
legal proceedings.
Item 4.
Submission of Matters to a Vote of Security Holders:
---------------------------------------------------
No matter was submitted to Unit Holders for a vote during the fourth
quarter of the year ended December 31, 1997.
4
<PAGE>
PART II
Item 5.
Markets for Registrant's Common Equity and Related Security Holder
------------------------------------------------------------------
Matters:
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(a) All Units of the Partnership have been sold; there has not been a
public secondary market and it is not anticipated that a public
secondary market for the Units will develop.
(b) As of December 31, 1997, there were approximately 645 holders of
record of the Units of the Partnership.
(c) There are no regularly scheduled distributions to limited
partners. Distributions are made subsequent to sale of Partnership
properties after provision has been made for adequate reserves to
cover anticipated future expenses of the Partnership. Unit holders
received cash distributions totaling $-0-, $840,000 and $2,625,000
during the years ended December 31, 1997, 1996, and 1996,
respectively.
Item 6.
Selected Financial Data:
-----------------------
<TABLE>
<CAPTION>
Years Ending December 31,
-------------------------
1997 1996 1995 1994 1993
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<S> <C> <C> <C> <C> <C>
Total Revenue $ 4,549 $ 349,807 $1,157,261 $ 376,468 $ 402,346
Net Income
(Loss) (46,136) 288,717 1,056,790 282,234 286,511
Total Assets 3,025,026 3,067,820 3,619,103 5,207,313 5,482,579
Partners'
Capital 3,021,684 3,067,820 3,619,103 5,482,579 5,482,578
</TABLE>
The above selected financial data should be read in conjunction with
the financial statements and related notes appearing elsewhere in this
annual report.
Item 7.
Management's Discussion and Analysis of Financial Condition and
----------------------------------------------------------------
Results of Operations:
---------------------
January 1, 1997 through December 31, 1997
During 1997, the General Partner continued in its effort to sell the
portfolio properties while at the same time managing the properties to
protect existing development rights and enhance the likely salability
of each parcel. While no sales of land were concluded during 1997, at
year-end the Partnership held four contracts which are expected to
close during 1998. In addition, a fifth contract was signed in
February, 1998.
In April, the Partnership entered into an agreement with a nationally
recognized developer of retail sites for the sale of its 7-acre parcel
located on State Road 405 in Titusville. This contract was canceled by
the Buyer in July when the anticipated user for the site deferred its
development plans until 1998. The property was placed back on the
market at that time.
In June the Partnership executed an option contract providing for
Amoco Oil Company to acquire the Partnership's 2.84-acre parcel at
Curry Ford Road and Chickasaw Trail in Orange County, Florida. The
option is contingent upon the Partnership reaching an agreement with
Orange County Department of Transportation regarding proposed changes
to this intersection. The Partnership retained a traffic consultant to
propose a revised access plan for this property and met with Orange
County officials and adjoining property owners. While we are still
working on a final agreement, the County has agreed in principle with
our proposal. The Amoco option has been extended during this process.
Amoco has made an additional $5,000 option payment to extend the
closing date until May 4, 1998. This additional deposit, together with
the previous payments, are non-refundable to Amoco but will be applied
to the purchase price at closing.
5
<PAGE>
During the third quarter of 1997, the Partnership entered into two
contracts for the sale of the remaining 5.39 acres of Parcel #4. See Item
2. Properties. Both buyers intend to develop their portion of the site.
These contracts are expected to close during the second quarter of 1998.
In October, the Partnership entered into a contract for sale of a 200' x
210' parcel on the corner of its site in Titusville, Florida with a
nationally known fast food restaurant. The inspection period has elapsed,
and the buyer has made an additional deposit on the property. Closing is
anticipated during the second quarter of 1998.
In February, 1998, the Partnership entered into a Sales Contract providing
for the sale of the balance of the Titusville site property to a nationally
recognized developer of retail shopping centers. The initial deposit has
been received, and the Buyer is currently inspecting the property for
suitability.
For the year ended December 31, 1997, the Partnership reported total
revenues of $4,549, consisting primarily of interest income earned on
short-term deposits. There were no sales of property during 1997. In 1996,
there were two sales of property producing $193,002 in land sale gains and
$127,712 in profits in the Partnership's joint venture. In addition, the
Partnership had $20,000 in income from a forfeited deposit on land during
1996. The combined result is a drop in total revenues from $349,807 in 1996
to only $4,549 in 1997.
Expenses declined from $61,090 for the year ended December 31, 1996 to
$50,685 for the year ended December 31, 1997. This was almost entirely due
to a reduction in taxes and permits, which fell from $32,399 in 1996 to
$22,775 in 1997. Taxes can be expected to decline as properties are sold.
Other expense categories remained relatively unchanged.
The net loss for 1997 was $46,136 compared to a profit of $288,717 for
1996. Future profitability will depend on the Partnership's ability to
sell portfolio properties at or near current market prices.
Total assets remained relatively constant between December 31, 1996
and December 31, 1997. This is to be anticipated, given the fact that no
properties were sold during the year. However, the Partnership's liquidity
was substantially diminished, as the Partnership funded both operating
losses and investment in its property at Woodbury Road in conjunction with
the sale to Miller Enterprises. As part of that transaction, the
Partnership shared in the costs of access roads and a water retention
system which benefit the entire parcel. The cost of these improvements
were withheld in escrow from the net sales proceeds at the time of closing.
These expenditures will be recovered from future sales. Likewise, the
Partnership committed resources to West 50 Joint Venture for engineering
and other related expenses to protect development rights and better
position the property held by the joint venture for sale. The result of
these necessary expenditures has been to reduce liquidity in the
Partnership to only $19,062, or about four months of operating capital. It
is anticipated that reserves will be restored to satisfactory levels from
sales which are expected in the first and second quarter of 1998. In
addition, West 50 Joint Venture has arranged a $500,000 secured line of
credit from a commercial bank to provide for future expenses in the joint
venture if required.
For 1998, the General Partner estimates that approximately $20,000 will be
required to pay real estate taxes on the remaining properties held by the
Partnership. In addition, the General Partner estimates that property
associated holding costs will total approximately $12,000 during 1998 and
the costs of administration, legal and accounting will require
approximately $14,500. These three categories of expense, totaling $46,500,
will be paid from Partnership reserves which were $19,062 at 1997 year end.
Should the Partnership not successfully conclude a property sale in 1998
and add to reserves, reserves would be depleted before year-end 1998. In
this event, the General Partner may elect to advance operating funds to the
Partnership, although it is not required to do so by the Partnership
Agreement. At the level of costs associated with the Partnership's business
as set out above, the Partnership has reserves at year end 1997 to fund
four months of costs.
The General Partner estimates that two properties and part of a third
parcel will be sold in 1998 resulting in cash to the Partnership in the
approximate amount of $1,500,000. If concluded as estimated, the sale and
collection proceeds would result in a distribution to the limited partners
in the approximate amount of $1,400,000. The General Partner feels that
the present level of reserves are inadequate to fund future expenses and
plans to restore reserves to adequate levels by retaining part of the
proceeds of future anticipated sales. However the General Partner feels the
majority of net sale proceeds could be distributed. If the sale and
distribution are concluded as estimated above, Partnership assets and
Partner's Capital would fall to $2,019,137.
In addition to the projected sales above, the General Partner reasonably
expects to place two more Partnership properties under contract in 1998.
However, it is expected that these contracts would not close until 1999. It
is estimated that it will require another three
6
<PAGE>
(3) years to complete the sale of properties held by West 50 Joint Venture
in which the Partnership is a 59% participant.
January 1, 1996 through December 31, 1996
During 1996, the General Partner continued to manage the affairs of the
Partnership and placed increased emphasis on the sale of portfolio
properties. The General Partner also took steps to improve the properties
chances for sale in the immediate future and to preserve development rights
associated with each property.
In January, the Partnership entered into a Contract for Sale of its 7-acre
parcel located on Rt. 405 in Titusville, Brevard County, Florida, with a
developer who intended to build a retail center for a nationwide building
supplies retailer. This Contract was terminated in September, and the
buyer's $20,000 deposit on the property was paid to the Partnership. The
Partnership distributed this amount to limited partners in October, 1996.
In May 1996, the Partnership distributed $540,000 to limited partners.
Funds for this distribution came from sale of Condev/McCulloch Road Joint
Venture's property on McCulloch Road in Seminole County. The Partnership
held a 50.1% interest in Condev/McCulloch Road Joint Venture. Please see
Item 2. Properties, Parcel #9. Upon sale of this property and payment of
all related expenses, Condev/McCulloch Road Joint Venture was terminated as
an entity as it had no assets or liabilities.
In July, 1996, the Partnership sold part of Property #4 located on State
Road 50 at Woodbury Road in Orange County, Florida. Please see Item 2.
Properties. The Partnership realized net proceeds of $284,244 from this
sale. In October, the Partnership distributed $280,000 to the limited
partners, together with the $20,000 forfeited escrow deposit mentioned in
the above paragraph for a total distribution of $300,000.
For the year ended December 31, 1996, the Partnership reported total
revenue of $349,807, including $193,002 recognized gain on the sale of
land, $127,7112 equity in income of joint ventures, and $29,093 in interest
and other income. This compares to $1,119,841 recognized gain on the sale
of land and $37,420 in interest and other income for the year ended
December 31, 1995. The 1996 gain on sale of land was the result of the sale
of part of the Partnership's land on State Road 50 and Woodbury Road in
Orange County. The equity in income of joint ventures was the combined
effect of the sale of Condev/McCulloch Road Joint Venture's 19.10 acre
parcel of land in Seminole County, Florida offset by expenses in the two
joint ventures of the Partnership. Total income decreased $807,454 from
$1,157,261 in 1995 to $349,807 in 1996, or 69.8%, reflecting a lower level
of property sales for 1996.
Operating expenses totaled $61,090 for the year ended December 31, 1996,
compared to $100,471 the previous year. The primary reason for the decrease
was the reported equity in income of joint ventures during 1996 of $127,712
as opposed to an equity loss of $23,947 in 1995. Other changes included
reduced property taxes in 1996, which decreased from $43,964 in 1995 to
$32,399 in 1996, and a decrease in amortization, which decreased from
$10,420 in 1995 to $3,375 in 1996. Property taxes will continue to decrease
as portfolio properties are sold. Organization costs are allocated to each
parcel of land. As sales occur, the related amortization is recognized.
The lower level of amortization recognized in 1996 reflects the lower level
of land sales. All other expense categories remained essentially level in
1996 from 1995.
Net income reported for the year ended December 31, 1996 was $288,217, a
decrease of 82.1% from the net profit reported for the year ended December
31, 1995 of $1,056,790.
At year-end 1996, total assets of the Partnership were $3,067,830, compared
with $3,619,103 at year-end 1995. This decrease reflects the sale of
Condev/McCulloch Road Joint Venture's 19.10 acre parcel of land in Seminole
County, Florida and part of the Partnership's parcel located on State Road
50 at Woodbury Road in Orange County, Florida. As the Partnership is
currently in the liquidation stage, assets will continue to decrease as
properties are sold. the Partnership had no liabilities at December 31,
1996. Partners' Capital declined from $3,619,103 at December 31, 1995 to
$3,067,820 at December 31, 1996, a decrease of $551,283. This decline
resulted from $840,000 in distributions to limited partners offset by
Partnership income of $288,717 for the year.
January 1, 1995 through December 31, 1995:
During the year, the General Partner continued to manage the affairs of the
Partnership and to emphasize the sale of portfolio properties.
7
<PAGE>
In July 1995, the Partnership distributed $1,275,000 to the Limited
Partners. Funds for this distribution came from repayment of the
outstanding $1,375,000 mortgage note relating to Parcel #5. The balance was
added to Partnership reserves.
In August 1995, the Partnership sold Property #3 in St. Cloud, Florida to
WalMart Stores, Inc. The Partnership realized net proceeds of $1,363,110
from this sale. In October, the Partnership distributed $1,350,000 to the
Limited Partners. The balance was added to Partnership reserves.
For the year ended December 31, 1995, the Partnership reported total
revenue of $1,157,261, including $1,119,841 recognized gain on the sale of
land and $37,420 in interest and other income. This compares to $369,702
recognized gain on the sale of land and $6,767 in interest and other income
for the year ended December 31, 1994. The 1995 gain on sale of land was
the combined result of the sale relating to the Partnership's 12.54 acre
parcel of land in St. Cloud, Florida and the repayment of the mortgage note
relating to the Partnership's multi-family land in Orange County, Florida.
Refer to Item 2, Properties, Parcels 3 and 5. Total income increased
$780,792 from $376,469 in 1994 to $1,157,261 in 1995, or 207%, reflecting a
higher level of property sales for 1995.
Operating expenses totaled $100,471 for the year ended December 31, 1995,
compared to $94,235 the previous year. The primary reason for the increase
was an increase in amortization, which increased by $8,216 from $2,024 in
1994 to $10,240 in 1995, and a small increase in professional fees which
rose by $1,773. As explained in Note 1 of the accompanying financial
statements, organization costs are allocated to each parcel of land. As
sales occur, the related amortization is recognized. The higher level of
amortization recognized in 1995 reflects the higher level of land sales.
All other expense categories declined slightly in 1995 from 1994.
Net income reported for the year ended December 31, 1995 was $1,056,790, an
increase of 274.4% from the net profit reported for the year ended December
31, 1994 of $282,234.
At year-end 1995, total assets of the Partnership were $3,619,103, compared
with $5,207,313 at year-end 1994. This decrease reflects the sale of the
Partnership's 12.54 acre parcel of land in St. Cloud, Florida and the
repayment of the mortgage note relating to parcel #5. On the advise of the
Partnership's auditors, the profit on Parcel #5 was deferred until
repayment of the mortgage note because the agreement had a provision for
return of the land to the Partnership under certain circumstances. As the
Partnership is currently in the liquidation stage, assets will continue to
decrease as properties are sold. The Partnership had no liabilities at
December 31, 1995. Partners capital declined from $5,187,313 at December
31, 1994 to $3,619,103 at December 31, 1995, a decrease of $1,568,210. This
decline resulted from $2,625,000 in distributions to Limited Partners
offset by Partnership income of $1,056,790 for the year.
8
<PAGE>
Item 8.
Financial Statements and Supplementary Data:
-------------------------------------------
I. Condev Land Growth Fund '86, Ltd.
-----------------------------------
Page
INDEPENDENT AUDITORS' REPORT 10
FINANCIAL STATEMENTS
Balance sheets 11
Statements of operations 12
Statements of partners' capital 13
Statements of cash flows 14
Notes to financial statements 15-20
II. West 50 Joint Venture
-------------------------
INDEPENDENT AUDITORS' REPORT 21
FINANCIAL STATEMENTS
Balance sheets 22
Statements of operations 23
Statements of partners' capital 24
Statements of cash flows 25
Notes to financial statements 26-27
9
<PAGE>
CONDEV LAND GROWTH FUND '86, LTD.
INDEPENDENT AUDITORS' REPORT
----------------------------
The Partners
Condev Land Growth Fund '86, Ltd.
Winter Park, Florida
We have audited the accompanying balance sheets of Condev Land Growth Fund
'86, Ltd. (a Florida Limited Partnership) as of December 31, 1997 and 1996, and
the related statements of operations, partners' capital, and cash flows for each
of the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the General Partner. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
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 Condev Land Growth Fund '86,
Ltd. as of December 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.
OSBURN, HENNING AND COMPANY
Orlando, Florida
January 13, 1998
10
<PAGE>
CONDEV LAND GROWTH FUND '86, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 19,062 $ 144,871
Due from related entity 1,682 -
Land, at cost (Note 2) 1,450,453 1,401,236
Investment in joint venture (Note 3) 1,533,035 1,500,919
Organization costs, less accumulated
amortization of $21,954 in 1997 and 1996 20,794 20,794
---------- ----------
$3,025,026 $3,067,820
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 1,242 $ -
Deposits on land 2,100 -
---------- ----------
3,342 -
---------- ----------
Partners' capital 3,505 3,966
General partner 3,018,179 3,063,854
---------- ----------
Limited partners 3,021,684 3,067,820
Total partners' capital ---------- ----------
$3,025,026 $3,067,820
========== ==========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
11
<PAGE>
CONDEV LAND GROWTH FUND '86, LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---------- --------- ----------
<S> <C> <C> <C>
Revenue:
Gain on land sale $ - $193,002 $1,119,841
Equity in income of joint
ventures 904 127,712 -
Interest income 3,645 7,968 36,395
Forfeited deposits - 20,000 -
Other income - 1,125 1,025
-------- -------- ----------
4,549 349,807 1,157,261
-------- -------- ----------
Expenses:
Taxes and permits 22,775 32,399 43,964
Office expenses 14,420 13,035 11,837
Professional fees 11,758 11,821 10,241
Amortization - 3,375 10,240
Other expenses 1,732 460 242
Equity in losses of joint
ventures - - 23,947
-------- -------- ----------
50,685 61,090 100,471
-------- -------- ----------
Net income (loss) $(46,136) $288,717 $1,056,790
======== ======== ==========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
12
<PAGE>
CONDEV LAND GROWTH FUND '86, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
-------- ------------ ------------
<S> <C> <C> <C>
Balances, December 31, 1994 $5,147 $ 5,182,166 $ 5,187,313
Net income (loss) (631) 1,057,421 1,056,790
Distributions - (2,625,000) (2,625,000)
------ ----------- -----------
Balances, December 31, 1995 4,516 3,614,587 3,619,103
Net income (loss) (550) 289,267 288,717
Distributions - (840,000) (840,000)
------ ----------- -----------
Balances, December 31, 1996 3,966 3,063,854 3,067,820
Net income (loss) (461) (45,675) (46,136)
------ ----------- -----------
Balances, December 31, 1997 $3,505 $ 3,018,179 $ 3,021,684
====== =========== ===========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
13
<PAGE>
CONDEV LAND GROWTH FUND '86, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---------- -------------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (46,136) $ 288,717 $ 1,056,790
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Gain on land sale - (193,002) (1,119,841)
Equity in (income) losses of
joint ventures (904) (127,712) 23,947
Amortization - 3,375 10,240
(Increase) decrease in:
Due from related entity (1,682) - -
Increase (decrease) in:
Accounts payable 1,242 - -
Deposits on land 2,100 - (20,000)
--------- ---------- -----------
Net cash provided by
(used in) operating
activities (45,380) (28,622) (48,864)
--------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from land sales, net of
closing costs - 308,149 2,790,092
Land acquisitions and related costs (49,217) (34,135) (1,435)
Investment in joint ventures (31,212) (8,737) (28,329)
Distributions from joint ventures - 551,402 -
--------- ---------- -----------
Net cash provided by
(used in) investing
activities (80,429) 816,679 2,760,328
--------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners - (840,000) (2,625,000)
--------- ----------- -----------
Net increase (decrease) in
cash and cash equivalents (125,809) (51,943) 86,464
CASH AND CASH EQUIVALENTS, BEGINNING 144,871 196,814 110,350
--------- ----------- -----------
CASH AND CASH EQUIVALENTS, ENDING $ 19,062 $ 144,871 $ 196,814
========= =========== ===========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
14
<PAGE>
CONDEV LAND GROWTH FUND '86, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Organization
------------
Condev Land Growth Fund '86, Ltd. (the Partnership) is a Florida
Limited Partnership formed on April 17, 1986 under the Florida
Uniform Partnership Act. The Partnership was formed for the
purpose of acquiring and holding predevelopment land in Central
Florida for investment. The Partnership was formed with an
initial capital contribution of $1,000 from the general partner,
Condev Associates, and the issuance of 7,500 units of limited
partnership interest at $1,000 per unit.
The terms of the partnership agreement provided that the
Partnership would continue in existence until December 31, 1993.
However, the Partnership's operation will continue until all
investments of the Partnership are sold and proceeds distributed
to the partners.
Use of Estimates
----------------
In preparing the financial statements, management is required to
make estimates and assumptions that affect the reported amounts
of assets and liabilities as of the date of the financial
statements and revenues and expenses for the period. Actual
results may differ significantly from those estimates.
Cash and Cash Equivalents
-------------------------
The Partnership considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents. At December 31, 1997, cash and cash equivalents
include $15,934 invested in Goldman FS Federal Admin.
Organization Costs
------------------
The Partnership has capitalized all organization costs. Upon sale
of land, each parcel is allocated a portion of these costs based
on the ratio of total acquisition cost to the net proceeds of the
offering available to purchase properties for investment. The
accompanying statements of operations include $-0-, $3,375 and
$10,240 of amortization of organization costs resulting from the
sales of land during the years ended December 31, 1997, 1996 and
1995, respectively. For tax purposes, the Partnership amortized
organization costs over five years.
CONTINUED ON NEXT PAGE
15
<PAGE>
CONDEV LAND GROWTH FUND '86, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies - (Continued)
Land
----
Land, held for investment, is stated at the lower of cost or fair
value. Land is assessed for impairment when the Partnership
believes events or changes in circumstances indicate that its
carrying amount may not be recoverable. Costs that clearly relate
to land development projects are capitalized. Interest costs, real
estate taxes and insurance are capitalized while development is in
progress. When development is complete, these costs are expensed.
Investments in Joint Venture
----------------------------
Investments in joint ventures are accounted for using the equity
method.
Income Taxes
------------
Rather than being a taxable entity, the Partnership functions as a
conduit for income tax purposes. As such, the Partnership files an
information tax return on which it allocates its revenue and
expenses among the partners as required by the partnership
agreement. The partners are required to report such items on their
individual income tax returns.
Note 2. Land
At December 31, 1997 and 1996, land consisted of the following:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
2.83 acre parcel, in 1997 and 1996,
(zoned commercial) in southeast
Orange County, Florida $ 331,026 $ 322,791
7 acre parcel, in 1997 and 1996,
(zoned commercial) in Brevard
County, Florida 420,503 420,503
5.39 acre parcel, in 1997 and 1996,
(zoned commercial) in Orange
County, Florida 698,924 657,942
---------- ----------
$1,450,453 $1,401,236
========== ==========
</TABLE>
16
<PAGE>
CONDEV LAND GROWTH FUND '86, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 3. Investment in Joint Ventures
The Partnership is a party to two joint ventures, which have
investments in land. The Partnership's investment in the joint
ventures as of December 31, and its equity in income (losses) of the
joint ventures for the years then ended are as follows:
<TABLE>
<CAPTION>
Condev/
McCulloch
West 50 Road
Joint Joint
Venture Venture Total
----------- ---------- -----------
<S> <C> <C> <C>
Investment:
1997 $1,533,035 $ - $1,530,086
1996 1,500,919 - 1,500,919
1995 1,515,009 400,862 1,915,871
Equity in income (losses):
1997 $ 904 $ - $ (2,046)
1996 (19,675) 147,388 127,712
1995 (18,802) (5,145) (23,947)
</TABLE>
The Partnership owns a 59% interest in West 50 Joint Venture (a
Florida Joint Venture) (the Joint Venture) whose purpose is to acquire
and hold a 133 acre parcel of land in Lake County, Florida for
investment purposes. The remaining 41% interest is owned by Condev
West 50, Ltd., an affiliate of the Partnership's general partner. The
Partnership's investment is carried at its equity in the net
underlying assets. A summary of the assets, liabilities, and
venturers' capital of the Joint Venture at December 31, 1997 and 1996
is as follows:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
Assets
------
<S> <C> <C>
Cash $ 6,693 $ 6,050
Investment in land 2,610,375 2,575,294
---------- ----------
$2,617,068 $2,581,344
========== ==========
Liabilities and Venturers' Capital
----------------------------------
Liabilities $ 18,703 $ 37,413
Venturers' capital 2,598,365 2,543,931
---------- ----------
$2,617,068 $2,581,344
========== ==========
</TABLE>
The Joint Venture had revenue of $6,000, $6,300 and $7,950 during the
years ended December 31, 1997, 1996 and 1995, respectively, and net
income (loss) of $1,532, $(33,348) and $(31,868) respectively.
CONTINUED ON NEXT PAGE
17
<PAGE>
CONDEV LAND GROWTH FUND '86, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 3. Investment in Joint Ventures - (Continued)
The Partnership owned a 50.1% interest in Condev/McCulloch Road Joint
Venture (a Florida Joint Venture) (the Joint Venture) whose purpose
was to acquire and hold a 19 acre parcel of land in Seminole County,
Florida for investment purposes. Condev Land Fund II, LTD., an
affiliate of the Partnership's general partner, owned the remaining
49.9% interest. The Partnership's investment was carried at its equity
in the net underlying assets.
During the year ended December 31, 1996, the Joint Venture sold its
parcel of land and recognized a gain of $300,900. The Joint Venture
made a complete distribution to its venturers of $1,100,602, of which
the Partnership received $551,402, thereby terminating the Joint
Venture.
Thus, the Joint Venture had no assets, liabilities and venturers'
capital at December 31, 1997 and 1996.
The Joint Venture had revenue of $300,900 and net income of $295,826
during the year ended December 31, 1996. The Joint Venture had no
revenue during the year ended December 31, 1995 and the net loss for
the year was $10,270.
Note 4. Allocations and Distributions to Partners
Operations (excluding land sales)
---------------------------------
Pursuant to the partnership agreement, cash flow and profits and
losses from operations are allocated and distributed 99% to the
limited partners and 1% to the general partner. No distributions
attributable to cash flow were made during the years ended December
31, 1997, 1996 or 1995.
CONTINUED ON NEXT PAGE
18
<PAGE>
CONDEV LAND GROWTH FUND '86, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 4. Allocations and Distributions to Partners - (Continued)
Land sales
----------
With respect to disposition of parcels of land, the allocations and
distributions shall be made as follows:
1. To the limited partners, an amount equal to the Partnership's
cost of the parcel disposed of;
2. To the limited partners, an amount equal to real estate taxes,
and organization and syndication expenses allocable to the
parcel disposed of;
3. To the limited partners, an amount equal to 10% per year non-
compounded return on such distributions minus previous
distributions of cash flows;
4. To the general partner and limited partners, 20% and 80%,
respectively, of the net cash proceeds after the above
distributions.
For the purposes of making the above described computations, the
Partnership books will be deemed to close as of the month-end closest
to the date of sale.
The limited partners received distributions of $-0-, $840,000 and
$2,625,000 attributable to net cash proceeds from the sales of land
during the years ended December 31, 1997, 1996 and 1995, respectively.
Note 5. Related Party Transactions
The partnership agreement permits the general partner or its
affiliates to receive an acquisition fee or a real estate commission
from sellers in an amount not to exceed 5% of the gross purchase price
of land purchased by the Partnership, so long as the total acquisition
fee, including that paid to unaffiliated parties, does not exceed 10%
of the gross purchase price. No acquisition fees were paid in 1997,
1996 or 1995, as no properties were purchased.
CONTINUED ON NEXT PAGE
19
<PAGE>
CONDEV LAND GROWTH FUND '86, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 5. Related Party Transactions - (Continued)
When properties are sold, an affiliate of the general partner may be
paid real estate commissions in amounts customarily charged by others
rendering similar services, with such commissions, plus commissions
paid to nonaffiliates, not to exceed 10% of the gross sales price. In
connection with the sale of land during 1996, real estate commissions
of 5% each were paid to two nonaffiliates. In connection with the two
sales of land during 1995, real estate commissions of 5% and 6%,
respectively, were paid to nonaffiliates. No real estate commissions
were paid in 1997, as no sales occurred.
The general partner is obligated to loan up to $100,000 to the
Partnership during its term to meet working capital requirements.
There is no balance due on this loan at December 31, 1997 or 1996.
The general partner earned certain fees for administration and
management services provided, pursuant to the Partnership agreement.
Such fees amounted to $9,096, $7,740 and $7,740 for each of the years
ended December 31, 1997, 1996 and 1995.
20
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
The Venturers
West 50 Joint Venture
Winter Park, Florida
We have audited the accompanying balance sheets of West 50 Joint Venture (a
Florida Joint Venture) as of December 31, 1997 and 1996, and the related
statements of operations, venturers' capital and cash flows for each of the
three years in the period ended December 31, 1997. These financial statements
are the responsibility of the Joint Venture's management. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
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 West 50 Joint Venture as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.
OSBURN, HENNING AND COMPANY
Orlando, Florida
January 14, 1998
21
<PAGE>
WEST 50 JOINT VENTURE
(A Florida Joint Venture)
BALANCE SHEETS
December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---------- ----------
ASSETS
<S> <C> <C>
Cash $ 6,693 $ 6,050
Land, at cost 2,610,375 2,575,294
---------- ----------
$2,617,068 $2,581,344
========== ==========
LIABILITIES AND VENTURERS' CAPITAL
Liabilities
Accounts payable $ 17,703 $ 37,413
Deposit on land 1,000 -
---------- ----------
18,703 37,413
Venturers' capital 2,598,365 2,543,931
---------- ----------
$2,617,068 $2,581,344
========== ==========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
22
<PAGE>
WEST 50 JOINT VENTURE
(A Florida Joint Venture)
STATEMENTS OF OPERATIONS
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
------- ---------- ----------
<S> <C> <C> <C>
Revenue
Other income $6,000 $ 6,300 $ 7,950
------ -------- --------
Expenses:
Real estate taxes 764 37,413 37,683
Professional fees 3,000 1,500 1,700
Insurance 704 435 435
Office expense - 300 -
------ -------- --------
4,468 39,648 39,818
------ -------- --------
Net income (loss) $1,532 $(33,348) $(31,868)
====== ======== ========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
23
<PAGE>
WEST 50 JOINT VENTURE
(A Florida Joint Venture)
STATEMENTS OF VENTURERS' CAPITAL
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
Condev Land
Growth Fund Condev
'86, Ltd. West 50, Ltd. Total
----------- ------------- ----------
<S> <C> <C> <C>
Balances at December 31, 1994 $1,510,318 $1,049,545 $2,559,863
Contributions 23,493 16,325 39,818
Net income (loss) (18,802) (13,066) (31,868)
---------- ---------- ----------
Balances at December 31, 1995 1,515,009 1,052,804 2,567,813
Contributions 5,585 3,881 9,466
Net income (loss) (19,675) (13,673) (33,348)
---------- ---------- ----------
Balances at December 31, 199 1,500,919 1,043,012 2,543,931
Contributions 31,212 21,690 52,902
Net income (loss) 904 628 1,532
---------- ---------- ----------
Balances at December 31, 1997 $1,533,035 $1,065,330 $2,598,365
========== ========== ==========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
24
<PAGE>
WEST 50 JOINT VENTURE
(A Florida Joint Venture)
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
--------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 1,532 $(33,348) $(31,868)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Increase (decrease) in:
Accounts payable (19,710) 37,413 -
Deposit on land 1,000 - -
-------- -------- --------
Net cash provided by (used
in) operating activities (17,178) 4,065 (31,868)
CASH FLOWS FROM INVESTING ACTIVITIES
Land acquisition and related costs (36,367) (17,462) -
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions 52,902 9,466 41,439
-------- -------- --------
Net increase (decrease)
in cash 643 (3,931) 9,571
Cash, beginning 6,050 9,981 410
-------- -------- --------
Cash, ending $ 6,693 $ 6,050 $ 9,981
======== ======== ========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
25
<PAGE>
WEST 50 JOINT VENTURE
(A Florida Joint Venture)
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Organization/Business Interest
------------------------------
On May 31, 1988, Condev Land Growth Fund '86 (the Fund) and
Condev West 50, Ltd. (West 50, Ltd.) ( collectively, the
Venturers), both of which are Florida Limited Partnerships in
which Condev Associates is the general partner, entered into an
agreement to form West 50 Joint Venture (the Joint Venture). The
Joint Venture has acquired a 133 acre parcel of land in Lake
County, Florida that will be held for investment purposes.
The terms of the joint venture agreement provided that the Joint
Venture was to continue in existence until December 31, 1993. The
Venturers have approved a five year extension until December 31,
1998.
Use of Estimates
----------------
In preparing the financial statements, management is required to
make estimates and assumptions that affect the reported amounts
of assets and liabilities as of the date of the financial
statements and revenues and expenses for the period. Actual
results could differ significantly from those estimates.
Funding
-------
The Fund and West 50, Ltd. are required to contribute 59% and
41%, respectively, to the capital of the Joint Venture from time
to time as required for the Joint Venture's operations. It is the
intent of the Venturers that all cash requirements of the Joint
Venture shall come from the Venturers and, therefore, the Joint
Venture shall not be required to borrow funds.
Land
----
Land held for investment, is stated at the lower of cost or fair
value. Land is assessed for impairment when the Joint Venture
believes that events or changes in circumstances indicate that
its carrying amount may not be recoverable. Costs that clearly
relate to land development projects are capitalized. Interest
costs, real estate taxes and insurance are capitalized while
development is in progress. When development is complete, these
costs are expensed.
CONTINUED ON NEXT PAGE
26
<PAGE>
WEST 50 JOINT VENTURE
(A Florida Joint Venture)
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies - (Continued)
Allocations
-----------
Profits shall be allocated 59% to the Fund and 41% to West 50,
Ltd. after certain allocations to reduce any negative capital
balance and to distribute any net cash flow generated from the
Joint Venture. Losses are allocated 59% to the Fund and 41% to
West 50, Ltd. after a proportionate allocation to the Venturers
with positive capital balances.
Distributions
-------------
Cash flow generated from the Joint Venture shall be distributed
59% to the Fund and 41% to West 50, Ltd.
Income Taxes
------------
Rather than being a taxable entity, the Joint Venture functions
as a conduit for income tax purposes. As such, the Joint Venture
files an information tax return on which it allocates its revenue
and expenses among the Venturers as required by the joint venture
agreement. The Venturers are required to report such items on
their respective income tax returns.
Note 2. Related Party Transactions
The joint venture agreement permits the general partner of the
Venturers or an affiliate to receive an acquisition fee or a real
estate commission from sellers in an amount not to exceed 5% of the
gross purchase price of land purchased by the Joint Venture, so long
as the total acquisition fee, including that paid to unaffiliated
parties, does not exceed 10% of the gross purchase price. No
acquisition fees were paid in 1997, 1996 or 1995, as no properties
were purchased.
When properties are sold, an affiliate of the general partner of the
Venturers may be paid real estate commissions in the amounts
customarily charged by others rendering similar services. Such
commissions plus commissions paid to nonaffiliates are not to exceed
10% of the gross sales price. No real estate commissions were paid in
1997, 1996 or 1995, as no sales occurred.
27
<PAGE>
Item 9.
Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure:
--------------------
There were no disagreements on accounting and financial disclosures
required to be disclosed by Item 304 of Regulation S-K.
PART III
Item 10.
Directors and Executive Officers of the Registrant
--------------------------------------------------
(a) The Registrant does not have a Board of Directors. Condev
Associates, A Florida general partnership consisting of Messrs. Robert
N. Gardner and Joseph J. Gardner, is the General Partner of the
Partnership.
(b), (c), (d) and (e)
Robert N. Gardner and Joseph J. Gardners are brothers. The background
and experience of the partners of the General Partner are as follows:
Robert N. Gardner, age 63 has been president, a director and
-----------------
shareholder of Condev Corporation and it's predecessors since 1961. A
Florida licensed real estate broker and Class A Contractor, he serves
on the boards of directors of Nations Bank of Central Florida, N.A.,
and Schroeder-Manatee, Inc.
Joseph J. Gardner, age 60 has been an officer, a director and
-----------------
shareholder of Condev Corporation and its predecessors since 1961.
Prior to joining Condev Corporation, he was employed in the land
department of Continental Oil Company. Mr. Gardner is a licensed real
estate broker.
Condev Corporation, which has its offices located at the same address
of the General Partner and Partnership, has been operating in the
Florida real estate market since 1961. It has two active affiliates.
PCD, Inc. is a development company specializing in horizontal land
development. Condev Realty, Inc. is a Florida licensed real estate
broker which concentrates on site acquisition, land assemblage and
land investment.
Item 11.
Executive Compensation
----------------------
(a), (b), (c) and (d)
The Registrant has not paid and does not plan to pay any executive
compensation to the General Partners or their affiliates (other than
described in Item 13 below).
28
<PAGE>
Item 12.
Security Ownership of Certain Beneficial Owners and Management:
--------------------------------------------------------------
(a) The following is a list of persons who are known to the
Registrant to be the beneficial owners of more than 5% of the total
units outstanding as of December 31, 1997:
<TABLE>
<CAPTION>
Name and Address of Amount & Nature Percent of
Title of Class Beneficial Owner of Beneficial Owner Class
-------------- ------------------- ------------------- ----------
<S> <C> <C> <C>
Unit Holder Jody B. Burgoon Trust 25 units
Richard A. Burgoon, TTEE
Susan A. Burgoon Trust 60 units
Richard A. Burgoon, TTEE
Richard A. Burgoon 60 units
Richard A. Burgoon CUST FBO 70 units
Richard Burgoon, FL UGMA
Richard R. Burgoon and 440 units
Patricia B. Burgoon, JTWRS
393 Whooping Loop #1403
Altamonte Springs, FL 32701
---------
655 units 8.73%
Unit Holder Bishop Norbert M. Dorsey 500 units 6.67%
TTEE, FBO Diocese of Orlando
Pension Plan #02132-66-0
Post Office Box 1800
Orlando, FL 32802
(b) The following is a list of units beneficially owned by all
partners of the General Partner as of December 31, 1997:
Unit Holder Robert N. and Patricia 30 units .04%
Gardner
1014 Temple Grove
Winter Park, FL 32789
</TABLE>
(c) There are no arrangements known to the registrant, including any
pledge by any person of securities of the registrant or any of its
parents or affiliates, the operation of which may at a subsequent date
result in a change in control of the registrant.
Item 13.
Certain Relationships and Related Transactions
----------------------------------------------
(a), and (b)
The partnership agreement permits the General Partner or affiliate to
receive an acquisition fee or a real estate commission from sellers in
an amount not to exceed 5% of the gross purchase price of land
purchased by the partnership, so long as the total acquisition fee,
including that paid to unaffiliated parties, does not exceed 10% of
the gross purchase price. No acquisition fees were paid during the
years ended December 31, 1997, 1996 or 1995 as no properties were
purchased.
When properties are sold, an affiliate of the General Partner may be
paid real estate commissions in amounts customarily charged by others
rendering similar services, with such commissions, plus commissions
paid to non-affiliates, not to exceed 10% of the gross sales price. No
real estate commissions were paid to a General Partner affiliate
during the years ended December 31, 1997, 1996, or 1995.
The General Partner is obligated to loan up to $100,000 to the
Partnership during its term to make working capital requirements.
During the years ended December 31, 1992, and 1991
29
<PAGE>
such loans amounted to $133,263, and $18,000 respectively. From
proceeds of the 1993 land sale, these amounts, plus accrued interest
at prime plus 1%, were repaid. No loans were made to the Partnership
during the years ended December 31, 1997, 1996, or 1995.
Pursuant to the Partnership agreement, the General Partner earned
certain fees for administration and management services provided. Such
fees amounted to $9,096, $7,740 and $7,740 for each of the years ended
December 31, 1997, 1996 and 1995.
(c) No management person in indebted to the Registrant.
(d) Not applicable.
30
<PAGE>
PART IV
Item 14.
Exhibits, Financial Statement, Schedules, and Reports on Form 8-K:
-----------------------------------------------------------------
(a) The following financial statements and supplementary data are
included in Part II Item 8:
Page
(1) Condev Land Growth Fund '86, Ltd.
--------------------------------
Independent Auditor's Report 10
Financial Statements
Balance Sheets - December 31, 1997 and 1996 11
Statements of Operations - Years ended
December 31, 1997, 1996 and 1995 12
Statements of Partners' Capital -
Years ended December 31, 1997, 1996 and 1995 13
Statements of Cash Flows -
Years ended December 31, 1997, 1996 and 1995 14
Notes to Financial Statements 15-20
(2) West 50 Joint Venture
---------------------
Independent Auditor's Report 10
Financial Statements
Balance Sheets - December 31, 1997 and 1996 11
Statements of Operations - Years ended
December 31, 1997, 1996 and 1995 12
Statements of Partners' Capital -
Years ended December 31, 1997, 1996 and 1995 13
Statements of Cash Flows -
Years ended December 31, 1997, 1996 and 1995 14
Notes to Financial Statements
(3) Exhibits included herein:
13 - Annual Report to Unit Holders 26
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Registrant
during the last quarter of the period covered by this
report.
31
<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.
CONDEV ASSOCIATES, General Partner
Date:____________________ By: /s/ Robert N. Gardner
----------------------------
Robert N. Gardner, Partner
Date:____________________ By: /s/ Joseph J. Gardner
---------------------------
Joseph J. Gardner, Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
CONDEV ASSOCIATES, General Partner
/s/ Robert N. Gardner ___________________________
- ---------------------------------
Robert N. Gardner, Partner Date
/s/ Joseph J. Gardner ___________________________
- ---------------------------------
Joseph J. Gardner, Partner Date
32
<PAGE>
Condev Land Growth Fund '86, Ltd. February 6, 1998
1997 Annual Report
Dear Limited Partner:
Enclosed is your Schedule K-1 (Form 1065) relating to the Fund's operations for
the year ended December 31, 1997. This Schedule is for your use in preparing
your 1997 income tax return.
The financial statement, on the reverse side hereof, shows a net loss for the
year ended December 31, 1997 of $46,136. This represents the normal costs of
operating the partnership and managing the portfolio properties. There were no
sales of property during 1997. As of December 31, 1997, the net asset value per
unit of limited partner interest was $402.42. The following is a brief
description of the status of each of the partnership's four remaining
properties:
Curry Ford Road/Chickasaw Trail. This is a 2.84-acre parcel of commercially
- -------------------------------
zoned land located at the southeast corner of this intersection in Orange
County. The Partnership has entered into an agreement with AMOCO Oil Company
whereby AMOCO will acquire this parcel from the Partnership. AMOCO is in the
process of applying for the necessary development permits. The Partnership is
simultaneously working with Orange County Department of Transportation to
finalize details of access to the property in conjunction with planned
intersection improvement.
Woodbury Road/East Colonial Drive. This parcel consists of 5.39 acres, which is
- ---------------------------------
the remainder of the original parcel after the sale during 1996. The
Partnership has two contracts for sale of the entire remaining land. These
contracts have both passed the inspection period and are in the final stages of
permitting. Closings are expected in the second quarter of 1998.
NASA Causeway, Titusville. This is a 7-acre parcel located on State Road 405
- -------------------------
across from a new Wal-Mart near Interstate 95 and State Road 50 near Cape
Canaveral. The Partnership has contracted with a nationally known retailer of
fast food for a 1-acre portion of this tract. The inspection period has passed,
and the prospective purchaser is in the final permitting stage. Closing is
expected in the second quarter of 1998.
West Hwy 50, Lake County. This 133-acre property located just West of the
- ------------------------
Orange/Lake County line is owned by West 50 Joint Venture, in which the
Partnership holds a 59% controlling interest. The City of Clermont is in the
process of extending sewer and water facilities to the site, and the Partnership
is working with the City of Clermont to insure that the new service is adequate
to service this property. Grading of the property is expected to begin in the
first quarter of 1998. West 50 Joint Venture has arranged a $500,000 line of
credit with a commercial bank to finance the necessary improvements in
anticipation of future sales. It is felt that these improvements will make the
property more attractive to prospective buyers at higher selling prices.
Sincerely yours,
CONDEV ASSOCIATES
33
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<PAGE>
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<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> DEC-31-1997 DEC-31-1996
<CASH> 19,067 144,871
<SECURITIES> 0 0
<RECEIVABLES> 1,682 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 3,025,026 3,067,820
<CURRENT-LIABILITIES> 3,342 0
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 3,021,684 3,067,820
<TOTAL-LIABILITY-AND-EQUITY> 3,025,026 3,067,820
<SALES> 0 0
<TOTAL-REVENUES> 4,549 349,807
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 50,685 61,090
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (46,136) 288,717
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (46,136) 288,717
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
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