United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report (Date of earliest event reported) November 8, 1996
UNION SQUARE HOTEL PARTNERS, L.P.
Exact Name of Registrant as Specified in its Charter
Commission File Number: 33-6678
Delaware 13-3389008
State or Other Jurisdiction of
Incorporation or Organization I.R.S. Employer Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn.: Andre Anderson 10285
Address of Principal Executive Offices Zip Code
(212) 526-3237
Registrant's Telephone Number, Including Area Code
Item 5. Other events.
A copy of the Union Square Hotel Partners, L.P (the
"Partnership") limited partner report dated November 8, 1996 is
attached hereto as Exhibit 99.1 and incorporated herein by this
reference. This report provides a discussion of definitive
agreements by the Partnership relating to the proposed sale of
its hotel, the Grand Hyatt San Francisco.
Item 7. Exhibits.
Exhibit
Number Description
99.1 Report to Limited Partners of Union Square Hotel
Partners, L.P., dated November 8, 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
UNION SQUARE HOTEL PARTNERS, L.P.
BY: UNION SQUARE/GP CORP.
General Partner
Date: November 8, 1996 BY: /s/ Jeffrey C. Carter
President, Director and
Chief Financial Officer
EXHIBIT INDEX TO FORM 8-K
Exhibit
Number Description
99.1 Report to Limited Partners of Union Square Hotel
Partners, L.P., dated November 8, 1996.
Union Square Hotel Partners, L.P.
c/o Service Data Corporation
2424 South 130th Circle
Omaha, NE 68144-2596
(800) 223-3464
November 8, 1996
Dear Limited Partner:
We would like to take this opportunity to update you on certain
information relating to the current status of Union Square Hotel
Partners, L.P. (the "Partnership") and its hotel, the Grand Hyatt San
Francisco (the "Hotel").
As discussed in prior reports, the Partnership has been exploring
viable options with respect to the January 1997 maturity of the
Partnership's secured mortgage debt. To this end, the Partnership
retained a nationally recognized real estate firm to facilitate a sale
of the Hotel or obtain replacement financing for the Partnership's
debt. In late August 1996, after evaluating several purchase offers,
the Partnership commenced exclusive negotiations with one prospective
purchaser.
On November 5, 1996, the Partnership entered into an agreement to
sell the Hotel for $126,900,000 in cash and the assumption of certain
debt owed to an affiliate of the prospective buyer, subject to certain
conditions described in the purchase and sale agreement. The
prospective buyer is HT-Hotel Equities, Inc., an affiliate of
California Hyatt Corporation, the current operator of the Hotel. The
buyer will assume all obligations of the Partnership with respect to
the Hotel's current management arrangements.
In connection with the sale, the Partnership expects to repay in
full all indebtedness outstanding under the first deed of trust note
secured by the Hotel, the balance of which, it is estimated, will be
approximately $89.7 million as of December 31, 1996. In addition, the
Partnership has also entered into an Allocation and Release Agreement
with Capital Growth Mortgage Investors, L.P. ("Capital Growth"), the
holder of a second deed of trust note secured by the Hotel. Pursuant
to that agreement, Capital Growth has agreed, subject to certain
limitations, to temporarily forebear during the pendency of the sale
from pursuing a foreclosure action on the second deed of trust.
Furthermore, in consideration of the Partnership's efforts and
undertakings in connection with the transaction, Capital Growth has
agreed to accept approximately $30 million in full satisfaction of all
of the Partnership's obligations to Capital Growth (including
unsecured debt obligations and the obligation to reimburse Capital
Growth for certain costs). Capital Growth's willingness to accept
these terms is conditioned on, among other matters, the sale being
consummated by March 31, 1997. The general partner of Capital Growth
is an affiliate of the undersigned general partner of the Partnership
(the "General Partner"). Consequently, the Partnership and Capital
Growth each engaged an independent, nationally recognized investment
banking firm to negotiate the allocation of proceeds available from
the sale of the Hotel (after the payment of transaction costs, the
making of closing adjustments, and the repayment of the first deed of
trust note) between the Partnership and Capital Growth.
The Partnership has been advised by its independent investment
banking firm that, in such firm's opinion as investment bankers, the
allocation of available proceeds to be made between the Partnership
and Capital Growth pursuant to the Allocation and Release Agreement is
fair, from a financial point of view, to the unitholders of the
Partnership, and in that context, the amount of the allocation is at
least as favorable to the Partnership as might have been obtained if
the allocation had been negotiated with an unaffiliated lender in
similar circumstances.
In addition, as a condition to the effectiveness of the
Allocation and Release Agreement, certain affiliates of the General
Partner, other than Capital Growth, have entered into a Consent and
Release Agreement, pursuant to which such affiliates have agreed to
fully release the Partnership from all of the Partnership's unsecured
indebtedness to them in an aggregate amount projected to be
approximately $14.3 million as of December 31, 1996.
Upon completion of the sale of the Hotel, the General Partner
intends to dissolve the Partnership and to make one or more
liquidating distributions in accordance with the terms of the
partnership agreement. Any such distributions will be made only after
satisfaction of all debts, liabilities and obligations of the
Partnership (excluding the amount of the unsecured debt obligations
forgiven as described above), payment of other expenses of the sale of
the Hotel and of the dissolution and liquidation of the Partnership,
and the establishment of any reserves for contingencies that the
General Partner deems necessary. We are presently unable to determine
with complete certainty the amount that will be available for
distribution to the unitholders of the Partnership, or the timing
thereof. However, we currently anticipate that the proceeds remaining
after the above described sale of the Hotel (together with the
estimated Partnership cash reserves), and after the preceding payments
have been made and the unsecured debt referred to above has been
forgiven, can be expected to be in the approximate range of $9 million
to $12 million, or approximately $1.25 to $1.67 per Partnership unit
outstanding, assuming a closing of the sale of the Hotel on or prior
to March 31, 1997. In addition, the amount of any distribution to the
unitholders of the Partnership will depend upon the timing of the
sale, and will vary depending on results of Hotel operations prior to
the sale and, if necessary, the willingness of the holder of the first
deed of trust to renegotiate any maturing debt, or to otherwise
forebear from initiating foreclosure proceedings as described below.
The sale of the Hotel is subject to the satisfaction of certain
conditions, including the Partnership obtaining the approval of a
majority in interest of the outstanding unitholders of the
Partnership. A proxy statement will be mailed for this purpose as
promptly as practicable following the filing with the Securities and
Exchange Commission and clearance of the requisite disclosure
documents. This letter is not, and is not intended to be, a
solicitation of unitholder approval of the Hotel sale and related
transactions. Such a solicitation may only be effected through
definitive proxy materials to be forwarded to the unitholders in the
future.
Because most of the Partnership's debt is scheduled to mature on
January 2, 1997, if the sale of the Hotel cannot be consummated by
that date, the Partnership expects to seek the agreement of the holder
of its first deed of trust note to renegotiate any maturing debt, or
to otherwise forebear from exercising any remedies in respect of the
Hotel, in order to permit, if necessary, the sale to be consummated
after such maturity date. If no such agreement can be reached, or the
sale were not to be consummated, there can be no assurance that a
satisfactory alternative with respect to the Partnership's debt can be
implemented, or that the secured lenders will not initiate foreclosure
proceedings against the Hotel. If foreclosure proceedings are
started, the General Partner will make a determination at such time as
to whether a filing on behalf of the Partnership under Chapter 11 of
the United States Bankruptcy Code would be beneficial.
Please be assured that we will carefully consider appropriate
options and will endeavor to keep you apprised of significant
developments in future investor reports. In the interim, if you have
any questions regarding the information contained in this letter,
please contact First Data Investor Services Group at (800) 223-3464.
Very truly yours,
Union Square/GP Corp.
The General Partner
/s/ Jeffrey C. Carter
Jeffrey C. Carter
President
