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):
February 21, 1997
UNION SQUARE HOTEL PARTNERS, L.P.
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(Exact name of registrant as specified in its charter)
Delaware 33-6678 13-3389008
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(State or other jurisdiction (Commission File (I.R.S. Employer
or incorporation) Number) Identification No.)
3 World Financial Center, 29th Floor, New York, NY 10285
Attn: Andre Anderson
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(Address of principal executive offices) (zip code)
(212) 526-3237
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 21, 1997, Union Square Hotel Partners, L.P., a
Delaware limited partnership ("Union Square"), consummated the
previously announced sale of its principal asset (the "Sale"),
the real property and the related improvements and personalty
located at 345 Stockton Street, San Francisco, California,
commonly known as the "Grand Hyatt San Francisco" (collectively,
the "Hotel"), to Grand Hyatt SF General Partnership, a Delaware
general partnership ("Buyer"). The Sale was accomplished
pursuant to a Purchase and Sale Agreement and Joint Escrow
Instructions (the "Purchase Agreement"), dated as of November 4,
1996, between Union Square and HT-Hotel Equities, Inc., a
Delaware corporation ("HT-Hyatt"). HT-Hyatt assigned the
Purchase Agreement to Buyer prior to the consummation of the
Sale. HT-Hyatt and Buyer are both affiliates of California Hyatt
Corporation, the current operator of the Hotel, and neither is
affiliated with Union Square or any of Union Square's affiliates.
Pursuant to the Purchase Agreement, the Hotel was sold for (i)
$126,900,000 in cash and (ii) the assumption by Buyer of Union
Square's outstanding nonrecourse indebtedness in favor of Hyatt
Corporation, which indebtedness was secured by a third deed of
trust on the Hotel in the approximate amount of $3,900,000. A
copy of the Purchase Agreement is attached as an annex to Union
Square's Proxy Statement, dated January 10, 1997, as supplemented
on February 3, 1997 (the "Proxy Statement"), and is incorporated
herein by reference. Union Square used a portion of the proceeds
from the Sale to (i) repay in full a first deed of trust note in
the approximate amount of $87,000,000 held by the Bank of Nova
Scotia and secured by a first deed of trust on the Hotel and (ii)
pay $30,250,000 to Capital Growth Mortgage Investors, L.P.
("Capital Growth") pursuant to the terms of the Allocation and
Release Agreement described in the Proxy Statement.
As described in the Proxy Statement, certain litigation
(the "Cal Kan Litigation") was commenced on January 24, 1997
against Union Square, the general partner of Union Square,
Capital Growth, the general partner of Capital Growth, and
others, challenging the allocation of certain proceeds from the
Sale. To minimize the risk that the Cal Kan Litigation might
delay or otherwise impair the Sale, Union Square and Capital
Growth entered into a Non-Distribution and Security Agreement,
dated as of February 21, 1997 (together with related documents,
the "Non-Distribution Agreement"), pursuant to which approximately
$6,900,000 of the proceeds from the Sale was deposited in a
restricted bank account (the "Blocked Account") with a nationally
recognized commercial bank. The terms of the Blocked Account
generally prohibit the release of funds therefrom on or before
April 21, 1997 (which may be extended). In addition, Union Square
granted Capital Growth a security interest in the Blocked Account
until April 21, 1997 (which may be extended), to secure certain of
Union Square's obligations to Capital Growth, some of which may be
affected by the Cal Kan Litigation. Union Square will receive the
funds held therein, free from Capital Growth's security interest in
such funds, upon expiration or termination of the Non-Distribution
Agreement. Union Square is continuing its efforts to resolve the
Cal Kan Litigation.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND
EXHIBITS.
(b) The following unaudited pro forma financial information
gives effect to the Sale. The pro forma financial information is
presented for illustrative purposes only, and therefore is not
necessarily indicative of the operating results and financial
position that might have been achieved had the Sale occurred as
of an earlier date, nor is it necessarily indicative of operating
results and financial position which may occur in the future. A
pro forma unaudited balance sheet is provided as of September 30,
1996, giving effect to the Sale as though it had been consummated
on that date. As a result of the Cal Kan Litigation and the Non-
Distribution Agreement described above, substantial uncertainty
exists as to the amount and timing of any distributions to
partners of Union Square. THE PRO FORMA FINANCIAL INFORMATION
SET FORTH HEREIN DOES NOT GIVE EFFECT TO ANY AMOUNTS WHICH MIGHT
BE PAYABLE IN CONNECTION WITH THE CAL KAN LITIGATION OR ANY OTHER
CLAIM WHICH MAY ARISE.
UNION SQUARE HOTEL PARTNERS, L.P.
PRO FORMA BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Sept. 30, 1996 Pro Forma Sept 30, 1996
(Unaudited) Adjustments (adjusted)(f)
-------------- ----------- -------------
ASSETS
<S> <C> <C> <C>
Property held for disposition . . . . $ 96,076,204 $ (96,076,204)(a) $ 0
Cash and cash equivalents . . . . . . 3,469,909 124,486,000 (a)
(119,700,000)(b)
1,977,749 (e) 10,233,658
Replacement reserve receivable . . . 903,639 (903,639)(e) 0
Rent Receivable . . . . . . . . . . . 1,074,110 (1,074,110)(e) 0
Deferred charges, net of
accumulated amortization of
$4,195,084 in 1996 and
$3,849,203 in 1995. . . . . . . . . 400,946 (251,245)(a)
(149,701)(d) 0
------------ ------------- ------------
TOTAL ASSETS . . . . . . . . . . . . $101,924,808 $ (91,691,150) $ 10,233,658
LIABILITIES AND PARTNERS'
CAPITAL/(DEFICIT)
Liabilities:
Accounts payable and accrued
expenses . . . . . . . . . . . . $ 42,720 $ 42,720
Due to affiliates . . . . . . . . . 24,133 24,133
Mortgage loan payable . . . . . . . 70,000,000 (70,000,000)(b) 0
Accrued interest . . . . . . . . . 12,560,535 (10,027,930)(b)
(2,532,605)(c) 0
Deferred interest . . . . . . . . . 9,672,070 (9,672,070)(b) 0
Notes and loans -- affiliate. . . . 56,484,017 (30,000,000)(b)
(26,484,017)(c) 0
Loan payable -- Hyatt . . . . . . . 3,772,578 (3,772,578)(a) 0
------------ ------------- ------------
Total liabilities . . . . . . . $152,556,053 $(152,489,200) $ 66,853
Partners' Capital/(Deficit):
General Partner . . . . . . . . . . $ (1,189,532) $ 319,311 (a)
973,386 (c)
(1,497)(d) 101,668
Limited Partners . . . . . . . . . (49,441,713) 31,611,818 (a)
28,043,236 (c)
(148,204)(d) 10,065,137
------------ ------------- ------------
Total Partners'
Capital/(Deficit). . . . . . . . $(50,631,245) $ 60,798,050 $ 10,166,805
------------ ------------- ------------
TOTAL LIABILITIES AND PARTNERS'
CAPITAL/(DEFICIT) . . . . . . . . . . $101,924,808 $ (91,691,150) $ 10,233,658
</TABLE>
UNION SQUARE HOTEL PARTNERS, L.P.
NOTES TO PRO FORMA FINANCIAL DATA
(UNAUDITED)
The unaudited pro forma balance sheet as of September
30, 1996 reflects the Sale. The costs to sell the Hotel were
estimated by the general partner (the "General Partner") of Union
Square and are expected to range between $2.4 and $3.0 million,
which amount includes a reserve for closing adjustments. The
remaining cash in Union Square, after satisfaction of Union
Square liabilities, is assumed to be distributed in accordance
with the Second Amended and Restated Agreement of Limited
Partnership of Union Square, dated as of September 1, 1986, which
states that 99% will be distributed to holders ("Unitholders") of
the economic and certain other rights attributable to the limited
partnership interests in Union Square and 1% will be distributed
to the General Partner, reflecting the General Partner's 1%
economic interest in Union Square.
NOTES TO PRO FORMA ADJUSTMENTS:
(a) To record the sale of the Hotel reflecting the removal of
the property held for disposition and related deferred
charges, the receipt of net sale proceeds, the assumption of
the loan payable to Hyatt and the allocation of the gain to
the General Partners and Unitholders as follows:
Sale price . . . . . . . . . . . . . . . . $126,900,000
Estimated closing costs . . . . . . . . . . 2,414,000
------------
Net cash proceeds . . . . . . . . . . . . . 124,486,000
Assumption of loan payable to Hyatt . . . . 3,772,578
Net sales proceeds . . . . . . . . . . . . 128,258,578
Property held for disposition . . . . . . . (96,076,204)
Deferred charges . . . . . . . . . . . . . (251,245)
------------
Gain on sale . . . . . . . . . . . . . . . $ 31,931,129
============
Allocated as follows:
Unitholders . . . . . . . . . . . . . . . . $ 31,611,818
General Partner . . . . . . . . . . . . . . 319,311
------------
$ 31,931,129
============
(b) To reflect the payment of the mortgage indebtedness,
pursuant to the agreements discussed herein, as follows:
Mortgage loan payable . . . . . . . . . . . $ 70,000,000
Accrued interest . . . . . . . . . . . . . 10,027,930
Deferred interest . . . . . . . . . . . . . 9,672,070
Notes and loans -- affiliate. . . . . . . . 30,000,000
------------
$119,700,000
(c) To reflect the debt forgiveness and related allocation to
the General Partner and Unitholders as follows:
Notes and loans -- affiliate. . . . . . . . $ 26,484,017
Accrued interest . . . . . . . . . . . . . 2,532,605
------------
$ 29,016,622
============
Allocated as follows:
Unitholders . . . . . . . . . . . . . . . . $ 28,043,236
General Partner . . . . . . . . . . . . . . 973,386
------------
$ 29,016,622
============
(d) To reflect the write-off of deferred charges associated with
the mortgages, notes and loans totalling $149,701 and the
related allocation to the General Partner and Unitholders as
follows:
Unitholders . . . . . . . . . . . . . . . . $ 148,204
General Partner . . . . . . . . . . . . . . 1,497
------------
$ 149,701
============
(e) To reflect the collection of the rent receivable and the
receipt of Union Square's portion of the replacement reserve
from Hyatt.
(f) The remaining cash, net of accounts payable and accrued
expenses and due to affiliates, will be distributed to the
General Partner and Unitholders in accordance with the
ending capital balances.
(c) Exhibits.
Exhibit
Number Description
10.1 Purchase and Sale Agreement and Joint Escrow
Instructions, dated as of November 4, 1996,
between Union Square and Buyer, incorporated
by reference from Union Square's Schedule 14A
filed with the Securities and Exchange
Commission on November 27, 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 hereunto duly authorized.
UNION SQUARE HOTEL PARTNERS, L.P.
By: UNION SQUARE/GP CORP.
Date: February 27, 1997 By: /s/ Jeffrey C. Carter
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Name: Jeffrey C. Carter
Title: President, Director and
Chief Financial Officer
