<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________________ to ______________________
Commission file number 0-19123
FOGELMAN MORTGAGE L.P. I
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Tennessee 62-1317805
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
One Seaport Plaza, New York, New York 10292-0116
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 214-1016
Securities registered pursuant to Section 12(g) of the Act:
Depositary Units
- --------------------------------------------------------------------------------
Title of class
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes CK 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. [ CK ]
DOCUMENTS INCORPORATED BY REFERENCE
Amended and Restated Certificate and Agreement of Limited Partnership dated
November 12, 1986, included as part of the Registration Statement (File No.
33-8596) filed with the Securities and Exchange Commission on November 26, 1986
pursuant to Rule 424(b) under the Securities Act of 1933, as amended on December
24, 1992, is incorporated by reference into Part IV of this Annual Report on
Form 10-K
Annual Report to Unitholders for the year ended December 31, 1995 is
incorporated by reference into Parts I, II and IV of this Annual Report on Form
10-K
Index to exhibits can be found on pages 8 through 10.
<PAGE>
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
Table of Contents
<TABLE>
<S> <C> <C>
PART I PAGE
Item 1 Business......................................................................... 3
Item 2 Properties....................................................................... 4
Item 3 Legal Proceedings................................................................ 4
Item 4 Submission of Matters to a Vote of Unitholders................................... 4
PART II
Item 5 Market for Registrant's Units and Related Unitholder 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...................................... 6
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure..................................................................... 6
PART III
Item 10 Directors and Executive Officers of the Registrant............................... 6
Item 11 Executive Compensation........................................................... 7
Item 12 Security Ownership of Certain Beneficial Owners and Management................... 7
Item 13 Certain Relationships and Related Transactions................................... 7
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
Financial Statements and Financial Statement Schedules........................... 8
Exhibits......................................................................... 8
Reports on Form 8-K.............................................................. 10
SIGNATURES................................................................................. 13
</TABLE>
2
<PAGE>
PART I
Item 1. Business
General
Fogelman Mortgage L.P. I (the ``Registrant''), a Tennessee limited
partnership, was formed on September 4, 1986 and will terminate on December 31,
2016 unless terminated sooner under the provisions of the Second Amendment to
Amended and Restated Certificate and Agreement of Limited Partnership (the
``Partnership Agreement''). The Registrant was formed to invest in mortgage
loans with the proceeds raised from the initial sale of 54,200 depositary units
(``Units''). The Registrant invested in two mortgage loans (the ``Mortgage
Loans'') which provided construction and permanent financing for the development
of two multi-family residential apartment complexes. The Registrant's fiscal
year for book and tax purposes ends on December 31.
The Registrant is engaged solely in the business of investing in mortgage
loans; therefore, presentation of industry segment information is not
applicable. For more information regarding the Registrant's operations, see Item
7 Management's Discussion and Analysis of Financial Condition and Results of
Operations.
General Partner
The general partner of the Registrant is Prudential-Bache Properties, Inc.
(``PBP'' or the ``General Partner'').
Mortgage Loans
The Registrant holds first mortgages on two properties, Pointe Royal
apartments and Westmont apartments (individually, a ``Property'' and
collectively, the ``Properties''). The Pointe Royal apartments were financed by
the ``Royal View Loan'' and the Westmont apartments were financed by the
``Chesterfield Loan.''
The Pointe Royal project, which secures the Royal View Loan, is located in
Overland Park, Kansas and is a townhouse apartment community consisting of 52
buildings on approximately 35 acres of land. As of December 31, 1995, the
monthly rents at the Pointe Royal project range from $560 to $875.
The Westmont project, which secures the Chesterfield Loan, is located in
Chesterfield, Missouri and is an apartment community consisting of 25 buildings
on approximately 58 acres of land. As of December 31, 1995, the monthly rents at
the Westmont project range from $560 to $790.
<TABLE>
<CAPTION>
Information on
Underlying Properties
---------------------------------------
Original Interest Average
Amount of Rate on Average Monthly
Mortgage Mortgage Maturity Occupancy Rental Rental Units
Property Closing Date Loan Loan Date Rates Rates Available
- ---------------- ---------------- ----------- ------------ --------- --------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Pointe Royal
Overland Park,
Kansas April 23, 1987 $22,745,000 9.5% 1999 98.3% $742 437
Westmont
Chesterfield,
Missouri July 8, 1987 23,320,000 9.5 1999 96.2 664 489
- ---------------
Average occupancy and rental rates are for the twelve months ended December 31, 1995.
</TABLE>
The interest pay rate has been modified and is equal to the net property cash
flow generated by the respective Properties payable monthly (7.7% for 1995),
with the difference between the amount actually paid and the original pay rate
of 9.5% per annum being accounted for in a separate account for each Property,
which itself bears interest at 9.5% per annum (``Unpaid Interest''). The
Mortgage Loans require
3
<PAGE>
<PAGE>
current payments of interest only with balloon payments of the entire principal
and Unpaid Interest amounts due from sale or refinancing proceeds or upon
maturity. The ultimate collectibility of the Unpaid Interest as well as the full
principal of the Mortgage Loans will depend upon the value of the underlying
properties which are currently estimated, based on third party appraisals, to be
less than the amounts due. However, the estimated property values exceed the
Registrant's carrying amount of the Mortgage Loans. A full appraisal for both
properties was obtained in 1990 which used the cost, sales comparison and income
capitalization approaches to value. These reports were subsequently updated via
limited appraisal reports in 1991, 1992 and 1993. Limited appraisal reports
consist of an update of the income capitalization approach used to determine a
property's market value. The values of Pointe Royal and Westmont estimated in
the limited appraisal reports were $22,400,000 and $19,000,000, respectively, as
of December 1, 1993.
Following is the interest received from each of the Registrant's Mortgage
Loans as a percentage of total interest received and the equity income on the
underlying properties as a percentage of total equity income:
<TABLE>
<CAPTION>
Interest Received Equity Income
---------------------- ----------------------
1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Pointe Royal 49.4% 36.7% 49.4% 46.8% 41.2% 50.4%
Westmont 50.6% 63.3% 50.6% 53.2% 58.8% 49.6%
</TABLE>
For summary financial statements of the underlying properties, see Note G to
the financial statements in the Registrant's Annual Report to Unitholders for
the year ended December 31, 1995 (``Registrant's Annual Report'') which is filed
as an exhibit hereto.
Competition
The General Partner has formed various entities to engage in businesses which
may be competitive with the Registrant. Both of the Properties collateralizing
the Mortgage Loans are located in markets where the property manager manages
other apartment complexes.
The Registrant's business is affected by competition to the extent that the
underlying properties from which it derives interest payments are subject to
competition from neighboring properties. The Westmont apartments are located in
the St. Louis metropolitan area and the Pointe Royal apartments are located in
the Kansas City metropolitan area. The Properties' occupancy and rental rates
are comparable to their competitors. There are new complexes under construction
with expected completion dates during 1996 and 1997 that could become future
competitors in Pointe Royal's market.
Employees
The Registrant has no employees. Management and administrative services for
the Registrant are performed by the General Partner and its affiliates pursuant
to the Partnership Agreement. The General Partner receives compensation and
reimbursement of expenses in connection with such activities as described in
Sections 9 and 10 of the Partnership Agreement. See Note E to the financial
statements in the Registrant's Annual Report which is filed as an exhibit
hereto.
Item 2. Properties
The Registrant does not own or lease any property.
Item 3. Legal Proceedings
This information is incorporated by reference to Note F to the financial
statements in the Registrant's Annual Report which is filed as an exhibit
hereto.
Item 4. Submission of Matters to a Vote of Unitholders
None
4
<PAGE>
PART II
Item 5. Market for Registrant's Units and Related Unitholder Matters
As of March 1, 1996 there were 5,553 holders of record owning 54,200 Units. A
significant secondary market for the Units has not developed and it is not
expected that one will develop in the future. There are also certain
restrictions set forth in the Partnership Agreement limiting the ability of a
Unitholder to transfer Units. Consequently, holders of Units may not be able to
liquidate their investments in the event of an emergency or for any other
reason.
The following per Unit cash distributions were paid to Unitholders during the
following calendar quarters.
<TABLE>
<CAPTION>
Quarter Ended 1995 1994
<S> <C> <C>
- ------------------- ------- -------
March 31 $13.75 $13.75
June 30 13.75 13.75
September 30 15.00 13.75
December 31 15.00 13.75
</TABLE>
There are no material legal restrictions upon the Registrant's present or
future ability to make distributions in accordance with the provisions of the
Partnership Agreement. Cash distributions paid in 1995 were funded from current
operations. Approximately $1,434,000 and $1,231,000 of the distributions paid to
Unitholders during 1995 and 1994, respectively, represent a return of capital on
a generally accepted accounting principles (GAAP) basis. The return of capital
on a GAAP basis is calculated as Unitholder distributions less net income
allocated to Unitholders. The Registrant currently expects that cash
distributions will continue to be paid in the foreseeable future from cash
generated by operations, which may be supplemented by previously undistributed
cash from operations. For discussion of other factors that may affect future
distributions, see Management's Discussion and Analysis of Financial Condition
and Results of Operations on pages 10 through 11 of the Registrant's Annual
Report which is filed as an exhibit hereto.
Item 6. Selected Financial Data
The following table presents selected financial data of the Registrant. This
data should be read in conjunction with the financial statements of the
Registrant and the notes thereto on pages 2 through 9 of the Registrant's Annual
Report which is filed as an exhibit hereto.
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Equity income from the
underlying properties $ 2,166,858 $ 2,267,243 $ 2,082,554 $ 1,851,372 $ 1,321,026
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Legal settlement $ -- $ -- $ -- $(2,152,000) $ --
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) $ 1,929,656 $ 1,997,698 $ 1,773,686 $ (685,682) $ 941,450
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) per Unit $ 31.04 $ 32.28 $ 28.19 $ (16.73) $ 12.99
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total assets $29,783,810 $31,191,034 $32,349,343 $33,668,524 $37,127,445
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total Unitholder
distributions $ 3,116,500 $ 2,981,000 $ 2,879,387 $ 2,511,505 $ 2,303,360
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Unitholder
distributions per Unit $ 57.50 $ 55.00 $ 53.13 $ 46.34 $ 42.50
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This information is incorporated by reference to pages 10 and 11 of the
Registrant's Annual Report which is filed as an exhibit hereto.
5
<PAGE>
<PAGE>
Item 8. Financial Statements and Supplementary Data
The financial statements are incorporated by reference to pages 2 through 9
of the Registrant's Annual Report which is filed as an exhibit hereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
There are no directors or executive officers of the Registrant. The
Registrant is managed by the General Partner.
The Registrant, the Registrant's General Partner and its directors and
executive officers, and any persons holding more than ten percent of the
Registrant's Units are required to report their initial ownership of such Units
and any subsequent changes in that ownership to the Securities and Exchange
Commission on Forms 3, 4 and 5. Such executive officers, directors and
Unitholders who own greater than ten percent of the Registrant's Units are
required by Securities and Exchange Commission regulations to furnish the
Registrant with copies of all Forms 3, 4 or 5 they file. All of these filing
requirements were satisfied on a timely basis. In making these disclosures, the
Registrant has relied solely on written representations of the General Partners'
directors and executive officers and Unitholders who own greater than ten
percent of the Registrant's Units or copies of the reports they have filed with
the Securities and Exchange Commission during and with respect to its most
recent fiscal year.
The directors and executive officers of PBP and their positions with regard
to managing the Registrant are as follows:
<TABLE>
<CAPTION>
Name Position
<S> <C>
Thomas F. Lynch, III President, Chief Executive Officer,
Chairman of the Board of Directors and Director
Barbara J. Brooks Vice President--Finance and Chief Financial Officer
Eugene D. Burak Vice President and Chief Accounting Officer
Chester A. Piskorowski Vice President
Frank W. Giordano Director
Nathalie P. Maio Director
</TABLE>
THOMAS F. LYNCH, III, age 37, is the President, Chief Executive Officer,
Chairman of the Board of Directors and a Director of PBP. He is a Senior Vice
President of Prudential Securities Incorporated (``PSI''), an affiliate of PBP.
Mr. Lynch also serves in various capacities for other affiliated companies. Mr.
Lynch joined PSI in November 1989.
BARBARA J. BROOKS, age 47, is the Vice President--Finance and Chief Financial
Officer of PBP. She is a Senior Vice President of PSI. Ms. Brooks also serves in
various capacities for other affiliated companies. She has held several
positions within PSI since 1983. Ms. Brooks is a certified public accountant.
EUGENE D. BURAK, age 50, is a Vice President of PBP. He is a First Vice
President of PSI. Prior to joining PSI in September 1995, he was a management
consultant for three years and was with Equitable Capital Management Corporation
from March 1990 to May 1992. Mr. Burak is a certified public accountant.
CHESTER A. PISKOROWSKI, age 52, is a Vice President of PBP. He is a Senior
Vice President of PSI and is the Senior Manager of the Specialty Finance Asset
Management area. Mr. Piskorowski has held several positions within PSI since
April 1972. Mr. Piskorowski is a member of the New York and Federal Bars.
FRANK W. GIORDANO, age 53, is a Director of PBP. He is a Senior Vice
President of PSI and an Executive Vice President and General Counsel of
Prudential Mutual Fund Management, Inc., an affiliate of
6
<PAGE>
<PAGE>
PSI. Mr. Giordano also serves in various capacities for other affiliated
companies. He has been with PSI since July 1967.
NATHALIE P. MAIO, age 45, is a Director of PBP. She is a Senior Vice
President and Deputy General Counsel of PSI and supervises non-litigation legal
work for PSI. She joined PSI's Law Department in 1983; presently, she also
serves in various capacities for other affiliated companies.
James M. Kelso ceased to serve as President, Chief Executive Officer,
Chairman of the Board of Directors and Director effective June 30, 1995.
Effective June 30, 1995, Thomas F. Lynch, III was elected President, Chief
Executive Officer, Chairman of the Board of Directors and Director. Robert J.
Alexander ceased to serve as Vice President effective August 25, 1995. Eugene D.
Burak was elected Vice President effective October 9, 1995.
There are no family relationships among any of the foregoing directors or
officers. All of the foregoing officers and/or directors have indefinite terms.
Item 11. Executive Compensation
The Registrant does not pay or accrue any fees, salaries or any other form of
compensation to directors and officers of the General Partner for their
services. Certain officers and directors of the General Partner receive
compensation from affiliates of the General Partner, not from the Registrant,
for services performed for various affiliated entities, which may include
services performed for the Registrant; however, the General Partner believes
that any compensation attributable to services performed for the Registrant is
immaterial. See Item 13 Certain Relationships and Related Transactions for
information regarding reimbursement to the General Partners for services
provided to the Registrant.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 1, 1996, no director or officer of the General Partner owns
directly or beneficially any interest in the voting securities of the General
Partner.
As of March 1, 1996, no director or officer of the General Partner owns
directly or beneficially any of the Units issued by the Registrant.
As of March 1, 1996, no beneficial owners who are neither a director nor
officer of the General Partner beneficially own more than five percent (5%) of
the Units issued by the Registrant.
Item 13. Certain Relationships and Related Transactions
The Registrant has and will continue to have certain relationships with the
General Partner and its affiliates. However, there have been no direct financial
transactions between the Registrant and the directors or officers of the General
Partner.
Reference is made to Notes A and E to the financial statements in the
Registrant's Annual Report which is filed as an exhibit hereto, which identify
the related parties and discuss the services provided by these parties and the
amounts paid or payable for their services.
7
<PAGE>
PART IV
<TABLE>
<CAPTION>
Page in
Annual Report
<S> <C> <C>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements and Independent Auditors' Report--Incorporated by
reference to the Registrant's Annual Report which is filed as an exhibit
hereto
2
Independent Auditors' Report
Financial Statements:
3
Statements of Financial Condition--December 31, 1995 and 1994
4
Statements of Operations--Three years ended December 31, 1995
4
Statements of Changes in Partners' Capital--Three years ended
December 31, 1995
5
Statements of Cash Flows--Three years ended December 31, 1995
6
Notes to Financial Statements
2. Financial Statement Schedule and Independent Auditors' Report
Independent Auditors' Report on Schedule
Schedule:
IV--Mortgage Loans on Real Estate--December 31, 1995
Separate Financial Statements for Pointe Royal Project and Westmont Project
Financial Statements:
Independent Auditors' Report
Statements of Assets and Liabilities--December 31, 1995 and 1994
Statements of Revenues and Expenses--Three years ended December 31, 1995
Statements of Cash Flows--Three years ended December 31, 1995
Notes to Financial Statements
All other schedules have been omitted because they are not applicable or
the required information is included in the financial statements or notes
thereto.
3. Exhibits
Description:
3.1 Amended and Restated Certificate and Agreement of Limited Partnership dated
November 12, 1986 (incorporated by reference to Registration Statement No.
33-8596 dated November 24, 1986)
3.2 Second Amendment to Amended and Restated Certificate and Agreement of
Limited Partnership dated December 24, 1992 (incorporated by reference to
the Registrant's Annual Report on Form 10-K for the year ended December 31,
1992)
10.1 Loan Agreement, as amended, dated July 7, 1987, between FPI Royal View,
Ltd., L.P. and the Registrant (incorporated by reference to the Registrant's
Current Report on Form 8-K filed July 8, 1987)
10.2 Loan Agreement dated July 7, 1987, between FPI Chesterfield, L.P. and the
Registrant (incorporated by reference to the Registrant's Current Report on
Form 8-K filed July 8, 1987)
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
10.3 Promissory Note Modification Agreement dated April 23, 1987 between FPI
Royal View, Ltd., L.P., The Merchants Bank and the Registrant (incorporated
by reference to the Registrant's Current Report on Form 8-K filed April 23,
1987)
10.4 Promissory Note Modification Agreement dated as of January 1, 1990 between
FPI Chesterfield, L.P. and the Registrant (incorporated by reference to the
Registrant's Report on Form 8-K dated January 16, 1991)
10.5 Amendment to Loan Agreement dated as of January 1, 1990 between the
Registrant and FPI Chesterfield, L.P. (incorporated by reference to the
Registrant's Current Report on Form 8-K dated January 16, 1991)
10.6 Second Amendment to Loan Agreement between the Registrant and FPI Royal
View, Ltd., L.P. (incorporated by reference to the Registrant's Current
Report on Form 8-K dated January 16, 1991)
10.7 First Amendment to Deed of Trust, Assignment of Rents and Leases and
Security Agreement dated as of January 1, 1990 between FPI Chesterfield,
L.P. and the Registrant (incorporated by reference to the Registrant's
Current Report on Form 8-K dated January 16, 1991)
10.8 Second Promissory Note Modification Agreement dated as of January 1, 1990
between FPI Royal View, Ltd., L.P. and the Registrant (incorporated by
reference to the Registrant's Current Report on Form 8-K dated January 16,
1991)
10.9 First Amendment to Mortgage and Security Agreement Modification Agreement
dated as of January 1, 1990 between FPI Royal View Ltd., L.P. and the
Registrant (incorporated by reference to the Registrant's Current Report on
Form 8-K dated January 16, 1991)
10.10 Guaranty dated as of July 8, 1987 by Avron B. Fogelman (``ABF'') in favor of
the Registrant with respect to the indebtedness of FPI Chesterfield, L.P.
(incorporated by reference to the Registrant's Current Report on Form 8-K
dated January 16, 1991)
10.11 Guaranty dated as of April 23, 1987 by ABF in favor of the Registrant with
respect to the indebtedness of FPI Royal View Ltd., L.P. (incorporated by
reference to the Registrant's Current Report on Form 8-K dated January 16,
1991)
10.12 Assignment of Partnership Interest by Fogelman Assignor L.P., Inc. to
Prudential-Bache Investor Services II, Inc. dated December 14, 1992
(incorporated by reference to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1992)
10.13 Assignment of Partnership Interest by Fogelman Mortgage Partners I, Inc. to
Prudential-Bache Properties, Inc. dated December 14, 1992 (incorporated by
reference to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992)
10.14 Assignment of Partnership Interest by ABF to Prudential-Bache Properties,
Inc. dated December 14, 1992 (incorporated by reference to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1992)
10.15 Second Amendment to Loan Agreement dated as of December 24, 1992 between the
Registrant and FPI Chesterfield, L.P. (incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1992)
10.16 Release, Discharge and Cancellation of Guaranty between the Registrant and
Avron B. Fogelman dated December 24, 1992 (incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1992)
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
10.17 Third Amendment to Loan Agreement dated December 24, 1992 between the Regis-
trant and FPI Royal View, Ltd., L.P. (incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1992)
13.1 Registrant's Annual Report to Unitholders for the year ended December 31,
1995 (with the exception of the information and data incorporated by
reference in Items 3, 7 and 8 of this Annual Report on Form 10-K, no other
information or data appearing in the Registrant's Annual Report is to be
deemed filed as part of this report)
19.1 First Amendment to Amended and Restated Certificate and Agreement of Limited
Partnership dated December 31, 1991 (incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1992)
19.2 Amended Stipulation of Settlement dated February 25, 1992 (incorporated by
reference to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992)
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the period covered by
this report.
</TABLE>
10
<PAGE>
(LOGO) Two World Financial Center Telephone: (212) 436-2000
New York, New York 10281-1414 Facsimile: (212) 436-5000
INDEPENDENT AUDITORS' REPORT
To the Partners of Fogelman Mortgage L.P. I
New York, New York
We have audited the financial statements of Fogelman Mortgage L.P. I (a
Tennessee Limited Partnership) as of December 31, 1995 and 1994, and for each
of the three years in the period ended December 31, 1995, and have issued our
report thereon dated February 12, 1996; such financial statements and report are
included in your 1995 Annual Report to Limited Partners and are incorporated
herein by reference. Our audits also included the financial statement schedule
of Fogelman Mortgage L.P. I, listed in Item 14. This financial statement
schedule is the responsibility of the General Partner. Our responsibility is
to express an opinion based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
Deloitte Touche
February 12, 1996
11
<PAGE>
FOGELMAN MORTGAGE L.P. I
Schedule IV--Mortgage Loans On Real Estate
December 31, 1995
MORTGAGE LOANS ON REAL ESTATE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Periodic
Final maturity payment Face amount of
Description Interest rate date terms Prior liens mortgage
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Royal View
First Mortgage Loan (A) 9.5%(C) 1999 (C) None $22,745,000
Chesterfield
First Mortgage Loan (B) 9.5%(C) 1999 (C) None 23,320,000
---------------
$46,065,000
---------------
---------------
<CAPTION>
Carrying amount of
Description mortgage (D)
- --------------------------------------------------------------
<S> <C>
Royal View
First Mortgage Loan (A) $ 13,642,509
Chesterfield
First Mortgage Loan (B) 13,485,101
------------------
$ 27,127,610
------------------
------------------
</TABLE>
(A) Multi-family residential apartment complex - Overland Park, Kansas
(B) Multi-family residential apartment complex - Chesterfield, Missouri
(C) The interest pay rate has been modified and is equal to the net property
cash flow generated by the respective Properties payable monthly (7.7% for
1995), with the difference between the amount actually paid and the original
pay rate of 9.5% per annum being accounted for in a separate account for
each Property, which itself bears interest at 9.5% per annum. The Mortgage
Loans require current payments of interest only with balloon payments of the
entire principal and Unpaid Interest amounts due from sale or refinancing
proceeds or upon maturity (the twelfth anniversary of the respective loan
closing dates). The Mortgage Loans may be prepaid in whole, but not in part,
upon the payment of a prepayment penalty equal to 5% of the outstanding
principal balance. Any such prepayment penalty will be in addition to any
contingent interest. The penalty decreases 1% per year after the sixth year.
There will be no prepayment penalty imposed in the eleventh or twelfth year.
(D) See Note C to the financial statements in the Registrant's Annual Report
which is filed as an exhibit hereto. No principal amount of the loans is
subject to delinquent interest because loans have been modified to a cash
flow basis.
12
<PAGE>
<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.
Fogelman Mortgage L.P. I
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
By: /s/ Eugene D. Burak Date: March 29, 1996
----------------------------------------
Eugene D. Burak
Vice President and Chief Accounting
Officer
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 (with respect to the General Partner) and on
the dates indicated.
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
By: /s/ Thomas F. Lynch, III Date: March 29, 1996
----------------------------------------
Thomas F. Lynch, III
President, Chief Executive Officer,
Chairman of the Board of Directors and
Director
By: /s/ Barbara J. Brooks Date: March 29, 1996
----------------------------------------
Barbara J. Brooks
Vice President-Finance and Chief
Financial Officer
By: /s/ Eugene D. Burak Date: March 29, 1996
----------------------------------------
Eugene D. Burak
Vice President
By: /s/ Frank W. Giordano Date: March 29, 1996
----------------------------------------
Frank W. Giordano
Director
By: /s/ Nathalie P. Maio Date: March 29, 1996
----------------------------------------
Nathalie P. Maio
Director
13
<PAGE>
(ICON) Audited Financial Statements
Pointe Royal Project
Years ended December 31, 1995, 1994, and 1993
with Report of Independent Auditors
(LOGO)
<PAGE>
Pointe Royal Project
Audited Financial Statements
Years ended December 31, 1995, 1994 and 1993
Contents
Report of Independent Auditors 1
Audited Financial Statements
Statements of Assets, Liabilities and Project Deficit 2
Statements of Revenues and Expenses and Changes in Project Deficit 3
Statements of Cash Flows 4
Notes to Financial Statements 5
<PAGE>
(LOGO) -1400 One Commerce Square -Phone: 901 526 1000
Memphis, Tennessee 38103
Report of Independent Auditors
To the Partners of
FPI Royal View, Ltd., L.P.
We have audited the accompanying statements of assets, liabilities and
project deficit of the Pointe Royal Project (the Project) as of
December 31, 1995 and 1994, and the related statements of revenues
and expenses and changes in project deficit and cash flows for the
years then ended. These financial statements are the responsibility
of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audits. The
financial statements of the Project for the year ended December
31, 1993 were audited by other auditors whose report dated January
28, 1994, expressed an unqualified opinion on those financial statements
and included an emphasis paragraph that described that the fair value of
the Project was less than the related principal and accrued interest
debt obligations.
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 1995 and 1994 financial statements referred to
above present fairly, in all material respects, the financial position
of the Project as of December 31, 1995 and 1994, and the results of
its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Ernst & Young LLP
January 27, 1996
1
<PAGE>
Pointe Royal Project
Statements of Assets, Liabilities and
Project Deficit
<TABLE>
<CAPTION>
December 31
1995 1994
<S> <C> <C>
Assets
Property, at cost $22,956,563 $23,091,008
Less accumulated depreciation (6,339,063) (5,710,142)
----------- ------------
16,617,500 17,380,866
Restricted funds and escrows 164,401 174,589
Cash 86,257 172,457
----------- ------------
Total assets $16,868,158 $17,727,912
----------- ------------
----------- ------------
Liabilities
Mortgage notes payable $23,808,000 $23,808,000
Due to FPI Royal View, Ltd., L.P. and
related entities 1,232,432 1,219,355
Accrued interest payable 3,171,596 2,405,075
Accrued real estate taxes 178,861 143,553
Security deposits 73,080 93,861
Other accrued expenses 35,335 127,558
----------- ------------
Total liabilities 28,499,304 27,797,402
Project deficit (11,631,146) (10,069,490)
----------- ------------
Total liabilities and project deficit $16,868,158 $17,727,912
----------- ------------
----------- ------------
</TABLE>
See accompanying notes.
2
<PAGE>
Pointe Royal Project
Statements of Revenues and Expenses and
Changes in Project Deficit
<TABLE>
<CAPTION>
Year ended December 31
1995 1994 1993
<S> <C> <C> <C>
Revenues
Rental income $ 3,615,886 $ 3,453,259 $3,228,609
Interest and other income 137,665 89,045 108,460
------------ ------------ ----------
3,753,551 3,542,304 3,337,069
Expenses
Operating expenses 1,686,854 1,823,285 1,521,286
------------ ------------ ----------
2,066,697 1,719,019 1,815,783
Interest 2,524,077 2,398,463 2,300,129
Depreciation 749,890 837,046 834,784
------------ ------------ ----------
Loss on disposal of property 354,386 -- --
------------ ------------ ----------
3,628,353 3,235,509 3,134,913
------------ ------------ ----------
Expenses in excess of revenues (1,561,656) (1,516,490) (1,319,130)
Project deficit at
beginning of year (10,069,490) (8,553,000) (7,233,870)
------------ ------------ ----------
Project deficit at end of year $(11,631,146) $(10,069,490) $(8,553,000)
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
See accompanying notes.
3
<PAGE>
Pointe Royal Project
Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31
1995 1994 1993
<S> <C> <C> <C>
Operating activities
Expenses in excess of revenues $(1,561,656) $(1,516,490) $(1,319,130)
Adjustments to reconcile
expenses in excess of
revenues to net cash
provided by operating
activities:
Depreciation 749,890 837,046 834,784
Loss on disposal of property 354,386 -- --
Decrease (increase) in
restricted funds and escrows 10,188 (51,786) (122,802)
Increase (decrease) in due
to FPI Royal View, Ltd.,
L.P. and related entities 13,077 (9,062) 28,736
Increase in accrued
interest payable 766,521 1,301,836 568,653
Increase (decrease) in accrued
real estate taxes 35,308 (7) 36,947
(Decrease) increase in
security deposits (20,781) 2,381 11,795
(Decrease) increase in
other accrued expenses (92,223) 77,331 17,551
----------- ---------- ---------
Net cash provided by
operating activities 254,710 641,249 56,534
Investing activities
Property additions (340,910) (481,971) (73,913)
----------- ---------- ---------
Net (decrease) increase in cash (86,200) 159,278 (17,379)
Cash at beginning of year 172,457 13,179 30,558
----------- ---------- ---------
Cash at end of year $ 86,257 $ 172,457 $13,179
----------- ---------- ---------
----------- ---------- ---------
</TABLE>
See accompanying notes.
4
<PAGE>
Pointe Royal Project
Notes to Financial Statements
December 31, 1995
1. Project Description
The Pointe Royal Project (the Project) is a 437 unit residential rental
property on 34.74 acres in Overland Park, Kansas. The Project is owned
by FPI Royal View, Ltd., L.P. (the Partnership), a Kansas limited
partnership. Avron B. Fogelman and Fogelman Enterprises, L.P. (FELP),
which is directly and indirectly owned by Avron B. Fogelman, are
general partners of the Partnership. FELP is also the sole limited
partner. Through December 24, 1992, Avron B. Fogelman was
also a general partner of Fogelman Mortgage L.P. I (FMLP) which
holds the first mortgage note on the Project's property (see Note
4). However, as of December 24, 1992, pursuant to settlement of
certain claims brought by investors in FMLP, Mr.
Fogelman and an affiliated entity withdrew as general partners
from FMLP (see Note 4).
Units are leased under short-term operating leases with monthly
rentals due in advance. The Project, existing and future leases,
and rents have been assigned as collateral for the related
mortgage notes (see Note 4).
2. Summary of Significant Accounting Policies
Basis of Reporting
The accompanying financial statements are prepared on the accrual
basis of accounting and represent the cumulative
operations of the Project beginning with the inception of the FMLP
loan agreement on April 23, 1987 (see Note 4).
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ
from those estimates.
Statements of Cash Flows
The Project made payments of $1,757,556, $1,096,627, and $1,731,476
for interest expense during the years ended December 31, 1995, 1994,
and 1993, respectively.
5
<PAGE>
Pointe Royal Project
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Restricted Funds and Escrows
Included in restricted funds and escrows are security deposits and
real estate tax escrow deposits.
Income Taxes
No income taxes are paid by the Project or the Partnership since
the results of operations are allocated directly to the partners.
Any income tax liability or benefit resulting therefrom is the
responsibility of the partners rather than the Partnership or
the Project.
3. Property
Property is stated at cost. Depreciation is provided for financial
statement reporting purposes using the straight-line method over
estimated useful lives as follows:
<TABLE>
<CAPTION>
Useful
Life 1995 1994
<S> <C> <C> <C>
Land N/A 3,496,000 $3,496,000
Buildings 30 years 16,401,018 16,635,731
Land improvements 15 years 1,618,401 1,618,401
Furniture and fixtures 5-7 years 1,441,144 1,340,876
----------- -----------
$22,956,563 $23,091,008
</TABLE>
Construction period interest incurred during Project development
amounted to $1,347,428 and has been capitalized as a component of
property costs.
4. Mortgage Notes Payable
The Project is financed with nonrecourse mortgage notes
payable consisting of the following at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
Accrued Accrued
Interest Interest
Principal Payable Principal Payable
<S> <C> <C> <C> <C>
First mortgage note payable
to FMLP $22,745,000 $2,807,878 $22,745,000 $2,187,151
Second mortgage note
payable to Avron
B. Fogelman 1,063,000 363,718 1,063,000 217,924
----------- ---------- ----------- ----------
$23,808,000 $3,171,596 $23,808,000 $2,405,075
</TABLE>
6
<PAGE>
Pointe Royal Project
Notes to Financial Statements (continued)
The first mortgage note was amended effective January 1, 1990 pursuant to
a consensual reorganization of the business affairs of Avron B.
Fogelman and related entities. The note, as amended, bears interest
at the basic interest rate of 9.50% per annum and is payable monthly
with the principal balance due April 23, 1999. If Property Cash Flow,
as defined, is insufficient to pay the basic interest, then the
interest paid shall be equal to the Property Cash Flow. Such insufficiency
between basic interest at 9.50% and Property Cash Flow is accrued and
bears interest at 9.50%, compounded monthly. If Property Cash Flow
exceeds the basic interest, then the excess shall be applied against
any unpaid accrued interest until all such accrued interest has been
paid. Thereafter, any excess Property Cash Flow shall be paid to FMLP
to be held in escrow as additional collateral for future interest
obligations. If Property Cash Flow exceeds the basic interest for
six consecutive months after payment of all accrued basic interest,
then cash held as additional collateral shall be paid as contingent
interest as provided under the original terms of the mortgage note.
Contingent interest is payable from any Property Cash Flow, sale or
refinancing proceeds received after January 1, 1989 as follows: (a)
75% thereof until the total interest (basic interest plus contingent
interest) paid results in a 10.75% yield on the note; (b) 50% of the
remaining balance until the total interest paid results in a 12.75%
yield on the note; and (c) 25% of the remaining balance thereof.
7
<PAGE>
Pointe Royal Project
Notes to Financial Statements (continued)
4. Mortgage Notes Payable (continued)
Under the first mortgage note agreement, effective January 1, 1994,
the principal may be repaid in whole, but not in part, upon the payment
of a prepayment penalty equal to 5% of the outstanding principal balance.
Thereafter, prepayment penalties decline 1% annually.
During 1992, Mr. Fogelman, FMLP and other defendants settled litigation
with certain investors in FMLP, the holder of the Project's first
mortgage note. Pursuant thereto, funds placed by Mr. Fogelman in
trust to satisfy his guarantee related to the mortgage note were
released to FMLP and applied as payment of accrued basic interest.
Mr. Fogelman was then released from his guarantee on the note and Mr.
Fogelman and an affiliated entity withdrew as general partners from
FMLP. Accordingly, the first mortgage note payable to FMLP is solely
a nonrecourse note collateralized by the Project. The Partnership's
ability to repay the note is dependent upon sufficient cash flow from
operations, or from the proceeds from a sale or refinancing of the
Project. At December 31, 1995 and 1994, management's estimate of the
fair value of the Project exceeded the net book value; however, that
estimate of fair value was less than the principal and accrued
interest obligations on the note. Accordingly, the proceeds received
from a current sale or refinancing of the Project would be insufficient
to satisfy the note obligations. However, at this time, management has
no plans or intentions to dispose of the Project.
In accordance with the transfer of funds to FMLP discussed in the
preceding paragraph, the Project recorded a second mortgage payable
to Mr. Fogelman in the amount of $1,063,000 which was the amount
of funds transferred to FMLP. The note bears interest at the prime
rate plus 2%, adjustable monthly (10.5% at December 31, 1995 and
1994), and the principal and accrued interest mature April 23,
1999. The note and interest thereon are subordinate to the note
and related interest payable to FMLP discussed above. The note
may be prepaid, subject to the subordination provisions above,
at any time without penalty.
5. Related Party Transactions
Fogelman Management Co. (FMC) (which is owned by Mr. Fogelman) manages the
Project and charges management fees equal to 5% of operating revenues as
defined in the management agreement. Management fees paid by the Project
were approximately $188,000, $177,000, and $167,000 for 1995, 1994, and
1993, respectively.
8
<PAGE>
Pointe Royal Project
Notes to Financial Statements (continued)
5. Related Party Transactions (continued)
FMC obtains insurance coverage for properties it manages and allocates
the related costs proportionately among the properties. Insurance
policies covering the Project are placed by an affiliate of FMC.
Commissions are earned by the affiliate as agent. The affiliated
insurance agency was sold by Mr. Fogelman on December 27, 1995.
6. Fair Values of Financial Instruments
The following methods and assumptions were used by the Project's management
in estimating fair value disclosures for financial instruments:
The carrying amounts reported in the balance sheet for restricted
funds and escrows, Due to FPI Royal View, Ltd., L. P. and related
entities, and other accrued expenses approximate fair value.
Management of the Project has determined that it is not practicable
to estimate the fair value of the first mortgage note payable to FMLP.
Due to the unique nature of the repayment structure of this note and
related accrued interest payable, any estimate of fair value would be
very subjective due to lack of reasonable estimates of future principal
and interest payments, and the related timing of those payments (see
Note 4). In addition, management of the Project has determined
that it is not practicable to estimate the fair value of the second
mortgage note payable to Mr. Fogelman since the obligation is
subordinate to the first mortgage (see Note 4).
7. Reclassifications
Certain reclassifications have been made to the 1993 financial
statements to conform with the 1995 and 1994 presentation.
9
<PAGE>
(ICON) Audited Financial Statements
Westmont Project
Years ended December 31, 1995, 1994, and 1993
with Report of Independent Auditors
(LOGO)
<PAGE>
Westmont Project
Audited Financial Statements
Years ended December 31, 1995, 1994 and 1993
Contents
Report of Independent Auditors 1
Audited Financial Statements
Statements of Assets, Liabilities and Project Deficit 2
Statements of Revenues and Expenses and Changes in Project Deficit 3
Statements of Cash Flows 4
Notes to Financial Statements 5
<PAGE>
(LOGO) -1400 One Commerce Square -Phone: 901 526 1000
Memphis, Tennessee 38103
Report of Independent Auditors
To the Partners of
FPI Chesterfield, L.P.
We have audited the accompanying statements of assets, liabilities and
project deficit of the Westmont Project (the Project) as of
December 31, 1995 and 1994, and the related statements of revenues
and expenses and changes in project deficit and cash flows for the
years then ended. These financial statements are the responsibility
of the Project's management. Our responsibility is to express an
opinion on these financial statements based on our audits. The
financial statements of the Project for the year ended December
31, 1993 were audited by other auditors whose report dated January
28, 1994, expressed an unqualified opinion on those financial statements
and included an emphasis paragraph that described that the fair value of
the Project was less than the related principal and accrued interest
debt obligations.
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 1995 and 1994 financial statements referred to
above present fairly, in all material respects, the financial position
of the Project as of December 31, 1995 and 1994, and the results of
its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Ernst & Young LLP
January 27, 1996
1
<PAGE>
Westmont Project
Statements of Assets, Liabilities and
Project Deficit
<TABLE>
<CAPTION>
December 31
1995 1994
<S> <C> <C>
Assets
Property, at cost $ 22,932,409 $ 22,809,853
Less accumulated depreciation (6,815,000) (6,019,274)
16,117,409 16,790,579
Restricted funds and escrows 253,720 256,573
Cash 81,832 127,644
Total assets $ 16,452,961 $ 17,174,796
Liabilities
Mortgage notes payable $ 24,409,000 $ 24,409,000
Due to FPI Chesterfield, L.P.
and related entities 656,551 651,019
Accrued interest payable 4,539,535 3,648,173
Security deposits 116,910 125,605
Other accrued expenses 48,967 66,504
Total liabilities 29,770,963 28,900,301
Project deficit (13,318,002) (11,725,505)
Total liabilities and
project deficit $ 16,452,961 $ 17,174,796
</TABLE>
See accompanying notes.
2
<PAGE>
Westmont Project
Statements of Revenues and Expenses and
Changes in Project Deficit
<TABLE>
<CAPTION>
Year ended December 31
1995 1994 1993
<S> <C> <C> <C>
Revenues
Rental income $ 3,547,581 $ 3,464,423 $3,228,090
Interest and other income 161,780 191,927 209,900
3,709,361 3,656,350 3,437,990
Expenses
Operating expenses 1,812,435 1,463,865 1,577,629
1,896,926 2,192,485 1,860,361
Interest 2,693,697 2,606,536 2,527,438
Depreciation 795,726 910,448 896,137
3,489,423 3,516,984 3,423,575
Expenses in excess of revenues (1,592,497) (1,324,499) (1,563,214)
Project deficit at beginning
of year (11,725,505) (10,401,006) (8,837,792)
Project deficit at end
of year $(13,318,002) $(11,725,505) $(10,401,006)
</TABLE>
See accompanying notes.
3
<PAGE>
Westmont Project
Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31
1995 1994 1993
<S> <C> <C> <C>
Operating activities
Expenses in excess of revenues $(1,592,497) $(1,324,499) $(1,563,214)
Adjustments to reconcile
expenses in excess
of revenues to net cash
provided by operating
activities:
Depreciation 795,726 910,448 896,137
Decrease (increase)
in other assets 2,853 (141,955) (19,496)
Increase (decrease) in
due to FPI Chesterfield,
L.P. and related entities 5,532 (6,071) (6,866)
Increase in accrued
interest payable 891,362 712,218 753,824
(Decrease) increase in
security deposits (8,695) 2,056 37,304
(Decrease) increase
in other accrued
expenses (17,537) 27,374 (10,010)
Net cash provided by operating
activities 76,744 179,571 87,679
Investing activities
Property additions (122,556) (106,386) (80,172)
Net (decrease) increase in cash (45,812) 73,185 7,507
Cash at beginning of year 127,644 54,459 46,952
Cash at end of year $ 81,832 $ 127,644 $ 54,459
</TABLE>
See accompanying notes.
4
<PAGE>
Westmont Project
Notes to Financial Statements
December 31, 1995
1. Project Description
The Westmont Project (the Project) is a 489 unit residential rental
property on 57.65 acres in Chesterfield, Missouri. The Project is owned
by FPI Chesterfield, L.P. (the Partnership), a Missouri limited
partnership. Avron B. Fogelman and Fogelman Enterprises, L.P. (FELP),
which is directly and indirectly owned by Avron B. Fogelman, are
general partners of the Partnership. Avron B. Fogelman is also
the sole limited partner. Through December 24, 1992, Avron B. Fogelman
was also a general partner of Fogelman Mortgage L.P. I (FMLP) which
holds the first mortgage note on the Project's property (see Note
4). However, as of December 24, 1992, pursuant to settlement of
certain claims brought by investors in FMLP, Mr. Fogelman
and an affiliated entity withdrew as general partners
from FMLP (see Note 4).
Units are leased under short-term operating leases with monthly
rentals due in advance. The Project, existing and future leases,
and rents have been assigned as collateral for the related
mortgage notes (see Note 4).
2. Summary of Significant Accounting Policies
Basis of Reporting
The accompanying financial statements are prepared on the accrual
basis of accounting and represent the cumulative
operations of the Project beginning with the inception of the FMLP
loan agreement on July 8, 1987 (see Note 4).
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ
from those estimates.
Statements of Cash Flows
The Project made payments of $1,802,335, $1,894,318, and $1,773,614
for interest expense during the years ended December 31, 1995, 1994,
and 1993, respectively.
5
<PAGE>
Westmont Project
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Restricted Funds and Escrows
Included in restricted funds and escrows are security deposits and
real estate tax escrow deposits.
Income Taxes
No income taxes are paid by the Project or the Partnership since
the results of operations are allocated to the partners.
Any income tax liability or benefit resulting therefrom is the
responsibility of the partners rather than the Partnership or
Project.
3. Property
Property is stated at cost. Depreciation is provided for financial
statement reporting purposes using the straight-line method over
estimated useful service lives as follows:
<TABLE>
<CAPTION>
Useful
Life 1995 1994
<S> <C> <C> <C>
Land N/A $ 2,386,320 $2,386,320
Buildings 30 years 17,027,526 17,009,368
Land improvements 15 years 1,931,757 1,931,757
Furniture and fixtures 5-7 years 1,586,806 1,482,408
----------- -----------
$22,932,409 $22,809,853
</TABLE>
Construction period interest incurred during Project development
amounted to $1,358,694 and has been capitalized as a component of
property costs.
6
<PAGE>
Westmont Project
Notes to Financial Statements (continued)
4. Mortgage Notes Payable
The Project is financed with nonrecourse mortgage notes
payable consisting of the following at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
Accrued Accrued
Interest Interest
Principal Payable Principal Payable
<S> <C> <C> <C> <C>
First mortgage note payable
to FMLP $23,320,000 $4,166,920 $23,320,000 $3,424,919
Second mortgage note
payable to Avron
B. Fogelman 1,089,000 372,615 1,089,000 223,254
----------- ---------- ----------- ----------
$24,409,000 $4,539,535 $24,409,000 $3,648,173
</TABLE>
The first mortgage note was amended effective January 1, 1990 pursuant to
a consensual reorganization of the business affairs of Avron B.
Fogelman and related entities. The note, as amended, bears interest
at the basic interest rate of 9.50% per annum and is payable monthly
with the principal balance due July 1, 1999. If Property Cash Flow,
as defined, is insufficient to pay the basic interest, then the
interest paid shall be equal to the Property Cash Flow. Such insufficiency
between basic interest at 9.50% and Property Cash Flow is accrued and
bears interest at 9.50%, compounded monthly. If Property Cash Flow
exceeds the basic interest, the excess shall be applied against
any unpaid accrued interest until all such accrued interest has been
paid. Thereafter, any excess Property Cash Flow shall be paid to FMLP
to be held in escrow as additional collateral for future interest
obligations. If Property Cash Flow exceeds the basic interest for
six consecutive months after payment of all accrued basic interest,
then cash held as additional collateral shall be paid as contingent
interest as provided under the original terms of the mortgage note.
Contingent interest is payable from any Property Cash Flow, sale or
refinancing proceeds received after January 1, 1989 as follows: (a)
75% thereof until the total interest (basic interest plus contingent
interest) paid results in a 10.75% yield on the note; (b) 50% of the
remaining balance until the total interest paid results in a 12.75%
yield on the note; and (c) 25% of the remaining balance thereof.
Under the first mortgage note agreement, effective January 1, 1994,
the principal may be repaid in whole, but not in part, upon the payment
of a prepayment penalty equal to 5% of the outstanding principal balance.
Thereafter, prepayment penalties decline 1% annually.
7
<PAGE>
Westmont Project
Notes to Financial Statements (continued)
4. Mortgage Notes Payable (continued)
During 1992, Mr. Fogelman, FMLP and other defendants settled litigation
with certain investors in FMLP, the holder of the Project's first
mortgage note. Pursuant thereto, funds placed by Mr. Fogelman in
trust to satisfy his guarantee related to the mortgage note were
released to FMLP and applied as payment of accrued basic interest.
Mr. Fogelman was then released from his guarantee on the note and Mr.
Fogelman and an affiliated entity withdrew as general partners from
FMLP. Accordingly, the first mortgage note payable to FMLP is solely
a nonrecourse note collateralized by the Project. The Partnership's
ability to repay the note is dependent upon sufficient cash flow from
operations, or from the proceeds from a sale or refinancing of the
Project. At December 31, 1995 and 1994, management's estimate of the
fair value of the Project exceeded the net book value; however, that
estimate of fair value was less than the principal and accrued
interest obligations on the note. Accordingly, the proceeds received
from a current sale or refinancing of the Project would be insufficient
to satisfy the note obligations. However, at this time, management has
no plans or intentions to dispose of the Project.
In accordance with the transfer of funds to FMLP discussed in the
preceding paragraph, the Project recorded a second mortgage payable
to Mr. Fogelman in the amount of $1,089,000 which was the amount
of funds transferred to FMLP. The note bears interest at the prime
rate plus 2%, adjustable monthly (10.5% at December 31, 1995 and
1994), and the principal and accrued interest mature July 1,
1999. The note and interest thereon are subordinate to the note
and related interest payable to FMLP discussed above. The note
may be prepaid, subject to the subordination provisions above,
at any time without penalty.
Each month, the Project is required to deposit into an escrow account
one-twelfth of the Project's estimated annual real estate tax liability.
All required deposits were made during 1995, 1994 and 1993. At December 31,
1995, the real estate tax escrow had a balance in excess of the real estate
tax liability in the amount of $139,135.
5. Related Party Transactions
Fogelman Management Co. (FMC) (which is owned by Mr. Fogelman) manages the
Project and charges management fees equal to 5% of gross operating
revenues as defined in the management agreement. Management fees paid
by the Project were approximately $185,000, $183,000, and $172,000
for 1995, 1994, and 1993, respectively.
8
<PAGE>
Westmont Project
Notes to Financial Statements (continued)
5. Related Party Transactions (continued)
FMC obtains insurance coverage for properties it manages and allocates
the related costs proportionately among the properties. Insurance
policies covering the Project are placed by an affiliate of FMC.
Commissions are earned by the affiliate as agent. The affiliated
insurance agency was sold by Mr. Fogelman on December 27, 1995.
6. Fair Values of Financial Instruments
The following methods and assumptions were used by the Project's management
in estimating fair value disclosures for financial instruments:
The carrying amounts reported in the balance sheet for restricted
funds and escrows, Due to FPI Chesterfield, L. P. and related
entities, and other accrued expenses approximate fair value.
Management of the Project has determined that it is not practicable
to estimate the fair value of the first mortgage note payable to FMLP.
Due to the unique nature of the repayment structure of this note and
related accrued interest payable, any estimate of fair value would be
very subjective due to lack of reasonable estimates of future principal
and interest payments, and the related timing of those payments.
In addition, management of the Project has determined
that it is not practicable to estimate the fair value of the second
mortgage note payable to Mr. Fogelman since the obligation is
subordinate to the first mortgage (see Note 4).
7. Reclassifications
Certain reclassifications have been made to the 1994 and 1993 financial
statements to conform with the 1995 presentation.
9
<PAGE>
1995
- ------------------------------------------------------------------
Fogelman Mortgage L.P. I Annual
Report
<PAGE>
FOGELMAN MORTGAGE L.P. I
LETTER TO THE UNITHOLDERS
FOR THE YEAR ENDED DECEMBER 31, 1995
1
<PAGE>
(LOGO) Two World Financial Center Telephone: (212) 436-2000
New York, New York 10281-1414 Facsimile: (212) 436-5000
INDEPENDENT AUDITORS' REPORT
To the Partners of Fogelman Mortgage L.P. I
New York, New York
We have audited the accompanying statements of financial condition of Fogelman
Mortgage L.P. I (a Tennessee Limited Partnership) as of December 31, 1995 and
1994, and the related statements of operations, changes in partners' capital and
cash flows for each of the three years in the period ended December 31, 1995.
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 the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Fogelman Mortgage L.P. I as of December 31,
1995 and 1994, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1995 in conformity with
generally accepted accounting principles.
Deloitte Touche
February 12, 1996
2
<PAGE>
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31,
---------------------------
1995 1994
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
ASSETS
Investments in mortgage loans $27,127,610 $28,520,644
Cash and cash equivalents 1,963,643 1,774,337
Deferred general partner's fees (net of accumulated amortization
of $1,746,443 in 1995 and $1,542,947 in 1994) 692,557 896,053
----------- -----------
Total assets $29,783,810 $31,191,034
----------- -----------
----------- -----------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Deposits held for tax obligations of underlying properties $ 228,565 $ 199,683
Due to affiliates 95,955 83,933
Accrued expenses 39,896 39,375
----------- -----------
Total liabilities 364,416 322,991
----------- -----------
Contingencies
Partners' capital
Unitholders (54,200 units issued and outstanding) 29,619,447 31,053,609
General partner (200,053) (185,566)
----------- -----------
Total partners' capital 29,419,394 30,868,043
----------- -----------
Total liabilities and partners' capital $29,783,810 $31,191,034
----------- -----------
----------- -----------
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
3
<PAGE>
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------
1995 1994 1993
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
REVENUES
Equity income from the underlying properties $2,166,858 $2,267,243 $2,082,554
Interest income from cash equivalents 103,340 62,357 53,169
---------- ---------- ----------
2,270,198 2,329,600 2,135,723
---------- ---------- ----------
EXPENSES
General and administrative 137,046 128,406 158,541
Amortization of deferred general partner's fees 203,496 203,496 203,496
---------- ---------- ----------
340,542 331,902 362,037
---------- ---------- ----------
Net income $1,929,656 $1,997,698 $1,773,686
---------- ---------- ----------
---------- ---------- ----------
ALLOCATION OF NET INCOME
Unitholders $1,682,338 $1,749,699 $1,527,927
---------- ---------- ----------
---------- ---------- ----------
General partner:
Special distribution $ 230,325 $ 230,325 $ 230,325
Other 16,993 17,674 15,434
---------- ---------- ----------
$ 247,318 $ 247,999 $ 245,759
---------- ---------- ----------
---------- ---------- ----------
Net income per depositary unit $ 31.04 $ 32.28 $ 28.19
---------- ---------- ----------
---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------
</TABLE>
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<CAPTION>
GENERAL
UNITHOLDERS PARTNER TOTAL
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Partners' capital (deficit)--December 31, 1992 $33,636,370 $(159,478) $33,476,892
Net income 1,527,927 245,759 1,773,686
Distributions (2,879,387) (259,410) (3,138,797)
----------- --------- -----------
Partners' capital (deficit)--December 31, 1993 32,284,910 (173,129) 32,111,781
Net income 1,749,699 247,999 1,997,698
Distributions (2,981,000) (260,436) (3,241,436)
----------- --------- -----------
Partners' capital (deficit)--December 31, 1994 31,053,609 (185,566) 30,868,043
Net income 1,682,338 247,318 1,929,656
Distributions (3,116,500) (261,805) (3,378,305)
----------- --------- -----------
Partners' capital (deficit)--December 31, 1995 $29,619,447 $(200,053) $29,419,394
----------- --------- -----------
----------- --------- -----------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
4
<PAGE>
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------
1995 1994 1993
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received from mortgage loans $ 3,559,892 $ 2,990,943 $ 3,505,092
Interest received from cash equivalents 103,340 62,357 53,169
Cash received for tax obligations of underlying
properties 615,068 669,497 733,743
Cash paid for tax obligations of underlying properties (586,186) (541,667) (675,919)
General and administrative expenses paid (124,503) (170,807) (170,435)
----------- ----------- -----------
Net cash provided by operating activities 3,567,611 3,010,323 3,445,650
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (3,378,305) (3,241,436) (3,138,797)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents 189,306 (231,113) 306,853
Cash and cash equivalents at beginning of year 1,774,337 2,005,450 1,698,597
----------- ----------- -----------
Cash and cash equivalents at end of year $ 1,963,643 $ 1,774,337 $ 2,005,450
----------- ----------- -----------
----------- ----------- -----------
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net income $ 1,929,656 $ 1,997,698 $ 1,773,686
----------- ----------- -----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of deferred general partner's fees 203,496 203,496 203,496
Equity income from the underlying properties (2,166,858) (2,267,243) (2,082,554)
Interest received from mortgage loans 3,559,892 2,990,943 3,505,092
Changes in:
Deposits held for tax obligations of underlying
properties 28,882 127,830 57,824
Due to affiliates 12,022 (19,600) (10,761)
Accrued expenses 521 (22,801) (1,133)
----------- ----------- -----------
Total adjustments 1,637,955 1,012,625 1,671,964
----------- ----------- -----------
Net cash provided by operating activities $ 3,567,611 $ 3,010,323 $ 3,445,650
----------- ----------- -----------
----------- ----------- -----------
- -----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
5
<PAGE>
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
A. General
Fogelman Mortgage L.P. I (the ``Partnership''), a Tennessee limited
partnership, was formed on September 4, 1986 and will terminate on December 31,
2016 unless terminated sooner under the provisions of the Amended and Restated
Certificate and Agreement of Limited Partnership, as amended (``Partnership
Agreement''). The Partnership was formed to invest in and hold loans evidenced
by notes secured by first liens on two apartment complexes developed by
affiliates of Avron B. Fogelman (``ABF'').
The general partner of the Partnership is Prudential-Bache Properties, Inc.
(``PBP'' or the ""General Partner''), a wholly-owned subsidiary of Prudential
Securities Group Inc. Prudential-Bache Investor Services II, Inc. is the
Assignor Limited Partner of the Partnership. ABF and Fogelman Mortgage Partners
I, Inc. (``FMPI'') withdrew from the Partnership and transferred their interests
as general partners to PBP as of December 14, 1992.
B. Summary of Significant Accounting Policies
Basis of accounting
The books and records of the Partnership are maintained on the accrual basis
of accounting in accordance with generally accepted accounting principles.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the General Partner to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Deferred general partner's fees
Deferred general partner's fees are amortized on a straight-line basis over
the lives of the mortgage loans, which are twelve years.
Investments in mortgage loans
Investments in mortgage loans are accounted for on the equity method. Such
investments are adjusted for net income or loss from the underlying properties
(before the accrual of interest and depreciation of certain capitalized costs
not financed by the Partnership) and are decreased by interest received from the
mortgage loans.
Cash and cash equivalents
Cash and cash equivalents include money market funds whose cost approximates
market value.
Income taxes
The Partnership is not required to provide for, or pay, any Federal or state
income taxes. Income tax attributes that arise from its operations are passed
directly to the individual partners. The Partnership may be subject to other
state and local taxes in jurisdictions in which it operates.
Profit and loss allocation and distributions
Net profits or losses are allocated 99% to the Unitholders and 1% to the
General Partner after giving effect to the allocation of the special
distribution. As more fully described in the Partnership Agreement, PBP receives
a special distribution equal to 0.5% per annum of the mortgage loan principal
outstanding, limited to 10% of all distributions of adjusted cash from
operations, payable quarterly. In addition, distributions of cash are made based
on adjusted cash flow from operations as defined in the Partnership Agreement
after giving effect to the special distribution to the General Partner.
6
<PAGE>
C. Investment in Mortgage Loans
A summary of the investments in mortgage loans' activity is as follows:
<TABLE>
<CAPTION>
Royal Chesterfield
View Loan Loan
(for Pointe Royal) (for Westmont) Total
<S> <C> <C> <C>
------------------ -------------- -----------
Balance at December 31, 1992 $ 15,232,695 $ 15,434,187 $30,666,882
Equity income from the underlying properties 1,048,921 1,033,633 2,082,554
Interest received from mortgage loans (1,731,477) (1,773,615) (3,505,092)
------------------ -------------- -----------
Balance at December 31, 1993 14,550,139 14,694,205 29,244,344
Equity income from the underlying properties 933,052 1,334,191 2,267,243
Interest received from mortgage loans (1,096,627) (1,894,316) (2,990,943)
------------------ -------------- -----------
Balance at December 31, 1994 14,386,564 14,134,080 28,520,644
Equity income from the underlying properties 1,013,501 1,153,357 2,166,858
Interest received from mortgage loans (1,757,556) (1,802,336) (3,559,892)
------------------ -------------- -----------
Balance at December 31, 1995 $ 13,642,509 $ 13,485,101 $27,127,610
------------------ -------------- -----------
------------------ -------------- -----------
</TABLE>
The Partnership has invested in two mortgage loans with two partnerships in
which ABF is the general partner: FPI Royal View Ltd., L.P. on April 23, 1987
for $22,745,000 (the ``Royal View Loan'') and FPI Chesterfield, L.P. on July 8,
1987 for $23,320,000 (the ``Chesterfield Loan''). At December 31, 1995, the
accrued interest liability at the property level was approximately $2,808,000
and $4,167,000 for Pointe Royal and Westmont, respectively. This accrued
interest plus the original loan principal balances aggregate approximately
$53,040,000. The ultimate collectibility of the accrued interest balance as well
as the full principal of the mortgages will depend upon the value of the
underlying properties, which are currently estimated to be less than the amounts
due; however, the estimated property values exceed the carrying amount of the
Partnership's investment in mortgage loans.
A plan for the consensual reorganization of the business and affairs of ABF
and related entities closed on July 31, 1990 (the ``Plan''). The Plan provided
for, among other things, the modification of loans and credit relationships
between lenders and ABF and related affiliates, including those of the
Partnership. The two notes executed by FPI Royal View, Ltd., L.P. and FPI
Chesterfield, L.P. and the loan agreements executed in connection with such
notes and the two mortgages with respect to Westmont Apartments and Pointe Royal
Apartments securing those notes were modified, effective as of January 1, 1990.
The principal effect of such modifications was to make the indebtedness
evidenced by the notes repayable on a cash flow basis, with the difference
between the amount actually paid and the original pay rate of 9.5% per annum
being accrued in a separate account on the books of FPI Royal View Ltd., L.P.
and FPI Chesterfield, L.P., as discussed above, at 9.5% per annum.
For the three years ended December 31, 1995, interest received from the net
property cash flow has not exceeded the original pay rate of 9.5% per annum.
D. Income Taxes
The following is a reconciliation of net income for financial reporting
purposes to net income for tax reporting purposes.
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Net income per financial statements $1,929,656 $1,997,698 $1,773,686
Equity income from the underlying properties (2,166,858 ) (2,267,243 ) (2,082,554 )
Interest received from mortgage loans 3,559,892 2,990,943 3,505,092
----------- ----------- -----------
Tax basis net income $3,322,690 $2,721,398 $3,196,224
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
7
<PAGE>
The differences between the tax basis and book basis of partners' capital are
primarily attributable to the cumulative effect of the book to tax income
adjustments and the recording of distributions.
E. Related Parties
The General Partner and its affiliates perform services for the Partnership
which include, but are not limited to: accounting and financial management;
registrar, transfer and assignment functions; asset management; investor
communications; printing and other administrative services. The amount of
reimbursement from the Partnership for these services is limited by the
provisions of the Partnership Agreement. The costs and expenses were
approximately $79,000, $76,000 and $92,000 for the years ended December 31,
1995, 1994 and 1993, respectively.
An affiliate of FMPI continues to manage the properties for which it earned
approximately $373,000, $360,000 and $339,000 for the years ended December 31,
1995, 1994 and 1993, respectively.
The Partnership maintains an account with the Prudential Institutional
Liquidity Portfolio Fund, an affiliate of PBP, for investment of its available
cash in short-term instruments pursuant to the guidelines established by the
Partnership Agreement.
Prudential Securities Incorporated, an affiliate of PBP, owns 835 units at
December 31, 1995.
F. Contingencies
By order of the Judicial Panel on Multidistrict Litigation dated dated April
14, 1994, a number of purported class actions then pending in various federal
district courts were transferred to a single judge of the United States District
Court for the Southern District of New York and consolidated for pretrial
proceedings under the caption In re Prudential Securities Incorporated Limited
Partnerships Litigation (MDL Docket 1005). On June 8, 1994, plaintiffs in the
transferred cases filed a complaint that consolidated the previously filed
complaints and named as defendants, among others, PSI, certain of its present
and former employees and PBP. The Partnership was not named a defendant in the
consolidated complaint, but the name of the Partnership was listed as being
among the limited partnerships at issue in the case.
On August 9, 1995, PBP, PSI and other Prudential defendants entered into a
Stipulation and Agreement of Partial Compromise and Settlement with legal
counsel representing plaintiffs in the consolidated actions. The court
preliminarily approved the settlement agreement by order dated August 29, 1995
and, following a hearing held November 17, 1995, found that the agreement was
fair, reasonable, adequate and in the best interests of the plaintiff class.
The court gave final approval to the settlement, certified a class of
purchasers of specific limited partnerships, including the Partnership,
released all settled claims by members of the class against the PSI settling
defendants and permanently barred and enjoined class members from instituting,
commencing or prosecuting any settled claim against the released parties. The
full amount due under the settlement agreement has been paid by PSI.
8
<PAGE>
G. Summarized Property Financial Information
Presented below is summarized property financial information for the
properties underlying the Partnership's two mortgage loan investments.
<TABLE>
<CAPTION>
December 31,
December 31, 1995 December 31, 1994 1993
CHESTERFIELD ROYAL VIEW TOTAL CHESTERFIELD ROYAL VIEW TOTAL CHESTERFIELD
<S> <C> <C> <C> <C> <C> <C> <C>
------------ ----------- ------------ ------------ ----------- ------------ ------------
Assets:
Property, net of
accumulated
depreciation $ 16,117,409 $16,617,500 $32,734,909 $ 16,790,579 $17,380,866 $34,171,445 $ 17,594,641
Other assets 335,552 250,658 586,210 384,217 347,046 731,263 169,077
------------ ----------- ------------ ------------ ----------- ------------ ------------
$ 16,452,961 $16,868,158 $33,321,119 $ 17,174,796 $17,727,912 $34,902,708 $ 17,763,718
------------ ----------- ------------ ------------ ----------- ------------ ------------
------------ ----------- ------------ ------------ ----------- ------------ ------------
Liabilities:
First mortgage note
payable to the
Partnership $ 23,320,000 $22,745,000 $46,065,000 $ 23,320,000 $22,745,000 $46,065,000 $ 23,320,000
Second mortgage note
payable to ABF 1,089,000 1,063,000 2,152,000 1,089,000 1,063,000 2,152,000 1,089,000
Other liabilities 5,361,963 4,691,304 10,053,267 4,491,301 3,989,402 8,480,703 3,755,724
------------ ----------- ------------ ------------ ----------- ------------ ------------
$ 29,770,963 $28,499,304 $58,270,267 $ 28,900,301 $27,797,402 $56,697,703 $ 28,164,724
------------ ----------- ------------ ------------ ----------- ------------ ------------
------------ ----------- ------------ ------------ ----------- ------------ ------------
Investments in
mortgage loans
(after elimination
of affiliated
interest) $ 13,485,101 $13,642,509 $27,127,610 $ 14,134,080 $14,386,564 $28,520,644 $ 14,694,205
------------ ----------- ------------ ------------ ----------- ------------ ------------
------------ ----------- ------------ ------------ ----------- ------------ ------------
<CAPTION>
Year Ended
Year Ended Year Ended December 31,
December 31, 1995 December 31, 1994 1993
----------------------------------------- ----------------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 3,547,581 $ 3,615,886 $ 7,163,467 $ 3,496,995 $ 3,453,259 $ 6,950,254 $ 3,308,944
Interest and other
income 161,780 137,665 299,445 159,355 89,045 248,400 129,046
------------ ----------- ------------ ------------ ----------- ------------ ------------
3,709,361 3,753,551 7,462,912 3,656,350 3,542,304 7,198,654 3,437,990
------------ ----------- ------------ ------------ ----------- ------------ ------------
Expenses:
Operating 1,812,435 1,686,854 3,499,289 1,463,865 1,823,285 3,287,150 1,577,629
Interest, net of
amounts capitalized 2,693,697 2,524,077 5,217,774 2,606,536 2,398,463 5,004,999 2,527,438
Depreciation 795,726 749,890 1,545,616 910,448 837,046 1,747,494 896,137
Write-off of fixed
assets -- 354,386 354,386 -- -- -- --
------------ ----------- ------------ ------------ ----------- ------------ ------------
5,301,858 5,315,207 10,617,065 4,980,849 5,058,794 10,039,643 5,001,204
------------ ----------- ------------ ------------ ----------- ------------ ------------
Net loss $ (1,592,497) $(1,561,656) $(3,154,153 ) $ (1,324,499) $(1,516,490) $(2,840,989 ) $ (1,563,214)
------------ ----------- ------------ ------------ ----------- ------------ ------------
------------ ----------- ------------ ------------ ----------- ------------ ------------
Equity income from
the underlying
properties (after
elimination of
affiliated
interest) $ 1,153,357 $ 1,013,501 $ 2,166,858 $ 1,334,191 $ 933,052 $ 2,267,243 $ 1,033,633
------------ ----------- ------------ ------------ ----------- ------------ ------------
------------ ----------- ------------ ------------ ----------- ------------ ------------
<CAPTION>
ROYAL VIEW TOTAL
<S> <C> <C>
----------- ------------
Assets:
Property, net of
accumulated
depreciation $17,735,941 $35,330,582
Other assets 135,981 305,058
----------- ------------
$17,871,922 $35,635,640
----------- ------------
----------- ------------
Liabilities:
First mortgage note
payable to the
Partnership $22,745,000 $46,065,000
Second mortgage note
payable to ABF 1,063,000 2,152,000
Other liabilities 2,616,922 6,372,646
----------- ------------
$26,424,922 $54,589,646
----------- ------------
----------- ------------
Investments in
mortgage loans
(after elimination
of affiliated
interest) $14,550,139 $29,244,344
----------- ------------
----------- ------------
<S> <C> <C>
Revenues:
Rental income $ 3,234,984 $ 6,543,928
Interest and other
income 102,085 231,131
----------- ------------
3,337,069 6,775,059
----------- ------------
Expenses:
Operating 1,521,286 3,098,915
Interest, net of
amounts capitalized 2,300,129 4,827,567
Depreciation 834,784 1,730,921
Loss on disposal of
property -- --
----------- ------------
4,656,199 9,657,403
----------- ------------
Net loss $(1,319,130) $(2,882,344 )
----------- ------------
----------- ------------
Equity income from
the underlying
properties (after
elimination of
affiliated
interest) $ 1,048,921 $ 2,082,554
----------- ------------
----------- ------------
</TABLE>
H. Subsequent Event
In February 1996, distributions of approximately $813,000 were paid to the
Unitholders and distributions of approximately $8,200 were paid to the General
Partner for the quarter ended December 31, 1995.
9
<PAGE>
<PAGE>
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Liquidity and Capital Resources
The Partnership provides permanent financing for two multi-family residential
apartment complexes. As of December 31, 1995, the Partnership had approximately
$1,964,000 of funds available which may be used to pay distributions,
unanticipated or extraordinary expenses and other costs relating to the
operation and administration of the Partnership's business. As discussed in more
detail in Results of Operations below, significant amounts of cash were expended
at the property level in 1995 for capital expenditures including roof repairs at
Pointe Royal and exterior building repairs at Westmont. These capital
expenditures partially offset cash flow paid by the properties to the
Partnership in the form of interest.
The Partnership's future operating cash requirements and quarterly
distributions are expected to be funded by Partnership operations. Quarterly
distributions in 1996 may need to be supplemented by previously undistributed
cash from operations in order to maintain a consistent level of distributions
and avoid fluctuations caused by the timing of capital expenditures.
Management is not presently aware of any trends or events, commitments or
uncertainties that will impact liquidity in a material way.
Results of Operations
Net income decreased by approximately $68,000 and increased by approximately
$224,000 for the years ended December 31, 1995 and 1994, respectively, as
compared to the prior years.
For financial reporting purposes, the Partnership's mortgage loans are
considered, in substance, to be investments in real estate and are accounted for
using the equity method. Interest received from the mortgage loans for the years
ended December 31, 1995 and 1994 of approximately $3,560,000 and $2,991,000,
respectively, is accounted for as distributions and, accordingly, reduces the
carrying value of the original investment. Interest payments received (paid from
property cash flow) increased by approximately $569,000 in 1995 as compared to
1994 because revenues improved and less cash was retained to fund capital
projects and real estate taxes.
Equity income from the underlying properties (which increases the carrying
value of the investment) decreased by approximately $100,000 and increased by
approximately $185,000 for the years ended December 31, 1995 and 1994,
respectively, as compared to the prior years. The 1995 decrease was primarily
due to an increase in real estate taxes and the write-off of prior years'
roofing expenditures (necessitated by replacement) at Pointe Royal partially
offset by lower depreciation and higher rental rates. The 1994 increase was
primarily due to higher rental rates at both properties and a decrease in real
estate taxes at Westmont.
At December 31, 1995, the accrued interest liabilities at the property level
were approximately $2,808,000 and $4,167,000 for Pointe Royal and Westmont,
respectively. This accrued interest plus the original principal balances
aggregate approximately $53,040,000. As of December 31, 1995, 1994 and 1993, the
cumulative differences between the original pay rate of 9.5% per annum and the
cash paid were approximately $6,975,000, $5,612,000 and $3,819,000,
respectively, including accrued interest on the unpaid balance. The ultimate
collectibility of the accrued interest as well as the full principal balances of
the mortgage loans will depend upon the value of the underlying properties which
are estimated, based on third party appraisals, to be less than the amounts due;
however, the estimated property values exceed the Partnership's carrying amount
of the investment in mortgage loans.
Average occupancy rates for the underlying properties were as follows:
<TABLE>
<CAPTION>
December 31,
------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Westmont 96.2% 96.1% 96.9%
Pointe Royal 98.3 98.8 98.6
</TABLE>
10
<PAGE>
Despite the occupancy rates, competition in local markets results in rental
rates that are below what is required for the projects to generate positive cash
flows after debt service at the original pay rate of 9.5%.
Approximately $525,000 and $582,000 were incurred for capital projects at
Westmont and Pointe Royal, respectively, during 1995 and $131,000 and $877,000
during 1994. Approximately $310,000 and $128,000, respectively, was incurred in
1995 for an exterior building painting and siding project at Westmont and a
major landscaping program that included wall replacements and irrigation repairs
at Pointe Royal. Unseasonable rains throughout the Midwest during the summer of
1993 caused extensive roof damage at Pointe Royal. Costs incurred to repair the
damage were approximately $241,000 in 1995 and $342,000 in 1994. In addition to
the roof repairs at Pointe Royal in 1994, approximately $306,000 was incurred to
paint and repair damage to the exterior of the buildings. A project to
reconstruct the decks of balconies for approximately half of the apartment units
at Westmont was completed in 1994 for approximately $64,000. Costs to reseal the
parking lots were approximately $49,000 at Pointe Royal in 1995 and $40,000 and
$43,000 in 1994 at Westmont and Pointe Royal, respectively. Several other
smaller projects were completed at both properties during both years. The costs
of these capital projects have impacted, and are expected to continue to impact,
the operating results and cash flow of the properties.
Interest income from cash equivalents increased by approximately $41,000 and
$9,000 for 1995 and 1994 as compared to the respective prior years primarily due
to higher cash balances in 1995 and higher interest rates in 1994.
General and administrative expenses increased by approximately $9,000 in 1995
and decreased by approximately $30,000 in 1994 primarily due to fluctuations in
overall costs of administering the Partnership.
11
<PAGE>
<PAGE>
OTHER INFORMATION
The Partnership's Annual Report on Form 10-K as filed with the Securities and
Exchange Commission is available to Unitholders without charge upon written
request to:
Fogelman Mortgage L.P. I
P.O. Box 2016
Peck Slip Station
New York, New York 10272-2016
12
<PAGE>
Prudential Securities Incorporated BULK RATE
Peck Slip Station U.S. POSTAGE
P.O. Box 2016 PAID
New York, NY 10272 Automatic Mail
FMLP/170970
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for Fogelman Mortgage LP 1
and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000800608
<NAME> Fogelman Mortgage LP 1
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-1-1995
<PERIOD-END> Dec-31-1995
<PERIOD-TYPE> 12-Mos
<CASH> 1,963,643
<SECURITIES> 0
<RECEIVABLES> 27,127,610
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 692,557
<DEPRECIATION> 0
<TOTAL-ASSETS> 29,783,810
<CURRENT-LIABILITIES> 364,416
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 29,419,394
<TOTAL-LIABILITY-AND-EQUITY> 29,783,810
<SALES> 0
<TOTAL-REVENUES> 2,270,198
<CGS> 0
<TOTAL-COSTS> 340,542
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,929,656
<EPS-PRIMARY> 31.04
<EPS-DILUTED> 0
</TABLE>
