UNITED STATES
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 0-17660
METRIC PARTNERS
GROWTH SUITE INVESTORS, L.P.,
a California Limited Partnership
(Exact name of Registrant as specified in its charter)
CALIFORNIA 94-3050708
- - ---------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1 California Street
San Francisco, California 94111-5415
- - ---------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 678-2000
(800) 347-6707 in all states
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Limited Partnership
Assignee Units
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 X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
No market for the Limited Partnership Assignee Units exists and therefore
a market value for such Units cannot be determined.
<PAGE>
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
a California Limited Partnership
PART I
Item 1. Business.
Metric Partners Growth Suite Investors, L.P., a California Limited
Partnership (the "Partnership"), was organized in 1984 under the California
Uniform Limited Partnership Act. The managing general partner of the Partnership
is Metric Realty, an Illinois general partnership. Metric Realty is owned by
Metric Holdings, Inc. and Metric Realty Corp. Metric Realty Corp. is the
Managing Partner of Metric Realty. The associate general partner of the
Partnership is GHI Associates II, L.P., a California Limited Partnership. The
general partner of GHI Associates II is Metric Realty and the limited partner is
Prudential-Bache Properties, Inc.
The Partnership's Registration Statement filed pursuant to the Securities
Act of 1933 (No. 33-8610) was declared effective by the Securities and Exchange
Commission on April 14, 1988. The Partnership marketed its securities pursuant
to its Prospectus dated April 14, 1988 which was thereafter supplemented
(hereinafter the "Prospectus"). This Prospectus was filed with the Securities
and Exchange Commission pursuant to Rule 424(b) of the Securities Act of 1933.
The principal business of the Partnership is to acquire, hold for
investment, manage and ultimately sell all-suite, extended stay hotels which are
operated under franchise licenses from Residence Inn by Marriott, Inc. The
Partnership is a "closed" limited partnership real estate syndicate. For a
further description of the Partnership's business, see the sections entitled
"Risk Factors" and "Investment Objectives and Policies" in the Prospectus.
Beginning in April 1988, the Partnership offered $60,000,000 in Limited
Partnership Assignee Units. The offering was closed on June 30, 1989 with total
funding of $59,932,000. The net proceeds of the offering were used to purchase
ten hotel properties, which are described on Item 2. The acquisition activities
of the Partnership were completed on March 16, 1990, with the purchase of its
final hotel property. Since that time, the principal activity of the Partnership
has been managing its portfolio. As the Partnership's long-term goal is to
ultimately liquidate the portfolio, the markets where the hotels are located are
monitored on an ongoing basis for potential sales opportunities. In mid 1995,
the Partnership believed that market conditions in Atlanta were optimum to
consider a sale of the Residence Inn-Atlanta (Perimeter West) and initiated
discussions with potential purchasers. Following a series of negotiations, the
Partnership entered into a purchase and sale agreement with an unaffiliated
buyer and sold the property on October 3, 1995. The Partnership's remaining
property portfolio is geographically diversified with nine hotels located in
seven states.
Both the income and expenses of operating the properties which the
Partnership owns are subject to factors outside the Partnership's control, such
as oversupply of similar properties resulting from overbuilding, increases in
unemployment or population shifts, or changes in patterns of needs of users. In
addition, there are risks inherent in owning and operating hotels and other
lodging facilities because such properties are management and labor intensive
and especially susceptible to the impact of economic and other conditions
outside the control of the Partnership.
Expenses, such as local real estate taxes and management expenses, are
subject to change and cannot always be reflected in room rate increases due to
market conditions. The profitability and marketability of developed real
property may be adversely affected by changes in general and local economic
conditions and in prevailing interest rates, and favorable changes in such
factors will not necessarily enhance the profitability or marketability of such
property. Even under the most favorable market conditions, there is no guarantee
that any property owned by the Partnership can be sold or, if sold, that such
sale can be made upon favorable terms.
1
<PAGE>
There have been, and it is possible there may be other, federal, state and
local legislation and regulations enacted relating to the protection of the
environment. The managing general partner is unable to predict the extent, if
any, to which such new legislation or regulations might occur and the degree to
which such existing or new legislation or regulations might adversely affect the
properties owned by the Partnership.
Environmental site assessments were performed for each of the properties
at the time of property acquisition. No material adverse environmental
conditions or liabilities were identified. In no case has the Partnership
received notice that it is a potentially responsible party with respect to an
environmental clean-up site.
The Partnership and the hotel management companies maintain property and
liability insurance on the properties. The Partnership believes such coverage to
be adequate.
The Partnership is subject to the general competitive conditions of the
lodging industry. In addition, each of the Partnership's properties competes in
an area which normally contains numerous other properties which may be
considered competitive.
2
<PAGE>
Item 2. Properties.
A description of the hotel properties which the Partnership owns is as
follows:
Date of
Name and Location Purchase Rooms
- - ----------------- -------- -----
Residence Inn-Ontario 04/88 200
2025 East D Street
Ontario, California
Residence Inn-Fort Wayne 06/88 80
4919 Lima Road
Fort Wayne, Indiana
Residence Inn-Columbus (East) 06/88 80
2084 South Hamilton Road
Columbus, Ohio
Residence Inn-Indianapolis 06/88 88
3553 Founders Road
Indianapolis, Indiana
Residence Inn-Lexington 06/88 80
1080 Newtown Pike
Lexington, Kentucky
Residence Inn-Louisville 06/88 96
120 North Hurstbourne Lane
Louisville, Kentucky
Residence Inn-Winston-Salem 06/88 88
7835 North Point Boulevard
Winston-Salem, North Carolina
Residence Inn-Nashville (Airport) 05/89 168
2300 Elm Hill Pike
Nashville, Tennessee
Residence Inn-Atlanta (Perimeter West)(1) 10/89 128
6096 Barfield Road
Atlanta, Georgia
Residence Inn-Altamonte Springs 03/90 128
270 Douglas Ave
Altamonte Springs, Florida
(1) Sold in October 1995.
See the Financial Statements in Item 8 for information regarding any
encumbrances to which the properties of the Partnership are subject.
3
<PAGE>
<TABLE>
Occupancy and room rates for the years ended December 31, 1995, 1994 and
1993 are as follows:
Average Average
Occupancy Rate (%) Daily Room Rate ($)
------------------ -------------------
<CAPTION>
1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
HOTELS:
Residence Inn-Ontario ....................... 72 69 73 67.84 67.57 66.77
Residence Inn-Columbus (East) ............... 89 87 84 68.98 64.23 64.25
Residence Inn-Fort Wayne .................... 93 89 82 62.43 59.04 60.14
Residence Inn-Indianapolis .................. 80 85 82 75.69 69.48 65.70
Residence Inn-Lexington ..................... 84 87 91 71.90 70.66 69.14
Residence Inn-Louisville .................... 85 90 90 79.92 75.04 72.07
Residence Inn-Winston-Salem ................. 85 85 83 71.94 65.47 64.71
Residence Inn-Nashville (Airport) ........... 77 75 74 77.43 72.71 70.99
Residence Inn-Atlanta (Perimeter West) (1) .. 81 82 79 87.82 76.76 71.14
Residence Inn-Altamonte Springs ............. 82 78 76 78.31 77.52 80.67
</TABLE>
(1) Sold in October 1995.
Project Operations
Project Operations for the years ended December 31, 1995, 1994 and 1993 are
shown on the next three pages. Project Operations tables reflect the components
of income or loss (before gain on sale) for each property which the Partnership
owns and the components of the loss at the Partnership level. In addition,
non-cash items such as depreciation and amortization are shown. The tables also
reflect principal payments on the Partnership's notes payable and capital
improvements.
4
<PAGE>
<TABLE>
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.
a California Limited Partnership
Project Operations of the Residence Inns for
The Year Ended December 31, 1995
(000's)
<CAPTION>
Columbus Fort Winston
Ontario (East) Wayne Indianapolis Lexington Louisville Salem
------- ------ ----- ------------ --------- ---------- -----
REVENUES:
Hotel operations:
<S> <C> <C> <C> <C> <C> <C> <C>
Rooms $3,603 $1,783 $1,693 $1,994 $1,751 $2,363 $1,956
Telephone and other 244 66 94 99 135 157 111
----------- ----------- ----------- ----------- ----------- ----------- ------------
Hotel operations 3,847 1,849 1,787 2,093 1,886 2,520 2,067
Interest and other 53 0 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- ----------- ------------
Total revenues 3,900 1,849 1,787 2,093 1,886 2,520 2,067
----------- ----------- ----------- ----------- ----------- ----------- ------------
EXPENSES:
Hotel operations:
Rooms 672 396 331 444 380 416 391
Administrative 385 298 196 292 236 264 280
Marketing 446 157 165 228 174 243 192
Energy 274 107 91 97 90 98 100
Repair and maintenance 189 101 64 127 123 115 121
Management fees 154 120 116 137 123 165 135
Property taxes 78 89 80 79 51 80 66
Other 201 54 51 56 70 78 64
----------- ----------- ----------- ----------- ----------- ----------- ------------
Hotel operations 2,399 1,322 1,094 1,460 1,247 1,459 1,349
Depreciation and other
amortization 496 206 204 253 245 286 248
Interest 855 279 293 339 330 381 335
General and administrative 0 0 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- ----------- ------------
Total expenses 3,750 1,807 1,591 2,052 1,822 2,126 1,932
----------- ----------- ----------- ----------- ----------- ----------- ------------
INCOME(LOSS) (1) 150 42 196 41 64 394 135
Plus non-cash items - net 442 210 209 258 250 292 254
Less notes payable
principal payments 5 17 17 20 20 23 20
----------- ----------- ----------- ----------- ----------- ----------- ------------
Project operations 587 235 388 279 294 663 369
Capital Improvements 163 268 228 163 326 220 84
----------- ----------- ----------- ----------- ----------- ----------- ------------
Project operations after
capital improvements $424 ($33) $160 $116 ($32) $443 $285
=========== =========== =========== =========== =========== =========== ============
<CAPTION>
Altamonte
Nashville Atlanta Springs Partnership Total
--------- ------- ------- ----------- -----
REVENUES:
Hotel operations:
<S> <C> <C> <C> <C> <C>
Rooms $3,654 $2,496 $2,982 $0 $24,275
Telephone and other 173 153 142 0 1,374
------------ ------------ ----------- ----------- -------------
Hotel operations 3,827 2,649 3,124 0 25,649
Interest and other 7 54 0 344 458
------------ ------------ ----------- ----------- -------------
Total revenues 3,834 2,703 3,124 344 26,107
------------ ------------ ----------- ----------- -------------
EXPENSES:
Hotel operations:
Rooms 877 493 767 0 5,167
Administrative 415 533 325 0 3,224
Marketing 384 258 291 0 2,538
Energy 236 131 174 0 1,398
Repair and maintenance 216 109 164 0 1,329
Management fees 115 132 167 0 1,364
Property taxes 105 82 167 0 877
Other 264 64 68 0 970
------------ ------------ ----------- ----------- -------------
Hotel operations 2,612 1,802 2,123 0 16,867
Depreciation and other
amortization 597 349 626 0 3,510
Interest 899 467 674 0 4,852
General and administrative 0 0 0 809 809
------------ ------------ ----------- ----------- -------------
Total expenses 4,108 2,618 3,423 809 26,038
------------ ------------ ----------- ----------- -------------
INCOME(LOSS) (1) (274) 85 (299) (465) 69
Plus non-cash items - net 590 307 773 0 3,585
Less notes payable
principal payments 100 28 83 0 333
------------ ------------ ----------- ----------- -------------
Project operations 216 364 391 (465) 3,321
Capital Improvements 331 178 202 0 2,163
------------ ------------ ----------- ----------- -------------
Project operations after
capital improvements ($115) $186 $189 ($465) $1,158
============ ============ =========== =========== =============
</TABLE>
(1) Before gain on sale of property.
5
<PAGE>
<TABLE>
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.
a California Limited Partnership
Project Operations of the Residence Inns for
the Year Ended December 31, 1994
(000's)
<CAPTION>
Columbus Fort Winston
Ontario (East) Wayne Indianapolis Lexington Louisville Salem
------- ------ ----- ------------ --------- ---------- -----
REVENUES:
Hotel operations:
<S> <C> <C> <C> <C> <C> <C> <C>
Rooms $3,381 $1,636 $1,527 $1,892 $1,780 $2,354 $1,790
Telephone and other 220 59 84 104 134 122 113
----------- ----------- ----------- ----------- ----------- ----------- ------------
Hotel operations 3,601 1,695 1,611 1,996 1,914 2,476 1,903
Interest and other 40 0 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- ----------- ------------
Total revenues 3,641 1,695 1,611 1,996 1,914 2,476 1,903
----------- ----------- ----------- ----------- ----------- ----------- ------------
EXPENSES:
Hotel operations:
Rooms 649 342 309 410 353 392 395
Administrative 428 268 189 236 275 252 264
Marketing 436 152 166 215 148 244 182
Energy 250 122 96 98 89 103 103
Repair and maintenance 171 77 87 104 117 113 130
Management fees 144 110 105 129 125 162 124
Property taxes 63 57 65 70 51 81 67
Other 147 50 43 53 62 64 76
----------- ----------- ----------- ----------- ----------- ----------- ------------
Hotel operations 2,288 1,178 1,060 1,315 1,220 1,411 1,341
Depreciation and other
amortization 550 283 272 346 307 371 323
Interest 856 281 294 341 332 383 337
General and administrative 0 0 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- ----------- ------------
Total expenses 3,694 1,742 1,626 2,002 1,859 2,165 2,001
----------- ----------- ----------- ----------- ----------- ----------- ------------
INCOME(LOSS) (53) (47) (15) (6) 55 311 (98)
Plus non-cash items - net 510 287 277 351 313 377 329
Less notes payable
principal payments 4 15 16 18 18 20 18
----------- ----------- ----------- ----------- ----------- ----------- ------------
Project operations 453 225 246 327 350 668 213
Capital Improvements 184 27 37 200 37 266 116
----------- ----------- ----------- ----------- ----------- ----------- ------------
Project operations after
capital improvements $269 $198 $209 $127 $313 $402 $97
=========== =========== =========== =========== =========== =========== ============
<CAPTION>
Altamonte
Nashville Atlanta Springs Partnership Total
--------- ------- ------- ----------- -----
REVENUES:
Hotel operations:
<S> <C> <C> <C> <C> <C>
Rooms $3,347 $2,931 $2,808 $0 $23,446
Telephone and other 169 169 134 0 1,308
----------- ----------- ----------- ----------- --------------
Hotel operations 3,516 3,100 2,942 0 24,754
Interest and other 20 18 0 176 254
----------- ----------- ----------- ----------- --------------
Total revenues 3,536 3,118 2,942 176 25,008
----------- ----------- ----------- ----------- --------------
EXPENSES:
Hotel operations:
Rooms 789 605 680 0 4,924
Administrative 330 355 316 0 2,913
Marketing 344 302 248 0 2,437
Energy 248 159 170 0 1,438
Repair and maintenance 216 144 142 0 1,301
Management fees 105 155 147 0 1,306
Property taxes 121 75 187 0 837
Other 270 75 61 0 901
----------- ----------- ----------- ----------- --------------
Hotel operations 2,423 1,870 1,951 0 16,057
Depreciation and other
amortization 688 453 611 0 4,204
Interest 901 622 670 0 5,017
General and administrative 0 0 0 677 677
----------- ----------- ----------- ----------- --------------
Total expenses 4,012 2,945 3,232 677 25,955
----------- ----------- ----------- ----------- --------------
INCOME(LOSS) (476) 173 (290) (501) (947)
Plus non-cash items - net 668 451 747 0 4,310
Less notes payable
principal payments 99 37 72 0 317
----------- ----------- ----------- ----------- --------------
Project operations 93 587 385 (501) 3,046
Capital Improvements 427 38 116 0 1,448
----------- ----------- ----------- ----------- --------------
Project operations after
capital improvements ($334) $549 $269 ($501) $1,598
=========== =========== =========== =========== ==============
</TABLE>
6
<PAGE>
<TABLE>
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.
a California Limited Partnership
Project Operations of the Residence Inns for
the Year Ended December 31, 1993
(000's)
<CAPTION>
Columbus Fort Winston
Ontario (East) Wayne Indianapolis Lexington Louisville Salem
------- ------ ----- ------------ --------- ---------- -----
REVENUES:
Hotel operations:
<S> <C> <C> <C> <C> <C> <C> <C>
Rooms $3,539 $1,562 $1,433 $1,715 $1,822 $2,256 $1,726
Telephone and other 205 57 62 97 113 83 100
----------- ----------- ----------- ----------- ----------- ----------- ------------
Hotel operations 3,744 1,619 1,495 1,812 1,935 2,339 1,826
Interest and other 107 0 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- ----------- ------------
Total revenues 3,851 1,619 1,495 1,812 1,935 2,339 1,826
----------- ----------- ----------- ----------- ----------- ----------- ------------
EXPENSES:
Hotel operations:
Rooms 669 331 302 381 367 407 389
Administrative 428 253 173 236 266 201 271
Marketing 445 148 172 211 164 231 200
Energy 237 95 91 100 83 108 103
Repair and maintenance 172 74 93 104 131 110 87
Management fees 150 106 97 118 126 154 119
Property taxes 98 102 63 71 51 81 68
Other 159 52 40 54 73 61 66
----------- ----------- ----------- ----------- ----------- ----------- ------------
Hotel operations 2,358 1,161 1,031 1,275 1,261 1,353 1,303
Depreciation and other
amortization 750 374 356 427 399 479 430
Interest 856 278 291 338 329 379 333
General and administrative 0 0 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- ----------- ------------
Total expenses 3,964 1,813 1,678 2,040 1,989 2,211 2,066
----------- ----------- ----------- ----------- ----------- ----------- ------------
INCOME(LOSS) (113) (194) (183) (228) (54) 128 (240)
Plus non-cash items - net 643 385 367 439 411 493 442
Less notes payable
principal payments 4 6 6 7 7 8 7
----------- ----------- ----------- ----------- ----------- ----------- ------------
Project operations 526 185 178 204 350 613 195
Capital Improvements 72 232 107 74 59 99 68
----------- ----------- ----------- ----------- ----------- ----------- ------------
Project operations after
capital improvements $454 ($47) $71 $130 $291 $514 $127
=========== =========== =========== =========== =========== =========== ============
<CAPTION>
Altamonte
Nashville Atlanta Springs Partnership Total
--------- ------- ------- ----------- -----
REVENUES:
Hotel operations:
<S> <C> <C> <C> <C> <C>
Rooms $3,227 $2,626 $2,839 $0 $22,745
Telephone and other 160 154 117 0 1,148
----------- ----------- ----------- ----------- --------------
Hotel operations 3,387 2,780 2,956 0 23,893
Interest and other 20 18 0 152 297
----------- ----------- ----------- ----------- --------------
Total revenues 3,407 2,798 2,956 152 24,190
----------- ----------- ----------- ----------- --------------
EXPENSES:
Hotel operations:
Rooms 707 551 580 0 4,684
Administrative 325 319 317 0 2,789
Marketing 351 279 259 0 2,460
Energy 213 162 157 0 1,349
Repair and maintenance 170 125 133 0 1,199
Management fees 101 139 149 0 1,259
Property taxes 119 160 178 0 991
Other 270 107 46 0 928
----------- ----------- ----------- ----------- --------------
Hotel operations 2,256 1,842 1,819 0 15,659
Depreciation and other
amortization 667 426 600 0 4,908
Interest 909 618 666 0 4,997
General and administrative 0 0 0 764 764
----------- ----------- ----------- ----------- --------------
Total expenses 3,832 2,886 3,085 764 26,328
----------- ----------- ----------- ----------- --------------
INCOME(LOSS) (425) (88) (129) (612) (2,138)
Plus non-cash items - net 647 469 728 0 5,024
Less notes payable
principal payments 90 13 54 0 202
----------- ----------- ----------- ----------- --------------
Project operations 132 368 545 (612) 2,684
Capital Improvements 49 250 179 0 1,189
----------- ----------- ----------- ----------- --------------
Project operations after
capital improvements $83 $118 $366 ($612) $1,495
=========== =========== =========== =========== ==============
</TABLE>
7
<PAGE>
Item 3. Legal Proceedings.
There are no material pending legal proceedings to which the Partnership
is a party or to which any of its assets are subject, except the following:
Metric Partners Growth Suite Investors, L.P. vs. Kenneth E. Nelson, The
Nelson Group, et al., San Francisco County Superior Court, Case No. 928065.
Nashville Lodging Company vs. Metric Partners Growth Suite Investors,
L.P., et al., Circuit Court, State of Wisconsin, Case No. 94CV001212.
Orlando Residence, Ltd. (Plaintiff) vs. Nashville Lodging Company, Metric
Partners Growth Suite Investors, L.P., et al. (Defendants); Metric Partners
Growth Suite Investors (Third Party Plaintiff) vs. 2300 Elm Hill Pike, Inc. et
al. (Third Party Defendant), Tennessee Chancery Court for Davidson County, Case
No. 92-3086-III.
Orlando Residence, Ltd. (Plaintiff) vs. 2300 Elm Hill Pike, Inc., et al.
(Defendants/Third Party Plaintiffs) vs. Metric Partners Growth Suite Investors,
L.P. (Third Party Defendant), Tennessee Chancery Court for Davidson County, Case
No. 94-1911-I.
For information regarding these lawsuits see Management's Discussion and
Analysis of Financial Condition and Results of Operations and Item 8, Note 7 to
the Financial Statements.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the period
covered by this report.
8
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The Limited Partnership Assignee Unit holders are entitled to certain
distributions as provided in the Partnership Agreement. From inception through
February 15, 1996, Assignee Unit holders have received distributions from
operations ranging from $220 - $313 for each $1,000 original investment,
exclusive of a $2 payment made in 1995 in payment of Georgia real property taxes
due on gain from the sale of the Residence Inn-Atlanta (Perimeter West). No
market for Limited Partnership Assignee Units exists, nor is expected to
develop.
As of December 31, 1995, the approximate number of holders of Limited
Partnership Assignee Units was as follows:
Number of
Record
Title of Class Holders*
- - -------------- --------
Limited Partnership Assignee Units.............................. 5,531
*Number of Investments
<TABLE>
Item 6. Selected Financial Data.
The following represents selected financial data for Metric Partners
Growth Suite Investors, L.P., a California Limited Partnership, for each of the
five years in the period ended December 31, 1995. The data should be read in
conjunction with the financial statements included elsewhere herein.
For the Year Ended December 31,
-------------------------------
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(Amounts in thousands except per unit data)
<S> <C> <C> <C> <C> <C>
TOTAL REVENUES ................... $ 26,107 $ 25,008 $ 24,190 $ 23,331 $ 22,895
======== ======== ======== ======== ========
NET INCOME (LOSS) ................ $ 3,344 $ (947) $ (2,138) $ (2,329) $ (2,289)
======== ======== ======== ======== ========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP ASSIGNEE UNIT(1) .... $ 52 $ (19) $ (39) $ (38) $ (37)
======== ======== ======== ======== ========
TOTAL ASSETS ..................... $ 71,071 $ 74,936 $ 77,899 $ 81,951 $ 85,487
======== ======== ======== ======== ========
LONG TERM OBLIGATIONS:
Notes Payable ................. $ 42,669 $ 48,800 $ 49,003 $ 49,014 $ 48,775
======== ======== ======== ======== ========
CASH DISTRIBUTIONS PER LIMITED
PARTNERSHIP ASSIGNEE UNIT ....... $ 32 $ 30 $ 30 $ 28 $ 20
======== ======== ======== ======== ========
(1) $1,000 original contribution per limited partnership assignee unit, based on
limited partnership assignee units outstanding during the period, after
allocation to the General Partners.
</TABLE>
9
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Introduction
This Item should be read in conjunction with Financial Statements
contained elsewhere in this Report.
Results of Operations
Net income was $3,344,000 in 1995 compared to a net loss of $947,000 in
1994. The change was primarily due to the gain from the sale of the Residence
Inn - Atlanta (Perimeter West) as well as increases in hotel operations revenue,
resulting from improved occupancy and room rates at certain of the Partnership's
properties and reduced depreciation and interest expense. Revenue from hotel
operations increased 3.6% for 1995 compared to 1994. An increase in room
revenues at eight of the nine Partnership's hotels held at year end was only
slightly offset by a very modest decrease at the Residence Inn-Lexington. Hotel
operating expenses increased 5.0% in comparison to 1994 primarily due to
increases in administrative and marketing expenses and room operating costs.
Interest and other income increased $204,000 in 1995 primarily as a result of
larger cash balances, specifically the proceeds from the sale of the Residence
Inn-Atlanta (Perimeter West), invested in interest bearing investments.
Depreciation and other amortization decreased $694,000 in 1995, due to the sale
of one hotel and fully depreciated furnishings at certain of the other hotels.
Interest expense decreased by $165,000 in 1995 primarily due to the sale of one
hotel. General and administrative expense increased $132,000 in 1995 primarily
due to an increase in legal costs.
On an ongoing basis, the Partnership monitors the markets where the hotels
are located and reviews potential opportunities for the sale of the properties.
During the second quarter of 1995, the Partnership initiated discussions with
several potential purchasers regarding the sale of the Residence Inn-Atlanta
(Perimeter West). After a series of negotiations, the Partnership entered into a
contract for sale with a non-affiliated buyer and on October 3, 1995 the sale of
the property was recorded. (See Note 6 to the Financial Statements for details
of the transaction)
The operations of the properties and the markets in which they are located
are described below.
Residence Inn-Ontario: In 1995 room revenues increased 6.6% in comparison
to the prior year due to an increase in occupancy and a very slight increase in
room rates, which was offset, in part, by an increase in hotel operations
expenses. During the year, the local economy strengthened with new business
development and an escalation in construction activity; however, during the
fourth quarter federal government curtailments affected the "extended stay"
patronage base at the hotel. A variety of marketing programs remain in place,
focusing on promoting new business as well as retaining the existing clients.
Residence Inn-Columbus: Room revenues increased 9.0% in 1995 as both room
rates and occupancy improved in comparison to the prior year. This increase,
however, was offset by an overall 12.2% increase in hotel operations expenses.
Increases were incurred in the categories of room operating and administrative
costs, repair and maintenance items and property taxes. Management continues to
work with the operator in an effort to affect expense reductions. Local hotel
market conditions have remained stable, although new competition is expected to
come on-line later in 1996. Marketing efforts are focused on maintaining and
increasing the patronage base in light of the additional new competition.
Residence Inn-Fort Wayne: Room revenues increased 10.9% in 1995 in
comparison to the prior year, which was only partially offset by a modest
increase in hotel operations expenses. Both occupancy and room rates improved
during the year as compared to 1994. The local economy and hotel market remained
stable throughout the year and the Partnership's property continues to retain a
strong competitive position in the marketplace.
Residence Inn-Indianapolis: A 5.4% increase in room revenues for 1995 is
primarily attributable to a substantial increase in room rates as compared to
the prior year. Occupancy, however, reflected a decline for the year, due to a
fire which occurred in the first quarter of 1995 rendering 10% of the rooms
uninhabitable. The rebuilding of the damaged suites was completed in the third
quarter of 1995. Reconstruction work and loss of revenue, after a deductible,
was covered through the use of insurance proceeds. The local economy remained
stable during the year and the operator continues to focus on increasing
patronage through solicitation of major corporate accounts and training
business.
10
<PAGE>
Residence Inn-Lexington: Room revenues decreased slightly, or 1.6%,
compared to the prior year and hotel operations expenses increased 2.2% during
1995. Although occupancy declined as compared to the prior year, room rates
reflected an increase. The local economy remains stable; however, conditions in
the hotel market continue to be competitive as two new hotel products are
scheduled for completion in 1996. Responsive marketing efforts, including offers
of special rates for weekend business, are being utilized to enhance performance
results.
Residence Inn-Louisville: Room revenues and hotel operations expenses
increased slightly for the year as compared to 1994. Room rates reflected an
improvement, which contributed to a decline in occupancy for the year. Economic
conditions in the area appear to be stable; however, the Partnership's hotel is
subject to competition from several apartment complexes in the marketplace which
offer corporate units for lease at rates significantly lower than local hotels.
Marketing efforts have included direct mail and telemarketing programs in an
effort to expand and diversify the current patronage base.
Residence Inn-Winston Salem: Room revenues increased 9.3% in 1995 in
comparison to the prior year due to a substantial increase in room rates.
Occupancy rates were unchanged. Conditions in the local hotel market remain
competitive as two new products are due to come on line during 1996. The
operator continued an aggressive marketing program, aimed primarily at
attracting new training business, to enable the property to remain competitive.
Residence Inn-Nashville: A 9.2% increase in room revenues for 1995 in
comparison to the prior year is attributable to an improvement in both occupancy
and room rates at the hotel. This increase was partially offset by a 7.8%
increase in hotel operations expenses primarily due to increases in room,
administrative and marketing costs. The local economy continues to be stable and
unemployment low; however, competition in the hotel market remains challenging
as several new hotels are scheduled to open in 1996. Marketing programs are in
place to retain the existing long-term stay business as well as to attract new
convention and corporate business.
Residence Inn-Altamonte Springs: An increase of 6.2% in room revenues for
1995 was offset by an 8.8% increase in hotel operations expenses in comparison
to the prior year. Room operating, marketing costs, and certain repair and
maintenance items contributed to the increase in expenses, which was slightly
offset by lower property taxes, as compared to the prior year. Occupancy
increased for 1995 in comparison to the prior year and room rates increased
slightly. The local economy remains stable. The new operator is focusing on
maintaining current clients while working to attract new corporate business
patronage.
Residence Inn-Atlanta (Perimeter West): The property was sold to a
non-affiliated buyer on October 3, 1995. From January 1, 1995 through October 2,
1995 the hotel generated strong project operations. Both revenues and expenses
decreased in 1995 in comparison to the prior year as the property was held for
only a nine-month period prior to sale. Expenses, however, did not decline
proportionally due to the costs incurred with regard to a sales tax audit.
1994 Compared to 1993
Net loss decreased $1,191,000 in 1994 compared to 1993 primarily due to
increases in hotel operations revenue, resulting from improved occupancy and
room rates at certain of the Partnership's properties and reduced depreciation
expense. Revenue from hotel operations increased 3.6% for 1994 compared to 1993.
An increase in room revenues at seven of the Partnership's hotels was only
partially offset by a substantial decrease at the Residence Inn-Ontario, and
modest decreases at the Residence Inn-Lexington and the Residence Inn-Altamonte
Springs. Hotel operating expenses increased 2.5% in comparison to 1993 primarily
due to increases in administrative expenses, room operating costs, expenses for
repair and maintenance, and escalations in energy costs during the winter months
at several of the properties which were only partially offset by a decrease in
real estate tax and marketing expense. Interest and other income decreased
$43,000 in 1994 primarily as a result of recognition in 1993 of deferred income
relating to the management contract at the Residence Inn-Ontario. Depreciation
and amortization decreased $704,000 in 1994, due to fully depreciated
furnishings at certain of the hotels. General and administrative expense
decreased $87,000 in 1994 due to decreases in audit, legal and administrative
costs partially offset by the cost incurred by the Partnership to obtain
appraisals on the Residence Inns.
11
<PAGE>
Partnership Liquidity and Capital Resources
Introduction
As presented in the Statements of Cash Flows, cash was provided by
operating activities. Cash was also provided by investing activities from
proceeds from cash investments and sale of a property and was used for
improvements to properties and purchase of cash investments. Cash was used by
financing activities for note payable payments and distributions to partners.
The results of project operations before capital improvements for the year
ended December 31, 1995 are determined by net income or loss (before gain on
sale of property) adjusted for non-cash items such as depreciation and
amortization, and reduced by principal payments made on the notes payable (see
Item 2, Properties). The project operations before capital improvements is an
indication of the operational performance of the property. During 1995, all of
the Partnership's properties generated positive project operations before
deductions for capital improvements. The Partnership, after taking into account
results of project operations before capital improvements, interest income, and
general and administrative expenses, on an accrual basis, experienced positive
results from operations. Project operations should not be considered as an
alternative to net income or loss (as presented in the financial statements), as
an indicator of the Partnership's operating performance, or as an alternative to
cash flow as a measure of liquidity. Project operations after capital
improvements for any given year may not be indicative of the property's general
performance as capital improvements are likely to be made in large amounts when
associated with renovation programs.
The Partnership considers cash investments to be those investments
(primarily commercial paper) with an original maturity date of more than three
months at time of purchase. There were no cash investments as of December 31,
1995.
The former management company at the Residence Inn-Ontario which is
controlled by Kenneth E. Nelson ("Nelson") defaulted on certain obligations
under the management agreement. As discussed in Note 7 to the financial
statements, in 1991, the Partnership terminated the management agreement and
initiated legal proceedings against the former management company. The
management company withheld $194,000 from property funds in unauthorized
management fees prior to relinquishing management of the property. The $194,000
has been treated as a receivable in the Partnership's financial statements. In
March 1993 the parties verbally agreed to settle the lawsuit (the "SF
Settlement"); however, difficulties arose in consummating the settlement. After
a hearing in May 1994, the Court ruled in June that in the settlement the
Partnership had agreed to purchase the land underlying the Residence
Inn-Nashville (the "Land") from Nashville Lodging Company ("NLC"), an affiliate
of Nelson, subject to a lis pendens on the land.
Following this ruling, the Partnership has attempted to negotiate and
enter into a settlement agreement and a land purchase agreement and related
agreements (the "Settlement Documents") among itself and Nelson and NLC and
another Nelson entity, 2300 Elm Hill Pike, Inc. ("2300"). To date, these parties
have not been able to reach agreement on all issues relating to the Settlement
Documents. Since June 1994, numerous appearances before the Court have been made
in an effort to resolve all issues regarding the Settlement Documents, but as of
the date hereof, the Settlement Documents have not been completed or executed.
As discussed in Note 7 to the financial statements, in May 1991 legal
proceedings were initiated against the Partnership and others by Orlando
Residence Ltd., ("Orlando"), holder of a promissory note issued by a previous
owner of the Residence Inn-Nashville (Airport) (the "Hotel"). Orlando claimed
the sale of the Hotel to the Partnership by NLC was intended to defraud, hinder
and delay Orlando's recovery of the amount owed to it. Orlando sought the
collection of all payments made by the Partnership in connection with the land
lease to the previous owner associated with the Hotel and/or rescission of the
sale of the Hotel to the Partnership. The Partnership obtained a summary
judgement dismissing the case against it on September 15, 1993. In May 1994, the
Partnership filed a motion for summary judgement against Nelson, NLC and 2300 to
recover attorneys' fees of the Partnership related to this action. In April
1995, the Court awarded judgement to the Partnership against NLC and 2300 for a
portion of the Partnership's legal fees in this case.
12
<PAGE>
In July 1994, the Court in the case filed by Orlando ruled that the Hotel
had been fraudulently conveyed to NLC by 2300 in 1986 and voided the conveyance.
Judgements totalling more than $1,350,000 were subsequently entered by this
Court against Nelson, NLC and 2300. Orlando may attempt to execute these
judgements against Nelson, NLC and 2300 on the Land, which could deprive the
Partnership of the benefits of the SF Settlement. There is also some risk that
consummation of the SF Settlement, which would result in ownership of the Hotel
and the Land being combined in the Partnership while the Land may be subject to
the lis pendens filed by Orlando and/or other liens and judgements obtained by
Orlando may adversely affect the Partnership's equity interest in the Hotel.
However, the Partnership does not believe that consummation of the SF Settlement
will have a material adverse effect on the Partnership or on its equity interest
in the Hotel.
In another action in Nashville, Tennessee, 2300 and NLC have alleged that
the Partnership refused to purchase the Land as required by the SF Settlement
and demanded indemnification for all costs and losses of 2300 and NLC relating
to Orlando's claims. In February 1996, the Court in this action granted a motion
filed by 2300 and NLC for partial summary judgement, ruling that the Partnership
had breached the SF Settlement. The action will continue to determine damages
and other issues. The Partnership does not believe it breached the SF Settlement
and, in any event, does not believe that any damages it might ultimately be
required to pay in this action will have a material adverse effect on the
Partnership.
See Note 7 to the Financial Statements for more information about the
foregoing and other related proceedings.
In April 1993, the interest rate increased on the Residence Inn -
Altamonte Springs loan. In addition, in July 1993 the interest rate increased on
the loans of seven other hotels. Also, the terms of the loans provided for
payment of principal to commence at the same time as the interest increased. As
the loans on the hotels mature in 1998, the Partnership periodically reviews
alternative financing options which may be available in the marketplace.
In 1995, the Partnership spent $2,163,000 on capital improvements. The
majority was spent for room renovations at the Residence Inns-Lexington,
Altamonte Springs, Louisville and Nashville, siding and building repairs at the
Residence Inns-Columbus and Fort Wayne and a new lock system at Ontario and
Nashville. In 1996, the Partnership anticipates spending approximately
$2,600,000 on capital improvements. These improvements are necessary to enable
the properties to remain competitive in their respective markets and are
required under the franchise agreements.
During the second and third quarters of 1995 the Partnership worked with
Marriott in an effort to restructure contracts on certain Partnership hotels
under their management. An agreement was reached whereby Marriott reduced the
overall management fees, as well as the length of the contract terms. In
addition, the Partnership is permitted to terminate the contract after a five
year term in connection with a sale of the hotels. A termination fee would be
payable if the purchaser were not to continue the Residence Inn by Marriott
franchise. In exchange, the Partnership executed new agreements with Marriott
for the management of the Residence Inns located in Altamonte Springs,
Nashville, and Ontario. Effective January 1, 1996, Marriott manages all nine of
the Partnership's remaining hotels.
In accordance with, and as is customary in the management of hotels, the
various management agreements with the operators provide for a percentage of
revenues to be placed in capital replacement funds. The capital replacement
funds are used to fund on-going capital improvements as well as room or other
major renovation programs. In general, the capital replacement funds are being
held at the individual properties with additions generally made monthly based on
revenues and expenditures which are based on approved capital expenditure
budgets by the Partnership. Unused funds are held in interest-bearing accounts.
To the extent not available from an individual property's capital replacement
fund, a capital improvement or renovation may be funded from the Partnership's
working capital reserve.
The Partnership became aware that on February 12, 1996, a third party made
an unsolicited offer to a large number of unit holders of the Partnership to
purchase up to 1,200 units, representing approximately 2% of the outstanding
units, at a price of $205 per unit. Under applicable securities laws, the
Partnership was required to notify its investors of the Partnership's views
regarding this offer. A letter dated February 15, 1996 was provided to investors
in fulfillment of that requirement. It should be noted that the Partnership did
not take a position with respect to the offer but rather advised the holders of
the assignee limited partnership units to consult their personal financial
advisors on the matter, as the desirability of the offer to any unit hold could
differ greatly depending upon such unit holder's financial, tax, and other
individual circumstances.
13
<PAGE>
Unit holders were also advised that the Partnership and its Transfer Agent
will take such action as the Partnership deems appropriate to ensure that resale
transactions do not result in the termination of the Partnership for tax
purposes, cause the Partnership to be classified as a publicly traded
partnership or cause the Partnership to be taxed as a corporation. In order to
protect its status as a partnership for federal income tax purposes, secondary
market activity in its units will be limited to less than 5% of the outstanding
units per year. For any of these reasons, the Partnership may refuse to
recognize a resale transaction. The Partnership may also request any information
needed to ensure compliance with the terms of the Partnership Agreement and any
applicable regulatory requirements.
Conclusion
The Partnership established an estimated value for the assignee units in
the Partnership as of December 31, 1995. Appraisals of the hotels were
commissioned and undertaken by a firm which is a recognized appraiser and
consultant to the hotel industry. The primary methodology employed in the
appraisals used in the evaluation, which was selected by the appraiser and not
pursuant to any instructions from the Partnership, was the income approach to
value utilizing a discounted cash flow analysis. In conjunction with the
preparation of the appraisals, a discount rate was determined by the appraiser
based on several relevant factors, including, but not limited to, the current
investment climate for hotel properties, local hotel market and economic
conditions, comparisons of occupancy and room rates with prevailing market rates
for similar properties and the status of the management contract for each hotel.
The Partnership believes that the assumptions utilized in the process were not
unreasonable. The value of the properties as determined by the appraisal
process, in combination with the book value of other Partnership assets, has
resulted in an estimated net asset value of each assignee unit of $521 as of
December 31, 1995. As of December 31, 1994, the value of the properties as
determined by the appraisal process, in combination with the book value of other
Partnership assets, resulted in an estimated net asset value of each assignee
unit of $335. It should be noted, however, that appraised values represent the
opinion of the appraisal firm as of the date of the appraisals and are based on
market conditions at the time of the appraisals and on assumptions concerning
future circumstances which may or may not be accurate.
This valuation is an estimate of the assignee unit value only which has
been made as of December 31, 1995 based on the methodology described herein and
does not represent a market value. There can be no assurance that the sales of
the assets in the current market or at any time in the future would yield net
proceeds which on a per assignee unit basis would be equal to or greater than
the estimated value. Further, there can be no assurance that sales of assignee
units now or in the future would yield net proceeds equal to or greater than
this value. The assignee units are illiquid and there is no formal liquid market
where they are regularly traded. However, the Partnership is aware that some
resales have taken place in the informal secondary market. In this informal
market, transactions may or may not take place in any time period and occur at a
price negotiated between buyer and seller. We have no knowledge concerning how a
particular price may be determined. Resale transactions of which the Partnership
has knowledge, reflect prices ranging from $200 to $340 in 1996 (through March
21, 1996). In 1995, sixty-five resale transactions, of which the Partnership had
knowledge, were recorded at a simple average price (not weighted) of $244 per
assignee unit. In 1994, thirty-one resale transactions, of which the Partnership
had knowledge, were recorded at a simple average price (not weighted) of $196
per assignee unit. The Partnership's knowledge of these transactions is based
solely on the books and records of its Transfer Agent.
The Partnership anticipates that it will have sufficient resources to meet
its capital and operating requirements into the foreseeable future.
14
<PAGE>
Item 8. Financial Statements and Financial Statement Schedules.
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
a California Limited Partnership
TABLE OF CONTENTS
Page
Reports of Independent Auditors......................................... 16-17
Financial Statements:
Balance Sheets at December 31, 1995 and 1994......................... 18
Statements of Operations for the Years ended December 31, 1995,
1994 and 1993....................................................... 19
Statements of Partners' Equity (Deficiency) for the Years ended
December 31, 1995, 1994 and 1993.................................... 20
Statements of Cash Flows for the Years ended December 31, 1995,
1994 and 1993....................................................... 21
Notes to Financial Statements........................................ 22-28
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 1995................................................... 29
Financial statements and financial statement schedules not included have
been omitted because of the absence of conditions under which they are required
or because the information is included elsewhere in the financial statements.
15
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Metric Partners Growth Suite Investors, L.P., a California Limited Partnership:
We have audited the accompanying balance sheets of Metric Partners Growth
Suite Investors, L.P., a California Limited Partnership, (the "Partnership") as
of December 31, 1995 and 1994 and the related statements of operations,
partners' equity and cash flows for the years then ended. Our audit also
included the financial statement schedule for 1995 and 1994 of the Partnership
listed in the accompanying table of contents. These financial statements and
financial statement schedule are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits. The financial
statements and financial statement schedule of the Partnership for the year
ended December 31, 1993 were audited by other auditors whose report dated March
18, 1994 expressed an unqualified opinion on these statements and schedule.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Partnership at 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. Also, in our
opinion, the financial statement schedule for 1995 and 1994, when considered in
relation to the basic financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.
San Francisco, California ERNST & YOUNG LLP
February 23, 1996
16
<PAGE>
INDEPENDENT AUDITORS' REPORT
Metric Partners' Growth Suite Investors, L.P.:
We have audited the accompanying statements of operations, partners' equity
(deficiency) and cash flows of Metric Partners' Growth Suite Investors, L.P., (a
limited partnership) (the "Partnership") for the year ended December 31, 1993.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the results of operations and cash flows of the Partnership for the
year ended December 31, 1993 in conformity with generally accepted accounting
principles.
/s/Deloitte & Touche LLP
March 18, 1994
17
<PAGE>
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
a California Limited Partnership
BALANCE SHEETS
December 31,
1995 1994
---- ----
ASSETS
CASH AND CASH EQUIVALENTS ...................... $ 10,248,000 $ 5,142,000
RESTRICTED CASH ................................ 302,000 --
ACCOUNTS RECEIVABLE ............................ 1,034,000 746,000
PREPAID EXPENSES AND OTHER ASSETS .............. 196,000 314,000
PROPERTIES AND IMPROVEMENTS .................... 87,885,000 96,213,000
ACCUMULATED DEPRECIATION ....................... (28,935,000) (28,008,000)
------------ ------------
NET PROPERTIES AND IMPROVEMENTS ................ 58,950,000 68,205,000
DEFERRED FINANCING COSTS ....................... 127,000 235,000
DEFERRED FRANCHISE FEES ........................ 214,000 294,000
------------ ------------
TOTAL ASSETS ................................... $ 71,071,000 $ 74,936,000
============ ============
LIABILITIES AND PARTNERS' EQUITY
ACCOUNTS PAYABLE ............................... $ 1,022,000 $ 747,000
ACCRUED PROPERTY TAXES ......................... 391,000 319,000
ACCRUED INTEREST ............................... 344,000 317,000
OTHER LIABILITIES .............................. 1,095,000 905,000
DEFERRED GAIN ON SALE OF PROPERTY .............. 300,000 --
NOTES PAYABLE .................................. 42,669,000 48,800,000
------------ ------------
TOTAL LIABILITIES .............................. 45,821,000 51,088,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY (DEFICIENCY):
GENERAL PARTNERS .............................. 100,000 (68,000)
LIMITED PARTNERS (59,932 units outstanding) ... 25,150,000 23,916,000
------------ ------------
TOTAL PARTNERS' EQUITY ......................... 25,250,000 23,848,000
------------ ------------
TOTAL LIABILITIES AND PARTNERS' EQUITY ......... $ 71,071,000 $ 74,936,000
============ ============
See notes to financial statements.
18
<PAGE>
<TABLE>
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
a California Limited Partnership
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1995, 1994 and 1993
<CAPTION>
1995 1994 1993
---- ---- ----
REVENUES:
<S> <C> <C> <C>
Hotel operations.................................................... $ 25,649,000 $ 24,754,000 $ 23,893,000
Interest and other.................................................. 458,000 254,000 297,000
------------ ------------ ------------
Total revenues...................................................... 26,107,000 25,008,000 24,190,000
------------ ------------ ------------
EXPENSES (Including $410,000, $390,000 and $454,000 paid to
managing general partner and affiliates in 1995, 1994 and 1993)
Hotel operations
Rooms....................................................... 5,167,000 4,924,000 4,684,000
Administrative.............................................. 3,224,000 2,913,000 2,789,000
Marketing................................................... 2,538,000 2,437,000 2,460,000
Energy...................................................... 1,398,000 1,438,000 1,349,000
Repair and maintenance...................................... 1,329,000 1,301,000 1,199,000
Management fees............................................. 1,364,000 1,306,000 1,259,000
Property taxes.............................................. 877,000 837,000 991,000
Other....................................................... 970,000 901,000 928,000
------------- ------------ ------------
Total hotel operations.............................................. 16,867,000 16,057,000 15,659,000
Depreciation and other amortization................................. 3,510,000 4,204,000 4,908,000
Interest............................................................ 4,852,000 5,017,000 4,997,000
General and administrative.......................................... 809,000 677,000 764,000
------------- ------------ ------------
Total expenses...................................................... 26,038,000 25,955,000 26,328,000
------------- ------------ ------------
INCOME (LOSS) BEFORE GAIN ON SALE OF PROPERTY....................... 69,000 (947,000) (2,138,000)
Gain on sale of property............................................ 3,275,000 - -
------------- ------------- ------------
NET INCOME (LOSS)................................................... $ 3,344,000 $ (947,000) $ (2,138,000)
============= ============= ============
NET INCOME (LOSS) PER LIMITED PARTNERSHIP
ASSIGNEE UNIT:
Income (loss) before gain on sale of property....................... $(1) $(19) $(39)
Gain on sale of property............................................ 53 - -
--- ------ -----
NET INCOME (LOSS)................................................... $52 $(19) $(39)
=== ===== =====
CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP
ASSIGNEE UNIT...................................................... $32 $30 $30
=== === ===
</TABLE>
19
<PAGE>
<TABLE>
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
a California Limited Partnership
STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)
For the Years Ended December 31, 1995, 1994 and 1993
<CAPTION>
General Limited
Partner Partners Total
------- -------- -----
<S> <C> <C> <C>
BALANCE, JANUARY 1, 1993............................................. $ (412,000) $ 31,015,000 $30,603,000
Net Income (Loss).................................................... 197,000 (2,335,000) (2,138,000)
Cash Distributions................................................... (37,000) (1,798,000) (1,835,000)
------------ ------------ ------------
BALANCE, DECEMBER 31, 1993........................................... (252,000) 26,882,000 26,630,000
Net Income (Loss).................................................... 221,000 (1,168,000) (947,000)
Cash Distributions................................................... (37,000) (1,798,000) (1,835,000)
------------ ------------ ------------
BALANCE, DECEMBER 31, 1994........................................... (68,000) 23,916,000 23,848,000
Income (Loss) Before Gain on Sale of Property........................ 105,000 (36,000) 69,000
Gain on Sale of Property............................................. 102,000 3,173,000 3,275,000
Cash Distributions from Sale......................................... (2,000) (105,000) (107,000)
Cash Distributions from Operations................................... (37,000) (1,798,000) (1,835,000)
------------ ------------ ------------
BALANCE, DECEMBER 31, 1995........................................... $ 100,000 $ 25,150,000 $ 25,250,000
============ ============ ============
</TABLE>
See notes to financial statements.
20
<PAGE>
<TABLE>
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
a California Limited Partnership
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1995, 1994 and 1993
<CAPTION>
1995 1994 1993
---- ---- ----
OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (loss)................................................... $ 3,344,000 $ (947,000) $ (2,138,000)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization............................... 3,585,000 4,310,000 5,024,000
Gain on sale of property.................................... (3,275,000) - -
Changes in operating assets and liabilities:
Accounts receivable...................................... (288,000) - 403,000
Prepaid expenses and other assets........................ 118,000 (13,000) 15,000
Accounts payable, accrued expenses
and other liabilities................................... 678,000 100,000 77,000
------------- ------------- -------------
Net cash provided by operating activities........................... 4,162,000 3,450,000 3,381,000
------------- ------------- -------------
INVESTING ACTIVITIES:
Proceeds from sale of property - net................................ 5,684,000 - -
Capital improvements................................................ (2,163,000) (1,448,000) (1,189,000)
Restricted cash - deposit to escrow account......................... (302,000) - -
Purchase of cash investments........................................ (1,409,000) (494,000) (2,964,000)
Proceeds from sale of cash investments.............................. 1,409,000 1,478,000 4,440,000
------------- ------------- -------------
Net cash provided (used) by investing activities.................... 3,219,000 (464,000) 287,000
------------- ------------- -------------
FINANCING ACTIVITIES:
Notes payable principal payments.................................... (333,000) (317,000) (202,000)
Cash distributions to partners...................................... (1,942,000) (1,835,000) (1,835,000)
-------------- -------------- -------------
Cash used by financing activities................................... (2,275,000) (2,152,000) (2,037,000)
-------------- -------------- -------------
INCREASE IN
CASH AND CASH EQUIVALENTS.......................................... 5,106,000 834,000 1,631,000
Cash and cash equivalents at beginning of year...................... 5,142,000 4,308,000 2,677,000
------------- ------------ -------------
CASH AND CASH EQUIVALENTS
AT END OF YEAR..................................................... $ 10,248,000 $ 5,142,000 $ 4,308,000
============= ============ =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid in cash during the year............................... $ 4,636,000 $ 4,819,000 $ 4,501,000
============= ============ =============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Balance of note payable assumed by buyer............................ $ 5,922,000 - -
============= ===== =====
</TABLE>
See notes to financial statements.
21
<PAGE>
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies
Organization - Metric Partners Growth Suite Investors, L.P., a California
Limited Partnership (the "Partnership"), was organized under the laws of the
State of California to acquire, hold for investment, manage, and ultimately
sell, all-suite, extended stay hotels which are a franchise of the Residence Inn
by Marriott, Inc. The managing general partner is Metric Realty, an Illinois
general partnership. The Associate General Partner of the Partnership is GHI
Associates II, L.P., a California Limited Partnership, of which Metric Realty is
the general partner and Prudential-Bache Properties, Inc., a wholly-owned
subsidiary of Prudential Securities Group Inc., is the limited partner. Metric
Realty is owned by Metric Holdings, Inc. and Metric Realty Corp. Metric Realty
Corp. is the Managing Partner of Metric Realty. The Partnership was organized on
June 28, 1984 and commenced operations on April 14, 1988. Capital contributions
of $59,932,000 ($1,000 per assignee unit) were made by the limited partners.
New Accounting Pronouncement - In March 1995, the FASB issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of." This statement requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the undiscounted cash flows estimated to be generated by those
assets during the holding period are less than the assets' carrying amount.
Statement No. 121 also addresses the accounting for long-lived assets that are
expected to be disposed of. The Partnership will adopt Statement No. 121 in the
first quarter of 1996 and, based on current circumstances, does not believe the
effect of adoption will be material.
Fair Value of Financial Instruments - In 1995, the Partnership adopted
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments," which requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet. Fair value is a subjective measurement based on assumptions and
market data. The carrying amounts of cash and cash equivalents, restricted cash,
receivables and obligations under accounts payable and accrued expenses
approximate their fair value. An estimate of the fair value of the Partnership's
notes payable and related accrued interest requires the use of discounted cash
flow analysis based on the current market rate for similar types of borrowing
arrangements. The carrying amounts of the Partnership's notes payable
approximate their fair value.
Use of Estimates - The preparation of the 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.
Cash and Cash Equivalents - The Partnership considers all highly liquid
investments, primarily commercial paper, with an original maturity date of three
months or less at the time of purchase to be cash equivalents.
Cash Investments - Cash investments include all cash investments not
considered cash or cash equivalents. There were no cash investments at December
31, 1995 or 1994.
Restricted Cash - Restricted cash consists of amounts related to the sale
of the Residence Inn - Atlanta (Perimeter West) which were deposited into an
escrow account. See Note 6.
Credit Risk - Financial instruments which potentially subject the
Partnership to concentrations of credit risk include cash and cash equivalents
and restricted cash. The Partnership places its cash deposits and temporary cash
investments with creditworthy, high-quality financial institutions. The
concentration of such cash deposits and temporary cash investments is not deemed
to create a significant risk to the Partnership.
22
<PAGE>
Properties and Improvements - Properties and improvements are stated at
cost. A provision for impairment of value is recorded when a decline in value of
property is determined to be other than temporary as a result of one or more of
the following: (1) a property is offered for sale at a price below its current
carrying value, (2) a property has significant balloon payments due within the
foreseeable future which the Partnership does not have the resources to meet,
and anticipates it will be unable to obtain replacement financing or debt
modification sufficient to allow a continued hold of the property over a
reasonable period of time, (3) a property has been, and is expected to continue,
generating significant operating deficits and the Partnership is unable or
unwilling to sustain such deficit results of operations, and has been unable to,
or anticipates it will be unable to, obtain debt modification, financing or
refinancing sufficient to allow a continued hold of the property for a
reasonable period of time or, (4) a property's value has declined based on
management's expectations with respect to projected future operational cash
flows and prevailing economic conditions. An impairment loss is indicated when
the undiscounted sum of estimated future cash flows from an asset, including
estimated sales proceeds, and assuming a reasonable period of ownership up to 5
years, is less than the carrying amount of the asset. In the absence of the
above circumstances, properties and improvements are stated at cost. Acquisition
fees are capitalized as a cost of properties and improvements. Certain payments
received from the sellers pursuant to performance guarantee agreements in excess
of the hotel's net operating income are applied as a reduction of the cost of
the related hotel.
Depreciation - Depreciation is computed by the straight-line method over
estimated useful lives of 30 years for buildings and improvements and six years
for furnishings.
Deferred Financing Costs - Financing costs are deferred and amortized as
interest expense over the lives of the related loans, which are three to ten
years, or expensed, if financing is not obtained.
Deferred Franchise Fees - Franchise fees, paid in connection with the
acquisition of the Residence Inns, are deferred and amortized over the remaining
lives of the franchise agreements which range from ten to fifteen years.
Net Income (Loss) Per Limited Partnership Assignee Unit - Net income
(loss) per limited partnership assignee unit is computed by dividing net income
(loss) allocated to the limited partners by 59,932 assignee units.
Income Taxes - No provision for Federal and state income taxes has been
made in the financial statements because income taxes are the obligation of the
partners.
Reclassification - Certain prior years' amounts have been reclassified to
conform to the 1995 presentation.
2. Transactions With the Managing General Partner and Affiliates
In accordance with the Partnership agreement, the Partnership is charged
by the managing general partner and affiliates for services provided to the
Partnership. The amounts are as follows:
1995 1994 1993
---- ---- ----
Partnership management fees ............ $160,000 $160,000 $160,000
Reimbursement of expenses .............. 250,000 230,000 294,000
-------- -------- --------
Total .................................. $410,000 $390,000 $454,000
======== ======== ========
Reimbursement of expenses include partnership accounting, professional
services and investor services.
In accordance with the Partnership agreement the general partners are
allocated their two percent continuing interest in the Partnership's net income
or loss and cash distributions. In addition, in both 1994 and 1993 the general
partners were allocated gross income of $245,000 in accordance with and
calculated pursuant to the Partnership agreement. However, beginning in 1995,
due to the general partners equity account balance, the Partnership adjusted and
limited the income allocation to the general partners to amounts equal to their
two percent continuing interest in cash distributions.
The general partners were allocated taxable gain and loss in accordance
with the Partnership agreement.
23
<PAGE>
3. Properties and Improvements
Hotel properties and improvements at December 31, 1995 and 1994 are
summarized as follows:
1995 1994
---- ----
Land ....................................... $ 9,358,000 $ 12,276,000
Buildings and improvements ................. 61,487,000 66,376,000
Furnishings ................................ 17,040,000 17,561,000
------------ ------------
Total ...................................... 87,885,000 96,213,000
Accumulated depreciation ................... (28,935,000) (28,008,000)
------------ ------------
Net properties and improvements ............ $ 58.950.000 $ 68,205,000
============ ============
4. Notes Payable
The Partnership has one or more notes payable associated with each
property. Individual properties are pledged as collateral for the related notes
payable. The notes are generally payable monthly and require balloon payments in
1998. Interest rates on the notes are fixed at December 31, 1995 and range from
8 percent to 10.25 percent. Certain of the notes have been discounted over their
term to yield interest at 10.15 to 10.5 percent per annum. Discount amortization
was $124,000, $114,000 and $191,000 for the years ended December 31, 1995, 1994
and 1993, respectively.
Each note for the six Residence Inns acquired in June 1988 (with a total
net book value of $29,505,000 at December 31, 1995) provides for
cross-collateralization to all of these properties. The principal amount of all
six notes was $18,739,000 at December 31, 1995. The Residence Inn - Nashville
(Airport) note payable with an original balance of $9,250,000 wraps an existing
loan which had a balance of approximately $9,336,000 at the time the Partnership
acquired the property.
Principal payments at December 31, 1995 are required as follows:
1996.............................................................. $ 353,000
1997.............................................................. 375,000
1998.............................................................. 42,257,000
Unamortized discount.............................................. (316,000)
-------------
Total............................................................. $ 42,669,000
=============
Amortization of deferred financing costs totaled $50,000, $70,000 and
$70,000 for the years ended December 31, 1995, 1994 and 1993, respectively.
5. Minimum Future Rental Commitments
One property, the Residence Inn-Nashville (Airport), is utilized through a
land lease which provides for lease payments of $100,000 per annum for the first
ten years, plus an additional $50,000 per annum until the purchase money note to
the seller is paid in full. The $50,000 is payable in equal monthly installments
with payment of the balance being subordinated to returns to the Partnership.
Furthermore, up to $210,000 of the balance of the ground lease can, and has
been, applied by the Partnership as an offset under a guarantee agreement. The
portion of the accrued rent not paid currently accrues interest at a rate of ten
percent per annum, compounded annually. Furthermore, the lease provides for
additional payments based on 1.8% of the revenues of the hotel.
Beginning in the eleventh lease year, the annual lease payment is adjusted
every five years with the payment based on application of the then current
ten-year United States Treasury Bond rate of interest, to a valuation of the
land at the higher of its then fair market value or the option price in the
lease. The lease extends through May 25, 2049 and contains an option to purchase
the fee interest in the land.
24
<PAGE>
Rental expense (including the 1.8% of revenues) for this lease was
$219,000, $214,000 and $211,000 in 1995, 1994 and 1993.
6. Sale of Property
The Partnership sold the Residence Inn-Atlanta (Perimeter West) on October
3, 1995. The net sales price was $11,350,000 after deducting $300,000 that was
deposited into an escrow account (the "Shortfall Guaranty Account"). The
Partnership has guaranteed certain income levels to the buyer for the years from
1996 through 1998. To the extent these income levels are not attained, the buyer
will receive the deficiency, up to the maximum $300,000, from the Shortfall
Guaranty Account. Any unused funds in the Shortfall Guaranty Account at December
31, 1998, will be returned to the Partnership together with interest. Gain on
sale of $300,000 has been deferred until the contingency has been removed.
The buyer assumed the existing loan with a balance of $5,922,000. After
payment of expenses of sale, the proceeds to the Partnership are approximately
$5,384,000. Of that amount, $107,000, representing state real property
withholding taxes due on the gain on sale, was paid to the State of Georgia and
recorded as cash distributions to partners from sale in these financial
statements because such taxes are the obligation of the partners.
7. Legal Proceedings
Metric Partners Growth Suite Investors, L.P. vs. Kenneth E. Nelson, The
Nelson Group, et al., San Francisco County Superior Court, Case No. 928065 (the
"SF Lawsuit). [This lawsuit is related to the other proceedings described below.
Terms defined in the description of one case may be used in the description of
the other cases.]
This lawsuit relates to management of the Partnership's Residence Inn -
Ontario by an entity controlled by Kenneth E. Nelson ("Nelson") from April 1988
to February 1991. As a result of several defaults by the Nelson entity under the
management agreement, the Partnership gave notice of termination of the
management agreement and filed the SF Lawsuit in January 1991 seeking damages
and declaratory and injunctive relief against Nelson and certain related parties
(collectively, the "Nelson Parties"). The Nelson Parties counterclaimed for
damages and declaratory relief.
In March 1993, the Partnership and the Nelson Parties verbally agreed to
settle the SF Lawsuit at a settlement conference (the "SF Settlement"). Under
this settlement, the Partnership is to purchase the land (the "Land") underlying
the Partnership's Residence Inn - Nashville (the "Hotel") currently leased by
the Partnership from Nashville Lodging Company ("NLC"), an entity controlled by
Nelson. The Land purchase would be 100% seller-financed pursuant to a
non-recourse promissory note of the Partnership in the amount of $1,700,000. The
Court retained jurisdiction to enforce the terms of the SF Settlement.
Various disagreements between the Partnership and Nelson regarding the
meaning of several provisions of the SF Settlement arose after March 1993. A
major disagreement related to whether the SF Settlement required the Partnership
to purchase the Land subject to a certain lis pendens filed against the Land by
Orlando Residence Ltd. ("Orlando") (see the "Nashville Case I" below). In
February 1994, the Nelson Parties filed a motion to enforce the SF Settlement
which was granted and in June 1994, the Court ruled that the Partnership had
agreed to purchase the Land subject to the lis pendens filed by Orlando.
Following this ruling, the Partnership has attempted to negotiate and
enter into a settlement agreement and a land purchase agreement and related
agreements (the "Settlement Documents") among itself and Nelson and NLC and
another Nelson entity, 2300 Elm Hill Pike, Inc. ("2300"). To date, these parties
have not been able to reach agreement on all issues relating to the Settlement
Documents. Since June 1994, numerous appearances before the Court have been made
in an effort to resolve all issues regarding the Settlement Documents, but as of
the date hereof, the Settlement Documents have not been completed or executed.
In July 1994, the Court in the Nashville Case I, discussed below, ruled
that the Hotel had been fraudulently conveyed to NLC by 2300 in 1986 and voided
the conveyance. Orlando may attempt to execute judgements against Nelson, NLC
and 2300 on the Land, which could deprive the Partnership of the benefits of the
SF Settlement. There is also some risk that consummation of the SF Settlement,
which would result in ownership of the Hotel and the Land being combined in the
Partnership while the Land may be subject to the lis pendens filed by Orlando
and/or other liens and judgements related to Nashville Case I, may adversely
affect the Partnership's equity interest in the Hotel. However, the Partnership
does not believe that consummation of the SF Settlement will have a material
adverse effect on the Partnership or on its equity interest in the Hotel.
25
<PAGE>
Orlando Residence Ltd. vs. Metric Partners Growth Suite Investors, L.P. et
al., Chancery Court for Davidson County, in Nashville, Tennessee, Case No.
92-3086-III ("Nashville Case I")
2300 was the original owner of the Hotel (including the Land). In 1985,
2300's shareholders severed their business relationships and 2300 executed a
promissory note (the "Note") in favor of Orlando. 2300 defaulted on the Note and
in March 1990 Orlando obtained a judgement against 2300 on the Note. 2300
conveyed its interest in the Hotel (including the Land) to NLC in 1986. In April
1989, NLC sold the Hotel and leased the Land to the Partnership.
In October 1992, Orlando filed this lawsuit against Nelson and NLC and
2300, and the Partnership, alleging that the sale of the Hotel and the Land by
2300 to NLC in 1986 and NLC's subsequent sale of the Hotel and lease of the Land
to the Partnership in 1989 were fraudulent conveyances, intended to hinder
Plaintiff's recovery of its Note judgement against 2300. In August 1993, the
Court dismissed this action against the Partnership. Orlando has previously
stated that it will appeal this judgement for the Partnership.
The Partnership cross-claimed against NLC, Nelson and 2300 for indemnity
and breach of representations and warranties under the purchase and sale
agreement between NLC and the Partnership. In April 1995, the Court awarded
judgement to the Partnership against NLC and 2300 for a portion of the
Partnership's legal fees in this case.
In July 1994, the Court ruled that the sale of the Hotel by 2300 to NLC
had been a fraudulent conveyance and voided this conveyance. In September 1994,
the Court entered judgement against Nelson, NLC and 2300 for approximately
$500,000. These rulings do not directly adversely affect the equity interest of
the Partnership in the Hotel or its leasehold interest in the Land. In September
1995, punitive damages of $850,000 against Nelson, NLC and 2300 were awarded to
Orlando. Although the defendants have appealed these judgements, they became
final on December 1, 1995.
In January 1996, NLC filed a petition with the U.S. Bankruptcy Court in
Milwaukee, Wisconsin, for reorganization under Chapter 11 of the Bankruptcy
Code. In connection with this filing, the Partnership filed an interpleader
action against NLC and Orlando (which had garnished payments due to NLC from the
Partnership) and the holder (the "Lender") of the underlying mortgage on the
Hotel (the "Underlying Mortgage"), asking the Court to determine which parties
were entitled to receive payments to be made by the Partnership to NLC under the
ground lease (the "Lease") of the Land and the promissory note (the "Wrap Note")
held by NLC which "wraps around" the Underlying Mortgage. All payments due to
NLC under the Lease and the Wrap Note from the filing of this action through
February 1996 were paid into the clerk of the Bankruptcy Court.
In February 1996, the Bankruptcy Court granted motions to dismiss the
reorganization proceeding filed by Orlando and the Lender. Following this
dismissal, in late February 1996, the parties to the interpleader action filed
by the Partnership stipulated, and the Bankruptcy Court subsequently ordered,
that all payments theretofore paid into the clerk of the Bankruptcy Court
pursuant to the Wrap Note and all payments due under such Note on March 1, 1996
and in the future, to the extent such payments constituted payments due under
the Underlying Mortgage, would be paid directly to the Lender until further
order to the contrary by the Bankruptcy Court. The parties were asked by the
Bankruptcy Court to present their arguments as to the disposition of payments
due under the Lease and the portion of the Wrap Note payments to be retained by
NLC. These payments due for March 1996 were paid by the Partnership into the
clerk of the Bankruptcy Court and are to continue to be so paid until further
order to the contrary by the Bankruptcy Court. The interpleader action will have
no economic effect on the Partnership since the action relates only to amounts
owed by the Partnership to NLC.
Nashville Lodging Company vs. Metric Partners Growth Suite Investors, L.P.
et al., Circuit Court, State of Wisconsin, Case No. 94CV001212.
In February 1994, NLC served this lawsuit on the Partnership. NLC alleges
fraud, breach of settlement contract and breach of good faith and fair dealing
and seeks compensatory, punitive and exemplary damages in an unspecified amount
for the Partnership's failure to consummate the SF Settlement. In February 1994,
the Partnership filed an answer and requested that the Court stay the action
pending resolution of the SF Lawsuit including all appeals. The Court refused to
stay the action and discovery commenced. In February 1995, the Court determined
that the Partnership could be sued in Wisconsin but stayed the case until the
settlement of the SF Lawsuit has been finalized.
26
<PAGE>
Orlando Residence Ltd. vs. 2300 Elm Hill Pike, Inc. and Nashville Lodging
Company vs. Metric Partners Growth Suite Investors, L.P., Chancery Court for
Davidson County, in Nashville, Tennessee, Case No. 94-1911-I ("Nashville Case
II").
Orlando has filed an action against 2300 and NLC in the Davidson County
Chancery Court to attempt to execute on its judgement against Nelson, NLC and
2300 in Nashville Case I by subjecting the Land to sale. In May 1995, 2300 and
NLC filed a third-party complaint against the Partnership, alleging it had
refused to purchase the Land as required by the SF Settlement. 2300 and NLC
claim as damages against the Partnership 2300 and NLC's costs in defending
Nashville Case I and Nashville Case II and indemnification for any loss
resulting from the claims of Orlando, among other claims of damage.
In September 1995, the Court dismissed this action by Orlando against 2300
and NLC for lack of standing. However, the Court refused to dismiss the
third-party action against the Partnership. In February 1996, the Court granted
a motion filed by 2300 and NLC for partial summary judgement, ruling that the
Partnership had breached the SF Settlement. The action will continue to
determine damages and other issues. The Partnership does not believe it breached
the SF Settlement and will appeal this ruling at an appropriate time. In any
event, it does not believe that any damages it might ultimately be required to
pay in this action will have a material adverse effect on the Partnership.
The ultimate disposition of these lawsuits cannot be predicted at this
time; however, based solely on the facts known to it as of the date hereof, the
Partnership does not believe the lawsuits will have a material adverse effect on
the Partnership.
8. Reconciliation to Income Tax Method of Accounting
<TABLE>
The differences between the method of accounting for income tax reporting
and the accrual method of accounting used in the financial statements are as
follows:
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net income (loss) - financial statements................... $3,344,000 $(947,000) $(2,138,000)
Differences resulted from:
Gain on sale of property................................ 281,000 -- --
Depreciation............................................ (95,000) 166,000 949,000
Amortization of notes payable discount.................. 124,000 114,000 191,000
Interest................................................ (17,000) (33,000) (181,000)
Other................................................... (141,000) (65,000) (116,000)
---------- ---------- -----------
Net income (loss) - income tax method...................... $3,496,000 $(765,000) $(1,295,000)
========== ========= ===========
Taxable income (loss) per limited partnership assignee unit
after giving effect to the allocation to the general
partners.................................................. $53 $(17) $(25)
=== ==== ====
Net assets and liabilities - financial statements.......... $25,250,000 $23,848,000 $26,630,000
Cumulative differences resulted from:
Gain on sale of property................................ 300,000 -- --
Depreciation............................................ 651,000 827,000 661,000
Amortization of notes payable discount.................. 2,211,000 2,087,000 1,973,000
Interest................................................ (2,205,000) (2,186,000) (2,153,000)
Capital account adjustment.............................. 5,993,000 5,993,000 5,993,000
Other................................................... 53,000 130,000 195,000
------------- ------------ -----------
Net assets and liabilities - income tax method............. $32,253,000 $30,699,000 $33,299,000
=========== =========== ===========
</TABLE>
27
<PAGE>
9. Subsequent Event
Effective January 1, 1996, the Partnership executed re-negotiated
contracts with Marriott for the management of six of the hotels already under
contract with Mariott. Furthermore, in exchange for such re-negotiated
contracts, the Partnership executed new agreements with Mariott for the
management of the Residence Inns located in Altamonte Springs, Nashville and
Ontario. Overall, the transaction is expected to reduce fees, relatively, as
well as the length of the contract terms.
28
<PAGE>
<TABLE>
SCHEDULE III
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
a California Limited Partnership
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1995
COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN
A B C D E F G H
Cost Capitalized
Initial Cost Subsequent Gross Amount at Which
to Partnership to Acquisition Carried at Close of Period(1)
-------------- -------------- -----------------------------
<CAPTION>
Accumu- Date
Buildings Buildings lated of Date
and and Deprecia- Con- of
Encum- Improve- Improve- Carrying Improve- tion struc- Acqui-
Description brances(5) Land ments ments Costs Land ments Total(2) (3)(4) tion sition
- - ----------- ---------- ---- ----- ----- ----- ---- ----- -------- ------ ---- ------
(Amounts in thousands)
HOTELS:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residence Inn-Ontario
Ontario, California .......... $ 9,003 $ 3,338 $13,555 $ 1,232 $ (775) $ 3,185 $14,165 $17,350 $ 5,052 2/86 4/29/88
Residence Inn-Columbus (East)
Columbus, Ohio ............... 2,673 587 5,277 908 (176) 571 6,025 6,596 2,438 1986 6/17/88
Residence Inn-Fort Wayne
Fort Wayne, Indiana .......... 2,801 595 5,541 693 (229) 573 6,027 6,600 2,334 1985 6/17/88
Residence Inn-Indianapolis
Indianapolis, Indiana ........ 3,250 996 6,128 1,143 (167) 973 7,127 8,100 2,832 1984 6/17/88
Residence Inn-Lexington 11/85 &
Lexington, Kentucky .......... 3,161 799 6,114 978 (92) 787 7,012 7,799 2,638 3/86(6) 6/17/88
Residence Inn-Louisville
Louisville, Kentucky ......... 3,649 1,093 6,880 1,198 (164) 1,070 7,937 9,007 3,180 1984 6/17/88
Residence Inn-Winston-Salem
Winston-Salem,
North Carolina ............... 3,205 669 6,341 720 (132) 657 6,941 7,598 2,773 1986 6/17/88
Residence Inn-Nashville (Airport)
Nashville, Tennessee ......... 8,703 -- 11,416 2,041 (525) -- 12,932 12,932 4,255 1/85 5/26/89
Residence Inn-Altamonte Springs
Altamonte Springs, 1985 &
Florida ...................... 6,224 1,594 9,862 797 (350) 1,542 10,361 11,903 3,433 1988(7) 3/16/90
------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL $42,669 $ 9,671 $71,114 $ 9,710 $(2,610) $ 9,358 $78,527 $87,885 $28,935
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
See accompanying notes.
29
<PAGE>
<TABLE>
SCHEDULE III
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.
A California Limited Partnership
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1995
NOTES:
(1) The aggregate cost for Federal income tax purposes is $88,103,000.
<S> <C>
(2) Balance, January 1, 1993................................................................$ 93,576,000
Capital Improvements................................................................... 1,189,000
------------
Balance, December 31, 1993.............................................................. 94,765,000
Capital Improvements................................................................... 1,448,000
------------
Balance, December 31, 1994.............................................................. 96,213,000
Cost of property and improvements sold.................................................. (10,491,000)
Capital Improvements................................................................... 2,163,000
------------
Balance, December 31, 1995..............................................................$ 87,885,000
============
(3) Balance, January 1, 1993................................................................$ 18,998,000
Additions charged to expense........................................................... 4,857,000
------------
Balance, December 31, 1993.............................................................. 23,855,000
Additions charged to expense............................................................ 4,153,000
------------
Balance, December 31, 1994.............................................................. 28,008,000
Accumulated depreciation on property and improvements sold.............................. (2,533,000)
Additions charged to expense........................................................... 3,460,000
------------
Balance, December 31, 1995..............................................................$ 28,935,000
============
</TABLE>
(4) Depreciation is computed on lives ranging from six to 30 years.
(5) Encumbrances are shown net of a discount of $316,000.
(6) Completed in stages from November 1985 to March 1986.
(7) Construction completed in two phases.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
The information called for by this item is incorporated herein by
reference to the Registrant's Current Report on Form 8-K filed September 14,
1994 (Commission File No. 0-17660).
30
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
The Partnership has no directors or executive officers. For informational
purposes only, the following are the names and additional information relating
to the directors and executive officers of Metric Realty Corp., the managing
partner of Metric Realty, the managing general partner of the Partnership which
also provides asset management services to the Partnership, and Metric Holdings,
Inc., the only other partner of Metric Realty.
(a) Directors
Robert A. Fiddaman
Director, President and Chief Executive Officer, Metric Realty Corp.
Mr. Fiddaman, age 58, has served as a director of the general partner
managing Metric Realty since March 1988 and was Executive Vice President,
Institutional Investments, of such general partner from March 1988 to December
1993 when he became President and Chief Executive Officer of such general
partner, i.e., Metric Realty Corp. Mr. Fiddaman was also a director of the other
partner of Metric Realty from June 1990 to December 1992. Since February 1994,
he has been Chairman of the Board, President and Chief Executive Officer of
Metric Income Trust Series, Inc., a publicly-held real estate investment trust,
of which Metric Realty is the Advisor. He was an officer of Fox Capital
Management Corporation ("FCMC") from 1979 to March 1993, and, since 1985, has
been a partner (or since December 1993, a limited partner of a limited
partnership which is a partner) of Fox Realty Investors. FCMC and Fox Realty
Investors are real estate investment management companies which serve directly
or indirectly as general partner for 24 publicly-held real estate limited
partnerships. Mr. Fiddaman is a licensed real estate broker and has served as
President of the Bay Area Mortgage Association and President of the Northern
California Mortgage Bankers Association.
Ralph F. Verni
Chairman of the Board, Metric Realty Corp.; Chairman of the Board, President and
Chief Executive Officer, Metric Holdings, Inc.
Mr. Verni, age 53, was elected to his positions with Metric Realty Corp.
and Metric Holdings, Inc. in March 1993. He joined State Street Research and
Management Company ("State Street Research"), a subsidiary of Metropolitan Life,
in 1992 as Chairman and Chief Executive Officer and became President in January
1993. He also serves as Chairman of Metropolitan Asset Management Company, a
wholly-owned subsidiary of MetLife which in turn serves as a holding company for
several of Metropolitan Life's investment and financial subsidiaries. Mr. Verni
also serves as Chairman of the Board of Metropolitan Securities, Inc., a
wholly-owned broker/dealer of Metropolitan Life which serves as the distributor
for mutual funds sold by Metropolitan Life representatives. He is a director of
10 registered investment companies in the State Street Research Fund complex
which are managed by State Street Research or an affiliate. Mr. Verni is a
member of the Board of Directors of the CML Group, Inc., a publicly-traded
company. In addition, Mr. Verni is a member of the Advisory Committee for the
MIT Center for Real Estate Development and a member of the Colgate University
Board of Trustees and its Finance Committee. Prior to joining State Street
Research, Mr. Verni was President and Chief Executive Officer of New England
Investment Companies, a holding company for the real estate, investment
management, and broker/dealer subsidiaries of New England Mutual Life Insurance
Company ("The New England"), and was also the Chief Investment Officer and a
director of The New England. Prior to joining The New England in 1982, Mr Verni
spent 16 years with The Equitable Life Assurance Company in senior investment
management positions. He holds a Bachelor's Degree from Colgate University and a
Master's Degree in Business Administration from Columbia University. He is also
a Chartered Financial Analyst.
31
<PAGE>
Gerard P. Maus
Director, Metric Realty Corp. and Metric Holdings, Inc.
Mr. Maus, age 44, was elected as a director of Metric Realty Corp. and
Metric Holdings, Inc. in March 1993. He joined State Street as Executive Vice
President, Chief Financial Officer and Chief Administrative Officer in February
1993. Prior to joining State Street, Mr. Maus served since 1983 as a financial
officer of New England and its subsidiary, New England Investment Companies
("NEIC"), most recently as Executive Vice President and Chief Financial Officer
of NEIC from 1990 to January 1993. Prior to holding these positions, Mr. Maus
held financial positions with Bank of New England, Coopers & Lybrand, and
Liberty Mutual Life Insurance Company. He received a Bachelor of Arts Degree in
Business Administration from Rutgers University in 1973 and is a Certified
Public Accountant.
(b) Executive Officers
Margot M. Giusti
Executive Vice President, Finance and Administration, and Chief Financial
Officer, Metric Realty Corp.; Executive Vice President, Chief Financial Officer,
Metric Holdings, Inc.
Mrs. Giusti, 43, has served as Chief Financial Officer of the partner
managing Metric Realty since March 1988 and as head of Administration since
August 1990. She has also held the same positions with the other partner of
Metric Realty since December 1992. From 1980 to 1988, she was employed by Fox
Realty Investors or an affiliate in various financial positions. She graduated
from the University of San Francisco in 1974 with a Bachelor of Science Degree
in Business Administration. From 1974 until 1979, Mrs. Giusti was employed on
the audit staff of Deloitte Haskins & Sells. From 1979 until 1980, Mrs. Giusti
was controller of Wallbangers, Inc. She is a Certified Public Accountant and a
member of the American Institute of Certified Public Accountants and the
California Society of Certified Public Accountants.
Michael J. Hoffmann
Executive Vice President, National Acquisitions Director, Metric Realty Corp.
In April 1994, Michael J. Hoffmann, age 35, joined Metric Realty as
Executive Vice President, National Acquisitions Director. In that capacity, he
is responsible for all acquisitions for Metric clients, and supervises all
acquisition personnel. Prior to joining Metric Realty, Mr. Hoffmann had been
Vice President of Acquisitions for AMB Institutional Realty Advisors since 1989.
He is also an attorney and was engaged in the practice of real estate law from
1984 to 1989. He is a member of the State Bars of California, Texas and
Wisconsin. Mr. Hoffmann received a Bachelor of Arts in 1982, and a Master's
Degree in Real Estate Appraisal and Investment Analysis and a Doctorate of
Jurisprudence in 1985, from the University of Wisconsin.
Herman H. Howerton
Executive Vice President, General Counsel and Secretary, Metric Realty Corp. and
Metric Holdings, Inc.
Mr. Howerton, age 52, has served as General Counsel with the partner
managing Metric Realty since 1988. He has held the same positions with the other
partner of Metric Realty since December 1993 and has been Secretary of these
corporations since March 1993. From 1984 to 1988, he was employed by FCMC in
various legal positions. He was employed by Cushman & Wakefield in commercial
leasing from 1983 to 1984. Prior to that, from 1972 to 1982, Mr. Howerton held
various positions with Itel Corporation, including those of Vice
President-Administration and Vice President, General Counsel and Secretary. He
received a Bachelor of Arts Degree from California State University at Fresno in
1965 and a Juris Doctorate Degree from Harvard Law School in 1968. He is a
member of the State Bar of California and a licensed California real estate
broker.
32
<PAGE>
James S. Keagy
Executive Vice President, Director of Investment Services, Metric Realty Corp.
Mr. Keagy, age 36, joined Metric Realty in July, 1995 and is in charge of
all investment services for Metric Realty, including marketing investment
programs and advisory services to pension plans and other tax-exempt entities.
Prior to joining Metric Realty, Mr. Keagy had been a senior executive of Aldrich
Eastman Waltch ("AEW"), a real estate investment advisor, since 1989. His
responsibilities at AEW included business and product development and asset
management. From 1982 to 1989, he worked in the real estate department of
Thomson McKinnon Securities in New York, serving as the Associate Director of
the department from 1985 to 1989. His responsibilities included raising capital
for real estate investments, acquisitions and asset management. Mr. Keagy
received a Bachelor of Science Degree from Yale College in 1980 and a Master's
Degree in Business Administration-Marketing and Real Estate from Harvard
University in 1982.
Ronald E. Zuzack
Executive Vice President, Director of Portfolio Services, Metric Realty Corp.
Mr. Zuzack, age 52, has been in charge of Portfolio Services for the
partner managing Metric Realty since March 1988. From 1981 to 1988, he was
employed by FCMC in various asset management positions. Prior to 1981 he was
employed by Union Bank as Vice President/Manager Real Estate, Sacramento Region,
and acted as Vice President, Development and Property Management while employed
by Inter-Cal Real Estate Corporation. He received his Bachelor of Science Degree
and Master's Degree in Business Administration from the University of Missouri.
Mr. Zuzack also attended the School of Mortgage Banking at Northwestern
University.
Item 11. Executive Compensation.
The Partnership does not pay or employ any directors or officers.
Compensation to the directors and officers of Metric Realty Corp., the managing
partner of Metric Realty (the managing general partner of the Partnership), is
paid by Metric Realty or its affiliates and is not related to the results of the
Partnership.
The Partnership has not established any plans pursuant to which plan or
non-plan compensation has been paid or distributed during the last fiscal year
or is proposed to be paid or distributed in the future, nor has the Partnership
issued or established any options or rights relating to the acquisition of its
securities or any plan relating to such options or rights. However, Metric
Realty is expected to receive certain allocations, distributions and other
amounts pursuant to the Partnership's limited partnership agreement. In
addition, included in the expense reimbursements made to such general partner or
affiliates by the Partnership is an allocation for a portion of the compensation
(including employee benefit plans) paid to personnel rendering asset management
services to the Partnership.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
There is no person known to the Partnership who owns beneficially or of
record more than five percent of the voting securities of the Partnership.
Neither the Partnership's managing general partner nor affiliates of the
Partnership's managing general partner have contributed capital to the
Partnership.
The Partnership is a limited partnership and has no officers or directors.
The managing general partner has discretionary control over most of the
decisions made by or for the Partnership in accordance with the terms of the
Partnership Agreement. Each of the directors and officers of the Partnership's
managing general partner, and all of these individuals as a group, own less than
one percent of the Partnership's voting securities.
There are no arrangements known to the Partnership, the operations of
which may, at a subsequent date, result in a change in control of the
Partnership.
33
<PAGE>
Item 13. Certain Relationships and Related Transactions.
None; except that the Partnership in 1995 paid and in 1996 will pay fees
and expense reimbursements to Metric Realty for services provided to the
Partnership. See the Prospectus filed pursuant to Rule 424(b) of the Securities
Act of 1933, which is incorporated by reference herein, and Note 2 to the
Financial Statements in Item 8. All of the individuals listed in Item 10 above
are officers and employees of and receive compensation from Metric Realty or an
affiliate.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) 1., 2. and 3. See Item 8 of Form 10-K for Financial Statements for the
Partnership, Notes thereto, and Financial Statement Schedules. (A table of
contents to Financial Statements and Financial Statement Schedules is
included in Item 8 and incorporated herein by reference.)
(b) No reports on Form 8-K were required to be filed during the last quarter
of the period covered by this Report other than the Form 8-K Report filed
on October 3, 1995, reporting the disposition of an asset. On February 27,
1996, the Form 8-K was subsequently amended to include additional
information concerning the disposition of the Residence Inn - Atlanta
(Perimeter West).
(c) List of Exhibits (numbered in accordance with Item 601 of Regulation S-K):
3.1 Amended and Restated Limited Partnership Agreement of the
Partnership. Incorporated by reference to Post- Effective Amendment
No. 3 to the Partnership's Form S-11 Registration Statement filed
with the Commission on July 14, 1989.
4.1 Assignment agreement among the Partnership, Metric Realty, and
Metric Assignor, Inc. on behalf of all holders of limited
partnership assignee units. Incorporated by reference to
Post-Effective Amendment No. 3 to the Partnership's Form S-11
Registration Statement filed with the Commission on July 14, 1989.
10.1 Lease between Nashville Lodging Company and the Partnership dated
April 24, 1989, as amended by Amendment to Lease dated as of April
15, 1990.
(d) Financial Statement Schedules, if required by Regulation S-K, are included
in Item 8.
34
<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.
REGISTRANT
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
a California Limited Partnership
By: Metric Realty,
an Illinois general partnership,
its Managing General Partner
By: Metric Realty Corp.,
a Delaware corporation,
its managing partner
By: /s/ Robert A. Fiddaman
-----------------------
Robert A. Fiddaman
President and
Chief Executive Officer,
Metric Realty Corp.
Date: March 25, 1996
--------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
By: /s/ Robert A. Fiddaman By: /s/ Ralph F. Verni
---------------------- ------------------
Robert A. Fiddaman Ralph F. Verni
Director, President and Chief Executive Chairman of the Board,
Officer, Metric Realty Corp. Metric Realty Corp;
Chairman of the Board,
President and Chief
Executive Officer,
Metric Holdings, Inc.
By: /s/ Margot M. Giusti By: /s/ Gerard P. Maus
-------------------- ------------------
Margot M. Giusti Gerard P. Maus
Principal Financial and Accounting Officer Director, Metric Realty Corp.
of Metric Realty; Executive Vice President, and Metric Holdings, Inc.
Finance and Administration, and Chief
Financial Officer, Metric Realty Corp.;
Executive Vice President, Chief Financial
Officer, Metric Holdings, Inc.
Date: March 25, 1996
--------------
35
L E A S E
Between
NASHVILLE LODGING COMPANY
as Lessor
and
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.
as Lessee
Dated April 24 , 1989.
2300 Elm Hill Pike
Nashville, Tennessee
<PAGE>
TABLE OF CONTENTS
Paragraph Page
1. Lease of Premises..................................................5
2. Term...............................................................5
3. Base Rent..........................................................5
4. Additional Rent...................................................12
5. Lessee's Option to Purchase the Premises..........................15
6. Quiet Enjoyment ..................................................20
7. Use ..............................................................21
8. Title to Buildings and Improvements...............................22
9. Permits, Licenses, Hotel Franchise Agreement......................23
10. Repairs, Governmental Regulations and Waste.......................25
11. Improvements, Changes, Alterations,
Demolition and Replacement by Lessee..............................26
12. Damage or Destruction.............................................29
13. Assignment and Subletting.........................................31
14. Mortgage of Fee...................................................32
15. Mortgage of Leasehold.............................................34
16. Protection of Leasehold Lender....................................34
17. Property and Liability Insurance..................................39
18. Mechanics' and Other Liens........................................43
19. Indemnity.........................................................44
20. Eminent Domain....................................................46
<PAGE>
Paragraph Page
21. Lessor's Right of Inspection.......................................50
22. Lessee's Defaults and Lessor's Remedies............................50
23. No Waiver..........................................................53
24. No Merger..........................................................55
25. No Partnership.....................................................55
26. Covenants Run With Land............................................55
27. Notices............................................................56
28. Limitation of Lessor's Liability...................................57
29. Limitation of Lessee's Liability...................................58
30. Estoppel Certificates..............................................58
31. Holding............................................................59
32. Arbitration........................................................59
33. General Provisions.................................................61
Exhibit A - Property Description
Exhibit B - Short Form Lease
Exhibit C - Base Option Price
Exhibit D - Form of Deed of Trust
<PAGE>
LEASE
THIS LEASE, made as of the Lot day of April, 1989, by an-between
NASHVILLE LODGING COMPANY, a Wisconsin limited partnership ("Lessor"), and
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P., a California limited partnership
("Lessee"),
W I T N E S S E T H:
WHEREAS Lessor is the owner of the real property, including the land
(the "Land") and all buildings, structures and improvements thereon (the
"Improvements"), located at 2300 Elm Hill Pike, Nashville, Tennessee, commonly
known as the Residence Inn By Marriott and more particularly described in
Exhibit A hereto; and
WHEREAS Lessor wishes to sell to Lessee the Improvements and to lease
to Lessee the Land, together with all rights, privileges and easements
appurtenant thereto (herein collectively called the "Premises"), and Lessee
wishes to purchase from Lessor the Improvements and to lease from Lessor the
Premises, all as more particularly described in that certain Purchase and Sale
Agreement, dated April Lay, 1989, among 2300 Elm Hill Pike, Inc., Lessor and
Lessee (the "Purchase Agreement"). All capitalized terms not expressly defined
herein shall have the meanings set forth in the Purchase Agreement.
4
<PAGE>
NOW, THEREFORE, in consideration of the rents to be paid hereunder and
of the agreements, covenants and conditions herein contained, Lessor and Lessee
hereby agree as follows:
1. Lease of Premises. Lessor hereby leases and demises to Lessee, and
Lessee hereby leases and takes from Lessor, the Premises for the term and upon
the agreements, covenants and conditions set forth herein.
2. Term
(a) The term of this Lease shall commence on April __ , 1989, and,
unless sooner terminated as herein provided, shall terminate on April __, 2049.
(b) As used herein, "Lease Year" shall mean each twelve (12) month
period from the __ day of April through the __ day of the following April during
the term hereof.
3. Base Rent
(a) For the period from the commencement of the Lease term until the payment in
full or other discharge of the Purchase Money Note (as defined in the Purchase
Agreement), whether at or before its stated maturity, Lessee covenants and
agrees to pay to Lessor, as annual basic rent (the "Base Rent") for the
Premises, the sum of One Hundred Fifty Thousand Dollars ($150,000), of which
5
<PAGE>
$50,000 shall be payable in equal monthly installments of $4,166.17, in advance,
on the first day of each and every month during each such Lease Year or port on
thereof without any right of set-off except as provided in paragraph 14 hereof.
The balance of the Base Rent for each such Lease Year shall be paid as provided
in subparagraph (g) below.
(b) For the period from the payment in full or other discharge of the
Purchase Money Note through the end of the tenth Lease Year, Lessee covenants
and agrees to pay to Lessor, as the annual Base Rent for the Premises, the sum
of One Hundred Thousand Dollars ($100,000), payable as provided in subparagraph
(g) below.
(c) For the remaining term of this Lease, beginning on the first day of
the eleventh Lease Year, the term of this Lease shall be divided into
consecutive five (5) year rent periods (a Parent Periods) and Lessee covenants
and agrees to pay to Lessor, as annual Base Rent for the Premises during each
Rent Period, an amount equal to the product derived by multiplying the greater
of the fair market value of the Premises established pursuant to subparagraph
(d) below or the base Option Price on the first day of the applicable Rent
Period, calculated as provided in paragraph 5(b)(i) hereof, times the published
yield to maturity of United States treasury bonds having a maturity closest to
10 years from the first day of the month immediately preceding the commencement
6
<PAGE>
of the Rent Period, as published in the Wall Street Journal or, if the Wall
Street Journal is not then being published, a comparable national business
periodical or newspaper, less $100,000; provided that in no event shall the
adjusted Base Rent be less than zero. If the mathematical result of the
computation described above produces a number which is less than zero, the
negative number produced by such calculation for each year during the Rent
Period, plus interest thereon as hereinafter set forth, shall be due from Lessor
to Lessee. Such amount, including any accrued interest thereon, shall be
credited against the next Base Rent payable hereunder by Lessee, whether or not
payment would otherwise be deferred under subparagraph (g) hereof. Interest at
the rate of 10% per annum shall accrue on the negative amount from the first day
of each Lease Year during the Rent Period until such amount is credited against
the next Base Rent payable as set forth above. The adjusted Base Rent shall be
payable as provided in subparagraph (g) below.
(d) In the event Lessor and Lessee are not able to agree on the fair
market value of the Premises for use in determining Base Rent for the succeeding
Rent Period at least ninety (90) days prior to the commencement of such Rent
Period, Lessor and Lessee shall select an MAI appraiser having not less than
five years experience appraising commercial properties in the Nashville,
Tennessee area to determine the fair market value of the Premises based on its
7
<PAGE>
use as a 168-room Residence Inn or similar hotel or, if the use of the Premises
has then been changed to a non-hotel use, based on the use to which it is being
put, without regard to the highest and best use to which it might be put, using
as the primary indicia of value the comparable sales comparison methodology
based solely on properties improved for use as a mid-priced limited service,
hotel or, if the use has been changed, for such changed use. The determination
of value by the appraiser shall be binding on both Lessor and Lessee. If Lessor
and Lessee are unable to agree upon an appraiser, each shall appoint an
appraiser having the qualifications described above and shall give written
notice thereof to the other not later than 75 days prior to the commencement of
the Rent Period. If either shall fail timely to appoint an appraiser, the
appointed appraiser shall select the second appraiser within 10 days thereafter.
Such appraisers shall, within 10 days after the appointment of the last of them
to be appointed, appoint a third appraiser. If the two appraisers are unable to
agree timely on the selection of a third appraiser, then either appraiser may
request such appointment by the American Arbitration Association. The third
appraiser shall, within 45 days after his appointment, make an independent
determination of fair market value of the Premises, using the methodology and
assumptions outlined above, and submit his written report to Lessor and Lessee.
8
<PAGE>
The fair market value of the Premises shall be as determined by the third
appraiser. Lessor and Lessee shall each pay the fees of their respective
appraisers and one-half the fees of the appraiser selected jointly or by the
first two appraisers for a fair market value land appraisal, and Lessee shall
pay any remaining fees of such joint or third-party appraisals.
(e) Should the adjusted Base Rent not be finally determined prior to
the commencement of any Rent Period, Lessee shall continue to pay the Base Rent
payable during the immediately preceding Rent Period until such determination is
made. Should the monthly pro rata Base Rent for the Rent Period in question
exceed the amount previously paid by Lessee for such Rent Period, Lessee shall
forthwith pay the difference to Lessor. Should the monthly pro rata Base Rent
for the Rent Period in question be less than the amount previously paid by
Lessee for such Rent Period, the over-payment shall be credited to the next
installments of rent due hereunder.
(f) If the last Rent Period during the term of this Lease is not a full
five (5) years, the Base Rent for such Rent Period shall nevertheless be
computed in the manner specified in subparagraph 3(c) above. Base Rent for any
fractional Lease Year, including the first Lease Year if such shall be less than
three hundred and sixty-five (365) days, during the term of this Lease shall be
prorated appropriately.
9
<PAGE>
(g) Payment of the Base Rent shall be made in equal monthly
installments, in advance, on the first day of each and every month during the
term hereof; provided, however, that (except as expressly provided~in
subparagraph (a) above) such Base Rent shall be payable monthly only to the
extent that Adjusted Gross Revenue (as defined in Section 8.1 of the Management
Agreement executed contemporaneously herewith by Lessee and A & N Management
Group, Inc.) from the operations of the Hotel for the preceding month exceeds
the sum of (1) all operating expenses of the Hotel incurred in the ordinary
course of business (including, without limitation, payments due under the
capital leases described in Exhibit E to the Purchase Agreement and any
replacement leases), (2) franchise fees due Franchisor, (3) a management fee
equal to 5% of Adjusted Gross Revenue, (4) a replacement reserve contribution
equal to 4% of Adjusted Gross Revenue, (5) actual debt service on any financing
secured by Lessee's interest in the Hotel up to a maximum of $81,667 per month,
(6) if then payable, the $4,166.67 in Base Rent payable-monthly pursuant to
subparagraph (a) above, (7) a return to Lessee of $22,090 per month, and (8) for
each month prior to the commencement for the fourth Lease Year, an additional
return to Lessee of $6,750 per month. All Base Rent not payable currently shall
earn interest at the rate of 10% per annum, compounded annually-at the
commencement of each Lease Year, from the date it would otherwise have been due
10
<PAGE>
until paid and shall be payable at the time of any sale of the Hotel or from the
net proceeds of any refinancing or further financing of Lessee's interest in the
Hotel after payment of all costs of such financing and, if required by the new
lender, the repayment in full of all debt then secured by Lessee's interest in
the Hotel or by the Premises. In the event Lessee exercises its option to
purchase the Premises pursuant to paragraph 5 below, any accrued and unpaid Base
Rent, and the interest thereon, shall be added to the Option Price. In all other
events (subject to the set-off rights hereinafter set forth), the full amount of
any accrued and unpaid Base Rent, including any interest thereon, shall be due
and payable upon expiration or earlier termination of the Lease.
(h) Notwithstanding any other provision of this paragraph 3 to the
contrary, Lessee shall have the right to set off against all Base Rent payable
on a current or deferred basis pursuant to subparagraphs (a) and (g) above any
sums advanced by Lessee to the holder of the Existing Deed of Trust pursuant to
paragraph 14 and against all accrued, current and future Base Rent payable
pursuant to subparagraph (g) above any sums not paid when due under the terms of
the Guaranty described in Article VIII of the Purchase Agreement and any sums
advanced by Lessee to the holder of the Existing Deed of Trust pursuant to
paragraph 14, in each case with interest on such amount at the rate of 10% per
11
<PAGE>
annum, compounded-annually at the commencement of each Lease Year, from the date
advanced by Lessee or due from Lessor until set-off against Base Rent as it
accrues.
(i) Lessor and Lessee intend that the Base Rent and Additional
Rent payable under this Lease shall be an absolute net return to Lessor for the
Lease term, free from any expense, charge or other deduction or set-off
whatsoever except as expressly provided for in subparagraph (h) above.
4. Additional Rent
(a) Lessee covenants and agrees to pay and discharge, as additional
rent (the "Additional Rent") for the Premises during the entire term of this
Lease, before delinquent, all taxes, assessments, water rents, sewer rentals,
utility rates and fees, levies or other charges, general, special, ordinary,
extraordinary and otherwise, of every kind and character which are or may during
the term of this Lease be levied, charged, assessed or imposed upon or against
the Premises or any buildings or improvements which are now or hereafter located
thereon, or against any of Lessee's personal property now or hereafter located
thereon, or which may be levied, charged, assessed or imposed upon or against
the fee or leasehold estate created hereby, or which may be levied upon or
measured by the rental payable hereunder, including without limitation, any
gross receipts tax levied by the City of Nashville, the County of Davidson, the
12
<PAGE>
State of Tennessee, the Federal government or any other governmental body with
respect to receipt of such rental by Lessors Lessee will deliver to Lessor
annually, or at such lesser intervals as may be required by the holder of the
Existing Deed of Trust (as defined in paragraph 14 hereof), receipts, or
duplicates thereof, evidencing payment before delinquent of such taxes,
assessments and other charges and will at all times save Lessor harmless from
the payment thereof or the payment of any claims or demands becoming chargeable
against or payable in respect of the Premises or any buildings or improvements
which are now or hereafter located thereon, or the use and occupancy thereof. At
the commencement and at the end of the term of this Lease, such taxes,
assessments and other charges to be paid by Lessee shall be prorated on the
basis of the fiscal year of the taxing authority in question so that, at the
commencement and at the end of the term of this Lease, as to any such taxes,
assessments and other charges levied or assessed for a fiscal year preceding the
commencement or extending beyond the end of such term, Lessee will pay only such
proportion of such taxes, assessments and other charges as the portion of such
fiscal year following the commencement and preceding the end of such term bears
to the entire fiscal year.
(b) Anything herein to the contrary notwithstanding, Lessee shall not
be required to pay any franchise, capital levy or transfer tax with respect to
13
<PAGE>
any sale or transfer of Lessor's interest in the Premises, or any net income tax
measured by the income of Lessor from all sources, or any tax which may, at any
time during the term of this Lease, be required to be paid on any gift or
demise, deed, mortgage, descent or other alienation of any part or all of the
estate of Lessor in and to the Premises, except as hereinafter provided. If
Lessee shall be required by law to pay, and pursuant thereto does pay, any tax,
assessment or charge specified in this subparagraph 4(b), Lessor shall,
immediately upon request, reimburse Lessee for any such payments; provided,
however, that if at any time during the term hereof under the laws of the United
States of America or any state or political subdivision thereof in which the
Premises are situate a tax on rent or other tax, assessment or charge, by
whatever name called, is levied, assessed or imposed against Lessor on the rent
payable hereunder to Lessor as a substitute in whole or in part for any existing
tax or other charge on real estate or as an additional tax or charge on real
estate, Lessee shall pay such tax, assessment or other charge as soon as the
same becomes due and payable.
(c) Subject to the provisions of subparagraph 19(a) hereof, Lessor
shall have the right, but not the obligation, at all times during the term
hereof to pay any taxes, assessments or other charges levied or assessed upon or
against the Premises or any buildings or improvements which are now or hereafter
14
<PAGE>
located thereon, and to pay, cancel and clear off all tax sales, liens, charges
and claims upon or against the Premises or any buildings or improvements which
are now or hereafter located thereon, and to redeem the Premises from the same,
or any of them, from time to time, without being obligated to inquire as to the
validity of the same. Any sum so paid by Lessor shall become Additional Rent due
and payable by Lessee within ten (10) days following receipt of notice from
Lessor.
(d) All sums advanced by Lessor pursuant to this paragraph 4 and any
sums advanced by Lessor pursuant to any other provision of this Lease shall
constitute Additional Rent and shall earn interest at a rate equal to the lesser
of two percent (2%) in excess of the reference rate or other base rate then in
effect as announced by Bank of America N.T.& S.A. at its San Francisco main
office for unsecured commercial loans or the maximum rate of interest permitted
by applicable law from the date due until paid.
5. Lessee's Option to Purchase the Premises
(a) Lessor hereby grants to Lessee an exclusive and irrevocable option
(the "Option") to purchase the Premises, for the price and upon the terms and
conditions specified in this paragraph 5, at any time prior to the expiration of
this Lease. Lessee may exercise the Option at any time prior to March 1, 2049 by
15
<PAGE>
giving Lessor written notice of exercise of the Option. Upon exercise of the
Option by Lessee, Lessor shall be obligated to sell and convey to Lessee and
Lessee shall be obligated to purchase from Lessor the Premises for the price and
upon the terms and conditions specified in this paragraph 5. As used in this
paragraph 5, "Closing Date" shall mean the date ninety (90) days following the
date of written notice of the exercise of the Option unless an earlier date,
which shall be not less than thirty (30) days following the date of the notice,
is specified in the notice of exercise. Lessee acknowledges that Lessor may
elect to convey the Premises to Lessee pursuant to this paragraph 5 as part of
an exchange under Section 1031 of the Internal Revenue Code, or its successor
section, and agrees to cooperate with Lessor in connection with any such
exchange, provided that Lessee shall not be required to take title to any
property other than the Premises, Lessor shall indemnify Lessee against any and
all costs, claims, damages or causes of action arising out of such exchange and
the exchange shall not delay the closing for more than three days or otherwise
vary the terms of the transaction contemplated herein. Lessee agrees to advise
Lessor when it enters into good faith negotiations with respect to any sale or
refinancing of the Hotel which would involve Lessee's purchase of the Premises.
(b) Lessee shall pay to Lessor, as the total purchase price for the
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Premises (the "Option Price"), cash in an amount equal to the sum of (i) the
base Option Price on the Closing Date, which shall be an amount equal to the
base Option Price shown on Exhibit C attached hereto for the Lease Year
immediately preceding the Lease Year in which the closing occurs plus the
product of the scheduled increase in the Option Price for the year in which the
closing occurs times a fraction the numerator of which is the number of days
elapsed between the commencement of the then current Lease Year and the Closing
Date and the denominator of the which is 365 (subject to adjustment of the
scheduled base Option price pursuant to paragraph 20(b) hereof), (ii) an amount
equal to 10% per annum of the increase in the base Option Price for the full
Lease Year immediately preceding the Lease Year in which the closing occurs
calculated from the first day of the then current Lease Year to the Closing
Date, (iii) any unpaid Base Rent or Additional Rent accrued as of the Closing
Date (after adjustment for any set-offs permitted hereunder or under the terms
of the Guaranty described in Article VIII of the Purchase Agreement), and (iv)
an amount equal to 10% per annum, compounded annually at the commencement of
each Lease Year, from the date the obligation arose to the Closing Date of item
(iii) above, less the sum of (w) any amounts due under the terms of the Guaranty
which are not offset by Base Rent which has accrued and remains unpaid as of the
Closing Date, (x) any amounts advanced to cure defaults under or to pay in full
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the indebtedness secured by the Existing Deed of Trust and not set-off against
accrued Base Rent, (y) interest on the amounts set forth in (w) and (x) above at
the rate of 108 per annum, compounded annually at the commencement of each Lease
Year, from the date the obligation arose to the Closing Date and (z) the amount,
if any, then owing under the note given by the holder of the Purchase Money Note
to Lessee pursuant to Section 12.2(a) of the Purchase Money Deed of Trust.
Purchase of the Land by Lessee pursuant to this paragraph 5 shall satisfy in
full and discharge the obligations of the holder of the Purchase Money Note
under the note and deed of trust evidencing and securing the obligation
described in Section 12.2(a) of the Purchase Money Deed of Trust.
(c) The purchase and sale of the Premises will close through an escrow
opened by Lessee with a title insurance company (title Company) qualified to do
business in the State of Tennessee and located in the City of Nashville
designated by Lessee. Prior to the Closing Date, Lessor and Lessee shall deposit
in escrow with Title Company all documents and funds necessary to close the
purchase and sale hereunder, together with escrow instructions consistent
herewith, and the escrow shall close on the date upon which such deposits have
been made. Lessor shall convey to Lessee by warranty deed fee simple title to
the Premises (or such portion thereof as shall not have been taken by eminent
domain in the event of such taking prior to the Closing Date), subject only
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to (i) the lien of taxes, assessments or other charges payable by Lessee under
paragraph 4 hereof, (ii) such matters, except the Existing Deed of Trust and the
Purchase Money Deed of Trust if the Purchase Money Note has then been paid in
full, as are set forth in the policy of title insurance issued to Lessee, as of
the date hereof, by Southern Title Insurance Company, and (iii) such other
matters as may be created, suffered to be created or consented to by Lessee or
by Lessor at Lessee's request (collectively, the "Permitted Exceptions"), and
shall assign to Lessee any eminent domain award with respect to the Premises
which has not been previously paid to Lessor. Lessee shall be released from all
obligation to Lessor under this paragraph 5 unless, on the Closing Date, Title
Company shall be willing to issue to Lessee its ALTA form policy of owner's
title insurance, in the amount of the Option Price, insuring Lessee that title
to the Premises is vested in Lessee, subject only to the matters specified in
this subparagraph 5(c), provided that Lessor shall have the right to extend the
Closing Date for not more than 30 days following notice from the Title Company
of the existence of a title defect or exception other than a Permitted Exception
in order to cure or attempt to cure such defect.
(d) The cost of the premium for the title insurance policy issued to
Lessee on the Closing Date shall be paid one-half by Lessee and one-half by
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Lessor. The transfer tax payable in respect of conveyance of the Premises shall
be paid by Lessor; provided, however, that any increase in the transfer tax
attributable to an increase in the rate of such tax above such amount as would
be charged if the Closing Date were as of the date hereof shall be shared
equally by Lessor and Lessee. Escrow fees shall be paid one-half (1/2) by Lessor
and one-half (1/2) by Lessee. All other costs of closing the escrow shall be
borne in accordance with the custom then prevailing in the City of Nashville.
(e) If the escrow is not closed on or before the Closing Date (as it
may be extended pursuant to subparagraph (c) above), without affecting the
obligations and liabilities of either Lessor or Lessee hereunder, the escrow
shall terminate and Title Company shall return to each party all documents and
funds deposited by such party in escrow, unless Lessor and Lessee agree in
writing to extend the Closing Date.
6. Quiet Enjoyment
Lessor covenants that upon payment by Lessee of the rent herein reserved and
upon performance and observance by Lessee of all of the agreements, covenants
and conditions herein contained on the part of Lessee to be performed and
observed, and subject to the exceptions to title set forth in subparagraph 5(c)
above, Lessee shall peaceably hold and quietly enjoy the Premises during the
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entire term of this Lease without hindrance, molestation or interruption by
Lessor or by anyone lawfully or equitably claiming by, through or under Lessor.
7. Use
(a) Lessee shall have the right to use the Premises for any lawful
purpose; provided, however, in no event shall the Premises be used for any
purpose or use (nor shall any activity be carried on upon the Premises) which in
any manner causes, creates or results in a nuisance or violates the terms of any
instrument or obligation affecting the Premises, including without limitation
any deed of trust, mortgage or other security interest now or hereafter
constituting a lien or encumbrance on the Premises, and provided further that
Lessor shall have the right, in its sole discretion, to disapprove any change in
use which reduces the value of either the Premises or the Improvements, as~those
values may be determined separately, or any use involving the use and/or storage
of hazardous, toxic or radioactive materials (collectively, "Hazardous
Materials") except in a manner which is incidental to and necessary for the
operation of a use which is otherwise permitted hereunder.
(b) Lessee shall not bring onto the Premises any Hazardous Materials
not reasonably required for or incident to the normal operations of the Hotel or
any other permitted use and shall strictly comply with all statutes, laws,
ordinances, rules, regulations and precautions now or hereafter mandated by any
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federal, state, local or other governmental agency with respect to the use,
generation, storage or disposal of Hazardous Materials and hereby agrees to
indemnify, defend and hold Lessor harmless from and against all claims,
liabilities, losses, damage or cost arising out of the use, generation, storage
or disposal of Hazardous Materials by Lessee or any person claiming through or
under Lessee (other than any acts or omissions of A & N Management Group, Inc.
("A & N") for which Lessee has no duty to indemnify A & N under the terms of the
Management Agreement). Lessor represents and warrants to Lessee that, to the
best of Lessor's knowledge, the Premises are presently in full compliance with
all environmental laws, ordinances, rules and regulations and there are no
Hazardous Materials on the Premises other than those used in the normal
operations of a hotel. Lessee acknowledges that it has been advised by Lessor
that Lessor has conducted no soils or other tests for the presence of Hazardous
Materials on the Premises. Lessor hereby agrees to indemnify, defend and hold
Lessee harmless from and against all claims, liabilities, losses, damage or cost
arising out of the use, generation, storage, disposal or presence of any
Hazardous Materials on the Premises attributable to any period prior to the
commencement of this Lease. The indemnities contained in this paragraph 7 shall
survive the termination of this Lease.
8. Title to Buildings and Improvements
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(a) Title to the Improvements and to all other buildings, structures
and improvements that may from time to time exist on the Premises and all
furniture, fixtures, equipment and other personal property that are now, or may
from time to time be, used or intended to be used in connection with the
Premises shall be and remain in Lessee until the termination of this Lease. Upon
the termination of this Lease, title to the Improvements and any other
buildings, structures and improvements constituting real property and any
easements for access, main tenance, use and support for such Improvements, shall
pass to and vest in Lessor without cost or charge to it. All furniture,
fixtures, equipment and other personal property used by Lessee in the operation
of the Hotel or any other business conducted on the Premises shall remain the
property of Lessee and shall be removed by Lessee from the Premises at the end
of the term of the Lease.
(b) Lessee shall on termination of this Lease execute and deliver any
and all deeds, bills of sale, assignments and other documents which in Lessor's
sole judgment may be necessary or appropriate to transfer, to evidence or to
vest in Lessor clear title to the Improvements and all other buildings,
structures and improvements located on the Premises at the time of such
termination.
9. Permits, Licenses, Hotel Franchise Agreement.
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(a) Lessor will from time to time during the term of this Lease execute
and deliver all applications for permits, licenses or other authorizations
relating to the Premises required by any municipal, county, state or Federal
authorities, or required in connection with the construction, reconstruction,
repair or alteration of any buildings or improvements now or hereafter located
on the Premises. Lessor will from time to time during the term of this Lease
execute, acknowledge and deliver any and all instruments required to grant
rights-of-way and easements in favor of municipal and other governmental
authorities or public utility companies incident to the installation of water
lines, fire hydrants, sewers, electricity, telephone, gas, steam and other
facilities and utilities reasonably required for the use and occupancy of the
Premises. Lessor's obligations pursuant to this paragraph 9 are subject to and
limited by the use restrictions set forth in paragraph 7 and the approval
requirements of paragraph 11 of this Lease. Lessee shall pay all costs
associated with any permits, licenses or other instruments referred to in this
paragraph, provided that, in the event such costs or fees must be paid by
Lessor, Lessee shall reimburse Lessor for any sums advanced by Lessor within 10
days following receipt of notice from Lessor and all such amounts advanced by
Lessor shall be Additional Rent hereunder.
(b) For so long as the Premises is used for hotel purposes, Lessee
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shall operate the hotel located on the Premises pursuant to a franchise
agreement with Residence Inns by Marriott or another national hotel franchisor
selected by Lessee, in Lessee's sole discretion, and shall perform in a timely
manner all of the obligations of the franchisee thereunder. Notwithstanding the
foregoing, Lessee shall have no obligation to enter into a new franchise
arrangement if the then existing franchise agreement is terminated as a result
of any failure by A & N Management Group, Inc. ("A & N.") to perform the
franchisee's obligations thereunder as and to the extent required by the
Management Agreement between Lessee and A & N.
10. Repairs, Governmental Regulations and Waste
(a) Lessee shall, during the term of this Lease, at its own cost and
expense and without any cost or expense to Lessor:
(i) Keep and maintain all buildings and improvements
now or hereafter located on the Premises and all appurtenances thereto in good
and neat condition, order and repair and shall allow no nuisances to exist or be
maintained therein. Lessee shall likewise keep and maintain the grounds,
sidewalks, roads and parking and landscaped areas in good and neat condition,
order and repair. Lessor shall not be obligated to make any repairs,
replacements or renewals of any kind, nature or description whatsoever to the
Premises or any buildings or improvements now or hereafter located thereon; and
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(ii) Comply with and abide by all Federal, state, county, municipal and
other governmental statutes, ordinances, laws, regulations, requirements, orders
and rulings then in effect affecting the Premises, all buildings and
improvements now or hereafter located thereof, or any activity or condition on
or in the Premises.
(b) Lessee agrees that it will not commit or permit waste upon the
Premises.
11. Improvements, Changes, Alterations, Demolition and Replacement by
Lessee
(a) Subject to the limitations on use set forth in paragraph 7 hereof,
Lessee shall have the right at any time and from time to time during the term of
this Lease to make such improvements to the Premises and such changes and
alterations, structural or otherwise, to any buildings, improvements, fixtures
and equipment on the Premises, including demolition of any or all buildings and
improvements now or hereafter located on the Premises and replacement thereof,
as Lessee shall deem necessary or desirable.
(b) All improvements, changes and alterations (other than changes or
alterations of movable trade fixtures and equipment) pursuant to subparagraph
(a) above shall be undertaken in all cases subject to the following conditions
which Lessee covenants to observe and perform:
(i) no improvement, change or alteration, and no demolition and
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replacement, shall be undertaken until Lessee shall have procured and paid for,
so far as the same may be required from time to time, all municipal and other
governmental permits and authorizations of the various municipal departments and
governmental subdivisions having jurisdiction, and Lessor agrees to join in the
application for such permits or authorizations whenever such action is
necessary.
(ii) no improvement, change or alteration involving an
estimated cost of more than One Hundred Thousand Dollars ($100,000), and no
demolition and replacement, shall be undertaken until Lessor shall have been
furnished by Lessee with evidence reasonably acceptable to Lessor of the
availability of funds necessary to complete such work or, at Lessee's expense,
with a contractor's performance and a labor and material payment bond, in the
principal amount of such estimated cost, naming Lessor as obligee and issued by
a surety company authorized to do business in Tennessee.
(iii) All contracts for amounts in excess of $25,000 entered
into by Lessee for and work in connection with any demolition, improvements,
changes or alterations involving an estimated cost of more than One Hundred
Thousand Dollars ($100,000) shall provide that, in the event of termination of
this Lease, Lessor shall have the right to assume all Lessee's obligations and
succeed to all Lessee's rights under such contract without charge or penalty.
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(iv) All improvements, changes and alterations, and any
demolition and replacement, when completed, shall be of such a character that
the value of the buildings and improvements on the Premises immediately after
any such improvement, change, alteration or demolition and replacement shall be
equal to or greater than the value of the buildings and improvements on the
Premises immediately before any such improvement, change, alteration or
demolition and replacement.
(v) All work done in connection with any improvement, change,
alteration or demolition and replacement shall be done promptly and in a good
and workmanlike manner and in compliance with all laws, ordinances, orders,
rules, regulations and requirements of all Federal, state and municipal
governments and the appropriate departments, commissions, boards and officers
thereof, and in accordance with the orders, rules regulations and of the
appropriate Fire Rating Bureau or any other body hereafter constituted
exercising similar functions. All such work shall be at the sole cost and
expense of Lessee and, upon completion thereof, shall be (subject to the
provisions of paragraphs 14 and 15 hereof) free and clear of all liens and
encumbrances of any nature whatsoever, including mechanics' liens. The work with
respect to any improvement, change, alteration or demolition and replacement
shall be prosecuted with reasonable dispatch, delays due to strikes, lockouts,
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acts of God, inability to obtain labor, materials or energy, governmental
restrictions or similar causes beyond the reasonable control of Lessee excepted.
In addition to the insurance coverage referred to in paragraph 17 below,
workmen's compensation insurance covering all persons employed in connection
with the work and with respect to whom death or injury claims could be asserted
against Lessor, Lessee or the Premises, and Owner's Protective policy coverage,
naming Lessor with limits of not less than One Million Dollars ($1,000,000),
shall be maintained by Lessee, at Lessee's sole cost and expense, at all times
when any work is in process in connection with any improvement, change,
alteration or demolition and replacement. All such insurance shall be obtained
and kept in force as otherwise provided in paragraph 17 below.
(c) NOTICE: Notice is hereby given to the public that Lessor shall not
be liable for any claims of mechanics, journeymen, supplymen or of anyone
working on their behalf for work performed on the Premises by or on behalf, or
at the direction of Lessee.
12. Damage or Destruction
(a) Except as provided in subparagraph (c) below, no loss or damage by
fire or other cause required to be insured against hereunder, resulting in
either partial or total destruction of any building or improvement on the
Premises, shall operate to terminate this Lease, or to relieve or discharge
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Lessee from the payment of rents or other amounts payable hereunder as they
become due and payable, or from the performance and observance of any of the
agreements, covenants and conditions herein contained on the part of Lessee to
be performed and observed.
(b) If any buildings or improvements located on the Premises at any
time during the term of this Lease shall be damaged or destroyed by fire or
other cause and Lessee does not elect to purchase the Premises pursuant to
subparagraph 12(c) below, then Lessee, with all reasonable diligence, shall
repair reconstruct or replace such buildings or improvements upon the same
general plans and dimensions as before the occurrence of such fire or other
cause or with such changes or alterations as may be made in conformity with
paragraph 11 hereof. All such repair, reconstruction or replacement shall be at
the sole cost and expense of Lessee and, upon completion thereof, shall be
(subject to the provisions of paragraphs 14 and 15 hereof) free and clear of all
liens and encumbrances of any nature whatsoever, including mechanics' liens.
(c) If any buildings or improvements now or hereafter located on the
Premises are totally or substantially destroyed by a cause not required to be
insured against hereunder, or if the insurance proceeds available for rebuilding
are insufficient to pay the entire cost of such rebuilding, Lessee shall, at its
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option, either repair, reconstruct or replace such buildings or improvements in
accordance with subparagraph 12(b) above or elect to purchase the Premises for
the price and on the terms set forth in paragraph S above by giving Lessor
written notice thereof within ninety (90) days after such total or substantial
destruction. Should Lessor and Lessee for any reason disagree as to whether any
destruction of such buildings or improvements is total or substantial, the
matter shall be determined by arbitration in the manner provided in paragraph 32
hereof.
13. Assignment and Subletting
(a) Subject to the provisions of paragraph 15 hereof, Lessee shall not
assign this Lease, or any interest therein, whether voluntarily or by operation
of law, or sublease all or substantially all of the Premises, without the prior
written consent of Lessor, which may be withheld by Lessor in its absolute
discretion. Lessor and Lessee have specifically bargained for this provision,
and Lessee acknowledges and agrees that Lessor would not have entered into this
Lease without retaining the absolute, unfettered right to withhold its consent
to any assignment of this Lease or to a sublease of all or substantially all of
the Premises for any reason or no reason whatsoever. Lessee acknowledges that
this provision is of the essence of this Lease.
(b) Lessee shall have the right, in the regular and ordinary course of
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its business of maintaining and operating the Hotel or the buildings and
improvements now or hereafter located on the Premises, to let rooms to Hotel
guests and to sublease any offices, spaces or related facilities in such
buildings and improvements to individual occupancy users in the ordinary course
of business (including, without limitation, extended stay hotel guests) as
Lessee shall deem appropriate without Lessor's prior consent.
14. Mortgage of Fee.
Lessee hereby agrees that the leasehold interest created herein shall be subject
and subordinate to the Existing Deed of Trust (sometimes hereinafter referred to
as the "Fee Mortgage") in favor of Savers Federal Savings and Loan Association
(the "Fee Lender"). Lessor shall be obligated to make all payments and to
perform all covenants of the debtor under the terms of the Existing Note and
Existing Deed of Trust except those covenants which relate to the operation of
the Hotel or which otherwise can be performed only by the owner of the Hotel,
provided that Lessor shall be excused from such obligation hereunder in the
event and to the extent that Lessee shall have failed to perform any parallel
obligation under the Purchase Money Note or the Purchase Money Deed of Trust.
Lessor shall also be obligated to deliver to Lessee at such time as the Purchase
Money Noteis paid or otherwise discharged in full a deed of trust encumbering
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the Land as security for the performance of the obligations of Lessor or its
successor holder of the Purchase Money Note, which are described more fully in
Section 12.2(a) of the Purchase Money Deed of Trust. Lessee shall perform all
covenants of the debtor set forth in the Existing Deed of Trust which relate to
the operation of the Hotel or which otherwise can be performed only by the owner
of the Hotel and shall take no action with respect to the Hotel or the Premises
which would give rise to an event of default under the Existing Deed of Trust.
If Lessor fails timely to make any payments due under the Existing Note or the
Existing Deed of Trust, is otherwise in default under the Existing Note or the
Existing Deed of Trust or fails timely to pay in full the principal balance and
any accrued interest under the Existing Note upon receipt of payment in full or
other discharge of the Purchase Money Note, and Lessee shall not be in default
of any parallel obligation in the Purchase Money Note or Purchase Money Deed of
Trust, Lessee shall have the right to cure such default or to pay such balance
and, at Lessee's sole election, to set-off any sums so advanced against the Base
Rent otherwise due hereunder or to reduce the Option Price by such amount. If,
at any time during the term of this Lease, Lessee shall be entitled to make
payments on the Existing Note directly to the Fee Lender (whether or not the
Purchase Money Note shall then remain in effect) and Lessee fails timely to make
any such payment, Lessor shall have the right to advance such funds to the Fee
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Lender and any sums so advanced shall become Additional Rent hereunder payable
within ten (10) days following receipt of notice from Lessor.
15. Mortgage of Leasehold
(a) Concurrently herewith, Lessor and Lessee shall enter into a
Purchase Money Deed of Trust encumbering Lessee's interest in the leasehold
created by this Lease.
(b) Lessee shall have the right at any time, subject to the limitations
on prepayment contained in the Purchase Money Note and Purchase Money Deed of
Trust and provided that the financing is on terms no less favorable to Lessee
than the terms generally available at the time for similar properties and is
made by an institutional lender having assets of not less than $500,000,000, to
refinance the Purchase Money Note or to enter into any further financing of the
Hotel, on such terms as Lessee may deem appropriate, and, in connection
therewith, to grant to the lender a security interest in Lessee's leasehold
interest in the Premises. Each of the foregoing security interests shall
hereafter be referred to as a "Leasehold Mortgage" and the holder of the
Leasehold Mortgage shall be referred to as the "Leasehold Lender."
16. Protection of Leasehold Lender. During the continuance of any
Leasehold Mortgage and until such time as the lien of the Leasehold Mortgage has
been extinguished:
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(a) Except as otherwise expressly provided in this paragraph 16, Lessor
shall not accept any surrender of this Lease, nor shall Lessor consent to any
amendment or modification of this Lease, without the prior written consent of
Leasehold Lender.
(b) Notwithstanding any default by Lessee in the performance or
observance of any agreement, covenant or condition of this Lease on the part of
Lessee to be performed or observed, Lessor shall have no right to terminate this
Lease unless an event of default shall have occurred and be continuing, Lessor
shall have given Leasehold Lender written notice of such event of default, and
Leasehold Lender shall have failed to remedy such default or acquire Lessee's
leasehold estate created hereby or commence foreclosure or other appropriate
proceedings in the nature thereof, all as set forth in, and within the time
specified by, this paragraph 16.
(c) Should any event of default under this Lease occur, Leasehold
Lender shall have sixty (60) days after receipt of written notice from Lessor
setting forth the nature of such event of default, and, if the default is such
that possession of the Premises may be reasonably necessary to remedy the
default, a reasonable time after the expiration of such sixty (60) day period,
within which to remedy such default, provided that (i) Leasehold Lender shall
have fully cured any default in the payment of any monetary obligations of
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Lessee under this Lease within such sixty (60) day period and shall continue to
pay currently such monetary obligations as and when the same are due and (ii)
Leasehold Lender shall have acquired Lessee's leasehold estate created hereby or
commenced foreclosure or other appropriate proceedings in the nature thereof
within such period, or prior thereto, and is diligently prosecuting any such
proceedings. All right of Lessor to terminate this Lease as the result of the
occurrence of any such event of default shall be subject to, and conditioned
upon, Lessor having first given Leasehold Lender written notice of such event of
default and Leasehold Lender having failed to remedy such default or acquire
Lessee's leasehold estate created hereby or commence foreclosure or other
appropriate proceedings in the nature thereof as set forth in and within the
time specified by this subparagraph 16(c).
(d) Any event of default under this Lease which cannot be cured by the
payment of money and which in the nature thereof cannot be remedied by Leasehold
Lender shall be deemed to be remedied if (i) within sixty (60) days after
receiving written notice from Lessor setting forth the nature of such event of
default, or prior thereto, Leasehold Lender shall have acquired Lessee's
leasehold estate created hereby or shall have commenced foreclosure or other
appropriate proceedings in the nature thereof, (ii) Leasehold Lender shall
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diligently prosecute any such proceedings to completion, and (iii) Leasehold
Lender shall have fully cured any default in the payment and performance of any
monetary or other obligations of Lessee hereunder which do not require
possession of the Premises within such sixty (60) day period and shall
thereafter continue to faithfully perform all such monetary obligations which do
not require possession of the Premises, and (iv) after gaining possession of the
Premises performing all other obligations of Lessee hereunder as and when the
same are due.
(e) If Leasehold Lender is prohibited by any process or injunction
issued by any court or by reason of any action by any court having jurisdiction
of any bankruptcy or insolvency proceeding involving Lessee from commencing or
prosecuting foreclosure or other appropriate proceedings in the nature thereof
the times specified in subparagraph 16(c) and 16(d) above for commencing or
prosecuting such foreclosure or other proceedings shall be extended for the
period of such prohibition; provided that Leasehold Lender shall have fully
cured any default in the payment of any monetary obligations of Lessee under
this Lease and shall continue to pay currently such monetary obligations as and
when the same fall due.
(f) Lessor shall mail or deliver to Leasehold Lender a duplicate copy
of any and all notices in writing which Lessor may from time to time give to or
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serve upon Lessee pursuant to the provisions of this Lease, and such copy shall
be mailed or delivered to Leasehold Lender at, or as near as possible to, the
same time such notices are given or served by Lessor. No notice by Lessor to
Lessee hereunder shall be deemed to have been given unless and until a copy
thereof shall have been mailed to delivered to Leasehold Lender.
(g) Foreclosure of the Leasehold Mortgage, or any sale thereunder,
whether by judicial proceedings or by virtue of any power contained in the
Leasehold Mortgage, or any conveyance of the leasehold estate created hereby
from Lessee to Leasehold Lender through, or in lieu of, foreclosure or other
appropriate proceedings in the nature thereof shall not require the consent of
Lessor or constitute a breach of any provision of or a default under this Lease,
and upon-such foreclosure, sale or conveyance Lessor shall recognize Leasehold
Lender, or any other foreclosure sale-purchaser (but not any purchaser from such
other foreclosure sale purchaser), as Lessee hereunder. In the event Leasehold
Lender becomes Lessee under this Lease, Leasehold Lender shall be personally
liable for the obligations of Lessee under this Lease only for the period of
time that Leasehold Lender remains Lessee, and Leasehold Lender shall have the
right to assign this Lease thereafter without any restriction otherwise imposed
on Lessee by paragraph 13 hereof, provided that Leasehold Lender's assignee
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shall agree in writing to assume all of the obligations of Lessee hereunder and
provided further that any further assignment shall be subject to the provisions
of paragraph 13.
(h) Should Lessor terminate this Lease by reason of any default by
Lessee hereunder, Lessor shall, upon written request by Leasehold Lender given
within thirty (30) days after such termination, immediately execute and deliver
a new lease of the Premises to Leasehold Lender, or its nominee, purchaser,
assignee or transferee, for the remainder of the term of this Lease with the
same agreements, covenants and conditions (except for any requirements which
have been fulfilled by Lessee prior to termination) as are contained herein and
with priority equal to that hereof; provided, however, that Leasehold Lender
shall promptly cure any defaults of Lessee susceptible to cure by Leasehold
Lender.
(i) Lessor shall not be obligated to recognize any party as a Leasehold
Lender hereunder until Lessor receives actual notice of the name and address of
such lender. Lessor and Lessee will cooperate in including in this Lease by
suitable amendment from time to time any provision which may reasonably be
necessary to implement the provisions of this paragraph 16; provided, however,
that such amendment shall not in any way affect the term hereby demised nor
affect adversely in any material respect any rights of Lessor under this Lease.
17. Property and Liability Insurance
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(a) Lessee shall, at its sole expense, obtain and keep in force during
the term hereof "all risk" insurance (excluding earthquake insurance) naming
Lessor, the Fee Lender, the Leasehold Lender and such other parties as Lessor
may designate as an additional insureds thereunder, in the customary form in the
City of Nashville for buildings and improvements of similar character, on all
buildings and improvements now or hereafter located on the Premises, and on all
machinery, furniture, fixtures and equipment located therein. the amount of such
insurance at all times during the term hereof shall not be less than ninety
percent (90%) of the actual replacement cost liability of Lessor and Lessee
including, without limitation, coverage for contractual liability, broad form
property damage, host liquor law liability, personal injury and non-owned
automobile liability, with respect to the Premises or arising out of the
maintenance, use or occupancy thereof, and insurance on all boilers and other
pressure vessels, whether fired or unfired, located in, on, or about the
Premises, without exclusion for explosion, collapse and underground damage, in
an amount not less than Two Hundred Fifty Thousand Dollars ($250,000). All of
such insurance shall insure the performance by Lessee of the indemnity agreement
as to liability for injury to or death of persons and damage to property set
forth in subparagraph 19(b) hereof. All of such insurance shall be
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noncontributing with any insurance which may be carried by Lessor and shall
contain a provision that Lessor, although named as an insured, shall
nevertheless be entitled to recover under the policy for any loss, injury or
damage to Lessor, its agents and employees, or the property of such persons. The
limits and coverage of all such insurance shall be adjusted by agreement of
Lessor and Lessee during every fifth (5th) Lease Year during the term hereof and
whenever any rebuilding occurs in conformity with the then prevailing custom of
insuring property similar to the Premises in the City of Nashville, and any
disagreement regarding such adjustment shall be settled by arbitration in the
manner provided in paragraph 32 hereof.
(c) All insurance provided for in this paragraph 17, and all renewals
thereof, shall be issued by companies having a Best's rating of not less than
A-XIII, unless otherwise approved by Lessor. The fire and extended coverage
insurance specified in subparagraph 17(a) above shall be payable to Lessor,
Lessee, the Fe'e Lender and the Leasehold Lender, as their interests may appear,
and any loss adjustment shall require the joint written consent of Lessor,
Lessee, the Fe'e Lender and the Leasehold Lender. The fire and extended coverage
insurance specified in subparagraph 17(a) above and the general liability and
boiler insurance specified in subparagraph 17(b) above shall be carried in the
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joint names of Lessee, Lessor and such other parties having an interest in the
Premises as Lessor may designate. All insurance policies shall be subject to
approval by Lessor and Lender as to form and substance and shall expressly
provide that such policies, except for the boiler insurance specified in
paragraph 17(b) above, shall not be canceled or altered without thirty (30)
days' prior written notice to Lessor, the Fee Lender and the Leasehold Lender,
in the case of the insurance specified in subparagraph 17(a) above, and to
Lessor, in the case of the insurance specified in subparagraph 17(b) above. Upon
the issuance thereof, each insurance policy or a duplicate or certificate
thereof shall be delivered to Lessor, the Fee Lender and the Leasehold Lender.
Nothing herein shall be construed to limit the right of Leasehold Lender to
cause Lessee to carry or procure other insurance covering the same or other
risks in addition to the insurance specified in this paragraph 17. (e) Subject
to the rights of the Fee Lender and the Leasehold Lender and subject to Lessee's
right pursuant to paragraph 12(c) to purchase the Premises, all amounts that
shall be received under any insurance policy specified in subparagraph 17(a)
above shall be first applied to the payment of the cost of repair,
reconstruction or replacement of any buildings or improvements, or furniture,
fixtures, equipment and machinery, that~is damaged or destroyed. Any amount
remaining from the proceeds of any such insurance funds, after the repairing,
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reconstructing and replacing of any buildings or improvements, or furniture,
fixtures, equipment and machinery, as herein required, or the entire amount of
such proceeds not retained by the Fee Lender or the Leasehold Lender if Lessee
elects to purchase the Premises, shall be immediately paid to and be the sole
property of Lessee.
18. Mechanics' and Other Liens. Lessee shall promptly discharge or
remove by bond or otherwise prior to judgment being rendered in any foreclosure
action with respect thereto any and all mechanics', materialmen's and other
liens for work or labor done, services performed, materials, appliances, teams
or power contributed, used or furnished to be used in or about the Premises for
or in connection with any operations of Lessee, any alterations, improvements,
repairs or additions which Lessee may make or permit or cause to be made, or any
work or construction by, for or permitted by Lessee on or about the Premises,
and to save and hold Lessor and all of the Premises and all buildings and
improvements thereon free and harmless of and from any and all such liens and
claims of liens and suits or other proceedings pertaining thereto. Lessee
covenants and agrees to give Lessor written notice not less than ten (10) days
in advance of the commencement of any construction, alteration, addition,
improvement or repair costing in excess of Twenty-Five Thousand Dollars
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($25,000) in order that Lessor may post appropriate notices of Lessor's
nonresponsibility.
19. Indemnity
(a) Provided that Lessee shall pay under protest, post a bond in twice
the amount in dispute or give Lessor other evidence reasonably acceptable to
Lessor of Lessee's ability to pay any disputed amount, Lessee shall have the
right to contest the amount or validity of any lien of the nature set forth in
paragraph 18 hereof or the amount or validity of any tax, assessment, charge or
other item to be paid by Lessee under paragraph 4 hereof by giving Lessor
written notice of Lessee's intention to do so within twenty (20) days after the
recording of such lien or at least ten (10) days prior to the delinquency of
such tax, assessment, charge or other item, as the case may be. In any such case
Lessee shall not be in default hereunder, and Lessor shall not satisfy and
discharge such lien nor pay such tax, assessment, charge or other item, as the
case may be, until ten (10) days after the final determination of the amount or
validity thereof, within which time Lessee shall satisfy and discharge such lien
or pay such tax, assessment, charge or other item to the extent held valid and
all penalties, interest and costs in connection therewith; provided, however,
that the satisfaction and discharge of any such lien shall not, in any case, be
delayed until execution is had upon any judgment rendered thereon, nor shall the
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payment of any such tax, assessment, charge or other item, together with
penalties, interest and costs, in any case be delayed until sale is made or
threatened to be made of the whole or any part of the Premises on account
thereof, and any such delay shall be a default of Lessee hereunder. In the event
of any such contest, Lessee shall protect and indemnify Lessor against all loss,
cost (including reasonable attorney' fees), expense and damage resulting
therefrom.
(b) To the fullest extent allowed by law, Lessee covenants and agrees
that Lessor shall not at any time or to any extent whatsoever be liable,
responsible or in anywise accountable for any loss, injury, death or damage to
persons or property which at any time may be suffered or sustained by Lessee,
any person claiming under Lessee (other than any claim by A & N for which Lessee
has no liability under the terms of the Management Agreement) or by any person
who may at any time be using, occupying or visiting the Premises or be in, on or
about the Premises, not arising out of the intentional or negligent acts of
Lessor, and Lessee shall forever indemnify, defend, hold and save Lessor free
and harmless of, from and against any and all claims, liability, loss or damage
whatsoever (including reasonable attorneys' fees) on account of any such loss,
injury, death or damage. Lessee hereby waives all claims against Lessor for
damages to the buildings and improvements now or hereafter located on the
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Premises and to the property of Lessee in, upon or about the Premises, and for
injuries to persons or property in, on or about the Premises, from any cause
arising at any time during the term of this Lease, except for any such claims
arising from the intentional or negligent acts of Lessor.
20. Eminent Domain
(a) If the whole of the Premises should be taken by any public or
quasi-public authority under the power or threat of eminent domain during the
term of this Lease, or if a substantial portion of the Premises should be taken
so as materially to impair the then existing use of the Premises, and thereby
frustrate Lessee's purpose in entering into this Lease, then, in either of such
events, this Lease shall terminate at the time of such taking unless Lessee
elects to continue the Lease and to use the Premises for some other purpose
permitted by paragraph 7 hereof. In the event the Lease is terminated, provided
that the Option shall not have been exercised, (i) all compensation and damages
payable for or on account of the Premises, exclusive of the buildings and
improvements thereon, shall be payable to and be the sole property of Lessor and
the Fee Lender, as their interests may appear; and (ii) all compensation and
damages payable for or on account of the buildings and improvements located on
the Premises shall be divided between Lessor, Lessee, the Fee Lender and the
Leasehold Lender as follows:
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(A) All compensation and damages payable for or on account of buildings
and improvements having a remaining useful life less than the remaining term of
this Lease as of the date of such taking shall be payable to and be the sole
property of Lessee, the Fee Lender and the Leasehold Lender, as their interests
may then appear; and
(B) A proportionate share of all compensation and damages payable for
or on account of buildings and improvements having a remaining useful life
greater than the remaining term of this Lease as of the date of such taking,
determined by the ratio that the then remaining term bears to the then remaining
useful life of such buildings and improvements, shall be payable to and be the
sole property of Lessee, the Fee Lender and the Leasehold Lender, as their
interests may appear, and the remaining share thereof shall be payable to and be
the sole property of Lessor and the Fee Lender, as their interests may appear.
(b) If less than the whole of the Premises should be taken by any
public or quasi-public authority under the power or threat of eminent domain
during the term of this Lease and this Lease is not terminated as provided in
subparagraph 20(a) above, Lessee shall promptly reconstruct and restore the
Premises and the Improvements, with respect to the portion of the Premises and
the Improvements not so taken, as an integral unit of the same quality and
character as existed prior to such taking, and the annual Base Rent payable by
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Lessee from and after the date Of the condemnation award shall be (i) for all
periods prior to payment in full or other discharge of the Purchase Money Note,
an amount equal to $50,000 plus five percent (5%) of the difference between
$2,000,000 and the amount of any condemnation award received by Lessor, (ii) for
all periods following payment in full or other discharge of the Purchase Money
Note through the end of the tenth Lease Year, an amount equal to five percent
(5%) of the difference between $2,000,000 and the amount of any condemnation
award received by Lessor, and (iii) for all periods thereafter, an amount equal
to the product of the greater of the fair market value established pursuant to
paragraph 3(d) or the base Option Price on the date of the condemnation,
calculated as provided in paragraph 5(b)(i) hereof, less the condemnation award
received by Lessor multiplied by the applicable United States Treasury bond rate
for the Rent Period in question less $100,000. The base Option Price shall also
be reduced as of the same date by the amount of the condemnation award received
by Lessor, and all subsequent increases in the base Option Price shall be
recalculated to equal five (5%) of the difference between $2,000,000 and the
amount of the condemnation award received by Lessor plus ten percent (10%) of
the increase in the base Option Price for the immediately preceding Lease Year.
All compensation and damages payable for or on account of such taking shall be
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applied first to the reconstruction and restoration of the Premises by Lessee
pursuant to this paragraph 20(b) and the remainder shall be divided among
Lessor, Lessee and Lender in the manner provided in subparagraph 20(a) above.
(c) Notwithstanding the foregoing, in the event of a taking by any
public or quasi-public authority under the power or threat of eminent domain
during the term hereof at a time when the Option has been exercised and provided
that the Premises is subsequently transferred to Lessee,-all compensation and
damages payable for or on account of the Premises shall be payable to and be the
sole property of Lessee.
(d) No taking of any leasehold interest in the Premises or any part
thereof shall terminate or give Lessee the right to surrender this Lease, nor
excuse Lessee from full performance of its covenants for the payment of rent and
other charges or any other obligations hereunder capable of performance by
Lessee after any such taking, but in such case all compensation and damages
payable for or on account of such taking shall be payable to and be the sole
property of Lessee and Leasehold Lender.
(e) Should Lessor and Lessee for any reason disagree (i) as to whether
any portion of the Premises taken is so substantial as materially to impair the
use of the Premises contemplated by Lessee, or (ii) on the division of any
compensation or damages paid for or on account of any taking of any or any
portion of the Premises, then, and in any of such events, the matter shall be
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determined by arbitration in the manner provided in paragraph 32 hereof.
21. Lessor's Right of Inspection. Lessor may, at any reasonable time
and from time to time during the term hereof, enter upon the Premises for the
purpose of inspecting the buildings or improvements now or hereafter located
thereon and for such other purposes as may be necessary or proper for the
reasonable protection of its interests, and Lessee shall, within ten (10) days
after the receipt of written notice thereof, make such repairs and replacements
as Lessor may reasonably require to correct any dangerous condition or to
prevent waste to the Hotel. In the event Lessee shall fail or neglect to make
such repairs and replacements within the time herein specified, Lessor and its
agents may enter the Premises and, at Lessee's expense, perform and carry out
such repairs and replacements, and Lessor, in so doing, shall not be liable for
any inconvenience, disturbance, loss of business or other damage resulting
therefrom. Any expense thereby incurred by Lessor shall become Additional Rent
due and payable on the next day after the incurrence of any such expense.
22. Lessee's Defaults and Lessor's Remedies. If (i) default shall be
made by Lessee in the payment punctually when due of any rent or other moneys
due hereunder and shall continue for a period of ten (10) days after written
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notice thereof to Lessee; (ii) default shall be made by Lessee in the
performance or observance of any of the other agreements, covenants or
conditions of this Lease and such default shall continue for a period of thirty
(30) days after written notice thereof to Lessee, or, in the case of a default
which cannot be cured by the payment of money and cannot be cured within thirty
(30) days, shall continue for an unreasonable period after such written notice;
(iii) (a) Lessee shall fail to perform any obligations or covenants under the
Purchase Money Deed of Trust or any of the covenants under the Existing Deed of
Trust which it is obligated pursuant to paragraph 14 to perform or, following an
assumption by Lessee of the Existing Note, shall fail to make any payments
thereunder when due, (b.) the Existing Lender shall give notice of its intent to
accelerate the obligation evidenced by the Existing Note and (c) Lessee shall
fail to cure such default within thirty (30) days following such notice; (iv)
Lessee shall abandon the Premises or shall cease for a period of more than
thirty (30) days to operate the Hotel or other business then being conducted on
the Premises for any reason other than damage or destruction to the
Improvements, strike, riot, act of God or other reason outside the reasonable
control of Lessee or any renovation, improvement or alteration permitted by
paragraph 11 hereof; (v) Lessee shall admit in writing its inability to pay its
debts generally as they become due, file a petition in bankruptcy, insolvency,
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reorganization, readjustment of debt, dissolution or liquidation under any law
or statute of the Federal government or any state government or any subdivision
of either now or hereafter in effect, make an assignment for the benefit of its
creditors, consent to or acquiesce in the appointment of a receiver of itself or
of the whole or any substantial part of the Premises; (vi) a court of competent
jurisdiction shall enter an order, judgment or decree appointing a receiver of
Lessee or of the whole or any substantial part of the Premises, and such order,
judgment or decree shall not be vacated, set aside or stayed within sixty (60)
days from the date of entry of such order, judgment or decree, or a stay thereof
be thereafter set aside; (vii) a court of competent jurisdiction shall enter an
order, judgment or decree approving a petition filed against Lessee under any
bankruptcy, insolvency, reorganization, readjustment of debt, dissolution or
liquidation law or statute of the Federal government or any state government or
any subdivision of either now or hereafter in effect, and such order judgment or
decree shall not be vacated, set aside or stayed within sixty (60) days from the
date of entry of such order, judgment or decree, or a stay thereof be thereafter
set aside; or (viii) under the provisions of any other law for the relief or aid
of debtors, a court of competent jurisdiction shall assume custody or control of
Lessee or of the whole or any substantial part of the Premises, and such custody
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or control shall not be terminated within sixty (60) days from the date of
assumption of such custody or control; then any such event shall constitute an
event of default by Lessee. Upon the occurrence of any event of default by
Lessee, Lessor shall have the following rights and remedies, which shall be the
sole remedies of Lessor hereunder:
(a) The right to terminate this Lease, in which event Lessee shall
immediately surrender possession of the Premises, and pay to Lessor all rent and
all other amounts payable by Lessee hereunder to the later of the date of such
termination or the surrender of the Premises by Lessee; and
(b) The right to cause a receiver to be appointed in any action against
Lessee to take possession of the Premises or to collect the rents or profits
therefrom. Neither appointment of such receiver nor any other action taken by
Lessor shall constitute an election on the part of Lessor to terminate this
Lease unless written notice of termination is given to Lessee; and
(c) In the event of fraud, willful misconduct or waste by Lessee, the
right to sue for damages proximately caused by such fraud, willful misconduct or
waste.
23. Nonwaiver. If any action or proceeding is instituted or if any
other steps are taken by Lessor or Lessee, and a compromise, part payment or
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settlement thereof shall be made, either before or after judgment, the same
shall not constitute or operate as a waiver by Lessor or Lessee of any
agreement, covenant or condition of this Lease or of any subsequent breach
thereof. No waiver of any default under this Lease shall constitute or operate
as a waiver of any subsequent default hereunder, and no delay, failure or
omission in exercising or enforcing any right, privilege, or option under this
Lease shall constitute a waiver, abandonment or relinquishment thereof or
prohibit or prevent any election under or enforcement or exercise of any right,
privilege, or option hereunder. No waiver of any provision hereof by Lessor or
Lessee shall be deemed to have been made unless and until such waiver shall have
been reduced to writing and signed by Lessor or Lessee, as the case may be. The
receipt by Lessor of rent with knowledge of any default under this Lease shall
not constitute or operate as a waiver of such default. Payment by Lessee or
receipt by Lessor of a lesser amount than the stipulated rent or other sums due
Lessor shall operate only as a payment on account of such rent or other sums. No
endorsement or statement on any check or other remittance or in any
communication accompanying or relating to such payment shall operate as a
compromise or accord and satisfaction unless the same is approved in writing by
Lessor, and Lessor may accept such check, remittance or payment without
prejudice to its right to recover the balance of any rent or other sums due by
Lessee and pursue any remedy provided under this Lease or by law.
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24. No Merger
(a) There shall be no merger of the leasehold estate created by this
Lease or with the fee estate in the Premises by reason of the fact that the same
person may own or hold the leasehold estate created by this Lease or any
interest in such leasehold estate and/or the fee estate in the Premises or any
interest in such fee estate; and no merger shall occur unless and until Lessor,
Lessee and Leasehold Lender shall join in a written instrument effecting such
merger and shall duly record the same.
(b) No termination of this Lease shall cause a merger of the estates of
Lessor and Lessee, unless Lessor so elects, and any such termination shall, at
the option of Lessor, either work a termination of any sublease in effect or act
as an assignment to Lessor of Lessee's interest in any such sublease.
25. No Partnerships. It is expressly understood and agreed that Lessor
does not, in any way or for any purpose, become a partner of Lessee in the
conduct of Lessee's business, or otherwise, or a joint venturer or a member of a
joint enterprise with Lessee.
26. Covenants Run With Land
(a) The agreements, covenants and conditions in this Lease contained
are and shall be deemed to be covenants running with the land and the reversion
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and shall be binding upon and shall inure to the benefit of Lessor and Lessee
and their respective successors and assigns and all subsequent Lessors and
Lessees respectively hereunder.
(b) All references in this Lease to "Lessee" or "Lessor" shall be
deemed to refer to and include successors and assigns of Lessee or Lessor,
respectively, without specific mention of such successors or assigns.
27. Notices. Except as otherwise provided hereunder, any notice or
communication to Lessor, Lessee, the Fee Lender or the Leasehold Lender shall be
in writing and be delivered personally, sent by overnight courier or mailed by
certified mail, postage prepaid. Notices or communications shall be addressed to
Lessor c/o Mr. Kenneth E. Nelson, Three Corporate Plaza, Suite 202, Newport
Beach, California 92660, with a copy addressed to Godfrey & Kahn, 780 North
Water Street, Milwaukee, Wisconsin 53202, Attention: Helge Lee, Esq. or such
other address or addresses as Lessor shall from time to time designate, or to
such agent of Lessor as it may from time to time designate, by notice in writing
to Lessee. Notices or communications shall be addressed to Lessee c/o MP Realty
Services, 950 Tower Road, Foster City, California 94404, Attention: Portfolio
Management, with a copy addressed to Pettit & Martin, 101 California Street,
Suite 3500, San Francisco, California 94111, Attention: Joan H. Story, Esq. or
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such other address or addresses as Lessee shall from time to time designate, or
to such agent of Lessee as it may from time to time designate, by notice in
writing to Lessor. Notices or communications to the Fee Lender or the Leasehold
Lender shall be addressed to such party at the address designated from time to
time by such Lender by notice in writing to Lessor and Lessee. Any notice mailed
in the manner above set forth shall be deemed delivered upon the earlier of
actual receipt, two business days following deposit with an overnight courier or
four business days following deposit in the U.S. mails.
28. Limitation of Lessor's Liability. The term "Lessor," as used in
this Lease, so far as covenants or obligations on the part of Lessor are
concerned, shall be limited to mean and include only the owner or owners at the
time in question of the fee or any lesser estate in the Premises, and in the
event of any transfer of the title to such fee or lesser estate the Lessor
herein named (and in case of any subsequent transfer, the then transferor) shall
be automatically freed and relieved from and after the date of such transfer of
all personal liability for the performance of and covenants or obligations on
the part of Lessor contained in this Lease thereafter to be performed; provided,
however, that any funds in the hands of Lessor or the then transferor at the
time of such transfer, in which Lessee has an interest, shall be turned over to
the transferee and any amount then due and payable to Lessee by Lessor or the
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then transferor under any provision of this Lease shall be paid to Lessee; and
provided, further, that upon any such transfer, the transferee shall expressly
assume, subject to the limitations of this paragraph 28, all of the agreements,
covenants and conditions in this Lease to be performed on the part of Lessor
from and after the date of the transfer, it being intended hereby that the
covenants and obligations contained in this Lease on the part of Lessor shall,
subject as aforesaid, be binding on each Lessor, its successors and assigns,
only during its period of ownership.
29. Limitation of Lessee's Liability. The term "Lessee," as used in
this Lease, so far as covenants and obligations on the part of Lessee are
concerned, shall be limited to mean and include only the owner at the time in
question of the leasehold interest in the Premises, and in the event of any
transfer of the title to such leasehold the then Lessee shall be automatically
freed and relieved from and after the date of such transfer of all personal
liability for the performance of and covenants or obligations on the part of
Lessee contained in this Lease thereafter to be performed.
30. Estopped Certificates. Lessee or Lessor, as the case may be, will
execute, acknowledge and deliver to the other and/or to the Fee Lender and the
Leasehold Lender, promptly upon request, its certificate certifying (a) that
this Lease is unmodified and in full force and effect (or, if there have been
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modifications, that this Lease is in full force and effect, as modified, and
stating the modifications), (b) the dates, if any, to which the Base Rent,
Adjusted Rent and Additional Rent have been paid, (c) whether there are then
existing any charges, offsets or defenses against the enforcement by Lessor of
any agreement, covenant or condition hereof on the part of Lessee to be
performed or observed (and, if so, specifying the same), and (d) whether there
are then existing any defaults by Lessee in the performance or observance by
Lessee of any agreement, covenant or condition hereof on the part of Lessee to
be performed or observed and whether any notice has been given to Lessee of any
default which has not been cured (and, if so, specifying the same). Any such
certificate may be relied upon by a prospective purchaser, mortgagee or trustee
under a deed of trust of the Premises or any part thereof.
31. Holding Over. This Lease shall terminate without further notice
upon the expiration of the term specified, and any holding over by Lessee after
the expiration of said term shall not constitute a renewal hereof or give Lessee
any rights hereunder or in or to the Premises, except as otherwise herein
provided, it being understood and agreed that this Lease cannot be renewed,
extended or in any manner modified except in writing signed by Lessor and
Lessee.
32. Arbitration. Whenever, under any provision of this Lease,
arbitration is required then:
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(a) Lessor and Lessee shall each appoint one (1) arbitrator within
thirty (30) days after a written notice requesting arbitration shall have been
given by one of them to the other, and written notice of appointment shall be
given to the other party.
(b) Said two (2) arbitrators shall permit the parties to conduct
reasonable discovery and to present evidence to the arbitrators and shall,
within sixty (60) days after the appointment of the last-appointed arbitrator,
resolve the question or dispute before them in writing, setting forth the
reasons for their decision, and notify Lessor and Lessee of the results thereof.
(c) If said two (2) arbitrators cannot agree within said period, they
shall, within a period of thirty (30) additional days, agree upon and appoint a
third arbitrator.
(d) Said three (3) arbitrators shall, within thirty (30) days after the
appointment of the third arbitrator, resolve the question or dispute before them
in writing and notify Lessor and Lessee of the results thereof.
(e) The decision of at least two (2) of said three (3) arbitrators,
rendered in writing and setting forth in reasonable detail the reasons for the
decision, shall be conclusive and binding upon Lessor and Lessee.
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(f) If either Lessor or Lessee fails to appoint an arbitrator within
the time limited in subparagraph (a) above, or if the two (2) arbitrators
appointed by Lessor and Lessee fail to agree upon and appoint a third
arbitrator, such second or third arbitrator (as the case may be), shall be
appointed by the presiding judge of the Superior Court in and for the County of
Davidson upon application by either party. Except as provided hereunder, the
arbitration shall proceed in accordance with the laws then in effect of the
State of Tennessee relating to arbitration.
(g) Each of the parties hereto shall pay nor the services of its
appointees, attorneys and witnesses plus one-half (1/2) of the fee charged by
the third arbitrator (if any) and one-half (1/2) of all other proper costs
relating to arbitration.
(h) All arbitrators appointed pursuant to this paragraph 32 shall be
real estate brokers or M.A.I. appraisers who are thoroughly familiar with
appraisal procedures and with commercial property values in the City of
Nashville.
33. General Provisions
(a) In case any one or more of the provisions contained in this Lease
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Lease, but this Lease shall be construed as if such
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invalid, illegal or unenforceable provisions had not been contained herein.
(b) Time is of the essence of each and all of the agreements, covenants
and conditions of this Lease.
(c) Except as provided in paragraph 13(a) above, whenever in this Lease
the consent or approval of either Lessor or Lessee is required or permitted, the
party requested to give such consent or approval will act promptly and will not
unreasonably withhold its consent or approval.
(d) Contemporaneously with the execution of this Lease, Lessor and
Lessee will execute, acknowledge and record in the Official Records of the
County of Davidson a Short Form Lease in the form of Exhibit B hereto.
(e) Lessor and Lessee intend that the obligations of the Lessor to sell
the Premises to Lessee and the obligations of the Lessee to purchase the
Premises from the Lessor on the terms and conditions set forth in paragraph 5
hereof shall be specifically enforceable, without limitation on the right of
Lessee or Lessor to seek damages or to resort to any other remedy available at
law. Notwithstanding the foregoing or any other provision of this Lease to the
contrary, Lessor shall not have the right to terminate this Lease as the result
of any failure by Lessee to purchase the Premises in accordance with paragraph
62
<PAGE>
5. The monetary damages of Lessee arising from Lessor's breach of Lessor's
obligations to sell the Premises in accordance with the terms and conditions set
forth in paragraph S shall be secured by a deed of trust encumbering the
Premises in the form of Exhibit D hereto, which is hereby made a part hereof.
Contemporaneously with the execution of this Lease, Lessor shall execute,
acknowledge and record in the official records of the County of Davidson a deed
of trust in said form. In the event (i) Lessor shall fail or refuse to perform
its obligations under paragraph 5, (ii) Lessee shall elect to foreclose its
interest under the deed of trust recorded pursuant to this paragraph 33(e) and
(iii) Lessee shall be the successful bidder at the foreclosure sale, Lessee
shall pay to Lessor following such foreclosure sale the then applicable Option
Price less all costs (including reasonable attorneys' fees), losses and damages
incurred or suffered by Lessee as a result of Lessor's failure to perform as
required herein. If Lessor has timely tendered performance of its obligations
under paragraph 5 hereof and Lessee's obligations under paragraph 5 have been
breached, Lessee shall cause said deed of trust to be reconveyed on demand.
(f) In the event of any action or proceeding at law or in equity
between Lessor and Lessee to enforce any provision of this Lease or to protect
or establish any right or remedy of either party hereunder, the unsuccessful
63
<PAGE>
party to such litigation shall pay to the prevailing party all costs and
expenses, including reasonable attorneys' fees, incurred therein by such
prevailing party, and if such prevailing party shall recover judgment in any
such action or proceeding, such costs, expenses and attorneys' fees shall be
included in and as a part of such judgment.
(g) This instrument constitutes the entire agreement between Lessor and
Lessee with respect to the subject matter hereof and supersede all prior offers
and negotiations, oral or written. This Lease may not be amended or modified in
any respect whatsoever except by an instrument in writing signed by Lessor and
Lessee.
(h) It is intended by the parties that this Lease and the Purchase
Money Note and the Purchase Money Deed of Trust are separate instruments and,
except for the set-off rights referred to therein, evidence separate obligations
of each of the parties thereto. The terms and provisions set forth in this Lease
and in the Purchase Money Note and the Purchase Money Deed of Trust are to be
read independently and enforced as provided in each such document.
64
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease
as of the date first hereinabove Written.
NASHVILLE LODGING COMPANY,
a Wisconsin limited partnership
By Nashville Residence Corporation,
a Tennessee corporation
By_______________________________
Its______________________________
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P., a
California limited partnership
By: Metric Partners, an Illinois
general partnership, its
managing partner
By: FGM Investment Partners,
L.P., a California limited
partnership, its general
partner
By: FGM Investments,
Inc., a California
corporation, its
general partner
By ____________________________________
Its Authorized Representative
65
<PAGE>
EXHIBIT A
TO
LEASE
(Legal Description)
66
<PAGE>
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE is entered into as of this 25 day of April, 1990 by and
between NASHVILLE LODGING COMPANY, a Wisconsin limited partnership ("Lessor"),
and METRIC PARTNERS GROWTH SUITE INVESTORS, L. P., a California limited
partnership ("Lessee").
RECITALS
A. Lessor and Lessee entered into a Lease dated as of April 24, 1989 (the
"Lease") with respect to certain land located at 2300 Elm Hill Pike, Nashville,
Tennessee, upon which The Residence Inn By Marriott-Nashville (the "Hotel") is
situated.
B. In connection with and in consideration for termination of that certain
Management Agreement dated as of April 24, 1989 with respect to the Hotel
between Lessee and Nelson Hotels of Tennessee, Inc., a Wisconsin corporation
affiliated with Lessor, Lessor and Lessee desire to amend the Lease to provide
for the payment of additional Base Rent and the delivery of certain operating
reports to Lessor. All terms not otherwise defined herein shall have the
meanings set forth in the Lease.
NOW, THEREFORE, Lessor and Lessee agree to amend the Lease as follows:
AGREEMENT
1. Additional Base Rent.
a. In addition to the Base Rent described in Section 3 of the Lease
and the Additional Rent described in Section 4 of the Lease, Lessee shall pay to
Lessor as additional Base Rent hereunder ("Additional Base Rent") an amount
equal to the lesser of (i) 1.8% of the Adjusted Gross Revenue from the
operations of the Hotel for each twelve-month period commencing on May 1, 1990
and ending on April 14, 1998 (each, a "measuring year") or (ii) for each
measuring year from and after May 1, 1991 1.8% of the Adjusted Gross Revenue for
the prior measuring year commencing May 1, 1990 increased by the percentage of
such Adjusted Gross Revenue which is the same as the percentage increase, if
any, in the Consumer Price Index measured from the first day of the measuring
year commencing May 1, 1991 to the end of the measuring year for which payment
is being made. As used herein, "Consumer Price Index" shall mean the United
States Department of Labor's Bureau of Labor Statistics' Consumer Price Index
for all consumers in the State of Tennessee or the successor of such index.
Lessee's obligation to pay Additional Base Rent Pursuant to this paragraph 1
shall survive the termination of this Lease prior to April 14, 1998 for any
reason (including without limitation Lessee's purchase of the land pursuant to
the option set forth in Section 5 of the Lease) except that set forth in
subparagraph (f) below and shall continue to be payable notwithstanding such
early termination.
<PAGE>
b. For the purpose of calculating Additional Base
Rent, the following definitions shall apply:
i. "Gross Revenue" shall mean all income and revenue of every
kind resulting from the operation of the Hotel and all of its
facilities including, without limitation, all income and revenue
received from transient guests, licensees, concessionaires and other
persons occupying space at and/or rendering services to the guests of
the Hotel (but not the gross receipts received by such licensees,
concessionaires and other persons); provided, however, that Gross
Revenue shall not include, or if included, shall be reduced by the
amount of the following:
(1) the proceeds of any loan to Owner; and
(2) any cash contributions or loans by
Owner.
(ii) "Adjusted Gross Revenue" shall mean Gross Revenue in any
Fiscal Year after deducting the following items (whether paid or
unpaid) accruing during such Fiscal Year to the extent included in
Gross Revenue:
(1) federal, state and municipal excise, sales and use
taxes, whether collected directly from patrons, guests or users
of the Hotel or charged as a part of the sales prices of any
goods, services or displays, such as gross receipts, admission,
cabaret or similar or equivalent taxes;
(2) any vending machine revenues from machines now owned by
Owner (other than sales commissions or other renumeration
received by Owner with respect to such machines);
(3) the proceeds payable to Owner by reason of any hazard or
business interruption insurance policies, title insurance
policies or items of a similar nature;
<PAGE>
(4) the proceeds of any permanent taking by condemnation or
eminent domain by any public or quasi-public authority of all or
any part of the Hotel;
(5) any reversal of any contingency or tax reserve;
(6) any cash or credit rebates or refunds paid to patrons,
guests, lessees, concessionaires or other users of the Hotel, any
correction of overcharges, the price of any merchandise given in
exchange of other merchandise which does not result in additional
income (or, if such exchanges result in additional income, that
part of the price of such merchandise equal to the price of the
returned merchandise), and any other items of the nature of those
items set forth herein;
(7) any allowance for bad debts;
(8) the proceeds to Owner from the sale or other disposition
of the Hotel or any part thereof or other assets of Owner not
sold in the ordinary course of business;
(9) any payments made directly to Owner to induce it to
enter into any lease, agreement or other transaction in
connection with the Hotel;
(10) any proceeds from settlement of legal proceedings;
(11) interest on the capital replacement reserve.
c. Except as expressly provided in subparagraphs (e), (f) and (g)
below, Additional Base Rent shall be paid monthly on or before the day upon
which the operator of the Hotel is paid its monthly management fee, but in no
event later than the twentieth (20th) day of the month following the month in
which the Adjusted Gross Revenue upon which it is computed is earned, and shall
be based on the monthly profit and loss statement for the preceding month and a
schedule for computation of the Additional Base Rent prepared by the operator of
the Hotel and delivered to Lessor at the time the Additional Base Rent is paid.
At the end of each fiscal year for the Hotel during which Additional Base Rent
is payable hereunder, the amount of the Additional Base Rent due hereunder shall
be adjusted to reflect changes in actual revenues and expenses shown on the
year-end profit and loss statement prepared by the operator of the Hotel from
those shown on the monthly statements previously delivered to Lessor, as well as
changes in the Consumer Price Index which affect the maximum Additional Base
Rent payable hereunder. Any Additional Base Rent due Lessor shall be paid at the
time the year-end profit and loss statement is submitted to Lessor. Any
overpayment of Additional Base Rent shall be credited against the next
Additional Base Rent due.
<PAGE>
d. In the event any Additional Base Rent is not paid on or before the
due date, Lessee shall be obligated to pay a late charge of $250 and the
delinquent rent shall earn interest until paid at a default rate equal to one
percent (1%) in excess of the Reference Rate established from time to time by
the Bank of America N.T. & S.A.
e. Notwithstanding the foregoing, Lessee's obligation to pay
Additional Base Rent hereunder shall terminate in the event and as of the date
Lessee sells the Hotel to any person or entity not affiliated with Lessee,
provided that in the event such sale occurs prior to May 1, 1994, Lessee shall
pay to Lessor on or before the date title to the Hotel is transferred to the
purchaser an amount equal to 1.8% of the Adjusted Gross Revenue from the
operation of the Hotel for the 12 month period immediately preceding the sale
times a fraction, the numerator of which is the number of months from the date
of the sale to May 1, 1994 and the denominator of which is 12.
f. Further notwithstanding the foregoing, Lessee's obligation to pay
Additional Base Rent shall terminate upon the happening of either of the
following events within one (1) year from the date hereof:
(i) Cessation of the operation of the Hotel as a hotel as a
result of damage to or destruction of a material part of the Hotel;
(ii) Cessation of the operation of the Hotel as a hotel as a
result of a taking by condemnation or eminent domain of all or a
material portion of the Hotel;
g. If either of the events described in subparagraphs f.(i) and (ii)
above occur at any time on or after the date which is one (1) year following the
date of this Amendment, the Additional Base Rent from and after such occurrence
shall be calculated based on the Adjusted Gross Revenue for the corresponding
month in the 12 month period immediately preceding such occurrence and shall be
payable only for the period from such occurrence through April 30, 1994.
<PAGE>
2. Delivery of Reports.
a. Lessee shall deliver to Lessor at the time each payment of
Additional Base Rent is due a profit and loss statement showing the results of
the operation of the Hotel for the immediately preceding month and the fiscal
year to date. Lessee shall also deliver to Lessor copies of the annual budget
(for the Hotel approved by Lessee) and, not less often than quarterly, any
reports showing results of the operation of the Hotel for the preceding quarter
and fiscal year to date as compared to the annual budget.
b. Lessee shall also deliver to Lessor copies of all inspection
reports rendered to Lessee by the franchisor of the Hotel.
3. Defaults and Remedies. In the event Lessee fails to pay any Additional
Base Rent when due, Lessor's sole remedies shall be those set forth in Section
22 of the Lease. Any failure by Lessee to perform any of its obligations under
Section 2 of this Amendment to Lease shall not constitute a default hereunder
unless Lessor has given Lessee notice of such default no later than sixty (60)
days following the date any such report is issued or, with respect to inspection
reports prepared by the franchisor of the Hotel, sixty (60) days following
receipt by Lessor of notice that an inspection has been performed and, in either
case, Lessee fails to deliver such report to Lessor within thirty (30) days
following receipt of Lessor's notice of default.
4. Except as expressly amended herein, all terms and provisions of the
Lease shall remain in full force and effect.
IN WITNESS WHEREOF, Lessor and Lessee have entered into this Amendment to
Lease as of the day first above written.
LESSOR: NASHVILLE LODGING COMPANY, a Wisconsin
limited partnership
By: Nashville Residence Corporation, a
Tennessee corporation, its general
partner
By: /s/Kenneth E. Nelson
-------------------------
Kenneth E. Nelson, President
[Signatures continued on next page]
<PAGE>
LESSEE: METRIC PARTNERS GROWTH SUITE
INVESTORS, L. P., a California limited
partnership
By: Metric Partners, an Illinois
general partnership, its
general partner
By: FGM Investment Partners, L.
P., a California limited
partnership, its general
partner
By: FGM Investments, Inc., a
California corporation,
its general partner
By:
----------------
Its Authorized
Representative
<PAGE>
Exhibit A
Land in Davidson County, Tennessee, said Parcel being Lot No. 1 as shown on the
subdivision Plat of the Atrium, Phase One, of record in Book 6250, page 84,
Register's Office Davidson County, Tennessee, and being more particularly
described by metes and bounds as follows:
Beginning at the northwest intersection of Atrium Way and Elm Hill Pike, said
point being the most northerly radius return of said intersection; thence along
the easterly margin of Atrium Way, North 07 deg. 57 min. 08 sec. East a distance
of 109.53 feet to a point; thence South 82 deg. 02 min. 52 sec. West a distance
of 5.00 feet to a point; thence around a curve to the left having a central
angle of 73 deg. 59 min. 28 sec., a radius of 166.00 feet, a length of 214.37
feet, a chord which bears North 44 deg. 56 min. 52 sec. West for a distance of
199.78 feet; thence North 81 deg. 56 min. 36 sec. West, a distance of 149.69
feet to a point; thence leaving said right of way, North 18 deg. 47 min. 21 sec.
East a distance of 123.44 feet to a point; thence North 50 deg. 03 min. 51 sec.
East a distance of 255.00 feet to a point; thence South 69 deg. 09 min. 37 sec.
East, a distance of 96.81 feet to a point; thence South 22 deg. 06 min. 36 sec.
West a distance of 29.16 feet to a point; thence South 69 deg. 44 min. 06 sec.
East a distance of 136.16 feet to a point; thence North 32 deg. 04 min. 16 sec.,
East a distance of 57.74 feet to a point; thence South 29 deg. 57 min. 39 sec.
East a distance of 112.74 feet to a point; thence South 73 deg. 58 min. 30 sec.
East a distance of 233.32 feet to a point; thence South 08 deg. 41 min. 38 sec.
West a distance of 301.97 feet to a point situated in the northerly margin of
Elm Hill Pike; thence along said road, South 82 deg. 02 min. 52 sec. West, a
distance of 374.00 feet to a point; thence around a curve to the right having a
central angle of 90 deg. 00 min. 00 sec., a radius of 25.00 feet, a length of
39.27 feet, a chord which bears North 52 deg. 57 min. 08 sec. West for a
distance of 35.36 feet to the point of beginning and containing 5.70 acres of
land, more or less, according to a survey made by Allen R. Trombo of Dale and
Associates, Tennessee Registered Land Surveyor No. 1127, on April 20, 1989.
Being the same property conveyed to Nashville Residence Corp., a Tennessee
Corporation, by deed from Miller Kimbrough, Jr., Trustee of record in Book 6074,
page 851, Register's Office for Davidson County, Tennessee .
THERE IS INCLUDED in this conveyance easements over the herein described
property for access, maintenance, use and support of such buildings and
improvements.
<PAGE>
SCHEDULE A
PERMITTED EXCEPTIONS
1. All taxes on the "Improvements" as defined herein for the year 1989 and
subsequent years, a lien but not yet due and payable.
2. Deed of Trust executed by Nashville Residence Corp., a Tennessee corporation
co John Kooistra, Jr., Trustee, dated June 14, 1983, and recorded in Book 6074,
page 855, Register's Office of Davidson County, Tennessee, in favor of Savers
Federal Savings and Loan Association, a federal savings and loan association,
which states that it secures a debt in the principal sum of $9,500,000.00
payable as therein specified, together with any terms, conditions, restrictions,
or limitations recited therein. The present amount due should be determined by
contacting the owner of the debt.
William L. Rosenberg was appointed Successor Trustee under said deed of trust by
Appointment of Successor Trustee of record in Book 6856, page 884, Register's
Office Davidson County, Tennessee.
3. Financing Statement in favor of Savers Federal Savings and Loan Association,
of record in Book 6074, page 893, Register's Office for Davidson County,
Tennessee.
4. Statement of Continuation in favor of Savers Federal Savings and Loan
Association of record in Book 7560, page 12, Registers Office for Davidson
County, Tennessee.
5. Assignment of Rents and Leases in favor of Savers Federal Savings and Loan
Association, of record in Book 6074, page 896, Register's Office for Davidson
County, Tennessee.
6. Assignment of Construction Contract to Savers Federal Savings and Loan
Association of record in Book 6074, page 907, Register's Office for Davidson
County, Tennessee.
7. Assignment of Plans and Specifications to Savers Federal Savings and Loan
Association, of record in Book 6074, page 914, Register's Office for Davidson
County, Tennessee.
8. Assignment of Management Agreement to Savers Federal Savings and Loan
Association, of record in Book 6074, page 920, Register's Office for Davidson
County, Tennessee.
<PAGE>
9.
10. Easement for flow of Simms Creek across premises.
11.
12. Encroachments, restrictions, easement and other matters shown on plat of
record in Book 6250, page 84, Register's Office of Davidson County, Tennessee.
13. Agreements for Dedication of Easement for Sanitary Sewers and/or Storm
Drainage to the Metropolitan Government of Nashville and Davidson County,
Tennessee, of record in Book 4260, page 10, and Book 4427, page 915, Registered
Office of Davidson County, Tennessee.
14. Lease between Nashville Lodging Company and Metric
Partners Growth Suite Investors, L. P. executed simultaneously herewith.
<PAGE>
SCHEDULE B
Land in Davidson County Tennessee said Parcel being Lot No. 1 as shown on the
subdivision Plat of the Atrium Phase One, of record in Book 6250 page 84,
Register's Office Davidson County, Tennessee, and being more particularly
described by metes and bounds as follows:
Beginning at the northwest intersection of Atrium and Elm Hill Pike, said point
being the most northerly radius return of said intersection; thence along the
easterly margin of Atrium Way North 07 deg. 57 min. 08 sec. East a distance of
109.53 feet to a point; thence South 82 deg. 02 min. 52 sec. West a distance of
5.00 feet to a point; thence around a curve to the left having a central angle
of 73 deg. 59 min. 28 sec., a radius of 166.00 feet, a length of 214.37 feet, a
chord which bears North 44 deg. 56 min. 52 sec. West for a distance of 199.78
feet; thence North 81 deg. 56 min. 36 sec. West, a distance of 149.69 feet to a
point; thence leaving said right of way North 18 deg. 47 min. 21 sec. East a
distance of 123.44 feet to a point; thence North 50 deg. 03 min. 51 sec. East a
distance of 255.00 feet to a point; thence South 69 deg. 09 min. 37 sec. East, a
distance of 96.81 feet to a point; thence South 22 deg. 06 min. 36 sec. West a
distance of 29.16 feet to a point; thence South 69 deg. 44 min. 06 sec., East a
distance of 136.16 feet to a point; thence North 32 deg. 04 min. 16 sec. East a
distance of 57.74 feet to a point; thence South 29 deg. 57 min. 39 sec. East a
distance of 112.74 feet to a point; thence South 73 deg. 58 min. 30 sec. East a
distance of 233.32 feet to a point; thence South 08 deg. 41 min. 38 sec. West a
distance of 301.97 feet to a point situated in the northerly margin of Elm Hill
Pike; thence along said road, South 82 deg. 02 min. 52 sec. West, a distance of
374.00 feet to a point; thence around a curve to the right having a central
angle of 90 deg. 00 min. 00 sec., a radius of 25.00 feet, a length of 39.27
feet, a chord which bears North 52 deg. 57 min. 08 sec. West for a distance of
35.36 feet to the point of beginning and containing 5.70 acres of land, more or
less, according to a survey made by Allen R. Trombo of Dale and Associates,
Tennessee Registered Land Surveyor No. 1127, on April 20, 1989.
Being the same property conveyed to Nashville Residence Corp., a Tennessee
Corporation, by deed from Miller Kimbrough, Jr., Trustee of record in Book 6074,
page 851, Register's Office for Davidson County, Tennessee.
THERE IS INCLUDED in this conveyance easements over the herein described
property for access, maintenance, use and support at such buildings and
improvements.
<PAGE>
STATE OF ____WISCONSIN_________________)
) SS.
COUNTY OF ____MILWAUKEE________________)
On , before me, the undersigned, a Notary Public in and for said state,
personally appeared ____________________ and ____________________, known to me
to be the ____________________ and ____________________ of Nashville Residence
Corporation, a Tennessee corporation, the general partner of Nashville Lodging
Company, a Wisconsin limited partnership, described in the attached instrument,
and also known to me to be the person who executed the attached instrument on
behalf of Nashville Lodging Company, and acknowledged to me that Nashville
Loding Company executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal.
--------------------
Notary Public
<PAGE>
EXHIBIT B
SHORT FORM LEASE
<PAGE>
THIS INSTRUMENT PREPARED BY:
Joan H. Story, Esq.
Pettit & Martin
101 California St.
Suite 3500
San Francisco, CA 94111
SHORT FORM OF LEASE THIS LEASE, made and entered into this ________
day of April 1989, by and between NASHVILLE LODGING COMPANY, a Wisconsin limited
partnership, as Lessor, and METRIC PARTNERS GROWTH SUITE INVESTORS, L.P., a
California limited partnership, as Lessee,
W I T N E S S E T H:
WHEREAS Lessor is the owner of all the real property including the
land (the "Land") and all buildings, structures and improvements thereon (the
"Improvements"), located at 2300 Elm Hill Pike, Nashville, Tennessee, commonly
known as the Residence Inn By Marriott and more particularly described in
Exhibit A hereto; and
WHEREAS Lessor wishes to sell to Lessee the Improvements and to lease
to Lessee the Land, together with all rights, privileges and easements
appurtenant thereto (herein collectively called the "Premises"), and Lessee
wishes to purchase from Lessor the Improvements and to lease from Lessor the
Premises, all as more particularly described in that certain Purchase and Sale
Agreement, dated April_________ , 1989, among Nashville Residence Corporation,
Lessor and Lessee.
<PAGE>
NOW, THEREFORE, Lessor and Lessee hereby agree as follows:
1. That upon the covenants and conditions as set forth in that certain
unrecorded lease of even date between Lessor and Lessee (said lease being
hereinafter called the "Lease"), Lessor does hereby lease the Premises unto
Lessee, and Lessee does hereby hire and take the Premises from Lessor. By this
reference the Lease is incorporated in this instrument and made a part hereof.
2. The term of this Lease shall commence on the date hereof and shall
terminate on the ______ day of April, 2049, unless said term shall be sooner
terminated under the provisions of the Lease.
3. The Lease provides Lessee with an option (the "Option") to purchase
the Premises on terms and conditions and for the consideration set forth in the
Lease.
4. This Short Form of Lease does not modify, alter, amend or change in
any way the provisions of the Lease, which shall for all purposes govern and
determine the relationship between Lessor and Lessee and their rights and duties
with respect to this lease.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Short Form of
Lease as of the day and year first hereinabove written.
NASHVILLE LODGING COMPANY,
a Wisconsin limited partnership
By Nashville Residence Corporation,
a Tennessee corporation
By______________________________
its__________________________
By______________________________
its__________________________
METRIC PARTNERS GROWTH SUITE INVESTORS,
L. P., a California limited partnership
By: Metric Partners, an Illinois
general partnership, its managing
partner
By: FGM Investment Partners, L.P.,
a California limited
partnership, its general
partner
By: FGM Investments, Inc., a
California corporation,
its general Partner
By:________________
Its Authorized
Representative
<PAGE>
STATE OF ______________________)
) SS
COUNTY OF______________________)
On __________________ , before me, the undersigned, a Notary Public in
and for said state, personally appeared ____________________ and
__________________________ , known to me to be the __________________________
and ____________________________of Nashville Residence Corporation, a Tennessee
corporation, the general partner of Nashville Lodging Company, a Wisconsin
limited partnership, described in the attached instrument, and also known to me
to be the person who executed the attached instrument on behalf of Nashville
Lodging Company, and acknowledged to me that Nashville Loding Company executed
the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal.
-----------------------
Notary Public
<PAGE>
EXHIBIT C
Nashville Residence Inn
Ground Lease
Option Price
Base Option Base Option
----------- -----------
12-mo 12-mo
ending Price Increase ending Price Increase
------ ----- -------- ------ ----- --------
1990 2,100,000 2020 18,549,402 1,586,309
1991 2,200,000 100,000 2021 20,294,342 1,744,940
1992 2,310,000 110,000 2022 22,213,777 1,919,434
1993 2,431,000 121,000 2023 24,325,154 2,111,378
1994 2,584,100 133,100 2024 26,647,670 2,322,515
1995 2,710,510 146,410 2025 29,202,437 2,554,767
1996 2,871,561 161,051 2026 32,012,681 2,810,244
1997 3,048,717 177,156 2027 35,103,949 3,091,258
1998 3,243,589 194,872 2028 38,504,343 3,400,395
1999 3,457,948 214,359 2029 42,244,778 3,740,434
2000 3,693,742 235,795 2030 46,359,258 4,114,478
2001 3,953,117 259,374 2031 50,885,181 4,525,926
2002 4,238,428 285,312 2032 55,883,699 4,978,513
2003 4,552,271 313,843 2033 51,340,069 5,478,370
2004 4,897,498 345,227 2034 67,364,078 6,024,007
2005 5,277,248 379,750 2035 73,990,484 6,626,408
2006 5,694,973 417,725 2036 81,279,532 7,269,048
2007 6,154,470 459,497 2037 89,297,485 8,017,953
2008 6,659,917 505,447 2038 98,117,234 8,819,749
2009 7,215,909 555,992 2039 107,818,957 9,701,723
2010 7,827,500 611,591 2040 118,490,853 10,671,896
2011 8,500,250 672,750 2041 130,229,938 11,739,085
2012 9,240,275 740,025 2042 143,142,932 12,912,994
2013 10,054,302 814,027 2043 157,347,225 14,204,293
2014 10,949,733 895,430 2044 172,971,948 15,624,723
2015 11,934,706 984,973 2045 190,159,142 17,187,195
2016 13,018,177 1,083,471 2046 209,065,057 18,905,914
2017 14,209,994 1,191,818 2047 229,861,562 20,796,506
2018 15,520,994 1,310,999 2048 252,737,719 22,876,158
2019 16,963,093 1,442,099 2049 277,901,490 25,163,772
<PAGE>
EXHIBIT D
LONG FORM DEED OF TRUST AND ASSIGNMENT OF RENTS
This Deed of Trust, made this 24 day of April, 1989 , between Nashville Lodging
Co., A Wisconsin Limited Partnership ,herein called Trustor, whose address is 3
Corporate Plaza, Suite 202, Newport, California 92660 Philip Kelly , herein
called Trustee and Metric Partners Growth Suite Investors, L.P. , herein called
Beneficiary.
Witnesseth: That Trustor irrevocably grants transfers and assigned to trustee in
trust, with power of sale, that property in Davidson County, Tennessee ,
described as: SEE SCHEDULE B ATTACHED HERETO.
This conveyance is subject to the matters on Schedule A attached hereto and Deed
of Trust, Leasehold Deed of Trust and Security Agreement dated of even date
herewith from Beneficiary (as Trustor) to Trustor (as Beneficiary).
TOGETHER WITH the rents, issues and profits thereof, SUBJECT, HOWEVER, to the
right, power and authority herein-after given to and conferred upon Beneficiary
to collect and apply such rents, issues and profits. For the Purpose of
Securing:
1. Performance of each agreement of Trustor herein contained. 2. The
monetary damages of Beneficiary, if any, arising from a breach by Trustor of its
obligation to sell certain real property as set forth in Paragraph 5 of that
certain Lease by and among Trustor, as Lessor, and Beneficiary, as Lessee dated
of even date herewith.
<PAGE>
STATE OF______________________ )
) SS
COUNTY OF_____________________ )
On ______________ , before me, the undersigned, a Notary Public in and for
said state, personally appeared _______________________________ , known to me to
be the authorized representative for FGM Investments, Inc., a California
corporation, the general partner of FGM Investment Partners, L.P., a California
limited partnership, the general partner of Metric Partners, an Illinois general
partnership, the managing partner of Metric Partners Growth Suite Investors,
L.P., the California limited partnership described in the attached instrument,
and also known to me to be the person who executed the attached instrument on
behalf of Metric Partners Growth Suite Investors, L.P. and acknowledged to me
that Metric Partners Growth Suite Investors, L.P. executed the same.
IN WITNESS WHEREOF I have hereunto set my hand and affixed my official
seal.
------------------
Notary Public
<TABLE> <S> <C>
<ARTICLE>5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-END> Dec-31-1995
<CASH> 10248000
<SECURITIES> 0
<RECEIVABLES> 1034000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11478000
<PP&E> 87885000
<DEPRECIATION> 28935000
<TOTAL-ASSETS> 71071000
<CURRENT-LIABILITIES> 2852000
<BONDS> 42669000
0
0
<COMMON> 0
<OTHER-SE> 25250000
<TOTAL-LIABILITY-AND-EQUITY> 71071000
<SALES> 0
<TOTAL-REVENUES> 25649000
<CGS> 0
<TOTAL-COSTS> 16867000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4852000
<INCOME-PRETAX> 69000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 3275000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3344000
<EPS-PRIMARY> 52
<EPS-DILUTED> 0
</TABLE>
