FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 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: 0-15837
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
----------------------------------------------------------
(Exact name of Registrant as specified in its charter)
California 33-0202964
-------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 South El Camino Real, Suite 1100
San Mateo, California 94402
---------------------- -----------
(Address of principal executive offices) (Zip Code)
(415) 343-9300
------------------------------
(Registrant's telephone number)
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
---- ----
Total number of units outstanding as of March 31, 1995: 35,742,572
NO EXHIBIT INDEX REQUIRED
Page 1 of 18
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Balance Sheets
(in thousands, except Unit amounts)
(Unaudited)
March 31, December 31,
Assets 1995 1994
------- ----------- ------------
Real estate investments, at cost:
Land $ 4,192 $ 4,192
Building and improvements 25,576 25,510
-------- --------
29,768 29,702
Less accumulated depreciation (8,729) (8,479)
-------- --------
Net real estate investments 21,039 21,223
Property held for sale, net - 9,282
Property held pending foreclosure,
net 3,550 3,591
Cash and cash equivalents 940 801
Notes receivable 2,000 2,000
Accounts receivable, net 151 87
Prepaid expenses and other assets 328 280
Deferred financing costs and other
fees (net of accumulated
amortization of $1,037 and
$1,014 in 1995 and 1994,
respectively) 792 1,015
-------- --------
Total assets $ 28,800 $ 38,279
======== ========
(continued)
See accompanying notes to financial statements.
Page 2 of 18
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Balance Sheets - continued
(in thousands, except Unit amounts)
(Unaudited)
March 31, December 31,
1995 1994
----------- -----------
Liabilities and Partners' Equity (Deficit)
------------------------------------------
Notes payable - secured $ 18,458 $ 26,076
Participating notes:
Notes issued 5,229 5,229
Accrued interest, thereon 4,739 4,582
Less: Notes held in trust (2,733) (544)
Accrued interest, thereon (2,381) (413)
-------- --------
Net due to outside holders 4,854 8,854
Note payable - unsecured - 7
Accrued interest payable 762 785
Accounts payable 154 152
Accrued expenses 375 247
Payble to affiliate 312 -
Deferred income and security
deposits 71 134
-------- --------
Total liabilities 24,986 36,255
Partners' equity (deficit):
General Partner (389) (407)
Limited Partners, 35,742,572
Equity Units outstanding 4,203 2,431
-------- --------
Total partners' equity 3,814 2,024
-------- --------
Total liabilities and
partners' equity $ 28,800 $ 38,279
======== ========
See accompanying notes to financial statements.
Page 3 of 18
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Statements of Operations
(in thousands, except per unit amounts)
(Unaudited)
Three months ended
March 31,
-------------------
1995 1994
------- -------
Revenues:
Operating $ 2,535 $ 2,565
Interest and other 130 128
-------- --------
Total revenues 2,665 2,693
-------- --------
Expenses:
Operating (including $652 and
$655 paid to affiliates in
the three months ended March
31, 1995 and 1994, respectively) 1,592 1,628
General and administrative
(including $115 and $130 paid
to affiliates in the three
months ended March 31, 1995
and 1994, respectively) 138 154
Depreciation and amortization 464 455
Interest 744 774
-------- --------
Total expenses 2,938 3,011
-------- --------
Loss before extraordinary items (273) (318)
Extraordinary items:
Gain on sale of asset 155 -
Gain from Participating Notes
purchased 1,908 -
-------- --------
Total extraordinary items 2,063 -
-------- --------
Net income (loss) $ 1,790 $ (318)
======== ========
Net income (loss) per Equity Unit $ 0.05 $ (0.01)
======== ========
Distributions per Equity Unit $ - $ -
======== ========
See accompanying notes to financial statements.
Page 4 of 18
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Statements of Partners' Equity (Deficit)
(in thousands)
For the three months ended March 31, 1995 and 1994
(Unaudited)
Total
General Limited Partners'
Partner Partners Equity
-------- -------- --------
Balance at December 31, 1993 $ (378) $ 5,295 $ 4,917
Net loss (3) (315) (318)
-------- -------- --------
Balance at March 31, 1994 $ (381) $ 4,980 $ 4,599
======== ======== ========
Balance at December 31, 1994 $ (407) $ 2,431 $ 2,024
Net income 18 1,772 1,790
-------- -------- --------
Balance at March 31, 1995 $ (389) $ 4,203 $ 3,814
======== ======== ========
See accompanying notes to financial statements.
Page 5 of 18
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Statements of Cash Flows (in thousands)
(Unaudited)
Three months ended
March 31,
------------------
1995 1994
------ ------
Cash flows provided by (used for) operating activities:
Net income (loss) $ 1,790 $ (318)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 464 455
Gain on sale of assets (155) -
Gain from Participating Notes purchased (1,908) -
Changes in assets and liabilities:
Accounts receivable (64) (34)
Prepaid expenses and other assets (48) (199)
Deferred financing and other fees 148 (66)
Accounts payable 2 64
Accrued expenses 128 (67)
Payable to affiliate 312 -
Accrued interest payable 74 152
Deferred income and security deposits (63) 4
-------- --------
Net cash provided by (used for) operating activities 680 (9)
-------- --------
Investing activities:
Acquisitions of and additions to real estate (75) (173)
Proceeds from sale of Millwood 9,349 -
-------- --------
Net cash provided by (used for) financing activities 9,274 (173)
-------- --------
Cash flows provided by (used for) financing activities:
Notes payable principal payments (7,618) (48)
Repayment of unsecurd note payable (2,007) -
Borrowings on unsecured notes payable 2,000 -
Unsecured note payable - (1)
Buy-back of Participating Note units - discounted (2,190) -
-------- --------
Net cash used for financing activities (9,815) (49)
-------- --------
Net increase (decrease) in cash and cash equivalents 139 (231)
Cash and cash equivalents at beginning of period 801 1,375
-------- --------
Cash and cash equivalents at end of period $ 940 $ 1,144
======== ========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 643 $ 623
======== ========
Supplemental disclosure of noncash transactions:
Reduction of accrued intrest payable resulting from
purchase of Participating Notes at discount $ 1,908 $ -
======== ========
See accompanying notes to consolidated statements.
Page 6 of 18
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Financial Statements
March 31, 1995
(Unaudited)
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
--------------------------------------------------
POLICIES
--------
In the opinion of Glenborough Realty Corporation, the managing
general partner, the accompanying unaudited financial statements
contain all adjustments (consisting of only normal accruals)
necessary to present fairly the financial position of Outlook
Income Fund 9, A California Limited Partnership (the
"Partnership"), as of March 31, 1995 and December 31, 1994, and
the related statements of operations for the three months ended
March 31, 1995 and 1994, and the changes in partners' equity and
cash flows for the three months ended March 31, 1995 and 1994.
Note 2. REFERENCE TO 1994 AUDITED FINANCIAL STATEMENTS
----------------------------------------------
These unaudited financial statements should be read in
conjunction with the Notes to Financial Statements included in
the 1994 audited financial statements.
Note 3. TRANSACTIONS WITH AFFILIATES
----------------------------
Glenborough Corporation and Glenborough Hotel Group
("Glenborough"), affiliates of Glenborough Realty Corporation,
have been compensated for management services. Included in
operating expenses for the three months ended March 31, 1995 and
1994, are the following amounts paid to Glenborough:
1995 1994
-------- --------
Property management fees $ 57,700 $ 58,100
Property salaries (reimbursed) 66,100 77,700
Hotel management fees 73,600 73,100
Hotel salaries (reimbursed) 454,600 445,700
The Partnership also reimbursed Glenborough for expenses incurred
for services provided to the Partnership such as accounting,
investor services, data processing, duplicating and office
supplies, legal and administrative services and the actual costs
of goods and materials used for or by the Partnership.
Glenborough was reimbursed $114,700 and $120,400 by the
Partnership for such expenses during the three months ended March
31, 1995 and 1994, respectively. Such amounts are included in
general and administrative expenses.
In addition, in accordance with the Partnership Agreement, the
Partnership paid Glenborough a transaction fee in January 1994 of
$9,500 for negotiating the October 1993 financing in the form of
Page 7 of 18
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Financial Statements
March 31, 1995
(Unaudited)
a first deed of trust note secured by Branford Business Park.
Such expense is included in general and administrative expenses.
Included on the Partnership's March 31, 1995 balance sheet is
$312,000 accrued and payable to Glenborough Corporation
representing a 3% property disposition fee for the Millwood sale
(discussed in Note 4). The fee was computed in accordance with
the partnership agreement and was paid on April 5, 1995,
subsequent to the Partnership's quarter end.
Note 4. PROPERTY SALES
--------------
In December 1993, based upon the deterioration of the local
market as seen in the steady decline of occupancy, market rents
and net operating income from 1991, and based on the unsuccessful
attempt at generating interest in the Branford property at an
asking price approximately equivalent to the book value of the
property, management determined that the carrying value of
Branford Business Park had been impaired. As a result, the
Partnership recorded a writedown of $1,697,400 to reduce the
carrying value of the property to its estimated net realizable
value.
On November 15, 1994, the Partnership sold Branford Business Park
to an unaffiliated third party for $2,675,000, out of which
$700,000 was used to payoff the outstanding note secured by the
property. The Partnership financed a $2,000,000 note at 8.5%
interest with interest-only payments due until maturity on
November 11, 1999. Since the cash received from the transaction
was used to payoff the outstanding note, the Partnership was
responsible for paying $166,000 in closing costs. The
Partnership incurred a loss on the sale in the amount of
$257,000.
On March 28, 1995, the Partnership sold Millwood Estates
Apartments to an unaffiliated third party for $10,400,000, out of
which $7,572,400 was used to payoff the outstanding note secured
by the property. In addition, sales proceeds were used to payoff
the $2,000,000 note payable used to repurchase Participating
Notes (as discussed in Note 5). After closing costs and the
payoff of the two notes, the Partnership netted cash proceeds in
the amount of $152,300. The Partnership recognized a gain on
sale on its 1995 Statement of Operations in the amount of
$155,000. In anticipation of the sale of the property,
management reclassified the net book value of Millwood Estates
Apartments to "Property held for sale" on the Partnership's
December 31, 1994 balance sheet.
Page 8 of 18
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Financial Statements
March 31, 1995
(Unaudited)
Note 5. PARTICIPATING NOTES
--------------------
In January 1994, the Partnership sent a "Conditional Offer to
Purchase 12% Participating Notes" ("the Offer") to all Note
investors. The Offer was made to Noteholders in an effort to
reduce the impact of the Notes' accrued interest on the value of
the Equity Units. The Offer was contingent upon selling one or
more properties or otherwise obtaining financing to raise the
cash needed to repurchase the Notes at a discount. The Offer
originally expired December 1, 1994 but was extended an
additional 60 days. Approximately 46% of the Noteholders
accepted the offer. Buying back these notes will provide a
significant interest savings to the Partnership, which will
benefit the Equity Unit investors (whose returns are subordinated
to the Noteholders' receiving a return of principal plus 12%
simple deferred interest per annum). On February 15, 1995, the
Partnership repurchased approximately $2,190,000 in principal of
the Participating Notes with accrued interest of approximately
$1,908,000 at a significant discount with the proceeds from a
$2,000,000 short-term loan. The accrued interest on these Notes
equated to the discount, since the noteholders who accepted the
Offer received the principal amount of their original note
without any of the deferred interest accrued to date. The
forgiveness was recognized as an extraordinary gain on the
Partnership's 1995 Statement of Operations. The Notes and
accrued interest will be held in trust for the benefit of the
Partnership.
On January 27, 1995, the Partnership borrowed $2,000,000 from an
unaffiliated lender to facilitate the repurchase of Notes as
discussed above. Since the Partnership was relying on the
proceeds from the sale of a property to fund the repurchase of
the Notes, but such funds would not be available until the sale
of Millwood Estates, the Partnership borrowed the money necessary
to facilitate the purchase in order to meet the deadline required
by the Offer. The loan required interest-only payments at a
variable interest rate (11% at March 28, 1995) and matured June
26, 1995. However, the loan was paid off on March 28, 1995 with
a portion of the proceeds from the sale of Millwood Estates
Apartments (discussed in Note 4).
Note 6. PROPERTY HELD PENDING FORECLOSURE
---------------------------------
Based on the continued low occupancy due to market saturation,
and the property's inability to meet debt service payments,
management is negotiating a deed-in-lieu of foreclosure with the
lender on the Regency Residence property. The principal balance
of the note secured by the property at March 31, 1995 was
Page 9 of 18
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Financial Statements
March 31, 1995
(Unaudited)
$3,539,000, with a accrued interest in the amount of $76,100.
Title to the property is due to pass to the lender in the second
quarter of 1995. Meanwhile, the Partnership is currently paying
all net cash flow (defined as all income collected less operating
expenses including reserves for real personal property taxes and
insurance) to the lender.
The Partnership recorded a write-down of $835,900 to reduce the
carrying value of the property to the balance of the note payable
and accrued interest at December 31, 1994.
Page 10 of 18
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
Outlook Income Fund 9 was formed to invest in improved, income-
producing real estate with the following objectives: (i) preserve
and protect capital, (ii) provide substantially tax-sheltered
distributions to Unit holders, and (iii) offer the potential for
appreciation in value.
The Partnership's original plan was to pay 9% current
distributions to the Equity investors. The driving force of
these distributions was two-fold: First, income warranties given
by sellers to maintain property income at a high level while the
properties were in their startup phase; and second, deferred
interest debt that allowed the Partnership to use borrowed money
without having to make current loan payments. Most of the
Partnership's debt, including the Notes, was originally of this
type. Thus, the income warranties subsidized the property
income, and the deferred interest debt allowed cash flow that
would normally have been required for debt service to be used for
distributions. By using these techniques, the Partnership was
able to pay distributions at a high level, in the hope that the
actual property cash flow and value of the properties would
increase enough that, (i) when the income warranties and interest
deferrals expired, the property cash flow would have increased to
a point where it would be able to make the new loan payments
without reducing distributions, and (ii) when the properties were
sold, the value would have increased enough to absorb the higher
mortgage balances without eroding the original equity. It is now
evident that a few properties have fallen far short of
expectations, so it is doubtful that the original overall plan
will be realized in the foreseeable future.
The Partnership historically paid more in distributions than it
earned, and had depleted its reserves. Additionally, all income
warranties expired prior to December 31, 1991 and in 1992, the
deferred interest debt was restructured and loan payments
commenced. During 1993, the Partnership paid: (1) $425,000 to
buyback the Note Units from the former general partner, (2)
$275,000 to purchase the note payable from the minority interest
in Country Suites By Carlson - Tempe which facilitated the
purchase of the minority interest in the joint venture, and (3)
$767,700 in capital improvements and leasing commissions. In
1994, $577,400 was paid for capital improvements, tenant
improvements and leasing commissions. In addition, the
Partnership had to pay a $250,000 principal paydown on the note
secured by Branford to extend the maturity date of the note until
the sale of Branford. The Partnership also had to pay $166,000
in closing costs associated with the sale. In light of these
events and management's intent to further reduce debt and rebuild
reserves to a level of at least $2,000,000, the suspension of
distributions was essential. At this time, management is unable
to predict when distributions will resume.
Page 11 of 18
In January 1994, the Partnership sent a "Conditional Offer to
Purchase 12% Participating Notes" ("the Offer") to all Note
investors. The Offer was made to Noteholders in an effort to
reduce the impact of the Notes' accrued interest on the value of
the Equity Units. The Offer was contingent upon selling one or
more properties or otherwise obtaining financing to raise the
cash needed to repurchase the Notes at a discount. The Offer
originally expired December 1, 1994 but was extended an
additional 60 days. Approximately 46% of the Noteholders
accepted the offer. Buying back these notes will provide a
significant interest savings to the Partnership, which will
benefit the Equity Unit investors (whose returns are subordinated
to the Noteholders' receiving a return of principal plus 12%
simple deferred interest per annum). On February 15, 1995, the
Partnership repurchased approximately $2,190,000 in principal of
the Participating Notes with accrued interest of approximately
$1,908,000 at a significant discount with the proceeds from a
$2,000,000 short-term loan. The accrued interest on these Notes
equated to the discount, since the noteholders who accepted the
offer received the principal amount of their original note
without any of the deferred interest accrued to date (see Note 5
of the Notes to Financial Statements). The forgiveness was
recognized as an extraordinary gain on the Partnership's 1995
statement of operations. The notes and accrued interest will be
held in trust for the benefit of the Partnership.
On January 27, 1995, the Partnership borrowed $2,000,000 from an
unaffiliated lender to facilitate the repurchase of Notes as
discussed above. Since the Partnership was relying on the
proceeds from the sale of a property to fund the repurchase of
the Notes, but such funds would not be available until the sale
of Millwood Estates, the Partnership borrowed the money necessary
to facilitate the purchase in order to meet the deadline required
by the Offer. The loan required interest-only payments at a
variable interest rate (11% at March 28, 1995) and matured June
26, 1995. However, the loan was paid off on March 28, 1995 with
a portion of the proceeds from the sale of Millwood Estates
Apartments (discussed in Note 4).
In anticipation of the Regency Residence property being given to
the bank by a deed-in-lieu of foreclosure in mid-1995 as
discussed in Note 6 of the Notes to Financial Statements, the
Partnership recorded a net realizable value reserve in the amount
of $835,900 at December 31, 1994 and reclassed the net book value
to "Property held pending foreclosure, net" on the Partnership's
balance sheet. The realizable value reserve brought the net book
value of the property down to the amount outstanding (principal
and accrued interest) on the note secured by the property.
On March 28, 1995, the Partnership sold Millwood Estates
Apartments to an unaffiliated third party for $10,400,000, out of
which $7,572,400 was used to payoff the outstanding note secured
by the property. In addition, sales proceeds were used to payoff
the $2,000,000 note payable used to repurchase Participating
Notes (as discussed in Note 5). After closing costs and the
payoff of the two notes, the Partnership netted cash proceeds in
Page 12 of 18
the amount of $152,300. The Partnership recognized a gain on
sale on its 1995 Statement of Operations in the amount of
$155,000. In anticipation of the sale of the property,
management reclassified the net book value of Millwood Estates
Apartments to "Property held for sale" on the Partnership's
December 31, 1994 balance sheet.
Accounts receivable at March 31, 1995 increased $64,000 to
$151,000 from $87,000 at December 31, 1994 due to an increase in
accounts receivable at the Memphis and Tempe properties
associated with tour groups which accounted for a large
percentage of occupancy at the properties. Management expects
full collection of these receivables and payments are currently
being made on the accounts.
Prepaid expenses and other assets increased $48,000 from December
31, 1994 to March 31, 1995 primarily due to an increase in
payments made to property tax impound accounts which are required
by two lenders who hold the notes secured by the Lake Mead and
Bryant Lake properties. Property taxes for these properties are
primarily due in the fourth quarter of each calendar year.
Deferred financing costs and other fees decreased by
approximately $223,000 from December 31, 1994 to March 31, 1995
as a result of the sale of Millwood Estates Apartments. Net loan
fees in the amount of $193,000 relating to the Millwood loan were
written-off as a result of the sale of the property.
The $7,618,000 decrease in notes payable-secured from December
31, 1994 to March 31, 1995 was primarily due to the payoff of the
loan secured by the Millwood property as part of the sale on
March 28, 1995.
The balance of notes payable-unsecured of $7,000 at December 31,
1994 represented a loan relating to the energy conserving
lighting at the Millwood Estates Apartments which was written-off
as a result of the sale of the property.
Accrued expenses increased approximately $128,000 from $247,000
at December 31, 1994 to $375,000 at March 31, 1995 due to an
increase in accrued property taxes. Property taxes for the
Partnership are primarily paid in the fourth quarter.
The payable to affiliate balance of $312,000 at March 31, 1995
represents the 3% property disposition fee payable to an
affiliate of the general partner for the Millwood sale (as
discussed in Note 4 of the Notes to Financial Statements). The
fee was paid on April 5, 1995.
Management's ongoing business plan for the Partnership is to
preserve capital, reduce debt and rebuild reserves. Management
has already successfully restructured the Partnership's deferred
interest debt which has lowered interest expense and stabilized
payments through the loan terms. By restructuring and/or
reducing debt, building reserves, suspending distributions, and
prudent day to day management of income and expenditures,
Page 13 of 18
management is striving to maintain stable operations and endure
the challenge of the market.
Results of Operations
----------------------
Operating revenues of $2,535,000 for the three month period
ending March 31, 1995 did not change significantly, a decrease of
1%, from revenues of $2,565,000 for the same three month period
in 1994.
Operating expenses of $1,592,000 for the three month period
ending March 31, 1995 did not change significantly, a decrease of
2%, from expenses of $1,628,000 for the same three month period
in 1994.
General and administrative expenses decreased by $16,000 or 10%
from $154,000 for the three month period ended March 31, 1994, to
$138,000 for the same period in 1995 due to decreases in overhead
allocated to the Partnership, legal costs and investor relations
expenses.
LAKE MEAD ESTATES:
Lake Mead Estates was 97% and 98% occupied at March 31, 1995 and
1994, respectively. The property's Clark county economy
experienced a slow-down during the early 90's but stabilized
during 1993. Lower interest rates attracted first time home
buyers from rental housing and the local defense industry has
been down-sizing due to cut-backs. Despite these conditions,
management has kept occupancy above 90% and raised average rental
rates without jeopardizing occupancy by offering clean, well
maintained facilities, a supportive staff and a strong resident
retention program. Demand for off-base housing from the military
sector is predicted to increase in 1995 and management
anticipates continued high occupancy with special incentives for
new tenants. The property has provided positive cash flow for
the Partnership so far during 1995 after making debt service
payments and capital improvements.
REGENCY RESIDENCE:
Regency Residence was 73% and 84% occupied at March 31, 1995 and
March 31, 1994, respectively. The property's local economy has
been moderately active since 1991. The property's grounds are
well maintained and the residence offers excellent amenities
compared to those of it's competitors. The original business
plan and proforma tenant mix was undermined by the inability to
attract a larger base of financially stable, active residents
with a minimum of living assistance needs. The actual tenant mix
has been predominantly those with lower incomes requiring full-
care in the 74 to 80+ age range. During 1993, the residence was
partially renovated and management has been striving to attract
it's originally targeted market while attending to the current
tenant mix needs.
Page 14 of 18
The property originally operated under a seller's income warranty
which provided the Partnership with annualized income of
$1,082,700 through September 30, 1991. The property was
encumbered by a deferred interest loan which, in mid-1992, was
restructured at a lower interest rate and, as of August 1992, the
Partnership began making monthly principal and interest
installments. The scheduled monthly payments on this loan have
been suspended and replaced with net cash flow payments in
anticipation of the property being given back to the lender as a
deed-in-lieu of foreclosure (as discussed in Note 6 of the Notes
to Financial Statements). The last scheduled monthly payment
made on this note was in November 1994. The Partnership recorded
a write-down in the amount of $835,900 to reduce the carrying
value of the property to the balance of the note payable and
accrued interest at December 31, 1994.
BRYANT LAKE PHASES I AND II:
Bryant Lake Phases I and II was 100% leased at March 31, 1995 and
1994. The next lease expiration date is March 1996. The
property is not encumbered by debt and has provided positive cash
flow to the Partnership so far in 1995.
BRYANT LAKE PHASE III:
Bryant Lake Phase III was 96% occupied at March 31, 1995 compared
to 94% as of March 31, 1994. Management is currently negotiating
a renewal with a tenant that occupies 7,502 square feet. The
next lease expirations are in December 1995. The property has
provided positive cash flow for the Partnership so far during
1995 after debt service payments.
COUNTRY SUITES BY CARLSON - MEMPHIS:
Country Suites By Carlson - Memphis year-to-date occupancy was
72% as of March 31, 1995, compared to 75% as of March 31, 1994.
The hotel maintained its share of the market with a slight
increase in average rental rates. Average daily room rates
increased from $50.65 to $51.53 when comparing the three month
period ended March 31, 1994 to 1995, respectively.
During 1993, $156,300 in capital improvements were invested to
improve the building's appearance and attract and maintain
corporate accounts. In addition, a new computer system was
installed to accommodate the industry's most sophisticated
reservations processing capabilities.
Marketing efforts have focused on account development in the
commercial business segments including small local companies and
contracts with larger nation-wide firms. Business from the
government /military sector also continued to provide a strong
revenue base for the hotel, as did a sector of transient guests
(guests who stay from one to five days) who account for higher
rated business.
Page 15 of 18
The hotel was encumbered by a deferred interest loan which, in
mid-1992, was restructured at a lower interest rate and as of
August 1992, the Partnership began making monthly principal and
interest installments. The hotel has provided positive cash flow
for the Partnership so far during 1995, after making debt service
payments and capital improvements.
Page 16 of 18
COUNTRY SUITES BY CARLSON - TEMPE:
The hotel's average occupancy for the three months ended March
31, 1995 and March 31, 1994, was 89%. The average daily room
rate, however, increased sharply from $49.89 at March 31, 1994 to
$58.47 at March 31, 1995. This increase is attributable to the
maturation of the franchise reservation system, which earns
higher-rated business.
Marketing efforts continued to focus on the tour groups while
developing commercial accounts for non-tourist seasons. (Tour
group revenue is the single largest contributor to room revenue
in 1995). The hotel's connection with the Country Suites By
Carlson franchise affiliates it with a well established suite
hotel chain, which should gradually elevate occupancy through
referral services and accelerate national recognition.
Significant capital improvements were completed in 1993 to
improve the image of the building and bring the property up to
the new franchise standards.
The hotel was also encumbered by deferred interest debt which was
restructured at a lower interest rate in mid-1992 and effective
August 1992, the Partnership began making monthly principal and
interest payments. The hotel has provided positive cash flow for
the Partnership so far during 1995, after making debt service
payments and capital improvements.
Page 17 of 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) No reports on Form 8-K were filed during the
period ended March 31, 1995.
Page 18 of 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
By: Glenborough Realty Corporation
a California corporation
Managing General Partner
Date: May 12, 1995 By: /s/ Andrew Batinovich
----------------------------
Andrew Batinovich
Senior Vice President,
Chief Financial Officer
and Director
