May 1, 1996
Filer Support, EDGAR
U.S. Securities and Exchange Commission
Operations Center, Stop 0-7
6432 General Green Way
Alexandria, VA 22312
Re: Outlook Income Fund 9
Gentlemen:
The following amendment to the December 31, 1995 form 10-K (as
filed under Form 10-K/A) adds to Item 8, Schedule III - Real
Estate and Accumulated Depreciation which was previously omitted
in error.
Very truly yours,
Outlook Income Fund 9,
a California Limited Partnership
By: /s/ Terri Garnick
---------------------------------
TERRI GARNICK
Senior Vice President and
Chief Financial Officer
Enclosures
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the 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: 0-15837
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
California 33-0202964
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
400 South El Camino Real, Suite 1100 94402-1708
San Mateo, California (Zip Code)
(Address of principal executive offices)
Partnership's telephone number, including area code: (415) 343-9300
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of class)
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]
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
No market for the Limited Partnership Units exists and therefore
a market value for such Units cannot be determined.
DOCUMENTS INCORPORATED BY REFERENCE: None
Page 1 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Balance Sheets (in thousands, except Unit amounts)
December 31, 1995 and 1994
Assets 1995 1994
Real estate investments, at cost:
Land $ 4,192 $ 4,192
Building and improvements 25,903 25,510
30,095 29,702
Less accumulated depreciation (9,543) (8,479)
Net real estate investments 20,552 21,223
Property held for sale, net --- 9,282
Property held pending foreclosure, net --- 3,591
Cash and cash equivalents 591 801
Notes receivable 2,000 2,000
Accounts receivable, net 177 87
Prepaid expenses and other assets 159 280
Deferred financing costs and other
fees, (net of accumulated
amortization of $1,225 and $1,014
in 1995 and 1994, respectively) 568 1,015
Total assets $ 24,047 $ 38,279
Liabilities and Partners' Equity (Deficit)
Notes payable - secured $ 15,345 $ 26,076
Participating notes:
Notes issued 4,591 5,229
Accrued interest, thereon 4,582 4,582
Less: Notes held in trust (2,329) (544)
Accrued interest, thereon (2,297) (413)
Net due to outside holders 4,547 8,854
Note payable - unsecured --- 7
Accrued interest payable 719 785
Accounts payable --- 152
Accrued expenses 380 247
Deferred income and security deposits 63 134
Total liabilities 21,054 36,255
Partners' equity (deficit):
General Partner (397) (407)
Limited Partners, 35,742,572
Equity Units outstanding 3,390 2,431
Total partners' equity 2,993 2,024
Total liabilities and
partners' equity $ 24,047 $ 38,279
The accompanying notes are an integral part
of these consolidated financial statements.
Page 2 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Operations
(in thousands, except per unit amounts)
For the Years Ended December 31, 1995, 1994 and 1993
1995 1994 1993
Revenues:
Rental $ 7,610 $ 9,824 $ 9,555
Interest and other 438 494 358
Gain (loss) on sale of asset 154 (257) ---
Total revenues 8,202 10,061 9,913
Expenses:
Operating (including $1,798, $2,618
and $2,525 paid to affiliates for the
years ended December 31, 1995, 1994
and 1993, respectively) 5,183 6,585 6,351
General and administrative (including
$458, $468 and $497 paid to affiliates
in 1995, 1994, and 1993, respectively) 557 571 639
Depreciation and amortization 1,536 1,881 2,042
Interest 2,060 3,081 3,068
Litigation expense --- --- 65
Provision to reduce carrying value of
real estate to estimated realizable
value --- 836 1,697
Total expenses 9,336 12,954 13,862
Loss before extraordinary items (1,134) (2,893) (3,949)
Extraordinary items:
Gain on debt forgiveness 188 --- ---
Gain from Participating Notes purchased 1,915 --- 428
Total extraordinary items 2,103 --- 428
Net income (loss) $ 969 $(2,893)$(3,521)
Net income (loss) per Equity Unit $ 0.03 $ (0.08)$ (0.10)
Distributions per Equity Unit $ --- $ --- $ ---
The accompanying notes are an integral part
of these consolidated financial statements.
Page 3 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Partners' Equity (Deficit)
(in thousands)
For the Years Ended December 31, 1995, 1994 and 1993
Total
General Limited Partners'
Partner Partners Equity
Balance at December 31, 1992 $ (343) $ 8,781 $ 8,438
Net loss (35) (3,486) (3,521)
Balance at December 31, 1993 $ (378) $ 5,295 $ 4,917
Net loss (29) (2,864) (2,893)
Balance at December 31, 1994 $ (407) $ 2,431 $ 2,024
Net income 10 959 969
Balance at December 31, 1995 $ (397) $ 3,390 $ 2,993
The accompanying notes are an integral part
of these consolidated financial statements.
Page 4 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows (in thousands)
For the Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995 1994
1993
Cash flows provided by operating activities:
Net income (loss) $ 969 $ (2,893)
$(3,521)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Extraordinary gain from Participating Notes
purchased --- --- (428)
Provision for impairment 836
1,697
Depreciation and amortization 1,536 1,881
2,042
Loss on sale of property 257
- - ---
Gain on sale of asset (154) ---
- - ---
Gain on debt forgiveness (188) ---
- - ---
Gain from Participating Notes purchased (1,915) ---
- - ---
Changes in certain assets and liabilities
Accounts receivable (90) ---
94
Prepaid expenses and other assets 89 (47)
83
Deferred financing and other fees (121) (28) (74)
Accounts payable (155) (33)
153
Accrued expenses 268 ---
- - ---
Accrued interest payable 358 633
705
Deferred income and security deposits (11) (70) (16)
Net cash provided by (used for)
operating activities 586 536
735
Cash flows used for investing activities:
Acquisitions of and additions to real estate (439) (496) (661)
Proceeds for the sale of Millwood 9,557 ---
- - ---
Purchase of minority interest in consolidated
joint venture (950)
Closing costs on sale of Branford --- (166)
- - ---
Net cash used for investing activities 9,118 (662) (1,611)
Cash flows provided by (used for) financing activities:
Borrowings on secured notes payable --- ---
950
Notes payable principal payments (7,689) (448) (178)
Repayment of unsecured note payable (2,007) ---
- - ---
Borrowings on unsecured notes payable 2,500 ---
10
Purchase of notes receivable --- --- (275)
Payment of Participating Notes and accrued
interest from Millwood sale (609) ---
- - ---
Buy-back of Participating Note units-discounted (2,109) --- (425)
Distributions of minority interest on consolidated
joint venture --- --- (
50)
Net cash used for financing activities (9,914) (448)
32
</TABLE>
(Continued)
Page 5 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows (in thousands) - continued
For the Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995 1994
1993
Net decrease in cash and cash equivalents (210) (574)
(844)
Cash and cash equivalents at beginning of period 801 1,375
2,219
Cash and cash equivalents at end of period $ 591 $ 801
$1,375
Supplemental disclosure of cash flow information:
Cash paid for interest $ 2,026 $2,247
$2,271
Supplemental disclosure of non-cash transactions:
Reduction of accrued interest payable resulting
from purchase of Participating Notes at
discount $ 1,915 $ --- $
- - ---
Purchase of Participating Notes:
Reduction of accrued interest payable
resulting from purchase of Participating
Notes at discount $ --- $ --- $
310
Reduction of participating notes resulting from
purchase of Participating Notes at discount $ --- $ --- $
119
Purchase of minority interest in consolidated
joint venture:
Repayment of note receivable by reduction of
cash proceeds for purchase of minority
interest $ --- $ --- $
275
Reduction of real estate investments resulting
from purchase of minority interest in
joint venture $ --- $ --- $
123
Receipt of Notes receivable in sale of property $ --- $2,000 $
- - ---
Proceeds from sale used to paydown note payable $ --- $ 700 $
- - ---
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
Page 6 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Organization - Outlook Income Fund 9, A California Limited
Partnership, (the "Partnership") was organized on August 29, 1986
in accordance with the provisions of the California Revised
Limited Partnership Act for the purpose of purchasing, holding,
operating, leasing and selling various properties. The
Partnership commenced operations on March 5, 1987. Through a
registered public offering, 60,000,000 units of limited
partnership interest (the "Equity Units") at $1.00 per unit, were
authorized for sale. The sale of Equity Units was concluded on
January 11, 1988, when 35,742,572 Equity Units had been sold.
The Partnership also raised funds by selling $5,228,811 in non-
recourse Participating Notes (the "Notes") (see Note 9). The
former general partner of the Partnership was Outlook Financial
Partners, a California general partnership. On May 8, 1992,
Glenborough Realty Corporation and Robert Batinovich were
substituted for Outlook Financial Partners, as the general
partners (collectively, the "General Partner").
The Partnership Agreement provides for varying allocations of net
income or net loss and distributions (see Note 10).
Reclassifications - Certain items in the 1993 financial
statements have been reclassified to conform to the 1994
financial statement presentation.
Consolidation and Joint Venture - A joint venture in which the
Partnership had an interest of greater than 50% has been
consolidated in the accompanying consolidated financial
statements. Transactions and balances between the Partnership
and this joint venture have been eliminated in consolidation.
Pervasiveness of Estimates - The preparation of financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions
that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported results of operations
during the reporting period. Actual results could differ from
those estimates.
New Accounting Pronouncement - In March, 1995, the Financial
accounting Standards Board issued Statement of Financial
Accounting Standards No. 121 (SFAS 121), "Accounting for
Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed Of." The Partnership adopted SFAS 121 in the fourth
quarter of fiscal 1995. SFAS 121 requires that an evaluation of
Page 7 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
an individual property for possible impairment must be performed
whenever events or changes in circumstances indicate that an
impairment may have occurred. There was no impact from the
initial adoption of SFAS 121.
Rental Property to be Held and Used - Rental properties are
stated at cost and include the related land unless events or
circumstances indicate that cost cannot be recovered in which
case carrying value is reduced to estimated fair value.
Estimated fair value: (i) is based upon the Partnership's plans
for the continued operation of each property; (ii) is computed
using estimated sales price, as determined by prevailing market
values for comparable properties and/or the use of capitalization
rates multiplied by annualized rental income based upon the age,
construction and use of the building, and (iii) does not purport,
for a specific property, to represent the current sales price
that the Partnership could obtain from third parties for such
property. The fulfillment of the Partnership's plans related to
each of its properties is dependent upon, among other things, the
presence of economic conditions which will enable the Partnership
to continue to hold and operate the properties prior to their
eventual sale. Due to uncertainties inherent in the valuation
process and in the economy, it is reasonably possible that the
actual results of operating and disposing of the Partnership's
properties could be materially different than current
expectations.
Depreciation is provided using the straight line method over the
useful lives of the respective assets (see Note 3).
Depreciation of buildings and their components is computed using
the straight-line method over useful lives ranging from five to
thirty years. Major replacements and improvements are
capitalized, and repairs and maintenance are charged to
operations as incurred.
Cash Equivalents - The Partnership considers short-term
investments (including certificates of deposit) with a maturity
of three months or less at the time of purchase to be cash
equivalents.
Deferred Financing and Other Fees - Fees paid to the former
general partner, its affiliates and the brokers in connection
with the issuance of Notes have been capitalized and amortized
using the straight-line method over the term of the related
Notes. Wholesaling and underwriting commissions relating to
Equity Units are charged directly to partners' equity. Other
fees such as loan fees and leasing commissions are amortized
using the straight-line method over the term of the related notes
Page 8 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
payable or leases.
Revenues - All leases are classified as operating leases. Rental
income is recognized on the straight-line basis over the terms of
the leases. At December 31, 1995, no tenant's revenues
represented greater than 10% of the Partnership's total revenues.
Net Loss and Distributions Per Equity Unit - Net loss and
distributions per limited partnership unit are based on
35,742,572 weighted average Equity Units outstanding during all
years presented.
Income Taxes - Federal and state income tax laws provide that
income or loss of the Partnership is reportable by the partners
in their tax returns. Accordingly, no provisions for such taxes
have been made in the accompanying consolidated financial
statements. The Partnership reports certain transactions
differently for tax and financial reporting purposes.
Note 2. TRANSACTIONS WITH AFFILIATES
In accordance with the Limited Partnership Agreement, the
Partnership paid the General Partner and its affiliates
compensation for services provided to the Partnership.
Glenborough Corporation provides property management services and
has been compensated as follows:
1995 1994 1993
Property management fees $ 157,200 $ 235,900 $ 235,700
Property salaries
(reimbursed) 177,400 333,600 335,500
Hotel management fees 234,500 269,500 251,700
Hotel salaries
(reimbursed) 1,228,700 1,778,900 1,702,500
The Partnership reimbursed Glenborough Corporation 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 $458,400, $467,600 and
$496,600 for such expenses in 1995, 1994 and 1993, respectively.
In accordance with the Partnership Agreement, the General Partner
or its affiliates are entitled to property disposition
compensation equal to 3% of the gross sales price of the
property. Glenborough Corporation was paid $312,000 in 1995 and
$80,250 in 1994 associated with the sale of Millwood Estates and
Branford Business Park, respectively.
Page 9 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
Page 10 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
Note 3. REAL ESTATE INVESTMENTS
The cost and accumulated depreciation and amortization of real
estate investments as of December 31, 1995 and 1994 are as
follows (in thousands):
Building and
Land Improvements Total
1995:
Lake Mead Estates
Apartments $ 772 $ 5,230 $ 6,002
Bryant Lake Business
Center-Phases I & II 945 4,587 5,532
Bryant Lake Business
Center-Phase III 1,004 4,792 5,796
Country Suites By Carlson
- Memphis 542 5,071 5,613
Country Suites By Carlson
- Tempe 929 6,223 7,152
4,192 25,903 30,095
Less accumulated
depreciation and
amortization --- (9,543) (9,543)
$ 4,192 $16,360 $20,552
Building and
Land Improvements Total
1994:
Lake Mead Estates
Apartments $ 772 $ 5,230 $ 6,002
Bryant Lake Business
Center-Phases I & II 945 4,578 5,523
Bryant Lake Business
Center-Phase III 1,004 4,728 5,732
Country Suites By Carlson
- Memphis 542 4,907 5,449
Country Suites By Carlson
- Tempe 929 6,067 6,996
4,192 25,510 29,702
Less accumulated
depreciation and
amortization - (8,479) (8,479)
$ 4,192 $ 17,031 $ 21,223
Property held pending foreclosure:
Regency Residence Apartments,
net $ 762 $ 2,829 $ 3,591
Property held for sale:
Millwood Estates Apartments,
net $ 1,859 $ 7,423 $ 9,282
Page 11 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
Lake Mead Estates Apartments
On April 30, 1987, the Partnership acquired Lake Mead Estates, an
apartment complex located in Las Vegas, Nevada. The property is
encumbered by an all-inclusive trust deed note in the original
amount of $4,000,000 (see Note 5).
Branford Business Park
On June 10, 1987, the Partnership acquired two industrial office
buildings collectively known as Branford Business Park, located
in Arleta, California. The property was encumbered by a first
deed of trust in the original amount of $950,000. On April 8,
1994, the Partnership made a principal payment in the amount of
$250,000 as required by the lender in order to extend the
maturity date from May 5, 1994 to November 7, 1994. The
outstanding principal balance of $700,000 at that time was paid
off with the proceeds from the sale of the property on
November 15, 1994.
In March 1993, management listed Branford Business Park for sale
with an asking price approximately equal to the book value of the
property. Management wanted to test the market to determine if
the sale of the property would provide sufficient proceeds to aid
in the possible buyback of more Participating Notes (as discussed
in Note 9). No offers were received in 1993 at the original
asking price. 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.
Regency Residence Apartments
Page 12 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
On September 30, 1987, the Partnership acquired Regency
Residence, a retirement apartment complex located in Port Richey,
Florida. The property is encumbered by an all-inclusive trust
deed note to GLENFED Service Corporation in the original amount
of $2,470,000 which was restructured during 1992 (see Note 6).
The seller gave the Partnership an income warranty which covered
the four-year period following closing. Under the terms of the
income warranty agreement, the Partnership was guaranteed a
specified minimum quarterly income from the property during the
warranty period. The seller's obligations under the income
warranty were satisfied in full as of December 31, 1991. The
cost basis for the property was adjusted accordingly.
Based on the continued low occupancy due to market saturation,
and on the property's inability to meet debt service payments,
management is negotiated a deed-in-lieu of foreclosure with the
lender on the Regency Residence property. The partnership paid
all net cash flow (defined as all income collected less operating
expenses) to the lender from November 1994 until title to the
property passed on May 26, 1995. The principal balance of the
note secured by the property on May 26, 1995 was $3,538,986, with
a accrued interest in the amount of $98,700.
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.
The Partnership recognized a gain on deed-in-lieu of foreclosure
in the amount of $188,000 primarily due to the write-off of
accrued property taxes that the property was unable to pay. The
gain is included on the Partnership's 1995 statement of
operations.
Millwood Estates Apartments
On December 2, 1987, the Partnership acquired Millwood Estates
Apartments, an apartment complex located in Lynnwood, Washington.
The property is encumbered by an all-inclusive trust deed note to
the seller in the original amount of $8,000,000 (see Note 5).
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 9). The Partnership recognized a
gain on sale on its 1995 Statement of Operations in the amount of
$154,000. In anticipation of the sale of the property,
management reclassified the net book value of Millwood Estates
Page 13 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
Apartments to "Property held for sale" on the Partnership's
December 31, 1994 balance sheet.
Bryant Lake Business Center - Phases I & II
On January 28, 1988, the Partnership purchased a 90% general
partnership interest in Bryant Lake Associates - Phases I & II,
an unaffiliated California Limited Partnership (the "Joint
Venture") which owned Bryant Lake Business Center - Phases I &
II, a business center located in Eden Prairie, Minnesota. Under
the terms of two of the agreements, the Partnership was
guaranteed a minimum monthly gross income from certain spaces for
a 12 and 24 month period from the date of purchase. Under the
terms of the third agreement, the seller guaranteed that all rent
and other amounts due under certain lease agreements would be
paid on a timely basis. The seller's obligations under the
income warranties were satisfied in full as of December 31, 1989.
On November 30, 1990, the Partnership purchased the 10% limited
partnership interest for $180,000; $75,000 paid upon closing and
$50,000 and $55,000 paid on January 31, 1991 and January 31,
1992, respectively. As a consequence of the purchase, the Joint
Venture was dissolved and the assets and liabilities of the Joint
Venture were transferred to the Partnership. Since the seller of
the 10%
limited partnership interest had a book value basis in the Joint
Venture which exceeded the consideration paid by the Partnership,
the cost basis of the related land and buildings and improvements
were reduced pro rata upon transfer to the Partnership.
Bryant Lake Business Center - Phase III
On January 28, 1988, the Partnership purchased a 50% general
partnership interest in Bryant Lake Associates - Phase III, an
unaffiliated California Limited Partnership, (the "Joint
Venture") which owned Bryant Lake Business Center--Phase III, a
business center located in Eden Prairie, Minnesota, for a
purchase price of $3,225,000. Total consideration of $3,251,900
included a cash investment of $826,900 and the assumption of 50%
of existing $4,850,000 commercial development revenue bonds
secured by a first deed of trust and a security agreement.
On November 30, 1990, the Partnership purchased the remaining 50%
limited partnership interest. As consideration for the purchase,
the sellers will be entitled to 25% of net cash flow from the
operation and ultimate disposition of the property, if any, as
provided in the purchase agreement. Through December 31, 1995,
Page 14 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
no net cash flow payments have been due or payable to the seller.
As a consequence of the purchase, the Joint Venture has been
dissolved and the assets and liabilities of the Joint Venture
have been transferred to the Partnership.
Page 15 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
Country Suites By Carlson - Memphis
On August 1, 1988, the Partnership acquired a 121-unit hotel
known as Country Suites By Carlson - Memphis, located in Memphis,
Tennessee. A promissory note secured by a first deed of trust in
the original amount of $1,371,000, payable to GLENFED Service
Corporation encumbered the property. The original note was
restructured during 1992 (see Note 5).
Country Suites By Carlson - Tempe
On August 1, 1988, the Partnership purchased an undivided 75%
Tenancy in Common interest in Country Suites By Carlson - Tempe,
a 138-unit hotel located in Tempe, Arizona. The Partnership
originally purchased its 75% interest as part of a joint venture
with Outlook Income Fund 10 ("OIF 10"), A California Limited
Partnership, an affiliated partnership with similar investment
objectives and the same General Partner as the Partnership. The
property was encumbered by a promissory note and first deed of
trust in the original amount of $1,859,000 secured by a deed of
trust and assignment of rents and payable to GLENFED Service
Corporation. The note payable was restructured during 1992 (see
Note 5).
On November 4, 1993, the Partnership finalized the purchase of
the minority interest in the consolidated joint venture from OIF
10 and Country Suites By Carlson - Tempe is now 100% owned by the
Partnership. The total purchase price of $1,225,000 included a
cash payment of $950,000 plus the cancellation of the $275,000
note receivable from OIF 10 originally owed to an affiliate of
the former general partner which was purchased by the Partnership
in June 1993.
The Partnership leases its commercial and industrial property
under noncancellable operating lease agreements. Future minimum
rents to be received under operating leases as of December 31,
1995 are as follows:
1996 $ 1,224,000
1997 817,000
1998 538,000
1999 305,000
2000 299,000
Thereafter 35,000
Total $ 3,218,000
Page 16 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
Note 4. LITIGATION SETTLEMENT EXPENSE
On May 6, 1993, Glenborough Corporation and certain of its
affiliates entered into a settlement of a lawsuit that had been
brought by the seller and former manager of the hotels on
November 13, 1991. The lawsuit alleged that, in connection with
the prior general partner's termination of the seller as operator
and franchisor of the Partnership's hotels, Glenborough and its
affiliates had defamed the seller and interfered with its
contractual relationship with the Partnership. A majority of the
amount paid to the seller under the settlement was funded by
Glenborough's insurance carriers, but a portion of the settlement
amount was funded by Glenborough. Pursuant to Glenborough's
indemnity rights as General Partner of the Partnership (and as
general partner of other Outlook partnerships that own hotels),
Glenborough is entitled to reimbursement of this portion of the
settlement payment. The Partnership's share of this
reimbursement together with the legal fees associated with this
settlement was $64,900.
Note 5. NOTES PAYABLE
A summary of notes payable at December 31, 1995 and 1994 follows
(in thousands):
1995 1994
9.625% note payable related to Lake
Mead Estates Apartments, secured by
a first deed of trust; payable in
monthly principal and interest
installments of $34,000 through
October 1, 2018, at which time all
remaining principal and interest
will be due and
payable. $ 3,764 $ 3,807
10.75% note payable, secured by the
assignment of a $2,000,000 note and
deed of trust on 12970-12990
Branford, payable in monthly
interest only installments of Prime
plus 2% through May 28, 1996, at
which time all remaining principal
and interest will be due and
payable. 500 ---
Page 17 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
1995 1994
9.0% note payable to GLENFED
Service Corporation, related to the
Regency Residence Apartments and
secured by a first deed of trust;
payable in monthly principal and
interest installments of $26,900
through July 1, 1999, at which time
all remaining
principal and interest will be due
and payable. --- 3,539
9.625% note payable related to
Millwood Estates Apartments,
secured by a first deed of trust;
payable in monthly principal and
interest installments of $68,000
through July 1, 2018, at which time
all remaining principal and
interest will be due
and payable. --- 7,594
8.652% bonds payable related to
Bryant Lake-Phase III, secured by
first deeds of trust on Bryant
Lake-Phase III and Bryant Lake-
Phases I and II; payable in monthly
interest only installments of
$35,000
through October 1, 2015, at which
time all remaining principal and
interest will be due and payable.
The interest rate adjusts to market
at November 1, 2000. 4,850 4,850
9.0% note payable to GLENFED
Service Corporation, related to the
Country Suites by Carlson-Memphis
and secured by a first deed of
trust; payable in monthly principal
and interest installments of
$26,800 through July 1, 1999, at
which time all principal will be
due and
payable. 3,504 3,535
9.0% note payable to GLENFED
Service Corporation, related to the
Country Suites By Carlson - Tempe
Page 18 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
and secured by a first deed of
trust; payable in monthly principal
and interest installments of
$22,500 through July 1, 1999, at
which time
1995 1994
all principal and interest will be
due and payable. 2,727 2,751
Total notes payable. $ 15,345 $ 26,076
On April 8, 1994, the Partnership made a principal payment in the
amount of $250,000 on the note secured by the Branford property
as required by the lender in order to extend the maturity date
from May 5, 1994 to November 7, 1994. On November 15, 1994,
using the proceeds from the sale of Branford, the remaining note
payable in the amount of $700,000 was paid off.
Principal maturities of these notes payable are as follows:
1996 $ 607,000
1997 118,000
1998 129,000
1999 6,099,000
2000 70,000
Thereafter 8,322,000
Total $15,345,000
Note 6. TAXABLE INCOME
The Partnership's tax returns, the qualification of the
Partnership as a partnership for Federal income tax purposes, and
the amount of income or loss are subject to examination by
Federal and state taxing authorities. If such examinations
result in changes to Partnership profits or losses, the tax
liability of the partners could be changed accordingly.
Page 19 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
The following is a reconciliation for the years ended December
31, 1995, 1994 and 1993, of the net income for financial
reporting purposes to the taxable income determined in accordance
with accounting practices used in preparation of Federal income
tax returns (in thousands).
1995 1994 1993
Net loss per financial
statements $ 969 $(2,893) $(3,521)
Amortization and depreciation 20 (60) 77
Interest income --- 70 101
Gain from note repurchase (241)
Guaranteed income --- --- 950
Prepaid income --- --- 35
Bad debt expense/reserve 3 (4) 26
Property tax expense 7 5 8
Interest expense (60) (133) 25
Management fee --- --- 100
Partnership income adjustment --- --- 75
Loss on sale of assets (3,837) (1,870) ---
Valuation reserve --- 836 ---
Net loss for Federal
income tax purposes $ (3,139) $ (4,049) $ (2,124)
The following is a reconciliation as of December 31, 1995 and
1994 of partners' capital for financial reporting purposes to
partners' equity for Federal income tax purposes (in thousands):
1995 1994
Partner's Equity per
financial statements $ 2,993 $ 2,024
Amortization and depreciation 887 (455)
Provision for doubtful accounts 5 2
Interest accrued 211 509
Income from joint ventures --- ---
Basis adjustments 1,801 6,144
Valuation allowance --- 836
Other 76 53
Partner's Equity for
Federal income tax purposes $ 5,973 $ 9,113
Note 7. PARTICIPATING NOTES
The Partnership was authorized to offer up to $40,000,000 in
Equity Units and non-recourse unsecured Participating Notes (the
"Notes"). The Partnership had sold $5,228,800 in Notes, of which
$543,500 were acquired in 1988 by GLENFED Service Corporation
("Glenfed"). The Notes bear stated interest at the rate of 12%
per annum, non-compounded, with payment of principal and stated
interest deferred until the earlier of the maturity date of the
Page 20 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
Notes or the sale or refinancing of Partnership properties. At
both December 31, 1995 and 1994, $4,582,000 of interest was
accrued on the Notes. The Noteholders will also receive payments
of contingent interest if, following the sale of all of the
Partnership properties, the Partnership realizes net profits
after the payment of all Partnership obligations and the
distribution of certain base amounts to the Limited Partners.
The amount of the Noteholders' contingent interest participation
in net profits varies between 0% and 24%, depending upon the
relative amounts invested in Notes and Equity Units and the total
amount of interest received by Noteholders as defined in the
Partnership Agreement. In no event, however, will the aggregate
amount of all interest, including contingent interest, paid on
the Notes exceed simple interest at the rate of 18% per annum on
the original principal balance of the Notes from date of issuance
until the date that all principal on the Notes is paid in full.
The Partnership may prepay principal and stated interest at any
time. Partial prepayments must be made pro rata to all
noteholders. Upon the sale or refinancing of a Partnership
property, the Partnership will pay or prepay some or all of the
principal and interest allocated to that property under the terms
of the Notes. If not previously paid, the Notes mature and all
remaining principal and interest, excluding contingent interest,
must be paid in full on December 31, 1997, unless the General
Partner extends the due date of the Notes, in its sole
discretion, to a date which is not later than December 31, 1998.
The payment of all principal and stated interest does not
extinguish the right to contingent interest which may accrue or
become payable following the sale of all of the Partnership
properties.
On June 15, 1993, the Partnership purchased the Participating
Notes ($545,300) and accrued interest thereon ($309,800), held by
the former general partner, for $425,000. The difference between
the carrying value of the liabilities to the former general
partner and the purchase price was recorded as an extraordinary
gain in the Partnership's 1993 consolidated statement of
operations. The Notes and accrued interest thereon are being
held in trust for the benefit of the Partnership.
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. Buying back these notes provides a significant
interest savings to the Partnership, which benefits the Equity
Unit investors (whose returns are subordinated to the
Noteholders' receiving a return of principal plus 12% simple
deferred interest per annum).
Page 21 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
Approximately 45% of the Noteholders accepted the offer and the
repurchase occurred in March 1995. The repurchase totalled
$2,102,000 in original Note principal. The related accrued
interest on these Notes was $1,915,000, which was not paid and
represented the discount the Partnership received in the buyback.
The Partnership used the proceeds from a $2,000,000 short-term
loan to fund the repurchase (further discussion follows). 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 purchase of the
Notes, which 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 requires interest-only payments at a
variable interest rate (11% at March 28, 1995) and matures 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).
On June 9, 1995, in accordance with the Participating Notes
Indenture and as a result of the sale of Millwood Estates, the
Partnership retired $637,000 in notes and $592,000 in related
accrued interest. Of this amount, the Partnership paid $609,000
($314,000 of Participating Notes principal and accrued interest
of $295,000) to outside Noteholders, the remainder represented a
retirement of notes held in trust for the Partnership.
In June 1995, the Partnership sent a second "Conditional Offer to
Purchase 12% Participating Notes" (the "second Offer") to the
remaining Noteholders. The second Offer is for the repurchase of
the Notes for a price equal to 135% of the Noteholders original
investment (i.e. the purchase price for each Note will be $1.35
compared to an approximate current Note and accrued interest
value of $1.95). The second Offer expired October 31, 1995, but
the Partnership extended the expiration to December 31, 1995. As
of February 1996, 177 Noteholders accepted the offer. The result
will be $1,104,000 in notes which will be bought at a purchase
price of $1,491,000 in 1996. Through March 27, 1996, the
partnership repurchased $863,000 in notes for a purchase price of
$1,166,000. The Partnership borrowed an additional $1,100,000 on
the $2,000,000 line of credit with an unaffiliated lender to fund
the repurchase.
Page 22 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
Note 8. PARTNERSHIP ALLOCATIONS AND DISTRIBUTIONS
The Partnership Agreement provides generally that losses are
allocated 1% to the General Partner and 99% to the Limited
Partners. Net income will be allocated among the Partners first
to restore negative capital accounts and then in accordance with
their rights to future cash distributions.
The source and amount of all Partnership distributions is
determined by the General Partner at its sole discretion.
Distributions may not be made if the cash reserves of the
Partnership have fallen below 3% of the capital raised from the
sale of Equity Units and Notes.
The Partnership Agreement provides that cash available for
distributions shall be distributed 97% to the Limited Partners
and 3% to the General Partner until the Limited Partners have
received aggregate distributions equal to a cumulative non-
compounded return of 9% on their adjusted capital investment.
Thereafter, distributions from operational cash flow shall be
distributed to the General Partner until the General Partner has
received the full amount of its deferred subordinated partnership
incentive fee as defined in the Partnership Agreement, and
thereafter 10% to the General Partner and 90% to the Limited
Partners.
Distributions of net cash from sources other than operational
cash flow shall be distributed 1% to the General Partner and 99%
to the Limited Partners until the amounts distributed to the
Limited Partners from all sources equal a complete return of
their adjusted capital investment and a 9% per annum cumulative
non-compounded return on their capital investment. Thereafter,
distributions from sources other than operational cash flow shall
be distributed to the General Partner until the General Partner
has received the full amount of its deferred subordinated
partnership incentive fee as defined in the Partnership
Agreement, and thereafter 10% to the General Partner and 90% to a
net profits account. Distributions from the net profits account
will be made to the Limited Partners and Noteholders (see Note 6)
based on amounts invested in Equity Units and Notes pursuant to
the Partnership Agreement.
Page 23 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
SCHEDULE III - CONSOLIDATED REAL ESTATE INVESTMENTS
AND RELATED ACCUMULATED DEPRECIATION AND AMORTIZATION
December 31, 1995
(In Thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
COLUMN A COLUMN B COLUMN C
COLUMN D
Cost
Capitalized
Initial Cost to
Subsequent to
Partnership
Acquisition
--------------
- - ----------------
Buildings
and(1)
(1) Carrying
Description Encumbrances Land Improvements
Improv Cost
----------- ------------ ----- -------------
- - ----- -----
Lake Mead Estates $ 3,764 $ 775 $ 5,190 $
61$ (24)
Apartments
Bryant Lake Business
Center-Phase I & II --- 1,036 4,375
567 (455)
Bryant Lake Business
Center-Phase III 4,850(2) 1,004 4,414
378 ---
Country Suites by
Carlson:
Memphis 3,504 590 4,913
559 (449)
Tempe 2,727 1,061 6,517
493 (919)
====== ====== ======
====== ======
$14,845 4,466 25,409
2,067 (1,847)
====== ====== ======
====== ======
COLUMN A COLUMN E COLUMN F COLUMN G
COLUMN H COLUMN I
Gross Amount Carried
at December 31, 1995
--------------------- (1)
Building Accum- Date of
Depreci-
and(1) (2) ulated Construc-
Date able
Description Land Improv Total Deprec tion
Acquired Lives
----------- ----- ------- ----- ----- --------
- - ------ ------
Lake Mead Estates
Apartments $ 772 $5,230 $6,002 1,947 ---
1/87 5-30
Bryant Lake
Business Center-
Phase I & II 945 4,587 5,532 1,793 ---
1/88 5-30
Bryant Lake
Business Center-
Phase III 1,004 4,792 5,796 1,395 ---
11/90 5-30
Country Suites by
Carlson:
Memphis 542 5,071 5,613 2,110
8/88 5-30
Tempe 929 6,223 7,152 2,298 ---
8/88 5-30
----- ----- ----- -----
4,192 25,903 30,095 9,543
===== ===== ===== =====
</TABLE>
(1) Amounts include furniture and equipment.
(2) This lender also hold a lien on the Bryant Lake Phase I and II property.
Page 24 of 24
(3) Aggregate costs for federal income tax purposes is $49,160.
Page 25 of 24
OUTLOOK INCOME FUND 9,
A CALIFORNIA LIMITED PARTNERSHIP
SCHEDULE III - CONSOLIDATED REAL ESTATE INVESTMENTS
AND RELATED ACCUMULATED DEPRECIATION AND AMORTIZATION
December 31, 1995
(In Thousands)
Following is a summary of real estate investments for the years ended
December 31, 1995, 1994 and 1993:
1995 1994 1993
------ ------ ------
Balance at beginning of period $ 47,265 $ 51,317 $ 52,476
Improvements 409 496 661
Net reduction resulting from
minority interest purchase --- --- (123)
Property dispositions (17,579) (3,712) ---
Reduction from write-down --- (836) (1,697)
Balance at end of period $ 30,095 $ 47,265 $51,317
======= ======= =======
Following is a summary of accumulated depreciation and December 31,
1994 amortization of real estate investments for the year ended
December 31, 1995, 1994 and 1993.
1995 1994 1993
------ ------ ------
Balance at beginning of period $ 13,169 $ 12,456 $ 10,647
1,237 1,666 1,809
(4,863) (953) ---
------- ------- -------
Balance at end of period $ 9,543 $ 13,169 $ 12,456
======= ======= =======
Page 26 of 24
SIGNATURES
Pursuant to the requirements of Section l3 or l5(d) of the Securities
Exchange Act of l934, 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: /s/ Robert Batinovich By: Glenborough Corporation,
Robert Batinovich a California corporation,
General Partner (formerly knows as Glenborough
Realty Corporation,
a California Corporation)
Date: 4/29/96 By: /s/ Andrew Batinovich
Andrew Batinovich
Chief Executive Officer
and Chairman of the Board
Date: 4/29/96
By: /s/ Terri Garnick
Terri Garnick
Chief Financial Officer
Date: 4/29/96
By: /s/ June Gardner
June Gardner
Director
Date: 4/29/96
(A Majority of the Board of Directors of the General Partner)
Page 27 of 24
