SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
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 [NO FEE REQUIRED]
For the transition period from _____________ to _____________
Commission File No. 0-16773
CLOVER INCOME PROPERTIES, L.P.
(Exact name of registrant as specified in its charter)
Delaware 22-2772496
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23 W. PARK AVENUE, MERCHANTVILLE, NJ 08109
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (609) 662-1116
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.
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.
The registrant has no voting stock. The registrant's outstanding voting
securities consist of units of limited partnership interest which have no
readily ascertainable market value since there is no public trading market for
these securities on which to base a calculation of aggregate market value.
<PAGE>
Documents incorporated by reference: The Prospectus of the registrant dated
December 19, 1986 filed with the Commission pursuant to Rule 424(b) under the
Securities Act of 1933 is incorporated herein by reference in Parts I, II and
III of this Annual Report on Form 10-K. Supplement No. 2 to the Prospectus,
dated July 15, 1987 and filed with the Commission pursuant to Rules 424(b)(3)
and 424(c) on July 21, 1987, is incorporated by reference in Part I of this
Annual Report on Form 10-K. Registrant's Current Report on Form 8-K filed with
the Securities and Exchange Commission on March 4, 1996 is incorporated by
reference in Part I of this Annual Report on Form 10-K.
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<PAGE>
PART I
ITEM 1. Business
The Registrant, Clover Income Properties, L.P. (the "Partnership"), is a
limited partnership formed in July 1986 under the Revised Uniform Limited
Partnership Act of the State of Delaware to invest in existing income-producing
residential real estate properties. C.I.P. Management Corp., a New Jersey
corporation which is a wholly-owned subsidiary of Clover Financial Corporation
("Clover"), a New Jersey corporation, is the General Partner (the "General
Partner") of the Partnership. The Partnership sold $14,891,940 of units (the
"Units") of limited partnership interest in a public offering made pursuant to a
Prospectus (the "Prospectus") contained in Pre-Effective Amendment No. 2 to the
Partnership's Form S-11 Registration Statement (the "Registration Statement")
filed with the Commission under the Securities Act of 1933 (No. 33-8987) on
December 19, 1986, as supplemented by Supplement No. 1 dated June 12, 1987
("Supplement No. 1") and Supplement No. 2 dated July 15, 1987 ("Supplement No.
2"), which supplements were filed with the Commission pursuant to Rules 424(b)
(3) and 424(c).
On July 1, 1994, the Partnership sold the Holly Tree Park Apartments
("Holly Tree"), a 144-unit garden apartment complex located in Waldorf, Charles
County, Maryland, together with all related improvements and intangible and
tangible property, to United Dominion Realty Trust, Inc. ("United Dominion") for
a cash purchase price of $6,500,000. United Dominion is not affiliated with the
Partnership, and the sale was negotiated on an arms length basis. The
Partnership incurred expenses of $71,992 in connection with the sale, which were
paid from the proceeds of the sale. The Partnership also set aside additional
working capital reserves of $141,046 at the time of the sale. No expenses or
commissions were paid to the General Partner or its affiliates in connection
with the sale. The Partnership had acquired the Holly Tree Park Apartments in
December 1986, at a purchase price of $5,000,000. The Holly Tree Park Apartments
and its acquisition are described on pages 30-31 of the Prospectus, and such
description is incorporated herein by reference.
The Partnership continues to own a 42.91% interest in The Willowbrook Joint
Venture, a joint venture among the Partnership, Clover Income Properties II,
L.P. ("CIP II") and Clover Income Properties III, L.P. ("CIP III"), both of
which are affiliates of the Partnership. The Willowbrook Joint Venture owns The
Willowbrook Apartments, a 299-unit mid-rise residential apartment complex
located in Baltimore, Maryland, which it acquired on December 17, 1987, at a
purchase price of $12,500,000.
The Partnership and CIP II each acquired a 50% interest in The Willowbrook
Joint Venture in December 1987 for an investment by each of $6,450,000. In April
1992, the interest of each of the Partnership and CIP II in The Willowbrook
Joint Venture was reduced
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<PAGE>
to 42.91% as a result of a purchase by CIP III of a 14.18% interest for a cash
purchase price of $2,200,000. In the transaction, the Partnership and CIP II
each received a distribution from The Willowbrook Joint Venture in the amount of
$1,100,000. The Partnership incurred $10,758 in expenses, including legal,
appraisal, accounting, title insurance and miscellaneous expenses, in connection
with the transaction, which amounts were paid from the distribution. Reference
is made to Supplement No. 2 and the Partnership's Current Report on Form 8-K
dated December 17, 1987 and filed with the Commission on January 4, 1988, both
of which are incorporated herein, for a more detailed discussion of The
Willowbrook Joint Venture, The Willowbrook Apartments and the acquisition of The
Willowbrook Apartments.
The Willowbrook Apartments are subject to risks, including competition from
other rental apartment and townhouse developments in the Baltimore area, adverse
local market conditions due to changes in economic conditions in the Baltimore
market, in the Mid-Atlantic region or nationally, area characteristics, interest
rates, availability and cost of insurance coverage, changes in real estate tax
rates or laws, rising utilities costs and operating expenses, rent control,
governmental regulations, acts of God and other factors which are beyond the
control of the Partnership.
Services at The Willowbrook Apartments are performed by on-site personnel
all of whom are employees of NPI-CL Management L.P. ("NPI"), an unaffiliated
third party. Such services are provided pursuant to a written agreement
providing for fees equal to 5% of the gross revenues from The Willowbrook
Apartments. NPI replaced Allstate Management Corp., an affiliate of the General
Partner, as the property manager effective February 21, 1995. At the same time,
other partnerships affiliated with the General Partner also engaged NPI as
property manager at rates equivalent to the rates previously paid to the prior
property manager of each partnership.
In January 1996, NPI was acquired by an affiliate of Insignia Financial
Group, Inc. According to Commercial Property News and the National Multi-Housing
Council, Insignia, together with its affiliates, is the largest property manager
in the United States. The General Partner does not believe this transaction will
have a significant impact on the Partnership.
On February 7, 1996, The Willowbrook Joint Venture, Berwind Property Group,
Inc. ("Berwind") and First Montgomery Properties, Ltd. ("First Montgomery", and
with Berwind, the "Buyers") executed an Agreement of Sale (as amended, the "Sale
Agreement") concerning the sale of The Willowbrook Apartments (the "Sale").
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<PAGE>
Pursuant to the terms of the Sale Agreement, the Buyers have agreed to
purchase The Willowbrook Apartments for a purchase price of $9,850,000. The
completion of the Sale is contingent upon the approval of the holders of more
than 50% of the outstanding Units and the holders of more than 50% of the
outstanding units of limited partnership interest in each of CIP II and CIP III.
If such approval is not obtained on or before June 30, 1996, the Sale Agreement
shall be automatically cancelled and terminated.
The preceding two paragraphs modify and supersede the description of the
Sale in the Partnership's Current Report on Form 8-K, filed with the
Commissioner pursuant to the Securities Exchange Act of 1934 on March 4, 1996.
Reference is made to Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations, for a further discussion of the
operations of the Partnership's business.
PART II
ITEM 5. Market for the Partnership's Units of Limited
Partnership Interest and Related Security Holder
Matter
There is no public market for the Units, and it is not anticipated that a
public market for the Units will develop. Transferability of Units is subject to
substantial restrictions, including limitations contained in the Partnership's
Amended and Restated Agreement of Limited Partnership (the "Partnership
Agreement") included as an exhibit to the Prospectus and incorporated herein by
reference. As of March 1, 1996, 1,311 limited partners held 15,000 Units of
limited partnership interest.
Cash distributions, if any, to be distributed to the partners of the
Partnership are described generally at pages 21-22 in the Prospectus, and such
description is incorporated herein by reference. Distributions for 1995 and 1994
were paid quarterly in the annual amounts set forth under Item 6. Selected
Financial Data.
The General Partner maintains a policy that the only cash distributions
made to the Partnership's limited partners are distributions of "net cash
receipts," as defined on page A-3 of the Prospectus, which definition is
incorporated herein by reference (other than distributions of proceeds from the
sale of Partnership property or the liquidation of the Partnership). The total
net cash receipts of the Partnership from inception through December 31, 1995
were $14,894,186. Total distributions from inception through December 31, 1995
were $14,585,243 and $55,298 was subsequently distributed in January 1996 with
respect to the fourth quarter of 1995 for a total of $14,640,541. Of that
amount, $9,016,345 represents a return of capital and the balance of
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<PAGE>
$5,624,196 represents a distribution of income. Except for the April 1992
distribution of $1,000,000 of the proceeds from the reduction of the
Partnership's interest in The Willowbrook Joint Venture and the July 15, 1994
distribution of $6,410,000 of the proceeds from the sale of Holly Tree, all
distributions to Partners have been funded by current year net cash receipts and
undistributed net cash receipts from prior years and all distributions have been
made on a quarterly basis.
On or about July 15, 1994, the Partnership distributed $6,550,050 to its
Limited Partners, including $6,410,100 of net sales proceeds from the sale of
Holly Tree and $139,950 of second quarter cash flow, representing a distribution
of $436.67 for each Unit of limited partnership interest owned. The Partnership
also distributed $1,414 of second quarter cash flow to the General Partner;
however, the General Partner received no proceeds from the sale of Holly Tree.
See Item 1. Business.
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<PAGE>
PART II
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition, Liquidity and Capital Resources
The Partnership's only remaining interest in real estate is a 42.91%
interest in the Joint Venture, which owns The Willowbrook Apartments.
Consequently, the Partnership's primary remaining source of operating cash flow
will be distributions from The Willowbrook Joint Venture.
On December 31, 1995, the Partnership had cash on hand of $299,295 as
compared to $292,557 on December 31, 1994. These funds, along with future
operating cash flow, will be utilized for working capital needs and for
distributions to the Limited Partners.
The Partnership's net cash flow from operations was $41,879 for 1995 as
compared to $260,375 for 1994 and $613,856 for 1993. The decrease in net cash
flow from operations was primarily due to a decrease in cash received from
rentals and the reduction in cash paid for expenses as a result of the sale of
Holly Tree on July 1, 1994.
The Willowbrook Joint Venture's net cash flow from operations was $797,919
for 1995 as compared to $820,992 for 1994 and $715,533 for 1993. The decrease in
cash flow from operations for 1995, as compared to 1994, was due to a decrease
in cash received from rentals, interest and other income. The increase in cash
flow from operations in 1994, as compared to 1993, was primarily due to an
increase in cash received from rentals combined with an increase in other income
and a decrease in cash paid for operating expenses.
The General Partner believes that the Partnership's current and future cash
flows will be sufficient to meet the Partnership's liquidity requirements over
the next twelve months and the foreseeable future, absent any unanticipated cost
increases or adverse market conditions.
If the Sale is approved by the Limited Partners and completed, the proceeds
from the Sale distributed by the Joint Venture will be sufficient to cover the
anticipated costs of the Sale estimated to be $832,000.
As of December 31, 1995, the Partnership had paid all outstanding amounts
owed to the General Partner and its affiliates. As of December 31, 1995, The
Willowbrook Joint Venture, however, owed a total of approximately $326,000 to
Allstate Management Corp., an affiliate of the General Partner, for accrued and
unpaid
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<PAGE>
property management fees and reimbursable costs. The payment of such amounts
will be made from The Willowbrook Joint Venture's cash flow when available and
from the proceeds of any sales or refinancing of the assets of The Willowbrook
Joint Venture.
During 1995, one elevator was replaced at a cost of $22,857; air
conditioning equipment was purchased at a cost of $18,422 and other capital
improvements were made at a cost of $10,810. These amounts are reflected in the
Statement of Cash Flows as cash paid for investing activities. In addition,
common area hallways were recarpeted in 1995. Major projects planned for 1996 at
The Willowbrook Apartments, at an estimated total cost of $188,000, include the
replacement of carpets and tiles, the resurfacing of the parking lot and the
painting of certain hallways. Funding for these projects will be provided by The
Willowbrook Joint Venture's operating cash flow. It is not anticipated that
these projects will cause any increase in the realty taxes at The Willowbrook
Apartments.
Results of Operations
Until the sale of Holly Tree, the Partnership earned revenues primarily
from rental income from Holly Tree. Revenues from The Willowbrook Apartments are
not included in the Partnership's revenues.
No rental income was recorded in 1995. Rental income was $526,129 in 1994
as compared to $1,052,502 in 1993. The decrease in 1995 from 1994 and in 1994
from 1993, was the result of the sale of Holly Tree on July 1, 1994. No other
income was recorded in 1995, compared to other income of $60,575 in 1994 and
$37,237 in 1993. The decrease in 1995, as compared to 1994 is due to refunds of
state tax overpayments recorded in 1994 and the elimination of other income from
Holly Tree. The increase in 1994, as compared to 1993, is due to the state tax
refunds recorded in 1994, partially offset by a decrease in other income due to
the sale of Holly Tree.
Operating expenses were $3,858 for 1995, $348,234 for 1994 and $554,505 for
1993. The decrease in 1995 and in 1994 was due to the sale of Holly Tree Park.
Operating expenses were 66% of rental income in 1994 as compared to 53% in 1993.
The increase from 1993 to 1994, as a percentage of rental income, is primarily
due to increased repairs and maintenance incurred during the first six months of
1994 preparing the Holly Tree property for the sale.
The Partnership had a net loss of $255,099 in 1995 as compared to net
income of $2,707,691 in 1994 and $342,883 in 1993. The net loss in income after
depreciation and amortization in 1995, as compared to net income in 1994, was
primarily due to an impairment loss on the investment in the Joint Venture and
the elimination of operating income from Holly Tree in 1995, reduced
depreciation expense as a result of the sale, the gain on the sale of Holly Tree
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<PAGE>
in 1994 and legal and accounting fees incurred during 1995 in connection with
efforts to sell The Willowbrook Apartments. For a further discussion of the
impairment loss, see Note 3 in the Financial Statements of the Partnership on
page F-11. The increase in income after depreciation and amortization in 1994,
as compared to 1993, was primarily due to the gain on the sale of Holly Tree in
1994, partially offset by a decrease in operating income and depreciation
expense from Holly Tree as a result of the sale.
Rental income for The Willowbrook Apartments, as operated by The
Willowbrook Joint Venture, was $2,013,638 in 1995, as compared to $2,013,518 in
1994 and $1,928,002 in 1993. Other income was $34,414 in 1995 as compared to
$48,416 in 1994 and $34,772 in 1993. Interest income was $1,051 in 1995 as
compared to $3,032 in 1994 and $5,135 in 1993.
Rental income for 1995 was virtually unchanged from 1994. A slight
improvement in occupancy rates was essentially offset by a slight decrease in
rental rates. The increase in rental income for 1994 as compared to 1993 was
primarily due to an increase in occupancy. The increase in other income from
1993 to 1994 and the decrease from 1994 to 1995 is primarily attributable to a
$17,000 refund of health benefit overpayments received in 1994. Interest income
decreased in 1994 and 1995 due to lower cash balances being maintained.
The average effective annual rental rates per unit for The Willowbrook
Apartments were $7,180 in 1995, $7,218 in 1994 and $7,270 in 1993. The average
occupancy rates were 93.9% in 1995, 93.3% in 1994 and 88.7% in 1993.
Operating expenses for The Willowbrook Apartments for 1995 were $1,225,052
as compared to $1,219,161 for 1994 and $1,186,441 for 1993. The slight increase
in 1995 over 1994 was primarily due to increases in advertising expenses and
repairs and maintenance, substantially offset by a decrease in real estate taxes
resulting from a reduction in the property tax rates from the period ended June
30, 1994 to the period ended June 30, 1995. The increase in operating expenses
for 1994 over 1993 was primarily due to increases in salaries and wages, repairs
and maintenance and utilities, partially offset by decreases in advertising and
marketing expenses and decreases in real estate taxes from the period ended June
30, 1993 to the period ended June 30, 1994.
The Joint Venture's income after depreciation and amortization was $295,191
for 1995 as compared to $310,701 for 1994 and $251,109 for 1993. The decrease in
income after depreciation and amortization in 1995 as compared to 1994 is due to
a decrease in other income combined with increases in operating expenses and
professional services, partially offset by a decrease in general and
administrative expenses. The increase in income after depreciation and
amortization in 1994 as compared to 1993 is due to
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<PAGE>
increases in rental and other income, partially offset by increases in operating
expenses.
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<PAGE>
ITEM 8. Financial Statements and Supplementary Data.
INDEX
-----
Report of Independent Certified Public Accountants for F-1
Clover Income Properties, L.P.
Clover Income Properties, L.P. Balance Sheets as of F-2
December 31, 1995 and 1994
Clover Income Properties, L.P. Statements of F-3
Operations for each of the three years in the period
ended December 31, 1995
Clover Income Properties, L.P. Statements of Partners' F-4
Capital for each of the three years in the period
ended December 31, 1995
Clover Income Properties, L.P. Statements of Cash F-5
Flows for each of the three years in the period ended
December 31, 1995
Clover Income Properties, L.P. Summary of Significant F-7
Accounting Policies
Clover Income Properties, L.P. Notes to the Financial F-9
Statements
Report of Independent Certified Public Accountants for F-17
The Willowbrook Joint Venture
The Willowbrook Joint Venture Balance Sheets as of F-18
December 31, 1995 and 1994
The Willowbrook Joint Venture Statements of Income for F-19
each of the three years in the period ended
December 31, 1995
The Willowbrook Joint Venture Statements of Partners' F-20
Capital for each of the three years in the period ended
December 31, 1995
The Willowbrook Joint Venture Statements of Cash Flows F-21
for each of the three years in the period ended
December 31, 1995
The Willowbrook Joint Venture Summary of Significant F-23
Accounting Policies
The Willowbrook Joint Venture Notes to the Financial F-24
Statements
Clover Income Properties, L.P. Schedule III Real F-28
Estate and accumulated depreciation for each of the
three years in the period ended December 31, 1995
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<PAGE>
The Willowbrook Joint Venture Schedule III Real Estate F-29
and accumulated depreciation for each of the three
years in the period ended December 31, 1995
C.I.P. Management Corporation Independent Accountants' F-30
Report
C.I.P. Management Corporation Balance Sheets as of F-31
November 30, 1995
C.I.P. Management Corporation Notes to Financial F-32
Statement
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<PAGE>
Report of Independent Certified Public Accountants
Clover Income Properties, L.P.
Merchantville, New Jersey
We have audited the accompanying balance sheets of Clover Income Properties,
L.P. (a Delaware limited partnership) as of December 31, 1995 and 1994, and the
related statements of operations, partners' capital, and cash flows for each of
the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 2, the 1995 financial statements have been revised.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Clover Income Properties, L.P.
as of December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
BDO SEIDMAN, LLP
January 30, 1996, except
for Notes 2 and 7 which
are May 16, 1996
F-1
<PAGE>
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Clover Income Properties, L.P.
Balance Sheets
December 31, 1995 1994
Assets
Cash $ 299,295 $ 292,557
State tax refund receivable -- 16,733
Investment in The Willowbrook
Joint Venture, at market in 1995
and equity in 1994 3,997,264 4,506,421
----------- -----------
$ 4,296,559 $ 4,815,711
=========== ===========
Liabilities and Partners' Capital
Liabilities
Accrued expenses $ 19,500 $ 50,250
Due to affiliates -- 3,000
----------- -----------
Total liabilities 19,500 53,250
----------- -----------
Partners' capital
General partner (deficiency) (4,854) --
Limited partners 4,281,913 4,762,461
----------- -----------
Total partners' capital 4,277,059 4,762,461
----------- -----------
$ 4,296,559 $ 4,815,711
=========== ===========
See accompanying summary of significant accounting policies
and notes to financial statements.
F-2
<PAGE>
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Clover Income Properties, L.P.
Statements of Operations
<TABLE>
<CAPTION>
Year ended December 31, 1995 1994 1993
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues
Rental income $ -- $ 526,129 $1,052,502
Other income -- 60,575 37,237
Interest income 5,809 15,324 5,502
---------- ---------- ----------
Total revenues 5,809 602,028 1,095,241
---------- ---------- ----------
Expenses
Impairment loss, investment in
The Willowbrook Joint Venture 289,764 -- --
Operating expenses (including affiliate
transactions of $1,383 in 1995,
$33,124 in 1994 and $76,633 in 1993) 3,858 348,234 554,505
Depreciation and amortization 24,231 141,597 257,572
Professional services 64,518 25,171 35,690
General and administrative 5,203 16,179 12,342
---------- ---------- ----------
Total expenses 387,574 531,181 860,109
---------- ---------- ----------
Operating (loss) income (381,765) 70,847 235,132
Share of income from The Willowbrook
Joint Venture 126,666 133,322 107,751
---------- ---------- ----------
(Loss) income before gain on sale of
Holly Tree Park Apts (255,099) 204,169 342,883
Gain on sale of Holly Tree Park Apts -- 2,503,522 --
---------- ---------- ----------
Net (loss) income $ (255,099) $2,707,691 $ 342,883
========== ========== ==========
Net (loss) income per limited partnership unit $ (16.84) $ 180.19 $ 22.32
========== ========== ==========
</TABLE>
See accompanying summary of significant accounting policies and notes to
financial statements.
F-3
<PAGE>
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Clover Income Properties, L.P.
Statements of Partners' Capital
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, December 31, 1992 $ -- $ 9,405,923 $ 9,405,923
Partners' distributions, $52.50 per limited
partnership unit (7,953) (787,500) (795,453)
Net income 7,953 334,930 342,883
----------- ----------- -----------
Balance, December 31, 1993 -- 8,953,353 8,953,353
Partners' distributions, $459.58 per limited
partnership unit (4,883) (6,893,700) (6,898,583)
Net income 4,883 2,702,808 2,707,691
----------- ----------- -----------
Balance, December 31, 1994 -- 4,762,461 4,762,461
Partners' distributions, $15.20 per limited
partnership unit (2,303) (228,000) (230,303)
Net (loss) (2,551) (252,548) (255,099)
----------- ----------- -----------
Balance, December 31, 1995 $ (4,854) $ 4,281,913 $ 4,277,059
=========== =========== ===========
</TABLE>
See accompanying summary of significant accounting policies
and notes to financial statements.
F-4
<PAGE>
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Clover Income Properties, L.P.
Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31, 1995 1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Cash received from rentals $ -- $ 522,491 $ 1,052,756
Other income received -- 60,575 37,237
Interest income received 5,809 15,324 5,502
Distributions received from The Willowbrook
Joint Venture 126,666 133,322 107,751
Cash paid for expenses (90,596) (471,337) (589,390)
----------- ----------- -----------
Net cash provided by operating activities 41,879 260,375 613,856
----------- ----------- -----------
Investing activities
Distributions received from
The Willowbrook Joint Venture 195,162 188,506 200,654
Payments made for property -- (52,370) (29,964)
Investment in The Willowbrook Joint Venture -- (4,116) (30,835)
Proceeds from sale of The Holly Tree
Park Apartments -- 6,500,000 --
Settlement costs paid from sale of Holly Tree Park -- (71,992) --
----------- ----------- -----------
Net cash provided by investing activities 195,162 6,560,028 139,855
----------- ----------- -----------
Financing activities
Partners' distributions (230,303) (6,898,583) (795,453)
----------- ----------- -----------
Net increase (decrease) in cash 6,738 (78,180) (41,742)
Cash, at beginning of year 292,557 370,737 412,479
----------- ----------- -----------
Cash, at end of year $ 299,295 $ 292,557 $ 370,737
=========== =========== ===========
</TABLE>
See accompanying summary of significant accounting policies
and notes to financial statements.
F-5
<PAGE>
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Clover Income Properties, L.P.
Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31, 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reconciliation of net income to net cash
provided by operating activities
Net (loss) income $ (255,099) $ 2,707,691 $ 342,883
----------- ----------- -----------
Adjustments
Impairment loss, investment in
The Willowbrook Joint Venture 289,764 -- --
Depreciation and amortization 24,231 141,597 257,572
Share of income from The Willowbrook Joint
Venture (126,666) (133,322) (107,751)
Distributions received from The Willowbrook
Joint Venture 126,666 133,322 107,751
Gain on sale of Holly Tree Park Apts -- (2,503,522) --
Decrease in rents receivable -- 659 10,598
Decrease (increase) in prepaid expenses -- 40,293 (2,451)
Decrease (increase) in state tax refund receivable 16,733 (16,733) --
(Decrease) increase in accounts payable -- (11,382) 490
(Decrease) increase in accrued expenses (30,750) 22,841 7,790
(Decrease) in tenants' security deposits -- (42,980) (10,665)
(Decrease) increase in prepaid rents -- (4,297) 321
(Decrease) increase in expenses due to affiliates (3,000) (73,792) 7,318
----------- ----------- -----------
Total adjustments 296,978 (2,447,316) 270,973
----------- ----------- -----------
Net cash provided by operating activities $ 41,879 $ 260,375 $ 613,856
=========== =========== ===========
</TABLE>
See accompanying summary of significant accounting policies
and notes to financial statements.
F-6
<PAGE>
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Clover Income Properties, L.P.
Summary of Significant Accounting Policies
Rental Revenue
Rental revenue is recognized when earned, net of concessions and vacancies.
Capitalization and Amortization of Certain Costs
At December 31, 1995, deferred acquisition fees paid to an affiliate have been
written off (see Note 2). For the years ended December 31, 1994 and prior, these
costs were included in investment in The Willowbrook Joint Venture and were
amortized over a two hundred and forty month period (life of the Partnership)
using the straight-line method.
Income Taxes
The Partnership has not provided for federal income taxes, since all income and
losses are to be allocated to the partners for inclusion in their respective tax
returns. The Partnership files a state composite tax return on behalf of its
non-resident partners and remits any taxes due. The tax returns, the status of
the Partnership as such for tax purposes and the amount of allocable Partnership
income or loss are subject to examination by the Internal Revenue Service. If
such examinations result in changes with respect to the Partnership status or in
changes to allocable Partnership income or loss, the tax liability of the
partners could be changed accordingly.
Net Income (Loss) and Distributions Per Partnership Unit
Net income (loss) and distributions per limited partnership unit are computed
from the date of the closing of the Minimum Offering (March 31, 1987) based upon
net income and distributions allocated to the limited partners and the weighted
average number of limited partnership units outstanding. Per unit information
has been computed based on 15,000 weighted average limited partnership units.
Investment Property and Depreciation
The investment property was recorded at cost.
Depreciation on the property was provided on a straight-line basis over the
estimated useful lives of the various assets as follows:
Apartment buildings 25 years
Land improvements 10 years
Furniture and fixtures 5-8 years
Maintenance and repair expenses were charged to expense as incurred. Significant
betterments and improvements were capitalized and depreciated over their
respective lives.
F-7
<PAGE>
- -------------------------------------------------------------------------------
Clover Income Properties, L.P.
Summary of Significant Accounting Policies
Impairment of
Long-Lived Assets
A writedown for impairment will be recorded when the facts and circumstances
indicate that the cost of the investment in the Willowbrook Joint Venture
including the related deferred acquisition fees may be impaired, the estimated
undiscounted cash flows associated with the assets are compared to the
investment's carrying amount.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-8
<PAGE>
- ------------------------------------------------------------------------------
Clover Income Properties, L.P.
Notes to Financial Statements
1. Organization
and Basis of
Accounting
Clover Income Properties, L.P. ("CIP") is a limited partnership which was formed
on July 14, 1986, in the State of Delaware for the purpose of acquiring,
operating and holding residential real estate for investment purposes. Leases
primarily had a term of one year or less. The general partner of the Partnership
is C.I.P. Management Corp., a wholly-owned subsidiary of Clover Financial
Corporation.
CIP's records are maintained on the accrual basis of accounting as adjusted for
federal income tax reporting purposes. The accompanying financial statements
have been prepared from such records after making appropriate adjustments, where
applicable, to reflect the Partnership's accounts on the accrual basis of
accounting according to generally accepted accounting principles (GAAP).
Depreciation for financial reporting purposes is provided using the
straight-line method over the estimated useful lives of the assets, while
alternative methods are used for federal income tax purposes. Transfer taxes
have been capitalized for financial reporting purposes and expensed for tax
purposes. The net effect of these items is summarized as follows:
December 31, 1995 1994
- -------------------------------------------------------------------------------
GAAP Tax Basis GAAP Tax Basis
- -------------------------------------------------------------------------------
Total assets $4,296,559 $5,126,194 $4,815,711 $5,288,084
========== ========== ========== ==========
Partners' capital $4,277,059 $5,106,694 $4,762,461 $5,234,834
========== ========== ========== ==========
F-9
<PAGE>
- ------------------------------------------------------------------------------
Clover Income Properties, L.P.
Notes to Financial Statements
Reconciliation of income per financial statement to income per Federal income
tax return is as follows:
<TABLE>
<CAPTION>
Year ended December 31, 1995 1994 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net (loss) income per
financial statement $ (255,099) $ 2,707,691 $ 342,883
Reconciling items
Depreciation -- (15,720) (31,521)
Impairment loss, investment in
The Willowbrook Joint Venture
(currently not deductible for
tax purposes) 289,764 -- --
Additional income from
The Willowbrook Joint
Venture resulting from
different depreciation
methods 67,259 67,082 67,082
Increase in the gain on the sale
of The Holly Tree Park Apts
resulting from different
depreciation methods -- 281,358 --
----------- ----------- -----------
Net income per federal income
tax return $ 101,924 $ 3,040,411 $ 378,444
=========== =========== ===========
</TABLE>
2. Investment
in The
Willowbrook
Joint Venture
On December 17, 1987, CIP acquired a 50% interest in The Willowbrook Joint
Venture for $6,450,000. The Willowbrook Joint Venture owns the Willowbrook
Apartments, a 299-unit mid-rise apartment complex located in Baltimore,
Maryland.
On April 8, 1992, CIP and Clover Income Properties II, L.P., an affiliated
partnership, consummated an agreement which was effective April 1, 1992 with
Clover Income Properties III, L.P. (CIP III), an affiliated partnership,
pursuant to which CIP III acquired an interest in The Willowbrook Joint Venture
for $2,200,000 in cash. The Partnership reduced its interest from 50% to 42.91%
and received a distribution of $1,100,000 from the Joint Venture, based on an
independently appraised value of the Willowbrook Apartments of $15,650,000 as of
F-10
<PAGE>
- -------------------------------------------------------------------------------
Clover Income Properties, L.P.
Notes to Financial Statements
February 11, 1992. The excess of the amount paid over the net book value of the
14.18% interest in the Joint Venture purchased by CIP III amounted to $325,788.
The $325,788 was credited to the partners' capital accounts as of that date.
On February 7, 1996, the Willowbrook Joint Venture entered into an agreement of
sale with Berwind Properties Group, Inc. and First Montgomery Properties, Ltd.
Under the terms of the agreement, the Joint Venture will sell the Willowbrook
Apartments (including land), all related improvements and tangible and
intangible property for $10,500,000 less a $315,000 credit for capital
improvements. See note 7 for additional information.
The sale is contingent upon, among other things, the approval by a majority of
the limited partners of CIP, CIP II and CIP III. If the sale is approved by a
majority of the limited partners and all other conditions to the sale are met,
the sale will be completed.
Concurrent with the sale of The Willowbrook Apartments, all assets of the Joint
Venture will be liquidated. The net proceeds will be distributed to its owners
(CIP, CIP I and CIP II) and the Joint Venture dissolved.
Upon receipt of distribution from the Joint Venture, the limited partnership
will then liquidate the net assets, distribute the proceeds and be dissolved.
Due to the proposed sale of the Willowbrook Apartments and subsequent
liquidation of the Partnership, CIP has reflected its investment in the Joint
Venture at the lower of cost or market. Market value is based on the estimated
cash proceeds (net of settlement costs) from the sale of the Willowbrook
Apartments after allocation of proceeds to CIP, CIP II and CIP III. In May 1996,
the Partnership reevaluated its investment in Willowbrook Apartments, including
an impairment loss amounting to $289,764, which has been charged to operations
in the 1995 year.
F-11
<PAGE>
- -------------------------------------------------------------------------------
Clover Income Properties, L.P.
Notes to Financial Statements
A summary of the Joint Venture's financial statements is as follows:
December 31, 1995 1994
- -------------------------------------------------------------------------------
Other assets $ 322,078 $ 331,731
Investment property held for sale,
net of accumulated depreciation 9,396,753 9,858,484
----------- -----------
$ 9,718,831 $10,190,215
=========== ===========
Liabilities (including
$326,293 in 1995 and $326,240
in 1994 to affiliates) $ 403,359 $ 419,934
Capital
Clover Income Properties, L.P. 3,671,476 3,866,638
Clover Income Properties II, L.P. 3,671,476 3,866,638
Clover Income Properties III, L.P. 1,972,520 2,037,005
----------- -----------
$ 9,718,831 $10,190,215
=========== ===========
Year ended December 31, 1995 1994 1993
- --------------------------------------------------------------------------------
Revenues $2,049,103 $2,064,966 $1,967,909
Expenses 1,753,912 1,754,265 1,716,800
---------- ---------- ----------
Net income $ 295,191 $ 310,701 $ 251,109
========== ========== ==========
Depreciation on the Willowbrook Property has been provided on a straight-line
basis over the estimated useful lives of the various assets as follows:
Apartment buildings 25 years
Furniture and fixtures 12 years
The Joint Venture made distributions to the Partnership totaling $321,828,
$321,828 and $308,405 during 1995, 1994 and 1993, respectively. These
distributions represent 42.91% of the total distributions made during 1995, 1994
and 1993.
F-12
<PAGE>
- -------------------------------------------------------------------------------
Clover Income Properties, L.P.
Notes to Financial Statements
For the year ended December 31, 1994, deferred acquisition fees amounted to
$313,995, net of accumulation of $205,134.
3. Sale of
Investment
Property
On July 1, 1994, CIP sold the Holly Tree Park Apartments, a 144 unit
garden-style residential apartment complex located in Waldorf, Maryland,
together with all related improvements and intangible and tangible property to
United Dominion Realty Trust, Inc. (the "Purchaser") for a cash purchase price
of $6,500,000. The purchaser is not affiliated with the Partnership. The gain of
$2,503,522 ($2,784,880 for tax purposes) has been recorded in income for the
year ended December 31, 1994.
4. Partnership
Agreement
Pursuant to the terms of the Partnership Agreement, the net profits or losses
until admission of the limited partners on March 31, 1987 were allocated 1% to
the initial limited partner and 99% to the general partner. After the sale of
the Minimum Offering and the admission of additional limited partners to the
Partnership, all items of income, gain and loss and distributions of cash are
allocated as follows:
Net income of the Partnership from operations will be allocated as follows:
(a) first, if the Partnership made net cash receipts distributions with
respect to such period, an amount of net income up to the amount of
such net cash receipts distributions shall be allocated among the
partners in the same proportions as such net cash receipts
distributions were distributed provided, however, that if the total
amount of net income is less than the amount of net cash receipts
distributions, an amount of net income equal to the amount of net
cash receipts distributions to the general partner shall be allocated
to the general partner and the balance shall be allocated to the
limited partners,
(b) second, to those partners having deficit balances in their capital
accounts in proportion to and to the extent of such deficits,
(c) third, to those partners, if any, who have received cumulative net
cash receipts distributions in the current and prior periods in an
amount in excess of the cumulative amount of net income allocated to
such partners in proportion to and to the extent of any such excess
and, then,
F-13
<PAGE>
- ------------------------------------------------------------------------------
Clover Income Properties, L.P.
Notes to Financial Statements
(d) fourth, the balance, if any, shall be allocated 1% to the general
partner and 99% to the limited partners in proportion to their
relative ownership of units.
Net income or gain realized by the Partnership on a sale shall be allocated in
the following order of priority:
(a) first, to the partners with negative capital account balances,
proportionately based on the respective negative balances in their
capital accounts until each such partner has a zero capital account
balance,
(b) second, to the limited partners until the capital account balance of
each limited partner shall equal his adjusted capital contribution,
(c) third, an amount equal to the priority returns (10%) distributed or
to be distributed to the limited partners pursuant to the transaction
giving rise to such allocation, in proportion to each limited
partner's relative share of such priority return,
(d) fourth, an amount equal to the additional returns (up to 2%)
distributed or to be distributed to the limited partners whose
subscriptions for units were received by the Partnership prior to
June 1, 1987, in proportion to each such limited partner's relative
share of such additional return and, then,
(e) any remaining amounts of net income or gain shall be allocated 15% to
the general partner and 85% to the limited partners in proportion to
their relative ownership of units.
Net losses of the Partnership shall be allocated 1% to the general partner and
99% to the limited partners.
Net cash receipts shall, to the extent determined by the general partner, be
distributed 1% to the general partner and 99% to the limited partners until the
limited partners receive a 7% annual noncompounded cumulative return on
contributed capital. Thereafter, net cash receipts will be distributed 10% to
the general partner and 90% to the limited partners. Sale, refinancing or
financing proceeds shall be distributed first to the limited partners in an
aggregate amount equal to their capital contributions plus a specified return
F-14
<PAGE>
- -------------------------------------------------------------------------------
Clover Income Properties, L.P.
Notes to Financial Statements
thereon and thereafter 15% to the general partner and 85% to the limited
partners.
5. Transactions
With Affiliates
Holly Tree, which was sold July 1, 1994, was managed by an affiliate of the
general partner pursuant to a management agreement which provided for an annual
fee not to exceed 5% of the gross revenues from the Property.
The general partner and its affiliates are entitled to reimbursement for
administrative services rendered to the Partnership, direct expenses of
Partnership operations, and goods and services used by and for the Partnership.
Transactions with affiliates are summarized below:
Management Reimbursable
Fees Costs Total
- -------------------------------------------------------------------------------
Amount payable (prepaid) at
January 1, 1993 $ (4,051) $ 69,474 $ 65,423
Incurred during 1993 55,296 33,679 88,975
Payments during 1993 (50,387) (27,219) (77,606)
--------- --------- ---------
Amount payable at
December 31, 1993 858 75,934 76,792
Incurred during 1994 27,567 21,736 49,303
Payments during 1994 (28,425) (94,670) (123,095)
--------- --------- ---------
F-15
<PAGE>
- -------------------------------------------------------------------------------
Clover Income Properties, L.P.
Notes to Financial Statements
Management Reimbursable
Fees Costs Total
- -------------------------------------------------------------------------------
Amount payable (prepaid) at
December 31, 1994 $ -- $ 3,000 $ 3,000
Incurred during 1995 -- 6,586 6,586
Payments during 1995 -- (9,586) (9,586)
-------- ----------- -------
Amount payable at
December 31, 1995 $ -- $ -- $ --
======== =========== =======
6. Subsequent
Distributions
In January 1996, the Partnership made cash distributions of $54,750 to the
limited partners and $548 to the general partner.
7. Subsequent
Event
On May 16, 1996, the agreement to sell the Willowbrook Apartments was amended.
The amendment, among other things, reduced the sales price from $10,500,000 less
a $315,000 credit for capital contributions to $9,850,000.
F-16
<PAGE>
Report of Independent Certified Public Accountants
The Willowbrook Joint Venture
Merchantville, New Jersey
We have audited the accompanying balance sheets of The Willowbrook Joint Venture
as of December 31, 1995 and 1994, and the related statements of income,
partners' capital, and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
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 referred to above present fairly, in
all material respects, the financial position of The Willowbrook Joint Venture
as of December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
BDO SEIDMAN, LLP
January 30, 1996, except
for Note 2, which is
February 7, 1996
and Note 5 which
is May 16, 1996.
F-17
<PAGE>
- -------------------------------------------------------------------------------
The Willowbrook Joint Venture
Balance Sheets
December 31, 1995 1994
- -------------------------------------------------------------------------------
Assets
Cash $ 141,494 $ 146,687
Cash held for security deposits - restricted 34,868 46,394
Rents receivable 7,602 868
Prepaid expenses 137,014 136,682
Utility deposit 1,100 1,100
Investment property held for sale, net of
accumulated depreciation 9,396,753 9,858,484
----------- -----------
$ 9,718,831 $10,190,215
=========== ===========
Liabilities and Partners' Capital
Liabilities
Accounts payable $ -- $ 17,447
Accrued expenses 36,956 26,563
Tenants' security deposits 32,222 40,748
Prepaid rents 7,888 8,936
Due to affiliates 326,293 326,240
----------- -----------
Total liabilities 403,359 419,934
----------- -----------
Commitment
Partners' capital
Clover Income Properties, L.P. 3,671,476 3,866,638
Clover Income Properties II, L.P. 3,671,476 3,866,638
Clover Income Properties III, L.P. 1,972,520 2,037,005
----------- -----------
Total partners' capital 9,315,472 9,770,281
----------- -----------
$ 9,718,831 $10,190,215
=========== ===========
See accompanying summary of significant accounting policies
and notes to financial statements.
F-18
<PAGE>
- -------------------------------------------------------------------------------
The Willowbrook Joint Venture
Statements of Income
<TABLE>
<CAPTION>
Year ended December 31, 1995 1994 1993
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues
Rental income $2,013,638 $2,013,518 $1,928,002
Other income 34,414 48,416 34,772
Interest income 1,051 3,032 5,135
---------- ---------- ----------
Total revenues 2,049,103 2,064,966 1,967,909
---------- ---------- ----------
Expenses
Depreciation and amortization 514,843 512,242 508,510
Operating expenses (including affiliate
transactions of $17,905 in 1995, $112,445
in 1994 and $115,451 in 1993) 1,225,052 1,219,161 1,186,441
Professional services 14,017 11,173 12,068
General and administrative, affiliates -- 11,689 9,781
---------- ---------- ----------
Total expenses 1,753,912 1,754,265 1,716,800
---------- ---------- ----------
Net income $ 295,191 $ 310,701 $ 251,109
========== ========== ==========
</TABLE>
See accompanying summary of significant accounting policies
and notes to financial statements.
F-19
<PAGE>
- -------------------------------------------------------------------------------
The Willowbrook Joint Venture
Statements of Partners' Capital
<TABLE>
<CAPTION>
Clover Clover Clover
Income Income Income
Properties, Properties Properties
L.P. II, L.P. III, L.P. Total
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, January 1, 1993 $ 4,220,846 $ 4,220,846 $ 2,154,052 $ 10,595,744
Capital contributions 30,836 30,836 10,197 71,869
Net income 107,751 107,751 35,607 251,109
Partners' distributions (308,405) (308,405) (101,924) (718,734)
------------ ------------ ------------ ------------
Balance, December 31, 1993 4,051,028 4,051,028 2,097,932 10,199,988
Capital contributions 4,116 4,116 1,360 9,592
Net income 133,322 133,322 44,057 310,701
Partners' distributions (321,828) (321,828) (106,344) (750,000)
------------ ------------ ------------ ------------
Balance, December 31, 1994 3,866,638 3,866,638 2,037,005 $ 9,770,281
Capital contributions -- -- -- --
Net income 126,666 126,666 41,859 295,191
Partners' distributions (321,828) (321,828) (106,344) (750,000)
------------ ------------ ------------ ------------
Balance, December 31, 1995 $ 3,671,476 $ 3,671,476 $ 1,972,520 $ 9,315,472
============ ============ ============ ============
</TABLE>
See accompanying summary of significant accounting policies
and notes to financial statements.
F-20
<PAGE>
- ------------------------------------------------------------------------------
The Willowbrook Joint Venture
Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31, 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Cash received from rentals $ 2,005,856 $ 2,020,702 $ 1,926,352
Interest income received 1,051 3,032 5,135
Other income received 34,414 48,416 34,772
Security deposits paid 11,526 4,051 15,521
Cash paid for operating expenses (1,254,928) (1,255,209) (1,266,247)
----------- ----------- -----------
Net cash provided by operating activities 797,919 820,992 715,533
----------- ----------- -----------
Investing activities
Cash paid for investment property (53,112) (62,265) (94,426)
----------- ----------- -----------
Financing activities
Partners' distributions (750,000) (750,000) (718,734)
Partners' contributions -- 9,592 71,869
----------- ----------- -----------
Net cash (used) in financing activities (750,000) (740,408) (646,865)
----------- ----------- -----------
Net (decrease) increase in cash (5,193) 18,319 (25,758)
Cash, at beginning of year 146,687 128,368 154,126
----------- ----------- -----------
Cash, at end of year $ 141,494 $ 146,687 $ 128,368
=========== =========== ===========
</TABLE>
See accompanying summary of significant accounting policies
and notes to financial statements.
F-21
<PAGE>
- ------------------------------------------------------------------------------
The Willowbrook Joint Venture
Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31, 1995 1994 1993
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reconciliation of net income to net cash
provided by operating activities
Net income $ 295,191 $ 310,701 $ 251,109
--------- --------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 514,843 512,242 508,510
(Increase) decrease in cash held
for security deposits 11,526 4,051 15,521
(Increase) decrease in rents receivable (6,734) 2,428 (1,929)
(Increase) decrease in prepaid expenses (332) 15,508 320
(Decrease) increase in accounts payable (17,447) (11,091) 9,308
Increase (decrease) in accrued expenses 10,393 526 (2,146)
(Decrease) in tenants' security deposits (8,526) (5,816) (15,874)
(Decrease) increase in prepaid rents (1,048) 4,756 279
Increase (decrease) in due to affiliates 53 (12,313) (49,565)
--------- --------- ---------
Total adjustments 502,728 510,291 464,424
--------- --------- ---------
Net cash provided by operating activities $ 797,919 $ 820,992 $ 715,533
========= ========= =========
</TABLE>
See accompanying summary of significant accounting policies
and notes to financial statements.
F-22
<PAGE>
- ------------------------------------------------------------------------------
The Willowbrook Joint Venture
Summary of Significant Accounting Policies
Impairment of
Long-Lived Assets
In the event that facts and circumstances indicate that the cost of the
investment property may be impaired, an evaluation of recoverability would be
performed. If an evaluation is required, the estimated undiscounted cash flows
associated with the assets would be compared to the asset's carrying amount.
Income Taxes
The Joint Venture has not provided for income taxes, since all income and losses
are to be allocated to the partners for inclusion in their respective tax
returns. The tax returns, the status of the Joint Venture as such for tax
purposes and the amount of allocable Joint Venture income or loss are subject to
examination by the Internal Revenue Service. If such examinations result in
changes with respect to the joint venture status or in changes to allocable
Joint Venture income or loss, the tax liability of the partners could be changed
accordingly.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-23
<PAGE>
- -------------------------------------------------------------------------------
The Willowbrook Joint Venture
Notes to Financial Statements
1. Organization
and Basis of
Accounting
The Willowbrook Joint Venture ("Joint Venture") was formed on December 17, 1987,
by Clover Income Properties, L.P. (CIP) and Clover Income Properties II, L.P.
(CIP II) for the purpose of acquiring, operating and holding the Willowbrook
Apartments. Leases primarily have a term of one year or less. The life of the
joint venture was initially set at 20 years.
On April 8, 1992, Clover Income Properties III, L.P. ("CIP III") acquired a
14.18% interest in the Joint Venture for $2,200,000 in cash, effective April 1,
1992, from CIP and CIP II, which reduced their respective ownership interest in
the Joint Venture from 50% to 42.91% each. The life of the Joint Venture was
extended for an additional 8 years, at that time.
The Joint Venture's records are maintained on the accrual basis of accounting as
adjusted for Federal income tax reporting purposes. The accompanying financial
statements have been prepared from such records after making appropriate
adjustments, where applicable, to reflect the Joint Venture's accounts on the
accrual basis of accounting according to generally accepted accounting
principles (GAAP). Depreciation for financial reporting purposes is provided
using the straight-line method over the estimated useful lives of the assets,
while alternative methods are used for Federal income tax purposes. The net
effect of this difference is summarized as follows:
<TABLE>
<CAPTION>
December 31, 1995 1994
- ---------------------------------------------------------------------------------
GAAP Tax Basis GAAP Tax Basis
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total assets $ 9,718,831 $11,481,249 $10,190,215 $11,809,659
=========== =========== =========== ===========
Partners' capital $ 9,315,472 $11,077,891 $ 9,770,281 $11,389,717
=========== =========== =========== ===========
</TABLE>
F-24
<PAGE>
- -------------------------------------------------------------------------------
The Willowbrook Joint Venture
Notes to Financial Statements
Reconciliation of income per financial statement to income per Federal income
tax return is as follows:
Year ended December 31, 1995 1994 1993
- --------------------------------------------------------------------------------
Net income per financial
statements $295,191 $310,701 $251,109
Reconciling item
Depreciation 142,983 142,571 142,571
-------- -------- --------
Tax basis income $438,174 $453,272 $393,680
======== ======== ========
2. Investment
Property Held
for Sale
On December 17, 1987, the Joint Venture acquired the Willowbrook Apartments (the
Property), a mid-rise apartment complex comprising 299 apartment units contained
in eight five-story buildings. The complex is located in Baltimore, Maryland.
On February 7, 1996, the Joint Venture entered into an agreement of sale with
Berwind Properties Group, Inc. and First Montgomery Properties, Ltd. Under the
terms of the agreement, the Joint Venture will sell The Willowbrook Apartments
(including land), all related improvements and tangible and intangible property
for $10,500,000 less a $315,000 credit for capital improvements (see Note 5 for
additional information).
The sale is contingent upon, among other things, the sale of all of the
properties owned by affiliates of Clover Financial Corporation which are also
under agreement of sale with Berwind and First Montgomery. Clover Financial
Corporation is the parent company of the general partner of CIP, CIP II and CIP
III. The sale must be approved by a majority of the limited partners of CIP, CIP
II and CIP III. Upon sale of The Willowbrook Apartments, all assets of the Joint
Venture will be liquidated. The net proceeds will then be distributed to its
owners (CIP, CIP II and CIP III) and the Joint Venture dissolved.
Due to the proposed sale of the Willowbrook Apartments and subsequent
liquidation of the Partnership, the Joint Venture has reflected the investment
property held for sale at the lower of cost or market. Market value is based on
the estimated cash proceeds (net of settlement costs) from the sale of the
Willowbrook Apartments. At December 31, 1995, the investment property held for
sale was not impaired.
F-25
<PAGE>
- ------------------------------------------------------------------------------
The Willowbrook Joint Venture
Notes to Financial Statements
The following is a summary of investment property held for sale which is carried
at the lower of cost or market:
December 31, 1995 1994
- -------------------------------------------------------------------------------
Land $ 1,421,205 $ 1,421,205
Apartment buildings 11,006,247 10,980,891
Furniture and fixtures 1,004,545 976,789
------------ ------------
13,431,997 13,378,885
Less accumulated depreciation (4,035,244) (3,520,401)
------------ ------------
$ 9,396,753 $ 9,858,484
============ ============
Depreciation on the property has been provided on a straight-line basis over the
estimated useful lives of the various assets as follows:
Apartment buildings 25 years
Furniture and fixtures 12 years
Maintenance and repair expenses are charged to expense as incurred. Significant
betterments and improvements are capitalized and depreciated over their useful
lives.
3. Transactions
with
Affiliates
Effective February 21, 1995, NPI-CL Management, L.P. ("NPI") which is
unaffiliated with the Partners, replaced an affiliate of the Partners as
Property Manager. Until that time, the property was managed by the affiliate
pursuant to a management agreement which provided for an annual fee not to
exceed 5% of the gross revenues from the Property.
The general partner of CIP, CIP II, and CIP III and their affiliates are
entitled to reimbursement for administrative services rendered to the Joint
Venture, direct expenses of operations and goods and services used by and for
the Joint Venture.
F-26
<PAGE>
- -------------------------------------------------------------------------------
The Willowbrook Joint Venture
Notes to Financial Statements
Transactions with affiliates are summarized below:
Management Reimbursable
Fees Costs Total
- -------------------------------------------------------------------------------
Amount payable at
January 1, 1993 $ 334,953 $ 53,165 $ 388,118
Incurred during 1993 98,313 26,919 125,232
Payments during 1993 (114,616) (60,181) (174,797)
--------- --------- ---------
Amount payable at
December 31, 1993 318,650 19,903 338,553
Incurred during 1994 102,734 21,400 124,134
Payments during 1994 (102,252) (34,195) (136,447)
--------- --------- ---------
Amount payable at
December 31, 1994 319,132 7,108 326,240
Incurred during 1995 12,750 5,155 17,905
Payments during 1995 (12,750) (5,102) (17,852)
--------- --------- ---------
Amount payable at
December 31, 1995 $ 319,132 $ 7,161 $ 326,293
========= ========= =========
4. Subsequent
Distributions
In January 1996, the Joint Venture made cash distributions of $26,819, $26,819
and $8,862 to Clover Income Properties, L.P., Clover Income Properties II, L.P.
and Clover Income Properties III, L.P., respectively.
5. Subsequent
Event
On May 16, 1996, the agreement to sell the Willowbrook Apartments was amended.
The amendment, among other things, reduced the sales price from $10,500,000 less
a $315,000 credit for capital contributions to $9,850,000.
F-27
<PAGE>
- ------------------------------------------------------------------------------
SCHEDULE III
Clover Income Properties, L.P.
Schedule of Real Estate and Accumulated Depreciation
Years Ended December 31, 1995, 1994 and 1993
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Cost Capitalized
Initial Cost Subsequent to Acquisition
---------------------- ----------------------------
Buildings and Buildings and
Description Encumbrances Land Improvements Land Improvements
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
144-unit garden apartment complex
located in Waldorf, Maryland None $474,225 $4,594,906 $45,276 $553,785
</TABLE>
(A) The aggregate cost for federal income tax purposes is equal to the amount
at which the real estate is carried for financial reporting purposes, less
$44,738 of transfer taxes which were capitalized for financial reporting
purposes and expensed for federal income tax purposes.
(B) Reconciliation of real estate:
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, at beginning of year $-- $ 5,615,822 $ 5,585,858
Additions during year:
Acquisitions -- 52,370 29,964
Dispositions during year:
Cost of real estate sold -- (5,668,192) --
--- ----------- -----------
Balance, at end of year $-- $ -- $ 5,615,822
=== =========== ===========
(C) Reconciliation of accumulated depreciation:
Balance, at beginning of year $-- $ 1,626,340 $ 1,392,999
Depreciation expense -- 117,366 233,341
Accumulated depreciation - disposal of assets -- (1,743,706) --
--- ----------- -----------
Balance, at end of year $-- $ -- $ 1,626,340
=== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at Which
Carried at December 31, 1995 (A) Life on Which
- ---------------------------------------------------------------------- Depreciation Has
Buildings and Date of Date Been Computed
Land Improvements Total (B) Depreciation (C) Construction Acquired in 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$- $- $- $- 1973 12/15/86 5-25 years
</TABLE>
F-28
<PAGE>
- -------------------------------------------------------------------------------
SCHEDULE III
The Willowbrook Joint Venture
Schedules of Real Estate and Accumulated Depreciation
Years Ended December 31, 1995, 1994 and 1993
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Cost Capitalized
Initial Cost Subsequent to Acquisition
------------------------ ---------------------------
Buildings and Buildings and
Description Encumbrances Land Improvements Land Improvements
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
299-unit mid-rise apartment complex
located in Baltimore, Maryland None $1,421,205 $11,289,276 $-- $721,516
</TABLE>
(A) The aggregate cost for federal income tax purposes is equal to the
amount at which the real estate is carried for financial reporting
purposes, plus the additional stepped up basis due to a Section 754
election in the amount of $556,439.
(B) Reconciliation of real estate:
1995 1994 1993
- --------------------------------------------------------------------------------
Balance, at beginning of year $13,378,885 $13,316,620 $13,222,194
Additions during year:
Improvements, etc. 53,112 62,265 94,426
----------- ----------- -----------
Balance, at end of year $13,431,997 $13,378,885 $13,316,620
=========== =========== ===========
(C) Reconciliation of accumulated depreciation:
Balance, at beginning of year $ 3,520,401 $ 3,008,159 $ 2,499,649
Depreciation expense 514,843 512,242 508,510
----------- ----------- -----------
Balance, at end of year $ 4,035,244 $ 3,520,401 $ 3,008,159
=========== =========== ===========
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Gross Amount at Which
Carried at December 31, 1995 (A)
- --------------------------------------------------------------------- Life on Which
Depreciation Has
Buildings and Date of Date Been Computed
Land Improvements Total (B) Depreciation (C) Construction Acquired in 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$1,421,205 $12,010,792 $13,431,997 $4,035,244 1966 12/17/87 12-25 years
</TABLE>
F-29
<PAGE>
To the Stockholder
C.I.P. Management Corporation
23 West Park Avenue
Merchantville, New Jersey 08109
We have audited the accompanying balance sheet of C.I.P.
Management Corporation as of November 30, 1995. This financial statement is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement 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 balance sheet is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the balance sheet. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to about presents
fairly, in all material respects, the financial position of C.I.P. Management
Corporation as of November 30, 1995 in conformity with generally accepted
accounting principles.
ALLOY, SILVERSTEIN, SHAPIRO, ADAMS, MULFORD & CO.
January 4, 1996
Cherry Hill, New Jersey
F-30
<PAGE>
C.I.P. MANAGEMENT CORPORATE
BALANCE SHEET
NOVEMBER 30, 1995
ASSETS
CURRENT ASSETS
Prepaid Expenses $ 13
OTHER ASSETS
Loans Receivable-Clover Financial Corporation $ 1,507,180
-----------
TOTAL ASSETS $ 1,507,193
===========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Share of Accumulated Losses from Partnership
in Excess of Investments and Advances $ 192
Deferred Tax Liability $ 908
-----------
TOTAL LIABILITIES 1,100
-----------
STOCKHOLDER'S EQUITY
Common Stock, no par value, 1,000 shares
Authorized, 300 Issued and Outstanding 1,525,500
Accumulated (Deficit) (19,407)
-----------
TOTAL STOCKHOLDER'S EQUITY 1,506,093
-----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 1,507,193
===========
The accompanying notes are an integral part of this statement.
F-31
<PAGE>
C.I.P. MANAGEMENT CORPORATION
NOTES TO FINANCIAL STATEMENT
NOVEMBER 30, 1995
1. Organization
C.I.P. Management Corporation, formerly Pennsville Properties, Inc., a
wholly-owned subsidiary of Clover Financial Corporation, is the general
partner of Clover Income Properties, L.P. (CIP), a real estate limited
partnership. The Company was formed on September 12, 1978.
2. Summary of Significant Accounting Policies
Use of Estimates
Estimates and assumptions are used in preparing financial statements.
Those estimates and assumptions affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities,
and the reported revenues and expenses, as applicable.
Actual results could differ from those estimates.
Investments
The Company accounts for its 1% investment in a real estate limited
partnership under the equity method, because the Company exercises
significant influence over its operating and financial activities.
Accordingly, the investment is carried at cost, adjusted for the
Company's proportionate share of earnings or losses.
Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
which requires the use of the "liability method" of accounting for
income taxes. Accordingly, deferred tax liabilities and assets are
determined based on the difference between the financial statement and
tax bases of assets and liabilities, using enacted tax rates in effect
for the year in which the differences are expected to reverse.
3. Loans Receivable - Clover Financial Corporation
Loans receivable - Clover Financial Corporation, bear interest at 5.86%
and have no scheduled maturity dates.
4. Investment in Partnership
The Company purchased for $1,000 a 1% general partnership interest in
CIP and has been allocated losses in the amount of $1,192. This amount
exceeds the Company's investment and advances to the partnership by
$192. This amount has been recorded as a liability.
5. Income Taxes
The Company files a consolidated federal income tax return with Clover
Financial Corporation. Temporary difference giving rise to the deferred
tax liability consisted of partnership investment income and deductions
accounted for differently for financial reporting and tax purposes. The
deferred tax liability as of November 30, 1995 was $908.
6. Commitments
The Company, as a general partner in CIP, could be liable for, or
otherwise committed to provide funds to this partnership.
F-32
<PAGE>
PART IV
ITEM 14. Exhibits, Financial Statement Schedules
and Reports on 8-K
(a) The following documents are filed as part of this report:
(1) Financial statements. See Index to Financial Statements under Item
8. Financial Statements and Supplementary Data.
(2) Financial statement schedules. See Index to Financial Statements
under Item 8. Financial Statements and Supplementary Data.
(3) Exhibits
* 3.1 Certificate of Limited Partnership (Exhibit 3.1 to the
registrant's Registration Statement, No. 33-8987 filed on
September 24, 1986 (the "Registration Statement")).
* 3.2 First Amendment to Certificate of Limited Partnership
(Exhibit 3.2 to the Registration Statement).
* 3.3 Amended and Restated Agreement of Limited Partnership dated
March 31, 1986. (Exhibit 3.3 to the registrant's Annual
Report on Form 10-K for the year ended December 31, 1991
(the "1991 Form 10-K")).
* 3.8 Fifth Amendment to Amended and Restated Agreement of Limited
Partnership (Exhibit 3.7 to Post-Effective Amendment No. 1
to the Registration Statement).
*10.1 $1,500,000 demand note of Clover Financial Corporation
payable to C.I.P. Management Corp., the general partner of
the registrant (Exhibit 10.1 to the Registration Statement).
*10.2 Joint Venture Agreement (the "Joint Venture Agreement")
dated December 17, 1987 between the registrant and Clover
Income Properties II, L.P. (Exhibit 10 to the registrant's
Current Report on Form 8-K dated December 17, 1987).
<PAGE>
*10.3 Cross Indemnification Agreement among the registrant,
Clover Income Properties II, L.P. and Landmark Associates
dated December 17, 1987, relating to The Willowbrook
Apartments (Exhibit 10.10 to the 1987 Form 10-K).
10.4 Second Amendment to Agreement of Sale dated May 6, 1996
among The Willowbrook Joint Venture, Berwind Property Group,
Inc. and Montgomery Properties, Ltd.
10.5 Third Amendment to Agreement of Sale dated May 16, 1996
among The Willowbrook Joint Venture, Berwind Property Group,
Inc. and Montgomery Properties, Ltd.
27 Financial Data Schedule
*99.1 The Prospectus of the Partnership dated December 19, 1986,
as filed with the Commission pursuant to Rule 424(b), and
included in the Registration Statement.
*99.2 Supplement No. 2 dated July 15, 1987 to Prospectus dated
December 19, 1986 and Supplement No. 1 dated June 12, 1987,
as furnished to limited partners and filed with the
Commission pursuant to Rule 424(b)(3) and (c) on July 21,
1987, and as a part of Post- Effective Amendment No. 1 to
the Registration Statement filed on September 10, 1987.
*99.3 The Partnership's Current Report on Form 8-K dated December
17, 1987 and filed with the Commission pursuant to Rule
15d-11 on January 4, 1988 (Exhibit 28.5 to the 1987 Form
10-K).
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CLOVER INCOME PROPERTIES, L.P.
C.I.P. MANAGEMENT CORP.,
General Partner
Date: June 4, 1996 By: /s/ Donald N. Love
--------------------------
Donald N. Love, President
Date: June 4, 1996 By: /s/ Stanley E. Borucki
----------------------
Stanley E. Borucki, Treasurer
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 in the capacities and on the dates indicated.
Date: June 4, 1996 /s/ Donald N. Love
------------------
Donald N. Love, Director and
President of C.I.P. Management
Corp., the General Partner
Date: June 4, 1996 /s/ Steven R. Zalkind
---------------------
Steven R. Zalkind, Director
and Vice-President of
C.I.P. Management Corp.,
the General Partner
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT NAME
- -------------- ------------
10.4 Second Amendment to Agreement of
Sale dated May 6, 1996 among the
Willowbrook Joint Venture, Berwind
Property Group, Inc. and
Montgomery Properties, Ltd.
10.5 Third Amendment to Agreement of
Sale dated May 16, 1996 among the
Willowbrook Joint Venture, Berwind
Property Group, Inc. and
Montgomery Properties, Ltd.
27 Financial Data Schedule
SECOND AMENDMENT TO AGREEMENT OF SALE
THIS SECOND AMENDMENT TO AGREEMENT OF SALE made this 6th day of May, 1996
by and between WILLOWBROOK JOINT VENTURE, a New Jersey Joint Venture, of 23
West Park Avenue, Merchantville, New Jersey 08109, hereinafter referred to as
Seller, and BERWIND PROPERTY GROUP, INC., a Pennsylvania Corporation, and FIRST
MONTGOMERY PROPERTIES, LTD., a Pennsylvania Corporation, c/o Berwind Property
Group, Inc., 3000 Centre Square West, 1500 Market Street, Philadelphia,
Pennsylvania 19102, hereinafter collectively referred to as Buyer.
BACKGROUND
A. Buyer and Seller executed a certain Agreement of Sale dated February
7th, 1996 (the "Agreement of Sale"), pursuant to the provisions of which Buyer
agreed to purchase from Seller and Seller agreed to sell to Buyer that certain
tract or parcel of land and premises situate, lying and being in Baltimore,
Maryland, commonly known and referred to as Willowbrook Apartments.
B. Buyer and Seller executed a certain First Amendment to Agreement of Sale
dated February 7, 1996.
C. Buyer and Seller now desire to terminate the First Amendment to
Agreement of Sale and amend the Agreement of Sale pursuant to the provisions
of this Second Amendment.
NOW, THEREFORE, in consideration of the mutual covenants, promises and
agreements contained herein, the parties hereto, intending to be legally bound
hereby, do covenant and agree with each other as follows:
1. Except as specifically defined herein, initially capitalized terms
herein shall have the meaning ascribed thereto in the Agreement of Sale.
2. The First Amendment to Agreement of Sale dated February 7, 1996 is
hereby cancelled and terminated and declared to be null and void.
3. Paragraph 3 of the Agreement of Sale is hereby amended in its entirety
as follows:
"3. CLOSING: The transactions contemplated by this Agreement shall be
consummated (the "Closing") on or before July 6, 1996 (the "Closing Date"),
at 10:00 o'clock A.M. at the offices of Sherman, Silverstein, Kohl, Rose &
Podolsky, P.A., 4300 Haddonfield Road, Suite 311, Pennsauken, New Jersey
08109. The said time for Closing as well as all other times for performance
set forth in this Agreement are hereby agreed to be of the essence of this
Agreement. Tender of an executed Deed is hereby waived. Immediately prior
to the Closing Date, Buyer shall have the right to close the loan (the
"Purchase Money Mortgage Loan"), if any, which is financing a portion of
the Purchase Price, at a place designated by the lender (the "Purchase
Money Lender") of the Purchase Money Mortgage Loan, if required as a
condition of closing the Purchase Money Mortgage Loan by the Purchase Money
Lender."
4. All references in the Agreement of Sale to the "Extended Closing Date"
are hereby deleted.
5. Paragraph 7(a) of the Agreement of Sale is hereby amended in its
entirety as follows:
"7. FEASIBILITY PERIOD: (a) For a Feasibility Period commencing on the
date of this Agreement and expiring on May 21, 1996 (the "Feasibility
Period"), Buyer is granted the right to conduct physical inspectitons,
tests and investigations of the Premises in such a manner as not to
inconvenience the tenants and to review copies of the Leases, Service
Contracts, bills for calendar years 1994 and 1995 for real estate taxes,
utilities (water, sewer, gas and electric) insurance premiums and trash
removal pertaining to the Premises. At any time during said Feasibility
Period, Buyer shall have the right, for any reason whatsoever, to cancel
and terminate this Agreement by serving written notice thereof upon Seller
on or before the expiration of said Feasibility Period; if Buyer elects to
terminate this Agreement as permitted herein, then this Agreement shall be
cancelled and terminated and the Deposit, together with interest earned
thereon, shall be returned to Buyer and neither party hereunder shall have
an further liability or obligation to the other hereunder except with
respect to the indemnifications contained in this Paragraph 7, Paragraph
5(e) and Paragraph 22; if Buyer fails to exercise its right to terminate
this Agreement as permitted herein, then said right shall automatically
lapse, terminate and become null and void. Buyer shall indemnify and save
harmless the Seller from any liability, loss, cost or expense (including
reasonable attorney's fees) arising from or in connection with such
inspection and/or entry upon the Premises; said indemnification shall
survive Closing and/or termination of this Agreement."
6. All references in the Agreement of Sale to the "Extended Feasibility
Period" are hereby deleted.
7. Paragraph 9 of the Agreement of Sale is hereby deleted and replaced with
the following Paragraph 9:
"9. CONTINGENCIES: Seller's obligation to close under this Agreement
is subject to and conditioned upon the receipt of any and all approvals and
consents necessary for Seller to consummate the transaction contemplated by
this Agreement. Seller will use its best efforts to endeavor to obtain said
approvals and consents. If all such approvals and consents necessary for
Seller to consummate the transaction contemplated by this Agreement are not
received on or before June 30, 1996, then this Agreement shall be
automatically cancelled and terminated, the Deposit, together with interest
earned thereon, shall be returned to the Buyer, and neither party shall
have any further liability or obligation to the other hereunder except with
respect to the indemnifications contained in Paragraphs 5(e), 7 and 22."
8. Exhibit F attached to the Agereement of Sale is hereby deleted and all
references in the Agreement of Sale to Exhibit F and/or to any of the properties
listed thereon are hereby deleted.
9. Except as specifically set forth herein, the Agreement of Sale remains
effective in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Second Amendment to Agreeemnt of Sale to be signed the
day and year first above written.
SIGNED, SEALED AND DELIVERED WILLOWBROOK JOINT VENTURE
IN THE PRESENCE OF: A New Jersey Joint Venture
BY: Clover Income Properties, L.P.,
A New Jersey Limited Partnership
Joint Venturer
By: C.I.P. Management Corporation,
A New Jersey Corporation,
General Partner
BY: /s/ STEVEN ZALKIND
-----------------------------------
Steven Zalkind, Vice President
BY: Clover Income Properties II, L.P.,
A New Jersey Limited Partnership
Joint Venturer
By: C.I.P. II Management
Corporation,
A New Jersey Corporation,
General Partner
BY: /s/ STEVEN ZALKIND
-----------------------------------
Steven Zalkind, Vice President
BY: Clover Income Properties III, L.P.,
A New Jersey Limited Partnership
Joint Venturer
By: Crown Management Corporation,
A New Jersey Corporation,
General Partner
BY: /s/ STEVEN ZALKIND
----------------------------------
Steven Zalkind, Vice President
BERWIND PROPERTY GROUP, INC.,
A Pennsylvania Corporation
/s/ LORETTA M. KELLY BY: /s/ BARRY HOWARD
- ------------------------ -----------------------------------
Loretta M. Kelly Barry Howard
Secretary Vice Chairman
FIRST MONTGOMERY PROPERTIES, LTD.
A Pennsylvania Corporation
BY: /s/ MITCHELL C. MORGAN
-----------------------------------
Mitchell C. Morgan, Pres.
THIRD AMENDMENT TO AGREEMENT OF SALE
THIS THIRD AMENDMENT TO AGREEMENT OF SALE made this 16th day of May, 1996
by and between WILLOWBROOK JOINT VENTURE, a New Jersey Joint Venture, of 23 West
Park Avenue, Merchantville, New Jersey 08109, hereinafter referred to as Seller,
and BERWIND PROPERTY GROUP, INC., a Pennsylvania Corporation, and FIRST
MONTGOMERY PROPERTIES, LTD., a Pennsylvania Corporation, c/o Berwind Property
Group, Inc., 3000 Centre Square West, 1500 Market Street, Philadelphia,
Pennsylvania 19102, hereinafter collectively referred to as Buyer.
BACKGROUND
A. Buyer and Seller executed a certain Agreement of Sale dated February
7th, 1996 (the "Agreement of Sale"), pursuant to the provisions of which Buyer
agreed to purchase from Seller and Seller agreed to sell to Buyer that certain
tract or parcel of land and premises situate, lying and being in Baltimore,
Maryland, commonly known and referred to as Willowbrook Apartments.
B. Buyer and Seller executed a certain First Amendment to Agreement of Sale
dated February 7, 1996.
C. Buyer and Seller executed a certain Second Amendment to Agreement of
Sale dated May 6, 1996 pursuant to which the First Amendment to Agreement of
Sale was terminated and the Agreement of Sale was amended.
D. Buyer and Seller now desire to terminate the Second Amendment to
Agreement of Sale, reinstate the First Amendment to Agreement of Sale and
further amend the Agreement of Sale pursuant to the provisions of this Third
Amendment.
NOW, THEREFORE, in consideration of the mutual covenants, promises and
agreements contained herein, the parties hereto, intending to be legally bound
hereby, do covenant and agree with each other as follows:
1. Except as specifically defined herein, initially capitalized terms
herein shall have the meaning ascribed thereto in the Agreement of Sale.
2. The Second Amendment to Agreement of Sale dated May 6, 1996 is hereby
cancelled and terminated and declared to be null and void.
3. The First Amendment to Agreement of Sale dated February 7, 1996 is
hereby reinstated and declared to be in full force and effect and all references
herein to Agreement of Sale shall be deemed to include the First Amendment to
Agreement of Sale.
4. Paragraph 2 of the Agreement of Sale is hereby amended in its entirety
as follows:
"2. PURCHASE PRICE: The total purchase price which the Buyer agrees to
pay to the Seller and which the Seller agrees to accept for the Property is
the sum of NINE MILLION EIGHT HUNDRED FIFTY THOUSAND ($9,850,000.00)
DOLLARS (the "Purchase Price"), which Purchase Price shall be paid by Buyer
to Seller as follows:
(a) The sum of FIFTY THOUSAND ($50,000.00) DOLLARS (the "Initial
Deposit") simultaneously with the execution and delivery of this Agreement
and the further sum of ONE HUNDRED FIFTY THOUSAND ($150,000.00) DOLLARS
(the "Second Deposit") on or before May 16, 1996. The Initial Deposit shall
be hereinafter referred to as the "Deposit" and the Second Deposit shall be
included within the definition of the "Deposit". The Deposit shall be
deposited with the Escrow Agent, as hereinafter defined, to be held subject
to the terms and conditions hereinafter set forth, and shall be treated as
payment on account of the Purchase Price if Closing is made for the
Property.
(b) At the time of Closing, as hereinafter provided, the further sum
of NINE MILLION SIX HUNDRED FIFTY THOUSAND ($9,650,000.00) DOLLARS on
account of the Purchase Price by federal funds wire transfer to Seller's
account as designated to Buyer in writing."
5. Paragraph 3 of the Agreement of Sale is hereby amended in its entirety
as follows:
"3. CLOSING: The transactions contemplated by this Agreement shall be
consummated (the "Closing") on or before July 31, 1996 (the "Closing
Date"), at 10:00 o'clock A.M. at the offices of Sherman, Silverstein, Kohl,
Rose & Podolsky, P.A., 4300 Haddonfield Road, Suite 311, Pennsauken, New
Jersey 08109. The said time for Closing as well as all other times for
performance set forth in this agreement are hereby agreed to be of the
essence of this Agreement. Tender of an executed Deed is hereby waived.
Immediately prior to the Closing Date, Buyer shall have the right to close
the loan (the "Purchase Money Mortgage Loan"), if any, which is financing a
portion of the Purchase Price, at a place designated by the lender (the
"Purchase Money Lender") of the Purchase Money Mortgage Loan, if required
as a condition of closing the Purchase Money Mortgage Loan by the Purchase
Money Lender."
6. All references in the Agreement of Sale to the "Extended Closing Date"
are hereby deleted.
7. Subparagraph 6(h) of the Agreement of Sale is hereby deleted.
8. The Feasibility Period referred to in subparagraph 7(a) of the Agreement
of Sale is hereby terminated and the rights granted to the Buyer in subparagraph
7(a), including but not limited to the right to cancel and terminate the
Agreement of Sale, are hereby waived and terminated.
9. The rights granted to the Buyer in subparagraph 7(c) of the Agreement of
Sale, including but not limited to the right to cancel and terminate the
Agreement of Sale, are hereby waived and terminated.
10. Paragraph 9 of the Agreement of Sale is hereby deleted and replaced
with the following Paragraph 9:
"9. CONTINGENCIES: Seller's and Buyer's obligation to close under this
Agreement is subject to and conditioned upon the receipt of any and all
approvals and consents necessary for Seller to consummate the transaction
contemplated by this Agreement. Seller will use its best efforts to
endeavor to obtain said approvals and consents. If all such approvals and
consents necessary for Seller to consummate the transaction contemplated by
this Agreement are not received on or before June 30, 1996, then this
Agreement shall be automatically cancelled and terminated, the Deposit,
together with interest earned thereon, shall be returned to the Buyer, and
neither party shall have any further liability or obligation to the other
hereunder except with respect to the indemnifications contained in
Paragraphs 5(e), 7 and 22."
11. Exhibit F attached to the Agreement of Sale is hereby deleted and all
references in the Agreement of Sale to Exhibit F and/or to any of the properties
listed thereon are hereby deleted.
12. The Agreement of Sale is hereby amended to include the following
additional Paragraph 35:
"35. MORTGAGE CONDITION: (a) Buyer represents that Dorman & Wilson,
Inc./Freddie Mac is Buyer's Purchase Money Lender. The Agreement of Sale is
conditioned upon the Purchase Money Lender issuing, and the Buyer
accepting, in Buyer's sole discretion, a commitment (the "Commitment") for
the Purchase Money Mortgage Loan on or before July 1, 1996.
(b) In the event the Purchase Money Lender does not issue, and the
Buyer does not accept, in Buyer's sole discretion, the Commitment on or
before July 1, 1996, then the Agreement of Sale shall be cancelled and
terminated and the Deposit, together with interest earned thereon, shall be
returned to the Buyer and neither party hereunder shall have any further
liability or obligation to the other hereunder except with respect to the
indemnifications contained in Paragraphs 5(e), 7 and 22.
(c) In the event the Purchase Money Lender issues, and the Buyer
accepts, in Buyer's sole discretion, the Commitment on or before July 1,
1996, then the condition contained in this Paragraph 35 shall automatically
lapse, terminate and become null and void and Closing shall be completed in
accordance with the terms of the Agreement of Sale.
(d) Buyer shall lock-in the interest rate on the Purchase Money
Mortgage Loan on or before July 10, 1996; and Buyer's failure to do so
shall be deemed a default by Buyer under the Agreement of Sale and the
Deposit shall be immediately delivered to the Seller who shall retain same
as liquidated damages for said default and the Agreement of Sale shall be
cancelled and terminated; the foregoing merely supplements the provisions
of Paragraph 18 of the Agreement of Sale and is not intended to supercede,
diminish or otherwise alter in any way the rights, remedies and other
provisions contained in Paragraph 18 of the Agreement of Sale.
(e) If the Buyer locks-in the interest rate on the Purchase Money
Mortgage Loan on or before July 10, 1996 then Closing shall be completed in
accordance with the terms of the Agreement of Sale; provided, however, if
the Purchase Money Lender fails to fund the Purchase Money Mortgage Loan
due solely to Buyer's inability to comply with a condition in the
Commitment, compliance of which is beyond Buyer's control, after Buyer
utilizes its best efforts as set forth below, then Closing shall be
extended for a period of ninety (90) days during which time the Buyer shall
proceed with due diligence and in good faith, utilizing its best efforts as
set forth below, to comply with and/or otherwise satisfy such condition. If
such condition is complied with and/or otherwise satisfied within said
ninety (90) day period, then Closing shall be completed in accordance with
the terms of the Agreement of Sale on the expiration of the ninety (90) day
period. If such condition can not be complied with and/or otherwise
satisfied within said ninety (90) day period, then the Agreement of Sale
shall be cancelled and terminated and the Deposit, together with interest
earned thereon, shall be returned to the Buyer and neither party hereunder
shall have any further liability or obligation to the other hereunder
except with respect to the indemnifications contained in Paragraphs 5(e)
and 22. Buyer shall use its best efforts, including, but not limited to,
taking all necessary actions, to comply with all conditions in the
Commitment."
13. Except as specifically set forth herein, the Agreement of Sale remains
effective in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Third Amendment to Agreement of Sale to be signed the
day and year first above written.
SIGNED, SEALED AND DELIVERED WILLOWBROOK JOINT VENTURE
IN THE PRESENCE OF: A New Jersey Joint Venture
BY: Clover Income Properties, L.P.,
A New Jersey Limited Partnership
Joint Venturer
BY: C.I.P. Management Corporation,
--------------------------------
A New Jersey Corporation,
General Partner
BY: /s/ STEVEN ZALKIND
--------------------------------
Steven Zalkind, Vice President
BY: Clover Income Properties II, L.P.,
A New Jersey Limited Partnership
Joint Venturer
By: C.I.P. II Management
Corporation,
A New Jersey Corporation,
General Partner
BY: /s/ STEVEN ZALKIND
--------------------------------
Steven Zalkind, Vice President
BY: Clover Income Properties III, L.P.,
--------------------------------
A New Jersey Limited Partnership
Joint Venturer
By: Crown Management Corporation,
A New Jersey Corporation,
General Partner
BY: /s/ STEVEN ZALKIND,
--------------------------------
Steven Zalkind, Vice President
BERWIND PROPERTY GROUP, INC.,
A Pennsylvania Corporation
BY: /s/ LORETTA M. KELLY
----------------------------------
Loretta M. Kelly, Vice President
FIRST MONTGOMERY PROPERTIES, LTD.,
A Pennsylvania Corporation
BY: /s/ MITCHELL C. MORGAN
----------------------------------
Mitchell C. Morgan, President
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 299,295
<SECURITIES> 3,997,264
<RECEIVABLES> 0
<ALLOWANCES> 0
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<CURRENT-ASSETS> 4,296,559
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0
0
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<OTHER-EXPENSES> 126,666
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