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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act
Commission file number 0-16859
NYLIFE REALTY INCOME PARTNERS I, L.P.
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(Exact name of registrant as specified in its charter)
DELAWARE 13-3410538
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
51 MADISON AVENUE, SUITE 1710, NEW YORK, N.Y. 10010
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 576-6456
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Securities Registered Pursuant to Section 12(b) of the Act:
NONE
Securities Registered Pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of class)
Indicate by check mark 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
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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 the registrant's knowledge, in any amendment to this Form 10-K.
Yes X No
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State the aggregate market value of the voting equity held by non-affiliates of
the Registrant. Not applicable; see "Item 5. Market for Registrant's Units and
Related Unitholder Matters"
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TABLE OF CONTENTS
PAGE NO.
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PART I
Item 1. Business 3
Item 2. Properties 6
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9
PART II
Item 5. Market for Registrant's Units and Related Unitholder Matters 10
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
Item 8. Financial Statements and Supplementary Data 20
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 21
PART III
Item 10. Directors and Executive Officers of the Registrant 22
Item 11. Executive Compensation 24
Item 12. Security Ownership of Certain Beneficial Owners
and Management 24
Item 13. Certain Relationships and Related Transactions 24
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K 25
Signatures 28
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DEFINITIONS - All capitalized terms not defined herein shall have the meanings
given to them in the Financial Statements attached hereto as Appendix A and in
the Partnership Agreement.
PART I
ITEM 1. BUSINESS
GENERAL
NYLIFE Realty Income Partners I, L.P. (the "Partnership") is a Delaware limited
partnership formed on November 14, 1986. The Partnership has invested in four
joint ventures (individually, a "Joint Venture," collectively, the "Joint
Ventures") with New York Life Insurance Company, (a New York mutual life
insurance company) (the "Co-Venturer" or "New York Life"), an Affiliate of the
Partnership. Through its interest in the Joint Ventures, the Partnership
acquired (on an unleveraged basis), operates, held for investment, and expects
to ultimately sell, income-producing commercial properties (individually, a
"Property," collectively, the "Properties").
The first two Joint Ventures were funded 60% by the Partnership and 40% by the
Co-Venturer. The third Joint Venture was funded 47.06% by the Partnership and
52.94% by the Co-Venturer. The last Joint Venture was originally funded 47.09%
by the Partnership and 52.91% by the Co-Venturer. However, during 1993 the
Partnership and the Co-Venturer contributed additional capital of $459,375 and
$1,600,163, respectively to such Joint Venture resulting in a change in
ownership interests to 44.21% and 55.79%, respectively, at December 31, 1993.
Additionally, in January 1994 the Co-Venturer contributed additional capital of
$155,059 to such Joint Venture resulting in ownership interests of 43.82% and
56.18% for the Partnership and the Co-Venturer, respectively, at December 31,
1995. (See ITEM 2. PROPERTIES). All Joint Venture income, losses and
distributions are generally apportioned pro rata between the Partnership and
the Co-Venturer in proportion to their respective contributions to the Joint
Ventures.
The Partnership's primary investment objectives are to (i) preserve and protect
the Partnership's assets, (ii) provide quarterly distributions to partners and
(iii) provide growth of capital through appreciation of the Properties. The
attainment of the Partnership's investment objectives depends on many factors,
including current and future economic conditions in the United States as a
whole and, in particular, in the localities in which the Properties are located
and the quality of property management provided to the Joint Ventures by local
property managers. Accordingly, management cannot be certain that the
Partnership's investment objectives will be attained either in whole or in
part.
The General Partners of the Partnership are NYLIFE Realty Inc., a Delaware
corporation ("NYLIFE Realty") and an indirect, wholly-owned subsidiary of the
Co-Venturer, and CNP Realty Investments Inc. ("CNP"), a Delaware corporation
and a wholly-owned subsidiary of NYLIFE Realty (collectively, the "General
Partners"). The conduct of the Partnership's business is controlled solely by
the General Partners. NYLIFE Realty is primarily responsible for both property-
related and Partnership administrative matters. A General Partners' Agreement
between the General Partners (the "General Partners' Agreement") provides that
a management committee (the "Investment Committee") composed of six persons,
three from each General Partner, must approve all major decisions with respect
to the Partnership's
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business. The present members of the Investment Committee are Jefferson C.
Boyce, Director of NYLIFE Realty, Frank J. Ollari, Director and Vice President
of Investment of NYLIFE Realty, Kevin M. Micucci, Director, President and Chief
Executive Officer of NYLIFE Realty and Director, President and Chief Executive
Officer of CNP. (See ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT).
The Partnership is the managing partner of each Joint Venture, responsible for
management of the day-to-day operations and implementing the joint decisions of
the Joint Venture's partners. Each Joint Venture agreement provides that a
management committee (the "Joint Venture Management Committee") composed of two
representatives from the Partnership and two representatives from the Co-
Venturer, must approve all major decisions with respect to each Joint Venture's
business. All such decisions require the unanimous approval of the four
representatives. Such representatives are all employees of New York Life.
The offering of Units was terminated by the General Partners on June 30, 1989.
As of June 30, 1989, the Partnership had raised Gross Proceeds of $28,339,255
from the sale of 2,833,925.5 Units to 3,383 Limited Partners. The Amended and
Restated Agreement of Limited Partnership (the "Partnership Agreement")
provides that the Partnership will continue until December 31, 2036, unless
sooner terminated upon the occurrence of certain events described in the
Partnership Agreement.
LIQUIDATION
Two class action lawsuits were filed against the Co-Venturer and certain other
affiliates of the General Partners in the District Court of Harris County,
Texas on January 11, 1996, styled Grimshawe v. New York Life Insurance Co., et
al. (No. 96-001188) and Shea v. New York Life Insurance Co., et al. (No. 96-
001189) alleging misconduct in connection with the original sale of investment
units in various partnerships, including violation of various federal and state
laws and regulations and claims of continuing fraudulent conduct. The
plaintiffs asked for compensatory damages for their lost original investment,
plus interest, costs (including attorneys fees), punitive damages, disgorgement
of any earnings, compensation and benefits received by the defendants as a
result of the alleged actions and other unspecified relief to which plaintiffs
might have been entitled. These suits were amended and refiled in a
consolidated action in the United States District Court for the Southern
District of Florida (the "Court") on March 18, 1996. In the federal action,
the plaintiffs added NYLIFE Realty as a defendant and included allegations
concerning the Partnership. The plaintiffs purported to represent a class of
all persons (the "Class") who purchased or otherwise assumed rights and title
to interests in certain limited partnerships, including the Partnership, and
other programs created, sponsored, marketed, sold, operated or managed by the
defendants (the "Proprietary Partnerships"). The Partnership was not a
defendant in the litigation.
The defendants expressly denied any wrongdoing alleged in the complaint and
conceded no liability or wrongdoing in connection with the sale of the Units or
the structure of the Proprietary Partnerships. Nevertheless, to reduce the
burden of protracted litigation, the defendants entered into a Stipulation of
Settlement (the "Settlement Agreement") with the plaintiffs because in their
opinion such Settlement would (i) provide substantial benefits to the Class in
a manner consistent with New York Life's position that it had previously
determined to wind up most of the Proprietary Partnerships, including the
Partnership, through orderly liquidation as the continuation of the business no
longer served the intended objectives of
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either the owners of interests in such Proprietary Partnerships or the
defendants and to offer the investors an enhancement to the liquidating
distribution they would otherwise receive and (ii) provide an opportunity to
wind up such partnerships on a schedule favorable to the Class and resolve
the issues raised by the lawsuit.
In coordination with the proposed settlement, the General Partners solicited
the approval of the limited partners for the dissolution of the Partnership.
On July 1, 1996, the expiration date for the solicitation of such consents, the
limited partners of the Partnership approved the dissolution, and termination
of the Partnership. NYLIFE Realty Inc., as liquidator, has commenced the
process of winding up the Partnership.
Final approval of the Settlement Agreement was given by the Court on July 3,
1996. The Settlement Agreement became final on August 5, 1996, the date on
which the period for appeal of the Settlement Agreement expired. Cash Payments
(comprised of a Liquidation Advance, and a Refund or Enhancement, as defined in
the Settlement Agreement) were made by NYLIFE Realty to settling limited
partners in August, September and November of 1996. Each settling limited
partner granted a security interest in favor of NYLIFE Realty in his units of
limited partnership interest and liquidating distributions up to the amount of
the settling limited partner's Liquidation Advance to secure repayment thereof.
Accordingly, liquidating distributions for settling limited partners will be
first applied to repay the Liquidation Advance and any remaining liquidating
distributions will be made to the partners. However, upon the sale of the
Partnership's remaining assets, payment of the Partnership's liabilities and
provision for contingent liabilities, the Partnership does not expect to have
cash sufficient to repay the entire Liquidation Advance. In such a
circumstance, partners would not receive any additional distributions from the
Partnership nor would any partner have an obligation to repay any unpaid
Liquidation Advance.
Under the terms of the Settlement Agreement, each settling limited partner
received a complete return of his original investment, less distributions
received prior to the final Settlement date. In exchange for the Settlement
benefits the settling limited partners released any and all claims that the
settling limited partner may have had against the defendants in connection with
any and all causes of action related to the Proprietary Partnerships and all
activities related to the dissolution and liquidation of such partnerships.
As of December 31, 1996, no liquidating distributions have been made to the
partners.
As part of the liquidation process, the Partnership has sold its indirect
interest in the Property known as Eden Woods Business Center as discussed in
ITEM 2. PROPERTIES. In addition, the Partnership has entered into an Agreement
of Sale and Purchase dated February 28, 1997 for the sale of the Cornell Plaza
Office Building. Subsequent to the sale of the Cornell Plaza Office Building,
the Partnership's remaining asset will be its joint venture interest in
NewMarket Shopping Center. The Partnership is currently actively seeking to
sell such remaining property. SEE ITEM 2. PROPERTIES for further information
regarding the property sales and operations.
EMPLOYEES
Neither the Partnership nor the Joint Ventures themselves have any employees.
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Since January 1, 1990, property management services have been provided to the
Joint Ventures by Greystone Realty Corporation ("Greystone"), an Affiliate of
the Partnership and New York Life. Prior to that date, Greystone had been
managing the Co-Venturer's interest in each of the Joint Ventures. Greystone
has contracted with local property and leasing agents to provide property
management services at each of the Properties. Local property and leasing
agents are paid a property management fee by the Joint Ventures equal to a
percentage of gross revenues received by them from the Properties. In
addition, Greystone is paid a management fee by the Joint Ventures for their
management services in accordance with the terms of the Partnership Agreement.
During the years ended December 31, 1996, 1995 and 1994, certain employees of
New York Life and its Affiliates performed accounting, secretarial and
administrative services for the Partnership. A portion of the costs of such
services allocable to the Partnership were reimbursed by the Partnership in
accordance with the Partnership Agreement.
COMPETITION
The real estate business is highly competitive, and the Partnership may
experience competition for potential buyers as it is now actively seeking to
sell the remaining joint venture Property. See ITEM 2. PROPERTIES for a
further discussion of each of the Properties and conditions affecting their
performance.
ITEM 2. PROPERTIES
GENERAL
The Partnership originally invested in four Joint Ventures in connection with
the acquisition of four Properties, namely, Cornell Plaza Office Building,
Parklane Office Building, Eden Woods Business Center and NewMarket Shopping
Center. The Properties are described below.
DESCRIPTION OF PROPERTIES
CORNELL PLAZA OFFICE BUILDING
On March 30, 1988, the Partnership, through a Joint Venture ("Joint Venture A")
with the Co-Venturer, acquired an interest in an office building known as
Cornell Plaza Office Building ("Cornell") located in Blue Ash, Ohio. Joint
Venture A acquired the fee simple title for a purchase price of $9,550,000, of
which $5,730,000 represented the Partnership's 60% share of the purchase price,
$34,964 represented the Partnership's 60% share of the Acquisition Expenses and
$136,512 represents the Partnership's 100% share of Acquisition Fees. No
mortgage or other indebtedness was incurred in connection with the acquisition
of Cornell.
Cornell is a five-story office building containing 97,790 gross sq. ft. and
85,625 net rentable sq. ft. The building was completed in 1985 and is situated
on a 5.6 acre site which provides parking for 302 cars.
The Blue Ash submarket is one of the strongest markets in the Cincinnati Area.
Cornell Plaza is a class "A" building of superior quality with a stable
occupancy rate and income stream.
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The Cincinnati office market experienced significant improvement over 1996.
Overall, occupancy averages approximately 85%, substantially at the same levels
as year-end 1995. However, vacancies in the Blue Ash submarket, where Cornell
is located, have declined from 14% at year-end 1995 to approximately 4% at year-
end 1996. Rental rates remained relatively flat during 1996 compared to 1995
as competition for new tenants is strong.
Activity included the opening of the 220,000 sq. ft. Ohio National Life
Building which included 80,000 sq. ft. of pre-leased speculative space. Ohio
National Life will occupy the remaining portion of the building. Also, Cincom
Systems consolidated their operations in four locations into Executive Center
II in Springdale.
The Greater Cincinnati Chamber of Commerce predicts job growth in 1997 of just
1.6% as compared to 1996's rate of 1.9%. Commercial construction is expected
to be approximately 13.5 million sq. ft. versus 12 million in 1996. The
economy is expected to continue a steady pace of growth complemented by new
business moving to the area as well as the expansion of existing companies.
The following table highlights pertinent data relating to Cornell for the years
1996, 1995 and 1994:
1996 1995 1994
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Occupancy rate at year end 88% 98% 98%
# of tenants at year end 18 18 22
Range of initial minimum
lease terms 3-10 years 3-10 years 3-10 years
Range of annual base rents
(per sq. ft.) $6.67-$12.95 $6.44-$12.91 $6.78-$15.45
Annual real estate taxes $119,020 $119,020 $130,355
Generally, leases contain provisions requiring tenants to pay their pro-rata
share of real estate taxes and operating expenses in addition to their annual
base rent.
Pursuant to an Agreement of Sale and Purchase dated February 28, 1997, Joint
Venture A is expected to sell Cornell, along with the underlying land and
related improvements, to ERI Cornell, Inc., an unrelated third party, for an
amount in excess of its carrying amount. The transaction is currently expected
to close on or before April 3, 1997 although the closing may be extended by the
agreement of the parties.
PARKLANE OFFICE BUILDING
On June 29, 1988, the Partnership, through its second Joint Venture ("Joint
Venture B") with the Co-Venturer, acquired an interest in an office building
known as Parklane Office Building ("Parklane") located in Brentwood, Tennessee,
a suburb 10 miles south of Nashville's central business district. Joint Venture
B acquired the fee title to Parklane for a purchase price of $9,600,000, of
which $5,760,000 represented the Partnership's 60% share of the purchase price,
$26,040 represented the Partnership's 60% share of Acquisition Expenses and
$137,129 represented the Partnership's 100% share of Acquisition Fees. No
mortgage or other indebtedness was incurred in connection with the purchase of
Parklane.
On December 6, 1994, pursuant to a Purchase and Sale Agreement dated October 7,
1994, Joint Venture B sold Parklane, along with the underlying land and related
improvements, to
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Principal Mutual Life Insurance Company for $5,600,000 which was approximately
127% of its then appraised value. Subsequent to the sale, the cash reserve
balance of $1,519,570 along with net sales proceeds of $5,271,847 was
distributed to the Co-Venturers. In accordance with the provisions of the
Partnership Agreement, the Partnership's share of such net sales proceeds was
distributed entirely to the Limited Partners. Joint Venture B was liquidated
in 1995.
EDEN WOODS BUSINESS CENTER
On August 23, 1988, the Partnership, through a Joint Venture ("Joint Venture
C") with the Co-Venturer and NYLIFE Realty, acquired three buildings known as
Eden Woods Business Center ("Eden Woods") located in Eden Prairie, Minnesota, a
suburb located eight miles southwest of Minneapolis' Central Business District.
Joint Venture C acquired the fee title to Eden Woods for a purchase price of
$10,900,000 and paid Acquisition Fees of $46,213 and Acquisition Expenses of
$53,570, resulting in a total cash investment of $10,999,783. No mortgage or
other indebtedness was incurred by Joint Venture C in connection with the
purchase of Eden Woods.
On December 30, 1996, pursuant to a Purchase and Sale Agreement dated November
26, 1996, Joint Venture C sold Eden Woods, along with the underlying land and
related improvements, to Principal Mutual Life Insurance Company for $9,700,000
which was approximately 105% of its appraised value of $9,200,000.
NEWMARKET SHOPPING CENTER
On December 22, 1988, the Partnership, through a Joint Venture ("Joint Venture
D") with the Co-Venturer, acquired a one-story retail shopping center known as
NewMarket Shopping Center ("NewMarket") located in northwestern Columbus,
Franklin County, Ohio. Joint Venture D acquired the fee title to NewMarket for
a purchase price of $15,500,000 and paid Acquisition Expenses of $75,888 in
connection with the purchase, resulting in a total cash investment of
$15,575,888. During 1993, substantial structural improvements were made at
NewMarket to accommodate leases with CompUSA to anchor the south end of the
center and Media Play to anchor the north end. Such improvements were funded
by cash flow from operations as well as capital contributions by the
Partnership and the Co-Venturer during 1994 and 1995. Since the Partnership
was unable to fund a portion of its required contribution, the Co-Venturer
increased its contribution by the amount of the Partnership's shortfall in
exchange for an increased ownership interest in the Joint Venture. During
1994, the Co-Venturer contributed $155,059 of additional capital and during
1993, the Partnership and Co-Venturer contributed $459,375 and $1,600,163 of
additional capital, respectively.
NewMarket is adjacent to the interchange of Sawmill Road and Interstate 270.
Sawmill Road is a heavily traveled retail corridor serving a relatively
affluent area. It contains 195,522 gross sq. ft. and 172,833 net rentable sq.
ft. It is an enclosed community shopping center, constructed of steel and
masonry with decorative split concrete block and metal banding around the
exterior walls.
The Greater Columbus region is experiencing a retail construction boom. In
1996, over 5 million square feet of space was under construction or in the
approval process. This activity will increase supply by nearly 20% which will
have a negative impact on rental rates. 1996 year-end vacancy rates are
estimated at just under 8%, down from the year-end 1995 rate of
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8.5%. Most of the recent project completions came in the form of "big box"
space which has attracted tenants such as Marshall Fields, Super K-Mart,
Helig-Meyers, Pep Boys, Eddie Bauer and Cub Foods. However, the area has
also seen the departure of many retailers including Central Hardware,
Herman's Sporting Goods and White Furniture, amongst others.
Average rental rates market wide are approximately $9.61 per sq. ft. which are
slightly higher than the 1995 average of $9.36.
Retailers continue to be attracted to Columbus' strong demographics which
include a highly educated workforce with good household income and a growing
population base.
The following table highlights pertinent data relating to NewMarket for the
years 1996, 1995 and 1994:
1996 1995 1994
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Occupancy rate at year end 86% 93% 96%
# of tenants at year end 22 23 25
Range of initial minimum month to month to month to
lease terms month-12 years month-14 years month-14 years
Range of annual base rents
(per sq. ft.):
less than 3,000 sq. ft. (1) $8.50-$75.00 $6.23-$75.00 $6.12-$63.83
more than 3,000 sq. ft. $5.50-$12.50 $5.88-$13.00 $4.81-$13.00
Annual real estate taxes $178,623 $179,582 $201,957
(1) The annual base rental rates per sq. ft. for tenants occupying less than
3,000 sq. ft. include amounts for "kiosk" tenants whose monthly rents range
from $750-$1,000.
Generally, lease provisions require tenants to pay their pro-rata share of
common area maintenance, real estate taxes and insurance in addition to their
annual base rent.
Joint Venture D has entered into a letter of intent with an unrelated third
party for the sale of NewMarket.
ITEM 3. LEGAL PROCEEDINGS
Information regarding legal proceedings of the Registrant is set forth in ITEM
1. BUSINESS, which Item is incorporated in this ITEM 3 by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of limited partners of the Registrant
during the fourth quarter of 1996.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S UNITS AND RELATED UNITHOLDER MATTERS
Units of the Registrant are not listed or quoted for trading on an established
securities exchange, and the Registrant does not maintain a redemption plan or
"matching service" to assist investors in disposing Units. As of December 31,
1996, there were 2,833,925.5 Units outstanding.
The number of investors holding Units as of December 31, 1996 was 3,057.
The Partnership Agreement provides for quarterly payments of Distributable Cash
From Operations, if available. The Partnership made its initial distributions
to partners subsequent to the quarter ended September 30, 1987, and as of
December 31, 1996, cumulative distributions of $9,869,429 had been paid to the
Limited Partners. The General Partners had previously suspended distributions
to investors from the February 15, 1993 through the August 15, 1994
distribution dates. The most recent distribution of Distributable Cash From
Operations was made on May 15, 1996. Distributions of cash proceeds from the
sale of joint venture Properties were made, however, during 1994 and the first
quarter of 1997.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth the selected financial information regarding the
Partnership's financial position and operating results for the five years ended
December 31, 1996. This information should be read in conjunction with
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS and THE FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA, which are
included in ITEMS 7 AND 8 of this report, respectively. Effective June 30,
1996, the Partnership changed its basis of accounting from the historical cost
basis to the liquidation basis. The Partnership's results of operations are
presented on a combined basis for the 1996 periods prior to and subsequent to
the adoption of the liquidation basis of accounting. Therefore, the operations
and balance sheet data presented by period are not comparable.
The financial position and operating results for the year ended December 31,
1996 are presented on the liquidation basis of accounting and the financial
position and operating results for the four years ended December 31, 1995 are
presented on the historical cost basis of accounting.
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<TABLE>
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total assets at December 31 (1) $11,999,753 $14,565,801 $19,114,353 $18,529,965 $18,480,937
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Equity in (loss) income from Joint
Ventures (3) (4) $(1,679,427) $ 248,687 $ 765,893 $ 311,734 $(4,686,456)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net (loss) income - GAAP basis (2) $(2,401,416) $ 157,197 $ 615,369 $ 158,466 $(4,856,242)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net (loss) income- Tax basis (2) $ (241,433) $ 486,336 $(1,155,825) $ 420,471 $ 412,579
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net (loss) income allocated to partners:
To Limited Partners $(2,377,402) $ 155,625 $ 609,215 $ 156,881 $(4,807,680)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
To General Partners $ (24,014) $ 1,572 $ 6,154 $ 1,585 $ (48,562)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net (loss) income per Unit $ (.85) $ .05 $ .21 $ .06 $ (1.70)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Cash generated from operations $ 1,657,811 $ 3,921,168 $ 1,503,302 $ 71,021 $ 295,680
Cash distributions to Limited Partners 283,392 4,581,098 141,697 0 0
Cash distributions to General Partners 2,863 13,769 1,431 0 0
----------- ----------- ----------- ----------- -----------
Total cash distributions (5) 286,255 4,594,867 143,128 0 0
----------- ----------- ----------- ----------- -----------
Cash generated from operations after
distributions to Limited Partners $ 1,371,556 $ (659,930) $ 1,361,605 $ 71,021 $ 295,680
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Limited Partner cash distributions
per Unit $ 0.10 $ 1.62 $ .05 $ .00 $ .00
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Number of Units outstanding
at December 31 2,833,925.5 2,833,925.5 2,833,925.5 2,833,925.5 2,833,925.5
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
(1) The decrease in Total Assets resulted from write-downs of joint venture
Properties and the sale of Eden Woods during 1996. See ITEM 2. PROPERTIES.
(2) The differences between GAAP and Tax basis net income are primarily the
result of different methods of depreciation and rental income recognition for
financial reporting and tax reporting purposes.
(3) The 1992 Equity in loss from Joint Ventures resulted from a write-down of
the carrying amounts of Parklane and NewMarket to their then current appraised
values. See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
(4) The 1996 Equity in loss from Joint Ventures resulted from a write-down of
the carrying amounts of the joint venture properties to their net realizable
values less costs to sell and the write-off of other related costs. See ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
(5) In 1991 the General Partners decided to suspend distributions from the
February 15, 1993 through the August 15, 1994 distribution dates as part of a
long-term strategy to preserve the assets and maximize performance of the
portfolio. See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
LIQUIDATION
Two class action lawsuits were filed against the Co-Venturer and certain other
affiliates of the General Partners in the District Court of Harris County,
Texas on January 11, 1996, styled Grimshawe v. New York Life Insurance Co., et
al. (No. 96-001188) and Shea v. New York Life Insurance Co., et al. (No. 96-
001189) alleging misconduct in connection with the original sale of investment
units in various partnerships, including violation of various federal and state
laws and regulations and claims of continuing fraudulent conduct. The
plaintiffs asked for compensatory damages for their lost original investment,
plus interest, costs (including attorneys fees), punitive damages, disgorgement
of any earnings, compensation and benefits received by the defendants as a
result of the alleged actions and other unspecified relief to which plaintiffs
might have been entitled. These suits were amended and refiled in a
consolidated action in the United States District Court for the Southern
District of Florida (the "Court") on March 18, 1996. In the federal action,
the plaintiffs added NYLIFE Realty as a defendant and included allegations
concerning the Partnership. The plaintiffs purported to represent a class of
all persons (the "Class") who purchased or otherwise assumed rights and title
to interests in certain limited partnerships, including the Partnership, and
other programs created, sponsored, marketed, sold, operated or managed by the
defendants (the "Proprietary Partnerships"). The Partnership was not a
defendant in the litigation.
The defendants expressly denied any wrongdoing alleged in the complaint and
conceded no liability or wrongdoing in connection with the sale of the Units or
the structure of the Proprietary Partnerships. Nevertheless, to reduce the
burden of protracted litigation, the defendants entered into a Stipulation of
Settlement (the "Settlement Agreement") with the plaintiffs because in their
opinion such Settlement would (i) provide substantial benefits to the Class in
a manner consistent with New York Life's position that it had previously
determined to wind up most of the Proprietary Partnerships, including the
Partnership, through orderly liquidation as the continuation of the business no
longer serves the intended objectives of either the owners of interests in such
Proprietary Partnerships or the defendants and to offer the investors an
enhancement to the liquidating distribution they would otherwise receive and
(ii) provide an opportunity to wind up such partnerships on a schedule
favorable to the Class and resolve the issues raised by the lawsuit.
In coordination with the proposed settlement, the General Partners solicited
the approval of the limited partners for the dissolution of the Partnership.
On July 1, 1996, the expiration date for the solicitation of such consents, the
limited partners of the Partnership approved the dissolution, and termination
of the Partnership. NYLIFE Realty Inc., as liquidator, has commenced the
process of winding up the Partnership.
Final approval of the Settlement Agreement was given by the Court on July 3,
1996. The Settlement Agreement became final on August 5, 1996, the date on
which the period for appeal of the Settlement Agreement expired. Cash Payments
(comprised of a Liquidation Advance and an Enhancement, as defined in the
Settlement Agreement) were made by NYLIFE Realty to settling limited partners
in August, September and November of 1996. Each settling limited partner
granted a security interest in favor of NYLIFE Realty in his units
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of limited partnership interest and liquidating distributions up to the amount
of the settling limited partner's Liquidation Advance to secure repayment
thereof. Accordingly, liquidating distributions for settling limited partners
will be first applied to repay the Liquidation Advance and any remaining
liquidating distributions will be made to the partners.
Under the terms of the Settlement Agreement, each settling limited partner
received a complete return of his original investment, less distributions
received prior to the final Settlement date. In exchange for the Settlement
benefits the settling limited partners released any and all claims that the
settling limited partner may have had against the defendants in connection with
any and all causes of action related to the Proprietary Partnerships and all
activities related to the dissolution and liquidation of such partnerships.
As of December 31, 1996, no liquidating distributions have been made to the
partners.
As part of the liquidation process, the Partnership has sold its indirect
interest in the Property known as Eden Woods Business Center as discussed in
ITEM 2. PROPERTIES. In addition, the Partnership has entered into an Agreement
of Sale and Purchase dated February 28, 1997 for the sale of the Cornell Plaza
Office Building. Subsequent to the sale of the Cornell Plaza Office Building,
the Partnership's remaining asset will be its joint venture interest in
NewMarket Shopping Center. The Partnership is currently actively seeking to
sell such remaining property. SEE ITEM 2. PROPERTIES for further information
regarding the property sales and operations.
LIQUIDITY AND CAPITAL RESOURCES - 1996
The Partnership's cash balance of $894,126 at December 31,1996 includes
$215,681 to pay accrued liabilities, and cash generated from operations of the
Joint Ventures to fund obligations of the Joint Ventures or to be distributed
to the Partnership. On January 8, 1997, the Partnership received approximately
$4.3 million from Joint Venture C which represented the Partnership's share of
the net sale proceeds of Eden Woods.
During the process of winding up and liquidating the Joint Ventures and the
Partnership, the Partnership will no longer pay any distributions to the
partners. Pursuant to the terms of the Settlement Agreement, liquidating
distributions paid to the settling limited partners will first be applied to
repay the $12.5 million Liquidation Advance and any remaining liquidating
distributions will be made to partners. However, upon the sale of the
Partnership's remaining assets, payment of the Partnership's liabilities and
provision for contingent liabilities, the Partnership does not expect to have
cash sufficient to repay the entire Liquidation Advance. In such a
circumstance, partners would not receive any additional distributions from the
Partnership nor would any partner have an obligation to repay any unpaid
Liquidation Advance.
The Partnership expects sufficient cash flow to be generated from its Joint
Venture investments to meet its current and future operating requirements.
However, if the Partnership does not have sufficient funds to meet its future
operating requirements, the General Partners, at their sole discretion, may
borrow money on behalf of the Partnership from unaffiliated third parties
subject to the terms of the Partnership Agreement
The most recent distribution to investors was made on May 15, 1996.
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RESULTS OF OPERATIONS - 1996
As a result of the limited partners' approval of the dissolution of the
Partnership, the Partnership has changed its basis of accounting for the period
subsequent to June 30, 1996, from the historical cost basis to the liquidation
basis. Under the liquidation basis of accounting, the Partnerships' assets at
December 31, 1996 are reported at their estimated net realizable values, and
the Partnership's liabilities are presented at estimated settlement amounts.
The net effect of the revaluation of the Partnership's assets and liabilities
due to the adoption of the liquidation basis of accounting was a downward
adjustment in the second quarter of 1996 of $2,024,587, to the Partnership's
investments in real estate joint ventures. This amount is reported on the
statement of operations for the six months ended June 30, 1996 and included in
equity in loss from Joint Venture operations.
Under the liquidation basis of accounting, the Partnership's results of
operations for the six months ended December 31, 1996 are presented as a
component of the statement of changes in net assets.
Occupancy at Cornell and NewMarket was 88% and 86%, respectively, as of
December 31, 1996, as compared to 97% and 93%, respectively, as of Dectember
31, 1995.
INVESTMENT IN JOINT VENTURES - 1996
NEWMARKET SHOPPING CENTER
Net operating income at New Market decreased by approximately $36,000 for the
year ended December 31, 1996 as compared to the prior year resulting primarily
from lower rental income due to decreased occupancy. The occupancy rate
decreased from 93% at December 31, 1995 to 86% at December 31, 1996.
During 1996, three tenants, We're For Kids, Family Theatre Playhouse, and Shoe
Sensation, which had occupied approximately 21,000 sq. ft., in the aggregate,
did not renew their leases.
Leases aggregating approximately 8,300 sq. ft., or 5% of NewMarket's net
rentable area, are due to expire during 1997. Included in such amount are
Backstage Studio and Finish Line Inc. which occupy 1,687 sq. ft. and 6,604 sq.
ft., respectively.
LIQUIDITY AND CAPITAL RESOURCES - 1995
The Partnership's cash and cash equivalents balance at December 31, 1995 of
$688,977 includes $94,058 to pay accrued liabilities and cash generated from
operations of the Joint Ventures and distributed to the Partnership.
The Partnership derived approximately 80% of its income from its equity
interests in the Joint Ventures. Accordingly, the Partnership's share of cash
flow from the Joint Ventures depends on the performance of the Properties.
Cash flow at the Joint Venture was used to fund tenant improvements, leasing
commissions, and capital improvements, if any. Any remaining cash flow was
then distributed to the Joint Ventures. The Partnership also received interest
income on the balance in its restricted cash account and short-term
investments.
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The Partnership's only operating costs were general and administrative expenses
which included audit and tax return preparation fees, printing and postage
costs for quarterly and annual reports, quarterly investor statement
processing, investor K-1 processing, and reimbursements to the General Partners
for reimbursable expenses incurred in accordance with the Partnership
Agreement. General and administrative expenses totaled $155,770 in 1995.
The Co-Venturers had determined that it was necessary to replace the HVAC
system at Cornell due to its insufficient capacity and outdated technology.
Accordingly, Cornell's cash flow from operations was set aside to fund such
improvement. The new system was installed and operational as of April 1995.
The total cost of the new system was approximately $323,000, all of which was
funded entirely from Cornell's cash flow from operations. Accordingly, Cornell
subsequently resumed distributions to Co-Venturers.
As discussed in ITEM 2. PROPERTIES, Lawrence Jewelry vacated Eden Woods on
January 31, 1996. Accordingly, cash flow from operations at Eden Woods is
being set aside to fund improvements and leasing commissions expected to be
incurred in conjunction with leasing this space. Eden Woods will resume
distributions to Co-Venturers after this space is leased and all applicable
costs are funded.
The Properties generated adequate cash flow to fund their own operations.
During the year ended December 31, 1995, Cornell, Eden Woods, and NewMarket
distributed approximately $281,000, 164,000, and 352,000 to the Partnership,
respectively. Additionally, the Partnership received approximately $3,301,000
of its share of Parklane's net sales proceeds and cash reserve during the
quarter ended March 31, 1995. As previously discussed, Parklane was sold on
December 6, 1994.
The Partnership has evaluated its cash needs and expects to make its next semi-
annual distribution to investors as planned on May 15, 1996.
RESULTS OF OPERATIONS
1995 COMPARED TO 1994
The Partnership's net income for the year ended December 31, 1995 decreased by
approximately $460,000 as compared to the prior year primarily as a result of a
decrease in equity in income from Joint Venture operations. Included in equity
in income from Joint Venture operations for the year ended December 31, 1994
was approximately $361,000 of equity in income from Parklane, including
approximately $177,000 representing the Partnership's share of the gain on the
sale of Parklane on December 6, 1994. For a more detailed discussion of the
operations of each Property, see INVESTMENTS IN JOINT VENTURES - 1995 below.
Partially offsetting such decrease in Equity in income from Joint Venture
operations was an increase in interest income of approximately $48,000 for the
year ended December 31, 1995 as compared to the prior year primarily due to
interest earned on the Partnership's share of the Parklane cash reserve account
and net sales proceeds from January 1, 1995 to February 15, 1995, when such
cash was distributed to investors.
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In management's opinion, except for the proposed dissolution of the Partnership
as more fully discussed in Note 11 of the Notes to Financial Statements, when
adopted on January 1, 1996, Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Assets to be
Disposed of" will not have a material adverse effect on the Partnership's
financial position or results of operations. In the event of disposition, the
Partnership would record an adjustment to state its investments in real estate
joint ventures at their then fair market value. Subsequent increases and
decreases in fair market value would be recorded currently in earnings under
the liquidation method of accounting.
The effects of inflation on the Partnership are immaterial.
INVESTMENTS IN JOINT VENTURES - 1995
CORNELL PLAZA OFFICE BUILDING
Net operating income at Cornell decreased by approximately $13,000, or 2%, for
the year ended December 31, 1995 as compared to the prior year. Occupancy was
98% as of December 31, 1995. Occupancy as of December 31, 1994 was also 98%.
Interest income at Cornell increased by approximately $5,000 for the year ended
December 31, 1995 as compared to the prior year primarily due to interest
earned on the funds set aside for the new HVAC system described below.
Depreciation and amortization increased by approximately $96,000 for the year
ended December 31, 1995 as compared to the prior year primarily due to
depreciation charges related to such HVAC system.
During 1995 one tenant, USA Mobile Communications, expanded by 3,119 sq. ft.
This tenant executed a five year lease at $10.75 per sq. ft. the first three
years and $11.50 thereafter.
Three tenants vacated the premises during 1995, however the USA Mobile
expansion absorbed most of such vacated space. Galbreath, Cornell's managing
and leasing agent, and Orion International vacated the space which USA Mobile
leased. Additionally, Talent Tree did not renew its lease. Computer
Associates will also be vacating its 9,000 sq. ft. space before its lease
expires in March 1997. This tenant will continue to make all payments in
accordance with its lease. Additionally, Chrysler, a current Cornell tenant,
has expressed interest in expanding into the Computer Associates space.
A new HVAC system was installed at Cornell due to the insufficient capacity and
outdated technology of the old system. Cornell's cash flow from operations had
been set aside to fund such improvement. The new system was installed and
operational as of April 1995. The total cost of the new system was
approximately $323,000, all of which was funded entirely from Cornell's cash
flow from operations. Accordingly, Cornell resumed distributions to Co-
Venturers.
EDEN WOODS BUSINESS CENTER
Net operating income at Eden Woods decreased by approximately $138,000 for the
year ended December 31, 1995 as compared to the prior year. Such decrease is
primarily due to revenues recognized by the Property in 1994 representing the
Sanborn early lease termination settlement. Eden Woods' occupancy increased
from 98% at December 31, 1994 to 99% at December 31, 1995.
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Approximately 35,000 additional sq. ft. was leased at Eden Woods during 1995.
Three new tenants were added during the year. Trisen Systems Inc. executed a 5
year lease for 10,132 sq. ft. vacated by Micro-Net in January, 1995 with a base
rent of $4.18 the first year and $5.66, $6.31, $6.94, and $8.45 the second
through fifth years, respectively. Office Products of Minnesota Inc. executed
a 5 year lease for 20,086 sq. ft., formerly occupied by Sanborn, with a base
rent of $7.06 the first three years and $7.42 thereafter. Wilson Learning
Corp. signed a three year lease for 5,186 sq. ft., vacated by Trimar in
January, 1995, with a base rent of $7.05.
In addition to the new leases discussed above, one tenant, Netstar, expanded by
3,043 sq. ft.
Lawrence Jewelry did not renew its lease for 42,500 sq. ft., which expired on
December 31, 1995, but insteadextended its lease for one month and vacated on
January 31, 1996. One current tenant has agreed to expand into approximately
half of the Lawrence Jewelry space.
NEWMARKET SHOPPING CENTER
Net operating income at New Market increased by approximately $86,000 for the
year ended December 31, 1995 as compared to the prior year partially as a
result of a property tax refund of approximately $52,000 received during 1995
resulting from a successful certorari of 1994's tax assessment. Also
contributing to the increase in net operating income for 1995 is a decrease in
repairs and maintenance expense of approximately $35,000 as compared to 1994.
Minor parking lot and electrical repairs performed during 1994 comprise most of
such difference. The occupancy rate decreased from 96% at December 31, 1994 to
93% at December 31, 1995.
During 1995 two tenants did not renew their leases. Elbee Shoes vacated its
4,813 sq. ft. space. Additionally, Southwest Designs informed Management of
its intention to vacate the mall by January 31, 1996. The adjacent tenant,
S & K Brands, which currently leases 4,030 sq. ft., intends to expand into such
vacated space.
As previously reported, in 1994 Famous Footwear expanded its space and extended
its lease. Their renovated space opened for business in June 1995.
Leases aggregating approximately 23,000 sq. ft., or 13% of NewMarket's net
rentable area, are due to expire during 1996. Included in such amount are
three month-to-month tenants: We're For Kids, Family Theatre Playhouse, and
Shoe Sensation, currently occupying 6,998 sq. ft., 8,000 sq. ft. and 6,100 sq.
ft., respectively.
Management plans for 1996 included retention of tenants whose leases expire in
1996, including the month-to-month tenants discussed above, and attracting one
or two new shops that may act as "mini-anchors."
1994 COMPARED TO 1993
The increase in the Partnership's net income for the year ended December 31,
1994 from the year ended December 31, 1993 was primarily a result of an
increase in equity in income from Joint Venture operations. Net operating
income for each of the Joint Ventures increased by an aggregate 34% for the
year ended December 31, 1994 over the corresponding period in 1993.
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See INVESTMENTS IN JOINT VENTURES - 1994 below for a more detailed discussion
of the operations of each Property. In addition, general and administrative
expenses decreased approximately $7,000 for the year ended December 31, 1994 as
compared to the corresponding period in 1993, resulting from a reduction in
printing and postage costs for the year ended December 31, 1994 as well as an
over accrual of professional fees of approximately $18,000 for the year ended
December 31, 1993. The Partnership had accrued for certain professional fees in
1993 that were subsequently paid for by the Joint Ventues. Accordingly, the
Partnership reversed the accrual for those expenses in 1994.
The effects of inflation on the Partnership were immaterial.
INVESTMENTS IN JOINT VENTURES - 1994
CORNELL PLAZA OFFICE BUILDING
Net operating income at Cornell increased by approximately $170,000 for the
year ended December 31, 1994 as compared to the year ended December 31, 1993.
Occupancy increased from 92% at December 31, 1993 to 98% at December 31, 1994.
Additionally, the Partnership received a real estate tax refund of
approximately $84,000 resulting from a successful appeal of the 1991 and 1992
tax assessments.
During 1994, an additional 5,458 sq. ft. of space was leased at Cornell. Two
new tenants were added, while seven existing tenants expanded. JBA
International and the Galbreath Company executed new leases aggregating 2,614
sq. ft. JBA International leased 1,614 sq. ft. for three years at $10.00 per
sq. ft. Galbreath executed a month-to-month lease for 1,000 sq. ft. at $5.00
per sq. ft. Galbreath is Cornell's managing and leasing agent and will likely
vacate their space to make way for upcoming expansions in 1995. Expansions
took place during 1994 for Cincinnati Asset Management, Spencer and Spencer,
Citizens Mortgage, USA Mobile Communications, Inacomp, Zaring Homes and Eaton
ranging from 389 sq. ft. to 1,603 sq. ft. with average rental rates ranging
from $9.00 per sq. ft. to $12.95 per sq. ft. In addition, Hitachi renewed its
lease for 5,891 sq. ft. for four years at an average rental rate of $9.75 per
sq. ft.
As expected, Phoenix Mutual Insurance ("Phoenix Mutual") vacated 3,261 sq. ft.
during 1994 as a result of the merger between Phoenix Mutual and Home Life
Insurance.
Besides the Galbreath month-to-month tenancy, the only lease expiring during
1995 was Talent Tree's for 1,325 sq. ft.
As of December 31, 1994, the property was 98% occupied, and management was
carefully evaluating any expansion requests in order to achieve maximum rents.
As discussed above, a new HVAC system was installed at Cornell during 1995 due
to the insufficient capacity and outdated technology of the old system. As of
December 31, 1994, cash in the amount of $149,956 had been set aside for such
expenditure.
PARKLANE OFFICE BUILDING
On December 6, 1994, pursuant to a Purchase and Sale Agreement dated October 7,
1994, Joint Venture B sold Parklane, along with the underlying land and related
improvements to
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Principal Mutual Life Insurance Company for $5,600,000 which represents
approximately 127% of its appraised value of $4,400,000 as of November 30,
1993. It was determined that under current market conditions and considering
the departure of South Central Bell, whose 69,302 sq. ft. occupancy comprises
approximately 64% of Parklane's net rentable space, the sale of Parklane
would provide more value than utilizing the cash reserve to re-tenant the
building. At the time of the sale the cash reserve balance was $1,519,570.
The Partnership distributed to investors its share of the net proceeds from
the sale, along with its share of the cash reserve, on February 15, 1995.
For the year ended December 31, 1994, Parklane had a decrease in net operating
income of approximately $48,000 over the corresponding period in 1993 due to
the reduction in rental income as a result of the sale of Parklane on December
6, 1994. The Joint Venture recognized a gain on the sale of Parklane of
$294,687, based on the carrying value of the land, the building and the related
improvements.
In addition, Parklane had an increase in interest income of approximately
$20,000 for the year ended December 31, 1994 as compared to the corresponding
period in 1993, due to the growth of the cash reserve account throughout 1994.
The cash reserve balance was $1,143,225 at December 31, 1993 and $1,519,570 at
December 6, 1994, the date of the sale of Parklane described above.
EDEN WOODS BUSINESS CENTER
Net operating income at Eden Woods increased by approximately $249,000 for the
year ended December 31, 1994 as compared to the year ended December 31, 1993.
Eden Woods' occupancy increased from 92% at December 31, 1993 to 98% at
December 31, 1994. Additionally, a tax reassessment of Eden Woods resulted in
a reduction of real estate taxes of approximately $85,000 for the year ended
December 31, 1994 as compared to the year ended December 31, 1993.
Approximately 11,000 additional sq. ft. was leased at Eden Woods during 1994.
Five new tenants were added during the year. Proline Audio executed a five
year lease for 4,103 sq. ft. at an average rental rate of $5.90 per sq. ft. A
five year lease was executed with Heidelberg USA for 5,441 sq. ft. at an
average rental rate of $6.55 per sq. ft. Original Marketing executed a five
year lease for 2,519 sq. ft. at an average rental rate of $7.00 per sq. ft.
Business Machine Sales executed a seven year lease for 7,162 sq. ft. at an
average rental rate of $7.19 per sq. ft. Woodroast Systems Inc. executed a
five year lease for 5,035 sq. ft. at an average rental rate of $6.24 per sq.
ft.
In addition, Datatrak (formerly Jobtrak) renewed the lease on its 8,123 sq. ft.
for five years at an average rental rate of $6.47 per sq. ft. Edentec also
elected to renew its lease for 15,388 sq. ft. for five years at an average
rental rate of $7.17 per sq. ft.
Fargo-Datamax and Datatrend vacated 12,197 sq. ft. and 4,103 sq. ft.,
respectively, during 1994. Trimar, which occupied 5,186 sq. ft., vacated in
January 1995. This space was subsequently leased to Wilson Learning
Corporation for three years at $7.05 per sq. ft.
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NEWMARKET SHOPPING CENTER
Net operating income at New Market increased by approximately $384,000 for the
year ended December 31, 1994 as compared to the year ended December 31, 1993,
as a result of the addition of CompUSA and Media Play in November 1993. Media
Play and CompUSA comprised approximately 47% of total occupancy of NewMarket at
December 31, 1994. During 1994, a full year of rental revenue was recognized
from these tenants. The occupancy rate at December 31, 1994 and 1993 remained
stable at 96%.
Depreciation and amortization expense for the year ended December 31, 1994
increased by approximately $133,000 as compared to the year ended December 31,
1993 as a result of depreciation expense related to the improvements for the
two anchor tenants.
Approximately 5,000 additional sq. ft. was leased at NewMarket during 1994.
Southwest Design executed a five year lease for 3,202 sq. ft. at an average
rental rate of $8.50 per sq. ft. Candlesticks executed a five year lease for
1,843 sq. ft. at an average rental rate of $8.56 per sq. ft.
Two tenants, Linens 'N Things and Mr. Bulky's, vacated NewMarket during 1994.
Linen 'N Things had occupied 7,200 sq. ft. Mr. Bulky's exercised a termination
option in its lease and vacated its 1,843 sq. ft. In accordance with such
termination option agreement, NewMarket received approximately $10,000 for
reimbursement of certain improvements and leasing commissions paid with regard
to the Mr. Bulky lease.
Hit or Miss renewed its lease for 3,686 sq. ft. for five years at $11.00 per
sq. ft. Dress Barn also renewed its lease for 7,427 sq. ft. for five years at
$12.50 per sq. ft.
Famous Footwear expanded by 3,982 sq. ft. from 5,418 sq. ft. to 9,400 sq. ft.
and extended its lease on the combined space for five years at $8.50 per sq. ft.
As of December 31, 1994, leases aggregating approximately 40,275 sq. ft., or
23% of NewMarket's net rentable area, were due to expire during 1995. Included
in the aforementioned are two month-to-month tenants: We're For Kids and Family
Theatre Playhouse, who occupy 6,998 sq. ft. and 8,000 sq. ft., respectively.
El-Bee Shoe Outlet and Shoe Sensation, occupying 4,813 sq. ft. and 6,100 sq.
ft., respectively, which had leases expiring during the first quarter of 1995,
renewed on a month-to-month basis.
As of December 31, 1994, management was also negotiating lease renewals with
three other tenants with large spaces expiring during 1995. These tenants: S&K
Famous Brands, The Casual Male and Dress Barn occupied 4,030 sq. ft., 2,719 sq.
ft. and 7,427 sq. ft., respectively, at December 31, 1994.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Appendix A to this report starting at page F-1.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The principal business occupations during the past five years for the Directors
and executive officers of NYLIFE Realty Inc. and CNP are set forth below.
Messrs. Boyce, Calhoun, Micucci, Warga, Drath, Ziegler and Zuccaro hold similar
positions with (i) NYLIFE Equity Inc., which is the general partner of three
series of publicly offered oil and gas limited partnerships known as NYLOG I,
NYLOG II and NYLOG III, and (ii) (except for Mr. Calhoun, who is an officer but
not a director or manager) NYLIFE Structured Asset Management Company Ltd.
("NYLIFE SAMCO"), which has sold notes in a public offering. Messrs. Boyce,
Micucci (who is also a director) and Drath hold similar positions with NYLIFE
Depositary Corporation ("Depositary"), which is the General Partner of Auto
Funding II, L.P., the originator of a series of trusts known as the NAFCO Auto
Trusts, which has sold certificates of beneficial interest in a public
offering. Messrs. Calhoun, Drath and Zuccaro are officers, but not directors,
of Depositary.
In addition, Messrs. Boyce, Calhoun and Warga are directors of NYLIFE
Securities Inc. ("NYLSEC"), the sales agent for the Partnership in its public
offering of Units, and Messrs. Boyce, Warga, Calhoun, Micucci and Zuccaro are
officers of NYLSEC. NYLIFE Realty Inc., NYLIFE Equity Inc., NYLIFE SAMCO,
Depositary and NYLSEC are indirect wholly-owned subsidiaries of the Co-Venturer
and CNP is a wholly owned subsidiary of NYLIFE Realty Inc.
Name Positions with NYLIFE Realty Inc.
- ---- ---------------------------------
Kevin M. Micucci Director, President and Chief Executive Officer
Jefferson C. Boyce Director
Frank J. Ollari Director and Vice President of Investment
Jay S. Calhoun Director and Treasurer
Scott J. Drath Vice President and Controller
Robert Ziegler Vice President of Administration and Secretary
Thomas J. Warga Vice President and General Auditor
Richard W. Zuccaro Tax Vice President
KEVIN M. MICUCCI, age 37, is a Director, President and Chief Executive Officer
of NYLIFE Realty Inc. and he is a Director, President and Controller of CNP.
Mr. Micucci has been a Vice President in the Structured Finance Department of
New York Life Insurance Company since March 1996; prior thereto, he was
Corporate Vice President since March 1991, and an Assistant Vice President from
July 1989. Mr. Micucci received a B.S. degree from St. John's University and
is a Certified Public Accountant.
JEFFERSON C. BOYCE, age 38, is a Director of NYLIFE Realty Inc. and CNP. Mr.
Boyce is a Senior Vice President of New York Life Insurance Company. Since
1994 he has been responsible for the Mutual Funds (MainStay Retail and MainStay
Institutional Funds), and Structured Finance departments, as well as NYLIFE
Securities Inc. In 1992, he became Chief Administrative Officer for the
Pension, Mutual Funds, and Structured Finance departments, as
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well as the Corporate Quality, Human Resources, and Employees' Health
departments. Mr. Boyce received a Bachelor of Business Administration in
Finance from Baruch College and has completed the Advanced Management Program
at the Harvard Business School.
FRANK J. OLLARI, age 49, is a Director and Vice President of Investment of
NYLIFE Realty Inc. Mr. Ollari has been a Senior Vice President in the Mortgage
Finance Department of New York Life Insurance Company since October 1989, and
prior thereto was Vice President in that department since November 1985. He
was a Real Estate Vice President from 1982 to 1985 and an Assistant Vice
President from 1980 to 1982. Mr. Ollari received a B.B.A. degree from St.
John's University.
JAY S. CALHOUN, age 40, is a Director and Treasurer of NYLIFE Realty Inc. He
was named a Senior Vice President of New York Life Insurance Company in March
1997 and has been Vice President and Treasurer since November 1992. He was
named Vice President and Associate Treasurer in March 1992 and, prior thereto,
served as a Corporate Vice President in the Treasury Department. Mr. Calhoun
received a B.A. degree from Princeton University and an M.S. degree in Business
Policy from Columbia University.
SCOTT J. DRATH, age 33, has been Corporate Vice President in the Structured
Finance Department of New York Life Insurance Company since May 1996. Mr.
Drath was Director of Accounting for Prins Recycling Corp. from May 1995 to
April 1996. Prior thereto, he was Assistant Vice President in the Structured
Finance Department of New York Life Insurance Company from April 1993 and
Director of Accounting from September 1991. Mr. Drath received a Bachelor of
Accountancy degree from George Washington University and an M.B.A. degree in
Finance from New York University.
ROBERT ZIEGLER, age 43, is a Vice President of Administration and Secretary of
NYLIFE Realty Inc. Mr. Ziegler has been Vice President of New York Life
Insurance Company in the Structured Finance Department since March 1996, and
prior thereto was Corporate Vice President since January 1989. He was an
Assistant Vice President from July 1987 to December 1988. He was a Vice
President of B&D Equities Inc. and Damson Investor Services Corporation from
1986 to 1987 and was an Assistant Vice President of Citibank, N.A. from 1981 to
1986. Mr. Ziegler received a B.B.A. degree and his M.B.A. degree from Baruch
College.
THOMAS J. WARGA, age 50, is a Vice President and General Auditor of NYLIFE
Realty Inc. Mr. Warga was elected Vice President and General Auditor of New
York Life Insurance Company May 1989. Prior to his current responsibilities,
he was Associate General Auditor from 1988 to 1989 and Assistant General
Auditor from 1985 to 1988. Mr. Warga received a B.S. degree from Fairfield
University and an M.B.A. degree from Long Island University and is a Certified
Internal Auditor, a Chartered Life Underwriter and a Chartered Financial
Consultant.
RICHARD W. ZUCCARO, age 46, is Tax Vice President of NYLIFE Realty Inc. and
CNP. Mr. Zuccaro has been a Vice President of New York Life Insurance Company
since April 1995, and prior thereto, was a Corporate Vice President since May
1986. Prior to his current responsibilities, he was an Assistant Vice
President of New York Life Insurance Company
23
<PAGE>
from November 1981 to May 1986. Mr. Zuccaro received a B.B.A. degree in
Accounting from the University of Oklahoma.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no directors or executive officers.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 1996, no person is known to the Registrant to be the
beneficial owner of more than 5% of the Partnership's 2,833,925.5 outstanding
Units. The officers and directors of NYLIFE Realty and CNP do not own any
Units in the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See Notes to Financial Statements on pages F-10 through F-19 and Notes to
Combined Financial Statements of Joint Ventures on pages F-29 through F-33.
24
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS:
All financial statements required by Item 8 and this Item 14 of Form 10-K
are contained in Appendix A hereto.
2. FINANCIAL STATEMENT SCHEDULES:
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted
since either (1) the information required is disclosed in the financial
statements and the notes thereto; (2) the schedules are not required under
the related instructions; or (3) the schedules are inapplicable.
3. EXHIBITS:
NUMBER AND DESCRIPTION UNDER REGULATION S-K
The following reflects all applicable Exhibits required under Item 601 of
Regulation S-K:
(2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
SUCCESSION
2.1) Agreement for Purchase and Sale of Property (All Cash) by and between
NYLIFE Realty Partners I - General Partnership (C) by and through Greystone
Realty Corporation, Principal Mutual Life Insurance Company and Chicago
Title Insurance Company.*
2.2) Agreement of Sale and Purchase by and between NYLIFE Realty
Partners - I General Partnership (A) and ERI Cornell, Inc.**
(3) ARTICLES OF INCORPORATION AND BY-LAWS
3.1) Amended and Restated Agreement of Limited Partnership ("Partnership
Agreement") of the Registrant, incorporated by reference to Exhibit A to
the Prospectus of Registrant dated March 2, 1987 included in Registrant's
Registration Statement on Form S-11 (Reg. No. 33-10725).*
(10) MATERIAL CONTRACTS
10.1) Form of Partnership Agreement of NYLIFE Realty Partners I -
General Partnership A (also referred to as Joint Venture Agreement)
between Registrant and the Co-Venturer.*
25
<PAGE>
10.2) Partnership Formation Agreement dated June 10, 1987 between
Registrant, the NYLIFE General Partner and the Co-Venturer.*
10.3) Agreement for Sale and Purchase of Real Property, Improvements
to Realty and Personal Property dated January 19, 1988 by and between
Cornell Plaza Partners and NYLIFE Realty Partners I - General Partnership
A, as amended, incorporated by reference to Exhibit 10E to Registrant's
Registration Statement on Form S-11 (Reg. No. 33-10725).*
10.4) Agreement for Sale and Purchase of Real Property, Improvements
to Realty and Personal Property dated April 18, 1988 by and between John
Hancock Mutual Life Insurance Co. and NYLIFE Realty Partners I - General
Partnership B, as amended, incorporated by reference to Exhibit 10F to
Registrant's Registration Statement on Form S-11 (Reg. No. 33-10725).*
10.5) Agreement for Sale and Purchase of Real Property, Improvements
to Realty and Personal Property dated June 22, 1988 by and between The Oak
Associates and NYLIFE Realty Partners I - General Partnership C, as
amended, incorporated by reference to Exhibit 10G to Registrant's
Registration Statement on Form S-11 (Reg. No. 33-10725).*
10.6) Agreement for Sale and Purchase of Real Property, Improvements
to Realty and Personal Property dated September 13, 1988 by and between
NewMarket Columbus Venture and NYLIFE Realty Partners I - General
Partnership D, as amended, incorporated by reference to Exhibit 10I to
Registrant's Registration Statement on Form S-11 (Reg. No. 33-10725).*
10.7) Letter Agreement dated March 25, 1992 by and between NYLIFE
Realty Partners I - General Partnership A and Greystone Realty
Corporation.*
10.8) Letter Agreement dated March 25, 1992 by and between NYLIFE
Realty Partners I - General Partnership B and Greystone Realty
Corporation.*
10.9) Letter Agreement dated March 25, 1992 by and between NYLIFE
Realty Partners I - General Partnership C and Greystone Realty
Corporation.*
10.10) Letter Agreement dated March 25, 1992 by and between NYLIFE
Realty Partners I - General Partnership D and Greystone Realty
Corporation.*
10.11) Letter Agreement dated December 18, 1992 by and between NYLIFE
Realty Partners I - General Partnership A and Greystone Realty
Corporation.*
10.12) Letter Agreement dated December 18, 1992 by and between NYLIFE
Realty Partners I - General Partnership B and Greystone Realty
Corporation.*
10.13) Letter Agreement dated December 18, 1992 by and between NYLIFE
Realty Partners I - General Partnership C and Greystone Realty
Corporation.*
26
<PAGE>
10.14) Letter Agreement dated December 18, 1992 by and between NYLIFE
Realty Partners I - General Partnership D and Greystone Realty
Corporation.*
10.15) Agreement for Purchase and Sale of Property (All Cash) by and
between NYLIFE Realty Partners I - General Partnership (B) by and
through Greystone Realty Corporation, Principal Mutual Life Insurance
Company and Chicago Title Insurance Company.*
(27) FINANCIAL DATA SCHEDULE**
(b) REPORTS ON FORM 8-K:
No reports on Form 8-K were filed by the Registrant during the fourth
quarter of 1996.
* Previously filed.
** Filed herewith.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NYLIFE Realty Income Partners I, L.P.
By: NYLIFE Realty Inc.
General Partner
March 31, 1997 By: /s/ Kevin M. Micucci
--------------------------------
Kevin M. Micucci
President and Chief
Executive Officer
(Principal Executive, Accounting
and Financial Officer)
By: CNP Realty Investments Inc.
General Partner
March 31, 1997 By: /s/ Kevin M. Micucci
--------------------------------
Kevin M. Micucci
President and Chief
Executive Officer
(Principal Executive, Accounting
and Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
President and Chief Executive
Officer of NYLIFE Realty Inc
and President, Treasurer and
Director of CNP Realty Investments
Inc. (Principal Executive,
Accounting and Financial Officer)
/s/ Kevin M. Micucci March 31, 1997
- -------------------------
Kevin M. Micucci
/s/ Jefferson C. Boyce Director of NYLIFE Realty Inc. March 31, 1997
- -------------------------
Jefferson C. Boyce
28
<PAGE>
Vice President of Investment and
/s/ Frank J. Ollari Director of NYLIFE Realty Inc. March 31, 1997
- -------------------------
Frank J. Ollari
Vice President, Treasurer and
/s/ Jay S. Calhoun Director of NYLIFE Realty Inc. March 31, 1997
- -------------------------
Jay S. Calhoun
29
<PAGE>
APPENDIX A
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(A)(1) AND (2)
FINANCIAL STATEMENTS AS OF
DECEMBER 31, 1996 AND 1995
NYLIFE REALTY INCOME PARTNERS I, L.P.
(IN THE PROCESS OF LIQUIDATION)
F-1
<PAGE>
Form 10-K -- Item 8, Item 14, (a)(1) and (2)
NYLIFE Realty Income Partners I, L.P.
(In the Process of Liquidation)
INDEX OF FINANCIAL STATEMENTS
PAGE NO.
--------
Report of Independent Public Accountants F-3
Statement of Net Assets in Liquidation
as of December 31, 1996 F-4
Statement of Changes in Net Assets in Liquidation
from July 1, 1996 to December 31, 1996 F-5
Balance Sheet as of December 31, 1995 F-6
Statements of Operations for the Six Months Ended
June 30, 1996 and For the Years Ended December 31,
1995 and 1994 F-7
Statements of Changes in Partners' Capital (Deficit)
for the Six Months Ended June 30, 1996 and For the
Years Ended December 31, 1995 and 1994 F-8
Statements of Cash Flows for the Six Months Ended
June 30, 1996 and For the Years Ended December 31,
1995 and 1994 F-9
Notes to Financial Statements F-10 to F-19
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted since
either (1) the information required is disclosed in the financial statements
and the notes thereto; (2) the schedules are not required under the related
instructions; or (3) the schedules are inapplicable.
F-2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of NYLIFE Realty Income Partners, I, L.P.
We have audited the accompanying balance sheet of NYLIFE Realty Income
Partners I, L.P. (a Delaware limited partnership) (the "Partnership") as of
December 31, 1995 and the related statements of operations, changes in
partners' capital and cash flows for the years ended December 31, 1995 and
1994 and the statements of operations, changes in partners' capital and cash
flows for the period from January 1, 1996 to June 30, 1996. In addition, we
have audited the statement of net assets in liquidation as of December 31,
1996, and the related statement of changes in net assets in liquidation for
the period from July 1, 1996 to December 31, 1996. These financial
statements are the responsibility of the general partner. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by the general partner, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
As described in Note 2 to the financial statements, the limited partners of
the Partnership approved a plan of liquidation on July 1, 1996, and the
Partnership commenced liquidation shortly thereafter. As a result, the
Partnership has changed its basis of accounting for periods subsequent to
June 30, 1996, from the going-concern basis to the liquidation basis.
Accordingly, the carrying amounts of the remaining assets as of December 31,
1996, are presented at estimated realizable values and all liabilities are
presented at estimated settlement amounts.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of
December 31, 1995 and the results of its operations and its cash flows for
each of the two years in the period ended December 31, 1995 and for the
period from January 1, 1996 to June 30, 1996, its net assets in liquidation
as of December 31, 1996, and the changes in its net assets in liquidation for
the period from July 1, 1996 to December 31, 1996 in conformity with
generally accepted accounting principles applied on the bases described in
the preceding paragraph.
ARTHUR ANDERSEN LLP
New York, New York
March 20, 1997
F-3
<PAGE>
NYLIFE Realty Income Partners I, L.P.
Statement of Net Assets in Liquidation
as of December 31, 1996
ASSETS 1996
-----------
Cash and cash equivalents $ 894,126
Investments in real estate joint ventures 11,105,627
-----------
Total assets $11,999,753
-----------
-----------
LIABILITIES
Accrued liabilities 215,681
-----------
Net assets $11,784,072
-----------
-----------
The accompanying Notes to Financial Statements are
an integral part of this statement.
F-4
<PAGE>
NYLIFE Realty Income Partners I, L.P.
Statement of Changes in Net Assets in Liquidation
For the Period from July 1, 1996 through December 31, 1996
1996
-----------
Net assets at July 1, 1996 $12,715,713
Equity in (loss) from joint venture operations (260,983)
Interest income 23,426
General and administrative expenses (100,209)
General and administrative expenses-related party (50,000)
Write-off of interest and acquisition fees (543,875)
-----------
Net (decrease) in net assets (931,641)
-----------
Net assets at December 31, 1996 $11,784,072
-----------
-----------
The accompanying Notes to Financial Statements are
an integral part of this statement.
F-5
<PAGE>
NYLIFE Realty Income Partners I, L.P.
(a limited partnership)
Balance Sheet
December 31, 1995
ASSETS
Cash and cash equivalents $ 688,977
Restricted cash 283,392
Investments in real estate joint ventures 13,590,960
Other assets - net 2,472
-----------
Total assets $14,565,801
-----------
-----------
LIABILITIES AND PARTNERS' CAPITAL
Accrued liabilities $ 94,058
-----------
Total liabilities 94,058
-----------
Partner's capital
General Partners:
Capital contributions 2,000
Accumulated deficit (9,103)
Cumulative distributions (66,470)
-----------
(73,573)
-----------
Limited Partners:
Capital contributions net of public offering expenses 25,032,724
Accumulated deficit (901,371)
Cumulative distributions (9,586,037)
-----------
14,545,316
-----------
Total partners' capital 14,471,743
-----------
Total liabilities and partners' capital $14,565,801
-----------
-----------
The accompanying Notes to Financial Statements are
an integral part of this statement.
F-6
<PAGE>
NYLIFE Realty Income Partners I, L.P.
Statements of Operations
Six Months
Ended Year Ended Year Ended
June 30, December 31, December 31,
INCOME 1996 1995 1994
- ------ ---------- ------------ ------------
Equity in income from
joint venture operations $ -- $ 248,687 $ 765,893
Interest 24,269 64,280 16,444
----------- ----------- -----------
Total income 24,269 312,967 782,337
----------- ----------- -----------
EXPENSES
- --------
Equity in loss from
joint venture operations 1,418,444 - -
General and administrative 25,600 55,770 66,968
General and administrative-
related party 50,000 100,000 100,000
----------- ----------- -----------
Total expenses 1,494,044 155,770 166,968
----------- ----------- -----------
Net (loss) income $(1,469,775) $ 157,197 $ 615,369
----------- ----------- -----------
----------- ----------- -----------
NET (LOSS) INCOME ALLOCATED
- ---------------------------
General Partners $ (14,698) $ 1,572 $ 6,154
Limited Partners (1,455,077) 155,625 609,215
----------- ----------- -----------
$(1,469,775) $ 157,197 $ 615,369
----------- ----------- -----------
----------- ----------- -----------
Net (loss) income per Unit $ (0.51) $ 0.05 $ 0.21
----------- ----------- -----------
----------- ----------- -----------
Number of Units 2,833,925.5 2,833,925.5 2,833,925.5
----------- ----------- -----------
----------- ----------- -----------
The accompanying Notes to Financial Statements are
an integral part of these statements.
F-7
<PAGE>
NYLIFE Realty Income Partners I, L.P.
Statements of Partners' Capital (Deficit)
for the Six Months Ended June 30, 1996 and
for the Year Ended December 31, 1995
Total
Limited General Partners'
Partners Partners Capital
----------- -------- -----------
Capital (deficit) at January 1, 1995 $18,970,789 $(61,376) $18,909,413
Net income 155,625 1,572 157,197
Distributions to partners (4,581,098) (13,769) (4,594,867)
----------- -------- -----------
Capital (deficit) at December 31, 1995 14,545,316 (73,573) 14,471,743
Net (loss) (1,455,077) (14,698) (1,469,775)
Distributions to partners (283,392) (2,863) (286,255)
----------- -------- -----------
Capital (deficit) at June 30, 1996 $12,806,847 $(91,134) $12,715,713
----------- -------- -----------
----------- -------- -----------
The accompanying Notes to Financial Statements are
an integral part of these statments.
F-8
<PAGE>
NYLIFE Realty Income Partners I, L.P.
Statements of Cash Flows
Six Months Year
Ended Ended
June 30, December 31,
1996 1995
------------ ------------
Cash flows from operating activities:
Net (loss) income $(1,469,775) $ 157,197
----------- -----------
Adjustments to reconcile net (loss)
income to net cash (used in) provided
by operating activities:
Equity in loss (income) from joint
venture operations 1,418,444 (248,687)
Cash distributions from joint ventures - 248,687
Amortization of interest and acquisition
fees 12,544 -
Changes in assets and liabilities:
(Increase) in due from affiliates (50,450) (100,000)
Decrease in other assets 1,836 25,331
Increase (decrease) in accrued liabilities 15,328 (10,882)
----------- -----------
Total adjustments 1,397,702 (85,551)
----------- -----------
Net cash (used in) provided by
operating activities (72,073) 71,646
----------- -----------
Cash flows from investing activities:
Cash distributions from joint ventures
in excess of earnings (return of capital) 258,799 3,849,522
----------- -----------
Cash flows from financing activities:
Distributions to partners (286,255) (4,594,867)
----------- -----------
Net (decrease) in cash and cash equivalents (99,529) (673,699)
Cash and cash equivalents at beginning
of period 688,977 1,362,676
----------- -----------
Cash and cash equivalents at end of period $ 589,448 $ 688,977
----------- -----------
----------- -----------
The accompanying Notes to Financial Statements are
an integral part of these statments.
F-9
<PAGE>
NYLIFE REALTY INCOME PARTNERS I, L.P.
(IN THE PROCESS OF LIQUIDATION)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 1 - ORGANIZATION
NYLIFE Realty Income Partners I, L.P. (the "Partnership") is a Delaware limited
partnership formed on November 14, 1986. Its co-general partners are NYLIFE
Realty Inc. ("Realty") and CNP Realty Investments, Inc. ("CNP"), (collectively,
the "General Partners"). The Partnership was formed to enter into a series of
joint ventures (individually, a "Joint Venture", collectively, the "Joint
Ventures") with New York Life Insurance Company (the "Co-Venturer"), an
affiliate of Realty. Each Joint Venture acquired (on an unleveraged basis),
operates, held for investment, and has sold or is in the process of selling,
income producing, commercial properties (individually, a "Property",
collectively, the "Properties").
The Partnership is the managing partner of each Joint Venture, responsible for
management of the day-to-day operations and implementing the joint decisions of
the Joint Venture's partners.
Capitalized terms used in these Notes to Financial Statements, unless otherwise
defined herein, shall have the meanings set forth in Section 2 of the
Partnership Agreement.
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
As discussed in further detail in Note 3, on July 1, 1996, the limited partners
of the Partnership approved the dissolution of the Partnership. As a result,
the Partnership has changed its basis of accounting for the period subsequent to
June 30, 1996, from the historical cost basis to the liquidation basis. Under
the liquidation basis of accounting, the Partnership's assets at December 31,
1996 are reported at their estimated net realizable values less costs to
dispose, and the Partnership's liabilities are presented at estimated settlement
amounts.
It is not presently determinable whether the amounts realizable from the
disposition of the remaining assets will differ materially from the amounts
shown in the accompanying financial statements.
The accompanying statements of operations, partners' capital and cash flows for
the 1996 reporting period were prepared using the historical cost basis of
accounting for the first six months of the year since the liquidation basis of
accounting was adopted effective June 30, 1996. For the years ended December
31, 1995 and 1994, such statements have been presented on a historical cost
basis. The balance sheet at December 31, 1995 is also presented on the
historical cost basis.
F-10
<PAGE>
The accompanying financial statements include the accounts of the Partnership
including its investments in NYLIFE Realty Partners I - General Partnership A
(Cornell), General Partnership C (Eden Woods), and General Partnership D
(NewMarket) (collectively, the "Joint Ventures") to which the equity method of
accounting has been applied.
PRINCIPLES OF REPORTING
The accompanying financial statements are prepared under generally accepted
accounting principles using the accrual basis of accounting. Accordingly,
revenues are recognized as earned and expenses are recognized as incurred.
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.
CASH AND CASH EQUIVALENTS
Highly liquid debt instruments (primarily consisting of commercial paper)
purchased with a maturity of three months or less are considered cash
equivalents and are stated at cost which approximates market value.
INVESTMENTS IN REAL ESTATE JOINT VENTURES
The Partnership accounts for its investments in real estate joint ventures using
the equity method of accounting. Equity in income (loss) from Joint Venture
operations is recognized as earned and cash distributions received are accounted
for as a reduction of the related investment (see Note 5).
Investments in real estate Joint Ventures at December 31, 1996 are recorded at
net realizable value. The fair value of Cornell was based on an appraisal
performed on December 15, 1995 less estimated costs to sell. Joint Venture A
has entered into a letter of intent to sell Cornell for an amount in excess of
its appraised value. See Note 12 - Subsequent Events. Joint Venture C was sold
on December 30, 1996 to an unrelated third party for $9,200,000. Joint Venture
D has received preliminary indications of interest in NewMarket for amounts
substantially less than its last appraisal. The Partnership's investment in
Joint Venture D has been adjusted downward and reflects an amount consistent
with the recent third party indications of interest. For all other assets and
liabilities presented on the liquidation basis of accounting, the General
Partner believes that historical cost approximates fair market value. The net
effect of the revaluation of the Partnership's assets and liabilities due to the
adoption of the liquidation basis of accounting was a downward adjustment of
$2,608,667. Such amount includes write-downs of properties and related assets
of $2,064,792, which is included in equity in loss from joint venture
operations on the accompanying statement of operations for the six months
ended June 30, 1996 and the statement of changes in net assets in liquidation
for the period from July 1, 1996 to December 31, 1996, and the write-off of
interest and acquisition fees of $543,875 which is included on the
accompanying statement of changes in net assets in liquidation for the period
from July 1, 1996 to December 31, 1996.
In connection with the dissolution of the Partnership, the Joint Ventures
changed their investment strategy from a long-term hold strategy to a held for
sale strategy as the Joint Ventures are actively marketing the Properties for
sale.
F-11
<PAGE>
INCOME TAXES
No provision for income taxes has been made in the financial statements since
these taxes are the responsibility of the individual partners rather than the
Partnership.
NOTE 3 - LIQUIDATION
Two class action lawsuits were filed against the Co-Venturer and certain other
affiliates of the General Partners in the District Court of Harris County, Texas
on January 11, 1996, styled Grimshawe v. New York Life Insurance Co., et al.
(No. 96-001188) and Shea v. New York Life Insurance Co., et al. (No. 96-001189)
alleging misconduct in connection with the original sale of investment units in
various partnerships, including violation of various federal and state laws and
regulations and claims of continuing fraudulent conduct. The plaintiffs asked
for compensatory damages for their lost original investment, plus interest,
costs (including attorneys fees), punitive damages, disgorgement of any
earnings, compensation and benefits received by the defendants as a result of
the alleged actions and other unspecified relief to which plaintiffs might have
been entitled. These suits were amended and refiled in a consolidated action in
the United States District Court for the Southern District of Florida (the
"Court") on March 18, 1996. In the federal action, the plaintiffs added NYLIFE
Realty as a defendant and included allegations concerning the Partnership. The
plaintiffs purported to represent a class of all persons (the "Class") who
purchased or otherwise assumed rights and title to interests in certain limited
partnerships, including the Partnership, and other programs created, sponsored,
marketed, sold, operated or managed by the defendants (the "Proprietary
Partnerships").
The defendants expressly denied any wrongdoing alleged in the complaint and
conceded no liability or wrongdoing in connection with the sale of the Units or
the structure of the Proprietary Partnerships. Nevertheless, to reduce the
burden of protracted litigation, the defendants entered into a Stipulation of
Settlement (the "Settlement Agreement") with the plaintiffs because in their
opinion such Settlement would (i) provide substantial benefits to the Class in a
manner consistent with New York Life Insurance Company's position that it had
previously determined to wind up most of the Proprietary Partnerships, including
the Partnership, through orderly liquidation as the continuation of the business
no longer serves the intended objectives of either the owners of interests in
such Proprietary Partnerships or the defendants and to offer the investors an
enhancement to the liquidating distribution they would otherwise receive and
(ii) provide an opportunity to wind up such partnerships on a schedule favorable
to the Class and resolve the issues raised by the lawsuit.
In coordination with the proposed settlement, the General Partners solicited the
approval of the limited partners for the dissolution of the Partnership. On
July 1, 1996, the expiration date for the solicitation of such consents, the
limited partners of the Partnership approved the dissolution, and termination of
the Partnership. NYLIFE Realty Inc., as liquidator, has commenced the process
of winding up the Partnership.
Final approval of the Settlement Agreement was given by the Court on July 3,
1996. The Settlement Agreement became final on August 5, 1996, the date on
which the period for appeal of the Settlement Agreement expired. Cash Payments
(comprised of a Liquidation Advance and either a Refund or an Enhancement, as
defined in the Settlement Agreement)
F-12
<PAGE>
were made by NYLIFE Realty to settling limited partners in August, September
and November of 1996. Each settling limited partner granted a security
interest in favor of NYLIFE Realty in his units of limited partnership
interest and liquidating distributions up to the amount of the settling
limited partner's Liquidation Advance to secure repayment thereof.
Accordingly, liquidating distributions for settling limited partners will be
first applied to repay the Liquidation Advance and any remaining liquidating
distributions will be made to the partners. However, upon the sale of the
Partnership's remaining assets, payment of the Partnership's liabilities and
provision for contingent liabilities, the Partnership does not expect to have
cash sufficient to repay the entire Liquidation Advance. In such a
circumstance, partners would not receive any additional distributions from the
Partnership nor would any partner have an obligation to repay any unpaid
Liquidation Advance.
Under the terms of the Settlement Agreement, each settling limited partner
received a complete return of his original investment, less distributions
received prior to the final Settlement date. In exchange for the Settlement
benefits, the settling limited partners released any and all claims that the
settling limited partner may have had against the defendants in connection with
any and all causes of action related to the Proprietary Partnerships and all
activities related to the dissolution and liquidation of such partnerships.
As of December 31, 1996, no liquidating distributions have been made to the
partners.
As part of the liquidation process, the Partnership has sold its indirect
interest in the Property known as Eden Woods Business Center as discussed in
ITEM 2. PROPERTIES. In addition, the Partnership has entered into an Agreement
of Sale and Purchase dated February 28, 1997 for the sale of the Cornell Plaza
Office Building. Subsequent to the sale of Cornell, the Partnership's remaining
asset will be its joint venture interest in NewMarket Shopping Center. The
Partnership is currently actively seeking to sell such remaining property. SEE
ITEM 2. PROPERTIES for further information regarding the property sales and
operations.
NOTE 4 - THE PARTNERSHIP AGREEMENT
The Partnership Agreement, dated June 10, 1987, provides that net cash from
operations, as defined, for each fiscal year will be distributed on a quarterly
basis, 99% to the Limited Partners and 1% to the General Partners until each
Limited Partner has received a 6% annual return. Any remaining net cash from
operations will first be distributed to the General Partners until the General
Partners have received an additional 9% of the aggregate net cash from
operations distributed to all partners. Thereafter, net cash from operations
will be distributed 99% to the Limited Partners and 1% to the General Partners.
Net proceeds from sales of Properties shall be distributed first, 100% to the
Limited Partners until each Limited Partner has received an amount equal to his
capital contribution; second, 100% to the Limited Partners until each Limited
Partner has received aggregate distributions from all sources (other than the
proceeds previously referred to) equal to a 6% cumulative return; third, after
payment of the subordinated disposition fee to the General Partners, if any,
100% to the Limited Partners until each Limited Partner has received aggregate
distributions from all sources (other than the proceeds first mentioned) equal
to a 10% cumulative return;
F-13
<PAGE>
and fourth, any remaining proceeds will be distributed 85% to the Limited
Partners and 15% to the General Partners.
As discussed in Note 3, pursuant to the Settlement Agreement, the General
Partners solicited the approval of the limited partners for the dissolution of
the Partnership. On July 1, 1996, the expiration date for the solicitation of
such consents, the limited partners of the Partnership approved the dissolution,
and termination of the Partnership. NYLIFE Realty Inc., as liquidator, has
commenced the process of winding up the Partnership. Upon approval, the
settling limited partners granted NYLIFE Realty a security interest in such
settling limited partners units and Liquidating Distributions up to the amount
of the Liquidation Advance.
NOTE 5 - INVESTMENT IN REAL ESTATE JOINT VENTURES
Since inception, the Partnership and Co-Venturer have acquired four commercial
properties, Cornell Plaza Office Building ("Cornell"), Parklane Office Building
("Parklane"), Eden Woods Business Center ("Eden Woods") and NewMarket Shopping
Center ("NewMarket") through investments in Joint Ventures ("Joint Ventures A,
B, C and D" respectively) as follows:
<TABLE>
Date
Acquired
Joint Property Rentable by Purchase Partnership Interest at
Venture Name Location Sq. Ft. Partnership Price 12/31/96 12/31/95
- ------- -------- -------- -------- ----------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
A (3) Cornell Blue Ash, OH 85,625 3/30/88 $9,550,000 60% 60%
B (1) Parklane Brentwood, TN 107,523 6/29/88 $9,600,000 - -
C (2) Eden Woods Eden Prairie, MN 165,866 8/23/88 $10,900,000 47.06% 47.06%
D NewMarket Columbus, OH 172,833 12/22/88 $15,500,000 43.82% 43.82%
</TABLE>
(1) As discussed below, Parklane was sold on December 6, 1994. Joint Venture B
was liquidated in 1995.
(2) As discussed below, Eden Woods was sold on December 30, 1996.
(3) As discussed below, Cornell is expected to be sold on or about April 3,
1997.
MINIMUM RENT PAYMENTS
Future minimum rental income to be received from non-cancelable operating
leases as of December 31, 1996 for NewMarket is as follows:
1997 $1,099,600
1998 1,083,341
1999 986,621
2000 889,851
2001 731,609
Thereafter 3,338,008
----------
$8,129,030
----------
----------
F-14
<PAGE>
Base rent in 1996, 1995 and 1994 was $2,650,499, $2,703,146 and $3,875,542
excluding escalations, respectively.
Generally, lease terms are for 3 to 5 years and allow for increases in certain
property operating expenses to be passed through to the tenants.
JOINT VENTURE A - CORNELL
During the years ended December 31, 1996 and 1995, various leasing and capital
improvement costs were incurred as follows:
1996 1995
-------- --------
Tenant improvements $365,104 $ 21,663
-------- --------
-------- --------
Building improvements $ - $314,554
-------- --------
-------- --------
Leasing commissions $ - $ 16,882
-------- --------
-------- --------
Rent concessions $ - $ 12,655
-------- --------
-------- --------
During 1996 and 1995, the Partnership received distributions from Cornell of
$250,698 and $280,761, respectively.
Occupancy at Cornell decreased from 97% to 88% during 1996.
Pursuant to an Agreement of Sale and Purchase dated February 28, 1997, Joint
Venture A is expected to sell Cornell, along with the underlying land and
related improvements, to ERI Cornell, Inc., an unrelated third party, for an
amount in excess of its carrying amount. The transaction is expected to close
on or about April 3, 1997 although the closing may be extended by the agreement
of the parties.
JOINT VENTURE B - PARKLANE
On December 6, 1994 pursuant to a Purchase and Sale Agreement dated October 7,
1994, Joint Venture B sold Parklane, along with the underlying land and related
improvements, to Principal Mutual Life Insurance Company for $5,600,000 which
represented approximately 127% of its appraised value of $4,400,000 at November
30, 1993.
JOINT VENTURE C - EDEN WOODS
On December 30, 1996, pursuant to a Purchase and Sale Agreement dated
November 26, 1996, Joint Venture C sold Eden Woods, along with the underlying
land and related improvements, to Principal Mutual Life Insurance Company for
$9,700,000 which represents approximately 105% of its appraised value of
$9,200,000 at December 31, 1995.
Joint Venture C will be liquidated during the second quarter of 1997. At
such time, liquidating distributions will be paid to the Partnership and the
Co-Venturer.
JOINT VENTURE D - NEWMARKET
During 1996, substantial tenant improvements were made at NewMarket to
accommodate a lease with Powerhouse Gym. Such improvements were funded by
cash flow from operations as well as capital contributions by the Partnership
and the Co-Venturer during 1996. During
F-15
<PAGE>
1996, the Partnership and the Co-Venturer contributed $180,556 and $231,391
of additional capital, respectively.
Occupancy at NewMarket decreased from 93% to 86% during 1996.
During 1996 and 1995 various leasing and capital improvement costs were
incurred as follows:
1996 1995
-------- --------
Tenant improvements $413,163 $ 4,500
-------- --------
-------- --------
Building improvements $ - $ 2,521
-------- --------
-------- --------
Rent concessions $ - $ 2,454
-------- --------
-------- --------
During 1996 and 1995, the Partnership received distributions from New Market
of $162,752 and $352,144, respectively.
Joint Venture D has entered into a letter of intent with an unrelated third
party for the sale of NewMarket.
The terms of the Partnership Agreement, dated June 10, 1987, provide that all
Joint Venture income, losses and distributions, generally, will be apportioned
pro-rata among the Partnership and the Co-Venturer in proportion to their
respective contributions (exclusive of the Partnership's contribution for
Acquisition Fees).
A summary of the condensed combined financial information for the Joint
Ventures as of December 31, 1996 and 1995 is presented below:
<TABLE>
1995
1996 ------------
----------------------------------------------------- HISTORICAL
LIQUIDATION BASIS COST BASIS
----------------------------------------------------- ------------
EDEN COMBINED COMBINED
CORNELL WOODS (1) NEWMARKET TOTAL TOTAL
----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Joint venture property $ 7,203,088 $ - $ 5,994,703 $ 13,197,791 $ 25,649,326
Other assets 444,699 9,890,661 464,896 10,800,256 1,902,645
Accrued liabilities (464,915) (261,654) (226,671) (953,240) (553,115)
Co-Venturer's equity (2,822,077) (5,131,486) (3,985,617) (11,939,180) (14,002,704)
----------- ----------- ----------- ------------ ------------
Partnership's equity in
Joint Ventures $ 4,360,795 $ 4,497,521 $ 2,247,311 $ 11,105,627 $ 12,996,152
----------- ----------- ----------- ------------ ------------
----------- ----------- ----------- ------------ ------------
Represented by:
Partnership's net equity
investment in Joint Ventures
at January 1 $ 4,905,324 $ 4,804,232 $ 3,906,803 $ 13,616,359 $ 17,440,482
Capital contributions 63,000 - 180,556 243,556 -
Joint Venture (loss) income (356,831) (124,473) (1,198,126) (1,679,430) 274,084
Cash distributions (250,698) (36,205) (167,752) (454,655) (4,098,209)
----------- ----------- ----------- ------------ ------------
4,360,795 4,643,554 2,721,481 11,725,830 13,616,357
Interest - (72,377) (300,910) (373,287) (373,287)
Acquisition fees - (73,656) (173,260) (246,916) (246,916)
Amortization of interest and
acquisition fees (2) - - - - 25,397
----------- ----------- ----------- ------------ ------------
Partnership's investment in
Joint Ventures at December 31 $ 4,360,795 $ 4,497,521 $ 2,247,311 $ 11,105,627 $ 13,021,551
----------- ----------- ----------- ------------ ------------
----------- ----------- ----------- ------------ ------------
</TABLE>
F-16
<PAGE>
The following is a summary of the condensed combined operations of the Joint
Ventures for the years ended December 31, 1996, 1995 and 1994. Such
information is presented on a combined basis for the 1996 periods prior to
and subsequent to the adoption of the liquidation basis of accounting.
<TABLE>
1996 1995 1994
------------------------------------------------------ ------------------------
LIQUIDATION BASIS HISTORICAL COST BASIS
------------------------------------------------------ ------------------------
EDEN COMBINED COMBINED COMBINED
CORNELL (4) WOODS NEWMARKET TOTAL TOTAL TOTAL
----------- --------- ----------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net operating income $ 146,350 $ 250,127 $ 287,743 $ 684,220 $538,467 $1,051,960
Interest income 5,481 15,707 6,555 27,743 29,967 67,190
Effect of adoption of liquidation
basis of accounting (746,549) (744,162) (2,890,660) (4,381,371) - -
Gain on sale of property (1,3) - 213,830 - 213,830 - 294,687
--------- --------- ----------- ----------- ---------- ----------
Net (loss) income $(594,718) $(264,498) $(2,596,362) $(3,455,578) $568,434 $1,413,837
--------- --------- ----------- ----------- ---------- ----------
--------- --------- ----------- ----------- ---------- ----------
Net (loss) income allocated:
To Co-Venturer $(237,887) $(140,025) $(1,398,236) $(1,776,148) $ 294,350 $ 647,944
To Partnership (356,831) (124,473) (1,198,126) (1,679,430) 274,084 765,893
--------- --------- ----------- ----------- ---------- ----------
$(594,718) $(264,498) $(2,596,362) $(3,455,578) $ 568,434 $1,413,837
--------- --------- ----------- ----------- ---------- ----------
--------- --------- ----------- ----------- ---------- ----------
</TABLE>
(1) As discussed above, Eden Woods was sold on December 30, 1996.
(2) As of January 1, 1995, the Partnership commenced amortizing acquisition
fees prospectively. Such amortization is recorded against the Partnership's
equity in investments in Joint Ventures C and D. The remaining unamortized
interest and acquisition fees were written-off in 1996 in connection with the
liquidation basis of accounting.
(3) As discussed above, Parklane was sold on December 6, 1994.
(4) As discussed above, Cornell is expected to be sold on or about April 3,
1997.
NOTE 6 - MANAGEMENT OF REAL ESTATE JOINT VENTURES
In order to provide quality asset management consistent with the goals and
objectives of the Partnership, the three remaining Joint Ventures contracted
with Greystone Realty Corporation ("Greystone"), an affiliate of the
Co-Venturer and the General Partners, to provide property management services
for the Joint Ventures. Greystone has been managing the Joint Ventures since
July 1, 1989. Greystone has contracted with local property managers and
leasing agents separately in accordance with the terms and conditions
approved by the management of each Joint Venture.
NOTE 7 - TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES
The following is a summary of the amounts earned by the General Partners and
their affiliates for the years ended December 31, 1996, 1995 and 1994, as
defined in the Partnership Agreement:
1996 1995 1994
-------- -------- --------
Property management fees (1) $138,660 $138,660 $171,972
Reimbursement of general and
administrative expenses paid
by the General Partner 100,000 100,000 100,000
-------- -------- --------
$238,660 $238,660 $271,972
-------- -------- --------
-------- -------- --------
F-17
<PAGE>
The above amounts are allocable to the General Partners and their affiliates
as follows:
1996 1995 1994
-------- -------- --------
NYLIFE Realty Inc. $100,000 $100,000 $100,000
Greystone Realty Corporation 138,660 138,660 171,972
-------- -------- --------
$238,660 $238,660 $271,972
-------- -------- --------
-------- -------- --------
(1) Costs associated with property management fees are borne by the Joint
Ventures.
NOTE 8 - CAPITAL CONTRIBUTIONS AND ALLOCATION OF NET INCOME TO LIMITED PARTNERS
As of December 31, 1996 and 1995, the Partnership had issued 2,833,925.5
Units in exchange for an aggregate of $28,339,255 in Limited Partner capital
contributions. Net income or loss and cash distributions from operations for
any fiscal year shall be allocated 99% to the Limited Partners and 1% to the
General Partners.
As discussed in Note 3, pursuant to the Settlement Agreement, the General
Partners solicited the approval of the limited partners for the dissolution
of the Partnership. On July 1, 1996, the expiration date for the solicitation
of such consents, the limited partners of the Partnership approved the
dissolution, and termination of the Partnership. NYLIFE Realty Inc., as
liquidator, has commenced the process of winding up the Partnership.
NOTE 9 - RECONCILIATION OF NET INCOME TO TAXABLE INCOME
The following table reconciles net (loss) income for financial reporting
purposes to taxable income for Federal income tax reporting purposes for the
years ended 1996, 1995 and 1994. The differences are due primarily to (i)
differences between the tax and financial statement basis of buildings and
improvements, (ii) the depreciating of real estate on a straight-line basis
for financial reporting purposes while using accelerated methods for tax
reporting purposes, (iii) recognition of rental income on a straight-line
basis for financial reporting purposes and based upon the contractual minimum
rental payments for tax reporting purposes and (iv) the timing of the
recognition of gains and losses on sale of the properites.
1996 1995 1994
----------- -------- -----------
Net (loss) income for financial
reporting purposes $(2,401,416) $157,197 $ 615,369
Difference between tax and
financial statement depreciation (118,612) 264,490 189,828
Adjustment for straight line rent 221,748 39,252 14,382
Adjustment for bad debt reserve - - (18,150)
Difference between tax and
financial statements related
to sales of properties (528,993) - (1,957,254)
Loss on write-down of properties
and related assets 2,620,765 - -
Difference between tax and
financial statement amortization (34,925) 25,397 -
----------- -------- -----------
Net (loss) income for income tax
reporting purposes $ (241,433) $486,336 $(1,155,825)
----------- -------- -----------
----------- -------- -----------
F-18
<PAGE>
NOTE 10 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments," requires disclosure of fair value information
about financial instruments, whether or not recognized on the accompanying
financial statements, for which it is practical to estimate that value.
Management believes that, due to the short term nature of cash equivalents, the
carrying amounts reported on the statement of net assets in liquidation as of
December 31, 1996 and the balance sheet as of December 31, 1995 approximate
their fair value.
NOTE 11 - ADOPTION OF NEWLY ISSUED PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board issued Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of." In connection with the adoption of the liquidation
basis of accounting (Note 2), the underlying Joint Venture Properties were
written down to their net realizable values less estimated costs to dispose and
the Partnership recorded a downward adjustment totaling $2,064,792, which is
included in equity in loss from joint venture operations on the accompanying
statement of operations for the six months ended June 30, 1996 and the statement
of changes in net assets in liquidation for the period from July 1, 1996 to
December 31, 1996.
NOTE 12 - SUBSEQUENT EVENT
CORNELL
Pursuant to an Agreement of Sale and Purchase dated February 28, 1997, Joint
Venture A is expected to sell Cornell, along with the underlying land and
related improvements, to ERI Cornell, Inc., an unrelated third party, for an
amount in excess of its carrying amount. The transaction is expected to
close on or about April 3, 1997.
F-19
<PAGE>
CORNELL PLAZA OFFICE BUILDING, PARKLANE OFFICE BUILDING,
EDEN WOODS BUSINESS CENTER AND NEWMARKET SHOPPING CENTER
(IN THE PROCESS OF LIQUIDATION)
COMBINED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996 AND 1995
F-20
<PAGE>
Cornell Plaza Office Building, Parklane Office Building, Eden Woods Business
Center and NewMarket Shopping Center (In the Process of Liquidation)
INDEX OF COMBINED FINANCIAL STATEMENTS
PAGE NO.
--------
Report of Independent Public Accountants F-22
Combined Statement of Net Assets in Liquidation
as of December 31, 1996 F-23
Combined Statement of Changes in Net Assets in Liquidation
from July 1, 1996 to December 31, 1996 F-24
Combined Balance Sheet as of December 31, 1995 F-25
Combined Statements of Operations for the Six Months Ended
June 30, 1996 and the Years Ended December 31, 1995 and 1994 F-26
Combined Statements of Changes in Partners' Capital
for the Six Months Ended June 30, 1996 and the Years Ended
December 31, 1995 and 1994 F-27
Combined Statements of Cash Flows for the Six Months Ended
June 30, 1996 and the Year Ended December 31, 1995 F-28
Notes to Combined Financial Statements F-29 to F-33
F-21
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of NYLIFE Realty Income Partners, I, L.P.
We have audited the accompanying combined balance sheet of Cornell Plaza
Office Building, Eden Woods Business Center and NewMarket Shopping Center
(all Delaware joint ventures) (collectively, the "Joint Ventures") as of
December 31, 1995 and the related combined statements of operations, changes
in partners' capital and cash flows for the years ended December 31, 1995 and
1994 and the combined statements of operations, changes in partners' capital
and cash flows for the period from January 1, 1996 to June 30, 1996. In
addition, we have audited the combined statement of net assets in liquidation
as of December 31, 1996, and the related combined statement of changes in net
assets in liquidation for the period from July 1, 1996 to December 31, 1996.
These financial statements are the responsibility of the general partner of
NYLIFE Realty Income Partners I, L.P. (the "Partnership"). Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
general partner, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
As described in Note 1 to the combined financial statements, the limited
partners of the Partnership approved a plan of liquidation on July 1, 1996, and
the Partnership and the Joint Ventures commenced liquidation shortly thereafter.
As a result, the Partnership and the Joint Ventures have changed their basis of
accounting for periods subsequent to June 30, 1996, from the going-concern basis
to the liquidation basis. Accordingly, the carrying amounts of the remaining
assets as of December 31, 1996, are presented at estimated realizable values and
all liabilities are presented at estimated settlement amounts.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of Cornell Plaza
Office Building, Eden Woods Business Center and NewMarket Shopping Center as
of December 31, 1995 and the combined results of their operations and their
cash flows for each of the two years in the period ended December 31, 1995,
and for the period from January 1, 1996 to June 30, 1996, its net assets in
liquidation as of December 31, 1996, and the changes in its net assets in
liquidation for the period from July 1, 1996 to December 31, 1996 in
conformity with generally accepted accounting principles applied on the bases
described in the preceding paragraph.
ARTHUR ANDERSEN LLP
New York, New York
March 20, 1997
F-22
<PAGE>
CORNELL PLAZA OFFICE BUILDING,
EDEN WOODS BUSINESS CENTER AND NEWMARKET SHOPPING CENTER
COMBINED STATEMENT OF NET ASSETS IN LIQUIDATION
AS OF DECEMBER 31, 1996
1996
--------------
ASSETS
Property held for disposition $ 13,197,791
Cash and cash equivalents 10,721,539
Other assets 78,717
--------------
Total assets $ 23,998,047
--------------
--------------
LIABILITIES
Accrued real estate taxes 211,103
Accrued liabilities 742,137
--------------
Total liabilities 953,240
--------------
Net Assets $ 23,044,807
--------------
--------------
The accompanying Notes to Financial Statements are
an integral part of this statement.
F-23
<PAGE>
CORNELL PLAZA OFFICE BUILDING,
EDEN WOODS BUSINESS CENTER AND NEWMARKET SHOPPING CENTER
COMBINED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
FOR THE PERIOD FROM JULY 1, 1996 THROUGH DECEMBER 31, 1996
1996
--------------
Net assets at July 1, 1996 $ 24,267,654
Rental income 2,184,088
Interest income 13,733
Operating expenses (796,689)
Real estate taxes (369,786)
Gain on sale of property 213,830
Revision to estimated sales value of property (2,468,023)
--------------
Decrease in net assets (1,222,847)
--------------
Net Assets at December 31, 1996 $ 23,044,807
--------------
--------------
The accompanying Notes to Financial Statements are
an integral part of this statement.
F-24
<PAGE>
CORNELL PLAZA OFFICE BUILDING, PARKLANE OFFICE BUILDING,
EDEN WOODS BUSINESS CENTER AND NEWMARKET SHOPPING CENTER
COMBINED BALANCE SHEET
DECEMBER 31, 1995
1995
--------------
ASSETS
Investment property $ 25,649,326
Cash and cash equivalents 789,631
Deferred leasing costs - net 786,511
Other assets 326,503
--------------
Total assets $ 27,551,971
--------------
--------------
LIABILITIES AND PARTNERS' CAPITAL
Accrued real estate taxes $ 298,602
Accrued liabilities 254,513
Partners' capital 26,998,856
--------------
Total liabilities and partners' capital $ 27,551,971
--------------
--------------
The accompanying Notes to Financial Statements are
an integral part of this statement.
F-25
<PAGE>
CORNELL PLAZA OFFICE BUILDING, PARKLANE OFFICE BUILDING (NOTE 4),
EDEN WOODS BUSINESS CENTER AND NEWMARKET SHOPPING CENTER
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
Six Months For the Year For the Year
Ended Ended Ended
June 30, December 31, Decmber 31,
1996 1995 1994
------------- ------------- ------------
<S> <C> <C> <C>
INCOME
Rental Income 1,665,144 $ 4,286,900 $ 5,817,251
Interest 14,010 29,967 67,190
------------ ------------ ------------
Total income 1,679,154 4,316,867 5,884,441
EXPENSES
Operating 828,199 1,495,365 2,194,574
Real estate taxes 370,105 616,120 786,738
Depreciation and amortization 800,237 1,636,948 1,783,979
------------ ------------ ------------
Total expenses 1,998,541 3,748,433 4,765,291
------------ ------------ ------------
(Loss) income before gain on sale of property and
effect of adoption of liquidation basis of accounting (319,387) 568,434 1,119,150
Gain on sale of property - - 294,687
Effect of adoption of liquidation basis of accounting (1,913,344) - -
------------ ------------ ------------
Net (loss) income (2,232,731) 568,434 1,413,837
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of these statements.
F-26
<PAGE>
CORNELL PLAZA OFFICE BUILDING, PARKLANE OFFICE BUILDING (NOTE 4),
EDEN WOODS BUSINESS CENTER AND NEWMARKET SHOPPING CENTER
COMBINED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1996
AND FOR THE YEARS ENDED DECEMBER 31, 1995, AND 1994
<TABLE>
New York NY LIFE
Life Realty Total
Insurance Income Partners'
Company Partners I, L.P. Capital
------------- ---------------- --------------
<S> <C> <C> <C>
Capital at January 1, 1994 $ 17,147,352 $ 17,622,786 $ 34,770,138
Capital contributions 155,059 - 155,059
Net income 647,944 765,893 1,413,837
Distributions to partners (1,303,960) (1,568,400) (2,872,360)
------------- ------------- -------------
Capital at December 31, 1994 16,646,395 16,820,279 33,466,674
Net income 294,351 274,083 568,434
Distributions to partners (2,938,043) (4,098,209) (7,036,252)
------------- ------------- -------------
Capital at December 31, 1995 14,002,703 12,996,153 26,998,856
Net (loss) (1,093,723) (1,139,008) (2,232,731)
Distributions to partners (239,673) (258,798) (498,471)
------------- ------------- -------------
Capital at June 30, 1996 $ 12,669,307 $ 11,598,347 $ 24,267,654
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of these statements.
F-27
<PAGE>
CORNELL PLAZA OFFICE BUILDING,
EDEN WOODS BUSINESS CENTER AND NEWMARKET SHOPPING CENTER
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
For the Year
For the Ended
Six Months Ended December 31,
June 30, 1996 1995
----------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (2,232,731) $ 568,434
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Effect of adoption of the liquidation basis of accounting 1,913,344 -
Depreciation and amortization 800,237 1,638,948
Changes in assets and liabilities:
Increase in deferred leasing costs - (126,782)
Decrease in other assets 238,996 253,884
Decrease in accrued real estate taxes (148,336) (33,710)
(Decrease) increase in accrued liabilities 67,314 (103,492)
------------- -------------
Total adjustments 2,871,555 1,626,848
------------- -------------
Net cash provided by operating activities 638,824 2,195,282
------------- -------------
Cash flows from investing activities:
Investments in property (70,154) (556,894)
------------- -------------
Net cash (used in) investing activities (70,154) (556,894)
------------- -------------
Cash flows from financing activities:
Distributions to partners (498,471) (7,036,252)
------------- -------------
Net cash (used in) financing activities (498,471) (7,036,252)
------------- -------------
Net increase (decrease) in cash and cash equivalents 70,199 (5,397,864)
Cash and cash equivalents at beginning of period 789,631 6,187,495
------------- -------------
Cash and cash equivalents at end of period $ 859,830 $ 789,631
------------- -------------
------------- -------------
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of these statements.
F-28
<PAGE>
CORNELL PLAZA OFFICE BUILDING, PARKLANE OFFICE BUILDING,
EDEN WOODS BUSINESS CENTER AND NEWMARKET SHOPPING CENTER
(IN THE PROCESS OF LIQUIDATION)
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF COMBINATION
Cornell Plaza Office Building ("Cornell"), Parklane Office Building
("Parklane"), Eden Woods Business Center ("Eden Woods") and NewMarket
Shopping Center ("NewMarket") (individually, a "Property", collectively, the
"Properties") are commercial real estate properties acquired by four separate
joint ventures (the "Joint Ventures"). As of December 31, 1996, Cornell and
NewMarket are owned 60% and 43.82%, respectively, by NYLIFE Realty Income
Partners I, L.P. (the "Partnership"). The remaining equity interests are
held by New York Life Insurance Company (the "Co-Venturer") an affiliate of
NYLIFE Realty Inc. (the "NYLIFE General Partner"), a co-general partner of
the Partnership. The Properties were acquired on March 30, June 29, August
23, and December 22, 1988, respectively. Parklane and Eden Woods were sold
on December 6, 1994 and December 30, 1996, respectively. See Note 4 "The
Properties" for a further discussion of the sales. The accompanying combined
financial statements include the individual accounts of the Properties, as
all four entities are affiliated under common ownership.
On July 1, 1996, the limited partners of the Partnership approved the
dissolution of the Partnership. As a result, each Joint Venture has changed
its basis of accounting for the period subsequent to June 30, 1996, from the
historical cost basis to the liquidation basis. Under the liquidation basis
of accounting, each Joint Venture's assets at December 31, 1996 are reported
at their estimated net realizable values, and each Joint Venture's
liabilities are presented at estimated settlement amounts.
It is not presently determinable whether the amounts realizable from the
disposition of the remaining assets will differ materially from the amounts
shown in the accompanying combined financial statements.
CASH AND CASH EQUIVALENTS
Highly liquid debt instruments (primarily consisting of commercial paper)
purchased with a maturity of three months or less are considered cash
equivalents and are stated at cost which approximates market value.
RENTAL INCOME
Prior to June 30, 1996, rental income was recognized on a straight-line basis
over the related lease terms. Pursuant to the adoption of the liquidation
basis of accounting, these amounts were written off during 1996 and rental
income is currently recorded when due, pursuant to the tenant leases.
Escalation rents and other charges which, pursuant to the terms of the
related leases, have been billed or are billable to tenants, are included in
rental income and are recorded on the accrual basis of accounting.
F-29
<PAGE>
DEFERRED LEASING COSTS
As an inducement to execute a lease, the Properties may offer incentives such
as rent abatements. Prior to June 30, 1996, these costs and other direct
lease costs, such as leasing commissions, were classified as deferred leasing
costs and were amortized on a straight-line basis over the terms of the
related leases. Pursuant to the adoption of the liquidation basis of
accounting, these amounts were written off during 1996.
BUILDINGS AND IMPROVEMENTS
The buildings were carried at their original cost, including acquisition fees
and expenses plus capital expenditures and improvements since acquisition,
less property value write-downs, and prior to June 30, 1996, were depreciated
over an estimated useful life of 31.5 years on a straight-line basis.
Building improvements were recorded at cost and prior to June 30, 1996, were
depreciated on a straight-line basis over the remaining life of the building.
Tenant improvements were recorded at cost and prior to June 30, 1996, were
amortized over the terms of the related leases. Expenditures for maintenance
and repairs which do not extend the useful life of the building are expensed.
Pursuant to the adoption of the liquidation basis of accounting, buildings,
building improvements and tenant improvements were not depreciated subsequent
to June 30, 1996 as the Properties were written down to their net realizable
values less estimated costs to sell.
In connection with the dissolution of the Partnership, the Joint Ventures
changed their investment strategy from a long-term hold strategy to a held
for sale strategy as the Joint Ventures are actively marketing the Properties
for sale. The Properties are presented as property held for disposition on
the accompanying combined statement of net assets in liquidation as of
December 31, 1996.
INCOME TAXES
No provision for income taxes is made in the accompanying combined financial
statements since these taxes are the responsibility of the individual
partners rather than the Joint Ventures.
NOTE 2 - MINIMUM RENT PAYMENTS
Future minimum rental income to be received from non-cancellable operating
leases as of December 31, 1996 for NewMarket is as follows:
1997 $1,099,600
1998 1,083,341
1999 986,621
2000 889,851
2001 731,609
Thereafter 3,338,008
----------
$8,129,030
----------
----------
Base rent in 1996, 1995 and 1994 was $2,650,499, $2,703,146 and $3,875,542
excluding escalations, respectively.
F-30
<PAGE>
Generally, lease terms are for 3 to 5 years and allow for increases in
certain property operating expenses to be passed through to the tenants.
NOTE 3 - RELATED PARTY TRANSACTIONS
Property management fees of $138,660, $138,660 and $171,972 were paid by the
Properties to Greystone Realty Corporation ("Greystone") during 1996, 1995 and
1994, respectively. Greystone is an affiliate of the Co-Venturer which provides
property management services to the Joint Ventures.
NOTE 4 - THE PROPERTIES
The terms of the Partnership Formation Agreement, dated June 10, 1987, provide
that all Joint Venture income, losses and distributions generally will be
apportioned pro-rata among the Partnership and the Co-Venturer in proportion to
their respective contributions (exclusive of the Partnership's contribution for
Acquisition Fees).
At December 31, 1996 and 1995, the partners' equity and ownership interests in
each of the Joint Ventures are as follows:
<TABLE>
DECEMBER 31, 1996 DECEMBER 31, 1995
------------------------------------------------ ------------------------------------------------
THE CO-VENTURER THE PARTNERSHIP THE CO-VENTURER THE PARTNERSHIP
JOINT PROPERTY ---------------------- ---------------------- ---------------------- ----------------------
VENTURE NAME EQUITY INTEREST EQUITY INTEREST EQUITY INTEREST EQUITY INTEREST
------- ----------- ---------- -------- ---------- -------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A Cornell $2,822,077 40% $4,360,795 60% $3,185,096 40% $4,905,324 60%
(1) C Eden Woods $5,131,485 52.94% $4,497,521 47.06% $5,312,239 52.94% $4,658,199 47.06%
D NewMarket $3,985,620 56.18% $2,247,311 43.82% $5,505,368 56.18% $3,432,630 43.82%
</TABLE>
At December 31, 1996 and 1995, the aggregate carrying amounts of the Properties
are as follows:
<TABLE>
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- ------------------------------------------
LIQUIDATION BASIS HISTORICAL COST BASIS
----------------- ------------------------------------------
PROPERTY
HELD FOR INVESTMENT ACCUMULATED CARRYING
PROPERTY DISPOSITION PROPERTY DEPRECIATION AMOUNT
- -------------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Cornell $ 7,203,088 $10,969,645 $(3,202,942) $ 7,766,703
Eden Woods (1) - 12,148,109 (2,802,780) 9,345,329
NewMarket 5,994,703 11,440,658 (2,903,364) 8,537,294
----------- ----------- ----------- -----------
$13,197,791 $34,558,412 $(8,909,086) $25,649,326
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
(1) As discussed below, Eden Woods was sold on December 30, 1996.
F-31
<PAGE>
CORNELL
During 1996 and 1995, various leasing and capital improvement costs were
incurred as follows:
1996 1995
-------- --------
Tenant improvements $365,104 $ 21,663
-------- --------
-------- --------
Building improvements $ - $314,554
-------- --------
-------- --------
Leasing commissions $ - $ 16,882
-------- --------
-------- --------
Rent concessions $ - $ 12,655
-------- --------
-------- --------
During 1996 and 1995, the Partnership received distributions from Cornell of
$250,698 and $280,761, respectively.
Pursuant to an Agreement of Sale and Purchase dated February 28, 1997, Joint
Venture A is expected to sell Cornell, along with the underlying land and
related improvements, to ERI Cornell, Inc., an unrelated third party, for an
amount in excess of its carrying amount. The transaction is expected to
close on or about April 3, 1997 although the closing may be extended by the
agreement of the parties.
PARKLANE
On December 6, 1994, pursuant to a Purchase and Sale Agreement dated October
7, 1994, Joint Venture B sold Parklane, along with the underlying land and
related improvements, to Principal Mutual Life Insurance Company for
$5,600,000 which represented approximately 127% of its appraised value of
$4,400,000 at November 30, 1993. Joint Venture B was liquidated in 1995.
EDEN WOODS
On December 31, 1996, pursuant to a Purchase and Sale Agreement dated
November 26, 1996, Joint Venture C sold Eden Woods, along with the underlying
land and related improvements, to Principal Mutual Life Insurance Company
$9,700,000 which represents approximately 105% of its appraised value of
$9,200,000 at December 31, 1995.
Joint Venture C will be liquidated during the second quarter of 1997. At
such time, liquidating distributions will be paid to the Partnership and the
Co-Venturer.
NEWMARKET
During 1996, substantial tenant improvements were made at NewMarket to
accommodate a lease with Powerhouse Gym. Such improvements were funded by
cash flow from operations as well as capital contributions by the Partnership
and the Co-Venturer during 1996. During 1996, the Partnership and the
Co-Venturer contributed $180,556 and $231,391 of additional capital,
respectively.
Occupancy at NewMarket decreased from 93% to 86% during 1996.
F-32
<PAGE>
During 1996 and 1995 various leasing and capital improvement costs were
incurred as follows:
1996 1995
-------- ------
Tenant improvements $413,163 $4,500
-------- ------
-------- ------
Building improvements $ - $2,521
-------- ------
-------- ------
Rent concessions $ - $2,454
-------- ------
-------- ------
During 1996 and 1995, the Partnership received distributions from New Market
of $167,752 and $352,144, respectively.
Joint Venture D has entered into a letter of intent with an unrelated third
party for the sale of NewMarket.
NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments," requires disclosure of fair value
information about financial instruments, whether or not recognized on the
accompanying financial statements, for which it is practical to estimate that
value. Management believes that, due to the short term nature of cash
equivalents, the carrying amounts reported on the combined statement of net
assets in liquidation as of December 31, 1996 and the balance sheet as of
December 31, 1995 approximate their fair value.
NOTE 6 - ADOPTION OF NEWLY ISSUED PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board issued Statement No.
121, "Accounting for the impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of." In connection with the adoption of the liquidation
basis of accounting (Note 1), the underlying Properties were written down to
net realizable values less estimated costs to dispose. Such downward adjustment
totaling $4,381,367 is included in effect of adoption of the liquidation basis
of accounting on the accompanying combined statement of operations for the six
months ended June 30, 1996 and in revision to estimated sales value of property
on the accompanying statement of changes in net assets in liquidation for the
period July 1, 1996 to December 31, 1996.
NOTE 7 - SUBSEQUENT EVENT
CORNELL
Pursuant to an Agreement of Sale and Purchase dated February 28, 1997, Joint
Venture A is expected to sell Cornell, along with the underlying land and
related improvements, to ERI Cornell, Inc., an unrelated third party, for an
amount in excess of its carrying amount. The transaction is expected to
close on or about April 3, 1997 although the closing may be extended by the
agreement of the parties.
F-33
<PAGE>
LIST OF EXHIBITS
EXHIBIT DESCRIPTION
- ------- -----------
2.1) Agreement for Purchase and Sale of Property (All Cash) by and between
NYLIFE Realty Partners I - General Partnership (C) by and through
Greystone Realty Corporation, Principal Mutual Life Insurance Company
and Chicago Title Insurance Company.*
2.2) Agreement of Sale and Purchase by and between NYLIFE Realty Partners -
I General Partnership (A) and ERI Cornell, Inc.**
3.1) Amended and Restated Agreement of Limited Partnership ("Partnership
Agreement") of the Registrant, incorporated by reference to Exhibit A to
the Prospectus of Registrant dated March 2, 1987 included in Registrant's
Registration Statement on Form S-11 (Reg. No. 33-10725).*
10.1) Form of Partnership Agreement of NYLIFE Realty Partners I - General
Partnership A (also referred to as Joint Venture Agreement) between
Registrant and the Co-Venturer.*
10.2) Partnership Formation Agreement dated June 10, 1987 between
Registrant, the NYLIFE General Partner and the Co-Venturer.*
10.3) Agreement for Sale and Purchase of Real Property, Improvements
to Realty and Personal Property dated January 19, 1988 by and between
Cornell Plaza Partners and NYLIFE Realty Partners I - General Partnership
A, as amended, incorporated by reference to Exhibit 10E to Registrant's
Registration Statement on Form S-11 (Reg. No. 33-10725).*
10.4) Agreement for Sale and Purchase of Real Property, Improvements
to Realty and Personal Property dated April 18, 1988 by and between John
Hancock Mutual Life Insurance Co. and NYLIFE Realty Partners I - General
Partnership B, as amended, incorporated by reference to Exhibit 10F to
Registrant's Registration Statement on Form S-11 (Reg. No. 33-10725).*
10.5) Agreement for Sale and Purchase of Real Property, Improvements
to Realty and Personal Property dated June 22, 1988 by and between The
Oak Associates and NYLIFE Realty Partners I - General Partnership C, as
amended, incorporated by reference to Exhibit 10G to Registrant's
Registration Statement on Form S-11 (Reg. No. 33-10725).*
10.6) Agreement for Sale and Purchase of Real Property, Improvements
to Realty and Personal Property dated September 13, 1988 by and between
NewMarket Columbus Venture and NYLIFE Realty Partners I - General
Partnership D, as amended, incorporated by reference to Exhibit 10I to
Registrant's Registration Statement on Form S-11 (Reg. No. 33-10725).*
10.7) Letter Agreement dated March 25, 1992 by and between NYLIFE
Realty Partners I - General Partnership A and Greystone Realty
Corporation.*
10.8) Letter Agreement dated March 25, 1992 by and between NYLIFE
Realty Partners I - General Partnership B and Greystone Realty
Corporation.*
10.9) Letter Agreement dated March 25, 1992 by and between NYLIFE
Realty Partners I - General Partnership C and Greystone Realty
Corporation.*
10.10) Letter Agreement dated March 25, 1992 by and between NYLIFE
Realty Partners I - General Partnership D and Greystone Realty
Corporation.*
10.11) Letter Agreement dated December 18, 1992 by and between NYLIFE
Realty Partners I - General Partnership A and Greystone Realty
Corporation.*
10.12) Letter Agreement dated December 18, 1992 by and between NYLIFE
Realty Partners I - General Partnership B and Greystone Realty
Corporation.*
10.13) Letter Agreement dated December 18, 1992 by and between NYLIFE
Realty Partners I - General Partnership C and Greystone Realty
Corporation.*
10.14) Letter Agreement dated December 18, 1992 by and between NYLIFE
Realty Partners I - General Partnership D and Greystone Realty
Corporation.*
10.15) Agreement for Purchase and Sale of Property (All Cash) by and
between NYLIFE Realty Partners I - General Partnership (B) by and
through Greystone Realty Corporation, Principal Mutual Life Insurance
Company and Chicago Title Insurance Company.*
(27) FINANCIAL DATA SCHEDULE**
- -----------------
* Previously filed.
** Filed herewith.
<PAGE>
AGREEMENT OF SALE AND PURCHASE
by and between
NYLIFE Realty Partners I - General Partnership A,
as Seller
and
ERI Cornell, Inc.,
as Purchaser
dated as of February 28, 1997
for the premises known as
CORNELL PLAZA
<PAGE>
TABLE OF CONTENTS
AGREEMENT OF SALE AND PURCHASE 2
1. Agreement to Sell and Purchase 3
2. Purchase Price 5
3. The Closing 5
4. Purchaser's and Seller's Representations and Warranties 6
5. Condition of Title 17
6. Purchaser's Inspection of the Property 19
7. Adjustments and Apportionments 22
8. Covenants of Seller 24
9. Insurance, Damage - Destruction, Condemnation 27
10. Conditions Precedent to Closing 28
11. Provisions with Respect to the Closing 30
12. Brokerage 34
13. Certiorari 34
14. Notices 35
15. Defaults 37
16. Miscellaneous Provisions 38
-1-
<PAGE>
AGREEMENT OF SALE AND PURCHASE
AGREEMENT (herein "Agreement") dated as of February 28, 1997, by and
between NYLIFE Realty Partners I-General Partnership A, a Delaware general
partnership, having an address at 51 Madison Avenue, New York, New York 10010
(herein referred to as "Seller"), and ERI Cornell, Inc., a Delaware corporation,
having an address c/o 800 Boylston Street, Suite 1475, Boston, Massachusetts
02199-8001 (herein, together with any assignee of ERI Cornell, Inc., as
permitted pursuant to Section 16.10 of this Agreement, referred to as
"Purchaser").
WHEREAS, Seller is the owner of (a) fee simple title to the real property
located in the County of Hamilton, State of Ohio, and more particularly
described on EXHIBIT A annexed hereto and made a part hereof (herein referred to
as the "Land"), together with the improvements located on the Land, or on the
surface or subsurface thereof (herein referred to as the "Improvements"; the
Land and Improvements being herein collectively referred to as the "Real
Property"), (b) landlord's interest in and to all the leases, licenses,
franchises or other occupancy agreements or concessions, including parking, of
all or a portion of the Real Property as described in EXHIBIT B hereof (herein
referred to as the "Leases") and (c) all the personal property owned by Seller
located on the Real Property, used in the operation, leasing and management of
the Real Property, and used in connection therewith as more particularly
described in EXHIBIT C annexed hereto and
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<PAGE>
made a part hereof (herein the "Personal Property"; the Real Property, the
Personal Property and Easement (hereinafter defined) being sometimes
collectively referred to herein as the "Property"); and
WHEREAS, Seller is the owner of all of the right, title and interest in and
to the Property and the Leases except as they are encumbered by the "Permitted
Exceptions" (as such term is hereinafter defined);
WHEREAS, Seller is the beneficiary of that easement reserved in the deed
dated October 16, 1978, filed for record November 3, 1978 and recorded in Deed
Book 4125, Page 358 of the Hamilton County, Ohio Registered Land Records, and
granted in the Deeds dated May 29, 1984, filed for record June 7, 1984 and
recorded in Deed Book 4259, Page 1114 of the Hamilton County, Ohio Registered
Land Records for sewer purposes over the land described in EXHIBIT A (the
"Easement");
WHEREAS, Purchaser wishes to purchase, and Seller wishes to sell, the
Property in accordance with the following terms, covenants and conditions.
NOW, THEREFORE, Seller and Purchaser for Ten ($10.00) Dollars and other
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. AGREEMENT TO SELL AND PURCHASE
1.1. Purchaser acknowledges and agrees that the mailing, delivery and/or
negotiation of this Agreement by Seller, its
-3-
<PAGE>
agents or attorneys shall not be deemed an offer by Seller to enter into any
transaction or to enter into any other relationship, whether on the terms
contained herein or on any other terms. This Agreement shall not be binding upon
Seller, nor shall Seller have any obligations or liabilities hereunder or
Purchaser have any rights hereunder unless and until Seller has executed and
delivered a duplicate original copy of this Agreement executed by Seller to
Purchaser or Purchaser's attorney.
1.2. Subject to the terms and conditions of this Agreement, Seller agrees
to sell, assign and convey to Purchaser, and Purchaser agrees to purchase the
following, free and clear of all liens, claims, encumbrances and interests
(other than the Permitted Exceptions), for the "Purchase Price" (as such term is
hereinafter defined):
(a) The Real Property together with (i) all right, title and interest of
seller in and to any land lying in the bed of any highway, street, road,
sidewalk, alley or avenue, open or proposed, in front of, abutting or adjoining
the Property; and (ii) all the appurtenances, rights, privileges and easements
in any way pertaining thereto, including any strips and gores;
(b) All of Seller's right, title and interest in the Leases;
(c) All of Seller's right, title and interest in the Personal Property;
-4-
<PAGE>
(d) All of Seller's right, title and interest in the Easement.
2. PURCHASE PRICE
2.1. The purchase price will be SEVEN MILLION FIVE HUNDRED THOUSAND AND
00/100 ($7,500,000) DOLLARS, (herein the "Purchase Price") payable by Purchaser
as follows:
(a) One Hundred Thousand and 00/100 ($100,000) Dollars as an earnest money
deposit (together with any interest earned thereon hereinafter referred to as
the "Earnest Money Deposit") delivered to Lawyers Title Insurance Corporation,
as escrow agent pursuant to a separate escrow agreement, by cashier's check,
bank check or immediately available federal funds wired to Seller pursuant to
its directions on the day of delivery of this Agreement executed by Purchaser to
Seller; and
(b) Seven Million Four Hundred Thousand and 00/100 ($7,400,000) Dollars
(the "Cash Portion"), payable by Purchaser wiring immediately available federal
funds in the amount of the Cash Portion of the Purchase Price to Seller as
directed by Seller on the "Closing Date" as such term is hereinafter defined;
and
2.2. EARNEST MONEY DEPOSIT. The Earnest Money Deposit is delivered to
Seller by Purchaser as security for Purchaser's performance pursuant to this
Agreement.
3. THE CLOSING
-5-
<PAGE>
3.1. The consummation of the transaction provided for in this Agreement
(the "Closing") shall take place on or before that date (the "Closing Date"),
which occurs fifteen (15) Business Days after the Inspection Termination Date
(hereinafter defined), at Seller's office or at such other time and place as the
parties shall mutually reasonably agree in writing. The term "Business Days" as
used in this Agreement shall mean all days except Saturdays, Sundays and all
other days on which the New York Stock Exchange is closed.
4. PURCHASER'S AND SELLER'S REPRESENTATIONS AND WARRANTIES.
4.1. A. Seller represents and warrants to Purchaser that:
(a) Seller is a general partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware, whose general
partners are New York Life Insurance Company and NYLIFE Realty Income Partners
I, L.P., and has full power and authority to execute and deliver this Agreement
and consummate the transaction contemplated herein, has taken all actions
required to be taken to execute, deliver and perform this Agreement and
consummate the transaction contemplated herein, and is not insolvent; this
Agreement has been, and all the documents executed by Seller which are to be
delivered to Purchaser at the Closing will be, duly authorized, executed, and
delivered by Seller, is, and in the case of the documents to be delivered will
be, legal, valid, and binding obligations of Seller enforceable against Seller
in accordance with their respective terms (except to the extent that such
enforcement may be limited by applicable
-6-
<PAGE>
bankruptcy, insolvency, moratorium and other principles relating to or limiting
the right of contracting parties generally), will be sufficient to convey title
(if they purport to do so), and does not, and in the case of the documents to be
delivered will not, violate any provisions of any agreement to which Seller is a
party or to which it is subject.
(b) To the best of Seller's knowledge, there are no material defects in the
physical condition of the Improvements which are not disclosed in Seller's
engineering reports which have been prepared by William J. O'Hare Company Inc.
dated March 8, 1988 or which would not be discovered by the sort of professional
engineering study typically conducted by prudent and sophisticated institutional
purchasers of properties similar to the Property.
(c) Seller has received no written notice from any governmental authority
advising Seller of a violation (or an alleged violation) of any applicable
building codes, environmental, zoning, subdivision and land use laws or other
federal, state or local laws and regulations.
(d) To the best of Seller's knowledge, the operating statements and income
and expense reports (the "Financial Statements") delivered to Purchaser for
calendar years 1994, 1995 and 1996 (1996 being from January through October
only) are true and correct in all material respects. The Financial Statements
fairly represent the results of operations of the Property as of the-end of
and for the period covered thereby.
-7-
<PAGE>
(e) To the best of Seller's knowledge, Seller has delivered to Purchaser
all items listed in EXHIBIT J which are in Seller's possession or control.
(f) The copies of the Leases and other agreements entered into by Seller
(or any prior owner) with the tenants, licensees, franchisees, or other parties
having any rights in all or a portion of the Property ("Tenants"), delivered to
Purchaser, a list of which is attached as EXHIBIT B. attached hereto and made a
part hereof, are true, correct and complete copies and are in full force and
effect, constitute the entire agreements with the Tenants relating to the
Property, have not been amended, modified or supplemented, except for such
amendments, modifications and supplements delivered to Purchaser, and there are
no other leases, licenses, franchises or other rights of occupancy affecting the
Real Property and, to the best of Seller's knowledge, are without default by any
party and without any right of setoff, except as expressly provided by the terms
of such Leases or as disclosed to Purchaser in writing at the time of delivery.
To the best of Seller's knowledge, (i) the Tenants are in possession of their
respective premises and (ii) Seller has no knowledge, and has received no
written notice, that any Tenant has filed, or is intending to file, for
bankruptcy.
(g) To the best of Seller's knowledge, (i) Seller has not received notice
that any Tenant has been overcharged for any pass-throughs or other payments due
under the Leases, (ii) there are no improvement costs or allowances due any
Tenant except as
-8-
<PAGE>
expressly set forth in the Leases and the rent roll annexed as EXHIBIT P hereto
and made a part hereof, it being agreed that Seller shall pay for the
improvement costs or allowances due Spencer & Spencer d/b/a Ciber, Zaring Homes
and Citizen's Mortgage, estimates of which amounts shall be credited to
Purchaser at the Closing (estimates are set forth on EXHIBIT L) and the
improvement costs or allowances due Benefits Network as of the Closing, if
already paid by Seller, shall be credited to Seller at the Closing, it being
further agreed that Seller shall deposit in an escrow account an amount of money
approximately equal to $248,695 to be used in connection with Hitachi's
anticipated relocation and lease extension after the Closing Date or as
otherwise set forth in an escrow agreement reasonably acceptable to both parties
to be entered at Closing generally in accordance with the terms and conditions
set forth on EXHIBIT S attached hereto and made a part hereof, (iii) no Tenant
is due any concessions including free rent which remains unexpired under the
Leases.
(h) Except for certain relocations and expansions of Tenants currently
being implemented by Seller at the Property, to the best of Seller's knowledge,
the information contained in the rent roll annexed hereto as EXHIBIT P and made
a part hereof is true, correct and complete in all material respects. The
information contained in the rent roll will be, to the best of Seller's
knowledge, true, correct and complete on the Closing Date.
-9-
<PAGE>
(i) As of the consummation of this purchase and sale transaction, there
will be no brokerage or leasing fees or commissions or other compensation due or
payable on an absolute or contingent basis to any person, firm, corporation, or
other entity, with respect to or on account of any of the Leases and no such
fees, commissions or other compensation shall, by reason of any existing
agreement, become due or payable after the Closing during the terms of any of
the Leases or with respect to any renewal or extension thereof or the leasing of
additional space by any Tenant (except as specified in EXHIBIT M attached
hereto, the payment of which will be the obligation of Purchaser).
(j) EXHIBIT N attached hereto is a schedule of all of the contracts in
connection with the maintenance and operation of the Property (the "Contracts"),
true, complete and correct copies of which will have been delivered to Purchaser
for Purchaser's approval prior to the Closing. To the best of Seller's
knowledge, the Contracts are in full force and effect, without default by any
party and without any claims made for the right of setoff, except as expressly
provided by the terms of such Contracts or as disclosed to Purchaser in writing
at the time of such delivery. The Contracts constitute the entire agreements
with such vendors relating to the Property, have not been amended, modified or
supplemented, except for such amendments, modifications and supplements
delivered to Purchaser, and there are no other agreements with any third parties
(excluding, however, the Leases and Permitted Exceptions) affecting the
-10-
<PAGE>
Property which will survive the Closing. All of the Contracts are terminable
upon not more than 30 days prior written notice and such notice of termination
of such Contracts will be delivered by Seller at the request of Purchaser at any
time after the Inspection Termination Date.
(k) All insurance policies held by Seller or its affiliates relating to or
affecting the Property are described in EXHIBIT O annexed hereto and hereby made
a part hereof (detailing deductibles and any self-insurance) and all of such
policies are in full force and effect with all premiums therefor prepaid in full
through the Closing Date. Seller has not received any written notice from any
insurance carrier or any of the Tenants of any defects or inadequacies in the
Property, or in any portion thereof, which would adversely affect the
insurability thereof or the cost of such insurance. Except as delivered to
Purchaser in writing, there are no pending insurance claims concerning the
Property.
(l) Seller has not received any written notice of any condemnation,
environmental, zoning or other land use regulation proceedings, either
instituted or planned to be instituted which would adversely impact the use and
operation of the Property for its intended purpose, nor has Seller received any
written notice of any assessments affecting the Property.
(m) As of the Closing, there will be no outstanding contracts made by
Seller for the construction or repair of any of the-Improvements which have not
been fully paid for, and Seller
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<PAGE>
shall cause to be discharged all mechanics' or materialmen's liens arising from
any labor or materials furnished to the Property prior to the Closing, except
for such contracts as are set forth as EXHIBIT L, the remaining amounts owing
under which will be a credit to Purchaser at Closing and Seller shall indemnify
Purchaser for claims arising under such contracts at the Closing for the period
prior to Closing.
(n) Seller does not use, treat, store or dispose of, and, to the best of
Seller's knowledge, has not permitted anyone else to use, treat, store or
dispose of, whether temporarily or permanently, any Hazardous Materials (as
hereinafter defined) at, on or beneath the Property (other than the customary
and usual application, storage and use of chemicals for landscape maintenance,
janitorial services and pest control in the ordinary course of Seller's
business, and other than any office products (toner, cleaning supplies, etc.)
which may be used by Tenants, which may in each case constitute Hazardous
Materials but which Seller hereby represents have been used only in material
compliance with all Environmental Laws (as hereinafter defined)). Except as may
be set forth in a report prepared by PEI Associates Inc. dated March 9, 1988 (a
copy of which Seller previously delivered to Purchaser), Seller has no knowledge
of any underground storage tanks at or beneath the Property, and Seller has no
knowledge of the presence, use, treatment, storage, release or disposal of any
Hazardous Materials at, on or beneath the- Property which has created any
liability of owners or
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<PAGE>
occupants of the Property under any federal, state or local law or regulation or
which would require reporting to a governmental agency. For the purpose of this
Agreement, "Hazardous Materials shall mean any material or substance that,
whether by its nature or use, is now defined as a hazardous waste, hazardous
substance, pollutant or contaminant under any Environmental Law or which is
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous and which is now regulated under any
Environmental Law, or which is or contains petroleum, gasoline, diesel fuel or
another petroleum hydrocarbon product, or which is or contains urea formaldehyde
or asbestos. The term "Environmental Laws" shall collectively mean all present
laws, statutes, ordinances, rules, regulations, orders, codes, licenses,
permits, decrees, judgments, directives or the equivalent of or by any
Governmental Authority and relating to or addressing the protection of the
environment or human health. The term "Governmental Authority" shall mean the
Federal government, or any state or other political subdivision thereof, or any
agency, court or body of the Federal government, any state or other political
subdivision thereof, exercising executive, legislative, judicial, regulatory or
administrative functions.
(o) Except as set forth in EXHIBIT O attached hereto, against which Seller
shall indemnify Purchaser at Closing, there are no pending or, to the best of
Seller's knowledge, threatened legal proceeding or actions of any kind or
character adversely affecting the Property or Seller's interest therein.
Except as
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delivered to Purchaser, there are no litigation documents relating to any of the
matters set forth in EXHIBIT O.
(p) Seller is not a "foreign person" within the meaning of Section
1445(f)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), and
Seller will furnish to Purchaser, prior to the Closing, an affidavit in the form
attached hereto as EXHIBIT I.
4.1. B. For purposes of this Agreement, "to the best of the Seller's
knowledge" shall be deemed to include any actual knowledge of Greg Camia or the
Galbreath Company, which has been property manager of the Property for at least
twenty-four (24) months. Seller hereby represents and warrants that except for
Greg Camia and the Galbreath Company, there are no other persons or entities
with any material knowledge of the Property or its operation.
4.1. C. All of the representations of Seller set forth in this Agreement
shall be true upon the execution of this Agreement and, upon Closing, shall be
deemed to be made jointly and severally by each of the partners comprising
Seller, and all of the representations, warranties and agreements of Seller set
forth in this Agreement shall survive Closing for a period of one (1) year after
the Closing Date, it being agreed and understood that, so long as any action
based on a breach of representation and warranty for which there is a one (1)
year survival y is commenced within one (1) year of the date hereof, such ~.
commencement of such action shall be deemed to toll the
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expiration of such one (1) year survivalty period with respect to the matter
complained of.
41. D (a) Seller shall and hereby does, jointly and severally together
with its general partners, indemnify and hold harmless the Purchaser
and its partners, shareholders, officers, directors, affiliates and
agents from and against any costs, expenses (including without
limitation reasonable attorneys' fees, and the reasonable out-of-
pocket expenses of testifying and preparing for testimony and
responding to document and other information requests, and in
connection with the enforcement of any rights hereunder, whether or
not a party to such litigation), liabilities, judgments, fines,
amounts paid in settlement, losses, claims and damages, as incurred,
to the extent they relate to, arise out of or are the result of the
inaccuracy of any of the representations or warranties of Seller
contained in or made pursuant to this Agreement for the period of
survivability of such representations and warranties set forth herein.
4.2. A. Purchaser represents and warrants to Seller that:
(a) Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of Delaware.
(b) Purchaser has full power, right and authority to execute,
deliver and perform this Agreement and to make each of the promises,
covenants, representations and warranties made in this Agreement by it.
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(c) All acts and other proceedings required to be taken on the
part of Purchaser to authorize it to execute, deliver and perform this
Agreement and such other agreements and instruments as are required of
Purchaser hereunder have been duly and properly taken.
4.2. B. (a) All of the representations of Purchaser set forth in this
Agreement shall be true upon the execution of this Agreement and, upon Closing,
and all of the representations, warranties and agreements of Purchaser set forth
in this Agreement shall survive Closing for a period of one (1) year after the
Closing Date, it being agreed and understood that, so long as any action based
on a breach of representation and warranty for which there is a one (1) year
survivalty is commenced within one (1) year of the date hereof, such
commencement of such action shall be deemed to toll the expiration of such one
(1) year survivalty period with respect to the matter complained of.
4.2. C (a) Purchaser shall and hereby does, indemnify and hold harmless
Seller and its partners, shareholders, officers, directors, affiliates and
agents from and against any costs, expenses (including without limitation
reasonable attorneys' fees, and the reasonable out-of-pocket expenses of
testifying and preparing for testimony and responding to document and other
information requests, and in connection with the enforcement of any rights
hereunder, whether or not a party to such litigation), liabilities, judgments,
fines, amounts
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paid in settlement, losses, claims and damages, as incurred, to the extent they
relate to, arise out of or are the result of the inaccuracy of any of the
representations or warranties of Purchaser contained in or made pursuant to this
Agreement for the period of survivability of such representation and warranties
set forth herein.
5. CONDITION OF TITLE
5.1. Title to the Property conveyed hereunder shall be good, free and clear
of all liens, claims, encumbrances and interests (other than the Permitted
Exceptions set forth on EXHIBIT G) and insurable by a nationally recognized
title insurance company of Purchaser's choice (the "Title Company"), at regular
rates, subject only to such defects and exceptions to title which Purchaser has
not listed as Unacceptable Exceptions (as hereinafter defined) or in a notice to
Seller or otherwise those Unacceptable Exceptions which Purchaser waives and
agrees to take subject to in accordance with the terms of this Agreement (the
"Permitted Exceptions").
5.2. Purchaser has ordered title and survey. Within fifteen (15) days from
the receipt of title and survey, Purchaser shall notify Seller whether
Purchaser's survey and/or title search reveals any defects or other exceptions
to title which are unacceptable to Purchaser (the "Unacceptable Exceptions").
Seller shall notify Purchaser within five (5) Business Days after receipt of the
notice of such Unacceptable Exceptions whether Seller will attempt to remedy the
same. Should Seller choose to
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remedy the Unacceptable Exceptions, Seller shall have up to thirty (30) days
within which to take such action as Seller, Purchaser and Purchaser's title
insurance company deem appropriate to clear or remove said Unacceptable
Exceptions and the Closing shall be postponed for up to such thirty (30) days
(the "Adjourned Closing Date"). Notwithstanding the foregoing, Seller shall be
obligated to remove and cure, or bond over any Unacceptable Exceptions provided
that the removal and cure or the bonding of such exceptions does not exceed
$100,000 in the aggregate (collectively, "Seller Cure Exceptions"). If an
Unacceptable Exception is incapable of being cured within a thirty (30) day
period as set forth above, such thirty (30) day period may be extended by
Purchaser for so long as Seller continues to diligently pursue remedying the
Unacceptable Exception. If after the expiration of said thirty (30) day period,
and prior to the Adjourned Closing Date, a new defect to title is disclosed by
an updated endorsement to Purchaser's title report, the same rights and
obligations of the parties as set forth above shall be applicable.
5.3. In the event Seller is unable or unwilling to remove any Unacceptable
Exceptions which are not Seller Cure Exceptions in accordance with Section 5.2
above, Purchaser shall have the right to terminate this Agreement. In the event
Purchaser so terminates this Agreement, the Earnest Money Deposit shall be
returned to Purchaser, and upon the return thereof, all
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obligations of the parties hereto shall cease and terminate other than those
obligations arising under Article 12.
In addition, in lieu of satisfying any of the foregoing liens or
encumbrances affecting the Property, Seller may direct Purchaser to apply a
portion of the Purchase Price to the satisfaction of such liens and encumbrances
provided that Seller shall, at the Closing, deliver to the Title Company
instruments in recordable form which, in the opinion of the Title Company, will
be sufficient to satisfy and cause such liens or encumbrances to be removed of
record, together with the cost of recording or filing any such instruments.
Purchaser shall, if request is made at least five (5) Business Days prior to the
Closing Date, provide Seller, on the Closing Date, with separate unendorsed
certified or bank checks payable as directed by Seller, in an aggregate amount
not exceeding the Purchase Price, to facilitate the satisfaction of any such
liens or encumbrances.
6. PURCHASER'S INSPECTION OF THE PROPERTY.
6.1. Nothing contained in this Section 6 shall be construed to permit
Purchaser to enter into possession of the Property prior to the Closing.
Notwithstanding anything to the contrary contained herein, for the period
(herein the "Inspection Period") commencing on January 15, 1997 and ending on
March 7, 1997 (herein the "Inspection Termination Date"), Seller agrees that at
reasonable times during the Inspection Period on reasonable notice to Seller's
manager of the Property, Purchaser and its engineers, contractors, management,
insurance and environmental
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personnel or environmental contractor (collectively referred to herein as
"Purchaser's Inspectors') may enter upon the Real Property and make, at
Purchaser's sole cost, right and expense, reasonable inspections of the books
and records of Seller with respect to the Property or its ownership and
operation and the Real Property without however any interference or interruption
of the current tenancies of the Real Property, or in violation of the terms of
any Leases, provided however, that Purchaser shall at its sole cost and expense
cause the Real Property to be restored to its condition prior to any of
Purchaser's or Purchaser's Inspectors' inspections that altered the condition of
the Real Property Purchaser hereby indemnifies and saves Seller harmless from
and against any and all damages, costs, including, without limitation,
attorneys' fees and costs, injuries, and liabilities to the Property and/or any
persons or property of any person including, without limitation, tenants under
the Leases, their guests, employees and invitees, which may occur by reason of,
or in connection with any such inspections or other entry upon, or use of the
Property by Purchaser or Purchaser's Inspectors. Purchaser and Purchaser's
Inspectors may make the physical inspections described herein provided (a)
Purchaser notifies Seller or its manager of the Inspection of the Property in
advance, (b) Purchaser and/or Purchaser's Inspectors are accompanied by a
representative of Seller, who shall be made available to Purchaser after
reasonable notice to Seller or its manager of the Property of the proposed
inspection, and (c) such
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inspections do not unreasonably interfere with the operation, management and
leasing of the Property, and the tenants pursuant to the Leases. If Purchaser
intends to conduct invasive testing at the Property, Purchaser shall be required
to first obtain Seller's consent thereto, which shall not be unreasonably
withheld. If Purchaser desires to conduct an environmental "Phase II" study of
the Property, Purchaser shall be required to first obtain Seller's prior written
consent thereto, which shall be given in Seller's sole and absolute discretion.
If Seller does not consent to Purchaser's request to conduct either an
environmental "Phase II" study of the Property or such invasive testing as
Purchaser deems appropriate, Purchaser may terminate this Agreement and in
addition to Seller having returned to Purchaser the Earnest Money Deposit,
Seller shall reimburse Purchaser for its costs and expenses to the date of
termination up to the amount of $35,000. If on or prior to the Inspection
Termination Date Purchaser makes any objection to the condition of the Property,
Seller shall have no obligation to remove or cure any objection to the state of
the Property, and if Seller refuses or is unable to remove or cure such
objections, Purchaser's only remedy hereunder shall be (i) to complete the
Closing as provided herein with no reduction in the Purchase Price or (ii) to
terminate the Agreement and receive back the Earnest Money Deposit, and in such
event this Agreement shall be immediately terminated with neither party having
any rights against the other party hereunder other than those obligations
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arising under Article 12. Nothing contained herein shall modify, qualify or
affect the representations and warranties made by Seller to Purchaser in this
Agreement. Once the Inspection Termination Date has occurred and Purchaser has
not terminated this Agreement, Purchaser shall continue to be entitled to the
inspection rights (including, without limitation, interviews with Tenants in the
presence of Seller) on the terms set forth herein through the Closing.
7. ADJUSTMENTS AND APPORTIONMENTS
7.1. At the Closing there shall be apportionments and adjustments between
Seller and Purchaser as of midnight preceding the Closing Date (where
appropriate, such adjustments shall be made on the basis of a year of 12 months,
30 days to the month, Seller to have the last day, unless otherwise provided) as
follows:
(a) Purchaser shall pay all special assessments for municipal
improvements to be made with respect to the Property which are confirmed of
record and become a lien after the Closing and so much of the property taxes
assessed for and becoming a lien during the calendar year in which the Closing
occurs and which shall be allocable to it on and after the Closing. Seller shall
pay the balance of such property taxes at Closing, using the present tax rate if
the applicable tax rate has not been set (i.e. the balance of the 1996 calendar
year taxes and the 1997 calendar year taxes prorated to the date of Closing). If
the Closing shall occur either before an assessment is made or a tax
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rate is fixed for the tax period in which the Closing occurs, the apportionment
of any such property taxes based thereon shall be made at the Closing by
applying the tax rate for the preceding year to the latest assessed valuation,
but, promptly after the assessment and/or tax rate for the current year are
fixed, the apportionment thereof shall be recalculated and Seller or Purchaser,
as the case may be, shall promptly make an appropriate payment to the other
based on such recalculation.
(b) Special taxes or assessments, if any, upon the Property assessed
or becoming a lien prior to the Closing Date shall be paid by Seller in full on
or prior to the Closing Date.
(c) Fuel, electricity, water, sewer, gas, telephone and other utility
charges not payable directly to the utility companies by Tenants (such proration
to be based upon meter readings, where possible, within 2 days prior to the
Closing Date), rents and assigned deposits, if such deposits shall be assignable
(except such metered utility charges which Seller shall cause to be read on the
business day prior to the Closing Date and billed to Seller), Purchaser agreeing
to assume all liability for future utility payments.
(d) Security deposits.
(e) Pre-paid rentals for periods extending beyond the Closing Date,
common area maintenance charges, tax reimbursements, insurance
reimbursements, and other charges under the Leases. Rents more than thirty
(30) days in arrears, if any, shall not be adjusted, and the right to
collect the same shall be
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assigned to Purchaser (provided that Purchaser shall subsequent to Closing,
remit any collections, applying any payment received from a Tenant formerly
delinquent first to the rentals due to Purchaser and the balance shall be
promptly remitted to Seller). On the Closing Date, adjustments for common area
charges, tax reimbursements, and insurance reimbursements payable with respect
to the period prior to Closing shall be made on the basis of the good faith
estimates of the parties, and final adjustment shall be made when precise
figures are determined but not later than February 15, 1998. Purchaser shall pay
to Seller after Closing any rents, reimbursements, common area charges, tax and
utility charges and other charges due Seller pursuant to the Lease only when and
to the extent they are received by Purchaser.
(f) The provisions of this Article 7 shall survive the Closing.
8. COVENANTS OF SELLER. (a) Between the date hereof and the Closing
Date, Seller shall:
(i) operate, manage and maintain the Property in a normal businesslike
manner consistent with current practice and keep on hand materials,
supplies, equipment, inventory and other personal property for the
efficient operation and management of the Property, all in a manner
consistent with current practice;
(ii) promptly deliver to the Purchaser a copy of any notice
(including, without limitation, a notice of
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default) received from any Tenant or from any governmental authority having
jurisdiction over the Property;
(iii) promptly deliver notice to the Purchaser of, and, if the same
may materially adversely affect the Purchaser or the Property, defend at
Seller's expense, all actions, suits, claims and other proceedings
materially adversely affecting the Property, or the use, possession or
occupancy thereof;
(iv) maintain the existing certificates of occupancy and all existing
permits and licenses required for the lawful operation of the Property in
full force and effect, obtain certificates of occupancy for the premises of
the Tenants listed on Exhibit R attached hereto, and promptly deliver
notice to the Purchaser of any intention of Seller to seek any new permit,
license or certificate of occupancy;
(v) maintain all the Leases in full force and effect, timely make all
payments and observe and perform all obligations to be paid, observed or
performed by Seller, and promptly notify the Purchaser of any receipt or
delivery of any notice (including any notice of default) thereunder;
(vi) maintain all the Contracts in the ordinary course of Seller's
business (subject to Purchaser's right to direct Seller to cancel any
Contracts but only after the Inspection Termination Date), timely make all
payments and observe and perform all obligations to be paid, observed or
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performed by Seller, and promptly notify the Purchaser of any receipt or
delivery of any notice (including any notice of default) thereunder;
(vii) maintain in full force and effect-all of the insurance policies
in connection with the Property; and
(viii) use reasonable efforts after the Inspection Termination Date to
obtain estoppel certificates from each Tenant at the Property in a form
acceptable to Purchaser (collectively, the "Tenant Estoppels").
(b) Between the Inspection Termination Date and the Closing Date,
Seller shall not, without Purchaser's prior written approval (which approval may
be withheld by Purchaser in its sole discretion):
(i) cancel, amend, modify and/or renew the terms of any Lease,
undertake capital improvements and repairs (except as may otherwise be
required by any Lease or by law, or in the event of emergency or other
exigent circumstance) or enter into new leases, tenancies and occupancy
agreements with respect to all or any portion of the Property;
(ii) enter into agreements (including, without limitation,
financing agreements) with respect to all or any portion of the Property.
(c) Between the date hereof and the Closing Date, Seller shall not
intentionally violate any material laws or regulations applicable to the
Property.
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(d) In the event that Seller desires to attempt to procure Purchaser's
approval for an act or acts requiring such approval pursuant to Section 8.1(b)
above, Purchaser shall provide such approval or disapproval within three (3)
Business Days from receipt of request from Seller therefor, together with all
material information regarding the same, or it will be deemed approved.
9. INSURANCE, DAMAGE - DESTRUCTION, CONDEMNATION
9.1. If, prior to Closing, any portions of the Improvements are damaged or
destroyed ("Casualty"), or any portion of the property is taken in condemnation,
or notice thereof is received by Seller ("Condemnation"), then:
(a) in the event the estimated cost to repair or restore is ONE
HUNDRED THOUSAND ($100,000.00) DOLLARS or less, Purchaser shall be obligated to
purchase, and Seller shall be obligated to sell, the Property pursuant to this
Agreement and Seller will assign at the Closing all proceeds of insurance and/or
awards resulting from such damage, destruction or condemnation, it being agreed
and understood that any shortfall in insurance proceeds up to the amount of
$100,000 shall be paid by Seller promptly after being billed therefor, this
provision being intended to survive the Closing.
(b) In the event the estimated cost to repair or restore, as estimated
by Seller, is in excess of ONE HUNDRED THOUSAND ($100,000.00) DOLLARS, then
Seller at its sole absolute discretion may (i) elect to repair and restore, in
which event
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the Closing Date will be extended to the date of completion of the repair or
restoration, but in no event for longer than six months, with no adjustment to
the Purchase Price or (ii) to notify Purchaser of its intention not to repair or
restore the Property and, subject to Purchaser's right in Section 9.1(c) below,
to terminate this Agreement, in which event the Earnest Money Deposit shall
promptly thereafter be returned to Purchaser and neither party shall have any
rights against the other party pursuant to this Agreement except for those set
forth in Article 12.
(c) In any event of Casualty or Condemnation under Section 9.1(b) for
which Seller elects not to repair or restore, Purchaser may elect by notice to
Seller within thirty (30) days of its receipt of the notice specified in Section
9.1(b) to proceed with Closing with no reduction in the Purchase Price and in
such event Seller shall assign to Purchaser all proceeds of the Condemnation
award and/or the insurance proceeds resulting from such Casualty and pay to
Purchaser any shortfall in insurance proceeds up to the amount of $100,000 upon
being billed therefor, this provision being intended to survive Closing.
10. CONDITIONS PRECEDENT TO CLOSING
10.1. The obligations of Purchaser to consummate the transactions
contemplated by this Agreement are subject to each of the following conditions,
any one or more of which may be waived in whole or in part by Purchaser:
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(a) The representations and warranties set forth in Section 4.1 hereof
shall be true and correct in all material respects at and as of the Closing Date
with the same effect as though the same had been made on and as of said date,
and at the Closing, Seller shall deliver to Purchaser a certification to such
effect.
(b) The relocation and expansion of certain Tenants and modification
of certain Leases as more fully set forth on Exhibit S attached hereto and made
a part hereof have been completed and approved by Purchaser.
(c) Seller shall have complied with and performed all material
agreements and conditions required by this Agreement to be performed or complied
with prior to or as of the Closing Date.
(d) Purchaser shall have received the Tenant Estoppels from all
Tenants above 2,000 square feet of net rentable area prior to Closing (the
"Required Estoppels"). Seller shall have the option, but not the obligation, to
provide Purchaser with a certificate of Seller (a "Seller Certificate")
addressing, in the same manner as provided in an estoppel certificate acceptable
in form and substance to Purchaser, the items set forth in each Tenant Estoppel
Certificate comprising the Required Estoppels which Seller is required, but is
unable, to obtain, it being agreed and understood that the Seller Certificate
shall not cover a square footage greater than twenty percent (20%) of the net
rentable area at the Property, excluding the space leased to Chrysler, Zaring
Homes, USA Mobile and Hitachi, unless otherwise
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agreed to by Purchaser. Notwithstanding the above, Purchaser shall have the
option of terminating this Agreement if Seller is unable to deliver an estoppel
certificate in form and substance satisfactory to Purchaser for either Chrysler,
Zaring Homes, USA Mobile or Hitachi.
(e) Purchaser may conduct interviews with any or all of the Tenants
with the Seller or an agent of Seller present.
11. PROVISIONS WITH RESPECT TO THE CLOSING
11.1. At the Closing:
(a) Seller shall pay all local transfer taxes, documentary stamps, and
the recording fees and taxes resulting from the transfer of the Property and in
connection with the recordation of the deed conveying the Real Property and
Easement (the "Deed") and the Assignment and Assumption Agreement.
(b) Seller shall pay the sales taxes, if any, for the Personal
Property.
(c) Seller shall pay for the cost of (i) the title policy, it being
agreed that Purchaser shall pay for any ordinary and customary required
endorsements, such as contiguity and access, (ii) the zoning report (the cost of
which zoning report shall not exceed $500), and (iii) the survey.
(d) Seller and Purchaser shall each pay fifty percent (50%) of escrow
fees of the Title Company, if any.
11.2. Seller and Purchaser shall each pay the costs of its own counsel for
representation in the sale and purchase of the Property pursuant to this
Agreement.
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11.3. On the Closing Date, simultaneously with the delivery to Seller by
Purchaser of the Cash Portion of the Purchase Price Seller shall deliver to
Purchaser the following:
(a) The Deed in the form attached hereto as EXHIBIT E.
(b) The Assignment and Assumption Agreement of all of Seller's right
title and interest in the Leases and rents due thereunder, duly executed and
acknowledged by Seller, subject only to the Permitted Exceptions in the form
attached hereto as EXHIBIT F.
(c) Any other documents reasonably required to record the Deed or
customarily required in the state where the Property is located in connection
with transfers such as this transfer.
(d) A reaffirmation of the representations, warranties and
indemnities set forth in this Agreement to the extent set forth herein.
(e) The Bill of Sale for the Personal Property conveying the Personal
Property without recourse, representation or warranty except as set forth in
this Agreement in the form attached hereto as EXHIBIT H.
(f) Secretary's Certificate of Seller and evidence reasonably
satisfactory to Purchaser of Seller's power and authority to enter into and
perform this transaction and the taking of partnership and/or corporate actions
to enter into and perform the transactions contemplated by this Agreement.
(g) Originals of the Leases.
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(h) Originals of, if available, or, otherwise, copies of all
certificates of occupancy for every Tenant at the Property, all permits and
licenses, and, to the extent the same are assignable, all guaranties and
warranties with respect to the Property.
(i) Broker Releases from CB Commercial and the Dietz Corporation.
(j) Seller's FIRPTA Affidavit in the form of Exhibit I annexed hereto.
(k) All keys to the Real Property, except for those keys in tenants'
possession.
(l) To the extent not delivered prior to Closing and to the extent
available, all plans drawings and specifications for the Real Property in the
Seller's possession, if any.
(m) Mechanics' Lien Affidavit reasonably required by the Title
Company.
(n) Transfer of the Security Deposits described in Exhibit K annexed
hereto and made a part hereof.
(o) An Assignment of all of Seller's right, title and interest in and
to the Easement, if required.
(p) All customary affidavits, undertakings and indemnities reasonably
required by the Title Company.
(q) Required Estoppels.
(r) Notices to all of the Tenants executed by Seller notifying the
Tenants of the purchase and sale in the form attached hereto as EXHIBIT T.
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Delivery by Seller of all items relating to the operation, management and
leasing of the Real Property shall be made by leaving such items at the Real
Property provided Seller acknowledges receipt thereof.
11.4. On the Closing Date, Purchaser shall simultaneously with delivery to
Purchaser of the items described in Section 11.3 hereof:
(a) Wire to Seller as directed in writing by Seller the Cash Portion
of the Purchase Price as adjusted pursuant to Article 7.
(b) Deliver to Seller evidence of Purchaser's power and authority to
enter into the transaction contemplated by this Agreement and evidence of the
taking of all corporate actions hereunder to authorize this transaction.
(c) Deliver to Seller an original counterpart of the Assignment and
Assumption Agreement described in Section 11.3(b) hereof, executed and
acknowledged by Purchaser.
(d) Deliver to Seller for execution by Seller and delivery to Tenants
by Purchaser a notice to the Tenants of the purchase and sale in the form
attached hereto as EXHIBIT T.
(e) A reaffirmation of the representations, warranties and indemnities
set forth in this Agreement to the extent set forth herein.
(f) Deliver to Seller such other documents that are customary in the
state where the Property is located in connection with transfers such as this
transfer.
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12. BROKERAGE
12.1. Seller and Purchaser hereby warrant and represent to each other that
no brokers were involved in this matter or brought about this transaction except
for CB Commercial and the Dietz Organization, which brokers will be paid in full
at Closing by Seller.
12.2. Seller hereby indemnifies and holds Purchaser harmless against any
claims of any broker, agent or other person arising out of or in connection with
this transaction claiming through Seller. The warranties, indemnities and
agreements in this Article 12 shall survive the Closing for the full statutory
period permitted by law.
12.3. Purchaser hereby indemnifies and holds Seller harmless against any
claims of any broker, agent or other person arising out of or in connection with
this transaction claiming through Purchaser (except for CB Commercial and the
Dietz corporation). The warranties, indemnities and agreements in this Article
12 shall survive the Closing for the full statutory period permitted by law.
13. CERTIORARI
13.1. Seller represents that there are no pending certiorari proceedings
with respect to all or a portion of the Property. Between the date of this
Agreement and the Closing, Seller may bring, with Purchaser's approval not to be
unreasonably withheld, all certiorari proceedings with respect to the reduction
of the tax assessment for calendar year 1996 and
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earlier. Seller shall have the right to make any settlement for calendar years
prior to 1997, provided such settlement does not prejudice Purchaser, without
Purchaser's approval and Seller shall be entitled to retain all savings and
refunds obtained therefrom. Any settlement for calendar year 1997 shall require
Purchaser's approval, which shall not be unreasonably withheld or delayed.
Purchaser agrees to fully cooperate with Seller in any such certiorari
proceedings.
13.2. The net amount of any reduction, if any, for real estate taxes for
the current tax year, whether by way of refund, credit or other savings, shall
be apportioned between Seller and Purchaser pursuant to Article 7 hereof, after
the payment of attorneys' fees, reasonable experts' fees and other disbursements
and expenses reasonably incurred by Seller and Purchaser in connection with
obtaining same. Any amounts due Tenant pursuant Leases as a result of any such
reduction shall be apportioned between Purchaser and Seller as proceeds in
Article 7 hereof.
13.3. The provisions of this Article 13 shall survive the Closing.
14. NOTICES
14.1. All notices, demands or requests required or permitted by this
Agreement to be given by or to Seller or Purchaser (a) shall be in writing, and
(b) until otherwise specified in a written notice by the respective parties or
any of them, shall be sent to the parties at their following respective
addresses:
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<PAGE>
Seller:
With a copy to:
New York Life Insurance Company
51 Madison Avenue,
New York, New York 10010
Attention: Marilyn Goldstein, Esq.
Greystone Realty Corporation
2 Pickwick Plaza
Greenwich, CT 06830
Attention: Jean Marie Murphy
Senior Vice President Purchaser:
Purchaser:
c/o Westmark Realty Advisors
800 Boylston Street, Suite 1475
Boston, Massachusetts 02199-8001
Attention: Mr. Victor S. Bucchere
With a copy to:
Battle Fowler LLP
75 East 55th Street
New York, NY 10021
Attention: Walter F. Schleimer, Esq. (jtb)
Each such notice, demand or request shall be deemed to have been properly served
for all purposes if personally delivered or deposited into the United States
Mail registered or certified mail, and return receipt requested, or by Federal
Express or other similar overnight delivery service, postage prepaid, to its
addressee at its address as set forth hereinabove in this Section. Each such
notice, demand or request so mailed by Seller or Purchaser shall be deemed to
have been received by its addressee on the next business day after the day of
mailing.
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<PAGE>
15. DEFAULTS
15.1. If Seller willfully defaults in the performance of its obligations
under this Agreement, Purchaser shall have the right (i) to seek specific
performance of Seller's obligations under this Agreement or (ii) to terminate
this Agreement (and promptly receive a return of the Earnest Money Deposit) and
obtain damages at law as a result of such breach, which damages shall not exceed
the sum of $100,000, and, thereafter, this Agreement shall become null and void,
except for the provision of Article 12 hereof, and neither party to this
Agreement shall have any further rights or obligation with respect to each other
hereunder, except for the provision of Article 12 hereof, which shall survive
the termination of this Agreement. Notwithstanding the foregoing, Seller shall
have thirty (30) days after receiving written notice of any such willful default
within which to cure such willful default, it being agreed and understood that
if such willful default is the failure to close the transaction, then Seller
shall have the additional time permitted in Section 16.13 of this Agreement.
15.2. If Purchaser willfully defaults in the performance of its obligations
under this Agreement, Seller shall have the right, as Seller's sole and
exclusive remedy, to receive and keep the Earnest Money Deposit as and for
liquidated damages it being agreed and understood between the parties hereto,
that the actual damages, costs and expenses sustained by Seller in the event of
a willful default are difficult, if not impossible, to ascertain
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<PAGE>
and, following the payment of the Earnest Money Deposit to Seller, this
Agreement shall become null and void except for the provision of Article 12
hereof and neither party to this Agreement shall have any further rights or
obligations to each other hereunder, except for those provisions of Article 12
hereof, which shall survive the termination of this Agreement. Notwithstanding
the foregoing, Purchaser shall have thirty (30) days after receiving written
notice of any such willful default within which to cure such willful default, it
being agreed and understood that if such willful default is the failure to close
the transaction, then Purchaser shall have the additional time permitted in
Section 16.13 of this Agreement.
15.3. Notwithstanding anything to the contrary contained in this Article
15, Purchaser may terminate this Agreement on or prior to the Inspection
Termination Date, for any reason whatsoever, by providing written notice to
Seller to the effect thereof. In the event that Purchaser terminates this
Agreement pursuant to this Section 15.3, the Earnest Money Deposit shall
immediately be returned to Purchaser and all other terms and conditions of this
Agreement shall be null and void, except as set forth in Article 12 hereof.
16. Miscellaneous Provisions
16.1. This Agreement shall be governed by the laws of the State of Ohio.
16.2. The captions of this Agreement are inserted for convenience of
reference only and in no way define, describe or
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<PAGE>
limit the scope or intent of this Agreement or any of the provisions hereof.
16.3. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.
16.4. All Sections, the terms of which provide for survival, shall be
deemed to have been remade at the Closing Date and shall survive the Closing
Date.
16.5. This Agreement may be executed in counterparts, each of which shall
be deemed an original.
16.6. This Agreement (including the exhibits attached hereto) contains the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior understandings and/or agreements, if any, with respect
thereto. This Agreement may not be modified, changed, or supplemented, nor may
any obligations hereunder be waived, except by written instrument signed by the
party to be charged or by its agent duly authorized in writing or as otherwise
expressly permitted herein. The parties do not intend to confer any benefit
hereunder on any person, firm or corporation other than the parties hereto. The
provisions of this Section shall survive the Closing Date.
16.7. No waiver of any breach of any agreement or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach thereof
or of any other agreement or provision herein contained. No extension of time
for performance of any
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<PAGE>
obligations or acts shall be deemed an extension of the time for performance of
any other obligations or acts.
16.8. The parties each agree that neither this Agreement nor any memorandum
or notice thereof shall be recorded.
16.9. Westmark Realty Advisors hereby jointly and severally assumes the
obligations of Purchaser under this Agreement through Closing on the same basis
as set forth herein, including all limitation on such obligations as set forth
herein.
16.10. Purchaser's entire interest under this Agreement may be assigned or
transferred by Purchaser without the consent of Seller provided that (a)
Purchaser provides Seller with notice with respect to any such assignment or
transfer stating the address, contact and telephone number of any such assignee
or transferee and (b) the assignee or transferee of Purchaser must be an
affiliate of Purchaser or an institutional investor.
16.11. The possession of the Property described herein (subject to the
rights of the tenants pursuant to the Leases) shall be delivered to Purchaser at
Closing. Nothing contained in this Section 16.11 shall be construed to permit
Purchaser to enter into possession of the Property prior to the Closing.
16.12. CONFIDENTIALITY. Each of Seller and Purchaser agrees with the other
that it has no present intention of making any public announcement about the
purchase and sale transaction contemplated hereby or of any of the terms hereof,
including without limitation, the results of any inspection, test, survey, or
study conducted pursuant to this Agreement except as may be
-40-
<PAGE>
required by any governmental authority or quasi-governmental authority or in
connection with the enforcement or exercise of rights and/or remedies under this
Agreement. If this Agreement is terminated for any reason other than Seller's
willful default, Purchaser shall promptly return to Seller all of the documents
and information theretofore delivered to Purchaser by Seller, including without
limitation the copies of Leases, title commitment, all documents relating
thereto, plus every report of findings obtained pursuant by Purchaser or
Purchaser's Inspectors pursuant to this Agreement. At any time prior to the
Closing Date, or at any time if this Agreement is terminated for any reason
other than Seller's willful default, Purchaser shall not deliver any of the
documents theretofore delivered to Purchaser by Seller or obtained by Purchaser
pursuant to this Agreement, or otherwise knowingly transmit any of the
information contained, in any such documents, to any third party except
Purchaser's counsel or other advisors, provided such individuals agree to be
bound to the same burdens or confidentiality and nondisclosure as Purchaser. The
covenants set forth in this Section 16.12 shall survive the termination of this
Agreement. Notwithstanding anything to the contrary contained in this Section
16.12, Purchaser's agreement to maintain confidentiality regarding the
transactions contemplated by this Agreement shall terminate at Closing.
16.13. Either party, upon at least 30 days notice to the other party given
after the expiration of the grace and cure
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<PAGE>
periods specified in Article 15 of this Agreement, may make time of the essence
with regard to the Closing of this transaction.
16.14. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which when taken together shall
constitute one and the same instrument. The signature page of any counterpart
may be detached therefrom without impairing the legal effect of the signatures
thereon and attached to any other counterpart identical thereto except having
additional signature pages attached to it.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this 25th
day of February 1997.
SELLER:
NYLIFE Realty Partners I-General Partnership A
By: New York Life Insurance Company
By: /s/ Jean-Marie Murphy
-------------------------------------
Name: Jean-Marie Murphy
-----------------------------------
Title: Senior Vice President
-----------------------------------
By: NYLIFE Realty Income Partners I, L.P.
By: NYLIFE Realty Inc.
By: /s/ Kevin M. Micucci
-------------------------------------
Name: Kevin M. Micucci
-----------------------------------
Title: President
-----------------------------------
PURCHASER:
ERI CORNELL, INC.
By: /s/ Victor S. Bucchere
-------------------------------------
Name: Victor S. Bucchere
-----------------------------------
Title: Authorized Signatory
-----------------------------------
ACCEPTED AND AGREED TO:
WESTMARK REALTY ADVISORS
By: /s/ Victor S. Bucchere
------------------------------
Name: Victor S. Bucchere
---------------------------
Title: Senior Director
---------------------------
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<PAGE>
SCHEDULE OF EXHIBITS*
EXHIBIT A LAND
EXHIBIT B SCHEDULE OF LEASES
EXHIBIT C PERSONAL PROPERTY
EXHIBIT D TAX BILLS
EXHIBIT E DEED
EXHIBIT F ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT G PERMITTED EXCEPTIONS
EXHIBIT H BILL OF SALE
EXHIBIT I FIRPTA
EXHIBIT J DUE DILIGENCE DOCUMENTS
EXHIBIT K SECURITY DEPOSITS
EXHIBIT L OUTSTANDING CONTRACTS AND LABOR LIENS
EXHIBIT M BROKERAGE FEES AND COMMISSIONS
EXHIBIT N CONTRACTS
EXHIBIT O INSURANCE POLICIES
EXHIBIT P RENT ROLL
EXHIBIT Q PENDING LITIGATION MATTERS
EXHIBIT R OUTSTANDING CERTIFICATES OF OCCUPANCY
EXHIBIT S CERTAIN TENANT RELOCATIONS AND MODIFIED
LEASES
EXHIBIT T FORM OF LETTER TO TENANTS
* Exhibits are not included in this Form 10-K but will be furnished upon
written request.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10-K.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 894,126
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 11,105,627
<CURRENT-ASSETS> 11,999,753
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 215,681
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,999,753
<SALES> 0
<TOTAL-REVENUES> 47,695
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,449,111
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,401,416)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,401,416)<F1>
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>The Partnership's results of operations from January 1, 1996 to
June 30, 1996 are presented using the historical cost basis of accounting.
Subsequent to June 30, 1996, the Partnership's results of operations are
presented on the liquidation basis of accounting.
</FN>
</TABLE>
