<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
--------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 24, 1998
Commission file number 0-17684
-------
ML/EQ Real Estate Portfolio, L.P.
---------------------------------
(Exact name of registrant as specified in its governing instrument)
Delaware 58-1739523
- --------------------------------------------------------------------------------
(State of Organization) (I.R.S. Employer Identification No.)
3424 Peachtree Road N.E., Suite 800, Atlanta, Georgia 30326
-----------------------------------------------------------
(Address of principal executive office) (Zip Code)
(Registrant's telephone number, including area code) (404) 239-5002
-------------
<PAGE> 2
REPORT ON FORM 8-K
Item 2. Acquisition or Disposition of Assets
On November 24, 1998, EML Associates, (the "Venture"), in which
ML/EQ Real Estate Portfolio, L.P. (the "Partnership") holds an 80% interest,
completed the sale of 1200 Whipple Road and 1345 Doolittle Drive, at a cash
price of $26,512,375. Prior to the sale, both 1200 Whipple Road and 1345
Doolittle Drive were wholly-owned by the Venture. 1200 Whipple Road is a
one-story warehouse/distribution property located in the Hayward-Union City
market area, approximately 25 miles southeast of San Francisco. 1345 Doolittle
Drive is a one-story warehouse/distribution property located in San Leandro,
California, approximately one mile south of Oakland International Airport. The
Venture received $25,878,974 in cash at closing, after deduction for closing
costs and prorations. The sale resulted in a gain of $8,543,703 to the Venture.
Management will make a special distribution of $4.82 per unit on December 21,
1998, representing a return of capital from sale or financing proceeds, to
holders of record as of November 24, 1998. The purchaser, SPP Real Estate (USA),
Inc. is unaffiliated with the Partnership and the Venture, and the transaction
was negotiated at arm's length.
Item 7. Financial Statements and Exhibits
(a) Pro Forma Financial Statements
(i) Pro Forma condensed consolidated balance sheet
dated September 30, 1998 (unaudited).
(ii)Pro Forma consolidated statement of operations for
the nine months ended September 30, 1998
(unaudited) and the year ended December 31, 1997
(unaudited).
2
<PAGE> 3
ML/EQ REAL ESTATE PORTFOLIO, L.P.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(unaudited)
This unaudited pro forma balance sheet is presented as if the Venture's sale of
1200 Whipple Road and 1345 Doolittle Drive had occurred on September 30, 1998.
In management's opinion, all adjustments necessary to reflect the effect of this
transaction have been made. This unaudited pro forma condensed consolidated
balance sheet is not necessarily indicative of what the actual financial
position would have been at September 30, 1998, nor does it purport to represent
the future financial position of the Partnership.
<TABLE>
<CAPTION>
Adjustments For
Sale of 1200
Whipple and 1345
Historical Doolittle Pro Forma
------------ ---------------- ------------
<S> <C> <C> <C>
ASSETS
NET REAL ESTATE INVESTMENTS $111,050,982 $(16,370,879) (A) $ 94,680,103
CASH AND CASH EQUIVALENTS 6,966,295 (265,791) (B) 6,700,504
OTHER ASSETS - NET 9,393,693 (1,219,558) (C) 8,174,135
------------ ------------ ------------
TOTAL ASSETS $127,410,970 $(17,856,228) $109,554,742
============ ============ ============
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES $ 2,628,969 $ (255,166) (C) $ 2,373,803
MINORITY INTEREST IN THE VENTURE 31,200,870 1,708,741 (D) 32,909,611
PARTNERS' CAPITAL
General partners 2,566,021 341,748 (E) 2,907,769
Initial limited partner 6,378 299 (E) 6,677
Limited partners (5,424,225 BACs issued
and outstanding) 91,008,732 (19,651,850) (E) 71,356,882
------------ ------------ ------------
Total partners' capital 93,581,131 (19,309,803) 74,271,328
------------ ------------ ------------
TOTAL LIABILITIES AND PARTNERS'
CAPITAL $127,410,970 $(17,856,228) $109,554,742
============ ============ ============
</TABLE>
See notes to pro forma condensed consolidated balance sheet.
3
<PAGE> 4
ML/EQ REAL ESTATE PORTFOLIO, L.P.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
A. Represents the Venture's sale of 1200 Whipple Road and 1345 Doolittle Drive
having a combined net book value of $16,370,879 at September 30, 1998.
B. Represents the amount of cash received by the Venture at closing of
$25,878,974, offset by the $26,144,765 special distribution to BAC holders.
C. Represents net other assets and liabilities of 1200 Whipple Road and 1345
Doolittle Drive transferred in connection with the sale.
D. Reflects 20% minority interest share of the $8,543,703 gain on the sale of
1200 Whipple Road and 1345 Doolittle Drive.
E. Reflects the Partnership's share of the $8,543,703 gain on the sale of 1200
Whipple Road and 1345 Doolittle Drive allocated 95% to the limited partners
as a group and 5% to the general partners. The limited partners' share of
the gain has been reduced by the $4.82 per unit special distribution to BAC
holders.
4
<PAGE> 5
ML/EQ REAL ESTATE PORTFOLIO, L.P.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(unaudited)
The accompanying pro forma consolidated statement of operations is presented as
if the Venture's sale of 1200 Whipple Road and 1345 Doolittle Drive had occurred
as of January 1, 1997. In management's opinion, all adjustments necessary to
reflect the effects of this transaction have been made. This unaudited pro forma
consolidated statement of operations is not necessarily indicative of what
actual results of operations would have been had this transaction occurred on
January 1, 1997, nor does it purport to represent the results of operations for
future periods.
<TABLE>
<CAPTION>
Adjustments For
Sale of 1200
Whipple and 1345
Historical Doolittle (A) Pro Forma
------------ ----------- ------------
<S> <C> <C> <C>
REVENUE:
Rental income $ 15,115,871 $(1,787,601) $ 13,328,270
Lease termination income 12,501 -- 12,501
Interest on loans receivable 461,250 -- 461,250
------------ ----------- ------------
Total revenue 15,589,622 (1,787,601) 13,802,021
------------ ----------- ------------
OPERATING EXPENSES:
Real estate operating expenses 6,207,514 (190,386) 6,017,128
Depreciation and amortization 2,520,468 (223,080) 2,297,388
Real estate taxes 1,363,810 (158,226) 1,205,584
Property management fees 334,383 (33,106) 301,277
------------ ----------- ------------
Total operating expenses 10,426,175 (604,798) 9,821,377
------------ ----------- ------------
INCOME FROM PROPERTY OPERATIONS 5,163,447 (1,182,803) 3,980,644
OTHER INCOME (EXPENSE):
Interest and other nonoperating income 426,944 (200) 426,744
Loss on write-down of real estate assets (3,581,890) -- (3,581,890)
Asset management fees (465,919) 81,227 (B) (384,692)
Amortization of guaranty fee (178,834) -- (178,834)
General and administrative (678,860) -- (678,860)
------------ ----------- ------------
Total other income (expense) - net (4,478,559) 81,027 (4,397,532)
------------ ----------- ------------
INCOME (LOSS) BEFORE MINORITY INTEREST 684,888 (1,101,776) (416,888)
MINORITY INTEREST IN NET INCOME OF
CONSOLIDATED VENTURE (363,611) 220,355 (143,256)
------------ ----------- ------------
NET INCOME (LOSS) $ 321,277 $ (881,421) $ (560,144)
============ =========== ============
ALLOCATION OF NET INCOME (LOSS):
General partners $ 16,064 $ (28,007)
Initial limited partner 14 (25)
Limited partners 305,199 (532,112)
------------ ------------
TOTAL $ 321,277 $ (560,144)
============ ============
NET INCOME (LOSS) PER LIMITED
PARTNER BAC $ 0.06 $ (0.10)
============ ============
WEIGHTED AVERAGE BACs OUTSTANDING 5,424,225 5,424,225
============ ============
</TABLE>
See notes to pro forma consolidated statement of operations
5
<PAGE> 6
ML/EQ REAL ESTATE PORTFOLIO, L.P.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(unaudited)
<TABLE>
<CAPTION>
Adjustments For
Sale of 1200
Whipple and 1345
Historical Doolittle (A) Pro Forma
------------ ------------- ------------
<S> <C> <C> <C>
REVENUE:
Rental income $ 24,458,345 $(2,336,001) $ 22,122,344
Lease termination income 132,840 -- 132,840
Interest on loans receivable 615,000 -- 615,000
------------ ----------- ------------
Total revenue 25,206,185 (2,336,001) 22,870,184
------------ ----------- ------------
OPERATING EXPENSES:
Real estate operating expenses 9,664,185 (120,837) 9,543,348
Depreciation and amortization 4,282,026 (446,721) 3,835,305
Real estate taxes 3,076,092 (197,162) 2,878,930
Property management fees 554,471 (40,143) 514,328
------------ ----------- ------------
Total operating expenses 17,576,774 (804,863) 16,771,911
------------ ----------- ------------
INCOME FROM PROPERTY OPERATIONS 7,629,411 (1,531,138) 6,098,273
OTHER INCOME (EXPENSE):
Gain on sale of real estate 3,288,138 -- 3,288,138
Interest and other nonoperating income 1,369,424 (1,492) 1,367,932
Asset management fees (747,302) 108,600 (B) (638,702)
Amortization of guaranty fee (268,251) -- (268,251)
General and administrative (725,258) -- (725,258)
------------ ----------- ------------
Total other income (expense) - net 2,916,751 107,108 3,023,859
------------ ----------- ------------
INCOME BEFORE MINORITY INTEREST 10,546,162 (1,424,030) 9,122,132
MINORITY INTEREST IN NET INCOME OF
CONSOLIDATED VENTURE (2,434,011) 284,806 (2,149,205)
------------ ----------- ------------
NET INCOME $ 8,112,151 $(1,139,224) $ 6,972,927
============ =========== ============
ALLOCATION OF NET INCOME:
General partners $ 405,608 $ 348,646
Initial limited partner 355 305
Limited partners 7,706,188 6,623,976
------------ ------------
TOTAL $ 8,112,151 $ 6,972,927
============ ============
NET INCOME PER LIMITED PARTNER BAC $ 1.42 $ 1.22
============ ============
WEIGHTED AVERAGE BACs OUTSTANDING 5,424,225 5,424,225
============ ============
</TABLE>
See notes to pro forma consolidated statement of operations
6
<PAGE> 7
ML/EQ REAL ESTATE PORTFOLIO, L.P.
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
A. On November 24, 1998, 1200 Whipple Road and 1345 Doolittle Drive were sold
and all of their operating revenues and expenses have been eliminated for
the period presented in arriving at pro forma amounts. The sale resulted in
a gain of $8,543,703, which is not reflected in the pro forma statement of
operations.
B. Represents the portion of asset management fees related to 1200 Whipple
Road and 1345 Doolittle Drive. Asset management fees are based on the
purchase price of each property multiplied by .75% annual basis points for
rental properties. Asset management fees are paid to the Managing General
Partner. Such asset management fees are then paid to Lend Lease Real Estate
Investments, Inc by the Managing General Partner.
7
<PAGE> 8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be filed on behalf of the
undersigned hereunto duly authorized.
ML/EQ Real Estate Portfolio, L.P.
By: EREIM Managers Corp.
Managing General Partner
By: /s/ Patricia C. Snedeker
------------------------------------
Patricia C. Snedeker
Vice President, Controller and Treasurer
(Principal Accounting Officer)
Dated: December 8, 1998
8
