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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported ): October 28, 1999
Commission file number 0-17684
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ML/EQ Real Estate Portfolio, L.P.
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(Exact name of registrant as specified in its governing instrument)
Delaware 58-1739523
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(State of Organization) (I.R.S. Employer Identification No.)
3424 Peachtree Road N.E., Suite 800, Atlanta, Georgia 30326
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(Address of principal executive office) (Zip Code)
(Registrant's telephone number, including area code) (404) 239-5002
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REPORT ON FORM 8-K
Item 2. Acquisition or Disposition of Assets
On September 28, 2000, EML Associates, (the "Venture"), in which
ML/EQ Real Estate Portfolio, L.P. (the "Partnership") holds an 80% interest,
completed the sale of Northland Center, at a cash price of $18,000,000, of which
the Venture's portion was approximately $12,899,000. Prior to the sale, the
Venture held a 71.66% participation interest in Northland Center, which was
transferred to the Venture and The Equitable Life Assurance Society of the
United States ("Equitable") as tenants in common on July 22, 1994, by a deed in
lieu of foreclosure. Northland Center is a regional shopping mall located in
Southfield, Michigan. The Venture received $11,949,263 in cash at closing, after
deduction for closing costs and prorations. The sale resulted in a loss of
$6,782,501 to the Venture. Management anticipates making a special distribution
of $2.57 per BAC on October 27, 2000, to holders of record as of September 28,
2000. The distribution is comprised of $2.29 per BAC, representing a return of
capital from the sale proceeds, and $0.28 per BAC representing a distribution of
cash on hand from operations. The cash on hand had been retained by the Venture
to cover operating and working capital requirements, but is now available for
distribution due to the sale of Northland Center. The Venture will distribute
$1.9 million of operating cash, of which $1,520,000 or 80% will be distributed
to the Partnership for distribution to BAC Holders, and $380,000 or 20% will be
distributed to EREIM LP Associates. The purchaser, GP-Northland Center, LLC, is
unaffiliated with the Partnership and the Venture, and the transaction was
negotiated at arm's length.
Under the Guaranty Agreement , EREIM LP Associates has agreed to
pay to the Partnership an amount which when added to all distributions from the
Partnership to BAC Holders will enable the Partnership to provide BAC Holders
with a minimum return equal to their initial capital contributions ($20 per BAC)
plus a 9.75% simple annual return on their adjusted capital contributions (which
is defined as $20 per BAC reduced by distributions from sale or financing
proceeds) calculated from the dates of investor closings. The unpaid cumulative
minimum return under the Guaranty Agreement as of June 30, 2000 was $12.38 per
BAC, which was reduced by $0.20 per BAC after the August 31, 2000 distribution,
and which will be reduced by an additional $2.57 per BAC after the October 27,
2000 distribution. The remaining unpaid cumulative minimum return of $9.61 per
BAC will be paid to BAC Holders prior to December 27, 2000.
Item 7. Financial Statements and Exhibits
(a) Pro Forma Financial Statements
(i) Pro Forma condensed consolidated balance
sheet dated June 30, 2000 (unaudited).
(ii) Pro Forma consolidated statement of
operations for the six months ended June 30,
2000 and the year ended December 31, 1999
(unaudited).
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ML/EQ REAL ESTATE PORTFOLIO, L.P.
PRO FORMA CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000
(unaudited)
This unaudited pro forma balance sheet is presented as if the Venture's sale of
Northland Center had occurred on June 30, 2000. 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 June 30,
2000, nor does it purport to represent the future financial position of the
Partnership.
<TABLE>
<CAPTION>
Adjustments For
Sale of Northland
Historical Center Pro Forma
------------ ----------------- ------------
<S> <C> <C> <C>
ASSETS
NET REAL ESTATE INVESTMENTS $ 18,316,484 $(18,316,484)(A) $ --
CASH AND CASH EQUIVALENTS 5,075,869 (2,371,065)(B) 2,704,804
OTHER ASSETS - NET 3,434,844 (644,937)(C) 2,789,907
------------ ------------ ------------
TOTAL ASSETS $ 26,827,197 $(21,332,486) $ 5,494,711
============ ============ ============
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES $ 2,406,235 $ (229,657)(C) $ 2,176,578
MINORITY INTEREST IN THE VENTURE 24,665,590 (1,736,500)(D) 22,929,090
PARTNERS' CAPITAL
General partners 2,281,933 (271,300)(E) 2,010,633
Initial limited partner 5,772 (308)(E) 5,464
Limited partners (5,424,225 BACs (2,532,333) (19,094,721)(E) (21,627,054)
issued and outstanding) ------------ ------------ ------------
Total partners' capital (244,628) (19,366,329) (19,610,957)
------------ ------------ ------------
TOTAL LIABILITIES AND PARTNERS'
CAPITAL $ 26,827,197 $(21,332,486) $ 5,494,711
============ ============ ============
</TABLE>
See notes to pro forma condensed consolidated balance sheet.
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ML/EQ REAL ESTATE PORTFOLIO, L.P.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
A. Represents the Venture's sale of Northland Center having a net book
value of $18,316,484 at June 30, 2000.
B. Represents the amount of cash received by the Venture at closing of
$11,949,263 offset by the $2.57 special distribution to BAC Holders.
C. Represents net other assets and liabilities of Northland Center
transferred in connection with the sale.
D. Reflects 20% minority interest share of the $6,782,501 loss on the sale
of Northland Center and distribution to the minority interest of
$380,000
E. Reflects the Partnership's share of the $6,782,501 loss on the sale of
Northland Center allocated 95% to the limited partners as a group and
5% to the general partners. The limited partners' share of the loss has
been increased by the $2.57 per unit special distribution to BAC
Holders.
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ML/EQ REAL ESTATE PORTFOLIO, L.P.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(unaudited)
The accompanying pro forma consolidated statement of operations is presented as
if the Venture's sale of Northland Center had occurred as of December 31, 1998.
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 December 31, 1998, nor does it
purport to represent the results of operations for future periods.
<TABLE>
<CAPTION>
Adjustments For
Sale of Northland
Historical Center (A) Pro Forma
------------ ----------------- ------------
<S> <C> <C> <C>
REVENUE:
Rental income $ 4,905,400 $ (4,884,416) $ 20,984
Lease termination income -- -- --
Interest on loans receivable -- -- --
------------ ------------ ------------
Total revenue 4,905,400 (4,884,416) 20,984
------------ ------------ ------------
OPERATING EXPENSES:
Real estate operating expenses 2,806,275 (2,690,123) 116,152
Depreciation and amortization -- -- --
Real estate taxes 839,323 (839,323) --
Property management fees 107,072 (107,072) --
Loss on write-down of real estate 3,734,174 (3,734,174)
assets --
Asset management fees 96,476 (96,476)(B) --
Amortization of guarantee fee 134,126 -- 134,126
General and administrative 12,926 -- 12,926
------------ ------------ ------------
Total operating expenses 7,730,372 (7,467,168) 263,204
------------ ------------ ------------
LOSS FROM OPERATIONS (2,824,972) 2,582,752 (242,220)
OTHER INCOME (EXPENSE):
Loss on sale of real estate -- -- --
Interest and other nonoperating income 273,037 (23,976) 249,061
------------ ------------ ------------
Total other income (expense) - net 273,037 (23,976) 249,061
------------ ------------ ------------
INCOME (LOSS) BEFORE MINORITY INTEREST (2,551,935) 2,558,776 6,841
MINORITY INTEREST IN NET (INCOME) LOSS OF
CONSOLIDATED VENTURE 3,496,380 (484,423) 3,011,957
------------ ------------ ------------
NET INCOME (LOSS) $ 944,445 $ 2,074,353 $ 3,018,798
============ ============ ============
ALLOCATION OF NET INCOME (LOSS):
General partners $ 47,222 $ 150,940
Initial limited partner 41 132
Limited partners 897,182 2,867,726
------------ ------------
TOTAL $ 944,445 $ 3,018,798
============ ============
NET INCOME PER LIMITED PARTNER BAC $ 0.16 $ 0.53
============ ============
WEIGHTED AVERAGE BACs OUTSTANDING 5,424,225 5,424,225
============ ============
</TABLE>
See notes to pro forma consolidated statement of operations
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ML/EQ REAL ESTATE PORTFOLIO, L.P.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(unaudited)
<TABLE>
<CAPTION>
Adjustments For
Sale of Northland
Historical Center (A) Pro Forma
------------ ----------------- ------------
<S> <C> <C> <C>
REVENUE:
Rental income $ 14,699,265 $(10,479,790) $ 4,219,475
Lease termination income 248,989 (128,989) 120,000
Interest on loans receivable 51,250 -- 51,250
------------ ------------ ------------
Total revenue 14,999,504 (10,608,779) 4,390,725
------------ ------------ ------------
OPERATING EXPENSES:
Real estate operating expenses 6,970,028 (5,553,320) 1,416,708
Depreciation and amortization 789,345 (789,345) --
Real estate taxes 1,812,913 (1,485,808) 327,105
Property management fees 328,644 (216,078) 112,566
Loss on write-down of real estate assets 21,020,338 (18,905,658) 2,114,680
Asset management fees 361,999 (192,952)(B) 169,047
Amortization of guarantee fee 268,251 -- 268,251
General and administrative 412,537 -- 412,537
------------ ------------ ------------
Total operating expenses 31,964,055 (27,143,161) 4,820,894
------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS (16,964,551) 16,534,382 (430,169)
OTHER INCOME (EXPENSE):
Gain on sale of real estate 4,540,599 -- 4,540,599
Interest and other nonoperating income 690,411 (57,789) 632,622
------------ ------------ ------------
Total other income (expense) - net 5,231,010 (57,789) 5,173,221
------------ ------------ ------------
INCOME (LOSS) BEFORE MINORITY INTEREST (11,733,541) 16,476,593 4,743,052
MINORITY INTEREST IN NET (INCOME) LOSS OF
CONSOLIDATED VENTURE 2,161,787 (3,333,909) (1,172,122)
------------ ------------ ------------
NET INCOME (LOSS) $ (9,571,754) $ 13,142,684 $ 3,570,930
============ ============ ============
ALLOCATION OF NET INCOME (LOSS):
General partners $ (478,588) $ 178,546
Initial limited partner (419) 156
Limited partners (9,092,747) 3,392,228
------------ ------------
TOTAL $ (9,571,754) $ 3,570,930
============ ============
NET INCOME PER LIMITED PARTNER BAC $ (1.68) $ 0.63
============ ============
WEIGHTED AVERAGE BACs OUTSTANDING 5,424,225 5,424,225
============ ============
</TABLE>
See notes to pro forma consolidated statement of operations
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ML/EQ REAL ESTATE PORTFOLIO, L.P.
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
A. On September 28, 2000, Northland Center was sold and all of the
operating revenues and expenses have been eliminated for the period
presented in arriving at pro forma amounts. The sale resulted in a loss
of $6,782,501, which is not reflected in the pro forma statement of
operations.
B. Represents the portion of asset management fees related to Northland
Center. 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, the advisor to the Partnership, by the Managing
General Partner.
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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/ Debra L. Keller
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Debra L. Keller
Vice President and Assistant Treasurer
(Principal Accounting Officer)
Dated: October 13, 2000
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