<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1999
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ____________________ to ________________________
Commission file number 33-11064
--------
EREIM LP Associates
(Exact name of registrant as specified in its governing instrument)
<TABLE>
<S> <C>
New York 58-1739527
(State of Organization) (I.R.S. Employer Identification No.)
787 Seventh Avenue, New York, New York 10019
(Address of principal executive office) (Zip Code)
</TABLE>
(Registrant's telephone number, including area code) (212) 554-1926
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
--- ---
<PAGE> 2
EREIM LP ASSOCIATES
CONTENTS
PART I - FINANCIAL INFORMATION
Item 1 - Financial statements:
Balance sheets at March 31, 1999 and
December 31, 1998
Statements of income for the three
months ended March 31, 1999 and 1998
Statement of partners' capital for the three
months ended March 31, 1999
Statements of cash flows for the three months
ended March 31, 1999 and 1998
Notes to financial statements
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II - OTHER INFORMATION
Items 1 through 6
Signatures
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EREIM LP ASSOCIATES
BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
(unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1999 1998
------------ ------------
<S> <C> <C>
Cash $ 10,000 $ 10,000
Guaranty fee receivable from affiliate 31,049 121,698
Investment in joint venture, at equity 31,877,173 32,023,757
------------ ------------
TOTAL ASSETS $ 31,918,222 $ 32,155,455
============ ============
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Deferred guaranty fee $ 935,679 $ 998,058
Due to affiliates 10,574 649
Accrued liabilities 15,006 17,919
------------ ------------
TOTAL LIABILITIES 961,259 1,016,626
------------ ------------
PARTNERS' CAPITAL:
General partners:
Equitable 31,542,977 31,695,037
EREIM LP Corp. (586,014) (556,208)
------------ ------------
TOTAL PARTNERS' CAPITAL 30,956,963 31,138,829
------------ ------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 31,918,222 $ 32,155,455
============ ============
</TABLE>
See notes to financial statements.
3
<PAGE> 4
EREIM LP ASSOCIATES
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
-------------------------
1999 1998
--------- ---------
<S> <C> <C>
REVENUE:
Equity in net income (loss) of joint venture $(146,584) $ 349,759
Guaranty fee from affiliate 95,935 131,427
--------- ---------
TOTAL REVENUE (50,649) 481,186
--------- ---------
EXPENSES:
General and administrative 7,012 7,012
--------- ---------
TOTAL EXPENSES 7,012 7,012
--------- ---------
NET INCOME (LOSS) $ (57,661) $ 474,174
========= =========
</TABLE>
See notes to financial statements
4
<PAGE> 5
EREIM LP ASSOCIATES
STATEMENT OF PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(unaudited)
<TABLE>
<CAPTION>
EREIM
Equitable LP Corp. Total
--------- -------- -----
<S> <C> <C> <C>
Balance, December 31, 1998 $31,695,037 $(556,208) $31,138,829
Net income (loss) (152,060) 94,399 (57,661)
Distributions to partners -- (124,205) (124,205)
----------- --------- -----------
Balance, March 31, 1999 $31,542,977 $(586,014) $30,956,963
=========== ========= ===========
</TABLE>
See notes to financial statements.
5
<PAGE> 6
EREIM LP ASSOCIATES
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(unaudited)
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (57,661) $ 474,174
--------- ---------
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Equity in net income of joint venture 146,584 (349,759)
Distributions from joint venture -- 331,591
Decrease in guaranty fee receivable from affiliate 90,649 111,319
Decrease in deferred guaranty fee (62,379) (62,379)
Increase in due to affiliates 9,925 5,475
Increase (decrease) in accrued liabilities (2,913) 1,537
--------- ---------
Total adjustments 181,866 37,784
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 124,205 511,958
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to general partners (124,205) (511,958)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (124,205) (511,958)
--------- ---------
NET CHANGE IN CASH -- --
CASH AT BEGINNING OF PERIOD 10,000 10,000
--------- ---------
CASH AT END OF PERIOD $ 10,000 $ 10,000
========= =========
</TABLE>
See notes to financial statements.
6
<PAGE> 7
EREIM LP ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(unaudited)
The financial statements of the Partnership included herein have been
prepared by the Partnership pursuant to the rules and regulations of
the Securities and Exchange Commission. In the opinion of management,
the accompanying unaudited financial statements reflect all
adjustments, which are of a normal recurring nature, to present fairly
the Partnership's financial position, results of operations, and cash
flows at the dates and for the periods presented. These financial
statements should be read in conjunction with the Partnership's audited
financial statements and notes thereto included in the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1998, as
certain footnote disclosures which would substantially duplicate those
contained in such audited financial statements have been omitted from
this report. Interim results of operations are not necessarily
indicative of results to be expected for the fiscal year.
1. GUARANTY AGREEMENT
The Partnership has entered into a guaranty agreement with EML
Associates (the "Venture"), a joint venture in which the Partnership
holds a 20% interest and invests in income-producing real properties
and a fixed-rate mortgage loan, to provide a minimum return to ML/EQ
Real Estate Portfolio, L.P.'s ("ML/EQ") limited partners on their
contributions. Payments on the guaranty are due 90 days following the
earlier of the sale or other disposition of all the properties and
mortgage loans and notes or the liquidation of ML/EQ. The minimum
return will be an amount which, when added to the cumulative
distributions from ML/EQ to its limited partners, will enable ML/EQ to
provide its limited partners with a minimum return equal to their
capital contributions plus a simple annual return of 9.75% on their
adjusted capital contributions calculated from the dates of ML/EQ's
investor closings at which investors acquired their Beneficial Assignee
Certificates ("BACs"). Adjusted capital contributions are the limited
partners' original cash contributions reduced by distributions of sale
or financing proceeds and by distributions of certain funds in
reserves, as more particularly described in ML/EQ's Partnership
Agreement. The limited partners' original cash contributions have been
adjusted by that portion of distributions paid through March 31, 1999
resulting from cash available to ML/EQ as a result of sale or financing
proceeds paid to the Venture.
The minimum return is subject to reduction in the event that certain
taxes, other than local property taxes, are imposed on ML/EQ or the
Venture, and is also subject to certain other limitations. If there
were no distributions until December 31, 2002, the expiration of the
term of ML/EQ, the maximum liability of the Partnership to the Venture
under the guaranty agreement as of March 31, 1999 is limited to
$119,292,639, plus the value of the Partnership's interest in the
Venture less any amounts contributed by the Partnership to the Venture
to fund cash deficits. The Venture has assigned its rights under the
guaranty agreement to ML/EQ. ML/EQ will have recourse under the
guaranty agreement only to the Partnership and EREIM LP Corp. as a
general partner of the Partnership but not to The Equitable Life
Assurance Society of the United States ("Equitable"). Equitable has
entered into a Keep Well Agreement with EREIM LP Corp. to permit EREIM
LP Corp. to pay its obligations with respect to the guaranty agreement
as they become due; provided, however, that the maximum liability of
Equitable under the Keep Well Agreement is an amount equal to the
lesser of (i) two percent of the total admitted assets of Equitable (as
determined in accordance with New York Insurance Law) or (ii)
$271,211,250. The Keep Well Agreement provides that only EREIM LP Corp.
and its successors will have the right to enforce Equitable's
obligation with respect to the guaranty agreement.
Capital contributions by the BAC holders of the Partnership totaled
$108,484,500. As of March 31, 1999, the cumulative 9.75% simple annual
return was $110,007,770. As of March 31, 1999, cumulative distributions
by the Partnership to the BAC holders totaled $109,091,999, of which
$27,663,548 is attributable to income from operations and $81,428,451
is attributable to sales of Venture assets, principal payments on
mortgage loans, and other capital events. To the extent that future
cash distributions to the limited partners are insufficient to provide
the specified minimum return, any shortfall will be funded by the
guarantor, up to the above described maximum.
7
<PAGE> 8
EREIM LP ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(unaudited)
1. GUARANTY AGREEMENT (Continued)
Effective as of January 1, 1997, the Partnership entered into an
amendment to the Joint Venture Agreement of the Venture between the
Partnership and ML/EQ pursuant to which the Partnership agreed to
defer, without interest, its rights to receive 20% of the Venture's
distributions of sale or financing proceeds until ML/EQ has received
aggregate distributions from the Venture in an amount equal to the
capital contributions made to ML/EQ by the BAC holders plus a
noncompounded cumulative return computed at the rate of 9.75% per annum
on contributions outstanding from time to time. Prior to the amendment,
the Partnership had a right to receive 20% of all the Venture's
distributions of sale or financing proceeds on a pari passu basis with
ML/EQ. The amendment has the effect of accelerating the return of
original contributions to BAC holders to the extent that sale or
financing proceeds are realized prior to the dissolution of ML/EQ.
2. INVESTMENT IN JOINT VENTURE
In March, 1988, ML/EQ had its initial investor closing. ML/EQ
contributed $90,807,268 to the Venture. The Partnership contributed
zero coupon mortgage notes to the Venture in the amount of $22,701,817.
The Venture purchased an additional $5,675,453 of zero coupon mortgage
notes from Equitable.
In May, 1988, ML/EQ had its second and final investor closing. ML/EQ
contributed $14,965,119 to the Venture. The Partnership contributed
zero coupon mortgage notes to the Venture in the amount of $3,741,280,
including accrued interest. The Venture purchased an additional
$935,320 of zero coupon mortgage notes from Equitable to bring the
total amount of zero coupon mortgage notes owned by the Venture to
$33,053,870, including accrued interest as of the dates of acquisition.
One of the zero notes was accounted for as a deed in lieu of
foreclosure by the Venture on July 22, 1994. The remaining note was due
on June 30, 1995. The borrower defaulted on its obligation to repay the
loan, and the collateral, Brookdale Center, was transferred to
Equitable and the Venture on December 16, 1996 as tenants in common,
pursuant to a Chapter 11 bankruptcy plan for reorganization filed with
the Bankruptcy Court by the borrower.
8
<PAGE> 9
2. INVESTMENT IN JOINT VENTURE (Continued)
The financial position and results of operations of the Venture are
summarized as follows:
SUMMARY OF FINANCIAL POSITION
MARCH 31, 1999 AND DECEMBER 31, 1998
(unaudited)
<TABLE>
<CAPTION>
March 31 December 31
-------- -----------
<S> <C> <C>
Assets:
Rental properties $ 45,971,242 $ 45,459,870
Accumulated depreciation (5,967,788) (5,586,628)
Rental properties, held for sale 31,208,125 41,869,718
------------ ------------
Net rental properties 71,211,579 81,742,960
Mortgage loan receivable -- 6,000,000
Cash and cash equivalents 9,448,126 10,677,613
Accounts receivable and accrued investment income 2,688,471 2,892,290
Deferred rent concessions 933,979 809,836
Deferred leasing costs 325,419 302,184
Prepaid expenses and other assets 831,692 875,369
Interest receivable 27,939 84,220
------------ ------------
Total assets $ 85,467,205 $103,384,472
============ ============
Liabilities and equity:
Accounts payable and accrued real estate expenses $ 1,970,043 $ 1,691,368
Accrued capital expenditures 479,463 788,395
Security deposits and unearned rent 384,617 343,922
Joint venturers' equity 82,633,083 100,560,787
------------ ------------
Total liabilities and equity $ 85,467,205 $103,384,472
============ ============
Partnership's share of joint venture equity $ 31,877,173 $ 32,023,757
============ ============
</TABLE>
9
<PAGE> 10
EREIM LP ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(unaudited)
2. INVESTMENT IN JOINT VENTURE (Continued)
SUMMARY STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(unaudited)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Revenue:
Rental income $ 4,587,277 $ 5,204,271
Lease termination income 0 12,500
Interest on loans receivable 51,250 153,750
----------- -----------
Total revenue 4,638,527 5,370,521
----------- -----------
Operating expenses:
Real estate operating expenses 2,400,023 2,072,565
Depreciation and amortization 394,108 1,058,352
Real estate taxes 452,444 537,918
Property management fees 96,199 107,690
----------- -----------
Total operating expenses 3,342,774 3,776,525
----------- -----------
Income from property operations 1,295,753 1,593,996
----------- -----------
Other income (expense):
Loss on sale of real estate (71,562) --
Loss on write-down of real estate assets (2,114,680)
General and administrative expense 0 (22,228)
Interest and other nonoperating income 157,579 177,029
----------- -----------
Total other income (loss), net (2,028,663) 154,801
----------- -----------
Net income (loss) $ (732,910) $ 1,748,797
=========== ===========
Partnership's share of equity in net income
(loss) of joint venture $ (146,584) $ 349,759
=========== ===========
</TABLE>
- --------------------------------------------------------------------------------
3. REAL ESTATE PROPERTIES HELD FOR SALE
At March 31,1999, the 300 Delaware and 16/18 Sentry Park West
properties are classified as held for sale, and accordingly the
application of depreciation has been suspended. Northland Mall, the
remaining property held for investment, continues to be
depreciated. In April 1999, management executed a purchase
and sale agreement to sell 300 Delaware for $8,750,000. A loss of
$2,114,680 was recorded in the first quarter of 1999 as a result of
this agreement in order to reduce 300 Delaware's carrying value to its
estimated net realizable value. Management expects to close this
transaction prior to the end of the third quarter, subject to customary
closing conditions and results of due diligence procedures. ML/EQ
anticipates making a special distribution of the net proceeds to BAC
holders shortly after the transaction is complete. Based on the
amendment to the Joint Venture Agreement effective as of January 1,
1997, the Partnership agreed to defer, without interest, its
rights to receive 20% of the Venture's distribution of sale or
financing proceeds, thereby entitling ML/EQ to receive 100% of the sale
or financing proceeds attributable to the sales. For 16/18 Sentry Park
West, management believes that the carrying value does not exceed
market value less selling costs. For the three months ended March 31,
1999, income from property operations includes approximately $736,000,
or 57%, of income from the two properties held for sale.
10
<PAGE> 11
As discussed in the Notes to Consolidated Financial Statements of the
Partnership's December 31, 1998 audited financial statements, on
January 27, 1999, the Venture consummated the sale of the Richland
Mall property at a sales price of $9,010,000. The net sales proceeds
received were $8,718,106, which resulted in a loss of $71,562.
4. MORTGAGE LOAN RECEIVABLE
In 1989, the Venture made a $6,000,000 nonrecourse first mortgage loan
bearing interest at 10.25% per annum. The loan was collateralized by an
apartment complex in Weston, Massachusetts. This note matured and was
paid in full on February 1, 1999.
5. LEGAL PROCEEDINGS
As discussed in the Notes to Financial Statements of the Partnership's
December 31, 1998 audited financial statements, the Partnership is a
defendant in a consolidated action brought in the Court of Chancery of
the State of Delaware entitled IN RE: ML/EQ Real Estate Partnership
Litigation. There have been no new developments associated with this
action for the three months ended March 31, 1999.
The Venture is currently in litigation with a current Northland Mall
tenant who is seeking damages for breach of lease. The Plaintiff, My
Inc, filed a claim with the State Court of Michigan in 1997. The
parties have agreed to the principal terms of a settlement, which has
not yet been finalized.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following analysis of the results of operations and financial
condition of the Partnership should be read in conjunction with the financial
statements and the related notes to financial statements included elsewhere
herein.
Certain Forward-Looking Information
Certain of the statements contained in this Quarterly Report on Form 10-Q
constitute forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These statements include, without limitation,
statements regarding future capital expenditures relating to renovation and
development activities. These forward-looking statements are included in this
Quarterly Report on Form 10-Q based on the intent, belief or current
expectations of the Partnership. However, such forward-looking statements are
not guarantees of future performance and involve risks and uncertainties, and
actual results may differ materially from those projected in the forward-looking
statements as a result of various factors. Although the Partnership believes
that the expectations reflected in such forward-looking statements are based
upon reasonable assumptions, it can give no assurance that its expectations will
be achieved. Factors that could cause actual results to differ materially from
the Partnership's current expectations include general local market conditions,
the investment climate for particular property types, individual property
issues, construction delays due to unavailability of materials, weather
conditions or other causes, leasing activities, risks associated with the
Year 2000 compliance issue, and the other risks detailed from time to
time in the Partnership's SEC reports, including the Annual Report on Form 10-K
for the year ended December 31, 1998.
Liquidity and Capital Resources
As of March 31, 1999, the Partnership had cash of $10,000. The cash is expected
to be used for general working capital purposes. The Partnership may establish
additional working capital reserves as the General Partners from time to time
determine are appropriate. In addition, at March 31, 1999, the Venture, in which
the Partnership owns a 20% interest, had approximately $9.5 million in cash and
cash equivalents. The cash balances that remain have been retained primarily to
fund potential costs that may be required to increase tenancy at 300 Delaware
and Northland Mall, both of which have significant vacancies. In addition, these
funds may be required to cover other general working capital requirements.
Management continues to evaluate appropriate strategies for the ownership of
each of the assets in its portfolio in order to achieve maximum value. In this
regard, management considers improving capital markets and investment market
conditions for real estate, local market conditions, future capital needs,
including potential lease exposure for specific properties; and other issues
that impact property performance. This ongoing analysis provides the
basis for hold/sell recommendations for the properties. Based on
this analysis of the various factors, management marketed for sale the Richland
Mall, 300 Delaware and 16/18 Sentry Park West properties in the second half of
1998. Due primarily to the turmoil in the financial markets during the third
11
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
quarter of 1998, management was unable to sell 300 Delaware and 16/18 Sentry
Park West in 1998 at an acceptable price. On January 27, 1999, the Venture
completed the sale of Richland Mall at a price of $9.01 million.
In accordance with management's strategy to achieve the maximum value for each
property prior to the termination of ML/EQ on December 31, 2002, management is
continuing its efforts to sell or position for sale the three remaining
properties. In April 1999, a purchase and sale agreement was executed for 300
Delaware at a price of $8.75 million. This potential sale is scheduled to close
in the third quarter of 1999, subject to the customary closing conditions,
including the results of the due diligence procedures. There is no assurance
that the sale of 300 Delaware will be completed. Remarketing efforts for 16 & 18
Sentry Park West commenced in April 1999, with the intent of selling the
property prior to the end of 1999. However, there is no certainty as to when
this property will be sold.
Additionally, management continues to evaluate appropriate strategies for
Northland Mall. While management has not engaged a broker to market the property
for sale, several brokers have provided an evaluation of the property to help
determine an appropriate plan of action for an exit strategy.
As of March 31, 1999, 300 Delaware and 16/18 Sentry Park West are classified
as held for sale. Based on the purchase and sale agreement price of $8.75
million for 300 Delaware, an additional reserve of $2.1 million was recognized
in the first quarter of 1999. Based on the current estimated value of 16 & 18
Sentry Park West, no reserve is required for this property.
FINANCIAL CONDITION
The Partnership's financial statements reflect its proportional ownership
interest in, and its share of the results of operations of the Venture, through
which the Partnership conducts its business of investment in real property.
The decrease in guarantee fee receivable of approximately $91,000, or 74%, from
$122,000 at December 31, 1998 to $31,000 at March 31, 1999 is attributable to
the payment to EREIM LP by ML/EQ of the $125,000 guaranty fee in February, 1999,
offset by the accrual of $34,000 of guaranty fee receivable for the first three
months of 1999.
The decrease in investment in joint venture of approximately $147,000, or .5%,
from $32.0 million at December 31, 1998 to $31.9 million at March 31, 1999
resulted from the $2.1 million write-down recorded on 300 Delaware.
RESULTS OF OPERATIONS
Equity in net income of the Venture decreased approximately $496,000, or 142%,
from $350,000 for the three months ended March 31, 1998 to $(147,000) for the
three months ended March 31, 1999. The decrease is due primarily to the $2.1
million write-down recorded on 300 Delaware during March 1999, of which the
Partnership's portion was approximately $423,000. The decrease also relates to
the sales of the 1200 Whipple Road and the 1345 Doolittle Drive properties in
late 1998, and the sale of the Richland Mall property in January 1999, resulting
in lower net income for the Venture for the three months ended March 31, 1999.
YEAR 2000
The inability of computers, software and other equipment to recognize and
properly process data fields containing a two-digit year is commonly referred to
as the Year 2000 compliance issue (Y2K). As the year 2000 approaches, such
systems may be unable to accurately process certain date-based information.
Y2K exposures of the Partnership and the Venture are currently being assessed.
Potential critical exposures include reliance on third party vendors and
building systems that are not Y2K compliant. The Venture has communicated with
our third party service vendors such as Lend Lease, Merrill Lynch and property
managers in an effort to assess their Y2K compliance status and the adequacy of
their Y2K efforts.
Each property owned by the Venture is being individually assessed in an effort
to identify critical Y2K issues specific to each property. The inventory survey
and assessment process for 16/18 Sentry Park West and Northland Mall have been
completed and remediation efforts are expected to be complete by July 31, 1999.
Remediation strategies have been developed based on assessment findings. The
inventory survey for 300 Delaware Avenue was halted due to the pending sale of
the property.
The Partnership and the Venture have incurred costs to date relating to Y2K of
approximately $27,000. The total property assessment costs to the Venture are
expected to be approximately $55,000 and the total cost for third party
engineers and consultants is expected to be approximately $12,700. Estimated
remediation costs of $30,000 are expected to be incurred to remediate and test
non-compliant building systems, for a total estimated cost of $97,700.
12
<PAGE> 13
The failure to adequately address the Year 2000 issue may result in a delay or
temporary suspension of certain building services, the closure of buildings
owned by the Venture, or delay in distributions to BAC Holders. In order to
reduce the potential impact on the operations of the Partnership and the
Venture, contingency plans for the Partnership entity will be developed by
July 31, 1999.
Likewise, contingency plans will be developed by June 30, 1999 for each of the
buildings owned by the Venture on a property by property basis. This will allow
the efficient development of contingency plans that take into account individual
circumstances surrounding each property. Contingency plans may involve the
engagement of additional security services, implementation of temporary systems
modifications, and the identification and engagement of alternate service
vendors. Additional contingency plans may be developed as circumstances warrant.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the exposure to loss resulting from changes in interest rates,
foreign currency exchange rates, commodity prices, and equity prices. As of
March 31, 1999, the Partnership had no material exposure to market risk.
13
<PAGE> 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As discussed in the Notes to Financial Statements of the Partnership's December
31, 1998 audited financial statements, the Partnership is a defendant in a
consolidated action brought in the Court of Chancery of the State of Delaware
entitled IN RE: ML/EQ Real Estate Partnership Litigation. There have been no new
developments associated with this action for the three months ended March 31,
1999.
The Venture is currently in litigation with a current Northland Mall tenant who
is seeking damages for breach of lease. The Plaintiff, My Inc, filed a claim
with the State Court of Michigan in 1997. The parties have agreed to the
principal terms of a settlement, which has not yet been finalized.
Item 2. Changes in Securities
Response: None
Item 3. Default Upon Senior Securities
Response: None
Item 4. Submission of Matters to a Vote of Security Holders
Response: None
Item 5. Other Information
Response: None
Item 6. Exhibits and Reports on Form 8-K
The Partnership filed a Current Report on Form 8-K on February
17, 1999, pursuant to which the sales of two of the Properties,
1850 Westfork Drive and Richland Mall, were reported.
a) Exhibits
27 Financial Data Schedule (for SEC filing purposes only)
b) Reports
None
14
<PAGE> 15
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Partnership has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
EREIM LP ASSOCIATES
By: EREIM LP Corp.
---------------------------------
General Partner
By: /s/Patricia C. Snedeker
---------------------------------
Patricia C. Snedeker
Vice President, Controller
and Treasurer
(Principal Accounting Officer)
Dated: May 14, 1999
15
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- --------------------------------------------------------------
<S> <C>
27 Financial Data Schedule (for SEC filing purposes only)
</TABLE>
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF EREIM LP ASSOCIATES FOR THE PERIOD ENDED MARCH 31, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 10,000
<SECURITIES> 0
<RECEIVABLES> 31,049
<ALLOWANCES> 0
<INVENTORY> 0
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0
0
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</TABLE>
