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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the fiscal year ended December 31, 1999
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission File Number 33-11064
EREIM LP ASSOCIATES
(Exact name of registrant as specified in governing instrument)
New York 58-1739527
(State of organization) (IRS Employer Identification No.)
787 Seventh Avenue, New York, N.Y. 10019
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 554-1926
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
<S> <C>
None None
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
The Investment Guarantee Agreement (Title of Class) has
not been registered as of the date of this Report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [x] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant.
Not Applicable
DOCUMENTS INCORPORATED BY REFERENCE
Selected portions of the Prospectus of ML/EQ Real Estate Portfolio, L.P., a
Delaware limited partnership, dated April 23, 1987, as supplemented by
supplements dated March 3, 1988 and March 17, 1988 (File No. 33-11064) filed
pursuant to Rule 424 of the Securities Act of 1933, as amended, are incorporated
by reference in Parts I and II of this Annual Report on Form 10-K.
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The Form 10-K of EREIM LP Associates for the year ended December 31,
1999 is being amended to provide additional disclosure under Item 7. Management
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources.
PART I.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
As of December 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, the Partnership owns a 20% interest in the Venture. At
December 31, 1999, the Venture owned an undivided interest in Northland Center
as a tenant in common with Equitable. Northland Center (originally a property
that secured a zero coupon mortgage note of the Venture), was transferred to the
Venture during 1994 in a deed in lieu of foreclosure transaction. The estimated
fair market value of the Venture's undivided interest in the Northland Center
Zero Coupon Mortgage Note Receivable immediately preceding the transfer was
approximately $32.2 million. The carrying value of Northland Center was adjusted
to the lower of cost or estimated net realizable value, resulting in a loss of
approximately $18.9 million in 1999.
At December 31, 1999, the Venture also had approximately $11.5 million
in cash and cash equivalents. The Venture retained this amount primarily to fund
potential capital expenditures that might have been required to retenant or
reconfigure the Montgomery Ward and J.C. Penney buildings. J.C. Penney had
expressed an interest in relocating to the smaller vacant Montgomery Ward space
and another national anchor tenant had expressed interest in occupying a
significant portion of the larger J.C. Penney space. The proposals related to
this retenanting scenario involved a significant amount of capital expenditure
to be incurred by the Venture. At this time, it also appears to be highly
unlikely that the other National anchor tenant with which the Venture was
negotiating will agree to open a store in Northland Center. No other potential
anchor tenant candidates have been identified. In March 2000, J.C. Penney
announced that they would be closing their Northland Center store on June 1,
2000. In light of this turn of events, the Venture has reevaluated its operating
and working capital requirements and will retain approximately $3.0 million to
cover potential operating and working capital expenses. The Venture will
distribute $8.5 million in the aggregate on April 25, 2000, of which $6.8
million or 80% will be distributed to ML/EQ and $1.7 million or 20% will be
distributed to the Partnership. ML/EQ will in turn distribute approximately $6.7
million on May 1, 2000 to BAC Holders of record as of March 1, 2000.
Approximately $100,000 will be retained by ML/EQ to cover general partnership
obligations of ML/EQ. ML/EQ will continue to make periodic determinations of the
advisability of distributing operating cash flow. For 1999, 1998 and 1997, ML/EQ
received distributions from the Venture totaling approximately $54.2 million,
$43.1 million and $34.5 million, respectively.
The Venture's remaining Property and the properties sold during 1999
were acquired without mortgage indebtedness, and neither the Venture nor ML/EQ
has incurred any borrowings. In aggregate, the Venture's Property is currently
producing operating cash flow to the Venture which, net of expenses of the
Venture and the establishment or increase of reserves, is distributable 20% to
the Partnership and 80% to ML/EQ.
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ML/EQ conducts an on-going analysis of the Venture's properties as a
basis for hold/sell recommendations for the properties. As a result of the
analysis, on January 27, 1999 the Venture completed the sale of the Richland
Mall property for $9.01 million, on July 23, 1999, the Venture completed the
sale of the 300 Delaware property for $8.75 million and on October 28, 1999, the
Venture completed the sale of the 16/18 Sentry Park West Property for $29.05
million. In addition, at December 31, 1999, the Venture's only remaining
property was classified as held for sale. While the Partnership Agreement
provides that the term of ML/EQ may extend until December 31, 2002, ML/EQ's
present intention is to sell the remaining Property in advance of the foregoing
date.
For 1999, the Partnership received no distributions from the Venture.
In addition, the Partnership received payments totaling $181,370 in respect of
the fee for providing the guarantee of minimum return pursuant to the Guaranty
Agreement. The Partnership will continue to be entitled to the recurring portion
of the Guaranty Fee at the rate of .35% of average annual adjusted capital
contributions of BAC Holders. The Partnership currently distributes all or
substantially all of its share of cash distributions from the Venture (as well
as payments of the Guaranty Fee) to its partners and expects to continue to do
so.
Under the terms of the Guaranty Agreement which has been assigned to
ML/EQ, following the earlier of the sale or other disposition of the Property or
the liquidation of ML/EQ, the Partnership has guaranteed to pay an amount which,
when added to all distributions from ML/EQ to the BAC Holders, will enable ML/EQ
to provide the BAC Holders with a minimum return equal to their original capital
contributions plus a simple annual return equal to 9.75% simple interest per
annum multiplied by their adjusted capital contributions, calculated from the
investor closing at which an investor acquired his or her BACs, subject to
certain limitations. Since inception, ML/EQ has made the following
distributions:
<TABLE>
<CAPTION>
Period Ended Date Paid Distribution per BAC
------------ --------- --------------------
<S> <C> <C>
December 31, 1990 February 28, 1991 $0.25
June 30, 1991 August 31, 1991 $0.50
December 31, 1991 February 28, 1992 $0.50
June 30, 1992 August 31, 1992 $0.662(1)
December 31, 1992 February 28, 1993 $0.40
June 30, 1993 --- $0.00
December 31, 1993 February 28, 1994 $0.10(2)
June 30, 1994 August 31, 1994 $0.10(2)
December 31, 1994 February 28, 1995 $0.15(2)
June 30, 1995 August 31, 1995 $0.15(2)
December 31, 1995 February 29, 1996 $0.10(2)
June 30, 1996 August 29, 1996 $0.10(2)
December 31, 1996 February 28, 1997 $0.15(2)
June 30, 1997 August 29, 1997 $2.70(3)
</TABLE>
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<TABLE>
<CAPTION>
Period Ended Date Paid Distribution per BAC
------------ --------- --------------------
<S> <C> <C>
November 30, 1997 December 23, 1997 $3.26(4)
December 31, 1997 February 27, 1998 $2.75(5)
June 30, 1998 August 31, 1998 $0.25
November 30, 1998 December 21, 1998 $4.82(6)
December 31, 1998 February 26, 1999 $0.45(7)
January 31, 1999 February 26, 1999 $1.61(8)
February 26, 1999 March 12, 1999 $1.11(9)
July 31, 1999 August 16, 1999 $1.55(10)
October 31, 1999 November 17, 1999 $5.28(11)
</TABLE>
(1) The distribution made on August 31, 1992 to holders of record on June
30, 1992 includes a $0.162 distribution of sale or financing proceeds
associated with the termination of the lease with Saab-Scania of
America, Inc. ("Saab") at 1850 Westford Drive.
(2) All of the distributions made from 1994 through February 28, 1997
constitute distributions of sale or financing proceeds derived from a
portion of the proceeds from the pay-off of a mortgage loan to the
Second Merritt Seven Joint Venture on November 22, 1993.
(3) The August 29, 1997 distribution represents a distribution of
distributable cash from operations. ML/EQ made a decision to distribute
a major portion of the monies previously held following its decision to
sell one of its properties, Brookdale Center.
(4) The December 23, 1997 distribution constitutes distributions of sale or
financing proceeds derived from the sale of Brookdale Center.
(5) The February 27, 1998 distribution constitutes distributions of sale or
financing proceeds derived from the sale of the Chicago Industrial
Properties during 1997, remaining proceeds from both the sale of
Brookdale Center and the pay-off of the mortgage loan to the Second
Merritt Seven Joint Venture and early lease termination payments.
(6) The December 21, 1998 distribution constitutes distributions of sale or
financing proceeds derived from the sale of the properties located at
1200 Whipple Road and 1345 Doolittle Drive.
(7) The distribution made on February 26, 1999 to holders of record on
December 18, 1998 represents sale or financing proceeds from the sale
of 1850 Westfork Drive Property.
(8) The distribution made on February 26, 1999 to holders of record on
January 27, 1999 represents sale or financing proceeds from the sale of
Richland Mall.
(9) The distribution made on March 12, 1999 to holders of record on
February 1, 1999 constitutes distributions of the proceeds from the
payoff of the Jericho Village loan.
(10) The distribution made on August 16, 1999 to holders of record on July
23, 1999 represents sale or financing proceeds from the sale of the 300
Delaware Property.
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(11) The distribution made on November 17, 1999 to holders of record on
October 28, 1999 represents sale or financing proceeds from the sale of
the 16/18 Sentry Park West Property.
The levels of cash distributions from the Venture to the Partnership
and ML/EQ principally will be dependent on returns from the Venture's
investments, after taking account of capital expenditures and future reserve
requirements. These amounts are expected to fluctuate from time to time based on
changes in occupancy, rental and expense rates at the Venture's Property and
other factors.
During 1997, 1998 and 1999, the Venture received approximately
$133,000, $13,000 and $249,000, respectively, for early lease termination
payments. These early lease termination payments were classified as sale or
financing proceeds and were distributed in 1998 and 1999. See Item 5. MARKET FOR
REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The amount and
timing of distributions from sale or financing proceeds depend upon the timing
of disposition of properties as well as the need to allocate such funds to
increase reserves.
The Venture, ML/EQ, and the Partnership are all intended to be
self-liquidating in nature, meaning that proceeds from the sale of properties or
principal repayments of loans will not be reinvested but instead will be
distributed to BAC Holders and partners, subject to certain limitations. Under
the terms of the Guaranty Agreement which has been assigned to ML/EQ, following
the earlier of the sale or other disposition of the remaining Property or the
liquidation of ML/EQ, the Partnership has guaranteed to pay an amount which,
when added to all distributions from ML/EQ to the BAC Holders, will enable ML/EQ
to provide the BAC Holders with a minimum return equal to their original capital
contributions plus a simple annual return equal to 9.75% simple interest per
annum multiplied by their adjusted capital contributions calculated from the
investor closing at which an investor acquired his or her BACs, subject to
certain limitations. Capital contributions by the BAC Holders totaled
$108,484,500. As of December 31, 1999, the cumulative 9.75% simple annual return
was $111,468,412. As of December 31, 1999, cumulative distributions by ML/EQ to
the BAC Holders totaled $146,139,456, or $26.94 per BAC, of which $27,663,548 is
attributable to income from operations and $118,475,908 is attributable to sales
of Venture assets, principal payments on mortgage loans and other capital
events. ML/EQ does not currently believe that future cash distributions to the
limited partners from liquidation of Venture assets will be sufficient to
provide the specified Minimum Return. Accordingly, the shortfall will be funded
by the guarantor, up to the above described maximum.
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SIGNATURES
Pursuant to 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 on the 21st day of April, 2000.
EREIM LP ASSOCIATES
By: EREIM LP CORP.
(General Partner)
By: /s/Joseph A. DeLuca
---------------------------------------
JOSEPH A. DELUCA
President, Chief Executive Officer and
Director
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