<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d) of the
- ---- Securities Exchange Act of 1934
For the fiscal year ended: December 31, 1998
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 no.: 0-16285
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
----------------------------------------------------------
(Exact name of registrant as specified in its Partnership
Agreement)
MARYLAND 52-1490861
(State of Organization) (IRS Employer Identification Number)
100 Light Street, Baltimore, Maryland 21202
(Address of principal executive offices) (Zip code)
Registrant's phone number, including area code: (410) 539-0000
Securities registered pursuant to Section 12(b) of the Act: none
Securities registered pursuant to Section 12(g) of the Act:
Units of Assignee Limited Partnership Interests
(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
--- ---
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]
Portions of the Registrant's Prospectus dated March 25, 1987 (included
in Registration Statement No. 33-11086) are incorporated by reference
into Parts II and III
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
Mid-Atlantic Centers Limited Partnership (the "Partnership") was
organized under the Maryland Revised Uniform Limited Partnership Act on
December 16, 1986. The Partnership was formed to acquire, hold, lease
and ultimately sell a portfolio of community and neighborhood shopping
center properties. The General Partners of the Partnership are FW
Realty Limited Partnership, organized under the Uniform Limited
Partnership Act of the District of Columbia, and Realty Capital IV
Limited Partnership, organized under the Maryland Revised Uniform
Limited Partnership Act (collectively, the "General Partners").
The Partnership had an original portfolio of eleven shopping centers.
The Partnership sold ten of the properties as follows: Orchard Square
Shopping Center on December 29, 1995, Holiday Shopping Center on May 3,
1996, Cloister Shopping Center on May 28, 1997, Jackson Heights
Shopping Center on July 16, 1997, Berkeley Square Shopping Center on
September 10, 1997, Highlandtown Village Shopping Center on December
19, 1997, Lynnwood Place Shopping Center on January 29, 1998, Edgewood
Plaza Shopping Center on March 2, 1998, Woodlawn Village Shopping
Center on April 30, 1998 and Quality Center Shopping Center on June 5,
1998. Each of the eleven shopping centers acquired by the Partnership
were purchased from unaffiliated parties and the ten sold were acquired
from the Partnership by unaffiliated parties. See Item 7,
"Management's Discussion and Analysis of Financial Condition and
Results of Operations."
The General Partners approved a plan of liquidation effective December
31, 1997. The plan provided that the Partnership sell or otherwise
dispose of the Partnership's remaining shopping centers, liquidate all
assets remaining after sale of the shopping centers and distribute net
proceeds to the assignee limited partners. The Partnership adopted the
liquidation basis of accounting effective December 31, 1997. Prior to
that date, the Partnership recorded results of operations using the
accrual basis of accounting. See Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations, - General."
As of the date of this filing and as of December 31, 1998, the
Partnership owns one shopping center property, Tarrytown Mall Shopping
Center in Rocky Mount, North Carolina. No value currently is ascribed
to Tarrytown Mall in the estimated net asset value of the Partnership's
assets, and none has been ascribed from and after December 31, 1995.
The Partnership has offered to deed Tarrytown Mall to the second trust
lender in satisfaction of the mortgage debt. See Item 2,
"Properties," and Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
The Partnership has no employees. The General Partners or their
affiliates provide, or contract with third parties to provide, services
required for Partnership operation and administration. See Item 13,
"Certain Relationships and Related Transactions."
<PAGE> 3
ITEM 2. PROPERTIES
The Partnership has sold ten of its eleven shopping center properties
as stated in Item 1, "Business". The Partnership has offered to deed
its remaining property, Tarrytown Mall, to the second trust mortgage
lender in satisfaction of mortgage indebtedness encumbering the
property. See Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
In order to provide certain information required by retirement account
investors, the General Partners value the assets of the Partnership at
December 31 each year. Based on 1,200,000 Assignee Limited Partnership
Units (the "Units") outstanding, the Partnership's net assets were
valued at approximately $6.31 per Unit as of December 31, 1997 as
described in Item 2, "Properties" of the Partnership's Annual Report
on Form 10-K for the year ended December 31, 1997. In 1998, subsequent
to that valuation, $5 per Unit ($3 per Unit in February and $2 per Unit
in May) in sales proceeds were distributed to Limited Partners. These
distributions directly reduced the net asset value of the Partnership.
The General Partners currently intend to make a final distribution to
Limited Partners subsequent to the liquidation of all partnership
assets and provision for all partnership liabilities. As of December
31, 1998 and currently, the General Partners estimate the net amount of
the final distribution to be in the range of $1.15 to $1.25 per Unit
with the ultimate amount particularly dependent on collection of
accounts receivable and expenses of the Partnership until
completely liquidated.
TARRYTOWN MALL SHOPPING CENTER
In September 1988, the Partnership purchased Tarrytown Mall Shopping
Center ("Tarrytown Mall"), a 322,081 leasable square-foot enclosed
mall. The property is located in Rocky Mount, North Carolina. The
largest tenants at Tarrytown Mall include Montgomery Ward, Goody's
Family Clothing and a public charter school.
The Partnership estimates its net equity in Tarrytown Mall at zero,
reflecting an appraised value of that center below non-recourse debt.
No value currently is ascribed to Tarrytown Mall (or related asset
accounts) in the estimated net asset value of the Partnership's assets
and none has been ascribed from and after December 31, 1995.
In view of these circumstances, the Partnership has offered to deed
Tarrytown Mall to the second trust lender in satisfaction of mortgage
indebtedness encumbering the property. Pursuant to the terms of the
second trust, payment obligations with respect to the Tarrytown Mall
indebtedness are limited to funds generated by operations at that
property. An obligation in the amount of approximately $212,000 for
funds so generated is reflected as a liability in the Partnership's
financial statements as of December 31, 1998. Absent resolution of the
terms of a voluntary transfer of the center, the Partnership
anticipates foreclosure of the property.
<PAGE> 4
Effective January 1, 1999, with the consent of the Partnership, the
second trust lender of Tarrytown Mall assumed management of the
property. On January 6, 1999, that lender paid the outstanding
principal balance plus accrued interest on the first trust mortgage
secured by that property which matured January 1, 1999, and such
payment was considered an advance under the second trust mortgage. The
mortgage escrow balances held by the first trust lender were applied to
pay down the first trust mortgage principal.
As of December 31, 1998, average annual net rent at Tarrytown Mall was
$3.69 per square foot and the range of net rental rates were $1.96 to
$17.28 per square foot. Average annual net rent is calculated based on
the shopping center's aggregate annual net rent (prior to assessments
for pass-throughs) for leases in place as of December 31, 1998 divided
by the total leased square feet for the shopping center as of that
date. For purposes of this calculation, net rental rates do not
include net rental rates for kiosks.
As of December 31, 1998, 26 tenants have leases expiring in 1999. The
square footage of leases expiring represents 20% of the total square
footage. These tenants contributed approximately $329,000 to 1998
total rent of Tarrytown Mall or 35% of total rent. Total rent for
purposes of these calculations does not include tenant reimbursement
income or rental income accrued for rent adjustments related to rent
abatements and scheduled rent increases.
As of December 31, 1998, tenants leasing 10% or more of the space
in Tarrytown Mall include a public charter school leasing 79,066 square
feet or 25% of total leasable space and Montgomery Ward, a department
store, leasing 74,069 square feet or 23% of total leasable space. The
annual rents per square foot for the public charter school and
Montgomery Ward are $3.75 and $1.96, respectively. Their lease
expiration dates are June 2012 and October 2003, respectively. The
charter school has four five-year lease renewal options with rent at
escalating rates per square foot. Montgomery Ward has three five-year
lease renewal options with rent at an identical rate per square foot as
the original lease.
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not presently involved in any material litigation
nor, to its knowledge, is any material litigation threatened against
the Partnership or its properties, other than routine litigation
arising in the ordinary course of business or which is expected to be
covered by the Partnership's liability insurance.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of investors (the "Limited
Partners") holding Units during 1998.
<PAGE> 5
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S UNITS OF ASSIGNEE LIMITED
PARTNERSHIP INTERESTS AND RELATED SECURITY HOLDER MATTERS
The Partnership completed its public offering of Units on November 11,
1987. As of December 31, 1998, there were approximately 2,700 holders
of 1,200,000 Units of the Partnership. There is no trading market for
the Units and there is no expectation that one will develop. See Page
66 of the Partnership's Prospectus dated March 25, 1987 incorporated by
reference herein, for a discussion of the restrictions on transfer of
the Units.
In 1998 and 1997, the Partnership made cash distributions to limited
partners aggregating $6,000,000 ($5 per Unit) and $4,800,000 ($4 per
Unit), respectively, which represented proceeds from the sales of
shopping centers. Prior to these distributions, no cash distributions
had been made to Limited Partners since 1990. See Pages 59 through 62
of the Partnership's Prospectus dated March 25, 1987 incorporated by
reference herein, for a discussion of the manner in which distributions
of cash flow, sale, or refinancing proceeds and allocations of the net
income or net loss from operations and gain or loss from a sale or
refinancing are to be made by the Partnership.
ITEM 6. SELECTED FINANCIAL DATA
The General Partners approved a plan of liquidation effective December
31, 1997. As a result, the liquidation basis of accounting was adopted
effective December 31, 1997. Prior to that date, the Partnership
recorded results of operations using the accrual basis of accounting.
The following tables set forth selected financial information relating
to the Partnership's financial position and operating results. The
financial information for 1998 is not comparable to that for prior
years as a result of the Partnership's adoption of the liquidation
basis of accounting. As a result, the financial information for 1998
is presented in a separate table. For comparative purposes, the
financial information for 1997 reflects the Partnership's operating
results and financial position immediately prior to the adoption of
liquidation accounting. The information from both tables 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, respectively, herein.
<PAGE> 6
For the Year Ended
December 31, 1998
------------------
Operating Results:
Net loss from operating activities $ (184,659)
Financial Position, End of Year:
Investment in real estate 8,040,351
Total assets 9,929,185
Long-term debt, including
current maturities 6,519,937
Interest payable 1,520,414
Net assets in liquidation 1,497,106
Per Assignee Limited Partnership Unit:
Cash distributions 5.00
For the Years Ended December 31,
-----------------------------------------------
1997 1996 1995 1994
---------- ----------- ---------- ----------
Operating Results: (1)
Total income $5,471,208 $6,476,674 $7,426,069 $7,907,735
Loss from rental operations (1,347,928) (3,500,781) (3,313,097) (1,727,918)
Gain (loss) from sales 647,002 (78,687) (2,271,249) -
Extraordinary gain related
to forgiveness of debt - - 1,602,902 -
Net loss (479,417) (3,225,468) (3,778,465) (1,717,157)
Financial Position, End of
Year: (1)
Investment in real estate
held for lease, net (2) 19,428,332 34,384,021 39,787,906 50,532,803
Total assets (2) 25,995,109 39,667,115 43,564,545 53,218,234
Long-term debt, including
current maturities 19,429,050 28,104,113 29,130,611 35,285,891
Per Assignee Limited
Partnership Unit:
Net loss (1) (0.52) (2.71) (3.57) (1.42)
Cash distributions 4.00 - - -
(1) - The 1997, 1996, 1995 and 1994 operating results and the financial
position as of December 31, 1997, 1996, 1995 and 1994 reflect the
effect of write-downs of assets totaling $550,000 in 1997 related
to Berkeley Square, $2,895,000 in 1996 and $2,606,156 in 1995 related
to Tarrytown Mall and $1,587,746 in 1994 related to Tarrytown Mall
and Holiday. See Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations," herein for a
discussion of the write-downs of assets.
(2)- The 1997 investment in real estate held for lease, net and total
assets reflect the Partnership's financial position immediately
prior to the adoption of liquidation accounting.
<PAGE> 7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The matters discussed in this Form 10-K include forward-looking
statements as contemplated by the Private Securities Litigation Reform
Act of 1995. Forward-looking statements are statements which relate to
future operations, strategies, financial results, or other
developments. Forward-looking statements are necessarily based upon
estimates and assumptions that are inherently subject to significant
business, economic and competitive risks, uncertainties and
contingencies, many of which are beyond the Partnership's control and
many of which, with respect to future business decisions, are subject
to change. These risks, uncertainties and contingencies can affect
actual results and could cause actual results to differ materially from
those expressed in any forward-looking statements made by the
Partnership.
The General Partners approved a plan of liquidation effective December
31, 1997. The plan provides that the Partnership sell or otherwise
dispose of the Partnership's remaining shopping centers, liquidate all
assets remaining after sale of the shopping centers and distribute net
proceeds to the assignee limited partners. The Partnership adopted the
liquidation basis of accounting effective December 31, 1997. Prior to
that date, the Partnership recorded results of operations using the
accrual basis of accounting.
Under the liquidation basis of accounting, assets are stated at their
estimated net realizable values and liabilities are stated at their
anticipated settlement amounts. The valuation of assets and
liabilities necessarily requires estimates and assumptions, and there
are substantial uncertainties in carrying out the dissolution of the
Partnership. The actual values upon dissolution and costs associated
therewith could be higher or lower than the amounts recorded. In
connection with the planned liquidation, the Partnership has recorded a
reserve for additional expenses to reflect the Partnership's best
estimate of the costs associated with the liquidation.
The Partnership's rental income from its shopping center properties has
consisted of base rents from tenants occupying space in each shopping
center. In addition, certain leases have provided for additional rent
computed based on a percentage of gross sales in excess of specified
levels. In some cases, leases have provided for rent abatements and
scheduled rent increases over the life of the lease. Prior to the
adoption of the liquidation basis of accounting, to the extent a lease
provided for rent abatements or adjustments, the Partnership, in
accordance with generally accepted accounting principles, recognized
rental income on the basis of equal monthly payments over the term of
such lease. The balance of the tenant accounts receivable related to
the recording of rental income on a straight-line basis were written
off upon adoption of liquidation accounting.
<PAGE> 8
Tenant reimbursement income has included payments made by tenants under
leases representing payment of a tenant's agreed share of real estate
taxes, insurance, utility charges and common area maintenance expenses.
Other expenses have included the balance of utility expenses, leasing
expenses (other than commissions) and miscellaneous expenses such as
legal and accounting fees and administrative expenses.
The Partnership's shopping centers are held subject to mortgages with
principal balances as of December 31, 1996, 1997 and 1998 as described
in the following chart:
MORTGAGE LOANS SECURED BY SHOPPING CENTERS
<TABLE>
<CAPTION>
FACE
SHOPPING CENTER INTEREST MATURITY AMOUNT OF BALANCE BALANCE BALANCE
MORTGAGES RATE DATE MORTGAGES 12/31/96 12/31/97 12/31/98
- -------------------- ---- ------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Tarrytown Mall - 9.25% at
first trust (1) 12/31/98(2) 1/1/99 $2,640,940 $1,674,940 $1,404,940 $1,134,940
Tarrytown Mall -
second trust 8.0% 1/1/99 6,500,000 5,384,997 5,384,997 5,384,997
Woodlawn Village - - 1,950,000 1,810,780 1,774,747 -
Lynnwood Place - - 6,600,000 6,220,016 5,846,495 -
Edgewood Plaza - - 1,400,000 1,380,501 1,362,160 -
Quality Center - - 4,150,000 3,692,436 3,655,711 -
Highlandtown Village - - 3,275,000 3,136,332 - -
Jackson Heights - - 2,450,000 1,974,849 - -
Cloister - - 1,750,000 1,444,197 - -
Berkeley Square - - 1,975,000 1,385,065 - -
----------- ----------- ----------- -----------
Totals $32,690,940 $28,104,113 $19,429,050 $6,519,937
=========== =========== =========== ===========
(1) - The Tarrytown Mall first trust mortgage was paid in full by the second trust
lender on January 6, 1999, and such payment was considered an advance
under the second trust mortgage.
(2) - Interest rate at the prime rate plus 1.50%, with a floor of 7.5%.
</TABLE>
The mortgage loans are generally without recourse to the assets of the
Partnership other than the particular property (and related
receivables, leases, personal property and certain escrows) securing
such mortgage loans. The mortgages are not cross-collaterized.
At December 31, 1998, Tarrytown Mall was subject to $6,519,937 in
mortgage indebtedness, of which $1,134,940 was represented by a first
trust mortgage and $5,384,997 was represented by a second trust
mortgage. In addition, at December 31, 1998, approximately $1,520,414
of interest was accrued with respect to the second mortgage.
Tarrytown Mall's first trust mortgage required principal payments of
$22,500 per month until January 1, 1999, when the mortgage was scheduled
to mature. On January 6, 1999, Tarrytown Mall's second trust lender paid
the outstanding principal balance and accrued interest on the first trust
mortgage, and such payment was considered an advance under the second
<PAGE> 9
trust mortgage. The mortgage escrow balances held by the first trust
lender were applied to pay down first trust mortgage principal.
The second trust mortgage requires that after payment of first trust
debt service and capital improvements made with respect to Tarrytown
Mall, net cash flow from operations from that center be applied to
second trust mortgage interest and principal curtailments. To the
extent that net cash flow is insufficient to make second trust debt
service payments, unpaid interest on the second trust loan is accrued
rather than paid. The Partnership accrued approximately $430,000 in
unpaid interest in 1998. Accrued and unpaid interest bears interest at
8% per annum and is due at the maturity of the loan or earlier to the
extent net cash flow is available.
The Partnership has offered to deed Tarrytown Mall to the second trust
lender in satisfaction of mortgage indebtedness encumbering the
property. Pursuant to the terms of the mortgage agreement, payment
obligations with respect to the Tarrytown Mall indebtedness are limited
to funds generated by operations at that property. An obligation in
the amount of approximately $212,000 for funds so generated is
reflected as a liability in the Partnership's financial statements as
of December 31, 1998. Absent resolution of the terms of a voluntary
transfer of the center, the Partnership anticipates foreclosure of the
property.
CASH FLOW
The Partnership recorded a $3,476,902 net decrease in cash and cash
equivalents in 1998. The decrease in cash and cash equivalents is
primarily attributable to the payment of distributions to limited
partners totaling $6,000,000 in 1998 which was offset in part by net
proceeds aggregating approximately $2,316,000 from the sale of four
shopping centers in 1998. The sale of Lynnwood Plaza Shopping Center
on January 29, 1998, Edgewood Plaza Shopping Center on March 2, 1998,
Woodlawn Village Shopping Center on April 30, 1998 and Quality Center
Shopping Center on June 5, 1998 contributed approximately $249,000,
$912,000, $539,000 and $616,000, respectively, to cash and cash
equivalents after payment of mortgage debt and transaction expenses
related to the sales. See the discussions of the sales of these
centers incorporated by reference from Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources," herein.
LIQUIDITY AND CAPITAL RESOURCES
The cash and cash equivalents position of the Partnership at December
31, 1998 decreased approximately $3,477,000 from December 31, 1997
primarily as a result of payment of distributions to limited partners
of $6,000,000, offset in part by aggregate net proceeds from the sale
of shopping centers of approximately $2,316,000.
<PAGE> 10
As of December 31, 1998, cumulative cash distributions of $17,447,888
and $62,391 had been made to Limited Partners and General Partners,
respectively. During 1998 and 1997, the Partnership made cash
distributions aggregating $10,800,000 or $9 per Assignee Limited
Partnership Unit ("Unit") to Limited Partners which represented
proceeds from the sales of shopping centers and directly reduced the
net asset value of the Partnership. Prior to 1997, cumulative cash
distributions of $6,647,888 and $62,391 had been made to Limited
Partners and General Partners, respectively.
The General Partners agreed to loan to the Partnership, without
interest, up to a maximum amount equal to 50% of the acquisition fees
actually paid to them at the time the loan was made in the event the
annual cumulative non-compounded return to Limited Partners fell below
7% of the allocable invested capital for the period from February 1,
1989 through January 31, 1992. In 1990, the General Partners fulfilled
their obligation under the Cash Flow Protector provisions. Prior to
the adoption of liquidation accounting, the Partnership's financial
statements reflected Cash Flow Protector Loans totaling $789,203, which
were payable to FW Realty Limited Partnership in the amount of $599,794
and to Realty Capital IV Limited Partnership in the amount of $189,409.
Effective December 31, 1997, the amounts payable under the Cash Flow
Protector Loans were reduced to zero to reflect the loans at their
estimated payable amounts.
In addition, upon adoption of liquidation accounting which was
effective December 31, 1997, acquisition fees totaling $73,431, which
were payable to FW Realty Limited Partnership in the amount of $55,808
and to Realty Capital IV Limited Partnership in the amount of $17,623,
were written off to reflect the determination of the General Partners
not to make such payments.
The General Partners currently intend to make a final distribution to
Limited Partners subsequent to the liquidation of all partnership
assets and satisfaction of all partnership liabilities. As of December
31, 1998 and currently, the General Partners estimate the net amount of
the final distribution to be in the range of $1.15 to $1.25 per Unit
with the ultimate amount particularly dependent on collection of
accounts receivable and expenses of the Partnership until completely
liquidated.
During 1998, the Partnership sold Lynnwood Place Shopping Center,
Edgewood Plaza Shopping Center, Woodlawn Village Shopping Center and
Quality Center Shopping Center. During 1997, the Partnership sold
Cloister Shopping Center, Jackson Heights Shopping Center, Berkeley
Square Shopping Center and Highlandtown Village Shopping Center.
On January 29, 1998, the Partnership sold Lynnwood Place Shopping
Center for a contract price of $6,365,000. Net proceeds from the sale,
after payment of mortgage debt and transaction expenses and adjustments
for mortgage escrow balances, were approximately $249,000 or $0.21 per
Unit.
On March 2, 1998, the Partnership sold Edgewood Plaza Shopping Center
for a contract price of $2,220,000. Net proceeds from the sale, after
<PAGE> 11
payment of mortgage debt and transaction expenses and adjustments for
mortgage escrow balances, were approximately $912,000 or $0.76 per
Unit.
On April 30, 1998, the Partnership sold Woodlawn Village Shopping
Center for a contract price of $2,375,000. Net proceeds from the sale,
after payment of mortgage debt and transaction expenses and adjustments
for mortgage escrow balances, were approximately $539,000 or $0.45 per
Unit.
On June 5, 1998, the Partnership sold Quality Center Shopping Center
for a contract price of $4,480,000. Net proceeds from the sale, after
payment of mortgage debt and transaction expenses and adjustments for
mortgage escrow balances, were approximately $616,000 or $0.51 per
Unit.
On May 28, 1997, the Partnership sold Cloister Shopping Center for a
contract price of $2,650,000. Net proceeds from the sale, after
payment of mortgage debt and transaction expenses and adjustments for
mortgage escrow balances, were approximately $1,119,000 or $0.93 per
Unit.
On July 16, 1997, the Partnership sold Jackson Heights Shopping Center
for a contract price of $4,800,000. Net proceeds from the sale, after
payment of mortgage debt and transaction expenses, were approximately
$2,577,000 or $2.15 per Unit.
On September 10, 1997, the Partnership sold Berkeley Square Shopping
Center for a contract price of $2,975,000. Net proceeds from the sale,
after payment of mortgage debt and transaction expenses and adjustments
for mortgage escrow balances, were approximately $1,540,000 or $1.28
per Unit. In the second quarter of 1997, at the time the Partnership
entered into the contract to sell Berkeley Square, the Partnership
recorded an impairment charge of $550,000 to write-down the carrying
value of that property to its revised fair value.
On December 19, 1997, the Partnership sold Highlandtown Village
Shopping Center for a contract price of $4,675,000. Net proceeds from
the sale, after payment of mortgage debt and transaction expenses and
adjustments for mortgage escrow balances, were approximately $1,464,000
or $1.22 per Unit.
On May 3, 1996, the Partnership sold Holiday Shopping Center for a
contract price of $1,200,000. Net proceeds from the sale, after
payment of mortgage debt and transaction expenses, were approximately
$858,000 or $0.72 per Unit.
In accordance with liquidation accounting, the Partnership adjusted the
carrying value of Tarrytown Mall to the sum of the outstanding balance
of the mortgage debt on the property and accrued interest as of
December 31, 1998 and 1997. In addition, escrow balances and other
assets related to Tarrytown Mall were written off to reflect the assets
at their estimated realizable values. Interest payable in the
Partnership's financial statements of $1,520,414 relates to Tarrytown
<PAGE> 12
Mall. The Partnership's net equity in Tarrytown Mall has been
effectively treated as zero.
The Partnership has offered to deed Tarrytown Mall to the second trust
lender as described in Item 2, "Properties" of this report.
INFLATION, RECESSION AND OTHER FACTORS
In view of the intention of the Partnership to liquidate and its
remaining asset holdings, inflation and other general economic factors
are not expected to have a material effect on the Partnership.
RESULTS OF OPERATIONS
Because the Partnership adopted the liquidation basis of accounting on
December 31, 1997 and the Partnership's activities pursuant to its plan
to dispose of its assets and liquidate, a comparison of the results of
operations for the year ended December 31, 1998 is not meaningful. The
Partnership's operating results for the period from January 1, 1998 to
December 31, 1998 have been reflected in the statement of changes of
net assets in liquidation.
For the year ended December 31, 1998, the Partnership incurred a net
operating loss of $184,659 and had interest income of $115,564. Net
operating loss for the year resulted primarily from adjustments made to
the provision for doubtful accounts based on an analysis of the
collectibility of tenant accounts receivable relating to centers sold
by the Partnership and the recording of an accrual for a payment due to
the second trust lender of Tarrytown Mall for net cash flow generated
by that property. These adjustments were partially offset by higher
than anticipated proceeds from the sales of Woodlawn Village and
Edgewood Plaza. In accordance with liquidation basis accounting, the
Partnership recorded these properties at their net realizable values in
its financial statements as of December 31, 1997 based on anticipated
sales proceeds at that time. Interest income resulted from the
temporary investment of proceeds from the sales of shopping centers.
<PAGE> 13
The net income (loss) for each shopping center (prior to the adoption
of liquidation accounting) for the years ended December 31, 1997 and
1996 was as follows:
NET INCOME (LOSS)
-------------------------
SHOPPING CENTER 1997 1996
----------- -----------
Woodlawn Village $ 19,931 $ (49,889)
Lynnwood Place (262,393) (130,643)
Highlandtown Village 67,072 38,214
Jackson Heights 98,983 164,376
Holiday - 8,838
Cloister 35,741 61,129
Edgewood Plaza 84,078 81,333
Tarrytown Mall (528,782) (3,406,679)
Berkeley Square (500,995) 62,237
Quality Center (144,962) (90,017)
----------- -----------
Subtotal (1,131,327) (3,261,101)
Other net income (expenses) 4,908 (126,970)
Gain (loss) on sale of
shopping centers 647,002 (78,687)
Gain on sale of pad sites - 241,290
----------- -----------
$ (479,417) $(3,225,468)
=========== ===========
Results of Operations for the Years Ended December 31, 1997 and 1996
During 1997, the Partnership owned and operated nine shopping centers
until May 28, 1997 when Cloister was sold; eight shopping centers from
May 28, 1997 until July 16, 1997 when Jackson Heights was sold; seven
shopping centers from July 16, 1997 until September 10, 1997 when
Berkeley Square was sold; six shopping centers from September 10, 1997
until December 19, 1997 when Highlandtown Village was sold; and five
shopping centers thereafter. During 1996, the Partnership owned and
operated ten shopping centers until May 3, 1996 when Holiday was sold.
A comparison of the results of operations is not meaningful with
respect to the properties sold.
For the year ended December 31, 1997, the Partnership reported a
decrease in net loss of $2,746,051 from a net loss of $3,225,468 in
1996 to a net loss of $479,417 in 1997. The significant factors
contributing to the decreased net loss in 1997 were a write-down of
assets in 1997 of $550,000 in comparison to a write-down in 1996 of
$2,895,000; a net gain on the sale of shopping centers of $647,002 in
1997 in comparison to a net loss of $78,687 in 1996; an increase in
interest income; and declines in interest, depreciation, taxes and
insurance, management and leasing, and repairs and maintenance
expenses. These factors were partially offset by declines in rental
income and tenant reimbursement income; and a gain on sale of pad sites
of $241,290 in 1996 with no comparable transaction in 1997. A
substantial portion of these variances in income and expense can be
attributed to the sales of Holiday, Cloister, Jackson Heights and
Berkeley Square.
<PAGE> 14
The Partnership's total income decreased $1,005,466 from $6,476,674 in
1996 to $5,471,208 in 1997. The change in total income consisted of a
decrease in rental income of $882,390 from $5,404,431 in 1996 to
$4,522,041 in 1997 and a decrease in tenant reimbursement income of
$123,076 from $1,072,243 in 1996 to $949,167 in 1997.
Rental income declined primarily due to the sales of Holiday, Cloister,
Jackson Heights and Berkeley Square and declines in rental income at
Quality Center of $83,019 and Lynnwood Place of $43,403. Holiday
generated rental income of $68,221 in 1996. Rental income with respect
to Cloister, Jackson Heights and Berkeley Square decreased $218,322,
$256,482 and $154,944, respectively in 1997 as compared to 1996 as a
result of the sales of these centers. Six of the shopping centers had
decreases in tenant reimbursement income including a decrease at
Cloister of $77,525 as a result of sale of that center. The decline in
rental income at Quality Center was primarily the result of changes in
occupancy throughout 1996 and 1997. However, Quality Center was 79%
leased at December 31, 1997, an increase from 73% leased at December
31, 1996, which primarily resulted from the execution of a lease for
13,887 square feet. The decline in rental income at Lynnwood Place was
primarily due to changes in occupancy. Lynnwood Place was 91% leased
at December 31, 1997, a decrease from 95% leased at December 31, 1996.
The following changes in leased percentages also contributed to changes
in rental income and tenant reimbursement income during the year.
Woodlawn Village was 98% leased at December 31, 1997, an increase from
93% leased at December 31, 1996. Tarrytown Mall was 84% leased at
December 31, 1997, an increase from 61% leased at December 31, 1996.
The increase of 23% at Tarrytown Mall in 1997 primarily resulted from
the addition of one tenant leasing 79,066 square feet whose base rent
commenced during the second quarter of 1998. Edgewood Plaza was 100%
leased at December 31, 1997 and 1996. Highlandtown Village which was
sold December 19, 1997 was 100% leased at December 31, 1996.
Total operating expenses decreased $3,158,319 from $9,977,455 in 1996
to $6,819,136 in 1997. The decrease in total operating expenses can
primarily be attributed to a write-down of assets of $550,000 in 1997
in comparison to a write-down of $2,895,000 in 1996; the sales of
Holiday, Cloister, Jackson Heights and Berkeley Square; and a decline
in total operating expenses at Quality Center of $50,069. Total
operating expenses at Cloister and Jackson Heights declined $270,349
and 244,949, respectively, from 1996 to 1997. Total operating expenses
at Holiday were $59,983 in 1996. Total operating expenses at Berkeley
Square, excluding the write-down of assets of $550,000 in 1997,
declined $142,181. These decreases in total operating expenses were
partially offset by an increase in total operating expenses at Lynnwood
Place of $86,410.
In 1997, the Partnership recorded an impairment charge of $550,000 in
comparison to the charge of $2,895,000 in 1996. In the second quarter
of 1997, the charge of $550,000 represented the amount required to
write-down the carrying value of Berkeley Square to its revised fair
value. In the fourth quarter of 1996, the charge of $2,895,000
<PAGE>15
represented the amount required to write-down the carrying value of
Tarrytown Mall to its fair value.
Interest expense decreased $377,503 from $2,759,025 in 1996 to
$2,381,522 in 1997 primarily due to the sales of Cloister, Jackson
Heights and Berkeley Square and declines in interest expense at
Woodlawn Village of $52,955 and Tarrytown Mall of $48,257. Interest
expense at Cloister, Jackson Heights and Berkeley Square declined
$88,169, $103,322 and $46,409, respectively. Woodlawn's interest
expense decreased due to the decline in the interest rate effective
January 1, 1997 with a loan extension. The decrease at Tarrytown Mall
primarily resulted from payments totaling $41,000 in 1996 for certain
deferred interest obligations to the holder of the second trust of
Tarrytown Mall. These deferred interest payment obligations were paid
in full in April 1996.
Depreciation expense decreased $189,823 from $1,383,271 in 1996 to
$1,193,448 in 1997 primarily due to the sales of Cloister, Jackson
Heights and Berkeley Square. Depreciation expense at these centers
declined $55,309, $69,781 and $39,212, respectively, from 1996 to 1997.
Repairs and maintenance expense decreased $145,259 from $920,829 in
1996 to $775,570 in 1997. Real estate tax expense decreased $94,889
from $612,334 in 1996 to $517,445 in 1997. Management and leasing to
related parties decreased $57,906 from $386,327 in 1996 to $328,421 in
1997.
Interest income increased $108,799 from $112,710 in 1996 to $221,509 in
1997. The increase in interest income was primarily the result of
increasing cash balances predominantly due to proceeds from the sales
of shopping centers.
YEAR 2000
In view of the intention of the Partnership to liquidate, the Year 2000
issue is not expected to impact the Partnership.
<PAGE> 16
ITEM 8. FINANCIAL STATMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements and Financial Statement Schedules
Page
Report of Independent Public Accountants........................17
Financial Statements:
Statements of Net Assets in Liquidation.......................18
Statement of Changes of Net Assets in Liquidation.............19
Statements of Operations......................................20
Statement of Adjustments to Net Assets in Liquidation.........21
Statements of Partners' Equity................................22
Statements of Cash Flows......................................23
Notes to Financial Statements.................................24
Financial Statement Schedules:
Schedule II - Valuation and Qualifying Account..............33
Schedule III - Real Estate and Accumulated Depreciation
and Notes to Schedule.........................34
Schedule IV - Mortgage Loans on Real Estate and Notes to
Schedule......................................37
All other schedules are omitted since they are not required, are
not applicable, or the financial information required is included
in the financial statements or the notes thereto.
<PAGE> 17
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Mid-Atlantic Centers Limited Partnership:
We have audited the statements of net assets in liquidation of MID-ATLANTIC
CENTERS LIMITED PARTNERSHIP (a Maryland limited partnership in liquidation)
as of December 31, 1998 and 1997 and the related statement of changes of net
assets in liquidation for the period from January 1, 1998 to December 31,
1998 and the statement of adjustments to net assets in liquidation as of
December 31, 1997. In addition, we have audited the statements of
operations, partners' equity and cash flows for each of the two years in
the period ended December 31, 1997. These financial statements and the
schedules referred to below are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements and schedules 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 management, 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 A to the financial statements, the general partners of
Mid-Atlantic Centers Limited Partnership approved a plan of liquidation
effective December 31, 1997 and the Partnership commenced liquidation
shortly thereafter. As a result, the Partnership changed its basis of
accounting as of and for periods subsequent to December 31, 1997, from the
accrual basis of accounting to the liquidation basis. Accordingly,
the carrying value of the remaining assets as of December 31, 1998 and 1997,
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 net assets in liquidation of Mid-Atlantic
Centers Limited Partnership as of December 31, 1998 and 1997, the changes
of its net assets in liquidation for the period from January 1, 1998 to
December 31, 1998, the adjustments to its net assets in liquidation as of
December 31, 1997 and the results of its operations and its cash flows for
each of the two years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles applied on the bases described
in the preceding paragraph.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index to
financial statements are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in
our opinion, fairly state, in all material respects, the financial
data required to be set forth therein in relation to the basic financial
statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Baltimore, Maryland
March 22, 1999
<PAGE> 18
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
STATEMENTS OF NET ASSETS IN LIQUIDATION
December 31, 1998 and 1997
1998 1997
---------- -----------
ASSETS (Liquidation Basis):
Investment in real estate $8,040,351 $22,796,248
Cash and cash equivalents 1,768,405 5,245,307
Tenant accounts receivable 49,664 367,393
Due from related parties 46,344 -
Escrow accounts 7,495 178,757
Other assets 16,926 160,059
---------- -----------
Total assets 9,929,185 28,747,764
---------- -----------
LIABILITIES (Liquidation Basis):
Long-term debt 6,519,937 19,429,050
Interest payable 1,520,414 1,417,295
Accounts payable and accrued expenses 370,647 161,607
Security deposits 21,081 103,175
Due to related parties - 70,436
---------- -----------
Total liabilities 8,432,079 21,181,563
---------- -----------
Net assets in liquidation $1,497,106 $ 7,566,201
========== ===========
The accompanying notes are an integral part of these statements.
<PAGE>19
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
STATEMENT OF CHANGES OF NET ASSETS IN LIQUIDATION
For the period from January 1, 1998 to December 31, 1998
Net assets in liquidation at January 1, 1998 $7,566,201
----------
Increase (decrease) during the period:
Operating activities:
Net loss from operating activities (184,659)
Interest income 115,564
----------
(69,095)
Liquidating activities:
Distributions to partners (6,000,000)
----------
Net decrease in net assets in liquidation (6,069,095)
----------
Net assets in liquidation at December 31, 1998 $1,497,106
==========
The accompanying notes are an integral part of this statement.
<PAGE> 20
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
for the years ended December 31, 1997 and 1996
1997 1996
Income: ----------- -----------
Rental income $4,522,041 $5,404,431
Tenant reimbursement income 949,167 1,072,243
----------- -----------
Total income 5,471,208 6,476,674
----------- -----------
Operating expenses:
Interest expense 2,381,522 2,759,025
Depreciation 1,193,448 1,383,271
Repairs and maintenance 775,570 920,829
Write-down of assets 550,000 2,895,000
Real estate taxes 517,445 612,334
Management and leasing to related parties 328,421 386,327
Amortization 135,011 111,445
Insurance 119,125 143,694
Provision for doubtful accounts 81,690 73,599
Other expenses 736,904 691,931
----------- -----------
Total operating expenses 6,819,136 9,977,455
----------- -----------
Loss from rental operations (1,347,928) (3,500,781)
Other income (loss):
Gain (loss) on sale of shopping centers 647,002 (78,687)
Interest income 221,509 112,710
Gain on sale of pad sites - 241,290
----------- -----------
Net loss $ (479,417) $(3,225,468)
=========== ===========
Net income allocated to general partners $ 150,486 $ 28,271
=========== ===========
Net loss allocated to assignee
limited partners $ (629,903) $(3,253,739)
=========== ===========
Net loss allocated to assignee limited
partners per unit: (1,200,000 units
issued and outstanding)
Net loss $ (0.52) $ (2.71)
======= =======
The accompanying notes are an integral part of these statements
<PAGE> 21
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
STATEMENT OF ADJUSTMENTS TO NET ASSETS IN LIQUIDATION
As of December 31, 1997
Net assets at December 31, 1997, prior to the adoption of
liquidation basis of accounting $3,950,912
Adjustment of carrying values of investment in real estate,
tenant accounts receivable and other assets to estimated
net realizable values at December 31, 1997, upon adoption
of liquidation basis of accounting 2,960,855
Adjustment of carrying values of certain related party loans
and payables to estimated settlement amounts at December
31, 1997, upon adoption of liquidation basis of accounting 862,634
Write-off of certain deferred costs at December 31, 1997,
upon adoption of liquidation basis of accounting (208,200)
----------
Net assets in liquidation at December 31, 1997 $7,566,201
==========
The accompanying notes are an integral part of this statement.
<PAGE> 22
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' EQUITY
for the years ended December 31, 1997 and 1996
Assignee Assignor Total
General Limited Limited Partners'
Partners Partners Partner Equity
-------- ----------- ------- -----------
Partners' equity, December 31, 1995 $501,522 $11,954,198 $ 77 $12,455,797
Net loss 28,271 (3,253,739) - (3,225,468)
-------- ----------- ------ -----------
Partners' equity, December 31, 1996 529,793 8,700,459 77 9,230,329
Distributions ($4 per assignee
limited partnership unit) - (4,800,000) - (4,800,000)
Net loss 150,486 (629,903) - (479,417)
-------- ----------- ------ -----------
Partners' equity, December 31, 1997,
prior to the adoption of
liquidation basis of accounting $680,279 $ 3,270,556 $ 77 $ 3,950,912
======== =========== ====== ===========
The accompanying notes are an integral part of these statements.
<PAGE> 23
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1997 and 1996
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES: ----------- -----------
Net loss $ (479,417) $(3,225,468)
Adjustments to reconcile net loss to net ----------- -----------
cash provided by operating activities:
Depreciation and amortization 1,328,459 1,494,716
Write-down of assets 550,000 2,895,000
(Gain) loss on sale of shopping centers (647,002) 78,687
Gain on sale of pad sites - (241,290)
Changes in operating assets and liabilities:
Decrease in tenant accounts receivable, net 277,921 23,808
Decrease (increase) in prepaid expenses
and other assets 349,061 (230,554)
Decrease in accounts payable and accrued
expenses (53,157) (96,410)
Increase in interest payable 318,544 415,069
Increase in due to related parties 17,087 35,877
----------- -----------
Total adjustments 2,140,913 4,374,903
----------- -----------
Net cash provided by operating activities 1,661,496 1,149,435
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of real estate 14,292,842 1,675,636
Improvements of real estate (364,264) (108,447)
----------- -----------
Net cash provided by investing activities 13,928,578 1,567,189
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Retirement of long-term debt (8,119,123) (382,510)
Distributions to partners (4,800,000) -
Principal payments on long-term debt (555,940) (643,988)
Financing fees (120,925) (109,505)
Mortgage escrow deposits, net 200,000 (194,394)
----------- -----------
Net cash used in financing activities (13,395,988) (1,330,397)
----------- -----------
Net increase in cash and cash equivalent 2,194,086 1,386,227
Cash and cash equivalents at beginning
of year 3,051,221 1,664,994
----------- -----------
Cash and cash equivalents at end of year $ 5,245,307 $ 3,051,221
=========== ===========
The accompanying notes are an integral part of these statements.
<PAGE> 23
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
Notes to Financial Statements
December 31, 1998, 1997 and 1996
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization
Mid-Atlantic Centers Limited Partnership (the "Partnership") was
organized under the laws of the State of Maryland on December 16, 1986.
The Partnership was formed to acquire, hold, lease and ultimately sell
income-producing community and neighborhood shopping centers.
Basis of Accounting
Effective December 31, 1997, the general partners decided to liquidate
the Partnership and adopt a plan of liquidation. This plan consists of
selling, or otherwise disposing of the Partnership's remaining shopping
centers, liquidating all assets remaining after the sale of the
shopping centers, and distributing the net proceeds to the assignee
limited partners.
The Partnership adopted the liquidation basis of accounting effective
December 31, 1997. Under the liquidation basis of accounting, assets
are stated at their estimated net realizable values and liabilities are
stated at their anticipated payable amounts. The valuation of assets
and liabilities necessarily requires estimates and assumptions, and
there are uncertainties in carrying out the dissolution of the
Partnership. The actual values upon dissolution and costs associated
therewith could be higher or lower than the amounts recorded.
The accompanying statements of net assets in liquidation and statement
of changes of net assets in liquidation reflect the transactions of the
Partnership utilizing liquidation accounting concepts as required by
generally accepted accounting principles. The accompanying statements
of operations reflect the operations of the Partnership prior to the
adoption of liquidation basis of accounting and prior to the
adjustments required to adopt the liquidation basis of accounting as of
December 31, 1997. Prior to December 31, 1997, the Partnership
recorded results of operations using the accrual basis of accounting.
Comparison of results to prior years, therefore, is not meaningful.
Investment in Real Estate
Investment in real estate at December 31, 1998 and 1997 consists of
land, buildings and improvements which are stated at estimated
liquidation value. Investment in real estate at December 31, 1998
consists of Tarrytown Mall Shopping Center presented as described in
Note F - Sales of Assets and Plan of Liquidation.
Prior to the adoption of liquidation accounting, the cost of land and
buildings and improvements were capitalized, while expenditures for
maintenance and repairs were charged to operations as incurred.
Depreciation was computed, through the effective date of the adoption
<PAGE> 25
of the plan of liquidation, using the straight-line method based on the
estimated useful lives of the respective assets.
Amortization
Deferred costs were written off upon adoption of liquidation
accounting. Prior to the adoption of liquidation accounting, deferred
financing costs were amortized over the term of the respective mortgage
loans and deferred leasing commissions were amortized over the term of
the respective tenant leases using the straight-line method.
Income Taxes
No provision for or benefit from income taxes has been included in
these financial statements since taxable income or loss passes through
to, and is reportable by, the partners individually.
Rental Income
Certain leases provide for either abatement of rents or scheduled rent
increases over the life of the lease. Prior to the date of the
adoption of the plan of liquidation, rental income was recorded on a
straight-line basis of equal monthly payments over the respective terms
of such leases.
Certain leases provide for additional rent computed on the basis of a
percentage of gross sales in excess of specified levels. Rental income
for the years ended December 31, 1998, 1997 and 1996 included income
with respect to these percentage rentals of $224,400, $240,917 and
$292,698, respectively.
Cash and Cash Equivalents
The Partnership considers cash in banks, commercial paper and
repurchase agreements with original maturities of less than three
months to be cash and cash equivalents.
Use of Estimates
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.
NOTE B - PARTNERS' CAPITAL CONTRIBUTIONS:
The Partnership has two general partners, Realty Capital IV Limited
Partnership and FW Realty Limited Partnership, and one assignor limited
partner, LM Unit Trust, Inc. Each general partner and the assignor
limited partner made capital contributions of $500 and $100,
respectively. Under the terms of the Partnership Agreement, the
general partners have no obligation to make additional capital
<PAGE> 26
contributions to the Partnership, except under certain circumstances
upon liquidation. As of December 31, 1998, the general partners do not
anticipate that completion of the dissolution will require additional
capital contributions.
The assignor limited partner has assigned all of its rights in its
limited partnership interests to the assignee limited partners. Total
assignee limited partners' contributions in accordance with the
Partnership Agreement were $29,997,125 (which excludes volume purchase
discounts of $2,875). Offering costs of $2,802,312 were funded from
such contributions.
NOTE C - LONG-TERM DEBT:
Long-term debt consists of the following at December 31, 1998 and 1997:
1998 1997
---------- ----------
Mortgage loan due January 1, 1999
Interest at 8% $5,384,997 $5,384,997
Mortgage loan due January 1, 1999
Interest at prime rate plus 1.5%,
with a floor of 7.5%
(9.25% at December 31, 1998) 1,134,940 1,404,940
Mortgage loan due August 1, 1998
Interest at 10.625% - 3,655,711
Mortgage loan due December 1, 2006
Interest at 8.5% - 1,774,747
Mortgage loan due February 10, 2000
Interest at 9.5% - 5,846,495
Mortgage loan due September 1, 2000
Interest at 8.625% - 1,362,160
---------- -----------
$6,519,937 $19,429,050
========== ===========
Subsequent to year-end, on January 6, 1999, Tarrytown Mall's second
trust mortgage holder paid the outstanding principal balance and
accrued interest on the first trust mortgage, and such payment was
considered an advance under the second trust mortgage. The mortgage
escrow balances held by the first trust lender were applied to pay down
first trust mortgage principal.
The mortgage loans are non-recourse obligations secured by deeds of
trust on the related real estate held for lease and by assignments of
rents. Interest expense related to these mortgages was $812,855,
$2,381,522 and $2,759,025 for the years ended December 31, 1998, 1997
and 1996, respectively. Interest paid on these mortgages was $498,118,
$2,062,978 and $2,343,956 for the years ended December 31, 1998, 1997
and 1996, respectively.
<PAGE> 27
NOTE D - RELATED PARTY TRANSACTIONS:
Management Fees
In accordance with the Partnership Agreement, management fees of
$26,798, $328,421 and $386,327 in 1998, 1997 and 1996, respectively,
were expensed for amounts due to First Washington Management, Inc., an
affiliate of FW Realty Limited Partnership, for services rendered in
connection with the leasing and operation of the shopping centers. A
portion of these fees were paid by First Washington Management, Inc. to
Legg Mason Realty Capital, Inc., an affiliate of Realty Capital IV
Limited Partnership, in consideration of its performance of certain
administrative services.
Amounts Due From/To Related Parties
At December 31, 1998, $37,654 and $8,690 were receivable from First
Washington Management, Inc. and Legg Mason Realty Capital, Inc.,
respectively, for reimbursement of management fees as a result of
accounting adjustments related to tenant rents receivable. Such
amounts were received by the Partnership subsequent to December 31,
1998.
At December 31, 1997, $42,208 and $28,228 were payable to First
Washington Management, Inc. and Legg Mason Realty Capital, Inc.,
respectively, for management fees and reimbursement of operating
expenses.
The General Partners agreed to lend the Partnership, without interest,
up to 50% of the acquisition fees actually paid to them at the time the
loan was made in the event the annual cumulative non-compounded return
to assignee limited partners fell below 7% of the allocable invested
capital for the period from February 1, 1989 through January 31, 1992.
In 1990, the General Partners fulfilled their obligation under the cash
flow protector provisions. Cash flow protector loans totaling $789,203
were payable to FW Realty Limited Partnership in the amount of $599,794
and to Realty Capital IV Limited Partnership in the amount of $189,409
from 1990 to the date of the adoption of liquidation accounting.
Effective December 31, 1997, the cash flow protector loans were reduced
to zero to reflect the loans at their estimated payable amounts. The
loans were non-interest bearing and were to be repaid from
distributable cash flow or sale or refinancing proceeds after the
payment of a preferred return equal to a 10% annual cumulative non-
compounded return on invested capital to assignee limited partners.
In addition, acquisition fees totaling $73,431, which were payable to
FW Realty Limited Partnership in the amount of $55,808 and to Realty
Capital IV Limited Partnership in the amount of $17,623, were written
off upon adoption of liquidation accounting which was effective
December 31, 1997 to reflect the determination of the general partners
not to make such payments.
<PAGE> 28
Other
In 1998, 1997 and 1996, the Partnership paid or accrued approximately
$7,000, $31,000 and $38,000, respectively, to First Washington
Management, Inc. for legal, marketing and architectural services
related to the renovation, leasing, rent collections and other matters
of the shopping centers. The Partnership paid or accrued approximately
$51,000, $85,000 and $75,000, in 1998, 1997 and 1996, respectively, to
Legg Mason Realty Capital, Inc. for reimbursement of operating
expenses.
NOTE E - PARTNERSHIP PROFITS, LOSSES AND DISTRIBUTIONS:
All profits and losses prior to the first date on which assignee
limited partners were admitted to the Partnership were allocated 99.9%
to the general partners and .1% to the assignor limited partner. Upon
admission of the assignee limited partners, the interest of the general
partners was reduced to 1% and the interest of the assignor limited
partner was reduced to zero.
Distributable cash flow is defined in the Partnership Agreement as the
sum of all cash receipts from operations and the principal amount of
loans from the general partners less disbursements for operating cash
expenses. Cash receipts under the master leaseback agreements are
treated as operating receipts in determining distributable cash flow.
Distributable cash flow is payable quarterly as follows:
1. 99% to the assignee limited partners and 1% to the general
partners until each assignee limited partner has received an
annual cumulative return equal to 10% of invested capital; and
2. the balance is distributable 98% to the assignee limited
partners and 2% to the general partners.
Income and loss from operations for each fiscal year is allocated as
follows:
1. If there has been a distribution of distributable cash flow
during such fiscal year, net income from operations shall be
allocated to the assignee limited partners and general partners
in proportion to such distribution of distributable cash flow.
2. If there has been no distribution of distributable cash flow
during such fiscal year, net income from operations shall be
allocated 99% to the assignee limited partners and 1% to the
general partners.
3. Net loss from operations for each fiscal year shall be allocated
99% to the assignee limited partners and 1% to the general
partners.
Sale or refinancing proceeds are distributed first to meet the debts
and obligations of the Partnership and to fund reserves for contingent
liabilities to the extent deemed reasonable by the general partners and
then to the assignee limited partners and general partners in the order
described in section 4.4 of the Partnership Agreement.
Any gain from a sale or refinancing is allocated as follows:
1. To the assignee limited partners and general partners having
negative balances in their capital accounts, prior to
<PAGE> 29
distribution of sale or refinancing proceeds, an amount of
such gain sufficient to increase their negative balances to zero.
2. To each assignee limited partner and general partner who has
received or will receive a distribution out of the sale or
refinancing proceeds, the amount of and in proportion to the
excess of such distribution over the positive balance in his
capital account, determined after any allocation of gain
from a sale or refinancing pursuant to (1) above; and
3. The balance, 75% to the assignee limited partners and 25% to
the general partners.
Any loss from a sale or refinancing shall be allocated 99% to the
assignee limited partners and 1% to the general partners.
The Partnership made cash distributions of $6,000,000 or $5 per
assignee limited partnership unit ("Unit") in 1998 and $4,800,000 or
$4 per Unit in 1997. These distributions represented proceeds from the
sales of shopping centers.
NOTE F - SALES OF ASSETS AND PLAN OF LIQUIDATION:
On January 29, 1998, the Partnership sold Lynnwood Place Shopping
Center to an unrelated third party for a contract price of $6,365,000.
The carrying value of this property had been adjusted at December 31,
1997 to reflect the actual sale transaction and estimated operating
revenues and expenses expected to be recorded in 1998 for the period
prior to the sale. For federal income tax purposes, the Partnership
recorded a loss, after transaction expenses, of approximately $494,000.
On March 2, 1998, the Partnership sold Edgewood Plaza Shopping Center
to an unrelated third party for a contract price of $2,220,000. The
carrying value of this property had been adjusted at December 31, 1997
to reflect the actual sale transaction and estimated operating revenues
and expenses expected to be recorded in 1998 for the period prior to
the sale. For federal income tax purposes, the Partnership recorded a
gain, after transaction expenses, of approximately $390,000.
On April 30, 1998, the Partnership sold Woodlawn Village Shopping
Center to an unrelated third party for a contract price of $2,375,000.
The carrying value of this property had been adjusted at March 31, 1998
to reflect the actual sale transaction and estimated operating revenues
and expenses expected to be recorded in 1998 for the period prior to
the sale. For federal income tax purposes, the Partnership recorded a
gain, after transaction expenses, of approximately $679,000.
On June 5, 1998, the Partnership sold Quality Center Shopping Center to
an unrelated third party for a contract price of $4,480,000. The
carrying value of this property had been adjusted at March 31, 1998 to
reflect the sale transaction and estimated operating revenues and
expenses expected to be recorded in 1998 for the period prior to the
sale. For federal income tax purposes, the Partnership recorded a loss,
after transaction expenses, of approximately $1,090,000.
The disposition of Tarrytown Mall is expected to be resolved following
discussions with that center's second trust lender. The appraised
<PAGE> 30
value of this property as of December 1, 1997 was below the level of
the outstanding mortgage debt on the property. As a result, the
carrying value of this property has been adjusted at December 31, 1998
and 1997 to the outstanding balance of the mortgage debt on the
property and accrued interest as of the respective dates. The
Partnership's net equity in Tarrytown Mall is effectively zero.
The Partnership has offered to deed Tarrytown Mall to the second trust
lender in satisfaction of mortgage indebtedness encumbering the
property. Pursuant to the terms of the mortgage agreement, payment
obligations with respect to the Tarrytown Mall indebtedness are limited
to funds generated by operations at that property. An obligation in
the amount of approximately $212,000 for funds so generated is
reflected as a liability in the Partnership's financial statements as
of December 31, 1998. Absent resolution of the terms of a volumtary
transfer of the center, the Partnership anticipates foreclosure of the
property.
In February and May 1998, the Partnership made distributions totaling
$3,600,000 and $2,400,000, respectively, to the limited partners. These
distributions represented proceeds from the sale of shopping centers.
It is currently the plan of the general partners to make one additional
distribution to the limited partners subsequent to the liquidation of
all partnership assets and satisfaction of all partnership liabilities.
The net amount ultimately available for distribution from the
liquidated partnership depends on factors which cannot be predicted
with certainty, particularly collection of accounts receivable and
expenses of the Partnership until completely liquidated.
On May 28, 1997, the Partnership sold Cloister Shopping Center to an
unrelated third party for a contract price of $2,650,000. For
financial reporting purposes, the Partnership recorded a gain, after
transaction expenses, of $128,597 in May 1997. For federal income tax
purposes, the Partnership recorded a gain, after transaction expenses,
of approximately $77,000.
On July 16, 1997, the Partnership sold Jackson Heights Shopping Center
to an unrelated third party for a contract price of $4,800,000. For
financial reporting purposes, the Partnership recorded a gain, after
transaction expenses, of $177,127 in July 1997. For federal income tax
purposes, the Partnership recorded a gain, after transaction expenses,
of approximately $154,000.
On September 10, 1997, the Partnership sold Berkeley Square Shopping
Center to an unrelated third party for a contract price of $2,975,000.
For financial reporting purposes, the Partnership recorded a gain,
after transaction expenses, of $4,797 in September 1997. For federal
income tax purposes, the Partnership recorded a loss, after transaction
expenses, of approximately $476,000.
On December 19, 1997, the Partnership sold Highlandtown Village
Shopping Center to an unrelated third party for a contract price of
$4,675,000. For financial reporting purposes, the Partnership recorded
a gain, after transaction expenses, of $336,481 in December 1997. For
federal income tax purposes, the Partnership recorded a gain, after
transaction expenses, of approximately $262,000.
On May 3, 1996, the Partnership sold Holiday Shopping Center to an
unrelated third party for a price of $1,200,000. For financial
reporting purposes, the Partnership recorded a loss, after transaction
expenses, of $78,687 in May 1996. For federal income tax purposes, the
Partnership recorded a loss, after transaction expenses, of
approximately $728,000.
<PAGE> 31
On August 6, 1996, the Partnership sold a pad site of approximately
1.15 acres of land at Tarrytown Mall to an unrelated third party for a
price of $330,000. For financial reporting purposes, the Partnership
recorded a gain, after transaction expenses, of $154,079 in August
1996. For federal income tax purposes, the Partnership recorded a
gain, after transaction expenses, of approximately $105,000. The net
proceeds from the sale, after payment of transaction expenses, of
approximately $324,000 were placed in escrow with the first trust
lender to be used for one of the following three purposes: (i) to fund
tenant improvement work if a replacement tenant is found for the
Wholesale Depot space (and thereafter for other capital improvements),
(ii) to acquire an adjoining parcel of land to enhance visibility and
provide additional customer parking at Tarrytown Mall or (iii) to
reduce the principal amount of the first trust loan.
On September 25, 1996, the Partnership sold a pad site at Edgewood
Plaza Shopping Center to an unrelated third party for a price of
approximately $220,000. For financial reporting purposes, the
Partnership recorded a gain, after transaction expenses, of $75,903 in
September 1996. For federal income tax purposes, the Partnership
recorded a gain, after transaction expenses, of approximately $82,000.
The pad site was not secured by the Edgewood Plaza mortgage.
On October 7, 1996, the Partnership sold a parcel of excess land at
Jackson Heights Shopping Center to an unrelated third party for
$40,000. For financial reporting and federal income tax purposes, the
Partnership recorded a gain, after transaction expenses, of $22,208 in
1996. The net proceeds of approximately $35,000 were applied to reduce
the mortgage on Jackson Heights.
On December 5, 1996, the Partnership sold a parcel of excess land at
Edgewood Plaza to an unrelated third party for a price of $29,900. For
financial reporting and federal income tax purposes, the Partnership
recorded a loss, after transaction expenses, of $10,900 in 1996. The
parcel of land was not secured by the Edgewood Plaza mortgage.
NOTE G - WRITE-DOWNS OF ASSETS PRIOR TO LIQUIDATION ACCOUNTING:
In the second quarter of 1997, at the time the Partnership entered into
a contract to sell Berkeley Square, the Partnership recorded an
impairment charge of $550,000 to write-down the carrying value of that
property to its revised fair value.
In the fourth quarter of 1996, the Partnership recorded an impairment
charge of $2,895,000 to write-down the carrying value of Tarrytown Mall
to its fair value of $4,500,000 as of December 1, 1996. In accordance
with SFAS No. 121, the assets, which include the land, buildings and
improvements and intangibles related to Tarrytown Mall, were determined
to be impaired because downward revisions in estimates indicated future
net cash flows would be insufficient to fully recover the carrying
value of this property. The revisions in estimates were received in
the fourth quarter of 1996, were not known before the fourth quarter,
and resulted in a lower valuation for Tarrytown Mall in comparison to
the prior year's valuation. Fair value was determined by an
independent appraisal based on an income capitalization approach.
<PAGE> 32
The treatment of these write-downs of assets does not affect cash
flow or taxable income (loss) of the Partnership.
NOTE H - FEDERAL TAXABLE NET LOSS:
A reconciliation of the financial statement net loss to the federal
taxable net income (loss) for the years ended December 31, 1998, 1997
and 1996 is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------- --------- -----------
<S> <C> <C> <C>
Financial statement net loss $ (69,095) $(479,417) $(3,225,468)
Adjustments:
-Liquidation basis accounting adjustments (844,517) - -
-Costs depreciated over a life longer
for income tax purposes than financial
reporting purposes (475,310) (40,003) 1,632
-Gain (loss) on sale of assets 90,266 (623,628) (692,288)
-Provision for doubtful accounts, net of
write-offs (92,888) (126,160) (97,685)
-Other adjustments 48 483 51,665
-Write-down of assets for financial statements - 550,000 2,895,000
-Adjustment for certain loans and payables - 862,634 -
-Rent abatements and scheduled rent increases - 4,705 (4,429)
-Effects of rents collected in advance - (14,052) (14,008)
----------- --------- -----------
Federal taxable net income (loss) $(1,391,496) $ 134,562 $(1,085,581)
=========== ========= ===========
</TABLE>
Because many types of transactions are susceptible to varying
interpretations under federal and state income tax laws and
regulations, the amounts reported above may be subject to change at a
later date upon final determination by the taxing authorities.
NOTE I - SUBSEQUENT EVENT:
Effective January 1, 1999, with the consent of the Partnership, the
second trust lender of Tarrytown Mall assumed management of that
property. On January 6, 1999, that lender paid the outstanding
principal balance plus accrued interest on the first trust mortgage
secured by that property which matured January 1, 1999, and such
payment was considered an advance under the second trust mortgage. The
mortgage escrow balances held by the first trust lender were applied to
pay down first trust mortgage principal.
<PAGE> 33
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNT
-------------------------
FOR THE YEARS ENDED
DECEMBER 31,
--------------------
1997 1996
-------- --------
Allowance for doubtful tenant
accounts receivable:
Balance at beginning of year $228,991 $326,673
Reserve charges to costs and expenses 81,690 73,599
Write-offs during the year (207,850) (171,281)
-------- --------
Balance at end of year, prior to
the adoption of liquidation basis
of accounting $102,831 $228,991
======== ========
Schedule II does not present valuation and qualifying account
information for 1998 due to the Partnership's adoption of the
liquidation basis of accounting effective December 31, 1997.
<PAGE> 34
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (1)
-------------------------
<TABLE>
<CAPTION>
Column A Column B Column C Column D
- ------------------ ------------ --------------------------- ----------------------------
Costs capitalized subsequent
Initial cost to Partnership to acquisition
Shopping Center/ Building & Carrying
Location Encumbrances Land Improvements Improvements Costs(2)
- ------------------ ------------ ------------ -------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Tarrytown Mall
Rocky Mount, NC $6,519,937 $2,360,955 $6,476,200 $5,365,205 ($1,735,967)
- -----------------------------------------------------------------------------
</TABLE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, Continued (1)
-------------------------
<TABLE>
<CAPTION>
Column A Column E Column F Column G Column H Col. I
- ------------------ ---------------------------------- -------- -------- -------- -------
Gross amount at which carried Accum- Depre-
at December 31, 1998 (1) (3) ulated Date of ciable
Shopping Center/ Building & Depreci- Construc- Date Life
Location Land Improvements Totals(5) ation(4) tion Acquired (yrs)
- ------------------ -------- --------------- ---------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Tarrytown Mall
Rocky Mount, NC (1) (1) (1) (1) 1963 09/01/88 31.5
</TABLE>
See notes attached.
<PAGE> 35
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
NOTE 1. ACCOUNTING BASIS:
The carrying values of Tarrytown Mall Shopping Center at December 31,
1998 is not presented on Schedule III due to the Partnership's adoption
of the liquidation basis of accounting effective December 31, 1997.
Under the liquidation basis of accounting, assets are stated at their
estimated net realizable values. The appraised value of this property
is below the level of the outstanding mortgage debt on the property.
As a result, the carrying value of this property has been adjusted at
December 31, 1998 to the outstanding balance of the mortgage debt on
the property and accrued interest. The Partnership's net equity in
Tarrytown Mall is effectively zero.
NOTE 2. CARRYING COSTS ADJUSTMENTS:
For financial reporting purposes, payments received pursuant to master
leaseback agreements are treated as an adjustment to the carrying value
of the property. Column D - Carrying Costs also includes adjustments
to investments in real estate for sales of property or portions thereof
and write-downs of assets.
NOTE 3. RECONCILIATION OF REAL ESTATE:
For the years ended
December 31,
------------------------
1997 1996
----------- -----------
Balance at beginning of year $51,323,894 $53,059,315
Improvements 433,599 387,419
Sale of shopping centers (18,874,071) (1,669,179)
Sale of pad sites and land - (453,661)
----------- -----------
Balance at end of year, prior to the
adoption of liquidation basis of accounting $32,883,422 $51,323,894
=========== ===========
NOTE 4. RECONCILIATION OF ACCUMULATED DEPRECIATION:
For the year ended
December 31,
------------------------
1997 1996
----------- -----------
Balance at beginning of year $16,939,873 $13,271,409
Depreciation expense for the year 1,193,448 1,383,271
Write-down of assets 550,000 2,895,000
Sale of shopping centers (5,228,230) (609,807)
----------- -----------
Balance at end of year, prior to the
adoption of liquidation basis of accounting $13,455,091 $16,939,873
=========== ===========
<PAGE> 36
In the second quarter of 1997, at the time the Partnership entered into
a contract to sell Berkeley Square Shopping Center, the Partnership
recorded an impairment charge of $550,000 to write-down the carrying
value of Berkeley Square to its revised fair value.
In the fourth quarter of 1996, the Partnership recorded an impairment
charge of $2,895,000 to write-down the carrying value of Tarrytown Mall
to its fair value of $4,500,000 as of December 1, 1996.
NOTE 5. FEDERAL INCOME TAX COST OF INVESTMENT IN REAL ESTATE:
The aggregate cost of land and buildings and improvements for federal
income tax purposes is $2,269,844 and $11,658,280, respectively, for a
total cost of $11,658,280 at December 31, 1998.
<PAGE> 37
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
-------------------------
<TABLE>
<CAPTION>
Column A Column B Column C Column D
- ------------------------ ------------ ------------ -----------------------------------
Description of Final Periodic
Shopping Center Interest Maturity Payment
Mortgages/Location Rate Date Terms
- ------------------------ ------------ ------------ -----------------------------------
<S> <C> <C> <C>
First trust mortgage Prime rate plus 1.5%, Monthly payments of principal
on Tarrytown Mall with a floor of 7.5%, and interest with entire
Rocky Mount, NC 9.25% at 12/31/98 1/1/99 principal due at maturity
Monthly payments of net cash flow from
Second trust mortgage the property after payment of first
on Tarrytown Mall trust debt service, with principal and
Rocky Mount, NC 8.0% 1/1/99 accrued interest due at maturity
- --------------------------------------------------------------------------------------
</TABLE>
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE, Continued
-------------------------
<TABLE>
<CAPTION>
Column A Column E Column F Column G Column H
- ------------------------ ---------- ------------ ------------ --------------------
Principal amount of
Description of Face Carrying loans subject to
Shopping Center Prior amount of amount of delinquent principal
Mortgages/Location Liens mortgages mortgages(1) or interest
- ------------------------ ---------- ------------ ------------ --------------------
<S> <C> <C> <C> <C>
First trust mortgage
on Tarrytown Mall
Rocky Mount, NC None $2,640,940 $1,134,940 (2) None
Second trust mortgage
on Tarrytown Mall
Rocky Mount, NC None 6,500,000 5,384,997 None
----------- -----------
Totals $9,140,940 $ 6,519,937
=========== ===========
</TABLE>
See notes attached.
<PAGE> 38
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
NOTE 1. RECONCILIATION OF MORTGAGE LOANS:
For the years ended December 31,
-------------------------------------
1998 1997 1996
----------- ----------- -----------
Balance at beginning of year $19,429,050 $28,104,113 $29,130,611
Deductions during the year:
Retirement of long-term debt (12,604,342) (8,119,123) (382,510)
Principal payments on long-term debt (304,771) (555,940) (643,988)
----------- ----------- -----------
Balance at end of year (a) $ 6,519,937 $19,429,050 $28,104,113
=========== =========== ===========
(a) The carrying amount of mortgages for federal income tax purposes
was $6,519,937 at December 31, 1998.
NOTE 2. On January 6, 1999, Tarrytown Mall's second trust lender paid the
outstanding principal balance and accrued interest on the first trust
mortgage secured by that property which matured January 1, 1999, and such
payment was considered an advance under the second trust mortgage. The
mortgage escrow balances held by the first trust lender were applied to pay
down first trust mortgage principal.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
Identification of Directors and Executive Officers
The Partnership does not have officers or directors. The General
Partners of the Partnership are FW Realty Limited Partnership and
Realty Capital IV Limited Partnership. The following tables set
forth the names, ages and positions held by the directors and
executive officers of FW Corporation and LMRC IV, Inc., the
respective general partners of the General Partners.
Relationship to
Positions Held With FW Realty Limited
Name FW Corporation Age Partnership
---- ------------------- --- -----------------
William J. Wolfe President and Director 46 Limited Partner
Marvin Fabrikant Vice President and Director 54 Limited Partner
Stuart D. Halpert Vice President, Secretary
and Director 56 Limited Partner
Lester Zimmerman Treasurer and Director 49 Limited Partner
Jack E. Spector Director 49 Limited Partner
<PAGE> 39
Relationship to
Positions Held With Realty Capital IV
Name LMRC IV, Inc. Age Limited Partnership
---- ------------------- --- -------------------
Richard J. Himelfarb President and Director 57 none
Gerard F. Petrik, Jr. Vice President, Assistant
Secretary and Director 40 none
L. Kay Strohecker Treasurer and Assistant
Secretary 43 none
Margaret M. Pasquarella Vice President and
Director 35 none
Thomas C. Merchant Secretary 31 none
All of the FW Corporation individuals have served in the capacities indicated
above since 1987 (with the exception of Mr. Wolfe who served as Vice
President until March 31, 1995 when at that time he became President and Mr.
Halpert who became a Vice President March 31, 1995). Mr. Himelfarb of LMRC
IV, Inc. has served in the capacities indicated above since 1987. Mr. Petrik
and Ms. Strohecker were elected to their respective positions in June 1995.
Ms. Pasquarella and Mr. Merchant were elected to their respective positions
in December 1998. All of the directors and executive officers will continue
to serve in their current capacities until their successors are elected and
qualified.
The following discussion provides certain information regarding the principal
employment and business experience of the executive officers and directors of
the General Partners.
Officers and Directors of FW Corporation
William J. Wolfe is President of FW Corporation, having assumed that office
on March 31, 1995. He has served as a director of FW Corporation since 1987
and was a Vice President of that company from 1987 until becoming its
President. Mr. Wolfe is President, Chief Executive Officer and a director of
First Washington Realty Trust, Inc., a publicly held real estate investment
trust formed in 1994. He is also President, Chief Executive Officer and a
director of First Washington Management, Inc. Mr. Wolfe is responsible for
the day to day operations of the companies and for acquisitions and leasing.
He has concentrated on the leasing of newly constructed shopping centers as
well as renovations and expansions. Mr. Wolfe was President of JNC
Enterprises, a diversified real estate development company, from 1979 until
December 1983 when he co-founded First Washington Development Group, Inc.
Mr. Wolfe is a member of the International Council of Shopping Centers.
Marvin Fabrikant is Vice President and a director of FW Corporation. Mr.
Fabrikant retired from active participation in the operations of FW
Corporation in 1991. Prior to joining First Washington Development Group,
Inc. in June 1984, Mr. Fabrikant was engaged from 1979 to 1984 in commercial
real estate acquisition and development with Fabrikant and Kain, a real
estate development firm.
Stuart D. Halpert is Vice President, Secretary and a director of FW
Corporation and Chairman of First Washington Management, Inc. He is Chairman
<PAGE> 40
of First Washington Realty Trust, Inc., a publicly held real estate
investment trust formed in 1994. Mr. Halpert is involved in the day to day
operations of the companies and in capital markets and investor relations.
From 1982 until joining First Washington in June 1984, Mr. Halpert was a
practicing attorney with a major Washington, DC law firm. Prior to entering
the private practice of law, Mr. Halpert served as Counsel to the House
Committee on Banking and Currency, United States Congress. Mr. Halpert is a
member of the International Council of Shopping Centers.
Lester Zimmerman is Treasurer and a director of FW Corporation. He is a
director of First Washington Realty Trust, Inc., a publicly held real estate
investment trust formed in 1994, and was an Executive Vice President until
1998 when he resigned to form LZ Realty, Inc., a real estate brokerage
company. Mr. Zimmerman was a Vice President of First Washington Management,
Inc. from 1984 until 1998. He is a licensed real estate broker and has had
experience in commercial brokerage, specializing in the sale of major office
and apartment projects. Mr. Zimmerman was a real estate broker with Carey
Winston, a commercial real estate brokerage company, from 1978 to 1981, and
from 1981 until joining First Washington in 1984 was employed as an
independent real estate broker.
Jack E. Spector is a director of FW Corporation, having served as a director
since 1987. From 1987 to March 31, 1995, he was the President of FW
Corporation. Mr. Spector was Executive Vice President of First Washington
Management, Inc. from 1984 until March 31, 1995 when he resigned to become a
business and real estate consultant. He was Executive Vice President of
First Washington Realty Trust, Inc., a publicly held real estate investment
trust formed in 1994 until March 1995. Mr. Spector is a Certified Public
Accountant and prior to joining First Washington Management, Inc., he was
associated with Grant Thornton, a national accounting firm. Mr. Spector is a
member of the American Institute of Certified Public Accountants.
Officers and Directors of LMRC IV, Inc. and LM Unit Trust, Inc.
Richard J. Himelfarb is President and a director of LMRC IV, Inc. and Legg
Mason Realty Capital, Inc. He is a Senior Executive Vice President and a
director of Legg Mason, Inc. and Legg Mason Wood Walker, Inc. Mr. Himelfarb
has senior management responsibility for the Corporate Finance, Real Estate
Finance and Direct Investments Departments of Legg Mason Wood Walker, Inc.
From 1972 until he joined Legg Mason, Inc. in 1983, Mr. Himelfarb was a
partner in a major Baltimore law firm, where he served as senior outside
counsel for Legg Mason, Inc. He is a graduate of the Johns Hopkins
University and the Yale Law School.
Gerard F. Petrik, Jr. is Vice President and a director of LMRC IV, Inc. and
Legg Mason Realty Capital, Inc. He is a Vice President of Legg Mason Wood
Walker, Inc. Mr. Petrik joined Legg Mason in April 1987. He is a member of
the firm's Equity Research Department. Prior to his employment at Legg
Mason, Mr. Petrik was a senior associate at Paine Webber Properties, Inc.
Mr. Petrik received his undergraduate and graduate degrees from Loyola
College.
L. Kay Strohecker is Treasurer of LMRC IV, Inc. She is Vice President of Legg
Mason Wood Walker, Inc. Ms. Strohecker joined Legg Mason in 1988 and serves
<PAGE> 41
as assistant controller of Legg Mason Wood Walker, Inc. Prior to joining
Legg Mason, Ms. Strohecker was controller for a private corporation in
Baltimore. Ms. Strohecker received her undergraduate and graduate degrees
from the University of Baltimore and is a Certified Public Accountant.
Margaret M. Pasquarella is Vice President and a director of LMRC IV, Inc.
She is a Vice President of Legg Mason Realty Capital, Inc. Ms. Pasquarella
joined Legg Mason in January 1989 and serves as controller of Legg Mason
Realty Capital, Inc. Prior to her employment at Legg Mason, she was a
supervisor in the audit department of Coopers & Lybrand in Baltimore,
Maryland. Ms. Pasquarella is a graduate of Loyola College and is a Certified
Public Accountant.
Thomas C. Merchant is Secretary of LMRC IV, Inc. He joined Legg Mason in
August 1998 and serves as the Assistant General Counsel of Legg Mason, Inc.
Prior to his employment at Legg Mason, Mr. Merchant was an associate at
Shearman and Sterling, a major New York law firm. He is a graduate of Penn
State University and the New York University School of Law.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership is a limited partnership and therefore has no directors or
executive officers.
The General Partners and their affiliates are entitled to receive various
fees, distributions of distributable cash flow and sale or refinancing
proceeds and allocations of net income and net loss from operations and gain
or loss from a sale or refinancing from the Partnership. Pages 10-14 of the
Prospectus under the caption MANAGEMENT COMPENSATION describe the manner
in which fees are to be paid, and pages 59-62 of the Prospectus under the
caption PARTNERSHIP DISTRIBUTIONS AND ALLOCATIONS describe the manner
in which cash distributions are to be made to the General Partners and their
Affiliates. These sections of the Prospectus are incorporated by reference
herein.
A description of the amounts, and sources of payment of, the fees and other
compensation paid or accrued by the Partnership to the General Partners and
their affiliates for the fiscal year ended December 31, 1998 is included in
Note D of the Notes to Financial Statements incorporated by reference from
Item 8, "Financial Statements and Supplementary Data," herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 31, 1999,
with respect to the beneficial ownership of the Units by individuals who are
officers and/or directors of the corporate general partners of the General
Partners:
<PAGE> 42
Name Number of Units Percent of Class
---- --------------- ----------------
Richard J. Himelfarb 80 (1)
Legg Mason Tower
100 Light Street
Baltimore, Maryland 21202
Jack E. Spector 200 (2) (1)
c/o First Washington Management, Inc.
4350 East-West Highway
Bethesda, Maryland 20814 --- ---
All executive officers and directors
as a group 280 (1)
=== ===
(1) Indicates less than 1%.
(2) Mr. Spector disclaims direct beneficial ownership of these Units
owned by his wife as custodian for their child.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions With Management and Others
The Partnership is a limited partnership and therefore has no directors or
officers. The Partnership has engaged in no transactions with individual
officers or directors of FW Corporation or LMRC IV, Inc., the corporate
general partners of the General Partners of the Partnership. Those officers
and directors may have indirect interests in amounts paid to the General
Partners and their affiliates for services rendered by them to the
Partnership. A description of the amounts of and sources of payment of the
fees and other compensation paid or accrued by the Partnership to the General
Partners and their affiliates for the fiscal year ended December 31, 1998 is
incorporated by reference from Item 11, "Executive Compensation," herein.
(b) Certain Business Relationships
The Partnership has entered into certain arrangements with the General
Partners and their affiliates whereby they will receive fees, commissions,
compensation and other income from transactions that have not and will not be
determined on the basis of arms-length negotiations. The Partnership
Agreement generally requires the terms of such transactions to be no less
favorable to the Partnership than the terms obtainable from nonaffiliated
entities rendering similar services on an ongoing basis in the same
geographic region. The types of business transactions and the amounts
payable in connection therewith are described on pages 10-14 of the
Prospectus under the caption Management Compensation, pages 14-17 of the
Prospectus under the caption Conflicts of Interest, pages 24-26 of the
Prospectus under the caption Management, and pages 37-39 of the Prospectus
under the caption Investment Objectives and Policies. These sections of the
Prospectus are incorporated by reference herein. A description of the amounts
paid to the General Partners or their affiliates during the fiscal year ended
December 31, 1998 are set forth in Note D of the Notes to Financial
Statements incorporated by reference from Item 8, "Financial Statements and
Supplementary Data," herein.
<PAGE> 43
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS
ON FORM 8-K
(a) Financial Statements and Financial Statement Schedules
(1) See Index to Financial Statements and Financial Statement
Schedules on Page 16.
(2)Exhibits
3.1 Third Amended and Restated Agreement and Certificate of Limited
Partnership. (1)
3.2 Third Certificate of Amendment to Third Amended and Restated
Agreement and Certificate of Limited Partnership. (3)
3.3 Second Certificate of Amendment to Third Amended and Restated Agreement
and Certificate of Limited Partnership. (3)
3.4 First Certificate of Amendment to Third Amended and Restated Agreement
and Certificate of Limited Partnership. (3)
4.1 Third Amended and Restated Agreement and Certificate of Limited
Partnership. (1)
4.2 First Amendment to Third Amended and Restated Agreement and Certificate
of Limited Partnership dated March 4, 1999.
4 The Partnership hereby agrees, pursuant to Item 601(b)(4)(iii)(A) of
Regulation S-K, to furnish to the Commission upon request a copy of
each instrument with respect to the rights of holders of the Edgewood
Plaza long-term debt of the Partnership. (10)
10.1 Form of Shopping Center Management and Leasing Agreement. (2)
10.2 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
Food Lion, Inc. (3)
10.3 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
Revco Drug Centers of Virginia Inc. (3)
10.4 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
The Kroger Company. (3)
10.5 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
Santoni's Markets Incorporated. (3)
10.6 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
Rite-Aid of Maryland, Inc. (3)
10.7 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
Family Dollar Stores of Martinsville, Virginia, Inc. (3)
10.8 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
Southeastern Outdoorsman, Inc. (3)
10.9 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
Noland Company, Inc. (3)
10.10 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
The Grand Union Company. (3)
10.11 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
The Reed Company. (3)
10.12 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
Family Dollar Stores of Pennsylvania, Inc. (3)
10.13 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
R.H. Properties Co. D/B/A New Ephrata Farmer's Market. (3)
10.14 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
<PAGE> 44
Santoni's, Inc. (3)
10.15 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
People's Service Drug Stores, Inc. (3)
10.16 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
Montgomery Ward Co., Inc. (3)
10.17 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
S.E. Nichols, Inc. (3)
10.18 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
Robert E. Lawlar. (3)
10.19 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
Ottis T. Cato D/B/A Bingo Time. (3)
10.20 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
Housewares Merchandisers, Inc. (3)
10.21 First Addendum to that certain contract between First Washington
Development Group, Inc. and BPT Lynnwood Place Associates, LTD. dated
March 11, 1987. (3)
10.22 Escrow Agreement between BPT Lynnwood Place Associates, Ltd. and Mid-
Atlantic Centers Limited Partnership (pursuant to First Addendum to
the Contract) dated July 16, 1987. (3)
10.23 Lease Guarantee Agreement between Mid-Atlantic Centers Limited
Partnership and The Mitchell Company dated December 30, 1987. (3)
10.24 Escrow Agreement between The Mitchell Company, Mid-Atlantic Center
Limited Partnership and Mid-South Title Insurance Corporation dated
December 30, 1987. (3)
10.25 First Amendment of Real Estate Purchase Contract between First
Washington Development Group, Inc. and Five Shopping Center Co. dated
December 7, 1987. (3)
10.26 First Addendum to Real Estate Purchase Contract between Quality
Centers/Lancaster Limited Partnership and First Washington Development
Group, Inc. dated September 13, 1988. (3)
10.27 Escrow Agreement between Fidelity Title & Guaranty Company, Quality
Centers/Lancaster Limited Partnership and Mid-Atlantic Centers Limited
Partnership dated January 31, 1989. (3)
10.28 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
Southeastern Health Spa, Inc. (4)
10.29 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
Frensleys, Inc. (4)
10.30 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
Nike Retail Services, Inc. (4)
10.31 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
Wanda Fay Toney and T.A. Coats, Jr. (5)
10.32 Lease Agreement between Mid-Atlantic Centers Limited Partnership and
Video Vibes.(6)
10.33 Modification of Promissory Note and Statement of Loan Status between
Mid-Atlantic Centers Limited Partnership and The Mitchell Company. (7)
10.34 Supplemental agreement by and between Mid-Atlantic Centers Limited
Partnership and Montgomery Ward & Co., Incorporated amending lease
agreement included as Exhibit 10.16 of Form 10-K for the year ended
December 31, 1988. (7)
10.35 Lease agreement by and between Mid-Atlantic Centers Limited
Partnership and Wholesale Depot Holding Company, Inc. (7)
10.36 Amended and Restated Nonrecourse Purchase Money Promissory Note dated
January 13, 1994. (8)
10.37 Amendment to Note, Deed of Trust and Other Loan Documents dated
<PAGE> 45
January 13, 1994. (8)
10.38 Promissory Note ($196,710.00) dated January 13, 1994. (8)
10.39 Loan Agreement between Mid-Atlantic Centers and FirstTrust Bank dated
January 13, 1994. (8)
10.40 Promissory Note between Mid-Atlantic Centers and FirstTrust Bank dated
January 13, 1994. (8)
10.41 Lease agreement by and between Mid-Atlantic Centers Limited
Partnership and W.S. Badcock Corporation dated November 10, 1993. (8)
10.42 Purchase and Sale Agreement between Mid-Atlantic Centers Limited
Partnership, RRC Acquisitions, Inc. and Ulmer, Murchison, Ashby and
Taylor dated December 29, 1995. (10)
27.1 Financial Data Schedule.
28.1 Letter of Valuation for 11 Shopping Center Properties as of January 1,
1993. (6)
28.2 Pages 10-14 of the Registrant's Prospectus dated March 25, 1987. (1)
28.3 Pages 14-17 of the Registrant's Prospectus dated March 25, 1987. (1)
28.4 Pages 24-26 of the Registrant's Prospectus dated March 25, 1987. (1)
28.5 Pages 37-39 of the Registrant's Prospectus dated March 25, 1987. (1)
28.6 Pages 59-62 of the Registrant's Prospectus dated March 25, 1987. (1)
28.7 Page 66 of the Registrant's Prospectus dated March 25, 1987. (1)
28.8 Letter of Valuation for 11 Shopping Center Properties as of January 1,
1994. (8)
28.9 Letter of Valuation for 11 Shopping Center Properties as of November
30, 1994. (9)
28.10 Letter of Valuation for Ten Shopping Center Properties as of January
1, 1996. (10)
28.11 Letter of Valuation for Nine Shopping Center Properties as of December
1, 1996. (11)
28.12 Limited Summary Report for Two (2) Shopping Centers as of December 1,
1997. (12)
- ------------------
(1) Incorporated by reference to the Registrant's Registration
Statement on Form S-11 under the Securities Act of 1933 (File
No. 33-11086).
(2) Incorporated by reference to Amendment No. 3 to the Registrant's
Registration Statement on Form S-11 under the Securities Act of 1933
(File No. 33-11086).
(3) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1988 pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (File No. 0-16285).
(4) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1989 pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (File No. 0-16285).
(5) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1990 pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (File No. 0-16285).
(6) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992 pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (File No. 0-16285).
(7) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the quarterly period ended June 30, 1993 pursuant to Section 13
or 15 (d) of the Securities Exchange Act of 1934 (File No. 0-16285).
(8) Incorporated by reference to the Registrant's Annual Report on Form 10-K
<PAGE> 46
for the fiscal year ended December 31, 1993 pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (File No. 0-16285).
(9) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994 pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (File No. 0-16285).
(10)Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995 pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (File No. 0-16285).
(11)Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996 pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (File No. 0-16285).
(12)Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997 pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (File No. 0-16285).
(b) Reports on Form 8-K
The Partnership filed reports on Form 8-K in February 1998 to report the
sales of Lynnwood Place Shopping Center and Edgewood Plaza Shopping Center
and in June 1998 to report the sale of Quality Center Shopping Center.
<PAGE> 47
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.
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
By: Realty Capital IV Limited Partnership,
General Partner
By: LMRC IV, Inc., General Partner
/s/ Richard J. Himelfarb
Richard J. Himelfarb, President
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.
Title
Signature (Position held with LMRC IV, Inc.) Date
President and Director
/s/ Richard J. Himelfarb (Principal Executive Officer) March 24, 1999
Richard J. Himelfarb
Vice President, Assistant
/s/ Gerard F. Petrik, Jr. Secretary and Director March 24, 1999
Gerard F. Petrik, Jr.
Treasurer and Assistant
Secretary (Principal Financial
/s/ L. Kay Strohecker and Accounting Officer) March 24, 1999
L. Kay Strohecker
Vice President and
/s/ Margaret M. Pasquarella Director March 24, 1999
Margaret M. Pasquarella
<PAGE> 48
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.
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
By: FW Realty Limited Partnership,
General Partner
By: FW Corporation, General Partner
/s/ William J. Wolfe
William J. Wolfe, President
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.
Title
Signature (Position held with FW Corporation) Date
President and Director
/s/ William J. Wolfe (Principal Executive Officer) March 24, 1999
William J. Wolfe
/s/ Marvin Fabrikant Vice President and Director March 24, 1999
Marvin Fabrikant
Vice President, Secretary
/s/ Stuart D. Halpert and Director March 24, 1999
Stuart D. Halpert
/s/ Lester Zimmerman Treasurer and Director March 24, 1999
Lester Zimmerman
/s/ Jack E. Spector Director March 24, 1999
Jack E. Specto
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF NET ASSETS IN LIQUIDATION AND THE STATEMENT OF CHANGES OF
NET ASSETS IN LIQUIDATION. THE PARTNERSHIP'S FINANCIAL STATEMENTS ARE
PRESENTED UTILIZING THE LIQUIDATION BASIS OF ACCOUNTING.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> $1,768,405
<SECURITIES> $0
<RECEIVABLES> $49,664
<ALLOWANCES> $0
<INVENTORY> $0
<CURRENT-ASSETS> $0
<PP&E> $8,040,351
<DEPRECIATION> $0
<TOTAL-ASSETS> $9,929,185
<CURRENT-LIABILITIES> $0
<BONDS> $6,519,937
$0
$0
<COMMON> $0
<OTHER-SE> $1,497,106
<TOTAL-LIABILITY-AND-EQUITY> $9,929,185
<SALES> $0
<TOTAL-REVENUES> $0
<CGS> $0
<TOTAL-COSTS> $0
<OTHER-EXPENSES> $0
<LOSS-PROVISION> $0
<INTEREST-EXPENSE> $0
<INCOME-PRETAX> $(69,095)
<INCOME-TAX> $0
<INCOME-CONTINUING> $(69,095)
<DISCONTINUED> $0
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> $(69,095)
<EPS-PRIMARY> $0
<EPS-DILUTED> $0
</TABLE>
MID-ATLANTIC CENTERS LIMITED PARTNERSHIP
FIRST AMENDMENT TO THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
THIS FIRST AMENDMENT TO THE THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP, dated as of March 4, 1999 and
effective as of January 1, 1998, is by and among REALTY CAPITAL
IV LIMITED PARTNERSHIP, a Maryland limited partnership, and FW
REALTY LIMITED PARTNERSHIP, a District of Columbia limited
partnership, as General Partners, and LM UNIT TRUST, INC., a
Maryland corporation, as the Assignor Limited Partner.
WHEREAS, the General Partners and the Assignor Limited
Partner formed the Mid-Atlantic Centers Limited Partnership (the
"Partnership"), by executing the Certificate of Limited
Partnership dated December 16, 1986, which was amended and
restated as the Amended and Restated Agreement and Certificate of
Limited Partnership on December 24, 1986 and, subsequently, as
the Second Amended and Restated Agreement and Certificate of
Limited partnership on February 26, 1987 and Third Amended and
Restated Agreement and Certificate of Limited Partnership as of
March 1987 (the "Partnership Agreement"); and
WHEREAS, the purposes of this Amendment are (i) to amend the
provisions of Article IV in order to cause the allocation
provisions to comply with the requirements of Section 704(b) of
the Internal Revenue Code of 1986, as amended (the "Code"),
while allowing the distribution provisions to accurately reflect
the agreement between the General Partners and the Investors
concerning the priority for distributions in liquidation of the
Partnership and (ii) to continue the Partnership as currently
existing without any other changes in the Partnership Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises of the parties hereto, and other good and
valuable consideration, the parties agree as follows:
1. A new Section 4.7.M is hereby added to the Partnership
Agreement which provides as follows:
M. The General Partners, through a charge to their respective
Capital Accounts, hereby agree to bear an amount of the
Partnership's operating expenses and losses equal to the positive
balance in their respective Capital Accounts determined before
any distributions are made to the General Partners.
Notwithstanding any other provision of the Partnership Agreement,
(i) with respect to 1998, there shall be allocated to the General
Partners the amount of Net Loss from Operations, or if
insufficient, operating expenses, which shall cause the aggregate
positive balance in the General Partners' Capital Accounts at
December 31, 1998 to equal the estimated Loss from a Sale or
Refinancing and Net Loss from Operations which will be allocable
to the General Partners in 1999 under the general allocation
provisions of the Partnership Agreement, (ii) with respect to
1999, if the actual loss and operating expenses allocable to the
General Partners under the general allocation provisions of the
Partnership Agreement for 1999 do not cause the General Partners'
Capital Accounts to have a zero balance when the Partnership
disposes of all of its assets and liquidates, then there shall be
allocated to the General Partners an additional amount of Net
Loss from Operations and Loss from a Sale or Refinancing, or if
insufficient, operating expenses, which shall cause the General
Partners' Capital Accounts to have a zero balance, and (iii) all
remaining items of income, gain, loss, deduction and credit for
1998 and 1999, as applicable, shall be allocated to the Investors
so that their respective Capital Account balances are equalized
on a per Unit basis.
2. Capitalized terms used in this First Amendment which are
not defined herein shall have the meaning given them in the
Partnership Agreement.
3. Except as amended hereby, the Partnership Agreement shall
remain unchanged.
4. This Amendment may be executed in several counterparts and
all so executed shall constitute one agreement binding on all
parties hereto, notwithstanding that all the parties have not
signed the original or the same counterpart. Any counterpart
hereof signed by the party against whom enforcement of this
Amendment is sought shall be admissible into evidence as an
original hereof to prove the contents hereof.
IN WITNESS WHEREOF, the undersigned have executed this First
Amendment effective as of the date first above written.
GENERAL PARTNERS:
REALTY CAPITAL IV LIMITED
PARTNERSHIP
WITNESS: By: LMRC IV, INC., General Partner
/s/ Margaret M. Pasquarella /s/ Richard J. Himelfarb
- --------------------------- By:-------------------------------
Name: Richard J. Himelfarb
Title: President
FW REALTY LIMITED PARTNERSHIP
By: FW CORPORATION, General Partner
/s/ Jeffrey S. Distenfeld /s/ Stuart D. Halpert
- --------------------------- By:--------------------------------
Name: Stuart D. Halpert
Title: Vice President
ASSIGNOR LIMITED PARTNER:
LM UNIT TRUST, INC.
/s/ Margaret M. Pasquarella /s/Gerard F. Petrik, Jr.
- --------------------------- By:--------------------------------
Name: Gerard F. Petrik, Jr.
Title: President
