<PAGE>
Exhibit Index p.29
Exhibits begin p. (n/a)
Total pages: 47
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 1995
Commission file number 000-16757
CONCORD MILESTONE PLUS, L.P.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 52-1494615
- ------------------------------------------ -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
5200 TOWN CENTER CIRCLE, 4TH FLOOR
BOCA RATON, FLORIDA 33486
- ------------------------------------------ -------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (407) 394-9260
----------------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Class A Interests ("Class A Interests"), each such interest representing an
assignment of one Class A Limited Partnership Interest held by CMP Beneficial
Corp., a Delaware corporation (the "Assignor"), under the Amended and Restated
Agreement of Limited Partnership (the "Partnership AGREEMENT") of Concord
Milestone Plus, L.P.
- -------------------------------------------------------------------------------
(Title of Class)
Class B Interests ("Class B Interests"), each such interest representing an
assignment of one Class B Limited Partnership Interest held by the Assignor
under the Partnership Agreement.
- -------------------------------------------------------------------------------
(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
---- ----
<PAGE>
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
-------
The Class A and Class B Interests are not traded on any established public
trading market.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
<PAGE>
PART I
ITEM 1. BUSINESS.
(A) GENERAL DEVELOPMENT OF BUSINESS.
Concord Milestone Plus, L.P. (the "Partnership") was organized as a
Delaware limited partnership on December 12, 1986 with CM Plus Corporation,
a Delaware corporation (the "General Partner"), as its general partner. The
General Partner is wholly owned by Concord Assets Group, Inc. ("Concord").
The Partnership is engaged in the business of owning and operating three
shopping centers. CMP Beneficial Corp. is a wholly owned subsidiary of
Concord which was organized under Delaware law in December 1986 for the sole
purpose of holding limited partnership interests in the Partnership for the
benefit of holders of the Class A Interests and Class B Interests and has
engaged in no business activities other than fulfilling its obligations
under the Amended and Restated Agreement of Limited Partnership of the
Partnership (the "Partnership Agreement").
(B) INDUSTRY SEGMENT INFORMATION.
The Partnership has only one industry segment, commercial real estate.
See Item 8, "Financial Statements and Supplementary Data", of this report for
a summary of the Partnership's operations for its last three fiscal years.
(C) NARRATIVE DESCRIPTION OF BUSINESS.
The Partnership was formed for the purpose of investing in existing
income-producing commercial and industrial real estate, such as shopping
centers, office buildings, free-standing commercial buildings, warehouses and
distribution centers. The Partnership currently owns and operates three
shopping centers, one located in Searcy, Arkansas (the "Searcy Property"), one
located in Valencia, California (the "Valencia Property") and one located in
Green Valley, Arizona (the "Green Valley Property").
The amount of revenues attributable to the Searcy Property, the Valencia
Property and the Green Valley Property (collectively, the "Properties") from
tenants not affiliated with the Partnership was (i) $441,239, $1,388,592 and
$1,204,137, respectively, for the fiscal year ended December 31, 1995; (ii)
$419,757, $1,427,475 and $1,291,654, respectively, for the fiscal year ended
December 31, 1994; and (iii) $490,351, $1,414,729 and $1,182,141, respectively,
for the fiscal year ended December 31, 1993.
See Item 2, "Properties", of this Report for additional information as to
the Properties, including a description of the competitive conditions
affecting them.
-3-
<PAGE>
EMPLOYEES
The Partnership employs six people at the Green Valley Property and one
person at the Searcy Property who provide general maintenance and security
services. Milestone Property Management, Inc., an affiliate of the General
Partner, provides all management services for the Partnership and is
reimbursed annually for its cost of administrative services provided to the
Partnership, including the pro rata cost of personnel. Aside from its
officers, the General Partner has no employees. See Item 11, Compensation; of
this Report.
ITEM 2. PROPERTIES.
The Properties consist of three shopping centers: the Searcy Property, the
Valencia Property and the Green Valley Property. For the purposes of this
section, the following is a glossary of terms:
a. Occupancy rate - the rate of the actual leased area (square
footage) to gross leaseable area (square footage) as of the
end of the fiscal year (December 31).
b. Leasable area - The area (square footage) for which rent
can be charged.
c. Average effective annual rental per square foot - The average
rental rate received per square foot of leased space taking
rental concessions and discounts into consideration.
BOND MORTGAGES
Each of the Properties is subject to a note together with a related first
mortgage or deed of trust on that Property in principal amount up to 65% of the
Partnership's purchase price of that Property (a "Bond Mortgage"), which was
granted by the Partnership to United States Trust Company of New York, as
trustee (the "Trustee") (or, in the case of a deed of trust, to a deed of trust
for the benefit of the Trustee) for the benefit of the holders of the
Partnership's Escalating Rate Collateralized Mortgage Bonds due November 30,
1997 (the "Bonds"). The aggregate principal amount of Bonds outstanding as of
March 15, 1996 was $16,452,000 and the Bonds are cross collateralized by all
three properties. As of that date, the principal amount of the Bond Mortgages,
on the Searcy Property, the Valencia Property and the Green Valley Property
were $2,632,500, $7,523,500 and $6,296,000, respectively.
The Bonds bear interest, payable semi-annually, from the date of issuance at
annual rates increasing from 8.15 percent to 10 percent (9.50 percent, 9.25
percent and 9.0 percent at December 31, 1995, 1994 and 1993, respectively) and
mature on November 30, 1997. The Bonds have an effective interest rate of 9.66
percent. Pursuant to the Indenture pursuant to which the Bonds were issued, the
Bonds are subject to early redemption (at 102 percent of the principal amount
for the period from June 1, 1995 to May 31, 1996, which is reduced by 1 percent
per year thereafter) under certain circumstances. The holders of the Bonds
have a first lien on the Properties through the Bond Mortgages. The bond
discount is amortized using the effective interest method.
-4-
<PAGE>
THE SEARCY PROPERTY
SEARCY, ARKANSAS
LOCATION. The Searcy Property is situated on an irregularly shaped parcel
of approximately 10.78 acres, which has frontages on Race Avenue and Front
Street in the City of Searcy, Arkansas. Searcy, the county seat of White
County, is located in the central portion of the State of Arkansas,
approximately 50 miles northeast of Little Rock, Arkansas.
The Searcy Property is part of a larger shopping complex known as the Town
and Country Plaza. In addition to the Searcy Property, the Town and Country
Plaza consists of an approximately seven acre parcel (formerly the site of a
free-standing Wal-Mart department store) and five adjacent out parcels totaling
3.86 acres.
The Searcy Property is situated on the west side of Front Street, just
west of U.S. Route 64, 67 and 167, and the south side of State Route 36 (Race
Avenue). The Searcy Property is part of a two-mile stretch of commerical
development along Race Avenue that is the main shopping area for the city,
county and surrounding areas. Searcy's marketing area includes all of White
County and portions of surrounding counties. Town and Country Plaza comprises
the major portion of this main shopping area. Race Avenue is densely improved
with strip shopping centers, car dealerships, fast food franchises, motels,
restaurants, gas stations, banks, a hospital, a vocational-technical school and
free-standing commercial businesses.
COMPETITION. There are three shopping centers within two miles to the west
of the Town and Country Plaza on Race Avenue. One shopping center consists of
an Alco discount department store and a Piggly Wiggly food store. The second
shopping center consists of a Fred's discount store, Warehouse Foods, Sears
catalog store and two satellite stores. The third center consists of a Kroger
food store and a Revco drugstore. Directly across the street from the Searcy
Property is a Wal-Mart superstore. The Wal-Mart relocated from the Town and
Country Plaza in 1992.
DESCRIPTION. The Searcy Property, which was completed in July 1985, is a
one-story masonry and steel building whose exterior is painted concrete block
with masonry, brick and glass fronts. The Searcy Property contains 78,436
gross leasable square feet leased to 11 tenants. The entire Town and Country
Plaza has parking for 970 cars of which approximately 570 parking spaces are
allocated to the Searcy Property.
OPERATING AND TENANT INFORMATION. As of March 15, 1996, there were 11
tenants (including two anchor tenants) and one vacancy at the Searcy Property.
The occupancy rate was 95.5%, 100%, 90.9%, 100% and 100% for 1995, 1994, 1993,
1992 and 1991, respectively. The average effective annual rental per square
foot was $5.15, $5.46, $6.05, $5.82, and $5.35 for 1995, 1994, 1993, 1992 and
1991, respectively.
-5-
<PAGE>
The two anchor tenants, a J.C. Penney department store and a Stage Store
("Stage"), occupy 10% or more of the gross leasable area of the Searcy Property.
J.C. Penney, a clothing and apparel department store, occupies 33,796 square
feet or 43.1% of the gross leasable area of the Searcy Property. Stage, a
clothing and apparel store, occupies 15,600 square feet or 19.9% of the gross
leasable area of the Searcy Property. The principal provisions of the leases
with these anchor tenants are summarized below.
J.C. Penney operates its department store under a lease that commenced
October 2, 1985 and expires October 31, 2005, subject to four five-year renewal
options exercisable by J.C. Penney. The annual minimum rent is $165,600 ($4.90
per square foot). The lease provides for annual percentage rent equal to 1.5%
of the tenant's gross receipts in excess of $8,280,000. The total rent
received from J.C. Penney in 1995 was $165,600. In addition, J.C. Penney is
required to reimburse the Partnership (as an offset against percentage rent) a
pro rata share of any increases in real estate taxes over the highest tax paid
by the Partnership during any of the first three years of operation. J.C.
Penney is also required to reimburse the Partnership for common area
maintenance expenses in annual amounts per square foot of tenant space as
follows: $.20 for years 1-15, $.25 for years 6-10, $.30 for years 11-15, $.35
for years 16-20 and $.50 during the option periods. J.C. Penney is required to
maintain comprehensive public liability insurance of not less than $1,000,000
per occurrence of bodily injury or death and not less than $100,000 per
occurrence for property damage.
J.C. Penney has the right to discontinue use of the premises as a J.C.
Penney retail store business, or sublet or assign the premises, at any time.
This right is subject to certain notice requirements and the Partnership's
option to cancel the lease. As long as the lease remains in effect after 30
days of discontinued use, J.C. Penney must pay, in addition to the annual
minimum rent, additional rent equal to the average of the amounts paid as
percentage rent for each lease year during the period between the commencement
of the lease and the time when it discontinues use of the premises.
Stage operates its store under a lease that expires July 30, 2001, subject
to three five-year renewal options exercisable by Stage. The annual minimum
rent is $81,900 ($5.25 per square foot). In addition, the lease provides for
percentage rent equal to 3% of gross annual sales in excess of $2,600,000. The
total rent received from Stage in 1995 was $81,900. Stage is required to
reimburse the Partnership a pro rata share of real estate taxes and insurance
costs subject to a maximum of $6,240 for real estate taxes and $1,248 for
insurance costs in any lease year. Stage is also required to reimburse the
Partnership to a maximum of $3,120 for a share of the expenses of maintaining
the common areas.
The other nine tenants at the Searcy Property provide a variety of goods
and services, including cosmetics, family shoes, ladies apparel, jewelry, and
men's clothing and western wear. Their leases provide for annual minimum rents
aggregating $137,965 and ranging from $5.00 per square foot to $9.00 per square
foot (a weighted average of $6.14 per square foot).
-6-
<PAGE>
Most of the leases contain provisions for additional rent calculated as a
specified percentage of the tenant's gross receipts above fixed minimum
amounts and for reimbursement of all or a portion of the tenant's pro rata
share of real estate taxes, insurance and common area maintenance expenses.
Four tenants leasing an aggregate of 7,160 square feet are on month to month
rental agreements.
The following table shows selected lease expiration information for the
Searcy Property (assuming no renewals or cancellations):
<TABLE>
<CAPTION>
% OF TOTAL
GROSS 1996 1996
YEAR OF NUMBER OF LEASABLE ANNUAL ANNUAL
EXPIRATION LEASES AREA MINIMUM MINIMUM
OF LEASE EXPIRING (SQ.FT.) RENT RENT
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C>
1996 5 10,720 $ 64,132 16.6%
1997 1 1,200 $ 7,200 1.9%
1998 1 2,867 $ 24,513 6.4%
2000 1 5,973 - (1)
2001 2 20,280 $124,020 32.1%
2005 1 33,796 $165,600 43.0%
1 vacancy - 3,600 - -
-- ------- -------- -----
Total 11 78,436 $385,465 100%
== ======= ======== =====
</TABLE>
(1) This tenant currently pays 4% of gross sales in lieu of all rental
obligations
Real estate taxes on the Searcy Property are based on a tax rate of 3.16% of
assessed valuation. The current assessed valuation of the Searcy Property is
$650,000 and real estate taxes for 1996 are estimated at $21,000. Real estate
taxes are subject to increases in the future that may result from reassessment
and/or increases in the tax rate.
The Partnership's adjusted federal income tax basis for the Searcy
Property is approximately $3,428,000 of which $430,000 is allocated to land
and $2,998,000 to the building and improvements. The Partnership
depreciates the cost of the building over 31.5 years and improvements over 5
years using the straight-line method of cost recovery. In the opinion of the
General Partner, the Searcy Property is adequately insured.
OLD ORCHARD SHOPPING CENTER
VALENCIA, CALIFORNIA
LOCATION. The Valencia Property is situated on an approximately 9.94-acre
parcel that has frontages on Lyons Avenue and Orchard Village Road in the town
of Valencia, California. Valencia is located in the Santa Clarita Valley in Los
Angeles County, approximately 35 miles north of Los Angeles. Old Orchard
Shopping Center is located on the northwest corner of Lyons Avenue and Orchard
Village Road in a heavily developed commercial area. Lyons Avenue is improved
with shopping centers, fast food restaurants, housing developments and free
standing convenience stores. The surrounding area is densely populated with
apartments, condominiums and single family residences.
-7-
<PAGE>
COMPETITION. Within two miles of the Valencia Property there are competing
shopping facilities at Newhall Plaza with a Von's Food Store and 10 satellite
stores, Granary Square with a Hughes Food Market, Long's Drugstore and 26
satellite stores, a Safeway Supermarket complimented by 14 satellite stores and
the Alpha Beta Center with Alpha Beta Food stores and 16 satellite stores. In
1992, a strip center anchored by a Ralph's Foods opened within a mile of the
Valencia Property.
In the spring of 1996, a 78,000 square foot shopping center is scheduled
to open on old Orchard Street across from the Valencia Property. Plans for
this center include a 46,000 square foot Ralph's Supermarket, a 16,000 square
foot drugstore and 16,000 square feet of smaller stores. The General Partner
believes that this shopping center may have an impact on tenant sales but does
not expect it to materially adversely affect the occupancy rate at the Valencia
Property.
DESCRIPTION OF THE PROPERTY. Old Orchard Shopping center is an eight
building, one-story masonry and steel shopping center complex that was
originally constructed in 1965. During 1985 and 1986 the shopping center was
renovated and enlarged to 103,413 square feet of gross leasable area. The
exterior construction is pre-cast concrete, fluted block and decorative tile.
The shopping center has over 500 parking spaces.
OPERATING AND TENANT INFORMATION. As of March 15, 1996 there were 22
tenants (including two anchor tenants) and no vacancies at the Valencia
Property. The occupancy rate was 100%, 93.5%, 100%, 97.1%, and 100% in 1995,
1994, 1993, 1992 and 1991, respectively. The average effective annual rental
per square foot was $10.15, $10.67, $10.62, $10.98, $10.89 for 1995, 1994,
1993, 1992 and 1991, respectively.
The two anchor tenants, Lucky Stores, Inc. ("Lucky Stores"), a full service
grocery store, and Thrifty Drugstore ("Thrifty"), a full service drug store,
occupy 10% or more of the gross leasable area of the Valencia Property. Lucky
Stores occupies 31,842 square feet or 30.8% of the gross leasable area of the
Valencia Property. Thrifty occupies 18,125 square feet or 17.5% of the gross
leasable area of the Valencia Property. The principal provisions of the leases
with these anchor tenants are summarized below.
Lucky Stores operates under a lease that commenced on July 1, 1986 and
expires June 30, 2006, subject to four five-year renewal options exercisable by
Lucky Stores. The annual base rent is $300,000 per year ($9.42 per square
foot). The lease also provides for percentage rent equal to 1.25% of gross
annual sales in excess of $38,000,000, less amounts paid by Lucky Stores for
property taxes and assessments and insurance premiums. The total rent received
from Lucky Stores in 1995 was $300,000. If the Valencia Property is occupied or
used for specified, prohibited purposes, the percentage used in calculating
percentage rent will be reduced to an amount not less than .625%. Lucky Stores
is required to reimburse the Partnership for a pro rata share of real estate
taxes, insurance and common area maintenance expenses (but Lucky Stores'
consent is required for any single expenditure regarding the maintenance,
insurance and lighting of the Property in excess of $5,000). Lucky Stores has
the right to assign or sublet the lease.
-8-
<PAGE>
Thrifty operates under a lease that commenced on March 25, 1965 and
expires May 31, 2005, subject to four five-year renewal options exercisable by
Thrifty. Rent is payable monthly in an amount equal to 3% of the tenant's gross
sales for the previous month, but not less than $45,000 annually. The total
rent received from Thrifty in 1995 was $144,000. Thrifty is entitled to
remodel its premises at any time, at its own expense, in which event it will
have the right to withhold one half of the rent payable in any one full
calendar year in excess of the rent paid during the year immediately preceding
the completion of the remodeling, until it has withheld its cost of
remodeling, but not more than $300,000. Thrifty is not required to reimburse
the Partnership for any real estate taxes or operating expenses. Thrifty may
not sublet or assign its space without prior written consent of the
Partnership, except to one of its affiliates.
The other 20 stores in the Old Orchard Shopping Center are leased to
tenants providing a variety of goods and services, including automotive, fast
food, gourmet food, apparel, shoes, hardware, specialty gifts, bicycles, dry
cleaning and hairstyling. These leases provide for annual minimum rents
aggregating $806,348 and ranging from $7.24 per square foot to $27.82 per
square foot (a weighted average of $15.09 per square foot). Many of the
leases contain provisions pursuant to which the Partnership is entitled to
participate in specified percentages of tenant's gross receipts above fixed
minimum amounts and to receive reimbursement for the tenant's pro rata share of
operating expenses, including real estate taxes, insurance and common area
maintenance expenses. In addition, many of the leases provide that after the
lease expires the tenant may continue to occupy the space subject to the
existing lease, except that annual minimum rent will increase by 25% to 50%.
The following table shows selected lease expiration and vacancy
information for the Valencia Property (assuming no renewals or cancellations):
<TABLE>
<CAPTION>
% OF TOTAL
GROSS 1996 1996
YEAR OF NUMBER OF LEASABLE ANNUAL ANNUAL
EXPIRATION LEASES AREA MINIMUM MINIMUM
OF LEASE EXPIRING (SQ.FT.) RENT RENT
---------- --------- -------- -------- ----------
<S> <C> <C> <C> <C>
1996 2 3,480 $ 53,802 4.7%
1997 2 1,800 $ 40,817 3.5%
1998 7 18,862 $ 301,910 26.2%
1999 4 7,900 $ 131,897 11.5%
2000 2 9,600 $ 82,462 7.2%
2002 1 2,500 $ 69,550 6.0%
2005 3 27,429 $ 170,910 14.8%
2006 1 31,842 $ 300,000 26.1%
-- ------- ---------- ----
22 103,413 $1,151,348 100%
== ======= ========== ====
</TABLE>
The Valencia Property is subject to real estate taxes at the rate of
1.4649% of assessed valuation. The current assessed valuation of the Valencia
Property is $8,938,000 and the total tax for 1996 on the Valencia Property is
estimated at $131,000. Real estate taxes are subject to increases in the future
that may result from reassessment and/or increases in the tax rate.
-9-
<PAGE>
The Partnership's adjusted federal income tax basis for the Valencia
Property is $11,378,000 of which $6,500,000 is allocated to land and $4,878,000
is allocated to the buildings and improvements. The Partnership depreciates
the cost of the buildings over 31.5 years and improvements over 5 years using
the straight-line method of cost recovery. In the opinion of the General
Partner, the Valencia Property is adequately insured.
GREEN VALLEY MALL
GREEN VALLEY, ARIZONA
LOCATION. The Green Valley Property, a mall complex known as the Green
Valley Mall, is situated on an approximately 21.31-acre parcel in the Town
of Green Valley, Arizona. It has frontages on Interstate 19 and Esperenza
Boulevard, with additional access from La Canada Road. Green Valley is a
planned adult community located in Pima County in the Santa Cruz River Valley
approximately 25 miles south of Tucson. Green Valley has a number of hotels
and office buildings, a community center and three 18 hole golf courses.
The Green Valley Property is located at the intersection of Interstate 19
and Esperenza Boulevard and serves Pima County, as well as Santa Cruz County
to the south.
COMPETITION. The Green Valley Property competes directly with the
142,500 square foot Continental Shopping Plaza located at Continental Road
and Interstate 19 approximately one mile south of the Green Valley Property.
The Continental Shopping Plaza is anchored by a Safeway Supermarket. There
is a shopping center located 3 miles to the north of the Green Valley
Property which includes a 65,000 square foot Wal-Mart Department Store and a
42,000 square foot Bashsa Food Store as anchor tenants plus 25,000 square
feet of space for local tenants. Another center, which is located to the
north of the Green Valley Property and was anchored by a 45,000 square foot
Kmart and 10,000 square feet of space for local tenants, closed during 1995.
DESCRIPTION OF THE PROPERTY. Green Valley Mall is an open-air shopping
complex originally built in the 1960s and expanded at various times
throughout the 1970s and 1980s. The shopping center is comprised of several
buildings, including some that are free standing, totalling 193,470 gross
leasable square feet (adjusted by 2,080 square feet representing the mall
office and maintenance space). The exterior construction is a combination of
adobe block, split face black and painted concrete block. The mall has
approximately 850 parking spaces.
OPERATING AND TENANT INFORMATION. As of March 15, 1996, there were 72
tenants (including four anchor tenants) and 7 vacancies at the Green Valley
Property. The anchor tenants are an Abco Supermarket (the only tenant that
occupies 10% or more of the gross leasable area of the Green Valley
Property), an Ace Hardware store, a Beall's Outlet and a local bank. The
occupancy rate was 92.0%, 85.4%, 82.8%, 80.0% and 85.3% for 1995, 1994,
1993, 1992 and 1991, respectively. The average effective annual rental per
square foot was $5.31, $5.56, $5.81, $5.44 and $6.34 for 1995, 1994, 1993,
1992 and 1991, respectively.
Abco Supermarket occupies 38,983 square feet or 20.15% of the gross
leasable area of the Green Valley Property. The principal provisions of the
lease with this anchor tenant are summarized below.
-10-
<PAGE>
Abco Supermarket operates its store under a lease that expires July 31,
1999, subject to five five-year renewal options exercisable by Abco
Supermarket. The annual base rent is $68,060 ($1.75 per square foot). The
lease provides for annual percentage rent equal to 1% of annual gross sales
in excess of $4,000,000. The total rent received from Abco Supermarket in
1995 was $91,000. The tenant is required to reimburse the Partnership a pro
rata share of real estate taxes and common area maintenance expenses and is
required to maintain liability insurance of not less than $300,000 for
personal injury or death of any one person, $500,000 for injury or death of
any number of persons in any one incident, and $100,000 for damage to
property resulting from any one incident. Abco Supermarket may not sublet
the space or assign the lease without the Partnership's consent.
The other 71 tenants in the mall provide a wide variety of retail goods
and services, including fast food, apparel, hair styling, insurance, books,
specialty gifts, mortgage services, accounting, greenery, printing, and
banking. These leases have varying lease terms ranging from 1 to 24 years
and provide for payment of annual minimum rents aggregating $910,036 and
ranging from $2.21 per square foot to $15.20 per square foot (a weighted
average of approximately $6.48 per square foot). Some of the leases contain
provisions pursuant to which the Partnership is entitled to participate in a
specified percentage of the tenant's gross receipts above fixed minimum
amounts. Most of the leases require the tenant to reimburse the Partnership
for all or some portion of the tenant's pro rata share of operating expenses
including real estate taxes, insurance and common area maintenance expenses.
The following table shows selected lease expiration (assuming no
renewals or cancellations) and vacancy information:
<TABLE>
<CAPTION>
% OF TOTAL
GROSS 1996 1996
YEAR OF NUMBER OF LEASABLE ANNUAL ANNUAL
EXPIRATION LEASES AREA MINIMUM MINIMUM
OF LEASE EXPIRING (SQ.FT.) RENT RENT
---------- -------- -------- -------- ----------
<S> <C> <C> <C> <C>
1996 23 44,774 $235,834 24.1%
1997 15 22,610 $216,804 22.2%
1998 18 31,014 $165,221 17.0%
1999 9 48,613 $155,944 15.9%
2000 3 15,055 $ 99,158 10.1%
2001 2 9,851 $ 54,150 5.5%
2002 1 3,812 $ 32,610 3.3%
2003 1 3,675 $ 18,375 1.9%
7 Vacancies - 14,066 - -
-- ------- ------- ----
72 193,470 $978,096 100%
== ======= ======= ====
</TABLE>
Although 78% of the current leases expire in the next three years, the General
Partner believes that it will be successful in either renewing these leases or
originating new leases for these spaces. However, no assurance can be given that
the Partnership will be successful at this, and if so, whether the terms of the
leases will be advantageous to the Partnership.
-11-
<PAGE>
Real estate taxes on the Green Valley Property are based on a primary tax
rate of 7.3037% per $100 of assessed value and a secondary tax rate of 4.5779%
per $100 of assessed value. The Green Valley Property is currently assessed at
$1,196,000 for purposes of the primary rate and $1,198,000 for purposes of the
secondary rate. Real estate taxes for 1996 are estimated at $142,000. Real
estate taxes are subject to increases in the future that may result from
reassessment and/or increases in the tax rate.
The Partnership's adjusted federal income tax basis for the Green Valley
Property is $9,803,000, of which $5,100,000 is allocated to land and $4,703,000
to the buildings and improvements. The Partnership depreciates the cost of the
buildings over 31.5 years and improvements over 5 years using the straight-line
method of cost recovery. In the opinion of the General Partner, the Green Valley
Property is adequately insured.
The Green Valley Property has been experiencing leasing problems in the
face of an increasingly difficult and overbuilt market. The strong competition
combined with the limited trade area required capital improvements in 1995 and
1994 at the Property which were primarily cosmetic in nature (such as canopies,
painting, new signage and general appearance) in order to attract new tenants
and maintain the existing tenants. To increase occupancy, the Partnership has
had to negotiate rent reductions on lease renewals and has had to lower the
average effective rental on new leases. During 1993 and 1994, the General
Partner determined, based on the current market conditions and projected future
cash flows that the Green Valley Property had experienced declines in market
value that were other than temporary and recorded $1,000,000 and $1,085,932
non-cash charges against earnings in 1993 and 1994, respectively, to write down
the Property. In 1995, in accordance with SFAS No. 121, "Accounting for
Impairment for Long-Lived Assets" (issued March 1995), the General Partner
determined that an additional write down of the Property was not necessary based
on the projected future cash flows of the Property.
COMMITMENTS AND CONTINGENCIES
Under various Federal, State and local laws and ordinances and
regulations, an owner, operator or developer of real property may be held liable
for the costs of removal or remediation of certain hazardous or toxic substances
(including asbestos containing materials) on or in such property. Such laws,
ordinances and regulations often impose liability without regard to whether the
owner knew of, or was responsible for, the presence of hazardous or toxic
substances. The cost of any required remediation of any property and the
owner's, operator's or developer's liability therefor is generally not limited
under such laws, ordinances and regulations, and could exceed the value of the
property and/or the aggregate assets of the owner, operator or developer.
While none of the Properties is presently subject to any environmental actions,
the presence of such substances, or the failure to properly remediate such
substances, may adversely affect the ability to sell or rent the Properties or
to borrow using any of the Properties as collateral.
-12-
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
On October 4, 1994, a former employee of the Partnership who was employed
as the property manager at the Green Valley Property filed a charge of sex
discrimination against the Partnership with the Civil Rights Division of the
Arizona Attorney General's Office which alleges that her gender was the
motivation for her discharge. The Partnership denied the charges of sex
discrimination and filed a position statement with the Civil Rights Division
explaining its reasons for discharging the employee. On June 19, 1995 the
Civil Rights Division of the Arizona Attorney General's Office dismissed these
charges.
On March 1, 1995, the same employee commenced an action against the
Partnership and certain of its affiliates entitled SHELTON V. CONCORD MILESTONE
PLUS, LTD., ET AL. in the Superior Court of Pima County, Arizona, alleging sex
discrimination, breach of contract, wrongful termination and an unpaid wage
claim for the failure to pay commissions. The employee alleged that she had an
implied employment contract which was breached because she was dismissed by the
Partnership and its affiliates in violation of oral and written policies and
procedures of progressive discipline which, she asserted, required that she be
given at least two formal warnings with specific reasons for the warnings and
notice of the corrective action that is required. She also alleged that she
was wrongfully discharged because she refused to support her employer's position
in a dispute with tenants regarding alleged overbillings for common area
maintenance charges. The employee claimed that she was discriminated against
on the basis of her sex. Finally, the employee alleged that she was owed a
commission of at least $1,300 for a lease to a bakery, and asserted that she
was entitled to treble damages because payment of the commission is overdue.
In its answer to the complaint, the Partnership denied any liability other than
for the $1,300 in unpaid commissions. A counterclaim against Ms. Shelton was
filed asserting that various inappropriate actions on her part led to her
dismissal. The Partnership and certain of its affiliates were seeking damages
estimated to exceed $224,000. In November 1995 a settlement hearing was held,
pursuant to which the Partnership agreed to settle the case and pay the employee
$50,000. Payment of this settlement was made in December 1995.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
-13-
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S UNITS AND RELATED SECURITY HOLDERS
MATTERS.
(a) Class A and Class B Interests are not traded on any established public
trading market and no organized market has developed for the interests in the
Partnership. Sales of the Class A and Class B Interests occur from time to
time through independent broker-dealers, but to the best of the Partnership's
knowledge, there are no market makers for the interests. Recently published
information relating to other real estate limited partnerships (which may not
be analogous to the Partnership) indicates that sales of limited partnership
interests in those partnerships occur at substantial discounts from the amounts
of the original investments.
(b) As of March 4, 1996, 1,518,800 Class A Interests and 2,111,072 Class B
Interests were held by approximately 1,363 and 1,438 holders, respectively.
(c) The Partnership is a limited partnership and, accordingly, does not
pay dividends. It does, however, make quarterly distributions of cash to its
partners.
Pursuant to the Partnership Agreement, distributable cash flow (as
defined) for each fiscal quarter is distributed as follows: (i) first, 99% to
the holders of the Class A Interests as a group and 1% to the General Partner
until the holders of the Class A Interests have received an amount of
cumulative distributions necessary to provide such holders with a
non-compounded 10.5% cumulative annual return (determined in accordance with the
Partnership Agreement); (ii) next, 90% to the holders of the Class A Interests
and 10% to the General Partner until the holders of the Class A Interests have
received distributions of distributable capital proceeds (i.e., net proceeds of
a sale or other disposition or a refinancing of Properties available for
distribution) and uninvested offering proceeds equal to $10.00 for each Class A
Interest plus an amount of cumulative distributions necessary to provide such
holders with a cumulative, non-compounded 12.5% annual return (determined in
accordance with the Partnership Agreement on their Adjusted Priority Base
Amount as defined) (a "12.5% Priority Return"); and (iii) thereafter, 85% to
the holders of the Class B Interests, 5% to the holders of the Class A Interests
and 10% to the General Partner.
Pursuant to the Partnership Agreement, distributable capital proceeds are
distributed as follows: (i) first, 100% to the holders of the Class A
Interests as a group until they have received distributions of distributable
capital proceeds and uninvested offering proceeds equal to $10.00 for each
Class A Interest plus an amount of cumulative distributions necessary to
provide such holders with a 12.5% Priority Return; and (ii) thereafter, 85% to
the holders of the Class B Interests and 15% to the General Partner.
-14-
<PAGE>
Distributable cash flow, as defined in the Partnership Agreement, means,
with respect to any period, (i) revenues and payments (which do not include
refundable deposits or unearned rent) of the Partnership received in cash
during such period, and reserves set aside out of revenues during prior periods
and no longer needed for the Partnership's business, but not including cash
proceeds attributable to a capital transaction (as defined), Bond proceeds or
capital contributions (as defined), less (ii) the sum of (A) amounts paid in
cash by the Partnership during such period for operating expenses of the
Partnership (excluding amounts paid from reserves or funds provided by capital
contributions or loans), for debt payments, and for compensation to a removed
General Partner and other fees or payments to the General Partner, (B) any
capital expenditures with respect to Properties, and (C) any amount set aside
for the restoration, increase or creation of reserves. Distributable cash
flow is deemed to include the amount of any income tax withheld with respect to
revenues that are includable in distributable cash flow.
During its two most recent fiscal years, the Partnership has made the
following cash distributions with respect to the Class A Interests:
AMOUNT OF PORTION
DISTRIBUTION DISTRIBUTION REPRESENTING
WITH RESPECT PER 100 CLASS A RETURN OF
TO QUARTER ENDED: A INTERESTS (1) CAPITAL (2)
---------------- --------------- ------------
March 31, 1995 $ 3.29 $ 3.29
June 30, 1995 $ 3.29 $ 3.29
September 30, 1995 $ 3.29 $ 2.74
December 31, 1995 $ 3.28 $ 3.28
March 31, 1994 $ 3.26 $ 3.26
June 30, 1994 $ 3.26 $ 3.26
September 30, 1994 $ 3.26 $ .89
December 31, 1994 $ 3.26 $ 3.26
- --------------------------------
(1) The amounts listed represent distributions of distributable
cash flow.
(2) That portion of the total "Amount of Distribution per 100
Class A Interests" which is a return of capital. Return of
capital is defined as distributions in excess of net income.
There have been no distributions with respect to Class B Interests.
In general, profits are allocated annually among the holders of Class A
Interests and Class B Interests and the General Partner, first in the ratio and
to the extent that they receive distributions of distributable cash flow.
Profits will next be allocated 100% to holders of Class A Interests until their
capital accounts equal the greater of zero or their Adjusted Priority Base
Amounts (as defined in the Partnership Agreement) plus their 12.5% Priority
Return. Any additional profits will be allocated to the holders of Class B
Interests and the General Partner to increase their capital accounts to reflect
the manner in which they are expected to share in further distributions.
-15-
<PAGE>
Gain arising upon the sale of a Property or otherwise is allocated first to
holders of Class A Interests and Class B Interests and the General Partner to
eliminate any deficits in their capital accounts, and then to the holders of
the Class A Interests and Class B Interests and the General Partner to increase
their capital accounts to reflect the manner in which they are expected to
share in further distributions.
In general, losses are allocated first to the holders of Class B Interests
and the General Partner in the ratio and to the extent of any positive balances
in their capital accounts; then, to the holders of Class A Interests to the
extent of any positive balances in their capital accounts; and finally, 100% to
the General Partner.
ITEM 6. SELECTED FINANCIAL DATA.
The following sets forth a summary of the selected financial information
for the Partnership. The information below should be read in conjunction with
the audited financial statements included elsewhere in this Report.
-16-
<PAGE>
<TABLE>
<CAPTION>
CONCORD MILESTONE PLUS, LP
(a Limited Partnership)
Selected Financial Data
For Year Ended For Year Ended For Year Ended For Year Ended For Year Ended
December 31, 1995 December 31, 1994 December 31, 1993 December 31, 1992 December 31, 1991
----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Operating Statement Data:
Revenue $3,061,279 $3,156,657 $3,106,835 $3,194,233 $3,346,033
Net (loss) income (307,810) (1,317,075) (1,225,028) (225,900) 3,891
Balance Sheet Data:
Total assets $22,537,617 $23,005,298 $24,386,240 $26,125,939 $26,538,058
Long term debt 16,425,967 16,334,737 16,217,540 16,071,155 15,783,716
Total liabilities 16,893,481 16,853,645 16,717,506 16,632,859 16,191,807
Statement of Partners'
(Deficit) Capital:
General Partner ($66,124) ($61,049) ($45,878) ($27,635) ($19,103)
Initial Limited Partner 0 0 0 0 0
Class A Interests 5,710,260 6,212,702 7,714,612 9,520,715 10,365,354
Class B Interests 0 0 0 0 0
Total 5,644,136 6,151,653 7,668,734 9,493,080 10,346,251
Per 100 Class A Interests (a):
Net (loss) income (b):
First quarter ($3.29) ($4.79) ($4.06) ($3.17) $0.01
Second quarter (5.06) (5.88) (5.75) (5.45) (0.44)
Third quarter 0.55 2.37 (5.26) (5.80) 0.13
Fourth quarter (12.47) (78.42) (65.59) (0.45) 0.56
Distributions (c):
First quarter $3.29 $3.26 $9.44 $10.25 $13.25
Second quarter 3.29 3.26 7.85 8.27 13.25
Third quarter 3.29 3.26 8.79 8.17 13.25
Fourth quarter 3.28 3.26 3.26 12.99 14.19
Return of Capital (d):
First quarter $3.29 $3.26 $9.44 $10.25 $13.24
Second quarter 3.29 3.26 7.85 8.27 13.25
Third quarter 2.74 0.89 8.79 8.17 13.12
Fourth quarter 3.28 3.26 3.26 12.99 13.63
</TABLE>
-17-
<PAGE>
(a) All income allocated with respect to Equity Units was allocated with
respect to the 100 Class A Interests in each such unit. No income was
allocated with respect to Class B Interests.
(b) The net income per 100 Class A Interests has been calculated by
dividing the net income for the period by the average number of Class A
Interests outstanding for the period and multiplying that quotient by 100.
(c) Distributions have been allocated based upon the dates that Class A
Interests were issued. Distributions with respect to each fiscal quarter of
the Partnership are paid 60 days following the end of that fiscal quarter. No
distributions were paid with respect to Class B Interests.
(d) Return of Capital is defined as distributions in excess of net income.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
GENERAL
The Partnership commenced a public offering of Equity Units and Bond Units
(together, "Units") on April 8, 1987 in order to fund the Partnership's real
property acquisitions. The Partnership terminated the public offering of Units
on April 2, 1988. On April 14, 1988, the Partnership held its final closing on
the sale of Units. The Partnership was fully subscribed to with a total of
16,452 Bond Units and 15,188 Equity Units from which the Partnership received
aggregate net proceeds (after deduction of sales commissions, discounts and
selling agent's expense otherwise required to be reimbursed to the General
Partner and its Affiliates) of $29,285,960. Of such total amounts, 15,954 Bond
Units and 15,188 Equity Units were sold by the Partnership during 1988 from
which the Partnership received net proceeds (after deduction of sales
commissions, discounts and selling agent's expense allowance and credit for
organization and offering expenses) of $19,599,176.
A portion of the total proceeds from the sale of Units was used to acquire
three shopping centers, the Searcy Property, the Valencia Property, and the
Green Valley Property, which carry mortgages of $2,632,500, $7,523,500 and
$6,296,000, respectively. There were no principal repayments through December
31, 1995. New borrowings to purchase property amounted to approximately
$14,478,000 and $481,000 during 1988 and 1987, respectively. There have been
no additional borrowings to acquire property.
The Partnership has an agreement with Milestone Property Management, Inc.
("MPMI"), an affiliate of the General Partner, to provide management services to
the Partnership's properties. In addition, MPMI is responsible for leasing
space at the properties and actively monitors all vacancies to ensure the
highest occupancy rate possible.
-18-
<PAGE>
All leasing is performed by MPMI and the terms of the leases are
negotiated on a lease by lease basis. The Partnership does not have a set
policy regarding discounts and rental concessions; however, late in 1994 the
Partnership began to give rental concessions and discounts more frequently in
order to increase occupancy. In 1995, most new leases included some form of
rental concession or discount. The total amount of rental concessions and
discounts given to tenants in 1995 was approximately $4,000. As of March 15,
1996, the total amount of rental concessions and discounts given to tenants for
new leases was approximately $46,000. The Partnership believes that it has
been successful with rental concessions and discounts as occupancy has increased
at both the Valencia Property and the Green Valley Property. Discounts and
rental concessions are amortized over the term of the leases.
CHANGES IN COMPETITIVE CONDITIONS
SEARCY PROPERTY
Over the past few years, the Searcy Property has been experiencing
difficulties stemming from the relocation of the adjacent Wal-Mart (which is
under separate ownership) in 1992. In 1994, the Partnership found it necessary
to negotiate rent reductions on lease renewals (approximately 25% in some
instances) in order to prevent vacancies. Over the last year, this trend has
been reversing as tenant sales have increased in 1995 evidenced by the increase
in percentage rent revenue.
Tenant sales increased primarily due to the sale of Beall Ladymon to
Specialty Retailer, Inc. (a current tenant) in 1995. The store was completely
remodeled and remerchandised, which increased traffic and exposure for the other
tenants. Notable for 1996, the Partnership is negotiating with J.C. Penney, a
current tenant, for the expansion of their existing space by approximately
15,000 square feet. The General Partner believes this expansion would
positively affect the center by increasing traffic for the other tenants. Based
on these factors, the General Partner believes that the Partnership may
gradually increase rents as leases are renewed or originated.
VALENCIA PROPERTY
The Valencia Property has a number of competing shopping facilities within
the immediate area. In the spring of 1996, a 78,000 square foot shopping center
is scheduled to open on old Orchard Street across from the Valencia Property.
Plans for this center include a 46,000 square foot Ralph's Supermarket, a
16,000 square foot drugstore and 16,000 square feet of smaller stores. The
General Partner believes that this shopping center may adversely affect tenant
sales but does not expect it will materially adversely affect the occupancy rate
at the Valencia Property.
On January 17, 1994, the Valencia Property sustained damage resulting from
an earthquake that occurred in Southern California. Proceeds from the related
insurance claim totaled $587,333 and the Partnership has incurred and paid
repairs and expenses for this amount as of December 31, 1995. The General
Partner believes that the repairs at the Valencia Property have had a positive
impact on the center. The remodeling of the fascia canopy and center lighting
have given the center a more contemporary look.
-19-
<PAGE>
GREEN VALLEY PROPERTY
The Green Valley Property has been experiencing leasing problems in the
face of an increasingly difficult and overbuilt market. The strong competition
combined with the limited trade area required capital improvements in 1995 and
1994 at the Property which were primarily cosmetic in nature (such as canopies,
painting, new signage and general appearance) in order to attract new tenants
and maintain the existing tenants. To increase occupancy, the Partnership has
had to negotiate rent reductions on lease renewals and has had to lower the
average effective rental on new leases. During 1993 and 1994, the General
Partner determined, based on the current market conditions and projected future
cash flows that the Green Valley Property had experienced declines in market
value that were other than temporary and recorded $1,000,000 and $1,085,932
non-cash charges against earnings in 1993 and 1994, respectively, to write down
the property. In 1995, in accordance with SFAS No. 121, "Accounting for
Impairment for Long-Lived Assets" (issued March 1995), the General Partner
determined that an additional write down was not necessary based on the
projected future cash flows of the Property.
The center has had a slightly above average level of activity in leasing
over the six month period from October 1995 to March 1996. Ace Hardware closed
a nearby second location and consolidated in the Green Valley Mall. As a result
of these factors, occupancy has increased to 92% in 1995 from 85% in 1994.
However, due to rental concessions given, the average effective annual rental
per square foot has decreased to $5.31 in 1995 from $5.56 in 1994.
The General Partner continues to aggressively manage and promote the
Partnership's properties in order to position them to capitalize on any
opportunities which may arise in the future.
RESULTS OF OPERATIONS
COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO 1994.
Revenues of the Partnership decreased $95,378, or 3.0%, to $3,061,279 in
1995 from $3,156,657 in 1994 primarily due to the net effect of the following:
(1) SEARCY PROPERTY - an increase in revenues at the Searcy
Property of $21,482, or 5.1%, to $441,239 in 1995 from
$419,757 in 1994 due to the net effect of the following: a)
a decrease in base rent of approximately $22,000 due to a
special agreement reached with a tenant in late 1994 whereby
the tenant is required to pay percentage rent in lieu of all
rental obligations (this agreement was reached due to the
relocation of the Wal-Mart in 1992), b) an increase in
percentage rent of approximately $37,000 due to the special
agreement stated in a) above and due to improved tenant
sales in 1995 and c) an increase in tenant reimbursements of
approximately $5,400 due to an increase in common area
maintenance expenses in 1995,
-20-
<PAGE>
(2) VALENCIA PROPERTY - a decrease in revenues at the Valencia
Property of $38,883, or 2.7%, to $1,388,592 in 1995 from
$1,427,475 in 1994 due to the net effect of the following:
a) an increase in base rent of approximately $16,000 due to
an increase in the occupancy rate in 1995, b) an increase in
percentage rent of approximately $10,000 due to improved
tenant sales and increased occupancy at the Valencia
Property and c) a decrease in tenant reimbursements of
approximately $64,000 due to:
(i) a decrease in real estate tax reimbursements of
approximately $44,000 due to a refund of 1990 taxes
received in 1994 and included in real estate tax
reimbursements in 1994,
(ii) a decrease in common area maintenance reimbursements
of approximately $17,000 due to the fact that the
Partnership decided not to bill certain items to the
tenants in 1995 that were billed in 1994, and
(iii) a decrease in insurance reimbursements of
approximately $2,500 due to a lower premium in 1995,
(3) GREEN VALLEY PROPERTY - a decrease in revenues at the
Green Valley Property of $87,517, or 6.8% to $1,204,137 in
1995 from $1,291,654 in 1994 due to the net effect of the
following: a) an increase in base rent of approximately
$5,000 due to an increase in the occupancy rate in 1995 , b)
a decrease in percentage rent of approximately $28,000 due
to decreased tenant sales, c) a decrease in tenant
reimbursements of approximately $66,000 due to:
(i) a decrease in real estate tax reimbursements of
approximately $2,000 due to a decrease in real estate tax
expense,
(ii) a decrease in sales tax reimbursements of approximately $12,000
due to a decrease in the Arizona sales tax rate from 3 percent
to 2 percent in 1995,
(iii) a decrease in management fee income of approximately $8,600
due to decreased rental revenue,
(iv) a decrease in common area maintenance approximately of
approximately $40,000 due to the fact that the Partnership
decided not to bill certain items to the tenants in 1995 that
were billed in 1994 and due to a decrease in common area
maintenance expenses in 1995, and
(v) a decrease in insurance reimbursements of approximately $3,000
due to a lower insurance premium in 1995, and
(4) OTHER INCOME - a general increase in interest income of
approximately $10,000 earned on the Partnership's money
market account in 1995.
-21-
<PAGE>
Management and property expenses decreased $64,220, or 5.9%, to $1,020,145
in 1995 from $1,084,365 in 1994 primarily due to the net effect of the
following:
(1) SEARCY PROPERTY - an increase in management and property
expenses at the Searcy Property of $4,968, or 5.7%, to
$92,196 in 1995 from $87,228 in 1994 due to the net effect
of the following: a) a general increase in common area
maintenance expense of approximately $8,600 due to an
increase in repairs and maintenance as a result of property
aging, and b) a decrease in insurance expense of
approximately $3,800 due to a lower premium in 1995,
(2) VALENCIA PROPERTY - an increase in management and property
expenses at the Valencia Property of $1,279, or .43%, to
$295,764 in 1995 from $294,485 in 1994 due to the net effect
of the following: a) an increase in real estate tax
expense of approximately $13,000, b) a decrease in insurance
expense of approximately $17,000 due to a lower premium in
1995, and c) an increase in common area expenses of
approximately $5,000,
(3) GREEN VALLEY PROPERTY - a decrease in management and
property expenses at the Green Valley Property of $71,411,
or 10.2%, to $626,813 in 1995 from $698,224 in 1994 due to
the net effect of the following: a) a decrease in real
estate tax expense of approximately $8,000, b) a decrease in
sales tax expense of approximately $12,000 due to a decrease
in the Arizona sales tax rate from 3 percent to 2 percent
during 1995, c) a decrease in common area expenses of
approximately $33,000 primarily in an effort by management
to improve the net operating income of the property, and d)
a decrease in insurance expense of approximately $18,000 due
to a lower premium in 1995.
Professional fees and other expenses increased $41,160, or 32.8% to
$166,496 in 1995 from $125,336 in 1994 primarily due to the net effect of the
following:
(1) An increase in legal fees of approximately $55,000 due to
the settlement in 1995 of a civil rights suit brought
against it by a former employee (see Item 3, "Legal
Proceedings", of this Report for more details),
(2) a decrease in promotions and advertising at all properties
of approximately $13,000 in a cost savings effort by
management in 1995.
Interest expense increased $41,130, or 2.8%, to $1,525,238 in 1995 from
$1,484,108 in 1994 primarily due to the scheduled increase in the interest rate
on the Bond Mortgage from 9.25% in 1994 to 9.50% in 1995.
Depreciation and amortization expense decreased $36,775, or 5.3%, to
$657,210 in 1995 from $693,985 in 1994 primarily due to a decrease in the
amortization of the Bond discount in 1995. The Bond discount is amortized
using the effective interest method.
-22-
<PAGE>
COMPARISON OF YEAR ENDED DECEMBER 31, 1994 TO 1993.
Revenues of the Partnership increased $49,822, or 1.6%, to $3,156,657 in
1994 from $3,106,835 in 1993 due to the net effect of the following:
1) SEARCY PROPERTY - a decrease in revenues at the Searcy
Property of $70,594, or 14.4% to $419,757 in 1994 from
$490,351 in 1993 due to the net effect of the following: a)
a decrease in base rent revenue of approximately $75,000 due
to rent concessions negotiated on lease renewals (due to the
relocation of the adjacent Wal-Mart store in 1992), b) an
increase in percentage rent of approximately $13,000 due to
a special agreement reached with a tenant in late 1994
whereby the tenant is required to pay percentage rent in
lieu of all rental obligations (this agreement was reached
due to the relocation of the Wal-Mart Store), and c) a
decrease in real estate tax revenue of approximately $7,000.
2) VALENCIA PROPERTY - an increase in revenue at the Valencia
Property of $12,746, or .9% to $1,427,475 in 1994 from
$1,414,729 in 1993 due to the net effect of the following:
a) a decrease in base rent revenue of approximately $16,000,
b) a decrease in percentage rent of approximately $6,000 due
to weaker tenant sales in 1994, and c) an increase in tenant
reimbursements of approximately $35,000.
3) GREEN VALLEY PROPERTY - an increase in revenues at the
Green Valley Property of $109,513, or 9.3%, to $1,291,654 in
1994 from $1,182,141 in 1993 due to the net effect of the
following: a) an increase in base rent revenue and
percentage rent revenue of approximately $30,000 due to an
increase in the occupancy rate in 1994, and b) an increase
in tenant reimbursements of approximately $80,000.
Interest expense increased $41,130, or 2.9% to $1,484,108 in 1994 from
$1,442,978 in 1993 primarily due to the scheduled increase in the interest rate
on the Bond Mortgage from 9.00% in 1993 to 9.25% in 1994.
Depreciation and amortization expense decreased $8,703, or 1.2%, to
$693,985 in 1994 from $702,688 primarily due to a decrease in the amortization
of the Bond discount in 1994. The Bond discount is amortized using the
effective interest method.
LIQUIDITY AND CAPITAL RESOURCES
The General Partner believes that the Partnership's working capital is
sufficient to meet the Partnership's operating requirements for the next
twelve months. Nevertheless, because the cash revenues and expenses of the
Partnership will depend on future facts and circumstances relating to the
Properties, as well as market and other conditions beyond the control of the
Partnership, a possibility exists that cash flow deficiencies may occur.
There are currently no material commitments for capital expenditures.
-23-
<PAGE>
The Bonds are payable on November 30, 1997 in the principal amount of
$16,452,000 and bear interest, payable semi-annually, at 9.5% (increasing to 10%
on November 30, 1996). At or prior to that time, it is expected that the
Partnership will seek to refinance the Bonds and/or sell one or more of the
Properties to pay off the Bonds. No assurance can be given as to whether the
Partnership will be able to refinance the Bonds or sell the Properties or, if
the Partnership is able to do so, that the terms of any such refinancing and/or
sale would be attractive to the Partnership.
Net cash provided by operating activities of $284,612 for the year ended
December 31, 1995 was comprised of (i) net loss of $307,810, (ii) adjustments of
$657,210 for depreciation and amortization, and (iii) a change in operating
assets and liabilities of $64,787.
Net cash provided by operating activities of $481,705 for the year ended
December 31, 1994 was comprised of (i) net loss of $1,317,075, (ii) adjustments
of $1,779,917 for depreciation and amortization and the write down of the Green
Valley Property, (iii) insurance proceeds of $88,585 (as more fully explained in
footnote 8 of the Notes to Financial Statements of the Partnership's Financial
Statements included in this Report), and (iv) a net change in operating assets
and liabilities of $69,722.
Net cash used in investing activities of $210,052 for the year ended
December 31, 1995 was comprised of capital expenditures for building
improvements at the Valencia Property and the Green Valley Property.
Net cash used in investing activities of $74,959 for the year ended
December 31, 1994 is comprised of capital expenditures for building
improvements at all three Properties.
Net cash used in financing activities of $199,707 for the year ended
December 31, 1995 was comprised of cash distributions to partners.
Net cash used in financing activities of $200,006 for the year ended
December 31, 1994 is comprised of cash distributions to partners.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and supplementary data, shown by index on page
34, begin on page 35 of this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
-24-
<PAGE>
PART III
ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT.
The names, offices held and the ages of the directors and executive
officers of the General Partner and of CMP Beneficial Corp. are as follows:
HAS SERVED AS A
DIRECTOR AND/OR
NAME AGE POSITION HELD OFFICER SINCE (1)
-------------------- --- ------------- -----------------
Leonard S. Mandor (3) 49 President Inception (2)
and Director
Robert A. Mandor (3) 44 Vice President Inception
and Director
Harvey Shore 50 Vice President December 24, 1987
Joan LeVine 46 Treasurer/ Inception
Secretary October 1, 1988
- -------------------------------------
(1) Each director and officer of the General Partner and CMP
Beneficial Corp. will hold office until the next annual meeting
of the General Partner and CMP Beneficial Corp. and until his
successor is elected and qualified.
(2) The General Partner was incorporated on December 12, 1986 and CMP
Beneficial Corp. was incorporated on December 18,1986.
(3) Robert A. Mandor and Leonard S. Mandor are brothers.
LEONARD S. MANDOR is the Chief Executive Officer and a Director of Concord.
For at least the past five years, Mr. Mandor has served as general partner in 22
Concord-sponsored private real estate programs and is the Chairman of the
Board, Chief Executive Officer and a Director of Milestone Properties, Inc.
Mr. Mandor has been associated with Concord since its inception in 1981.
ROBERT A. MANDOR is the President and a Director of Concord. For at least
the past five years he has served as the President, Chief Financial Officer, and
a Director of Milestone Properties, Inc. Mr. Mandor has been associated with
Concord since its inception.
HARVEY SHORE (f/k/a Harvey Schuldwach) joined Concord in 1983 and is the
Senior Vice President. He also serves as a Senior Vice President and Secretary
of Milestone Properties, Inc. Before joining Concord he worked at Chase
Manhattan Bank as a Vice President.
-25-
<PAGE>
JOAN LeVINE (f/k/a Joan Maisano), joined Concord in 1984 and is Vice
President, Treasurer and Controller. She also serves as a Senior Vice
President and Treasurer of Milestone Properties,Inc. Ms. LeVine is a certified
public accountant and is a member of the American Institute of Certified Public
Accounts.
On February 2, 1995, the Securities and Exchange Commission filed a civil
complaint against Concord in the United States District
Court for the District of Columbia in connection with the proxy solicitation
conducted with respect to the merger of Concord Milestone Income Fund, L.P. and
Concord Milestone Income Fund II, L.P. into a publicly held corporation,
Milestone Properties, Inc., in 1990. The complaint alleges that Concord (of
which Leonard and Robert Mandor are the owners and are officers and directors)
violated the anti-fraud provisions of the Securities Exchange Act of 1934
through the forgery of investors' signatures on proxy cards and further alleges
that Concord failed to provide certain investors in the affected partnerships
with lists of partners, as required under the proxy rules. Concord has
consented, without admitting or denying the Commission's allegations, to the
entry of a final judgment ordering it to pay a civil penalty of $500,000 and
enjoining it from violating Section 17(a) of the Securities Act of 1933 and
Sections 10(b) and 14(a) of the Securities Exchange Act of 1934 and Rules 10b-5
and 14a-7 thereafter.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
Based on the General Partner's review of Forms 3, 4 and 5 furnished to the
Partnership, there were no late reports filed during 1995.
ITEM 11. COMPENSATION.
During 1995, the Partnership paid or accrued:
(i) Pursuant to the Partnership Agreement, $1,997 to the
General Partner as a distribution of distributable
cash flow (See Item 5 "Market for Registrant's Units
and Related Security Holders Matters" of this
Report for a description of distributable cash flow).
(ii) $25,000 to Milestone Property Management, Inc.
("MPMI"), an affiliate of the General Partner, for
administrative services rendered to the Partnership.
Pursuant to an agreement between MPMI and the
Partnership, the Partnership reimburses MPMI for
administrative services provided to the Partnership,
such as payroll, rent, supplies and utilities in an
amount equal to $25,000 per year.
(iii) $107,356 to MPMI for property management fees for the
fiscal year ended December 31, 1995. Pursuant to the
management agreement between the Partnership and
MPMI, property management fees are equal to a
percentage of gross revenues not to exceed 5 percent
for multiple tenant property for which MPMI performs
leasing services, 3 percent for multiple tenant
property for which MPMI does not perform leasing
services and 1 percent for single tenant property.
-26-
<PAGE>
The management fees are 3 percent for the Searcy
Property, 4 percent for the Valencia Property and 5
percent for the Green Valley Property. The
management fee for any Property may not exceed
competitive fees for comparable services reasonably
available to the Partnership in the same geographic
area as the property in question. Gross revenues are
defined in the management agreement to mean, with
respect to each Property, all base, additional and
percentage rents collected from the Property but
exclude all other receipts or income with respect to
that Property, such as, (i) receipts arising out of
any sale of assets or of all or part of the Property,
condemnation proceeds and other items of a similar
nature; (ii) payments made by tenants for
over-standard finish out improvements or other
amortization; (iii) income derived from interest on
investments, security deposits utility deposits; (iv)
proceeds of claims under insurance policies; (v)
abatements or reductions of taxes; (vi) security
deposits made by tenants; or (vii) any portions of
rentals which are specifically designated as
amortization of, or interest on, tenant moving
expenses, takeover expenses or similar items in the
nature of advances by the Partnership.
No officer or employee of the General Partner received any direct
compensation from the Partnership during the fiscal year ended December 31,
1995.
No director of the General Partner received any direct compensation from
the Partnership during the fiscal year ended December 31, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
(a) The General Partner does not know of any beneficial owner of five
percent or more of the issued and outstanding Class A Interests. The General
Partner knows of only one owner of five percent or more of the issued and
outstanding Class B Interests, the information as to which is set forth below as
of March 4, 1996:
AMOUNT AND
NATURE OF PERCENT
TITLE NAME AND ADDRESS OF BENEFICIAL OF
OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS
- ---------- ------------------- ---------- -------
Class B The Guardian Life 572,292* 27.1%
Interests Insurance Company
of America
203 Park Avenue South
New York, NY 10003
- ---------------------------------------
* To the best of the Partnership's knowledge, The Guardian Life
Insurance Company of America has sole voting power and investment
power with respect to these securities.
-27-
<PAGE>
(b) The General Partner, together with its affiliates and the officers
and directors of the General Partner, own less than 1% of the issued and
outstanding Class A Interests and less than 1% of the issued and outstanding
Class B Interests.
The number of shares of stock, no par value, of Concord (which is the
parent of the General Partner) beneficially owned by all directors of the
General Partner and CMP Beneficial Corp. and all directors and officers of
the General Partner and CMP Beneficial Corp. as a group as of March 4, 1996
is set forth in the following table:
AMOUNT AND
NATURE OF PERCENT
NAME OF BENEFICIAL OF
(1) BENEFICIAL OWNER (2) OWNERSHIP (3) CLASS
---------------- --------- ------
Leonard S. Mandor 332 83%
Robert A. Mandor 68 17%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
See Items 1, "Business," 5, "Market for Registrant's Units and Related
Security Holders Matters," 10, "Directors and Officers of the Registrant,"
and 11, "Compensation," of this Report for details. See also Note 5 of the
Notes to Financial Statements of the Partnership's Financial Statements
included in this Report.
-28-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL SCHEDULE, AND REPORTS
ON FORM 8-K.
(a) Financial Statements and Financial Schedule
See Index to Financial Statements and Financial Schedule
included herewith on page 34 of this Report.
(b) No reports of Form 8-K were filed for the three months ended
December 31, 1995.
(c) Exhibits:
LOCATION OF
EXHIBIT IN
SEQUENTIAL
EXHIBIT NUMBERING
NUMBER DESCRIPTION OF DOCUMENT SYSTEM
- ------- ----------------------- ----------
3.1 Amended and Restated Agreement of Limited Partnership
of Concord Milestone Plus, L.P. Incorporated herein by
reference to Exhibit A to the Registrant's Prospectus
included as Part I of the Registrant's Post-Effective
Amendment No. 3 ("Post-Effective Amendment No. 3") to
the Registrant's Registration Statement on Form S-11
which was declared effective on April 3, 1987 (the
"Registration Statement").
3.2 Amendment No. 1 to Amended and Restated Agreement of
Limited Partnership of Concord Milestone Plus, L.P.,
included as Exhibit 3.2 to Registrant's Form 10-K for
the fiscal year ended December 31, 1987 ("1987 Form
10-K"), which is incorporated herein by reference.
3.3 Amendment No. 2 to Amended and Restated Agreement of
Limited Partnership of Concord Milestone Plus, L.P.
included as Exhibit 3.3 to the 1987 Form 10-K,
which is incorporated herein by reference.
3.4 Amendment No. 3 to Amended and Restated Agreement of
Limited Partnership of Concord Milestone Plus, L.P.
included as Exhibit 3.4 to the 1987 Form 10-K,
which is incorporated herein by reference.
3.5 Amendment No. 4 to Amended and Restated Agreement of
Limited Partnership of Concord Milestone Plus, L.P.
included as Exhibit 3.5 to the 1987 Form 10-K,
which is incorporation herein by reference.
3.6 Amendment No. 5 to Amended and Restated Agreement of
Limited Partnership of Concord Milestone Plus, L.P.
included as Exhibit 3.6 to Registrant's Form 10-K
for the fiscal year ended December 31, 1988 ("1988
Form 10-K) which is incorporated herein by reference.
-29-
<PAGE>
LOCATION OF
EXHIBIT IN
SEQUENTIAL
EXHIBIT NUMBERING
NUMBER DESCRIPTION OF DOCUMENT SYSTEM
- ------- ----------------------- -----------
4. Form of Indenture relating to Escalating Rate
Collateralized Mortgage Bonds due November 30, 1997
between Concord Milestone Plus, L.P. and United States
Trust Company of New York, as Trustee. Incorporated
herein by reference to Exhibit 4 to the Registration
Statement.
4.1 Form of Supplemental Indenture. Incorporated herein
by reference to Exhibit 4.7 to the Registrant's
Post-Effective Amendment No. 1 ("Post-Effective
Amendment No. 1") to the Registration Statement.
4.2 Form of Escalating Rate Collateralized Mortgage Bond
due November 30, 1997 included as Exhibit 4.2 to the
1987 Form 10-K, which is incorporated herein by
reference.
4.3 Form of certificate evidencing Class A Interests
included as Exhibit 4.3 to the 1987 Form 10-K,
which is incorporated herein by reference.
4.4 Form of certificate evidencing Class B Interests
included as Exhibit 4.4 to the 1987 Form 10-K,
which is incorporated herein by reference.
10.1 Property purchase agreements. Incorporated herein by
reference to Exhibit 10.1 to the Registration
Statement.
10.2 Form of property management agreement. Incorporated
herein by reference to Exhibit 10.2 of the
Registration Statement.
10.3 First Amendment to Management Agreement by and between
Concord Milestone Plus, L.P. and Concord Assets
Management, Inc. Incorporated herein by reference to
Exhibit 10.3 of the 1988 Form 10-K.
10.4 Second Amendment to Management Agreement by a between
Concord Milestone Plus, L.P. and Concord Assets
Management, Inc. Incorporated herein by reference to
Exhibit 10.4 of the 1988 Form 10-K.
10.5 Omitted intentionally.
10.6 Omitted intentionally.
10.7 Mortgage Promissory Note executed by Concord Milestone
Plus, L.P. in favor of United States Trust Company of
New York, as trustee, in the principal amount of
$7,523,500 and secured by a mortgage on certain
property located in Valencia, California.
Incorporated herein by reference to Exhibit 10.5 to
the 1987 Form 10-K.
-30-
<PAGE>
LOCATION OF
EXHIBIT IN
SEQUENTIAL
EXHIBIT NUMBERING
NUMBER DESCRIPTION OF DOCUMENT SYSTEM
- ------- ----------------------- -----------
10.8 Mortgage Promissory Note executed by Concord Milestone
Plus, L.P. in favor of United States Trust Company as
trustee, in the principal amount of $6,296,000 and
secured by a mortgage on a certain property located in
Green Valley, Arizona. Incorporated herein by
reference to Exhibit 10.8 to the 1988 Form 10-K.
10.9 Deed of Trust and Uniform Commercial Code Security
Agreement and Financing Statement with Assignment of
Leases, Rents and Profits executed by Concord
Milestone Plus, L.P. in favor of United States Trust
Company of New York, as trustee, with respect to
property located in Valencia, California.
Incorporated herein by reference to Exhibit 10.6 to
the 1987 Form 10-K.
10.10 Mortgage Deed of Trust and Uniform Commercial Code
Security Agreement and Financing Statement with
Assignment of Leases, Rents and Profits, in favor of
United States Trust Company of New York, as trustee,
with respect to certain property located in Green
Valley, Arizona. Incorporated herein by reference to
Exhibit 10.10 to the 1988 Form 10-K.
10.11 Amended and Restated Mortgage Promissory Note executed
by Concord Milestone Plus, L.P. in favor of United
States Trust Company of New York, as trustee, in the
principal amount of $2,632,500 and secured by a
mortgage on certain property located in Searcy,
Arkansas. Incorporated herein by reference to Exhibit
10.7 of the 1987 Form 10-K.
10.12 Mortgage, Deed of Trust and Uniform Commercial Code
Security Agreement and Financing Statement with
Assignment of Leases, Rents and profits by Concord
Milestone Plus, L.P. in favor of United States Trust
Company of New York, as trustee, with respect to
property located in Searcy, Arkansas. Incorporated
herein by reference to Exhibit 10.8 of the 1987
Form 10-K.
10.13 Modification of Mortgage, Deed of Trust and Uniform
Commercial Code Security Agreement and Financing
statement with Assignment of Leases, Rents and Profits
by Concord Milestone Plus, L.P. in favor of United
States Trust Company of New York, as trustee, with
respect to property located in Searcy, Arkansas.
Incorporated herein by reference to Exhibit 10.9 of
the 1987 Form 10-K.
-31-
<PAGE>
LOCATION OF
EXHIBIT IN
SEQUENTIAL
EXHIBIT NUMBERING
NUMBER DESCRIPTION OF DOCUMENT SYSTEM
- ------- ----------------------- -----------
10.14 Second Modification to Mortgage, Deed of Trust and
Uniform Commercial Code Security Agreement and
Financing Statement with Assignment of Leases, Rents
and Profits by Concord Milestone Plus, L.P. in favor
of United States Trust Company of New York, as
trustee, with respect to property located in Searcy,
Arkansas. Incorporated herein by reference to Exhibit
10.10 of the 1987 Form 10-K.
-32-
<PAGE>
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 thereunder duly authorized on March 26, 1995.
CONCORD MILESTONE PLUS, L.P.
By: CM PLUS CORPORATION,
------------------------
General Partner
By: /s/ Leonard S. Mandor
------------------------------
Leonard S. Mandor, President
CMP BENEFICIAL CORP.
(Registrant of Beneficial Interests)
By: /s/ Leonard S. Mandor
-------------------------------
Leonard S. Mandor, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons in the capacities and on the
dates indicated.
By: /s/ Leonard S. Mandor March 26, 1995
---------------------------------------
Leonard S. Mandor
President (principal executive Officer)
and Director of CM Plus Corporation and
CMP Beneficial Corp.
By: /s/ Robert A. Mandor March 26, 1995
---------------------------------------
Robert A. Mandor
Vice President and Director of CM Plus
Corporation and CMP Beneficial Corp.
By: /s/ Joan LeVine March 26, 1995
---------------------------------------
Joan LeVine
Secretary and Treasurer (principal
financial and accounting officer) of
CM Plus Corporation and CMP Beneficial
Corp.
-33-
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL SCHEDULE
PAGE NO.
--------
1. Financial Statements:
a. Concord Milestone Plus, L.P.
1. Independent Auditors' Report ............... 35
2. Balance Sheets, December 31, 1995
and December 31, 1994 ...................... 36
3. Statements of Revenues and Expenses
for the Years Ended December 31, 1995
1994 and 1993 .............................. 37
4. Statements of Changes in Partners'
Capital for the Years Ended December 31,
1995, 1994, 1993 ........................... 38
5. Statements of Cash Flows for the
Years Ended December 31, 1995,
1994 and 1993 .............................. 39
6. Notes to Financial Statements .............. 40
2. Financial Schedule:
a. Real Estate and Accumulated
Depreciation (Schedule III) ............... 41
b. Schedules not filed:
All Schedules except Schedule III have been omitted as the
required information is not applicable or the information
is shown in the financial statements or notes thereto.
-34-
<PAGE>
INDEPENDENT AUDITORS' REPORT
Concord Milestone Plus, L.P.:
We have audited the accompanying balance sheets of Concord Milestone Plus, L.P.
(the "Partnership") as of December 31, 1995 and 1994 and the related statements
of revenues and expenses, changes in partners' capital and cash flows for the
years ended December 31, 1995, 1994 and 1993. Our audits also included the
financial statement schedule of real estate and accumulated depreciation. These
financial statements and financial statement schedule are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
the financial statements and financial statement schedule 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
misstatements. 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.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership at December 31, 1995 and
1994, and the results of its operations, changes in its partners' capital and
its cash flows for the years ended December 31, 1995, 1994 and 1993 in
conformity with generally accepted accounting principles. Also, in our opinion,
such financial statement schedule, when considered in relation to the basic
financial statements, presents fairly in all material respects the information
set forth therein.
March 15, 1996
Deloitte & Touche LLP
-35-
<PAGE>
<TABLE>
<CAPTION>
CONCORD MILESTONE PLUS, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
DECEMBER 31, DECEMBER 31,
1995 1994
-------------- ---------------
<S> <C> <C>
PROPERTY, AT COST (NOTES 2, 4 AND 6)
BUILDING AND IMPROVEMENTS $ 15,262,476 $ 15,052,424
LESS: ACCUMULATED DEPRECIATION 4,253,132 3,695,110
-------------- ---------------
BUILDING AND IMPROVEMENTS, NET 11,009,344 11,357,314
LAND 10,987,034 10,987,034
-------------- ---------------
TOTAL PROPERTY 21,996,378 22,344,348
CASH AND CASH EQUIVALENTS (NOTE 2) 218,872 344,020
ACCOUNTS RECEIVABLE 168,344 224,058
PREPAID EXPENSES 32,690 71,835
DUE FROM AFFILIATES, NET (NOTE 5) 47,879 0
OTHER ASSETS, NET 73,454 21,037
-------------- ---------------
TOTAL ASSETS $ 22,537,617 $ 23,005,298
-------------- ---------------
-------------- ---------------
LIABILITIES:
BONDS PAYABLE, NET (NOTES 2 AND 6) 16,425,967 16,334,737
ACCRUED INTEREST 130,246 126,818
ACCRUED EXPENSES AND OTHER LIABILITIES
(NOTE 7) 337,268 353,263
ACCRUED EXPENSES PAYABLE TO AFFILIATES
(NOTE 5) 0 38,827
-------------- ---------------
TOTAL LIABILITIES 16,893,481 16,853,645
-------------- ---------------
COMMITTMENTS AND CONTINGENCIES (NOTE 10)
PARTNERS' CAPITAL (NOTES 1 AND 3)
GENERAL PARTNER (66,124) (61,049)
LIMITED PARTNERS:
CLASS A INTERESTS, 1,518,800 5,710,260 6,212,702
CLASS B INTERESTS, 2,111,072 0 0
-------------- ---------------
TOTAL PARTNERS' CAPITAL 5,644,136 6,151,653
-------------- ---------------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL $ 22,537,617 $ 23,005,298
-------------- ---------------
-------------- ---------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
-36-
<PAGE>
<TABLE>
<CAPTION>
CONCORD MILESTONE PLUS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF REVENUES AND EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1993
------------- ------------- ---------------
<S> <C> <C> <C>
REVENUES:
RENT (NOTE 4) $ 2,573,507 $ 2,556,754 $ 2,611,112
REIMBURSED EXPENSES 455,546 581,112 474,639
INTEREST AND OTHER INCOME 32,226 18,791 21,084
------------- ------------- ---------------
TOTAL REVENUES 3,061,279 3,156,657 3,106,835
------------- ------------- ---------------
EXPENSES:
INTEREST EXPENSE (NOTE 6) 1,525,238 1,484,108 1,442,978
DEPRECIATION AND AMORTIZATION
(NOTE 2) 657,210 693,985 702,688
MANAGEMENT AND PROPERTY EXPENSES
(NOTE 5) 1,020,145 1,084,365 1,078,981
PROFESSIONAL FEES AND OTHER
EXPENSES 166,496 125,336 107,216
WRITE-DOWN OF PROPERTY
(NOTES 2 AND 4) 0 1,085,932 1,000,000
------------- ------------- ---------------
TOTAL EXPENSES 3,369,089 4,473,726 4,331,863
------------- ------------- ---------------
NET LOSS $ (307,810) $ (1,317,069) $ (1,225,028)
------------- ------------- ---------------
LOSS PER WEIGHTED AVERAGE
LIMITED PARTNERSHIP 100 CLASS A
INTERESTS OUTSTANDING $ (20.27) $ (86.72) $ (80.66)
------------- ------------- ---------------
------------- ------------- ---------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
-37-
<PAGE>
<TABLE>
<CAPTION>
CONCORD MILESTONE PLUS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
GENERAL CLASS A CLASS B
TOTAL PARTNER INTERESTS INTERESTS
----- -------- --------- ---------
<S> <C> <C> <C> <C>
PARTNERS' CAPITAL (DEFICIT)
DECEMBER 31, 1992 $ 9,493,080 $ (27,635) $ 9,520,715 $ 0
DISTRIBUTIONS (599,318) (5,993) (593,325) 0
NET LOSS (1,225,028) (12,250) (1,212,778) 0
------------- ------------ -------------- ------------
PARTNERS' CAPITAL (DEFICIT)
DECEMBER 31, 1993 7,668,734 (45,878) 7,714,612 0
DISTRIBUTIONS (200,006) (2,000) (198,006) 0
NET LOSS (1,317,075) (13,171) (1,303,904) 0
------------- ------------ -------------- ------------
PARTNERS' CAPITAL (DEFICIT)
DECEMBER 31, 1994 6,151,653 (61,049) 6,212,702 0
DISTRIBUTIONS (199,707) (1,997) (197,710) 0
NET LOSS (307,810) (3,078) (304,732) 0
------------- ------------ -------------- ------------
PARTNERS' CAPITAL (DEFICIT)
DECEMBER 31, 1995 $ 5,644,136 $ (66,124) $ 5,710,260 $ 0
------------- ------------ -------------- ------------
------------- ------------ -------------- ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
-38-
<PAGE>
<TABLE>
<CAPTION>
CONCORD MILESTONE PLUS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1993
--------------- ------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS $ (307,810) $ (1,317,075) $ (1,225,028)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
WRITE-DOWN OF PROPERTY 0 1,085,932 1,000,000
DEPRECIATION AND AMORTIZATION 657,210 693,985 702,688
INSURANCE PROCEEDS - NET 0 88,585 0
CHANGE IN OPERATING ASSETS AND LIABILITIES - NET:
DECREASE (INCREASE) IN ACCOUNTS RECEIVABLE 55,714 (59,221) 86,540
DECREASE (INCREASE) IN PREPAID EXPENSES 39,145 60,946 (21,505)
INCREASE IN DUE FROM AFFILIATE, NET (47,879) 0 0
INCREASE IN OTHER ASSETS, NET (60,375) (1,804) (8,742)
INCREASE IN ACCRUED INTEREST 3,428 3,428 3,427
DECREASE IN ACCRUED EXPENSES AND OTHER LIABILITIES (15,995) (95,302) (69,103)
(DECREASE) INCREASE IN ACCRUED EXPENSES PAYABLE TO AFFILIATES (38,827) 22,231 3,938
--------------- ------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 284,611 481,705 472,215
--------------- ------------- --------------
CASH FLOWS FROM INVESTING ACTIVITY:
PROPERTY IMPROVEMENTS (210,052) (74,959) (262,773)
--------------- ------------- --------------
CASH FLOWS FROM FINANCING ACTIVITY:
CASH DISTRIBUTIONS TO PARTNERS (199,707) (200,006) (599,318)
--------------- ------------- --------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (125,148) 206,740 (389,876)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 344,020 137,280 527,156
--------------- ------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 218,872 344,020 137,280
--------------- ------------- --------------
--------------- ------------- --------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
CASH PAID DURING THE PERIOD FOR INTEREST $ 1,521,810 1,480,680 1,439,551
----------------- ------------- --------------
----------------- ------------- --------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
-39-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994, AND 1993
1. ORGANIZATION AND CAPITALIZATION
Concord Milestone Plus, L.P., a Delaware limited partnership (the
"Partnership"), was formed on December 12, 1986, to invest in existing
income-producing commercial and industrial real estate, such as shopping
centers, office buildings, free-standing commercial warehouses and
distribution centers. Currently, the Partnership owns and operates three
shopping centers (the "Properties"), one located in Searcy, Arkansas (the
"Searcy Property"), one located in Valencia, California (the "Valencia
Property") and one located in Green Valley, Arizona (the "Green Valley
Property"). The Partnership began operations on August 20, 1987.
The Partnership commenced a public offering on April 8, 1987 in order to
fund the Partnership's real property acquisitions. The Partnership
terminated its public offering on April 2, 1988 and was fully subscribed to
with a total of 16,452 Bond Units (see Note 6) and 15,188 Equity Units
issued. Each Bond Unit consisted of $1,000 principal amount of the
Partnership's Escalating Rate Collateralized Mortgage bonds due November
30, 1997 (the "Bonds") and 36 Class B Interests ("Class B Interests"), each
such interest representing an assignment of one Class B Limited
Partnership Interest held by CMP Benefit Corp., a Delaware corporation (the
"Assignor"), under the Amended and Restated Agreement of Limited
Partnership of the Partnership (the "Partnership Agreement"). Each Equity
Unit consisted of 100 Class A Interests ("Class A Interests"), each
interest representing an assignment of one Class A Limited Partnership
Interest held by the Assignor under the Partnership Agreement, and 100
Class B Interests. Capital contributions to the Partnership consisted of
$15,187,840 from the sale of the Equity Units and $592,272 from the sale of
the Class B Interests that comprised the Bond Units.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING, FISCAL YEAR
The Partnership's records are maintained on the accrual basis of accounting
for both financial and tax purposes. Its fiscal year is the calendar
year.
CASH AND CASH EQUIVALENTS
The Partnership considers all highly liquid debt instruments purchased with
a maturity of three months or less to be cash equivalents.
BASE RENTS
Base rents are recognized on a straight-line basis over the terms of the
related leases, including free rent, if any, and lease step ups.
-40-
<PAGE>
PROPERTY
Property is carried at cost, and depreciated on a straight-line basis over
the estimated useful life of 31.5 years. Building improvements are carried
at cost, and depreciated on a straight-line basis using an estimate useful
life of 5 years. Leasehold improvements are amortized on a straight-line
method over the remaining term of the lease.
For Federal income tax purposes, the Partnership depreciates a portion (33
percent attributable to tax-exempt investors) using the straight-line
basis over 40 years; the balance is depreciated over 31.5 years.
The Partnership's policy which is in accordance with SFAS No. 121,
"Accounting for Impairment for Long-Lived Assets" (issued March 1995) is to
annually assess any impairment in value by making a comparison of the
current and projected operating cash flows of each of its properties over
its remaining useful life, on an undiscounted basis, to the carrying amount
of such property. Such carrying amount would be adjusted, if necessary,
to reflect an impairment in the value of the asset. The Partnership
adopted SFAS No. 121 in 1995 and determined that an adjustment to the
carrying amount of its long lived assets was not necessary in 1995.
INCOME TAXES
The Partnership makes no provision for income taxes since all income and
losses are allocated to the partners and holders of Class A Interests and
Class B Interests for inclusion in their respective tax returns. The tax
bases of the Partnership's net assets and liabilities are $2,617,796
higher than the amounts reported for financial statement purposes at
December 31, 1995, which is due to the utilization of different estimated
useful lives for the depreciation of property for tax and financial
reporting purposes and the write-down of property during 1993 and 1994 for
financial reporting purposes (see Note 4).
DISCOUNT ON BONDS PAYABLE
The Partnership is amortizing the original issue discount on bonds payable
using the effective interest method over the term of the Bonds.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
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.
FINANCIAL STATEMENTS PRESENTATION
Certain reclassifications were made to the accompanying 1994 and 1993
financial statements to conform with the 1995 presentation.
-41-
<PAGE>
3. PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement the general partner of
the Partnership, CM Plus Corporation, a Delaware corporation (the "General
Partner") is liable for all general obligations of the Partnership to the
extent not paid by the Partnership.
Holders of Class A Interests and Class B Interests are not liable for
expenses, liabilities or obligations of the Partnership beyond the amount
of their contributed capital.
All distributable cash, capital proceeds, profit, gain or loss from
Partnership operations are generally allocated 1 percent to the General
Partner and 99 percent to the holders of Class A Interests. The holders of
Class B Interests were specifically allocated certain organization and
offering expenses to the extent of their positive capital account
balances, thus reducing their account balance to zero. After the holders
of Class A Interests have received the 12.5 percent Priority Return (as
defined in the Partnership Agreement) all distributable cash is allocated
in a ratio of 85 percent to the holders of Class B Interests, 5 percent to
the holders of Class A Interests and 10 percent to the General Partner.
Since the inception of the Partnership, all income and distributable cash
with respect to the Equity Units has been allocated to the holders of Class
A Interests because they have not received the 12.5 percent Priority
Return. Therefore, no income has been allocated to the holders of Class B
Interests.
4. PROPERTIES
On August 20, 1987, the Partnership purchased the Searcy Property, a
shopping center in Searcy, Arkansas from Concord Milestone Plus of
Arkansas Limited Partnership, an affiliated entity, for $4,050,000.
On January 22, 1988, the Partnership purchased the Valencia Property, a
shopping center in Valencia, California from Concord Milestone Plus of
California Limited Partnership, an affiliated entity, for $11,575,000.
On April 15, 1988, the Partnership purchased the Green Valley Property, a
shopping center in Green Valley, Arizona from Concord Milestone Plus of
Arizona Limited Partnership, an affiliated entity, for $9,687,000. During
1993 and 1994, management determined, based on the current market
conditions and projected future cash flows of the Green Valley Property,
that the Property had experienced declines in the market value that were
other than temporary and recorded $1,000,000 and $1,085,932 non-cash
charges against earnings in 1993 and 1994, respectively to write-down the
Property.
-42-
<PAGE>
Each Property was acquired using the proceeds from the sale of Equity
Units and Bond Units. The Partnership issued Bonds to the purchasers of
the Bond Units for approximately 65 percent of the respective Property's
purchase price. Concurrently under the Indenture governing the Bonds, the
Partnership granted United States Trust Company of New York, as trustee
(the "Trustee") (or, in the case of a deed of trust, to a deed of trust for
the benefit of the Trustee), a note together with a related first mortgage
or deed of trust on each Property (each, a "Bond Mortgage") in the
principal amount up to 65% of the Partnership's purchase price on that
Property, for the benefit of the holders of the Bonds (See Note 6).
Additionally, as part of the acquisitions of the Properties, the underlying
tenant leases were assigned and assumed by the Partnership. Minimum base
rental income under non-cancelable tenant lease agreements, having lease
terms expiring from one to twenty-four years, at December 31, 1995 are as
follows:
Year Ended
December Amount
---------- -----------
1996 $ 2,514,908
1997 2,161,140
1998 1,896,319
1999 1,404,675
2000 1,116,832
Thereafter 2,984,950
Total -----------
$12,078,824
===========
The above table does not include contingent rental amounts. The total
contingent rentals received in 1995, 1994 and 1993 was $185,117, $166,917,
and $154,877, respectively.
Two anchor tenants, a J.C. Penney department store and a Stage Store
("Stage"), occupy 10% or more of the gross leasable area of the Searcy
Property. J.C. Penney, a clothing and apparel department store, occupies
33,796 square feet or 43.1% of the gross leasable area of the Searcy
Property. J.C. Penney's annual minimum rent is $165,000 ($4.90 per square
foot) and the lease provides for annual percentage rent equal to 1.5% of
gross receipts in excess of $8,280,000. In addition, J.C. Penney is
required to reimburse the Partnership for real estate taxes, insurance and
common area maintenance expenses.
Stage, a clothing and apparel store, occupies 15,600 square feet or 19.9%
of the gross leasable area of the Searcy Property. Stage's annual minimum
rent is $81,900 ($5.25 per square foot) and the lease provides for annual
percentage rent equal to 3% of gross annual sales in excess of $2,600,000.
In addition, Stage is required to reimburse the Partnership for real
estate taxes, insurance and common area maintenance expenses.
Two anchor tenants, Lucky Stores, Inc. ("Lucky Stores"), a full service
grocery store, and Thrifty Drugstore ("Thrifty"), a full service drug
store, occupy 10% or more of the gross leasable area of the Valencia
Property. Lucky Stores occupies 31,842 square feet or 30.8% of the gross
leasable area of the Valencia Property.
-43-
<PAGE>
Lucky Stores annual minimum rent is $300,00 per year ($9.42 per square
foot) and the lease provides for percentage rent equal to 1.25% of gross
receipts in excess of $38,000,000, less amounts paid by Lucky Stores for
property taxes and insurance premiums. Lucky Stores is required to
reimburse the Partnership for its pro rata share of real estate taxes,
insurance and common area maintenance expenses.
Thrifty occupies 18,125 square feet or 17.5% of the gross leasable area of
the Valencia Property. Thrifty's rent is equal to 3% of gross sales for
the previous month, but not less than $45,000 per year. Thrifty is not
required to reimburse the Partnership for real estate taxes, insurance or
operating expenses.
One anchor tenant, Abco Supermarket, occupies 10% or more of the gross
leasable area of the Green Valley Property. Abco Supermarket occupies
38,983 square feet or 20.15% of the gross leasable area of the Green
Valley Property.
Abco's annual base rent is $68,060 ($1.75 per square foot). The lease
provides for annual percentage rent equal to 1% of annual gross sales in
excess of $4,000,000. Abco is required to reimburse the Partnership a pro
rata share of real estate taxes and common are maintenance expenses.
5. RELATED PARTY TRANSACTIONS
The Partnership pays fees for customary property management services
("Management Fees") equal to a percentage of gross revenues from the
Properties, not to exceed 5 percent. The Management Fees are 3 percent for
the Searcy Property, 4 percent for the Valencia Property and 5 percent
for the Green Valley Property. Management Fees incurred for the years
ended December 31, 1995, 1994 and 1993 were $107,356, $134,274 and
$130,407, respectively. Management Fees are payable to Milestone Property
Management, Inc., a Delaware corporation and affiliate of the General
Partner ("MPMI").
The Partnership also pays fees to MPMI for administrative services provided
to the Partnership. These fees amounted to $25,000 each for the years
ended December 31, 1995, 1994 and 1993.
In 1995 the Partnership accrued a $42,678 receivable from Concord Assets
Group, Inc. ("CAG"), an affiliate of the General Partner, due to an
overpayment made to CAG for insurance expense. The General Partner
expects to receive this payment in full by the end of the first quarter of
1996.
In 1994 the Partnership accrued $20,953, payable to CAG, as reimbursement
for the actual cost of employee health insurance for the years ended
December 31, 1992 and 1993.
6. BONDS PAYABLE
Bonds payable consists of Bonds outstanding in the principal amount of
$16,452,000. The Bonds bear interest, payable semi-annually, from the
date of issuance at annual rates increasing from 8.15 percent to 10
percent (9.50 percent, 9.25 percent and 9.0 percent at December 31, 1995,
1994 and 1993, respectively) and mature on November 30, 1997.
-44-
<PAGE>
The Bonds have an effective interest rate of 9.66 percent. The Bonds are
cross collateralized by all three properties. Pursuant to the Indenture,
the Bonds are subject to early redemption (at 102 percent of the principal
amount for the period from June 1, 1995 to May 31, 1996, which is reduced
by 1 percent per year thereafter) under certain circumstances. The
holders of the Bonds have a first lien on the Properties through the Bond
Mortgages held by the Trustee (see Note 4).
At December 31, 1995 and 1994, the Bonds are comprised of the following:
1995 1994
----------- -----------
Principal amount $16,452,000 $16,452,000
Less unamortized discount 26,033 117,263
---------- ----------
Bonds payable - net $16,425,967 $16,334,737
========== ==========
7. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities are comprised of the following:
1995 1994
-------- --------
Accounts payable - trade $ 90,769 $ 66,374
Accrued professional fees 1,035 16,345
Accrued real estate tax 71,344 0
Accrued leasing fees 20,000 0
Deposits - tenant security 79,196 77,359
Deferred income 71,348 100,713
Repairs reserve (see Note 8) 0 88,585
Other 3,576 3,887
------- -------
Total $337,268 $353,263
======= =======
8. DEFERRED REPAIRS
On January 17, 1994 the Valencia Property sustained damage resulting from
an earthquake that occurred in the Southern California area. Proceeds
from the subsequent insurance claim totaled $587,333, which covered the
cost of the damage resulting from the earthquake. Repairs, expenses and
fees totaling $587,333 have been incurred and paid as of December 31,
1995.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of cash and cash equivalents, accounts
receivable, accounts payable, and accrued expenses are approximate amounts
reflected in the balance sheet based on their short term nature.
The carrying value and the fair value of the bonds payable was not
considered to be significantly different. The fair value of the Bonds
has been estimated by discounting cash flows at the current rate at which
similar loans would be made to borrowers with similar credit ratings for
the remaining term. The fair value estimates are based on information
available as of December 31, 1995. Although management is not aware of
any factors that would significantly affect the estimate of fair value
amounts, a comprehensive reevaluation has not been performed for purposes
of this financial statement disclosure and current estimate of fair value
may differ significantly from these amounts reflected in the balance
sheet.
-45-
<PAGE>
10. COMMITMENTS AND CONTINGENCIES
Under various Federal, State and local laws and ordinances and regulations,
an owner, operator or developer of real property may be held liable for the
costs of removal or remediation of certain hazardous or toxic substances
(including asbestos containing materials) on or in such property. Such
laws, ordinances and regulations often impose liability without regard to
whether the owner knew of, or was responsible for, the presence of
hazardous or toxic substances. The cost of any required remediation of any
property and the owner's, operator's or developer's liability therefor is
generally not limited under such laws, ordinances and regulations, and
could exceed the value of the property and/or the aggregate assets of the
owner, operator or developer. While none of the Properties is presently
subject to any environmental actions, the presence of such substances, or
the failure to properly remediate such substances, may adversely affect
the ability to sell or rent the Properties or to borrow using any of the
Properties as collateral.
11. SUBSEQUENT EVENT
On February 15, 1996 the Partnership made a cash distribution of $3.28 per
100 Class A Interests which represented distributable cash for the quarter
ended December 31, 1995.
-46-
<PAGE>
<TABLE>
<CAPTION>
CONCORD MILESTONE PLUS, L.P.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
Costs
Capitalized
Intial Cost to Subsequent to Gross Amount at Which Carried
Partnership Acquisition at Close of Period (A)
---------------------------------- -------------------------- ------------------------------
Land
Description Building & Building & Building &
and Location Encumbrances Land Improvements Improvements Land Improvements Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Town & Country Plaza $ 2,632,500 430,000 3,620,000 368,959 430,000 3,988,959 4,418,959
Searcy, AR
Old Orchard Shopping Center 7,523,500 6,500,000 5,075,000 1,240,977 6,500,000 6,315,977 12,815,977
Valencia, CA
Green Valley Mall 6,296,000 5,100,000 4,587,000 1,413,506 4,057,034 4,957,540 9,014,574
Green Valley, AZ
-------------------------------------------------------------------------------------------------
$16,452,000 12,030,000 13,282,000 3,023,442 10,987,034 15,262,476 26,249,510
=================================================================================================
<CAPTION>
Description Accumulated Date of Date Depreciation
and Location Depreciation(B) Construction Acquired Life
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Town & Country Plaza 1,064,061 1985 08/20/87 31.5 years
Searcy, AR
Old Orchard Shopping Center 1,596,789 1965 01/22/88 31.5 years
Valencia, CA
Green Valley Mall 1,592,282 1960 04/15/88 31.5 years
Green Valley, AZ ---------
4,253,132
=========
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
(A) Reconciliation of investment properties owned:
Beginning balance $26,039,458 27,050,431 27,787,658 27,761,885 27,660,168
Property acquistions/improvements 210,052 74,959 262,773 25,773 101,717
Acquisition fees and expenses 0 0 0 0 0
Write-down of property 0 (1,085,932) (1,000,000) 0 0
-----------------------------------------------------------------------
Balance at end of period $26,249,510 26,039,458 27,050,431 27,787,658 27,761,885
=======================================================================
(B) Reconciliation of accumulated depreciation:
Beginning balance $ 3,695,110 3,122,666 2,570,521 2,020,654 1,480,426
Depreciation expense 558,022 572,444 552,145 549,867 540,228
-----------------------------------------------------------------------
Balance at end of period $ 4,253,132 3,695,110 3,122,666 2,570,521 2,020,654
=======================================================================
</TABLE>
-47-
