UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________.
Commission File Number 0-18148
DEAN WITTER REALTY YIELD PLUS, L.P.
(Exact name of registrant as specified in governing instrument)
Delaware 13-3426531
(State of organization) (IRS Employer Identification No.)
2 World Trade Center, New York, NY 10048
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (212)
392-1054
Securities registered pursuant to Section 12(b) of the Act:
Title of each className of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
State the aggregate market value of the voting stock held by
nonaffiliates of the registrant. Not Applicable
DOCUMENTS INCORPORATED BY REFERENCE
None
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON
FORM 8-K
(a) The following documents are filed as part of this
Annual Report:
1. Financial Statements (see Index to
Financial Statements filed as part of Item 8 of
this Annual Report).
2. Financial Statement Schedules (see Index
to Financial Statements filed as part of Item 8
of this Annual Report).
3. Exhibits
(3)(a) Amended and Restated Agreement of
Limited Partnership dated as of April 29, 1987
set forth in Exhibit A to the Prospectus
included in Registration Statement Number 33-
11648 is incorporated herein by reference.
(3)(b) Certificate of Limited Partnership
dated as of April 29, 1987 incorporated by
reference in Registration Statement Number 33-
11648 is incorporated herein by reference.
(4)(a) Amended and Restated Agreement of
Limited Partnership dated as of April 29, 1987
set forth in Exhibit A to the Prospectus
included in Registration Statement Number 33-
11648 is incorporated herein by reference.
(4)(b) Certificate of Limited Partnership
dated as of April 29, 1987 incorporated by
reference in Registration Statement Number 33-
11648 is incorporated herein by reference.
(10)(a) Partnership Agreement for DW
Michelson Associates dated March 14, 1988.
Incorporated by reference to Exhibit 10(a) to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995.
(10)(b) First Mortgage Promissory Note, dated
April 26, 1989, between the Government Center
Garage Realty Trust (Maker) and Dean Witter
Realty Yield Plus, L.P. (Holder) was filed as
Exhibit to Amendment No. 2 to Current Report on
Form 8-K on April 26, 1989 and is incorporated
herein by reference.
(10)(c) Construction Loan Agreement, dated
April 26, 1989, between Government Center
Garage Realty Trust, as Borrower and Dean
Witter Realty Yield Plus, L.P. and Dean Witter
Realty Yield Plus II, L.P., as Lender was filed
as Exhibit to Amendment No. 2 to Current Report
on Form 8-K on April 26, 1989 and is
incorporated herein by reference.
(10)(d) Intercreditor Agreement among Dean
Witter Realty Yield Plus, L.P., Dean Witter
Realty Yield Plus II, L.P., and Realty
Management Services Inc. dated as of April 26,
1989 was filed as Exhibit to Amendment No. 2 to
Current Report on Form 8-K on April 26, 1989
and is incorporated herein by reference.
(10)(e) First Amendment to Construction Loan
Agreement dated October 12, 1989 between
Government Center Garage Realty Trust, as
Borrower and Dean Witter Realty Yield Plus,
L.P. and Dean Witter Realty Yield Plus II,
L.P., as Lender. Incorporated by reference to
Exhibit 10(e) to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1995.
(10)(f) Amended and Restated Construction
Loan/Office Loan Promissory Note dated October
12, 1989 between Government Center Garage
Realty Trust (Maker) and Dean Witter Realty
Yield Plus, L.P. (Holder). Incorporated by
reference to Exhibit 10(f) to Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1995.
(10)(g) Second Amendment to Construction Loan
Agreement dated June 22, 1990 between
Government Center Garage Realty Trust, as
Borrower and Dean Witter Realty Yield Plus,
L.P. and Dean Witter Realty Yield Plus II,
L.P., as Lender. Incorporated by reference to
Exhibit 10(g) to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1995.
(10)(h) First Amendment to Amended and
Restated Construction Loan/Office Loan
Promissory Note dated June 22, 1990 between
Government Center Garage Realty Trust (Maker)
and Dean Witter Realty Yield Plus, L.P.
(Holder). Incorporated by reference to Exhibit
10(h) to Registrant's Annual Report on Form 10-
K for the year ended December 31, 1995.
(10)(i) Supplemental Loan Agreement dated
September 20, 1993 between Government Center
Garage Realty Trust, as Borrower and Dean
Witter Realty Yield Plus, L.P. and Dean Witter
Realty Yield Plus II, L.P., as Lender.
Incorporated by reference to Exhibit 10(i) to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995.
(10)(j) Second Amendment to Notes dated
September 20, 1993 between Government Center
Garage Realty Trust (Maker) and Dean Witter
Realty Yield Plus, L.P. and Dean Witter Realty
Yield Plus II, L.P., (Holders). Incorporated
by reference to Exhibit 10(j) to Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1995.
(21) Subsidiaries:
Deptford Crossing Associates, a New Jersey
limited partnership.
Hampton Crossing Associates, a Michigan limited
partnership.
DW Lakeshore Associates, an Illinois limited
partnership.
DW Columbia Gateway Associates, a Maryland
limited partnership.
DW Michelson Associates, a California limited
partnership.
(27) Financial Data Schedule
(d) Financial Statement Schedules
1. Financial Statements of GCGA Limited
Partnership, owner of an office
building/parking garage located in Boston,
Massachusetts.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DEAN WITTER REALTY YIELD PLUS, L.P.
By: Dean Witter Realty Yield Plus Inc.
Managing General Partner
By: /s/E. Davisson Hardman, Jr. Date: March 27,
1998
E. Davisson Hardman, Jr.
President
By: /s/Lawrence Volpe Date: March 27,
1998
Lawrence Volpe
Controller
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities
and on the dates indicated.
DEAN WITTER REALTY YIELD PLUS INC.
Managing General Partner
/s/William B. Smith Date: March 27,
1998
William B. Smith
Chairman of the Board of Directors
/s/E. Davisson Hardman, Jr. Date: March 27,
1998
E. Davisson Hardman, Jr.
Director
/s/Lawrence Volpe Date: March 27,
1998
Lawrence Volpe
Director
/s/Ronald T. Carman Date: March 27,
1998
Ronald T. Carman
Director
DEAN WITTER REALTY YIELD PLUS, L.P.
Two World Trade Center
New York, New York 10048
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
Attached is Registrant's Form 10-K/A by which the financial
statements of GCGA Limited Partnership are filed as
financial statement schedules to Registrant's annual report
on Form 10-K for the year ended December 31, 1996.
Very truly yours,
DEAN WITTER REALTY YIELD PLUS,
L.P.
By: Dean Witter Realty Yield Plus,
Inc.
Managing General Partner
By: /s/ C. M. Charrow
Charles M. Charrow
Assistant Controller
5
GCGA LIMITED PARTNERSHIP
(Debtor-in-Possession)
Financial Statements
December 31, 1996, 1995 and 1994
(With Independent Auditors' Report Thereon)
Independent Auditors' Report
The Partners
GCGA Limited Partnership (Debtor-in-Possession):
We have audited the accompanying balance sheets of GCGA
Limited Partnership (debtor-in-possession) as of
December 31, 1996 and 1995, and the related statements of
operations, changes in partners' deficit, and cash flows for
each of the years in the three-year period ended
December 31, 1996. These financial statements are the
responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of GCGA Limited Partnership (debtor-in-possession)
as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the years in the
three-year period ended December 31, 1996 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared
assuming that the Partnership will continue as a going
concern. As discussed in note 1, the Partnership filed a
voluntary petition for reorganization under Chapter 11 of
the United States Bankruptcy Code in the United States
Bankruptcy Court (the Bankruptcy Court) on October 15, 1996.
As discussed in note 4 to the financial statements, the
Partnership's first and second mortgage loans are in
default. As discussed in note 5 to the financial
statements, substantially all of the leases on office and
retail space will expire in 1997. These matters raise
substantial doubt about the Partnership's ability to
continue as a going concern. The Partnership is currently
operating its business as a debtor-in-possession under the
jurisdiction of the Bankruptcy Court, and continuation of
the Partnership as a going concern is contingent upon its
ability to formulate a plan of reorganization that will be
confirmed by the Bankruptcy Court, including restructuring
its existing long-term debt arrangements. The financial
statements do not include any adjustments that might result
from the outcome of this uncertainty.
KPMG Peat Marwick, LLP
/s/ KPMG Peat Marwick, LLP
April 18, 1997 except for note 7
which is dated October 27, 1997
Washington, D.C.
<TABLE>
GCGA LIMITED PARTNERSHIP
(Debtor-in-Possession)
Balance Sheets
December 31, 1996 and 1995
<CAPTION>
1996 1995
<S> <C> <C>
Assets
Real estate, at cost (notes 4 and 5):
Land $
4,892,336 $ 4,892,336
Building and improvements 70,946,012
70,934,457
Furniture and equipment 5,965
5,965
75,844,313
75,832,758
Accumulated depreciation 14,148,959
12,369,304
61,695,354
63,463,454
Cash
807,497 435,732
Escrow deposits (note 1) 583,576
75,673
Accounts receivable - tenants (note 2) 4,938,776
5,432,364
Deferred costs, net of accumulated amortization of
$2,600,215 in 1996 and $2,153,009 in 1995 395,020
838,803
Due from general partner 97,379
119,976
Other assets 14,184
17,625
$ 68,531,786 $
70,383,627
Liabilities and Partners' Deficit
Liabilities:
First mortgage loan (note 4) $ 37,750,000 $
37,750,000
Second mortgage loan (note 4) 59,200,000
59,200,000
Note payable - Kinney System of Sudbury St., Inc. (note 5)
2,594,826 2,631,260
Related party loan (note 6) -
219,094
Deferred rental revenue 102,981
257,454
Accounts payable and accrued expenses 6,603,158
813,443
Total liabilities 106,250,965
100,871,251
Partners' deficit (note 3) (37,719,179)
(30,487,624)
Contingencies (notes 4 and 5)
$ 68,531,786 $
70,383,627
See accompanying notes to financial statements.
</TABLE>
<TABLE>
GCGA LIMITED PARTNERSHIP
(Debtor-in-Possession)
Statements of Operations
Years ended December 31, 1996, 1995 and 1994
<CAPTION>
1996 1995 1994
<S> <C> <C>
<C>
Revenue:
Rental (including escalation income of
$1,844,629 in 1996, $1,846,475 in 1995,
and $2,065,462 in 1994 $13,064,483
$12,986,313 $12,425,230
Supplemental rent (note 5) 316,200
316,200 316,200
Interest and other 63,455
102,906 27,595
Total revenue 13,444,138
13,405,419 12,769,025
Expenses:
Interest (notes 4 and 5) 13,174,287
8,559,012 8,430,761
Depreciation 1,779,655
1,779,558 1,779,558
Amortization 447,206
453,135 476,211
Real estate taxes 2,846,875
2,821,441 2,782,248
Utilities 734,805
737,485 656,224
General and administrative 941,627
1,081,944 1,309,469
Management fee (note 6) 351,238
353,425 282,607
Total expenses 20,275,693
15,786,000 15,717,078
Net loss $(6,831,555)
$(2,380,581) $(2,948,053)
See accompanying notes to financial statements.
</TABLE>
<TABLE>
GCGA LIMITED PARTNERSHIP
(Debtor-in-Possession)
Statements of Changes in Partners' Deficit
Years ended December 31, 1996, 1995 and 1994
<CAPTION>
General Limited
Partners Partners Total
<S> <C> <C>
<C>
Partners' deficit at December 31, 1994 $(2,270,416)
$(25,836,627) $(28,107,043)
Net loss (23,806)
(2,356,775) (2,380,581)
Partners' deficit at December 31, 1995 (2,294,222)
(28,193,402) (30,487,624)
Partner distributions (4,000)
(396,000) (400,000)
Net loss (68,316)
(6,763,239) (6,831,555)
Partners' deficit at December 31, 1996 $(2,366,538)
$(35,352,641) $(37,719,179)
See accompanying notes to financial statements.
</TABLE>
<TABLE>
GCGA LIMITED PARTNERSHIP
(Debtor-in-Possession)
Statements of Cash Flows
Years ended December 31, 1996, 1995 and 1994
<CAPTION>
1996
1995 1994
<S> <C> <C>
<C>
Cash flows from operating activities:
Net loss $(6,831,555)
$(2,380,581) $(2,948,053)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,226,861
2,232,693 2,255,769
Decrease (increase) in:
Escrow deposits (507,903)
21,375 196,630
Accounts receivable-tenants 493,588
377,720 (357,888)
Deferred costs (3,423)
(22,342) (434,528)
Due from general partner 22,597
(20,793) (8,293)
Other assets 3,441
(4,415) (1,148)
Increase (decrease) in:
Accounts payable and accrued expenses 5,789,715
(187,478) (89,150)
Deferred rental revenue (154,473)
(154,473) (652,010)
Net cash provided by (used in) operating
activities 1,038,848
(138,294) (2,038,671)
Cash flows from investing activities - investment in
real estate (11,555) -
(151,103)
Cash flows from financing activities:
Proceeds of second mortgage loan - 393,258
1,319,809
Proceeds of related party loan - 139,094
80,000
Repayment of related party loan (219,094) -
- -
Partner distributions (400,000) -
- -
Repayment of notes payable to Kinney Systems (36,434)
(50,310) (45,542)
Net cash provided by (used in) financing
activities (655,528)
482,042 1,354,267
Increase (decrease) in cash 371,765
343,748 (835,507)
Cash at beginning of year 435,732
91,984 927,491
Cash at end of year $ 807,497 $
435,732 $ 91,984
Supplemental disclosure of cash paid during the year
for interest $ 7,398,731 $
8,548,352 $ 8,416,486
See accompanying notes to financial statements.
</TABLE>
GCGA LIMITED PARTNERSHIP
(Debtor-in-Possession)
Notes to Financial Statements
December 31, 1996, 1995, and 1994
1. Organization
GCGA Limited Partnership (the Partnership) is a limited
partnership organized under the laws of the Commonwealth of
Massachusetts. Since September 20, 1993, the partners of
the Partnership are Government Center Garage Associates
Limited Partnership (GCA), which owns a 1 percent general
partnership interest and a 98 percent limited partnership
interest, and Richard Rubin, who owns a 1 percent limited
partnership interest.
The Partnership is the sole beneficiary of Government Center
Garage Realty Trust (the Trust) which owns One Congress
Street (the Property), an 11-story structure containing
approximately 260,000 square feet of office and retail space
in addition to a 2,200-space parking garage, located in
Boston, Massachusetts.
On October 15, 1996, the Partnership and the Trust filed a
voluntary petition for relief under Chapter 11 ("Chapter
11") of Title 11 of the United States Code in the United
States Bankruptcy Court for the District of Maryland (the
Bankruptcy Court). The Partnership is presently operating
its business as debtor-in-possession under the jurisdiction
of the Bankruptcy Court and intends to propose a plan of
reorganization pursuant to Chapter 11. As
debtor-in-possession, the Partnership may not engage in
transactions outside of the ordinary course of business
without approval of the Bankruptcy Court, after notice and
hearing. Since the Chapter 11 filing on October 15, 1996,
the Partnership continued discussions with the holder of its
second mortgage loan relating to restructuring alternatives.
As described in note 4, the general partner in GCA filed a
voluntary petition under Chapter 11 of the Bankruptcy Code.
This constitutes a technical event of default under the
first and second mortgage loans. The lenders' remedies
include accelerating the maturity date and demanding
immediate payment of the loans.
GCGA LIMITED PARTNERSHIP
(Debtor-in-Possession)
Notes to Financial Statements
1. Organization (continued)
At December 31, 1996, 62 percent of the office building and
retail rental space and 100 percent of the garage space is
under lease. The current occupancy level has caused a
significant decrease in the Partnership's cash flow from
operations. As a result of the decrease in cash flow, the
Partnership was delinquent in making the October 1, 1996
payment on its second mortgage loan. Due to this
delinquency, the second mortgagor filed for receivership of
the assets of the Partnership on October 15, 1996. These
events led to the Partnership's decision to file for
protection under Chapter 11 to enable the Partnership to
restructure its financial arrangements under the
jurisdiction of the Bankruptcy Court.
The liabilities subject to compromise at October 15, 1996
are comprised primarily of the second mortgage loan and
related accrued interest. These liabilities and other
operating liabilities are subject to adjustment in the
reorganization process. Under Chapter 11, actions to
enforce certain claims against the Partnership are stayed if
the claims arose, or are based on events that occurred, on
or before the petition date of October 15, 1996. The
ultimate terms of settlement of these liabilities and claims
will be determined in accordance with a plan of
reorganization which requires the approval of impaired
prepetition creditors and confirmation by the Bankruptcy
Court. Other liabilities may arise or be subject to
resolution of claims for contingencies and other disputed
amounts. The ultimate resolution of such liabilities will
be part of reorganization.
In conjunction with the Partnership's bankruptcy filing,
certain utility companies required cash deposits for
continued service to the building. Escrow deposits as of
December 31, 1996 include $70,310 in funds held by these
utility companies.
The accompanying financial statements have been presented on
the basis that the Partnership is a going concern, which
contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As a
result of the Chapter 11 filing and circumstances relating
to this event, realization of assets and
GCGA LIMITED PARTNERSHIP
(Debtor-in-Possession)
Notes to Financial Statements
1. Organization (continued)
satisfaction of liabilities is subject to uncertainty. A
plan of reorganization could materially change the amounts
reported in the accompanying financial statements, which may
be necessary as a consequence of a plan of reorganization.
The ability of the Partnership to continue as a going
concern is dependent on, among other things, confirmation of
an acceptable plan of reorganization.
See the subsequent event in note 7.
2. Summary of Significant Accounting Policies
Basis of Accounting
The Partnership uses the accrual basis of accounting for
financial reporting purposes in conformity with generally
accepted accounting principles. The preparation of
financial statements in conformity with generally accepted
accounting principles requires the use of management
estimates that affect certain reported amounts and
disclosures. Actual results could differ from those
estimates.
Real Estate
Real estate and related improvements are recorded at cost
less accumulated depreciation and amortization. Cost
includes land and improvements, direct construction costs,
indirect project costs, and carrying costs, including real
estate taxes, interest and loan costs incurred during the
construction period.
Depreciation is recorded on the straight-line basis over the
estimated useful lives of the assets: building and building
improvements, 40 years; furniture and equipment, 15 years.
GCGA LIMITED PARTNERSHIP
(Debtor-in-Possession)
Notes to Financial Statements
2. Summary of Significant Accounting Policies (continued)
Rental Revenue
Rental revenue is recognized on a straight-line basis over
the life of the respective leases. The cumulative excess of
rental revenue recognized on a straight-line basis over
contract rents is included in accounts receivable. As of
December 31, 1996 and 1995, such amounts included in
accounts receivable were $4,434,976 and $4,722,299,
respectively. The cumulative excess of contract rents over
rental revenue recognized on a straight-line basis is
recorded as deferred rental revenue.
Deferred Costs
Loan costs related to the mortgage payable have been
capitalized and are being amortized over the term of the
mortgage.
Lease commission expenses incurred have been capitalized and
are amortized on a straight-line basis over the lives of the
respective leases.
Leasehold improvements have been capitalized and are
amortized on a straight-line basis over the lives of their
respective leases.
Income Taxes
No provision for income taxes has been made in the financial
statements because the partners report any income or loss
for tax purposes on their tax returns.
3. Partnership Agreement
The Partnership Agreement and subsequent amendments
(the Agreement) provide that net cash flow, as defined in
the Agreement, generally will be paid to the partners
prorata, in accordance with each of their partnership
interests.
GCGA LIMITED PARTNERSHIP
(Debtor-in-Possession)
Notes to Financial Statements
3. Partnership Agreement (continued)
Net capital proceeds, as defined in the agreement, generally
will be distributed to the partners prorata in accordance
with each of their partnership interests. However, net
capital proceeds arising from a transaction involving the
disposition of all or substantially all the beneficial
interest in the Trust or property or involving the
liquidation of the Partnership shall be distributed in
accordance with the partners capital accounts, as adjusted,
pursuant to the Agreement.
4. Mortgage Loans Payable
In October 1989, the Trust obtained a 9.39 percent fixed
rate first mortgage loan for $37,750,000 from a major
insurance company. The loan requires monthly payments of
interest only and matures November 1, 2001. Interest
expense incurred on this loan was $3,544,725 in 1996, 1995
and 1994.
In April 1989, the Trust also obtained a $57.7 million
second mortgage construction and permanent loan commitment
from Dean Witter Realty Yield Plus, L. P. and Dean Witter
Realty Yield Plus II, L.P. (the Lenders). Subsequently, the
commitment was increased to $59.2 million to fund certain
costs incurred to accelerate the completion of the
construction.
In August 1990, the second mortgage construction and
permanent loan commitment was converted to a permanent
second mortgage loan. Base interest is payable monthly at
8 percent. The second mortgage loan matures November 1,
2001. The Partnership is delinquent on its October 1, 1996
and subsequent months interest payments. As a result, the
Partnership incurred a one-time default interest charge of
7 percent. In addition, interest is accruing at the default
rate of 13 percent beginning September 1, 1996. At
December 31, 1996 accrued interest on the second mortgage
loan amounted to $6,092,000. Interest expense incurred on
this loan for 1996, 1995 and 1994 was $9,357,983, $4,734,619
and $4,614,996, respectively.
GCGA LIMITED PARTNERSHIP
(Debtor-in-Possession)
Notes to Financial Statements
4. Mortgage Loans Payable (continued)
The second mortgage loan was modified on September 20, 1993.
Under the loan modification, the Lenders and the Trust
agreed to increase the amount of "Additional Interest"
payable to the Lenders under the second mortgage loan by
(i) providing for the payment of the first $250,000 of
adjusted gross receipts in any calendar year as additional
interest, and (ii) increasing the additional interest from
adjusted gross receipts and net capital proceeds of the
Property, after payment of the first $250,000, from
37 percent to 58 percent. No additional interest was due to
the Lenders at December 31, 1996, 1995 and 1994.
In conjunction with the loan modification and changes in
partnership interests on September 20, 1993, an existing
operating deficit guaranty of the former general partners
was released by the Lenders.
In August 1991, the general partner of GCA filed a voluntary
petition under Chapter 11 of the Bankruptcy Code. In
September 1993, this general partner's interest was
converted to a limited partnership interest. In June 1996,
this limited partnership interest was placed in a trust for
the benefit of the partner's creditors. The above matter
constitutes a technical event of default under the first and
second mortgage loans. Therefore, the loans may be called
at any time. See notes 1 and 7.
As a result of the partnership's reorganization proceedings,
the repayment terms of the mortgage loans payable will be
determined pursuant to a plan of reorganization confirmed by
the Bankruptcy Court. See note 7.
5. Leases
The Partnership's rental real estate consists of an 11-story
structure containing a 2,200 space parking garage and
approximately 260,000 square feet of office and retail space
available for lease. As of December 31, 1996, approximately
62 percent of the office and retail rental space and
100 percent of the garage space is under lease. The
following table
GCGA LIMITED PARTNERSHIP
(Debtor-in-Possession)
Notes to Financial Statements
5. Leases (continued)
summarizes future minimum rents under noncancelable
operating leases as of December 31, 1996:
<TABLE>
<CAPTION>
Year ended December 31 Future minimum rentals
<S> <C> <C>
1997 $ 7,991,683
1998 4,130,449
1999 4,335,515
2000 4,402,455
2001 4,457,757
Thereafter 8,948,779
$34,266,638
</TABLE>
The building has one tenant that comprises approximately 61
percent of the total leaseable office and retail space and
60 percent of total building cash rents paid during 1996.
This tenant's lease is scheduled to expire in 1997.
The parking garage is master-leased to Kenney System of
Sudbury St., Inc., a wholly owned subsidiary of Kinney
System, Inc., under a lease agreement which expires in
December 2003. The lease is a triple-net lease with two
five-year options at fair market value.
At the inception of the lease, the lessee granted a
$3,000,000 loan to the Partnership, which is payable in
monthly payments of $26,350, which include interest at
10 percent per annum. As of December 31, 1996 and 1995, the
balance outstanding was $2,594,826 and $2,631,260,
respectively. The lease provides for supplemental rental
payments to the Partnership of $26,350 per month to cover
loan principal and interest payments. These amounts are
recorded as supplemental rent. The lease also provides that
the unpaid principal of the loan may be forgiven if certain
conditions, as more fully described in the note agreement,
are met. Interest expense incurred on this loan for 1996,
1995, and 1994 was $271,579, $266,785, and $271,040,
respectively.
GCGA LIMITED PARTNERSHIP
(Debtor-in-Possession)
Notes to Financial Statements
6. Related-Party Transactions
The Property is managed by an affiliate of the Partnership.
During 1996, 1995 and 1994, the affiliate earned $351,238,
$353,425, and $282,607, respectively, in management fees.
In November 1994, the Partnership obtained an $80,000 short-
term loan from an affiliate. This non-interest bearing loan
was repaid in January 1995. In March 1995, the Partnership
obtained a $205,000 loan from another affiliate. This loan
accrued interest at a fixed rate of 9 percent. Principal and
accrued interest on this loan were repaid in July 1996.
7. Subsequent Event
On October 27, 1997, Bankruptcy Court authorized the
dismissal of the Partnership's and the Trust's (the Debtors)
bankruptcy cases upon implementation of a Settlement
Agreement among the Debtors, the Lenders and the limited
partners of GCA. Under the terms of the Settlement
Agreement the above parties agreed to restructure the
Partnership as follows:
GCA shall withdraw as the sole general partner of the
Partnership and Richard Rubin shall withdraw as the
sole general partner of GCA.
The Lenders shall become the new general partner of the
Partnership and GCA.
The Lenders shall receive 19 percent partnership
interest in the Partnership and a one percent
partnership interest in GCA (which shall receive the
remaining 81 percent interest in the Partnership).
GCGA LIMITED PARTNERSHIP
(Debtor-in-Possession)
Notes to Financial Statements
7. Subsequent Event
Also under the terms of the Settlement Agreement, the above
parties agreed to modify the second mortgage loan as
follows:
The Lenders shall provide the Trust with an additional
$3,000,000 for costs in connection with leasing space
in the Property. Any advances would be added to the
second mortgage balance, bear interest at the fixed
rate of 12 percent per annum and be repaid out of the
first funds available from the Propert's cash flows as
defined in the Settlement Agreement.
The interest rate on the existing second mortgage
balance will be changed to a fixed rate of 10 percent
per annum, but cash payments would be limited to the
available cash flow as defined in the Settlement
Agreement. Accrued but unpaid interest will be added
to principal on a monthly basis.
The Lender's interest in the cash flow of the Property
will be increased to 80 percent and the Partnership's
interest in the cash flow of the Property will be
reduced to 20 percent.
The Settlement Agreement also provides for the payment, in
full, of certain pre-petition and post-petition claims
against various debtors.
