SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
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 0-17689
CLOVER INCOME PROPERTIES II, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2811188
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
23 W. Park Avenue, Merchantville, NJ 08109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (609) 662-1116
- --------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interest.
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 statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
The registrant has no voting stock. The registrant's outstanding voting
securities consist of units of limited partnership interest which have no
readily ascertainable market value since there is no public trading market for
these securities on which to base a calculation of aggregate market value.
Documents incorporated by reference: The Prospectus of the registrant dated
September 18, 1987 filed with the Commission pursuant to Rule 424(b) under the
Securities Act of 1933 on September 30, 1987 is incorporated herein by reference
in Parts I, II and III of this Annual Report on Form 10-K, and Supplement No. 3
to the Prospectus dated September 12, 1988 and filed with the Commission as part
of Post-Effective Amendment No. 4 to the Registrant's Registration Statement on
September 13, 1988 is incorporated by reference in Part I of this Annual Report
on Form 10-K. Registrant's Current Report on Form 8-K filed with the Securities
and Exchange Commission on March 4, 1996 is incorporated by reference in Part I
of this Annual Report on Form 10-K.
PART I
Item 1. Business
The Registrant, Clover Income Properties II, L.P. (the "Partnership"),
is a limited partnership formed in June 1987 under the Revised Uniform Limited
Partnership Act of the State of Delaware to invest in existing income-producing
residential real estate properties. C.I.P. II Management Corp., a New Jersey
corporation which is a wholly-owned subsidiary of Clover Financial Corporation
("Clover"), a New Jersey Corporation, is the General Partner (the "General
Partner") of the Partnership. The Partnership sold $17,432,290 of units (the
"Units") of limited partnership interest in a public offering made pursuant to a
Prospectus (the "Prospectus") contained in the Partnership's Registration
Statement on Form S-11 under the Securities Act of 1933 (No. 33-15487). The
Partnership supplemented the Prospectus by supplements dated December 29, 1987
and June 9, 1988, and by supplement dated September 12, 1988 (the "Supplement")
which incorporated and superseded the two previous supplements.
On July 1, 1994, the Partnership sold its entire interest in the Knolls
at Newgate Apartments (the "Knolls"), a 144-unit garden apartment complex
located in Centreville, Fairfax County, Virginia, together with all related
improvements and intangible and tangible personal property, to United Dominion
Realty Trust, Inc. ("United Dominion") for a cash purchase price of $3,750,000.
United Dominion acquired the land, which was formerly subject to a long-term
ground lease, from the owner of the land for $1,550,000. Both United Dominion
and the owner of the land are unaffiliated with the General Partner, and the
sale of the Knolls and the land was negotiated on an arms-length basis. The
Partnership incurred expenses of $46,556 in connection with the sale, which were
paid from the proceeds of the sale. The Partnership also set aside additional
working capital reserves of $76,879 at the time of the sale. No expenses or
commissions were paid to the General Partner or its affiliates in connection
with the sale. The General Partner did not receive any proceeds of the sale.
The Partnership had acquired the Knolls in April 1989, generally upon
the terms discussed under "Real Property Investments - The Knolls at Newgate" at
pages 4-7 of the Supplement, which discussion is incorporated herein by
reference. The Partnership purchased the Knolls from an affiliate at a purchase
price of $6,864,301 (the price paid by the affiliate plus its net acquisition
and carrying costs), plus acquisition expenses of $14,615 and an acquisition fee
paid to the General Partner in the amount of $225,738.
The Partnership continues to own a 42.91% interest in The Willowbrook
Joint Venture, a joint venture among the Partnership, Clover Income Properties,
L.P. ("CIP") and Clover Income Properties III, L.P. ("CIP III"), both of which
are affiliates of the Partnership. The Willowbrook Joint Venture owns The
Willowbrook Apartments, a 299-unit mid-rise residential apartment complex
located in Baltimore, Maryland, which it acquired on December 17, 1987, at a
purchase price of $12,500,000.
The Partnership and CIP each acquired a 50% interest in The Willowbrook
Joint Venture in December 1987 for an investment by each of $6,450,000. In April
1992, the interest of each of the Partnership and CIP in The Willowbrook Joint
Venture was reduced to 42.91% as a result of a purchase by CIP III, an affiliate
of the Partnership, of a 14.18% interest for a cash purchase price of
$2,200,000. In the transaction, the Partnership and CIP each received a
distribution from The Willowbrook Joint Venture in the amount of $1,100,000. The
Partnership incurred $10,758 in expenses, including legal, appraisal,
accounting, title insurance and miscellaneous expenses, in connection with the
transaction, which amounts were paid from the distribution. Reference is made to
the Prospectus and the Supplement for a more detailed discussion of The
Willowbrook Joint Venture, The Willowbrook Apartments and the acquisition of The
Willowbrook Apartments, which discussions are incorporated herein by reference.
The Willowbrook Apartments are subject to risks, including competition
from other rental apartment and townhouse developments in the Baltimore area,
adverse local market conditions due to changes in economic conditions in the
Baltimore market, the Mid-Atlantic region or nationally, area characteristics,
interest rates, availability and cost of insurance coverage, changes in real
estate tax rates or laws, rising utilities costs and operating expenses, rent
control, governmental regulations, acts of God and other factors which are
beyond the control of the Partnership.
Services at Willowbrook Apartments are performed by on-site personnel
all of whom are employees of NPI-CL Management L.P. ("NPI"), an unaffiliated
third party. Such services are provided pursuant to a written agreement
providing for fees equal to 5% of the gross revenues from the Willowbrook
Apartments. NPI replaced Allstate Management Corp., an affiliate of the General
Partner, as the property manager effective February 21, 1995. At the same time,
other partnerships affiliated with the General Partner also engaged NPI as a
property manager at rates equivalent to the rates previously paid to the prior
property manager of each partnership.
In January 1996, NPI was acquired by an affiliate of Insignia Financial
Group, Inc. According to Commercial Property News and the National Multi-Housing
Council, Insignia, together with its affiliates is the largest property manager
in the United States. The General Partner does not believe this transaction will
have a significant impact on the Partnership.
On February 7, 1996, the Willowbrook Joint Venture, Berwind Property
Group, Inc. ("Berwind") and First Montgomery Properties, Ltd. ("First
Montgomery", and with Berwind, the "Buyers") executed an Agreement of Sale (as
amended, the "Sale Agreement") concerning the sale of Willowbrook Apartments
(the "Sale").
Pursuant to the terms of the Sale Agreement, the Buyers have agreed to
purchase The Willowbrook Apartments for a purchase price of $10,500,000 (less a
$315,000 credit for capital improvements). The completion of the Sale is
contingent upon the approval of the holders of more than 50% of the outstanding
Units and the holders of more than 50% of the outstanding units of limited
partnership interest in each of CIP and CIP III. In addition, for a period of 90
days from the date of the execution of the Sale Agreement, the Buyers have the
right to cancel and terminate the Sale Agreement for any reason whatsoever. The
Sale is described in a Form 8-K filed with the Commission pursuant to the
Securities Exchange Act of 1934 on March 4, 1996 and such description is
incorporated herein by reference.
Reference is made to Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations for a further discussion of the
operations of the Partnership's business.
Item 2. Properties
The Partnership owns a 42.91% interest in The Willowbrook Joint Venture
which owns The Willowbrook Apartments. Reference is made to Item 1. Business,
for a description of The Willowbrook Apartments and The Willowbrook Joint
Venture.
The Willowbrook Joint Venture continued with its operational program
put in place in 1993 which was established to maintain and enhance the overall
appearance and physical condition of The Willowbrook Apartments. As part of this
program, in 1995 one elevator was replaced at a cost of $22,857; air
conditioning equipment was purchased at a cost of $18,422 and other capital
improvements were made at a cost of $11,833. In addition, common area hallways
were recarpeted in 1995. In 1994 one roof was replaced, large areas of sidewalks
were also replaced, apartment interiors were fully repainted as needed as well
as updated with appliances and carpeting as needed and tiles were repaired and
replaced in the pool area for a combined cost of $133,141. Major projects
planned for 1996 at The Willowbrook Apartments at an estimated total cost of
$188,000 include the replacement of carpets and tiles, the resurfacing of the
parking lot and the painting of certain hallways. See Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations.
Funding for these projects is anticipated to be fully provided by the
Willowbrook Apartments' operating cash flow. It is not anticipated that the
completion of these projects will cause any increase in the realty taxes at The
Willowbrook Apartments.
The average occupancy rates at The Willowbrook Apartments for the five
years ended December 31, 1991, 1992, 1993, 1994 and 1995 were 94.1%, 90.1%,
88.7%, 93.3% and 93.9%, respectively, and the average effective annual rentals
per unit for those five years were $7,128, $7,350, $7,270, $7,218 and $7,180,
respectively. The realty tax rates for the Willowbrook Apartments for the
periods ended June 30, 1994, June 30, 1995 and June 30, 1996 were $61.60, $60.60
and $60.60, respectively, per $1,000 of assessed value, resulting in annual
realty taxes of $298,778, $267,996 and $267,996, respectively.
The General Partner believes that The Willowbrook Apartments are
adequately covered by insurance.
Item 3. Legal Proceedings
There are no material pending legal proceedings to which the
Partnership is a party or to which its property is subject.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for the Partnership's Units of Limited Partnership Interests
and Related Security Holder Matters
There is no public market for the Units, and it is not anticipated that
a public market for the Units will develop. Transferability of Units is subject
to substantial restrictions, including limitations contained in the
Partnership's Amended and Restated Agreement of Limited Partnership (the
"Partnership Agreement"), included as an Exhibit to the Prospectus and
incorporated herein by reference. As of March 28, 1996, 1,670 limited partners
held 17,500 Units.
Cash distributions, if any, to be distributed to the partners of the
Partnership are described at pages 23-24 in the Prospectus and such description
is incorporated herein by reference. Distributions for 1995 and 1994 were paid
quarterly in the annual amounts set forth under Item 6. Selected Financial Data.
The General Partner maintains a policy that the only cash distributions
made to the Partnership's limited partners are distributions of "net cash
receipts," as defined on page A-4 of the Prospectus, which definition is
incorporated herein by reference (other than distributions of proceeds from the
sale of Partnership property or the liquidation of the Partnership). The total
net cash receipts of the Partnership from inception through December 31, 1995
were $9,984,039 (including $3,703,444 from the sale of Knolls). Of that amount,
$9,743,450 has been distributed to the Partnership's limited partners through
December 31, 1995, and $55,676 was subsequently distributed in January 1996 with
respect to the quarter ended December 31, 1995. Except for the April 1992
distribution of $1,000,000 of the proceeds from the reduction of the Partner-
ship's interest in The Willowbrook Joint Venture and the July 15, 1994
distribution which included $3,446,975 of the proceeds from the sale of Knolls:
(i) all distributions to partners have been funded by current year net cash
receipts and undistributed net cash receipts from prior years; (ii) all
distributions have been made on a quarterly basis; and (iii) none of the
distributions represent the return to the partners of any part of their
original investments.
On or about July 15, 1994, the Partnership distributed $3,550,050 to
its Limited Partners, including $3,446,975 of net sales proceeds and $103,075 of
second quarter cash flow, representing a distribution of $202.86 for each Unit
of limited partnership interest owned. The Partnership also distributed $1,041
of second quarter cash flow to the General Partner; however, the General Partner
received no proceeds from the sale of the Knolls. See Item 1. Business.
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Total revenues $ 3,725 $ 488,796 $ 1,005,324 $ 859,290 $ 818,905
Share of joint
venture income $ 126,666 $ 133,322 $ 107,751 $ 226,577 $ 224,410
Net income (loss) $ 29,323 $(2,387,181) $ 143,160 $ 440,676 $ 165,032
Net income (loss)
per Unit $ 1.54 $ (135.24) $ 7.87 $ 15.13 $ 8.93
Cash distribution
per Unit $ 13.20 $ 218.39 $ 30.64 $ 91.14 $ 50.00
Total assets at
end of period $ 4,521,563 $ 4,726,258 $11,269,350 $11,658,064 $12,850,676
Long-term debt $ -- $ -- $ -- $ -- $ --
</TABLE>
The above selected financial data should be read in conjunction
with the financial statements for the Partnership appearing in Item 8.
Financial Statements and Supplementary Data and Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition, Liquidity and Capital Resources
The Partnership's only remaining interest in real estate is a 42.91%
interest in the Willowbrook Joint Venture, which owns the Willowbrook
Apartments. Consequently, the Partnership's primary remaining source of
operating cash flow will be distributions from the Willowbrook Joint Venture.
On December 31, 1995, the Partnership had cash on hand of $231,081 as
compared to $209,407 on December 31, 1994. These funds, along with future
operating cash flow, will be utilized for working capital needs and for
distributions to the Limited Partners.
The Partnership's net cash flow from operations was $254,942 for 1995,
$33,582 for 1994 and $572,158 for 1993. The increase in net cash flow from
operations for 1995 as compared to 1994, was primarily due to a decrease in cash
paid for expenses, partially offset by a decrease in cash received from rentals
and other income as a result of the sale of the Knolls on July 1, 1994. The
decrease in net cash flow from operations for 1994 as compared to 1993, was
primarily due to a decrease in cash received from rentals as a result of the
sale of the Knolls and an increase in cash paid for expenses.
The Willowbrook Joint Venture's net cash flow from operations was
$786,393 for 1995 as compared to $816,941 for 1994 and $700,012 for 1993. The
decrease in cash flow from operations for 1995, as compared to 1994, was due to
a decrease in cash received from rentals, interest and other income. The
increase in cash flow from operations in 1994, as compared to 1993, was
primarily due to an increase in cash received from rentals combined with an
increase in other income and a decrease in cash paid for operating expenses.
The General Partner believes that the Partnership's current and future
cash flows will be sufficient to meet the Partnership's liquidity requirements
over the next twelve months and the forseeable future absent any unanticipated
cost increases or adverse market conditions.
As of December 31, 1995, the Partnership had paid all outstanding
amounts owed to the General Partner and its affiliates. As of December 31, 1995,
The Willowbrook Joint Venture, however, owed a total of approximately $326,000
to Allstate Management Corp., an affiliate of the General Partner, for
reimbursable costs and accrued and unpaid property management fees. The payment
of such amounts will be made from The Willowbrook Joint Venture's cash flow when
available and from the proceeds of any sales or refinancing of the assets of The
Willowbrook Joint Venture.
During 1995, one elevator was replaced at a cost of $22,857; air
conditioning equipment was purchased at a cost of $18,422 and other capital
improvements were made at a cost of $11,833. These amounts are reflected in the
Statement of Cash Flows as cash paid for investing activities. In addition,
common area hallways were recarpeted in 1995. Major projects planned for 1996 at
The Willowbrook Apartments, at an estimated total cost of $188,000, include the
replacement of carpets and tiles, the resurfacing of the parking lot and the
painting of certain hallways. Funding for these projects will be provided by the
Willowbrook Joint Venture's operating cash flow. It is not anticipated that
these projects will cause any increase in the realty taxes at The Willowbrook
Apartments.
Results of Operations
Until the sale of the Knolls, the Partnership earned revenues primarily
from rental income from the Knolls. Revenues from the Willowbrook Apartments are
not included in Partnership revenues.
No rental income was recorded in 1995. Rental income was $443,084 in
1994 as compared to $952,004 in 1993. The decrease in 1995 from 1994 and in 1994
from 1993 was the result of the sale of the Knolls on July 1, 1994. No other
income was recorded in 1995, compared to other income of $37,771 in 1994 and
$47,695 in 1993. The decrease in 1995 as compared to 1994 is due to refunds of
state tax overpayments recorded in 1994 and the elimination of other income from
the Knolls. The decrease in 1994 as compared to 1993 is due to the sale of the
Knolls, partially offset by the state tax refund.
Operating expenses were $3,940 for 1995, $442,280 for 1994 and $691,076
for 1993. The decrease in 1995 and in 1994 was due to the sale of the Knolls.
Operating expenses were 99.8% of rental income in 1994 as compared to 72.6% in
1993. The increase from 1993 to 1994, as a percentage of rental income, is
primarily due to increases in snow and trash removal costs, higher utility costs
and expenses incurred to prepare the Knolls property for the sale.
The Partnership had income before depreciation and amortization was
$53,758 in 1995, compared to a loss of $2,252,618 in 1994 and income of $372,995
in 1993. The increase in income before depreciation and amortization in 1995 as
compared to 1994, was primarily due to the loss of approximately $2.4 million
incurred in 1994 on the sale of the Knolls, the elimination of operating
expenses in 1995 and the non-recurring cost of legal proceedings in 1994,
partially offset by the elimination of rental income, legal and accounting fees
incurred during 1995 in connection with efforts to sell the Willowbrook
Apartments and forgiveness of debt recorded in 1994. The decrease from income
before depreciation and amortization in 1993 to a loss in 1994 is primarily due
to the loss on the sale of the Knolls in 1994, a decrease in rental and other
income due to the sale of the Knolls and the cost of legal proceedings incurred
in 1994, partially offset by a decrease in operating expenses and by the
forgiveness of debt recorded in 1994.
Rental income for the Willowbrook Apartments, as operated by the
Willowbrook Joint Venture, was $2,013,638 in 1995 as compared to $2,013,518 in
1994 and $1,928,002 in 1993. Other income was $34,414 in 1995 as compared to
$48,416 in 1994 and $34,772 in 1993. Interest income was $1,051 in 1995 as
compared to $3,032 in 1994 and $5,135 in 1993.
Rental income for 1995 was virtually unchanged from 1994. A slight
improvement in occupancy rates was essentially offset by a slight decrease in
rental rates. The increase in rental income for 1994 as compared to 1993 was
primarily due to an increase in occupancy. The increase in other income from
1993 to 1994 and the decrease from 1994 to 1995 is primarily attributable to a
$17,000 refund of health benefit overpayments received in 1994. Interest income
decreased in 1994 and 1995 due to lower cash balances being maintained.
The average effective rental rates for the Willowbrook Apartments were
$7,180 in 1995, $7,218 in 1994 and $7,270 in 1993. The average occupancy was
93.9% in 1995, 93.3% in 1994 and 88.7% in 1993.
Operating expenses for the Willowbrook Apartments for 1995 were
$1,225,052 as compared to $1,219,161 for 1994 and $1,186,441 for 1993. The
slight increase in 1995 over 1994 was primarily due to increases in advertising
expenses and repairs and maintenance, substantially offset by a decrease in real
estate taxes resulting from a reduction in the property tax rates from the
period ended June 30, 1994 to the period ended June 30, 1995. The increase in
operating expenses for 1994 over 1993 was primarily due to increases in salaries
and wages, repairs and maintenance and utilities, partially offset by decreases
in advertising and marketing expenses and decreases in real estate taxes from
the period ended June 30, 1993 to the period ended June 30, 1994.
The Willowbrook Joint Venture's income before depreciation and
amortization was $810,034 for 1995 as compared to $822,943 for 1994 and $759,619
for 1993. The decrease in income before depreciation and amortization in 1995 as
compared to 1994 is due to a decrease in other income combined with increases in
operating expenses and professional services, partially offset by a decrease in
general and administrative expenses. The increase in income before depreciation
and amortization in 1994 as compared to 1993 is due to increases in rental and
other income, partially offset by increases in operating expenses.
Item 8. Financial Statements and Supplementary Data.
INDEX
Page
Report of Independent Certified Public F-1
Accountants for Clover Income Properties
II, L.P.
Clover Income Properties II, L.P. Balance F-2
Sheets as of December 31, 1995 and 1994
Clover Income Properties II, L.P. Statements F-3
of Operations for each of the three years in the
period ended December 31, 1995
Clover Income Properties II, L.P. Statements F-4
of Partners' Capital for each of the three
years in the period ended December 31, 1995
Clover Income Properties II, L.P. Statements F-5
of Cash Flows for each of the three years
in the period ended December 31, 1995
Clover Income Properties II, L.P. Summary F-7
of Significant Accounting Policies
Clover Income Properties II, L.P. Notes F-9
to Financial Statements
Report of Independent Certified Public F-18
Accountants for The Willowbrook Joint Venture
The Willowbrook Joint Venture Balance F-19
Sheets as of December 31, 1995 and 1994
The Willowbrook Joint Venture Statements of F-20
Income for each of the three years in the
period ended December 31, 1995
The Willowbrook Joint Venture Statements of F-21
Partners' Capital for each of the three years
in the period ended December 31, 1995
The Willowbrook Joint Venture Statements of F-22
Cash Flows for each of the three years in the
period ended December 31, 1995
The Willowbrook Joint Venture Summary F-24
of Significant Accounting Policies
The Willowbrook Joint Venture Notes F-25
to Financial Statements
Financial Statement Schedules
Clover Income Properties II, LP Schedule III F-29
Real estate and accumulated depreciation for
each of the three years in the period ended
December 31, 1995
The Willowbrook Joint Venture Schedule III F-30
Real estate and accumulated depreciation for
each of the three years in the period ended
December 31, 1995
[LETTERHEAD OF BDO SEIDMAN, LLP]
Report of Independent Certified Public Accountants
Clover Income Properties II, L.P.
Merchantville, New Jersey
We have audited the accompanying balance sheets of Clover Income Properties II,
L.P. (a Delaware limited partnership) as of December 31, 1995 and 1994, and the
related statements of operations, partners' capital and cash flows for each of
the three years in the period ended December 31, 1995. 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 Clover Income Properties II,
L.P. as of December 31, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
/s/ BDO Seidman, LLP
BDO SEIDMAN, LLP
January 30, 1996, except
for Note 3 which is
February 7, 1996
Clover Income Properties II, L.P.
Balance Sheets
- --------------------------------------------------------------------------------
December 31, 1995 1994
- --------------------------------------------------------------------------------
Assets
Cash $ 231,081 $ 209,407
State tax refund receivable - 6,772
Other deferred costs, less accumulated amortization
of $191,406 in 1995 and $166,971 in 1994 293,217 317,652
Investment in The Willowbrook
Joint Venture, at equity 3,997,265 4,192,427
- -------------------------------------------------------------------------------
$4,521,563 $4,726,258
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
December 31, 1995 1994
- -------------------------------------------------------------------------------
Liabilities and Partners' Capital
Liabilities
Accrued expenses $ 19,500 $ 18,250
Due to general partner and affiliates - 2,000
- --------------------------------------------------------------------------------
Total liabilities 19,500 20,250
- --------------------------------------------------------------------------------
Commitments and Contingencies
Partners' capital
General partner (deficiency) (24,181) (24,181)
Limited partners 4,526,244 4,730,189
- -------------------------------------------------------------------------------
Total partners' capital 4,502,063 4,706,008
- -------------------------------------------------------------------------------
$4,521,563 $4,726,258
- -------------------------------------------------------------------------------
See accompanying summary of significant accounting policies and notes to
financial statements.
Clover Income Properties II, L.P.
Statements of Operations
- --------------------------------------------------------------------------------
Year ended December 31, 1995 1994 1993
- --------------------------------------------------------------------------------
Revenues
Rental income $ - $ 443,084 $ 952,004
Other income - 37,771 47,695
Interest income 3,725 7,941 5,625
- -------------------------------------------------------------------------------
Total revenues 3,725 488,796 1,005,324
- -------------------------------------------------------------------------------
Expenses
Operating expenses (including
affiliate transactions of $24,005 in
1994 and $77,274 in 1993) 3,940 442,208 691,076
Depreciation and amortization 24,435 134,563 229,835
Costs of legal proceedings - 98,065 -
Professional services 63,643 25,819 36,675
General and administrative 9,050 10,590 12,329
- -------------------------------------------------------------------------------
Total expenses 101,068 711,245 969,915
- -------------------------------------------------------------------------------
Operating (loss) income (97,343) (222,449) 35,409
Share of income from The Willowbrook
Joint Venture 126,666 133,322 107,751
- -------------------------------------------------------------------------------
Income (loss) before (loss) on sale
of Knolls at Newgate 29,323 (89,127) 143,160
(Loss) on sale of Knolls at Newgate - (2,418,097) -
- -------------------------------------------------------------------------------
Income (loss) before extraordinary item 29,323 (2,507,224) 143,160
Extraordinary item, forgiveness of debt - 120,043 -
- -------------------------------------------------------------------------------
Net income (loss) $ 29,323 $(2,387,181) $143,160
- -------------------------------------------------------------------------------
Income (loss) per limited partnership unit
before extraordinary item $ 1.54 $ (142.05) $ 7.87
Extraordinary item per limited partnership
unit - 6.81 -
- -------------------------------------------------------------------------------
Net income (loss) per limited partnership
unit $ 1.54 $ (135.24) $ 7.87
- -------------------------------------------------------------------------------
See accompanying summary of significant accounting policies and notes to
financial statements.
Clover Income Properties II, L.P.
Statements of Partners' Capital
- --------------------------------------------------------------------------------
General Limited
Partner Partners Total
- -------------------------------------------------------------------------------
Balance, December 31, 1992 $ - $11,317,255 $11,317,255
Partners' distributions, $30.64
per limited partnership unit (5,415) (536,200) (541,615)
Net income 5,415 137,745 143,160
- -------------------------------------------------------------------------------
Balance, December 31, 1993 - 10,918,800 10,918,800
Partners' distributions, $218.39
per limited partnership unit (3,786) (3,821,825) (3,825,611)
Net (loss) (20,395) (2,366,786) (2,387,181)
- -------------------------------------------------------------------------------
Balance, December 31, 1994 (24,181) 4,730,189 4,706,008
Partners' distributions, $13.20
per limited partnership unit (2,334) (230,934) (233,268)
Net income 2,334 26,989 29,323
- -------------------------------------------------------------------------------
Balance, December 31, 1995 $(24,181) 4,526,244 $ 4,502,063
- -------------------------------------------------------------------------------
See accompanying summary of significant accounting policies and notes to
financial statements.
Clover Income Properties II, L.P.
Statements of Cash Flows
- --------------------------------------------------------------------------------
Year ended December 31, 1995 1994 1993
- -------------------------------------------------------------------------------
Operating activities
Cash received from rentals $ - $ 438,813 $ 941,791
Other income received - 30,999 47,695
Interest income received 3,725 7,941 5,625
Distributions received from The
Willowbrook Joint Venture 321,828 321,828 308,405
Cash paid for expenses (70,611) (765,999) (731,358)
- -------------------------------------------------------------------------------
Net cash provided by operating activities 254,942 33,582 572,158
- -------------------------------------------------------------------------------
Investing activities
Payments made for property - - (34,557)
Investment in The Willowbrook Joint Venture - (4,116) (30,836)
Proceeds from the sale of Knolls at Newgate - 50,000
Settlement costs paid from sale of
Knolls at Newgate - (46,556) -
- -------------------------------------------------------------------------------
Net cash provided (used) by investing
activities - 3,699,328 (65,393)
- -------------------------------------------------------------------------------
Financing activities
Partners' distributions (233,268) (3,825,611) (541,615)
- -------------------------------------------------------------------------------
Net increase (decrease) in cash 21,674 (92,701) (34,850)
Cash, at beginning of year 209,407 302,108 336,958
- -------------------------------------------------------------------------------
Cash, at end of year $ 231,081 $ 209,407 $ 302,108
- -------------------------------------------------------------------------------
See accompanying summary of significant accounting policies and notes to
financial statements.
Clover Income Properties II, L.P.
Statements of Cash Flows
- --------------------------------------------------------------------------------
Year ended December 31, 1995 1994 1993
- -------------------------------------------------------------------------------
Reconciliation of net income (loss) to net
cash provided by operating activities
Net income (loss) $ 29,323 $(2,387,181) $143,160
- -------------------------------------------------------------------------------
Adjustments
Depreciation and amortization 24,435 134,563 229,835
Share of income from The Willowbrook
Joint Venture (126,666) (133,322) (107,751)
Forgiveness of debt - (120,043) -
Loss on sale of Knolls at Newgate - 2,418,097 -
Distributions received from The
Willowbrook Joint Venture 321,828 321,828 308,405
Decrease (increase) in rents receivable - 13,808 (10,895)
Decrease (increase) in state tax refund
receivable 6,772 (6,772) -
Decrease (increase) in prepaid expenses - 2,861 (337)
Increase (decrease) in accounts payable 1,250 18,152 (1,301)
(Decrease) increase in accrued expenses - (104,755) 7,075
(Decrease) in prepaid rents - (2,275) (6,023)
(Decrease) increase in tenants' security
deposits - (15,804) 6,705
(Decrease) increase in due to general
partner and affiliates (2,000) (105,575) 3,285
- -------------------------------------------------------------------------------
Total adjustments 225,619 2,420,763 428,998
- -------------------------------------------------------------------------------
Cash provided by operating activities $ 254,942 $ 33,582 $ 572,158
- -------------------------------------------------------------------------------
See accompanying summary of significant accounting policies and notes to
financial statements.
Clover Income Properties II, L.P.
Summary of Significant Accounting Policies
- --------------------------------------------------------------------------------
Rental Revenue
Rental revenue is recognized when earned and represents potential billings, net
of concessions and vacancies.
Capitalization and Amortization of Certain Costs
Deferred costs representing acquisition fees paid to an affiliate are being
amortized over a two hundred and forty month period using the straight-line
method.
Income Taxes
The Partnership has not provided for federal income taxes, since all income and
losses are to be allocated to the partners for inclusion in their respective tax
returns. The Partnership files a state composite tax return on behalf of its
non-resident partners and remits any taxes due. The tax returns, the status of
the Partnership as such for tax purposes and the amount of allocable Partnership
income or loss are subject to examination by the Internal Revenue Service. If
such examinations result in changes with respect to the Partnership status or
in changes to allocable Partnership income or loss, the tax liability of the
partners could be changed accordingly.
Net Income (Loss) and Distributions Per Partnership Unit
Net income (loss) and distributions per limited partnership unit are computed
from the date of the closing of the Minimum Offering (February 19, 1988)
based upon net income (loss) and distributions allocated to the limited
partners and the weighted average number of limited partnership units
outstanding. Per unit information has been computed based on 17,500 weighted
average limited partnership units.
Investment Property and Depreciation
The investment property was recorded at cost.
Depreciation on the property was provided on a straight-line basis over the
estimated useful lives of the various assets as follows:
Apartment buildings 40 years
Furniture and fixtures 12 years
Clover Income Properties II, L.P.
Summary of Significant Accounting Policies
- --------------------------------------------------------------------------------
Maintenance and repair expenses were charged to expense as incurred. Significant
betterments and improvements were capitalized and depreciated over their
respective lives.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assump- tions
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.
Clover Income Properties II, L.P.
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Organization and Basis of Accounting
Clover Income Properties II, L.P. ("CIP II") is a limited partnership which was
formed on June 25, 1987, in the State of Delaware for the purpose of acquiring,
operating and holding residential real estate for investment purposes. Leases
primarily have a term of one year or less. The general partner of the
Partnership is C.I.P. II Management Corporation, a wholly-owned subsidiary of
Clover Financial Corporation.
CIP II's records are maintained on the accrual basis of accounting as adjusted
for Federal income tax reporting purposes. The accompanying financial statements
have been prepared from such records after making appropriate adjustments, where
applicable, to reflect the Partnership's accounts on the accrual basis of
accounting according to generally accepted accounting principles (GAAP).
Depreciation of the property owned by The Willowbrook Joint Venture for
financial reporting purposes is provided using the straight-line method over the
estimated useful lives of the assets, while alternative methods are used for
Federal income tax purposes. The net effect of these items is summarized as
follows:
December 31, 1995 1994
- -------------------------------------------------------------------------------
GAAP Tax Basis GAAP Tax Basis
- -------------------------------------------------------------------------------
Total assets $4,521,563 $5,061,193 $4,726,258 $5,198,628
- -------------------------------------------------------------------------------
Partners' capital $4,502,063 $5,041,693 $4,706,008 $5,178,377
- -------------------------------------------------------------------------------
Clover Income Properties II, L.P.
Notes to Financial Statements
- --------------------------------------------------------------------------------
Reconciliation of income (loss) per financial statement to income (loss) per
Federal income tax return is as follows:
Year ended December 31, 1995 1994 1993
- -------------------------------------------------------------------------------
Net income (loss) per
financial statement $29,323 $(2,387,181) $143,160
Reconciling item
Additional income from The
Willowbrook Joint Venture
resulting from different
depreciation methods 67,259 67,082 67,082
- -------------------------------------------------------------------------------
Net income (loss) per
federal income tax return $96,582 $(2,320,099) $210,242
- -------------------------------------------------------------------------------
2. Sale of Investment Property
On July 1, 1994, CIP II sold its entire interest in the Knolls at Newgate
Apartments, a 144 unit garden-style residential apartment complex located in
Centreville, Virginia, together with all related improvements and intangible and
tangible property to United Dominion Realty Trust (the Purchaser), an
unaffiliated party, for a cash purchase price of $3,750,000. The Purchaser also
acquired the land, which was formerly subject to a long-term ground lease, from
the owner of the land (also an unaffiliated party) for $1,550,000. The loss on
the sale of the investment property of $2,418,097, the same for tax purposes,
has been recorded in income for the year ended December 31, 1994.
3. Investment in The Willowbrook Joint Venture
On December 17, 1987, CIP II acquired a 50% interest in The Willowbrook Joint
Venture for $6,450,000. The Willowbrook Joint Venture owns the Willowbrook
Apartments, a 299-unit mid-rise apartment complex located in Baltimore,
Maryland.
Clover Income Properties II, L.P.
Notes to Financial Statements
- --------------------------------------------------------------------------------
On April 8, 1992, CIP II and Clover Income Properties, L.P., an affiliated
partnership, consummated an agreement which was effective April 1, 1992 with
Clover Income Properties III, L.P. (CIP III), an affiliated partnership,
pursuant to which CIP III acquired an interest in The Willowbrook Joint Venture
for $2,200,000 in cash. The Partnership reduced its interest from 50% to 42.91%
and received a distribution of $1,100,000 from the Joint Venture, based on an
independently appraised value of the Willowbrook Apartments of $15,650,000 as of
February 11, 1992.
On February 7, 1996, the Willowbrook Joint Venture entered into an agreement of
sale with Berwind Properties Group, Inc. and First Montgomery Properties, Ltd.
Under the terms of the agreement, the Joint Venture will sell the Willowbrook
Apartments (including land), all related improvements and tangible and
intangible property for $10,500,000 less a $315,000 credit for capital
improvements.
The sale is contingent upon, among other things, the approval by a majority of
the limited partners of CIP, CIP II and CIP III. If the sale is approved by a
majority of the limited partners and all the other conditions to the sale are
met, the sale will be completed.
Concurrent with the sale of The Willowbrook Apartments, all assets of the Joint
Venture will be liquidated. The net proceeds will be distributed to its owners
(CIP, CIP I and CIP II) and the Joint Venture dissolved.
Upon receipt of distribution from the Joint Venture, the limited partnership
will then liquidate the net assets, distribute the proceeds and be dissolved.
Clover Income Properties II, L.P.
Notes to Financial Statements
- -------------------------------------------------------------------------------
A summary of the Joint Venture's financial statements is as follows:
December 31, 1995 1994
- -------------------------------------------------------------------------------
Other assets $ 322,078 $ 331,731
Investment property held for sale,
net of accumulated depreciation 9,396,753 9,858,484
- -------------------------------------------------------------------------------
$ 9,718,831 $10,190,215
- -------------------------------------------------------------------------------
December 31, 1995 1994
- -------------------------------------------------------------------------------
Liabilities (including
$326,293 in 1995 and $326,240
in 1994 to affiliates) $ 403,359 $ 419,934
Capital
Clover Income Properties, L.P. 3,671,476 3,866,638
Clover Income Properties II, L.P. 3,671,476 3,866,638
Clover Income Properties III, L.P. 1,972,520 2,037,005
- -------------------------------------------------------------------------------
$9,718,831 $10,190,215
- -------------------------------------------------------------------------------
Year ended December 31, 1995 1994 1993
- -------------------------------------------------------------------------------
Revenues $2,049,103 $2,064,966 $1,967,909
Expenses 1,753,912 1,754,265 1,716,800
- -------------------------------------------------------------------------------
Net income $ 295,191 $ 310,701 $ 251,109
- -------------------------------------------------------------------------------
Clover Income Properties II, L.P.
Notes to Financial Statements
- -------------------------------------------------------------------------------
Depreciation on the Willowbrook Property has been provided on a straight-line
basis over the estimated useful lives of the various assets as follows:
Apartment buildings 25 years
Furniture and fixtures 12 years
The investment in The Willowbrook Joint Venture at December 31, 1995 and 1994,
at equity of $3,997,265 and $4,192,427, respectively, has been adjusted by the
Partnership's gain of $325,788 upon the reduction of 14.18% of its interest in
the Joint Venture before the deduction of $10,758 in expenses relating to the
transaction and write-off of 14.18% of the unamortized deferred costs of
$63,587 related to the initial acquisition of the Joint Venture interest by the
Partnership in 1992. Therefore, the amount of the investment, at equity,
reflected here does not correspond to the Partnership's capital account balance
in the Joint Venture.
The Joint Venture made distributions to the Partnership totaling $321,828,
$321,828 and $308,405 during 1995, 1994 and 1993, respectively. These
distributions represent 42.91% of the total distributions made during 1995, 1994
and 1993.
4. Partnership Agreement
Pursuant to the terms of the Partnership Agreement, the net profits or losses
for 1987 were allocated 1% to the initial limited partner and 99% to the general
partner. After the sale of the Minimum Offering and the admission of additional
limited partners to the Partnership, all items of income, gain and loss and
distributions of cash are allocated as follows:
Clover Income Properties II, L.P.
Notes to Financial Statements
- --------------------------------------------------------------------------------
Net income of the Partnership from operations will be allocated as follows:
(a) first, if the Partnership made net cash receipts distributions with
respect to such period, an amount of net income up to the amount of
such net cash receipts distributions shall be allocated among the
partners in the same proportions as such net cash receipts
distributions were distributed provided, however, that if the total
amount of net income is less than the amount of net cash receipts
distributions, an amount of net income equal to the amount of net cash
receipts distributions to the general partner shall be allocated to
the general partner and the balance shall be allocated to the limited
partners,
(b) second, to those partners having deficit balances in their capital
accounts in proportion to and to the extent of such deficits,
(c) third, to those partners, if any, who have received cumulative net
cash receipts distributions in the current and prior periods in an
amount in excess of the cumulative amount of net income allocated to
such partners in proportion to and to the extent of any such excess
and, then,
(d) fourth, the balance, if any, shall be allocated 1% to the general
partner and 99% to the limited partners in proportion to their
relative ownership of units.
Net income or gain realized by the Partnership on a sale shall be allocated in
the following order of priority:
(a) first, to the partners with negative capital account balances, until
each such partner has a zero capital account balance,
(b) second, to the limited partners until the capital account balance of
each limited partner shall equal his adjusted capital contribution,
(c) third, to the limited partners until the capital account of each
limited partner shall equal his adjusted capital contribution and an
amount
Clover Income Properties II, L.P.
Notes to Financial Statements
- --------------------------------------------------------------------------------
equal to the priority return (10%) distributed or to be
distributed to each limited partner in proportion to each limited
partner's relative share of such priority return,
(d) fourth, to the limited partners whose subscriptions were received by
the Partnership prior to June 1, 1988, until the capital account of
each limited partner shall equal the amount described in (c) above and
an amount equal to the additional return (up to 2%) distributed or to
be distributed to each limited partner in proportion to each such
limited partner's relative share of such additional returns and, then,
any remaining amounts of net income or gain shall be allocated 15% to
the general partner and 85% to the limited partners in proportion to
their relative ownership of units.
Net losses of the Partnership shall be allocated 1% to the general partner and
99% to the limited partners.
Net cash receipts shall, to the extent determined by the general partner, be
distributed to the partners in the following manner:
(a) first, 1% to the general partner and 99% to the limited partners until
the limited partners receive a 7% annual noncompounded cumulative
return, and
(b) second, 10% to the general partner and 90% to the limited partners of
any remaining net cash receipts.
Sale proceeds shall be distributed in the following manner:
(a) First, an amount up to the aggregate amount of the adjusted capital
contributions of all the limited partners immediately prior to such
distribution shall be distributed to the limited partners, in
proportion to the relative amounts of their adjusted capital
contributions,
Clover Income Properties II, L.P.
Notes to Financial Statements
- --------------------------------------------------------------------------------
(b) second, an amount up to the aggregate amount of the priority returns,
if any, payable to the limited partners shall be distributed to the
limited partners, in proportion to the relative amounts of their
priority returns,
(c) third, an amount up to the aggregate amount of the additional returns,
if any, payable to the limited partners whose subscriptions for units
were received by the Partnership prior to June 1, 1988, shall be
distributed to such limited partners in proportion to the relative
amounts of their additional returns, and then,
(d) any remaining amounts shall be distributed 15% to the general partner
and 85% to the limited partners, with all the amounts distributed to
the limited partners as a group being divided among the limited
partners in accordance with their relative ownership of units.
5. Transactions with Affiliates
The general partner and its affiliates are entitled to reimbursement for
administrative services rendered to the Partnership, direct expenses of the
Partnership, operations and goods and services used by and for the Partner-
ship.
The Knolls, which was sold July 1, 1994, was managed by an affiliate of the
general partner pursuant to a management agreement which provided for an annual
fee not to exceed 5% of the gross rentals of the property.
Transactions with affiliates are summarized below:
Management Reimbursable
Fees Costs Total
- --------------------------------------------------------------------------------
Amount payable at
January 1, 1993 $ 120,560 $ 103,773 $ 224,333
Incurred during 1993 49,089 40,514 89,603
Payments during 1993 (46,260) (40,058) (86,318)
- -------------------------------------------------------------------------------
Amount payable at
December 31, 1993 123,389 104,229 227,618
Clover Income Properties II, L.P.
Notes to Financial Statements
- -------------------------------------------------------------------------------
Management Reimbursable
Fees Costs Total
- -------------------------------------------------------------------------------
Incurred during 1994 $ 23,903 $ 10,692 $ 34,595
Payments during 1994 (132,021) (8,149) (140,170)
Amounts forgiven in 1994 (15,271) (104,772) (120,043)
- -------------------------------------------------------------------------------
Amount payable at
December 31, 1994 - 2,000 2,000
Incurred during 1995 - 9,050 9,050
Payments during 1995 - (11,050) (11,050)
- -------------------------------------------------------------------------------
Amount payable at
December 31, 1995 $ - $ - $ -
- -------------------------------------------------------------------------------
During the year ended December 31, 1994, amounts due to affiliates were forgiven
(see Note 7).
6. Commitments and Contingencies
The Partnership was a defendant in a lawsuit filed by one of its former
employees for alleged retaliatory termination of employment and sexual
harassment. In the first quarter of 1994, the lawsuit was resolved requiring the
Partnership to pay for all attorney fees totaling $98,065.
7. Extraordinary Item
During 1994, amounts due to affiliates for management fees and reimbursable
costs of $15,271 and $104,772, respectively, were forgiven.
8. Subsequent Distributions
In January 1996, the Partnership made cash distributions of $55,125 to the
limited partners and $551 to the general partner.
[LETTERHEAD OF BDO SEIDMAN, LLP]
Report of Independent Certified Public Accountants
The Willowbrook Joint Venture
Merchantville, New Jersey
We have audited the accompanying balance sheets of The Willowbrook Joint Venture
as of December 31, 1995 and 1994, and the related statements of income,
partners' capital, and cash flows for each of the three years in the period
ended December 31, 1995. 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 The Willowbrook Joint Venture
as of December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
/s/ BDO Seidman, LLP
BDO SEIDMAN, LLP
January 30, 1996, except
for Note 2, which is
February 7, 1996
The Willowbrook Joint Venture
Balance Sheets
- --------------------------------------------------------------------------------
December 31, 1995 1994
- -------------------------------------------------------------------------------
Assets
Cash (including $34,868 in 1995 and $46,394 in 1994 of
cash held for security deposits) $ 176,362 $ 193,081
Rents receivable 7,602 868
Prepaid expenses 137,014 136,682
Utility deposit 1,100 1,100
Investment property held for sale, net of
accumulated depreciation 9,396,753 9,858,484
- -------------------------------------------------------------------------------
$9,718,831 $10,190,215
- -------------------------------------------------------------------------------
December 31, 1995 1994
- -------------------------------------------------------------------------------
Liabilities and Partners' Capital
Liabilities
Accounts payable $ - $ 17,447
Accrued expenses 36,956 26,563
Tenants' security deposits 32,222 40,748
Prepaid rents 7,888 8,936
Due to affiliates 326,293 326,240
- -------------------------------------------------------------------------------
Total liabilities 403,359 419,934
- -------------------------------------------------------------------------------
Commitment
Partners' capital
Clover Income Properties, L.P. 3,671,476 3,866,638
Clover Income Properties II, L.P. 3,671,476 3,866,638
Clover Income Properties III, L.P. 1,972,520 2,037,005
- -------------------------------------------------------------------------------
Total partners' capital 9,315,472 9,770,281
- -------------------------------------------------------------------------------
$9,718,831 $10,190,215
- -------------------------------------------------------------------------------
See accompanying summary of significant accounting policies and notes to
financial statements.
The Willowbrook Joint Venture
Statements of Income
- -------------------------------------------------------------------------------
Year ended December 31, 1995 1994 1993
- -------------------------------------------------------------------------------
Revenues
Rental income $2,013,638 $2,013,518 $1,928,002
Other income 34,414 48,416 34,772
Interest income 1,051 3,032 5,135
- -------------------------------------------------------------------------------
Total revenues 2,049,103 2,064,966 1,967,909
- -------------------------------------------------------------------------------
Expenses
Depreciation and amortization 514,843 512,242 508,510
Operating expenses (including affiliate
transactions of $17,905 in 1995,
$112,445 in 1994 and $115,451 in 1993) 1,225,052 1,219,161 1,186,441
Professional services 14,017 11,173 12,068
General and administrative, affiliates - 11,689 9,781
- -------------------------------------------------------------------------------
Total expenses 1,753,912 1,754,265 1,716,800
- -------------------------------------------------------------------------------
Net income $ 295,191 $ 310,701 $ 251,109
- -------------------------------------------------------------------------------
See accompanying summary of significant accounting policies and notes to
financial statements.
The Willowbrook Joint Venture
Statements of Partners' Capital
- -------------------------------------------------------------------------------
Clover Clover Clover
Income Income Income
Properties, Properties Properties
L.P. II, L.P. III, L.P. Total
- -------------------------------------------------------------------------------
Balance, January 1, 1993 $4,220,846 $4,220,846 $2,154,052 $10,595,744
Capital contributions 30,836 30,836 10,197 71,869
Net income 107,751 107,751 35,607 251,109
Partners' distributions (308,405) (308,405) (101,924) (718,734)
- -------------------------------------------------------------------------------
Balance, December 31, 1993 4,051,028 4,051,028 2,097,932 10,199,988
Capital contributions 4,116 4,116 1,360 9,592
Net income 133,322 133,322 44,057 310,701
Partners' distributions (321,828) (321,828) (106,344) (750,000)
- -------------------------------------------------------------------------------
Balance, December 31, 1994 3,866,638 3,866,638 2,037,005 $9,770,281
Capital contributions - - - -
Net income 126,666 126,666 41,859 295,191
Partners' distributions (321,828) (321,828) (106,344) (750,000)
- -------------------------------------------------------------------------------
Balance, December 31, 1995 $3,671,476 $3,671,476 $1,972,520 $9,315,472
- -------------------------------------------------------------------------------
See accompanying summary of significant accounting policies and notes to
financial statements.
The Willowbrook Joint Venture
Statements of Cash Flows
- --------------------------------------------------------------------------------
Year ended December 31, 1995 1994 1993
- -------------------------------------------------------------------------------
Operating activities
Cash received from rentals $ 2,005,856 $ 2,020,702 $ 1,926,352
Interest income received 1,051 3,032 5,135
Other income received 34,414 48,416 34,772
Cash paid for operating expenses (1,254,928) (1,255,209) (1,266,247)
- -------------------------------------------------------------------------------
Net cash provided by operating activities 786,393 816,941 700,012
- -------------------------------------------------------------------------------
Investing activities
Cash paid for investment property (53,112) (62,265) (94,426)
- -------------------------------------------------------------------------------
Financing activities
Partners' distributions (750,000) (750,000) (718,734)
Partners' contributions - 9,592 71,869
- -------------------------------------------------------------------------------
Net cash (used) in financing activities (750,000) (740,408) (646,865)
- -------------------------------------------------------------------------------
Net (decrease) increase in cash (16,719) 14,268 (41,279)
Cash, at beginning of year 193,081 178,813 220,092
- -------------------------------------------------------------------------------
Cash, at end of year $ 176,362 $ 193,081 $ 178,813
- -------------------------------------------------------------------------------
See accompanying summary of significant accounting policies and notes to
financial statements.
The Willowbrook Joint Venture
Statements of Cash Flows
- -------------------------------------------------------------------------------
Year ended December 31, 1995 1994 1993
- -------------------------------------------------------------------------------
Reconciliation of net income to net cash
provided by operating activities
Net income $295,191 $310,701 $251,109
- -------------------------------------------------------------------------------
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 514,843 512,242 508,510
(Increase) decrease in rents receivable (6,734) 2,428 (1,929)
(Increase) decrease in prepaid expenses (332) 15,508 320
(Decrease) increase in accounts payable (17,447) (11,091) 9,308
Increase (decrease) in accrued expenses 10,393 526 (2,146)
(Decrease) in tenants' security deposits (8,526) (5,816) (15,874)
(Decrease) increase in prepaid rents (1,048) 4,756 279
Increase (decrease) in due to affiliates 53 (12,313) (49,565)
- -------------------------------------------------------------------------------
Total adjustments 491,202 448,903 503,368
- -------------------------------------------------------------------------------
Net cash provided by operating activities $786,393 $816,941 $700,012
- -------------------------------------------------------------------------------
See accompanying summary of significant accounting policies and notes to
financial statements.
The Willowbrook Joint Venture
Summary of Significant Accounting Policies
- --------------------------------------------------------------------------------
Income Taxes
The Joint Venture has not provided for income taxes, since all income and losses
are to be allocated to the partners for inclusion in their respective tax
returns. The tax returns, the status of the Joint Venture as such for tax
purposes and the amount of allocable Joint Venture income or loss are subject to
examination by the Internal Revenue Service. If such examinations result in
changes with respect to the joint venture status or in changes to allocable
Joint Venture income or loss, the tax liability of the partners could be changed
accordingly.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assump- tions
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.
The Willowbrook Joint Venture
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Organization and Basis of Accounting
The Willowbrook Joint Venture ("Joint Venture") was formed on December 17, 1987,
by Clover Income Properties, L.P. (CIP) and Clover Income Properties II, L.P.
(CIP II) for the purpose of acquiring, operating and holding the Willowbrook
Apartments. Leases primarily have a term of one year or less. The life of the
joint venture was initially set at 20 years.
On April 8, 1992, Clover Income Properties III, L.P. ("CIP III") acquired a
14.18% interest in the Joint Venture for $2,200,000 in cash, effective April 1,
1992, from CIP and CIP II, which reduced their respective ownership interest in
the Joint Venture from 50% to 42.91% each. The life of the Joint Venture was
extended for an additional 8 years, at that time.
The Joint Venture's records are maintained on the accrual basis of accounting as
adjusted for Federal income tax reporting purposes. The accompanying financial
statements have been prepared from such records after making appropriate
adjustments, where applicable, to reflect the Joint Venture's accounts on the
accrual basis of accounting according to generally accepted accounting
principles (GAAP). Depreciation for financial reporting purposes is provided
using the straight-line method over the estimated useful lives of the assets,
while alternative methods are used for Federal income tax purposes. The net
effect of this difference is summarized as follows:
December 31, 1995 1994
- -------------------------------------------------------------------------------
GAAP Tax Basis GAAP Tax Basis
- -------------------------------------------------------------------------------
Total assets $9,718,831 $11,481,249 $10,190,215 $11,809,659
- -------------------------------------------------------------------------------
Partners' capital $9,315,472 $11,077,891 $ 9,770,281 $11,389,717
- -------------------------------------------------------------------------------
The Willowbrook Joint Venture
Notes to Financial Statements
- --------------------------------------------------------------------------------
Reconciliation of income per financial statement to income per Federal income
tax return is as follows:
Year ended December 31, 1995 1994 1993
- --------------------------------------------------------------------------------
Net income per financial
statements $295,191 $310,701 $251,109
Reconciling item Depreciation 142,983 142,571 142,571
- --------------------------------------------------------------------------------
Tax basis income $438,174 $453,272 $393,680
- --------------------------------------------------------------------------------
2. Investment Property Held for Sale
On December 17, 1987, the Joint Venture acquired the Willowbrook Apartments (the
Property), a mid-rise apartment complex comprising 299 apartment units contained
in eight five-story buildings. The complex is located in Baltimore, Maryland.
On February 7, 1996, the Joint Venture entered into an agreement of sale with
Berwind Properties Group, Inc. and First Montgomery Properties, Ltd. Under the
terms of the agreement, the Joint Venture will sell The Willowbrook Apartments
(including land), all related improvements and tangible and intangible property
for $10,500,000 less a $315,000 credit for capital improvements.
The sale is contingent upon, among other things, the sale of all of the
properties owned by affiliates of Clover Financial Corporation which are also
under agreement of sale with Berwind and First Montgomery. Clover Financial
Corporation is the parent company of the general partner of CIP, CIP II and CIP
III. The sale must be approved by a majority of the limited partners of CIP, CIP
II and CIP III. Upon sale of The Willowbrook Apartments, all assets of the Joint
Venture will be liquidated. The net proceeds will then be distributed to its
owners (CIP, CIP II and CIP III) and the Joint Venture dissolved.
The Willowbrook Joint Venture
Notes to Financial Statements
- --------------------------------------------------------------------------------
The following is a summary of investment property held for sale:
December 31, 1995 1994
- -------------------------------------------------------------------------------
Land $ 1,421,205 $ 1,421,205
Apartment buildings 11,006,247 10,980,891
Furniture and fixtures 1,004,545 976,789
- -------------------------------------------------------------------------------
13,431,997 13,378,885
Less accumulated depreciation (4,035,244) (3,520,401)
- -------------------------------------------------------------------------------
$ 9,396,753 $ 9,858,484
- -------------------------------------------------------------------------------
Depreciation on the property has been provided on a straight-line basis over the
estimated useful lives of the various assets as follows:
Apartment buildings 25 years
Furniture and fixtures 12 years
Maintenance and repair expenses are charged to expense as incurred. Significant
betterments and improvements are capitalized and depreciated over their useful
lives.
3. Transactions with Affiliates
Effective February 21, 1995, NPI-CL Management, L.P. ("NPI") which is
unaffiliated with the Partners, replaced an affiliate of the Partners as
Property Manager. Until that time, the property was managed by the affiliate
pursuant to a management agreement which provided for an annual fee not to
exceed 5% of the gross revenues from the Property.
The general partner of CIP, CIP II, and CIP III and their affiliates are
entitled to reimbursement for administrative services rendered to the Joint
Venture, direct expenses of operations and goods and services used by and for
the Joint Venture.
The Willowbrook Joint Venture
Notes to Financial Statements
- --------------------------------------------------------------------------------
Transactions with affiliates are summarized below:
Management Reimbursable
Fees Costs Total
- --------------------------------------------------------------------------------
Amount payable at
January 1, 1993 $ 334,953 $ 53,165 $ 388,118
Incurred during 1993 98,313 26,919 125,232
Payments during 1993 (114,616) (60,181) (174,797)
- --------------------------------------------------------------------------------
Amount payable at
December 31, 1993 318,650 19,903 338,553
Incurred during 1994 102,734 21,400 124,134
Payments during 1994 (102,252) (34,195) (136,447)
- -------------------------------------------------------------------------------
Amount payable at
December 31, 1994 319,132 7,108 326,240
Incurred during 1995 12,750 5,155 17,905
Payments during 1995 (12,750) (5,102) (17,852)
- -------------------------------------------------------------------------------
Amount payable at
December 31, 1995 $ 319,132 $ 7,161 $ 326,293
- -------------------------------------------------------------------------------
4. Subsequent Distributions
In January 1996, the Joint Venture made cash distributions of $26,819, $26,819
and $8,862 to Clover Income Properties, L.P., Clover Income Properties II, L.P.
and Clover Income Properties III, L.P., respectively.
Schedule III
Clover Income Properties II, L.P.
Schedules of Real Estate and Accumulated Depreciation
Years Ended December 31, 1995, 1994 and 1993
Cost Capitalized
Subsequent
Initial Cost to Acquisition
------------------- -------------------
Buildings and Buildings and
Description Encumbrances Land Improvements Land Improvements
- ----------- ------------ ---- ------------- ---- -------------
144-unit garden
apartment complex
located in
Centreville,
Virginia None $- $7,105,605 $- $74,482
(A) The aggregate cost for federal income tax purposes is equal to
the amount at which the real estate is carried for financial
reporting purposes.
(B) Reconciliation of real estate:
1995 1994 1993
--------- ---------- ----------
Balance, at beginning of year $ - $7,180,087 $7,145,530
Dispositions during year:
Cost of real estate sold - (7,180,087) -
Additions during year:
Acquisitions - - 34,557
--------- --------- ----------
Balance, at end of year $ - $ - $7,180,087
========= ========= ==========
(C) Reconciliation of accumulated depreciation:
Balance, at beginning of year $ - $ 948,417 $ 743,336
Depreciation expense - 110,128 205,081
Accumulated depreciation -
disposal of assets - (1,058,545) -
--------- --------- ----------
Balance, at end of year $ - $ - $ 948,417
========= ========= ==========
<TABLE>
<CAPTION>
Gross Amount at Which
Carried at December 31, 1995(A)
- --------------------------------------------------------
Life on Which
Depreciation Has
Buildings and Date of Date Been Computed
Land Improvements Total(B) Depreciation(C) Construction Acquired in 1995
- ---- -------------- -------- --------------- ------------ -------- --------------
<S> <C> <C> <C> <C> <C> <C>
$ - $ - $ - $ - 1972 4/14/89 5-40 years
</TABLE>
Years Ended December 31, 1995, 1994 and 1993
Cost Capitalized
Initial Cost Subsequent to Acquisition
---------------------- -------------------------
Encumb- Buildings and Buildings and
Description brances Land Improvements Land Improvements
- ----------- ------- ---- ------------ ---- --------------
299-unit mid-rise
apartment complex
located in
Baltimore, Maryland None $1,421,205 $11,289,276 $- $721,516
(A) The aggregate cost for federal income tax purposes is equal to the amount
at which the real estate is carried for financial reporting purposes,
plus the additional stepped up basis due to a Section 754 election in the
amount of $556,439.
(B) Reconciliation of real estate:
1995 1994 1993
------------ ------------ ------------
Balance, at beginning of year $ 13,378,885 $ 13,316,620 $ 13,222,194
Additions during year:
Improvements, etc. 53,112 62,265 94,426
------------ ------------ ------------
Balance, at end of year $ 13,431,997 $ 13,378,885 $ 13,316,620
============ ============ ============
(C) Reconciliation of
accumulated depreciation:
Balance, at beginning of year $ 3,520,401 $ 3,008,159 $ 2,499,649
Depreciation expense 514,843 512,242 508,510
------------ ------------ ------------
Balance, at end of year $ 4,035,244 $ 3,520,401 $ 3,008,159
============ ============ ============
Schedule III
The Willowbrook Joint Venture
Schedule of Real Estate and Accumulated Depreciation
<TABLE>
<CAPTION>
Gross Amount at Which
Carried at December 31, 1995 (A) Life on Which
- -------------------------------------------------------------------------------- Depreciation Has
Buildings and Date of Date Been Computed
Land Improvements Total (B) Depreciation (C) Construction Acquired in 1995
- ---------- ------------ ----------- ---------------- ------------ -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
$1,421,205 $12,010,792 $13,431,997 $4,035,244 1966 12/17/87 12-25 years
</TABLE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The General Partner has the sole right to manage the business of the
Partnership and make any and all decisions with respect thereto. The limited
partners are allowed to vote or consent only in limited circumstances as
permitted by the Delaware Revised Uniform Limited Partnership Act and as
specifically set forth in the Partnership Agreement. The General Partner has
ultimate authority in all Partnership business decisions.
The General Partner has the right to delegate management functions and
to exercise sole discretion in selecting properties in which to invest. Limited
partners have no right to participate in the management of the Partnership or in
the selection of investment properties.
The General Partner is a New Jersey corporation which is a wholly-owned
subsidiary of Clover Financial Corporation ("Clover"), a New Jersey corporation
which has engaged, directly and indirectly, in real estate ownership and
operation since 1972. The officers and directors of the General Partner, Donald
N. Love, Steven R. Zalkind, Diane P. Duggan and Stanley E. Borucki, are also
officers and/or directors of Clover. In addition, Messrs. Love and Zalkind are
the majority shareholders of Clover.
Various relationships of the Partnership to the General Partner and its
affiliates are described at pages 13-16 of the Prospectus, which description is
incorporated herein by reference.
The executive officers and directors of the General Partner and Clover
are as follows:
Name Age Position
Donald N. Love 57 President, Director
Steven R. Zalkind 53 Vice President, Director
Diane P. Duggan 53 Secretary
Stanley E. Borucki 42 Treasurer
Mr. Love has been President and a director of the General Partner
since its formation in 1986, and he is President and a director of Clover and
various affiliates of Clover. Mr. Love has been associated with Clover
since 1971. Mr. Love holds a B.S. degree in Business Administration from Temple
University.
Mr. Zalkind has been Vice President and a director of the General
Partner since its formation in 1986, and he is Vice President and a director
of Clover and various affiliates of Clover. Mr. Zalkind has been
associated with Clover since May 1985.
Ms. Duggan has been Secretary of the General Partner since its
formation in 1986, and she serves as Secretary of Clover and various
affiliates of Clover. Ms. Duggan has been associated with Clover since 1973
and has served as an officer of Clover and its affiliates since 1982.
Mr. Borucki has served as Treasurer of the General Partner since May
1990, and he serves as Treasurer of various affiliates of Clover. He has been
the Assistant Treasurer of Clover since 1988. Mr. Borucki joined Clover
as a staff accountant in 1977, and he served as the Controller of Clover from
1984 to 1988. Mr. Borucki is a Certified Public Accountant.
All of the directors and executive officers of the General Partner are
elected annually to the offices set forth above to hold office until their
successors are duly elected and qualified.
Item 11. Executive Compensation
The officers and directors of the General Partner receive no current or
proposed direct compensation for serving in such capacities. The General Partner
received acquisition fees for services rendered in connection with the selection
and acquisition of direct or indirect interests in properties and the General
Partner will be entitled to receive a share of cash distributions. Such fees and
distributions are described generally under the caption "Compensation and Fees"
at pages 10-13 and under the caption "Allocations of Profits and Losses and Cash
Distributions" on pages 23-25 of the Prospectus dated September 18, 1987 and at
pages A-7 to A-16 of the Partnership Agreement, included as an Exhibit to the
Prospectus, which descriptions are incorporated herein by reference. Effective
February 21, 1995, NPI, which is unaffiliated with the General Partner, replaced
Allstate Management Corp., an affiliate of the General Partner, as the property
manager of The Willowbrook Apartments. See Item 1. Business.
The Partnership is permitted to engage in various transactions
involving the General Partner and its affiliates as described under the captions
"Compensation and Fees" at pages 10-13 and "Conflicts of Interests" at pages
13-16 of the Prospectus and "Rights, Authority, Powers, Responsibilities and
Duties of the General Partner" at pages A-l9 to A-25 of the Partnership
Agreement, included as an Exhibit to the Prospectus, which descriptions are
incorporated herein by reference.
The General Partner and its affiliates may also be reimbursed by the
Partnership for the actual costs advanced by them for materials used by the
Partnership and obtained from unaffiliated parties, administrative services and
direct expenses of Partnership operations.
Reference is made to Note 3 of Notes to the Partnership's Financial
Statements and Note 5 of Notes to The Willowbrook Joint Venture's Financial
Statements under Item 8. Financial Statements and Supplementary Data, which
contain information on the amounts of acquisition fees, reimbursements which
were actually earned by the General Partner and its affiliates and actually paid
by the Partnership. Reference is made to the Statements of Partners' Capital
(Deficiency) and Note 8 of the Notes to the Partnership's Financial Statements
under Item 8. Financial Statements and Supplementary Data, which contain
information on the amount of cash distributions actually made by the Partnership
to the General Partner.
Item 12. Security Ownership of Certain Beneficial Owners and Management
No person (including any "group" as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934) is known to the Partnership to
be the beneficial owner of more than five percent of the outstanding Units as of
March 7, 1996.
As of March 7, 1996, the directors of the General Partner and the
directors and officers of the General Partner as a group subscribed for the
following Units of the Partnership:
Amount and nature
of Beneficial Percentage
Name Ownership of Units Interest
Donald N. Love 7 *
Dianne P. Duggan 1 *
All directors and
officers as a group
(4 persons) 8 *
- --------------------
* Less than one percent
All the outstanding shares of the Common Stock of the General Partner
are owned by Clover as discussed under Item 10. Directors and Executive Officers
of the Registrant.
Item 13. Certain Relationships and Related Transactions.
Since January 1, 1995, there were no significant transactions or
business relationships with the General Partner or its affiliates other than
those described in Item 11. Executive Compensation. CIP and CIP III are both
publicly syndicated limited partnerships, the general partner of each of which
is a wholly owned subsidiary of Clover. The officers and directors of the
general partners of CIP and CIP III are the same persons as the officers and
directors of the General Partner. The Partnership did not pay any disposition
fees or other compensation to Clover, the General Partner or any of their
affiliates in connection with the Partnership's disposition of a portion of its
interest in The Willowbrook Joint Venture.
As of December 31, 1995, the Partnership was not indebted to Clover and
its affiliates. The Willowbrook Joint Venture (in which the Partnership has a
42.91% ownership interest) was indebted to Clover and its affiliates in the
aggregate amount of $326,293, including reimbursable costs incurred
and accrued and unpaid property management fees.
PART IV
Item 14. Exhibits. Financial Statement Schedules and Reports on 8-K.
(a) The following documents are filed as part of this report:
(1) Financial statements. See Index to Financial Statements
under Item 8. Financial Statements and Supplementary
Data.
(2) Financial statement schedules. See Index to Financial
Statements under Item 8. Financial Statements and
Supplementary Data.
(3) Exhibits.
* 3.1 Certificate of Limited Partnership (Exhibit 3.1 to the
Registrant's Registration Statement, No. 33-15487 filed on
September 18, 1987 (the "Registration Statement")).
* 3.2 Limited Partnership Agreement (Exhibit 3.2 to the Registration
Statement).
* 3.3 Amended and Restated Agreement of Limited Partnership
dated February 19, 1988 (Exhibit 3.3 to the registrant's
Annual Report on Form 10-K for the year ended December 31,
1991 (the "1991 Form 10-K")).
*10.1 $1,000,000 demand note of Clover Financial Corporation payable
to C.I.P. II Management Corp., the general partner of the
registrant (Exhibit 10.1 to the Registration Statement).
*10.2 Joint Venture Agreement between the registrant and
Clover Income Properties, L.P. dated December 17, 1987,
relating to The Willowbrook Apartments (Exhibit 10.5
to Post-Effective Amendment No. l to the Registration
Statement).
*10.3 Cross Indemnification Agreement among the registrant,
Clover Income Properties, L.P. and Landmark Associates
dated December 17, 1987, relating to The Willowbrook
Apartments (Exhibit 10.6 to Post Effective Amendment No. 1 to
the Registration Statement).
*10.4 Amendment dated November, 1988 to Property Management
Agreement among the registrant, Clover Income Properties II,
L.P., The Willowbrook Joint Venture and Allstate Management
Corp. relating to The Willowbrook Apartments (Exhibit 10.8 to
the registrant's Annual Report on Form 10-K for the year ended
December 31, 1988).
*99.1 The Prospectus of the Partnership dated September 18, 1987, as
filed with the Commission pursuant to Rule 424(b), and
included in the Registration Statement.
*99.2 Supplement dated September 12, 1988 to Prospectus dated
September 18, 1987, as furnished to limited partners and filed
with the Commission as part of Post-Effective Amendment No. 4
to the Registration Statement on September 13, 1988.
*99.4 The Partnership's Current Report on Form 8-K filed
with the Commission on March 4, 1996.
- ------------
* Incorporated by reference.
(b) No reports on Form 8-K were filed during the fourth quarter of
1995.
--------------------
Pursuant to the Partnership Agreement and certain undertakings in the
Registration Statement, the registrant is obligated to provide an annual report
to limited partners of the Partnership on or before April 30, 1995. The
Partnership will furnish copies of such report to the Commission when it is sent
to the limited partners.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CLOVER INCOME PROPERTIES II, L.P.
C.I.P. II MANAGEMENT CORP.,
General Partner
Date: March 27, 1996 By: /s/ Donald N. Love
---------------------
Donald N. Love, President
Date: March 27, 1996 By: /s/ Stanley E. Borucki
------------------------
Stanley E. Borucki, Treasurer
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 in the capacities and on the dates indicated.
Date: March 27, 1996 /s/ Donald N. Love
---------------------
Donald N. Love, Director and
President of C.I.P. II Management
Corp., the General Partner
Date: March 27, 1996 /s/ Steven R. Zalkind
-----------------------
Steven R. Zalkind, Director
and Vice-President of
C.I.P. II Management Corp.,
the General Partner
