<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED SEPTEMBER 30, 1995
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Commission File Number 1-9648
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NATIONAL REALTY, L.P.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 75-2163175
-------------------------------- --------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10670 North Central Expressway, Suite 300, Dallas, Texas 75231
- --------------------------------------------------------------------------------
(Address of Principal Executive Office) (Zip Code)
(214) 692-4700
-------------------------------
(Registrant's Telephone Number,
Including Area Code)
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 .
--- ---
Units of Limited Partner Interest 2,139,348
- --------------------------------- ---------------------------------
(Class) (Outstanding at November 3, 1995)
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying Consolidated Financial Statements have not been audited by
independent certified public accountants, but in the opinion of the management
of National Realty, L.P., all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of consolidated results of
operations, consolidated financial position and consolidated cash flows at the
dates and for the periods indicated, have been included.
NATIONAL REALTY, L.P.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
-------------- -------------
(dollars in thousands)
<S> <C> <C>
Assets
------
Real estate held for investment
Land............................................. $ 47,270 $ 46,842
Buildings and improvements....................... 355,933 352,219
-------------- --------------
403,203 399,061
Less - accumulated depreciation.................. (192,731) (186,161)
-------------- --------------
210,472 212,900
Real estate held for sale......................... 52,742 52,511
Less - Accumulated depreciation.................. (24,960) (23,876)
-------------- --------------
27,782 28,635
Notes and interest receivable, net of deferred
gains of $16,198 in 1994 and 1995................ 15,770 13,442
Less - allowance for estimated losses............ (1,910) (1,910)
-------------- --------------
13,860 11,532
Cash and cash equivalents......................... 7,816 3,748
Accounts receivable............................... 1,602 1,975
Prepaid expenses.................................. 991 695
Escrow deposits and other assets.................. 14,117 11,500
Marketable equity securities of affiliate, at
market........................................... 762 636
Deferred financing costs.......................... 14,358 15,321
Amounts due from affiliates....................... 1,184 3,198
-------------- --------------
$ 292,944 $ 290,140
============== ==============
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
2
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NATIONAL REALTY, L.P.
CONSOLIDATED BALANCE SHEETS - Continued
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
--------------- --------------
(dollars in thousands)
<S> <C> <C>
Liabilities and Partners' Equity (Deficit)
------------------------------------------
Liabilities
Notes and interest payable....................... $ 334,011 $ 326,775
Pension notes and related interest payable....... 11,704 10,769
Accrued property taxes........................... 7,675 6,967
Accounts payable and other liabilities........... 4,338 5,901
Tenant security deposits......................... 3,018 2,751
-------------- --------------
360,746 353,163
Commitments and contingencies
Redeemable General Partner Interest............... 28,800 28,800
Partners' equity (deficit)
General Partner.................................. 2,508 2,580
Limited Partners (2,139,348 units in 1995 and
2,139,418 units in 1994)...................... (66,627) (61,795)
Unrealized gain on marketable equity securities.. 492 367
-------------- --------------
(63,627) (58,848)
Less - Redeemable General Partner Interest....... (32,975) (32,975)
-------------- --------------
(96,602) (91,823)
-------------- --------------
$ 292,944 $ 290,140
============== ==============
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
3
<PAGE> 4
NATIONAL REALTY, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
---------------------------------- ---------------------------------
1995 1994 1995 1994
-------------- -------------- --------------- -------------
(dollars in thousands, except per share)
<S> <C> <C> <C> <C>
Revenues
Rents......................... $ 27,300 $ 26,631 $ 80,404 $ 78,579
Interest...................... 818 686 2,169 1,872
-------------- -------------- --------------- -------------
28,118 27,317 82,573 80,451
Expenses
Interest...................... 8,935 8,508 26,096 25,568
Depreciation & amortization... 2,569 2,561 7,655 7,631
Property taxes & insurance.... 3,139 3,045 9,127 8,962
Utilities..................... 2,955 2,915 8,617 8,951
Property-level payroll costs.. 1,783 1,785 5,031 4,817
Repairs and maintenance....... 6,033 6,251 18,070 16,609
Other operating expenses...... 1,151 1,148 3,397 3,329
Property management fees...... 1,168 1,138 3,447 3,402
General and administrative.... 1,424 1,238 4,753 4,082
-------------- -------------- --------------- -------------
29,157 28,589 86,193 83,351
-------------- -------------- --------------- -------------
Net (loss)..................... $ (1,039) $ (1,272) $ (3,620) $ (2,900)
============== ============== =============== =============
Earnings per unit
Net (loss)..................... $ (.48) $ (.58) $ (1.66) $ (1.33)
============== ============== =============== =============
Weighted average units of
limited partner interest
used in computing earnings
per unit...................... 2,139,355 2,139,607 2,139,380 2,139,607
============== ============== =============== =============
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
4
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NATIONAL REALTY, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Unrealized
Gain On Redeemable
Marketable General Partners'
General Limited Equity Partner Equity
Partner Partners Securities Interest (Deficit)
-------------- --------------- ---------------- ------------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1995......... $ 2,580 $ (61,795) $ 367 $ (32,975) $ (91,823)
Distributions ($.60 per unit).... - (1,284) - - (1,284)
Unrealized gain on marketable
equity securities of affiliate.. - - 125 - 125
Net (loss)....................... (72) (3,548) - - (3,620)
------------- ------------- ------------- ------------- -------------
Balance, September 30, 1995...... $ 2,508 $ (66,627) $ 492 $ (32,975) $ (96,602)
============= ============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
5
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NATIONAL REALTY, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
----------------------------------
1995 1994
--------------- --------------
(dollars in thousands)
<S> <C> <C>
Cash Flows From Operating Activities
Rents collected.................................. $ 80,104 $ 78,507
Interest collected............................... 1,966 1,734
Interest paid.................................... (23,093) (22,749)
Payments for property operations................. (49,589) (49,216)
General and administrative expenses paid......... (4,608) (4,515)
Deferred financing costs......................... (446) (745)
-------------- --------------
Net cash provided by operating activities..... 4,334 3,016
Cash Flows From Investing Activities
Acquisition of real estate....................... (463) -
Real estate improvements......................... (2,662) (1,991)
Collections on notes receivable.................. 14 648
Acquisition and settlement of notes receivable... (1,207) -
-------------- --------------
Net cash (used in) investing activities....... (4,318) (1,343)
Cash Flows From Financing Activities
Proceeds from notes payable...................... 23,233 8,376
Payments from (to) affiliates, net............... 2,098 (857)
Payments on notes payable........................ (19,995) (8,578)
Distributions to unitholders..................... (1,284) (1,284)
-------------- --------------
Net cash provided by (used in) financing
activities.................................. 4,052 (2,343)
-------------- --------------
Net increase (decrease) in cash and cash
equivalents................................. 4,068 (670)
Cash and cash equivalents at beginning of period.. 3,748 4,038
-------------- --------------
Cash and cash equivalents at end of period........ $ 7,816 $ 3,368
============== ==============
Reconciliation of net (loss) to net cash
provided by operating activities
Net (loss)........................................ $ (3,620) $ (2,900)
Adjustments to reconcile net (loss) to net
cash provided by operating activities
Depreciation and amortization.................... 7,655 7,631
(Increase) in other assets....................... (996) (3,475)
(Increase) in interest receivable................ (66) (25)
Increase in interest payable..................... 1,164 843
Increase in other liabilities.................... 197 942
-------------- --------------
Net cash provided by operating activities..... $ 4,334 $ 3,016
============== ==============
Schedule of noncash financing activities
Note payable from acquisition of real estate..... $ 1,200 $ -
Unrealized gain (loss) on marketable equity
securities.................................... 126 (30)
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
6
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NATIONAL REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The accompanying Consolidated Financial Statements of National Realty, L.P. and
consolidated entities (the "Partnership") have been prepared in conformity with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
Operating results for the nine month period ended September 30, 1995 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1995. For further information, refer to the Consolidated
Financial Statements and Notes thereto included in the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1994 (the "1994 Form
10-K").
Certain 1994 balances have been reclassified to conform to the 1995
presentation.
NOTE 2. EARNINGS PER UNIT
Net (loss) per unit of limited partner interest (per "unit") is computed based
upon the weighted average number of units outstanding during each period. The
limited partners of National Realty, L.P. ("National Realty") have a 99%
interest and the general partner, Syntek Asset Management, L.P. (the "General
Partner" or "SAMLP"), has an aggregate 1% interest in the net income, net loss
and distributions of National Realty. National Realty is allocated 99% of the
net income or net loss of National Operating, L.P. ("NOLP" or the "Operating
Partnership"), and the General Partner is allocated an aggregate 1% of the net
income or net loss of the Operating Partnership. The 1% General Partner
interest in each of National Realty and the Operating Partnership is equal to a
1.99% interest on a combined basis. Accordingly, net (loss) per unit is
derived by dividing 98.01% of the net (loss) in each period by the respective
weighted average units of limited partner interest.
NOTE 3. REAL ESTATE
In March 1995, the Partnership purchased the Chalet II Apartments, a 72 unit
apartment complex in Topeka, Kansas, for $1.6 million. The Partnership paid
$439,000 in cash and obtained new first mortgage financing of $1.2 million.
The mortgage bears interest at a variable rate, currently 10% per annum,
requires monthly payments of principal and interest, currently $12,000, and
matures in March 2002. The Partnership, in accordance with the Partnership's
Limited Partnership Agreement, paid a real estate brokerage commission of
$98,000 to Carmel Realty, Inc., an affiliate of the Partnership's Managing
General Partner, based on the $1.6 million purchase price of the property.
In May 1995, the Partnership refinanced the mortgage debt secured by the
Mallard Lake Apartments in Greensboro, North Carolina in the amount of $8.2
million. The Partnership received net cash of $1.4 million after
7
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NATIONAL REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
NOTE 3. REAL ESTATE (Continued)
the payoff of $6.5 million in existing mortgage debt. The remainder of the
refinancing proceeds were used to fund escrows for replacements and repairs and
to pay various closing costs associated with the refinancing. The new mortgage
bears interest at the rate of 8.75% per annum, requires monthly payments of
principal and interest of $67,416 and matures June 1, 2005. The Partnership,
in accordance with the Partnership Agreement, paid a mortgage brokerage and
equity refinancing fee of $82,000 to Basic Capital Management, Inc. ("BCM"),
the sole shareholder of the Partnership's Managing General Partner, based upon
the new $8.2 million mortgage.
In September 1995, the Partnership refinanced the mortgage debt secured by the
Four Seasons Apartments in Denver, Colorado in the amount of $9.9 million. The
Partnership received net cash of $4.4 million after the payoff of $5.2 million
in existing mortgage debt, including a $147,000 prepayment penalty. The
remainder of the refinancing proceeds were used to fund escrows for
replacements and repairs and to pay various closing costs associated with the
refinancing. The new mortgage bears interest at the rate of 8.25% per annum,
requires monthly payments of principal and interest of $78,000 and matures in
October 2005. The Partnership, in accordance with the Partnership Agreement,
paid a mortgage brokerage and equity refinancing fee of $99,000 to BCM based
upon the new $9.9 million mortgage.
Also in September 1995, the Partnership refinanced the mortgage debt secured by
the Nora Pines Apartments in Indianapolis, Indiana in the amount of $6.2
million. The Partnership received net cash of $952,000 after the payoff of
$4.9 million in existing mortgage debt, including a $48,000 prepayment penalty.
The remainder of the refinancing proceeds were used to fund escrows for
replacements and repairs and to pay various closing costs associated with the
refinancing. The new mortgage bears interest at the rate of 8.25% per annum,
requires monthly payments of principal and interest of $48,000 and matures in
October 2005. The Partnership, in accordance with the Partnership Agreement,
paid a mortgage brokerage and equity refinancing fee of $62,000 to BCM based
upon the new $6.2 million mortgage.
NOTE 4. NOTES RECEIVABLE
In 1991, the Partnership and an insurance company entered into an Asset Sales
Agreement to sell participations in certain of the Partnership's mortgage notes
receivable in exchange for participations in other mortgage notes or assets and
cash. The Partnership entered into the Asset Sales Agreement in an effort to
develop a potential source for future financing and to generate cash from
otherwise illiquid assets. The assets transferred by the Partnership pursuant
to the Asset Sales Agreement included a $2.5 million senior participation in a
wraparound mortgage note receivable secured by a shopping center in Las Vegas,
Nevada, a $1.0 million senior participation in a wraparound mortgage note
receivable secured by a shopping center in La Crosse, Wisconsin,
8
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NATIONAL REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
NOTE 4. NOTES RECEIVABLE (Continued)
and a first lien mortgage note with a carrying value of $1.2 million prior to
transfer. In return, the Partnership received a $447,000 senior participation
in a note secured by land in Granby, Colorado, a $1.5 million participation in
a note secured by a country club in the Ka'u District of Hawaii, a 10% limited
partner interest in the partnership owning the country club, valued at $1.5
million, a $213,000 first lien mortgage note secured by land in Denver,
Colorado and $1.0 million in cash. The Asset Sales Agreement included put and
guaranty provisions.
In March 1992, the insurance company was placed in receivership. In June 1992,
the Partnership provided notice to the insurance company, under the terms of
the put and guaranty provisions, of its desire to divest itself of all the
assets received. The Receiver refused to allow the enforcement of the terms of
the Asset Sales Agreement.
In 1992, the Partnership determined that the fair value of the underlying
collateral securing one of the participations and a note receivable received
was not sufficient to satisfy the Partnership's interests and accordingly, the
Partnership recorded a $1.6 million provision for loss to provide for such
deficiency. In May 1993, the Partnership foreclosed on an assigned first lien
secured by land in Denver, Colorado. The Partnership incurred no loss as a
result of the foreclosure. In October 1993, this land was sold for its
carrying value.
A settlement between the Partnership and the Receiver was approved by the court
on February 15, 1995. Under the terms of the settlement, on July 7, 1995, the
insurance company returned to the Partnership the senior participations in the
wraparound mortgage notes secured by the shopping centers in Las Vegas, Nevada
and La Crosse, Wisconsin. In exchange, the Partnership returned all of the
assets that it received from the insurance company other than the first lien
mortgage note secured by the land in Denver, Colorado, which had been
foreclosed and sold by the Partnership, and paid $657,000 in cash. The
Partnership also purchased from the insurance company the first lien note
secured by the land in Granby, Colorado and a second lien note secured by
commercial condominiums also in Granby, Colorado for $550,000. The Partnership
incurred no loss on the settlement.
NOTE 5. WARRANTS
Pursuant to a litigation settlement agreement, on February 14, 1992, the
Partnership issued 2,692,773 warrants to purchase an aggregate of 673,193 of
its units of limited partner interest subject to adjustment. Each warrant
entitles the holder thereof to purchase one quarter of one unit at the exercise
price ($12.00 per warrant), equal to $48.00 per unit, subject to adjustment.
The warrants may be exercised for five years from the February 14, 1992 date of
issuance or until earlier redemption. See NOTE 7. "LEGAL PROCEEDINGS - Moorman
Settlement."
9
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NATIONAL REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
NOTE 6. INCOME TAXES
No federal or state income taxes have been provided for in the accompanying
Consolidated Statements of Operations as the partners include their share of
Partnership income or loss in their respective tax returns. For income or loss
allocation purposes, limited partners are allocated their proportionate share
of income or loss commencing with the calendar month subsequent to their entry
into the Partnership.
NOTE 7. LEGAL PROCEEDINGS
Moorman Settlement. The Partnership is party to a settlement agreement, dated
as of May 9, 1990, between plaintiffs Joseph B. Moorman, et al. and defendants
Robert A. McNeil, National Realty, the Operating Partnership, SAMLP, Gene E.
Phillips and William S. Friedman, and Shearson Lehman Hutton Inc.,
successor-in-interest to defendant E.F. Hutton & Company Inc., relating to the
action entitled Moorman, et al. v. Southmark Corporation, et al. Such action
was filed on September 2, 1987, in the Superior Court of the State of
California, County of San Mateo. On May 9, 1990, the Partnership agreed to
settle such action pursuant to the terms of a written agreement (the "Moorman
Settlement Agreement"). On June 29, 1990, after a hearing as to its fairness,
reasonableness and adequacy, the Moorman Settlement Agreement was granted final
court approval.
By agreeing to settle the Moorman action, the Partnership, SAMLP, and Messrs.
Phillips and Friedman did not and do not admit any liability whatsoever.
The terms of the Moorman Settlement Agreement are complex and the following
summary is qualified in its entirety by reference to the text thereof, which
was previously included as an exhibit to a Partnership filing with the
Securities and Exchange Commission. The Moorman Settlement Agreement provides
for a plan (the "Moorman Settlement Plan") consisting of, among other things,
the following: (i) the appointment and operation of a committee (the
"Oversight Committee") to oversee the implementation of the Moorman Settlement
Plan, (ii) the appointment and operation of an audit committee having a
majority of members unaffiliated with Messrs. Phillips and Friedman or SAMLP,
(iii) the establishment of specified annually increasing targets described
below (each a "Target") for each of the next five years through May 1995,
relating to the price of the units of limited partner interest as decreased for
certain distributions to unitholders, (iv) an agreement by SAMLP not to seek
reimbursement of greater than $500,000 per year for Messrs. Phillips' and
Friedman's salaries for serving as general partners of SAMLP, (Mr. Friedman
resigned as general partner of SAMLP effective March 4, 1994) and a deferral of
such payments until such time as a Target may be met, and, if SAMLP resigns as
General Partner, a waiver of any compensation so deferred, (v) a deferral until
such time as a Target may be met of certain future annual General Partner
compensation payable, pursuant to the Partnership's governing documents, to
SAMLP or its affiliates, and, if SAMLP resigns as General Partner, a
10
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NATIONAL REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
NOTE 7. LEGAL PROCEEDINGS (Continued)
waiver of any compensation so deferred, (vi) the required distribution to
unitholders of all the Partnership's operating cash flow in excess of certain
renovation costs, unless the Oversight Committee approves alternative uses for
such operating cash flow, (vii) the issuance of Warrants to purchase an
aggregate of up to 687,500 units (the "Warrants") to Class Members, (viii) the
contribution by certain co-defendants of cash and notes payable to the
Partnership aggregating $5.5 million (including $2.5 million contributed by
SAMLP and its general partners over a four-year period), (ix) the amendment of
the Partnership Agreement to reduce the vote required to remove the General
Partner from a two-thirds vote to a majority vote of the units, (x) the
Partnership's redemption of its unit purchase rights and an agreement not to
adopt a similar rights plan without Oversight Committee approval and (xi) the
Partnership's payment of certain settlement costs, including plaintiffs'
attorneys' fees in the amount of $3.4 million. The Moorman Settlement Plan
will remain in effect until SAMLP has resigned as General Partner and a
successor general partner is elected and takes office, and the Warrants will
remain exercisable for five years from the February 14, 1992 date of issuance
or until earlier redemption.
If Targets are not met for any two successive years of the Moorman Settlement
Plan or for the final year of the Moorman Settlement Plan, SAMLP will be
required to withdraw as General Partner effective at the time a successor
general partner is elected. Upon, among other things, the withdrawal of SAMLP
as General Partner and the due election and taking office of a successor, the
Moorman Settlement Plan would terminate.
The Targets for the first and second anniversary dates were not met. Since the
Targets were not met for two successive years, the Moorman Settlement Agreement
requires that SAMLP resign as General Partner, effective upon the election and
qualification of its successor. On July 8, 1992, SAMLP notified the Oversight
Committee of the failure to meet the Target for two successive years.
Upon, among other things, the withdrawal of SAMLP as General Partner and the
due election and taking office of a successor, the Moorman Settlement Plan
would terminate. Withdrawal of SAMLP as General Partner pursuant to the Moorman
Settlement Agreement requires unitholders to elect a successor general partner
by majority vote. Upon the withdrawal or removal of the General Partner
without the selection of a successor, the Partnership would be dissolved.
The Moorman Settlement Agreement provides that between the date of the
certification causing the General Partner's resignation and the date a
successor general partner takes office, the resigning General Partner shall
limit its activities, as General Partner, to the conduct of the business of the
Partnership in the ordinary course, shall not, without consent of the Oversight
Committee, purchase or sell any real estate or other assets of the Partnership
not in progress on said date, shall
11
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NATIONAL REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
NOTE 7. LEGAL PROCEEDINGS (Continued)
cooperate in the election of a successor general partner and shall cooperate
with its successor to facilitate a change in the office of General Partner of
the Partnership. The resigning General Partner will continue to receive fees,
expenses and distributions, if any, while the solicitation is prepared.
Any dispute between the General Partner and the Oversight Committee concerning
the operation of the Moorman Settlement Agreement is to be resolved by the
Judge (the "Supervising Judge") appointed pursuant to the Moorman Settlement
Agreement to supervise its implementation.
The withdrawal of the General Partner would require the Partnership to acquire
the General Partner's interest in the Partnership (the "Redeemable General
Partner Interest") at its then fair value, and to pay certain fees and other
compensation, as provided in the Partnership Agreement and the Moorman
Settlement Agreement. Under the Moorman Settlement Agreement, payment for such
Redeemable General Partner Interest, fees and other compensation may, at the
Oversight Committee's option, be paid over a three year period pursuant to a
secured promissory note bearing interest at the prime rate and containing
commercially reasonable terms and collateral. Under the Moorman Settlement
Plan, the purchase price for Redeemable General Partner Interest would be
calculated, as of the time SAMLP withdraws as General Partner under the
Partnership's governing documents. The Managing General Partner has calculated
the Redeemable General Partner Interest at December 31, 1994 to be $33.0
million, and believes there has been no material change in such value since
such date. The Partnership would be entitled to offset against any such
payment the then outstanding principal balance ($4.2 million at September 30,
1995) plus all accrued but unpaid interest ($5.0 million at September 30, 1995)
on the note receivable from SAMLP for its capital contribution to the
Partnership. In the accompanying Consolidated Balance Sheets, the Redeemable
General Partner Interest is shown as a reduction of Partners' Equity. The note
receivable from the General Partner has been offset against the Redeemable
General Partner Interest. The Oversight Committee previously has informed the
Partnership that it calculated the amount of such Redeemable General Partner
Interest to be less than the amount calculated by the Managing General Partner.
When SAMLP withdraws as General Partner of the Partnership, the value of the
Redeemable General Partner Interest would depend on the fair value of the
Partnership's assets at the time of calculation and there can be no assurance
that the Redeemable General Partner Interest, fees and other compensation
payable on any such withdrawal will not be substantially higher or lower than
any current estimate or calculation. Any dispute pertaining to the amount of
Redeemable General Partner Interest upon withdrawal of SAMLP, will be resolved
by the Supervising Judge.
On January 27, 1995, National Realty, SAMLP, the Oversight Committee and
William H. Elliott executed an Implementation Agreement which provides for the
nomination of an entity controlled by Mr. Elliott as successor
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NATIONAL REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
NOTE 7. LEGAL PROCEEDINGS (Continued)
general partner and for the resolution of all related matters under the Moorman
Settlement. The Implementation Agreement was subject to receipt of a notice
from Mr. Elliott that he consented to stand for election as the successor
general partner. On April 20, 1995, Mr. Elliott formally notified the parties
that he would stand for such election.
On June 29, 1995, the Implementation Agreement was submitted to the Supervising
Judge for tentative approval and approval of the notice to be sent to the
original class members. As of November 3, 1995, the tentative approval of the
Supervising Judge had not been obtained and therefore the notice to class
members had not been mailed. Upon final approval by the Supervising Judge, the
proposal to elect the successor general partner will be submitted to the
unitholders of National Realty for a vote. In addition, the unitholders will
vote upon amendments to the National Realty partnership agreement which relate
to the proposed compensation of the successor general partner and other related
matters.
Upon approval by the unitholders, SAMLP shall withdraw as General Partner and
the successor general partner shall take office. If the required approvals are
obtained, National Realty anticipates that the successor general partner may be
elected and take office during the first or second quarter of 1996.
The Implementation Agreement provides that SAMLP, and its affiliates owning
units in National Realty, shall not vote to remove the successor general
partner, except for removal with cause, for a period of thirty months from the
date the successor general partner takes office. In addition, the Supervising
Judge shall make a determination of any amounts which National Realty may owe
to SAMLP upon SAMLP's withdrawal as General Partner and any amounts which SAMLP
or its affiliates may owe to National Realty. Any amounts which National
Realty may be determined to owe to SAMLP may be paid by National Realty over a
period of time to be determined by the parties on terms which shall not hinder
National Realty's ability to meet its other financial obligations.
Upon the election and taking office of the successor general partner, the
Moorman Settlement Plan and the Oversight Committee shall terminate. If the
successor general partner nominee is not elected, the existing Moorman
Settlement Agreement shall remain in full force and effect and all of the
provisions of the Implementation Agreement shall be voided.
Other. The Partnership is involved in various lawsuits arising in the ordinary
course of business. Management of the Partnership is of the opinion that the
outcome of these lawsuits would have no material impact on the Partnership's
financial condition or results of operations.
NOTE 8. SUBSEQUENT EVENTS
In October 1995, the Partnership refinanced the mortgage debt secured by the
Covered Bridge Apartments in Gainsville, Florida in the amount of
13
<PAGE> 14
NATIONAL REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
NOTE 8. SUBSEQUENT EVENTS (Continued)
$4.7 million. The Partnership received net cash of $907,000 after the payoff
of $3.6 million in existing mortgage debt, including a $35,000 prepayment
penalty. The remainder of the refinancing proceeds were used to pay various
closing costs associated with the refinancing. The new mortgage bears interest
at the rate of 8% per annum, requires monthly payments of principal and
interest of $36,000 and matures in November 2005. The Partnership, in
accordance with the Partnership Agreement, paid a mortgage brokerage and equity
refinancing fee of $47,000 to BCM based upon the new $4.7 million mortgage.
Also in October 1995, the Partnership accepted a $3.7 million discounted payoff
of three wraparound mortgage loans secured by the Hurstbourne Business Park in
Louisville, Kentucky. The Partnership received $1.5 million in cash after the
payoff of $2.2 million in first mortgage debt. No loss was recorded as the
discounted note payoff was equal to the Partnership's net carrying value of the
loans.
__________________________________
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Introduction
National Realty, L.P. ("National Realty") is a Delaware limited partnership
formed on January 29, 1987, the business of which consists primarily of owning
and operating through National Operating, L.P., also a Delaware limited
partnership (the "Operating Partnership"), a portfolio of real estate. Most of
the Operating Partnership's properties were acquired in transactions
consummated on September 18, 1987, pursuant to which National Realty acquired
all of the assets, and assumed all of the liabilities, of 35 public and private
limited partnerships. National Realty and the Operating Partnership operate as
an economic unit and, unless the context otherwise requires, all references
herein to the "Partnership" shall constitute references to National Realty and
the Operating Partnership as a unit.
In November 1992, the Operating Partnership, in conjunction with a refinancing
of 52 of its apartment properties and a wraparound note receivable, transferred
such assets to Garden Capital, L.P. ("GCLP"), a Delaware limited partnership in
which the Operating Partnership holds a 99.3% limited partner interest.
National Realty's units of limited partner interest are traded on the American
Stock Exchange (the "AMEX") using the symbol "NLP". National Realty no longer
meets certain of the criteria of the AMEX for continued listing and will likely
continue to fail to meet such criteria. Although National Realty does not
anticipate that the AMEX will seek to delist its units of limited partner
interest, there can be no assurance that the AMEX will not seek to do so.
14
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources
Cash and cash equivalents aggregated $7.8 million at September 30, 1995 and
$3.7 million at December 31, 1994.
The Managing General Partner of the Partnership's General Partner has
discretion in determining methods of obtaining funds for the Partnership's
operations. The Partnership's governing documents place no limitation on the
amount of leverage that the Partnership may incur either in the aggregate or
with respect to any particular property or other investment. At September 30,
1995, the aggregate loan-to-value ratio of the Partnership's real estate
portfolio was 48.6%, computed on the basis of the ratio of total
property-related debt to aggregate appraised values as of December 31, 1994, as
compared with a loan-to-value ratio of 47.9% at December 31, 1994.
The Partnership's principal sources of cash flow have been and will continue to
be from property operations and externally generated funds. Externally
generated funds include borrowings, proceeds from the sale of Partnership
properties and other assets and proceeds from the issuance of debt secured by
Partnership properties or mortgage notes receivable. The Partnership expects
the cash flow from property operations together with externally generated funds
will be sufficient to meet the Partnership's various cash needs during the
remainder of 1995, including but not limited to the payment of distributions,
debt service obligations coming due and property maintenance and improvements,
as more fully discussed in the paragraphs below.
In March 1995, the Partnership, with the approval of the Oversight Committee,
purchased the Chalet II Apartments, a 72 unit apartment complex in Topeka,
Kansas, for $1.6 million. The Partnership paid $439,000 in cash, obtaining new
mortgage financing of $1.2 million.
In May 1995, the Partnership refinanced the mortgage debt secured by the
Mallard Lake Apartments in Greensboro, North Carolina in the amount of $8.2
million. The Partnership received net cash of $1.4 million after the payoff of
$6.5 million in existing mortgage debt. The remainder of the refinancing
proceeds were used to fund escrows for replacements and repairs and to pay
various closing costs associated with the refinancing.
In September 1995, the Partnership refinanced the mortgage debt secured by the
Four Seasons Apartments in Denver, Colorado and the Nora Pines Apartments in
Indianapolis, Indiana. The Partnership received net cash totaling $5.4 million
from the two refinancings after the payoff of $10.1 million in existing
mortgage debt, including $195,000 in prepayment penalties. The remainder of
the refinancing proceeds were used to fund escrows for replacements and repairs
and to pay various closing costs associated with the refinancing.
In November 1992, in conjunction with the transfer of the net assets of 52
apartment complexes and a wraparound note receivable to GCLP, such assets were
refinanced under a $223 million blanket mortgage loan. The
15
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources (Continued)
blanket mortgage loan requires that cash flow from the GCLP properties be used
to fund various escrow and reserve accounts and limits the payment of
distributions to the Partnership. During the first nine months of 1995, the
Partnership received distributions from GCLP totaling $1.9 million, compared to
distributions totaling $1.7 million received during the first nine months of
1994.
In the first nine months of 1995, the Partnership paid quarterly distributions
aggregating $0.60 per unit, or a total of $1.3 million.
The Partnership's net cash flow from property operations (rents collected less
payments applicable to rental income) of $29.3 million for the nine months
ended September 30, 1994 increased to $30.5 million for the nine months ended
September 30, 1995. This increase is due to an increase in rental rates at the
Partnership's apartment complexes and one commercial property, partially offset
by decreases due to the sale of Brandywine and Raintree Apartments in October
1994.
In October 1995, the Partnership refinanced the mortgage debt secured by the
Covered Bridge Apartments in Gainsville, Florida in the amount of $4.7 million.
The Partnership received net cash of $907,000 after the payoff of $3.6 million
in existing mortgage debt, including a $35,000 prepayment penalty. The
remainder of the refinancing proceeds were used to pay various closing costs
associated with the refinancing.
Also in October 1995, the Partnership accepted a $3.7 million discounted payoff
of three wraparound mortgage loans secured by the Hurstbourne Business Park in
Louisville, Kentucky. The Partnership received $1.5 million in cash after the
payoff of $2.2 million in first mortgage debt.
As discussed in NOTE 7. "LEGAL PROCEEDINGS," the Moorman litigation settlement
agreement (the "Moorman Settlement Agreement") sets forth certain aggressive,
annually increasing targets relating to the price of the Partnership's units of
limited partner interest which were not met, resulting in, among other things,
withdrawal of the General Partner and the resulting required repurchase of the
General Partner's interest. The effects of some or all of these provisions
could adversely affect the Partnership's liquidity. However, the General
Partner and the Oversight Committee have agreed in principle, as discussed
below, to possible arrangements which would alleviate the adverse effect of
such provisions.
The withdrawal of the General Partner requires the Partnership to acquire the
General Partner's interest in the Partnership (the "Redeemable General Partner
Interest") at its then fair value, and to pay certain fees and other
compensation, as provided in the Partnership Agreement and the Moorman
Settlement Agreement. The Moorman Settlement Agreement provides that any
payment for such Redeemable General Partner Interest, fees and other
compensation during the pendency of the Moorman Settlement Agreement may, at
the option of the Oversight Committee (also established under the Moorman
Settlement Agreement), be made over three
16
<PAGE> 17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources (Continued)
years pursuant to a secured promissory note bearing interest at a financial
institution's prime rate. The Managing General Partner has calculated the fair
value of the Redeemable General Partner Interest at December 31, 1994 to be
$33.0 million, and believes that there has been no material change in such
value since that date. The Partnership would be entitled to offset against
such payment the then outstanding principal balance of the note receivable
($4.2 million at September 30, 1995) plus all accrued and unpaid interest ($5.0
million at September 30, 1995) on the note receivable from the General Partner
representing its capital contribution to the Partnership. When Syntek Asset
Management, L.P. ("SAMLP") withdraws as General Partner of the Partnership,
the fair value of the Redeemable General Partner Interest would depend on the
value of the Partnership's assets at the time of calculation and there can be
no assurance that the Redeemable General Partner Interest, fees and other
compensation payable on any such withdrawal will not be substantially higher or
lower than any current estimate or calculation.
In the accompanying Consolidated Balance Sheets, the Redeemable General Partner
Interest is shown as a reduction in Partners' Equity and the note receivable
from the General Partner has been offset against the Redeemable General
Partner Interest.
On January 27, 1995, National Realty, SAMLP, the Oversight Committee and
William H. Elliott executed an Implementation Agreement which provides for the
nomination of an entity controlled by Mr. Elliott as successor general partner
and for the resolution of all related matters under the Moorman Settlement.
The Implementation Agreement was subject to receipt of a notice from Mr.
Elliott that he consented to stand for election as the successor general
partner. On April 20, 1995, Mr. Elliott formally notified the parties that he
would stand for such election.
On June 29, 1995, the Implementation Agreement was submitted to the Supervising
Judge for tentative approval and approval of the notice to be sent to the
original class members. As of November 3, 1995, the tentative approval of the
Supervising Judge had not been obtained and therefore the notice to class
members had not been mailed. Upon final approval by the Supervising Judge, the
proposal to elect the successor general partner will be submitted to the
unitholders of National Realty for a vote. In addition, the unitholders will
vote upon amendments to the National Realty partnership agreement which relate
to the proposed compensation of the successor general partner and other related
matters.
Upon approval by the unitholders, SAMLP shall withdraw as General Partner and
the successor general partner shall take office. If the required approvals are
obtained, National Realty anticipates that the successor general partner may be
elected and take office during the second quarter of 1996.
The Implementation Agreement provides that SAMLP, and its affiliates owning
units in National Realty, shall not vote to remove the successor
17
<PAGE> 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources (Continued)
general partner, except for removal with cause, for a period of thirty months
from the date the successor general partner takes office. In addition, the
Supervising Judge shall make a determination of any amounts which National
Realty may owe to SAMLP upon SAMLP's withdrawal as General Partner and any
amounts which SAMLP or its affiliates may owe to National Realty. Any amounts
which National Realty may be determined to owe to SAMLP may be paid by National
Realty over a period of time to be determined by the parties on terms which
shall not hinder National Realty's ability to meet its other financial
obligations.
Upon the election and taking office of the successor general partner, the
Moorman Settlement Plan and the Oversight Committee shall terminate. If the
successor general partner nominee is not elected, the existing Moorman
Settlement Agreement shall remain in full force and effect and all of the
provisions of the Implementation Agreement shall be voided.
Results of Operations
The Partnership reported a net loss of $1.0 million and $3.6 million for the
three and nine months ended September 30, 1995 as compared to a net loss of
$1.3 million and $2.9 million for the three and nine months ended September 30,
1994. The primary factors effecting the Partnership's operating results are
discussed in the following paragraphs.
Net rental income for the Partnership (rental income less expenses applicable
to rental income) increased from $10.3 million and $32.5 million for the three
and nine months ended September 30, 1994 to $11.1 million and $32.7 million for
the three and nine months ended September 30, 1995. These increases are
primarily attributable to increased rental rates at the Partnership's apartment
complexes and an increase in rental rates and occupancy at one of the
Partnership's commercial properties. In addition, an increase of $48,000 for
the three months and $129,000 for the nine months is due to the acquisition of
the Chalet II Apartments in March 1995. These increases are partially offset
by decreases of $244,000 and $991,000 for the three and nine months ended
September 30, 1995 due to the sale of the Brandywine and Raintree Apartments in
October 1994.
Interest income increased from $686,000 and $1.9 million for the three and nine
months ended September 30, 1994 to $818,000 and $2.2 million for the three and
nine months ended September 30, 1995. This increase is primarily attributable
to an increase in interest earned on the GCLP credit enhancement escrow account
and to the acquisition of a note receivable in July 1995.
Interest expense increased from $8.5 million and $25.6 million for the three
and nine months ended September 30, 1994 to $8.9 million and $26.0 million for
the three and nine months ended September 30, 1995. Decreases of $218,000 and
$645,000 for the three and nine months ended
18
<PAGE> 19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
September 30, 1995 attributable to the sale of the Brandywine and Raintree
Apartments in October 1994 were offset by increases of $109,000 and $365,000
for the three and nine months ended September 30, 1995 in interest on the
variable interest rate portion of the GCLP mortgage due to an increase in the
London Interbank Offering Rate. In addition, interest expense increased by
$121,000 and $250,000 for the three and nine months ended September 30, 1995
due to the refinancing of the Creekwood Apartments in September 1994 and the
Mallard Lake Apartments in May 1995 and the acquisition of the Chalet II
Apartments in March 1995. In addition, interest expense for the three and nine
months ended September 30, 1995 includes $196,000 in prepayment penalties
related to the refinancings of the Four Seasons and Nora Pines Apartments in
September 1995.
General and administrative expenses increased from $1.3 million and $4.1
million for the three and nine months ended September 30, 1994 to $1.4 million
and $4.8 million for the three and nine months ended September 30, 1995. These
increases are primarily due to an increase in legal fees and appraisal fees
related to the Moorman litigation and an increase in the Partnership's overhead
reimbursements to Basic Capital Management, Inc.
Tax Matters
National Realty is a publicly traded limited partnership and, for federal
income tax purposes, all income or loss generated by the Partnership is
included in the income tax returns of the individual partners. In December
1987, Congress passed legislation requiring certain publicly traded
partnerships to be taxed as corporations. National Realty qualifies for
"grandfather" treatment and will be treated as a partnership until at least
1997, unless the Partnership adds a substantial new line of business, which
would require approval of the Oversight Committee, and will continue to be so
treated thereafter if 90% or more of its gross income consists of qualifying
income from real estate activities. As presently operated, the Partnership
meets these requirements. Under Internal Revenue Service guidelines generally
applicable to publicly traded partnerships and thus to the Partnership, a
limited partner's use of his or her share of partnership losses is subject to
special limitations.
Inflation
The effects of inflation on the Partnership's operations are not quantifiable.
Revenues from property operations generally fluctuate proportionately with
inflationary increases and decreases in housing costs. Fluctuations in the
rate of inflation also affect the sales values of the Partnership's properties
and, correspondingly, the ultimate gains to be realized by the Partnership from
property sales. To the extent that inflation affects interest rates, the
Partnership's earnings from short-term investments and the cost of new
borrowings as well as the cost of its variable rate borrowings will be
affected.
19
<PAGE> 20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Environmental Matters
Under various federal, state and local environmental laws, ordinances and
regulations, the Partnership may be potentially liable for removal or
remediation costs, as well as certain other potential costs relating to
hazardous or toxic substances (including governmental fines and injuries to
persons and property) where property-level managers have arranged for the
removal, disposal or treatment of hazardous or toxic substances. In addition,
certain environmental laws impose liability for release of asbestos-containing
materials into the air, and third parties may seek recovery from the
Partnership for personal injury associated with such materials.
The General Partner is not aware of any environmental liability relating to the
above matters that would have a material adverse effect on the Partnership's
business, assets or results of operations.
Recent Accounting Pronouncement
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 121 - "Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to Be Disposed Of".
The statement requires that long-lived assets be considered impaired "...if the
sum of the expected future cash flows (undiscounted and without interest
charges) is less than the carrying amount of the asset." If impairment exists,
an impairment loss shall be recognized, by a charge against earnings, equal to
"...the amount by which the carrying amount of the asset exceeds the fair value
of the asset." If impairment of a long-lived asset is recognized, the carrying
amount of the asset shall be reduced by the amount of the impairment, shall be
accounted for as the asset's "new cost" and such new cost shall be depreciated
over the asset's remaining useful life.
SFAS No. 121 further requires that long-lived assets held for sale "...be
reported at the lower of carrying amount or fair value less cost to sell." If
a reduction in a held for sale asset's carrying amount to fair value less cost
to sell is required, a provision for loss shall be recognized by a charge
against earnings. Subsequent revisions, either upward or downward, to a held
for sale asset's fair value less cost to sell shall be recorded as an
adjustment to the asset's carrying amount, but not in excess of the asset's
carrying amount when originally classified as held for sale. A corresponding
charge or credit to earnings is to be recognized. Long-lived assets held for
sale are not to be depreciated. SFAS No. 121 is effective for fiscal years
beginning after December 15, 1995.
The General Partner has not fully evaluated the effects of adopting SFAS No.
121, but expects that the Partnership's policy with regard to the
classification of revenue producing properties as assets held for sale prior to
entering into a firm contract of sale, will require reevaluation.
20
<PAGE> 21
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Recent Accounting Pronouncement (Continued)
The General Partner estimates that if the Partnership had adopted SFAS No. 121
effective January 1, 1995, without a change in its policy of classifying
revenue producing assets as held for sale prior to entering into a firm
contract of sale, its depreciation in the three and nine months ended September
30, 1995 would have been reduced by $361,000 and $1.1 million, respectively,
its net loss reduced by like amounts in each period and that a provision for
loss for either impairment of its properties held for investment or for a
decline in estimated fair value less cost to sell of its properties held for
sale would not have been required in either period.
_______________________________
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See NOTE 7. "LEGAL PROCEEDINGS - Moorman Settlement," of NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS in PART I for information relating to legal proceedings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -------------------------------------------------------------
<S> <C>
11.0 Computation of Earnings Per Unit, filed herewith.
27.0 Financial Data Schedule, filed herewith.
</TABLE>
(b) Reports on Form 8-K:
None.
21
<PAGE> 22
NATIONAL REALTY, L.P.
Signature Page
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.
NATIONAL REALTY, L.P.
By its General Partner:
SYNTEK ASSET MANAGEMENT, L.P.
By its Managing General Partner:
SYNTEK ASSET MANAGEMENT, INC.
<TABLE>
<S> <C> <C>
Date: November 13, 1995 By: /s/ Randall M. Paulson
-------------------------- -----------------------------------
Randall M. Paulson
President
Date: November 13, 1995 By: /s/ Thomas A. Holland
-------------------------- -----------------------------------
Thomas A. Holland
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
</TABLE>
22
<PAGE> 23
NATIONAL REALTY, L.P.
EXHIBITS TO
QUARTERLY REPORT ON FORM 10-Q
For the Quarter ended September 30, 1995
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- ------- --------------------------------------------------- ------
<S> <C> <C>
11.0 Computation of Earnings Per Unit 24
27.0 Financial Data Schedule 25
</TABLE>
23
<PAGE> 1
EXHIBIT 11.0
NATIONAL REALTY, L.P.
A DELAWARE LIMITED PARTNERSHIP
Computation of Earnings Per Unit
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------------------------ --------------------------------
1995 1994 1995 1994
-------------- ---------------- -------------- -------------
(dollars in thousands, except per unit)
<S> <C> <C> <C> <C>
Net (loss)................... $ (1,039) $ (1,272) $ (3,620) $ (2,900)
Less - General Partner's
1.99% Interest............. (21) (25) (72) (58)
-------------- -------------- --------------- -------------
Net (loss) allocable to
Limited Partners............ $ (1,018) $ (1,247) $ (3,548) $ (2,842)
============== ============== =============== =============
Earnings Per Unit
Net (loss).................. $ (.48) $ (.58) $ (1.66) $ (1.33)
============== ============== =============== =============
Weighted average units of
limited partner interest
used in computing earnings
per unit.................... 2,139,355 2,139,607 2,139,380 2,139,607
============== ============== =============== =============
</TABLE>
24
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 7,816
<SECURITIES> 762
<RECEIVABLES> 15,770
<ALLOWANCES> 1,910
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 455,945
<DEPRECIATION> 217,691
<TOTAL-ASSETS> 292,944
<CURRENT-LIABILITIES> 0
<BONDS> 345,715
<COMMON> 0
0
0
<OTHER-SE> (96,602)
<TOTAL-LIABILITY-AND-EQUITY> 292,944
<SALES> 0
<TOTAL-REVENUES> 80,404
<CGS> 0
<TOTAL-COSTS> 47,689
<OTHER-EXPENSES> 7,655
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,096
<INCOME-PRETAX> (3,620)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,620)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,620)
<EPS-PRIMARY> (1.66)
<EPS-DILUTED> (1.66)
</TABLE>
