<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
/x/ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1997
Commission File No.: 33-16163-LA
Nashville Super 8 Ltd., A California Limited Partnership
(Name of small business issuer in its charter)
California 33-0249749
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1466 9th Avenue, San Diego, California 92101 92101
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (619) 699-6100
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
None
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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.
X Yes /x/ No / /
State issuer's revenues for its most recent fiscal year: $1,211,019.
The aggregate market value of the voting securities held by non-affiliates is
not determinable as there is no established market and the securities have only
limited voting rights.
State the number of limited partnership interests outstanding as of December 31,
1997: 3,975 interests held by 585 limited partners.
<PAGE>
DOCUMENT INCORPORATED BY REFERENCE
Definitive Prospectus dated September 1, 1987, as supplemented August 31,
1988, is incorporated by reference into Part III.
PART I
tem 1. Business
Nashville Super 8 Ltd., A California Limited Partnership, formerly Motels of
America Series XI, A California Limited Partnership, (the Partnership) was
formed on September 1, 1988 pursuant to the California Revised Uniform
Limited Partnership Act. As of December 31, 1997, the Partnership consisted
of a general partner, GHG Hospitality, Inc. (GHG), and 585 limited partners
owning 3,975 limited partnership interests. The limited partnership interests
sold at a public offering price of $1,000 each commencing September 1, 1987
pursuant to a Registration Statement on Form S-18 under the Securities Act of
1933 (Registration 33-16163-LA). The offering of $3,975,000 was fully
subscribed and closed on September 27, 1988.
The Partnership was organized to acquire a parcel of property located near the
Nashville Metropolitan Airport in Nashville, Tennessee, and to build and
operate a 106-room "economy" motel as a franchise of Super 8 Motels, Inc.
The motel opened for business on April 23, 1989 under a 20-year franchise
agreement with Super 8 Motels, Inc. The agreement required the payment of
initial franchise fees of $20,000 and requires ongoing royalty and chain-
affiliated advertising fees based on a percentage of gross room revenues.
Since January 1,1990, the motel has been operated pursuant to a management
agreement with GHG.
The profitability of a motel is subject to general economic risks, the manage-
ment ability of the operator, intense competition, desirability of a particular
location, and other factors relating to its operations. The demand for par-
ticular accommodations may vary seasonally and may be affected by economic
recessions, changes in travel patterns caused by changes in energy prices,
strikes, relocation of highways, the construction of additional highways and
other factors. To meet competition in the industry and to maintain economic
values, continuing expenditures must be made for modernizing, refurnishing, and
maintaining existing facilities prior to the expiration of their anticipated
useful lives.
There is no assurance that the Partnership's motel can be profitably operated.
Further, there is no assurance the motel can be sold at a profit. Consequently,
there is no guarantee of any profit or that the limited partners' investments
will be preserved against loss.
2
<PAGE>
There is significant competition in the lodging market. The Partnership is in
competition either directly or indirectly with a large number of hotels and
motels of varying quality and sizes, including other motels which are part
of national or regional chains. Such hotels and motels may have greater
financial resources and personnel with more experience than the Partnership
and the general partner.
The Partnership has no employees.
At the time of the public offering in 1988, the Prospectus stated that the
general partner expected that the Partnership would consider selling or
refinancing the motel after operating it for a period of approximately six to
ten years. A recent informal survey conducted by the general partner of a
number of limited partners indicated that a substantial majority would like the
motel to be sold. For these reasons, the general partner decided in early 1998
to initiate the process which could possibly result in a sale of the motel. On
March 3, 1998, the Partnership entered into an agreement with Hotel Partners,
Inc., a real estate broker specializing in hotel and motel properties, to list
the motel for sale. The initial listing price is $3,700,000. However, there is
no assurance that a buyer can be found or that the motel can be sold for this
price. Furthermore, any sale would be subject to the approval of limited
partners holding a majority of the limited partnership interests.
Item 2. Property
The Partnership acquired the following property in September 1988.
The Partnership does not intend to acquire any additional property.
Property name and address Property description
Nashville Super 8 Motel A 106-room "economy" motel on
Metropolitan Airport Center approximately 2 acres of land.
Nashville, Tennessee
The Partnership purchased the land for $711,000, including closing costs, and
constructed the motel. The Partnership completed construction and opened
the motel in April 1989.
In 1995, significant improvements to the property were completed. These
include completion of a swimming pool and fitness center, improvements to
lobby area, and renovation of certain guest rooms. The total cost of the
project was approximately $677,300.
3
<PAGE>
In the opinion of the Partnership's management, the property is adequately
covered by insurance.
The property is subject to a trust deed with a balance of $164,284 as of
December 31, 1997. The trust deed requires monthly payments of
approximately $2,150, including interest at the bank's index rate plus 2%
(10.85% at December 31, 1997) through August 2009 or until paid in full.
Item 3. Legal Proceedings
The Partnership is not subject to any pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
PART II
Item 5. Market for Limited Partnership Interests and Related Partner Matters
There is no public trading market for the Partnership's limited partnership
interests. There were approximately 585 holders of the Partnership's 3,975
limited partnership interests as of December 31, 1997. Cash distributions
of $58,500 and $134,999 were paid to holders of limited partnership interests
in 1997 and 1996, respectively.
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition:
On September 1, 1987, the Partnership commenced its public offering pursuant
to its Prospectus. On September 27, 1988, the Partnership completed the public
offering. The Partnership received $3,449,823 (net of offering costs of
$525,177) from the sale of limited partnership interests. These funds were
available for investment in property, to pay legal fees and other costs related
to the investments, to pay operating expenses, and for working capital. The
majority of the proceeds were used to acquire and construct the property
identified in Item 2 above.
4
<PAGE>
Construction of an indoor swimming pool, workout center, and spa and
renovations of the lobby and certain guest rooms were completed in 1995.
The total cost of the project was approximately $677,300. The project's
cost was funded by cash from operations and a loan of $184,258 from First
Bank & Trust of Tennessee. As of December 31, 1997, a principal balance
of $164,284 was outstanding on this note. The note is payable in monthly
installments of approximately $2,150 including interest at two points over the
index which is the New York Consensus Prime as quoted in the Wall Street
Journal. The interest rate at December 31, 1997 was 10.85%. The final
balance is due August 2009. The note is secured by a first priority deed of
trust on the Partnership's motel.
An independent appraisal valued the Partnership's investment property at
$3,200,000 as of July 30, 1997. The carrying amount of investment property
on the Partnership's financial statements was $2,947,365 as of December 31,
1997.
The Partnership's liquidity is indicated by net working capital which was
$94,801 at December 31, 1997 and $27,151 at December 31, 1996. The
increase in net working capital is attributable to net cash provided by
operating activities of $212,036 less cash distributions to partners of
$65,000 and investment property expenditures of $58,998 in 1997.
Super 8 is requiring all franchisees to convert to electronic locks by 1999.
Management expects to complete the conversion in the fourth quarter of
1998 or first quarter of 1999 for an estimated cost of $30,000 subject to
the possible sale of the motel. The cost will be funded by cash from opera-
tions.
As discussed in Item 1, the general partner decided in early 1998 to initiate
the process which could possibly result in a sale of the motel. Any sale would
be subject to the approval of limited partners holding a majority of the limited
partnership interests. If a sale is consummated, the net sale proceeds, after
payment of all liabilities and costs to wind down the affairs of the Partner-
ship, would be paid to the limited partners in the form of a final liquidating
distribution and the Partnership would be dissolved.
Results of Operations:
Net income was $25,042 in 1997 and $17,654 in 1996. Total revenues were
$1,211,019 in 1997 and $1,078,483 in 1996. The property operated at an
occupancy of 61.79% in 1997 and 51.81% in 1996. The average daily room
rate was $49.63 in 1997 and $52.50 in 1996.
5
<PAGE>
The increase in occupancy and the decrease in average daily room rate resulted
from management's decision to more aggressively sell rooms to groups and
businesses at discounted rates in order to increase total revenues. Total
revenues increased by 12% in 1997 largely as a result of this program.
The increase in property operating expenses was partially due to the increase in
occupancy. Also, in 1997, the motel began offering an improved complimentary
breakfast to guests. The total cost of complimentary breakfasts and breakfast
crew wages was $39,297 in 1997 and $19,449 in 1996. And, in 1997, the motel
began contracting with an outside party to provide security service. Security
expenses were $29,365 in 1997 and $8,100 in 1996.
Royalties and chain-affiliated advertising decreased despite the increase in
revenues because of a 1% of gross room sales reduction in royalties payable to
Super 8. The Partnership was entitled to the reduction because of a clause in
a franchise agreement amendment under which the Partnership agreed to reduce
its area of protection in exchange for Super 8 relinquishing certain of its
rights under the original agreement.
Real estate taxes increased due to an increase in the assessed value of the
property from $1.9 million to $2.3 million primarily because of the addition
of the indoor swimming pool and fitness center.
Property and liability insurance decreased as a result of adding the property to
a group policy which also covers other properties managed by the general
partner.
In 1997, the Partnership incurred costs of $28,716 associated with a proposal
to reorganize the Partnership into a real estate investment trust (REIT).
The efforts were discontinued when management and the proposed sponsor of
the REIT were unable to negotiate mutually acceptable terms and conditions for
a reorganization.
Opryland, a major tourist attraction located near the motel, was closed on
December 31, 1997 for approximately two years in order to undergo major
renovations and refurbishments including the construction of additional retail
shops and attractions. This will likely have a negative impact on revenues
during the period of closure and a positive impact on revenues after the
reopening. The Partnership does not have a method to reliably determine
historical revenues from guests who stayed at the motel in order to visit
Opryland and, therefore, the exact impact of the closing and reopening on
future revenues is not known.
6
<PAGE>
A National Football League team will begin playing in Nashville in 1998. This
should help the motel to attract new business from visitors traveling to
Nashville to attend games.
The effect of current operations on liquidity was net cash provided by
operating activities of $212,036 in 1997 and $204,827 in 1996.
Seasonality:
The motel business is seasonal with the third quarter being the strongest due to
the tourist business and the last half of the fourth quarter and the first half
of the first quarter being the weakest.
7
<PAGE>
Item 7. Financial Statements and Supplementary Data
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
I N D E X
Independent Auditor's Report 9
Balance Sheets, December 31, 1997 and 1996 10-11
Statements of Operations, Years Ended December 31, 1997
and 1996 12
Statements of Partners' Capital, Years Ended December 31,
1997 and 1996 13-14
Statements of Cash Flows, Years Ended December 31, 1997
and 1996 15
Notes to Financial Statements 16-20
8
<PAGE>
Independent Auditor's Report
------------------------------
The Partners
Nashville Super 8 Ltd.,
A California Limited Partnership
We have audited the balance sheets of Nashville Super 8 Ltd., A California
Limited Partnership, as of December 31, 1997 and 1996, and the related
statements of operations, partners' capital, and cash flows for the years then
ended. 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 Nashville Super 8 Ltd., A
California Limited Partnership, as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ Levitz, Zacks, & Ciceric, CPAs
San Diego, California
February 10, 1998
9
<PAGE>
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Balance Sheets, page 1
December 31, 1997 and 1996
<TABLE>
<CAPTION>
...ASSETS...
1997 1996
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 159,319 $ 79,268
Accounts receivable 17,447 5,554
Operating supplies 15,455 15,455
Prepaid expenses 4,947 5,197
----------- -----------
Total current assets 197,168 105,474
----------- -----------
Investment property, at cost:
Land 711,092 711,092
Building and improvements 2,854,422 2,805,283
Furniture, fixtures and equipment 634,303 624,444
----------- ------------
4,199,817 4,140,819
Less accumulated depreciation 1,252,452 1,078,638
----------- ------------
Investment property, net 2,947,365 3,062,181
----------- ------------
Other Assets:
Franchise fees, net 11,417 12,417
---------- ------------
Total other assets 11,417 12,417
----------- ------------
Total assets $ 3,155,950 $ 3,180,072
=========== ============
</TABLE>
See accompanying notes to financial statements
10
<PAGE>
NASHVILLE SUPER 8, LTD
A California Limited Partnership
Balance Sheets, page 2
December 31, 1997 and 1996
...LIABILITIES AND PARTNERS' CAPITAL...
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Current Liabilities:
Accounts payable $ 23,761 $ 18,702
Accrued expenses 58,669 47,527
Due to affiliates 11,553 3,931
Current portion of long-term debt 8,384 8,163
------------ ------------
Total current liabilities 102,367 78,323
Long-term debt, less current portion 155,900 164,108
----------- ------------
Total liabilities 258,267 242,431
----------- ------------
Partners' Capital:
General partner:
Cumulative net income 16,732 14,228
Cumulative cash distributions (71,950) (65,450)
------------ ------------
(55,218) (51,222)
Limited partners (3,975 interests): ------------ ------------
Capital contributions,
net of offering costs 3,449,823 3,449,823
Cumulative net income 150,620 128,082
Cumulative cash distributions (647,542) (589,042)
------------- --------------
2,952,901 2,988,863
-------------- --------------
Total partners' capital 2,897,683 2,937,641
------------- -------------
Total liabilities and
partners' capital $ 3,155,950 $ 3,180,072
============= =============
</TABLE>
11
<PAGE>
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Statements of Operations
Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Revenues:
Room revenues $ 1,186,602 $ 1,055,385
Phone revenues 19,555 19,166
Interest income 1,283 508
Other 3,579 3,424
------------ -------------
Total revenues 1,211,019 1,078,483
------------ -------------
Expenses:
Property operating expenses 513,135 429,210
Depreciation 173,814 167,882
General and administrative 125,933 122,223
Repairs and maintenance 77,548 73,605
Management fees 72,584 64,678
Royalties and chain-affiliated advertising 61,678 63,302
Marketing 55,946 60,086
Real estate taxes 45,293 37,349
REIT proposal costs 28,716 -0-
Interest expense 18,133 18,428
Property and liability insurance 12,197 23,066
Amortization 1,000 1,000
------------ -------------
Total expenses 1,185,977 1,060,829
------------ ------------
Net income $ 25,042 $ 17,654
============ ============
Net income per interest $ 5.67 $ 4.00
====== ======
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Statements of Partners' Capital, page 1
Years Ended December 31, 1997 and 1996
General Partner
<TABLE> Cumulative
<CAPTION> Cumulative Cash
Net Income Distributions Total
<S> <C> <C> <C>
Balance, December 31, 1995 $ 12,463 $ (50,450) $ (37,987)
Net income,
year ended December 31, 1996 1,765 -0- 1,765
Cash distributions
($33.96 per interest) -0- (15,000) (15,000)
----------- ------------ -----------
Balance, December 31, 1996 14,228 (65,450) (51,222)
Net income,
year ended December 31, 1997 2,504 -0- 2,504
Cash Distributions
($14.72 per interest) -0- (6,500) (6,500)
------------- --------------- ------------
Balance, December 31, 1997 $ 16,732 $ (71,950) $ (55,218)
=========== =============== ============
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
NASHVILLE SUPER 8, LTD.,
A California Limted Partnership
Statements of Partners' Capital, page 2
Years ended December 31, 1997 amd 1996
<TABLE>
<CAPTION>
Limited Partners
Cumulative Total
Capital Cumulative Cash Partners'
Contributions Net Income Distributions Total Capital
<S> <C> <C> <C> <C> <C>
Balance,
Dec.31,1995 $ 3,449,823 $ 112,193 $(454,043) $3,107,973 $3,069,986
Net income,
year ended
Dec. 31,1996 -0- 15,889 -0- 15,889 17,654
Cash distributions
($33.96 per interest) -0- -0- (134,999) (134,999) (149,999)
------------ --------- ----------- ----------- ----------
Balance,
Dec. 31,1996 3,449,823 128,082 (589,042) 2,988,863 2,937,641
Net income,
year ended
Dec. 31,1997 -0- 22,538 -0- 22,538 25,042
Cash distributions
($14.72 per interest) -0- -0- (58,500) (58,500) (65,000)
------------ --------- ----------- ----------- ----------
Balance,
Dec. 31,1997 $ 3,449,823 $ 150,620 $ (647,542) $ 2,952,901 $ 2,897,683
============ ========== =========== =========== ===========
</TABLE>
14
<PAGE>
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
Statements of Cash Flows
Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 25,042 $ 17,654
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 174,814 168,882
(Increase) decrease in:
Accounts receivable (11,893) 936
Operating supplies -0- -0-
Prepaid expenses 250 5,242
Due from affiliate -0- 7,899
Increase (decrease) in:
Accounts payable 5,059 6,106
Accrued expenses 11,142 (4,915)
Due to affiliates 7,622 3,023
---------- ----------
Net cash provided by
operating activities 212,036 204,827
----------- ----------
Cash flows from investing activities:
Purchases of property and equipment (58,998) (25,025)
----------- ----------
Net cash used in investing activities (58,998) (25,025)
----------- ----------
Cash flows from financing activities:
Payments of note payable (7,987) (6,743)
Cash distributions to partners (65,000) (149,999)
----------- ----------
Net cash used in financing activities (72,987) (156,742)
---------- ----------
Net increase in cash
and cash equivalents 80,051 23,060
Cash and cash equivalents, beginning of year 79,268 56,208
---------- ----------
Cash and cash equivalents, end of year $ 159,319 $ 79,268
=========== ==========
Supplemental disclosure of cash flow information:
Interest paid $ (18,133) $ (16,907)
=========== ==========
</TABLE>
15
<PAGE>
NASHVILLE SUPER 8, LTD.,
A California Limited Partnership
Notes to Financial Statements
Years ended December 31, 1997 and 1996
Note 1. THE PARTNERSHIP AND A SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Nashville Super 8 Ltd., A California Limited Partnership (the Partnership),
formerly Motels of America Series XI, A California Limited Partnership, was
formed on September 1, 1988 pursuant to the California Revised Uniform Limited
Partnership Act. The Partnership consists of a general partner which owns a 10%
interest and 585 limited partners which collectively own a 90% interest. The
purpose of the Partnership is to construct, own, and operate a 106-room
"economy" motel in Nashville, Tennessee under a Super 8 franchise. The motel
was opened in April 1989.
The following is a summary of the Partnership's significant accounting policies:
Cash and Cash Equivalents
The Partnership considers all highly liquid instruments purchased with an
original maturity of three months or less to be cash equivalents.
Investment Property
Investment property is recorded at cost. Depreciation is computed using the
straight-line method based on estimated useful lives of 7 to 39 years.
Maintenance and repairs costs are expensed as incurred, while significant
improvements, replacements, and major renovations are capitalized.
Effective January 1, 1996, the Partnership adopted Statement of Financial
Accounting Standard ("SFAS") No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of". SFAS No. 121
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS No. 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. There was no effect on the
financial statements from the adoption of SFAS No. 121.
16
<PAGE>
NASHVILLE SUPER 8, LTD.,
A California Limited Partnership
Notes to Financial Statements
Years Ended December 31, 1997 and 1996
(Continued)
Franchise Fees
Franchise fees are amortized over the 20-year life of the franchise agreement
which expires in 2009.
Note 1. THE PARTNERSHIP AND A SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
Advertising
Advertising costs are expensed as incurred. Advertising expense was $63,443 for
the year ended December 31, 1997 and $58,502 for the year ended December 31,
1996.
Income Taxes
No provision for income taxes has been made as any liability for such taxes
would be that of the partners rather than the Partnership.
Net Income Per Interest
Net income per interest is based upon the 90% of net income allocated to limited
partners divided by 3,975 limited partner interests outstanding throughout the
year.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
17
<PAGE>
NASHVILLE SUPER 8, LTD.,
A California Limted Partnership
Notes to Financial Statements
Years Ended December 31, 1997 and 1996
(Continued)
Note 2. PARTNERSHIP AGREEMENT
Net income or loss and cash distributions from operations of the Partnership are
allocated 90% to the limited partners and 10% to the general partner. Profits
from the sale or other disposition of Partnership property are to be allocated
to the general partner until its capital account equals zero; thereafter, to the
limited partners until their capital accounts equal their capital contributions
reduced by prior distributions of cash from sale or refinancing plus an amount
equal to a cumulative but not compounded annual 8% return thereon which
cumulative return shall be reduced (but not below zero) by the aggregate amount
of prior distributions of cash available for distribution; thereafter, gain
shall be allocated 15% to the general partner and 85% to the limited partners.
Loss from sale shall be allocated 1% to the general partner and 99% to the
limited partners.
Note 3. FRANCHISE AGREEMENT
The Partnership has entered into a twenty-year franchise agreement expiring in
2009 with Super 8 Motels, Inc. to provide the Partnership with consultation in
the areas of design, construction, and operation of the motel. The agreement
required the payment of initial franchise fees of $20,000 and requires ongoing
royalty and chain-affiliated advertising fees based on a percentage of gross
room revenues.
During 1994, the franchise agreement was amended to reduce the Partnership's
area of protection in exchange for the franchisor reducing by one-half the
liquidated damages that would be payable by the Partnership in the event it
elects an early termination of the franchise agreement. In addition, if the
franchisor grants a franchise in the released area and the occupancy rate at the
Partnership's motel drops by three or more points for any twelve month period,
the Partnership may obtain a 1% of gross room sales reduction in royalties
payable for the balance of the franchise agreement or terminate the franchise
agreement upon payment of the reduced liquidated damages. The occupancy rate
was 51.81% in 1996 compared to 65.38% in 1995 and, therefore, management has
notified Super 8 that the Partnership is entitled to the 1% of gross room sales
reduction in royalties payable for the balance of the franchise agreement.
18
<PAGE>
NASHVILLE SUPER 8, LTD.,
A California Limited Partnership
Notes to Financial Statements
Years Ended December 31, 1997 and 1996
(Continued)
Note 4. LONG-TERM DEBT
The Partnership has a note payable to a bank due in monthly installments of
approximately $2,150, including interest at the bank's index rate plus 2%
(10.85% at December 31, 1997), through August 2009 or until paid in full. The
note is secured by a first priority deed of trust on the Partnership's motel.
The fair value of long-term debt approximates its carrying amount based on the
borrowing rates currently available to the Partnership for loans with similar
terms.
Principal payments on this note are due as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 $ 8,384
1999 9,340
2000 10,406
2001 11,593
2002 12,915
Thereafter 111,646
----------
</TABLE> $ 164,284
==========
Note 5. RELATED PARTY TRANSACTIONS
The motel is operated pursuant to a management agreement with the general
partner, GHG Hospitality, Inc. (GHG). The agreement expires upon the
termination or dissolution of the Partnership or upon three months' written
notice from the general partner. The agreement provides for the payment of
monthly management fees of 6% of gross revenues.
The Partnership has agreed to reimburse GHG for certain expenses related to
services performed in maintaining the books and administering the affairs of the
Partnership.
19
<PAGE>
NASHVILLE SUPER 8, LTD.,
A California Limited Partnership
Notes to Financial Statements
Years ended December 31, 1997 and 1996
(Continued)
GHG and an affiliate, Grosvenor Management Services, Inc. (GMS), allocate to
the Partnership certain marketing and accounting salaries and certain other
expenses directly related to the operations of the Partnership.
Fees, reimbursements, salaries, and other expenses paid to GHG and GMS and
included in total expenses for the years ended December 31, 1997 and 1996 are
as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
anagement fees $ 72,584 $ 64,678
Reimbursement for partnership
administration expenses 23,770 22,392
Salaries and other allocated
expenses 31,504 34,143
---------- ----------
$ 127,858 $ 121,213
========= =========
</TABLE>
In addition, all motel staff are employed by GMS. The Partnership reimbursed
GMS $344,455 in 1997 and $304,321 in 1996, including a one percent processing
fee, for the wages of these employees.
In 1997, the Partnership purchased used air conditioners and computers for
$4,780 from an affiliate of GHG.
Note 6. SUBSEQUENT EVENT
Subsequent to December 31, 1997, the Partnership entered into an agreement with
a real estate broker to list the motel for sale. The initial listing price is
$3,700,000. However, there is no assurance that a buyer can be found or that the
motel can be sold for this price. Furthermore, any sale would be subject to the
approval of limited partners holding a majority of the limited partnership
interests.
20
<PAGE>
Item 8. Changes In and Disagreements with Accountants on
------------------------------------------------
Accounting and Financial Disclosure
-----------------------------------
None
PART III
Item 9. Directors and Executive Officers of the Registrant
--------------------------------------------------
The general partner has general responsibility and ultimate authority in all
matters affecting the business of the Partnership.
The general partner and its directors and executive officers as of December
31, 1997 are as follows:
GHG HOSPITALITY, INC. (GHG) was incorporated in November 1989 under the
laws of the state of Delaware. GHG was elected as general partner effective
January 1, 1990.
J. MARK GROSVENOR, 50, is President and a Director of GHG. From 1976 to
1988, he served as chief executive officer of Nite Lite Inns, a California
corporation, which owned Grosvenor Enterprises, a California limited
partnership, which owns Grosvenor Inn. In 1984, he acquired Medallion
Foods, Inc., a food processing company, located in Newport, Arkansas.
Mr. Grosvenor graduated from San Diego State University with a bachelor's
degree in business and finance.
STEPHEN D. BURCHETT, 38, is Vice President of GHG. From 1984 to 1991 he
worked in private business law practice in San Diego, California with Schall,
Boudreau & Gore and Kaufman, Lorber, Grady & Farley. Mr. Burchett graduated
from California State University Fullerton in 1981 with a bachelor's degree
in finance and from the University of Santa Clara School of Law in 1984 with a
juris doctorate.
SYLVIA MELLOR CLARK, 53, is Controller of GHG. In 1978, she joined
Grosvenor Industries, Inc., where she is controller and a director. Prior to
joining Grosvenor Industries, Inc., she operated her own accounting firm from
1976 to 1978. Ms. Clark graduated from San Diego State University and National
University.
21
<PAGE>
Item 10. Executive Compensation
----------------------
The Partnership has not paid and does not propose to pay any executive
compensation to the general partner or any of its affiliates (except as describ-
ed in Item 12 below). There are no compensatory plans or arrangements regarding
termination of employment or change of control.
Item 11. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
(a) No person or group is known to the Partnership to be the
beneficial owner of more than 5% of the outstanding limited
partnership interests in the Partnership.
(b) The general partner does not directly or indirectly own any
limited partnership interests in the Partnership. The general
partner does not possess a right to acquire beneficial ownership
of limited partnership interests in the Partnership.
(c) There are no arrangements, known to the Partnership, which may
result in a change in control of the Partnership.
Item 12. Certain Relationships and Related Transactions
-----------------------------------------------
The motel is operated pursuant to a management agreement with GHG. The
agreement provides for the payment of monthly management fees of 6% of gross
revenues.
The Partnership has agreed to reimburse GHG for certain expenses related to
services performed in maintaining the books and administering the affairs of
the Partnership.
GHG and an affiliate, Grosvenor Management Services, Inc. (GMS), allocate to the
Partnership certain marketing, accounting, and maintenance salaries and other
expenses directly related to the operation of the Partnership.
Fees, reimbursements, salaries, and other expenses paid to GHG and GMS and
included in total expenses for the years ended December 31, 1997 and 1996 are
as follows:
22
<PAGE>
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Management fees $ 72,584 $ 64,678
Reimbursement for partnership
administration expenses 23,770 22,392
Salaries and other allocated expenses 31,504 34,143
---------- ----------
$ 127,858 $ 121,213
</TABLE> ========= =========
In addition, all motel employees are paid by GMS. The Partnership reimbursed
GMS $344,455 in 1997 and $304,321 in 1996, including a one percent processing
fee, for the wages of these employees.
In 1997, the Partnership purchased used air conditioners and computers for
$4,780 from an affiliate of GHG.
Item 13. Exhibits and Reports on Form 8-K
---------------------------------
(a) The following documents are filed as part of this report:
1. Financial Statements (see Index to Financial Statements
filed with this annual report).
2. Exhibits:
3-A. The Prospectus of the Partnership dated September 1,
1987, as supplemented August 31, 1988, as filed
with the Commission, is hereby incorporated herein
by reference.
3-B. Agreement of Limited Partnership set forth as Exhibit
B to the Prospectus, as filed with the Commission, is
incorporated herein by reference.
3-C. Amendment to Agreement of Limited Partnership dated
January 1, 1990, as filed with the Commission, is
incorporated herein by reference.
(b) No reports on Form 8-K were filed during the last quarter of the
period covered by this report.
No annual report or proxy material for the fiscal year 1997 has been sent to the
limited partners of the Partnership. An annual report will be sent to the
limited partners subsequent to this filing and the Partnership has incorporated
such reports in this filing.
23
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NASHVILLE SUPER 8 LTD.,
A California Limited Partnership
By: GHG Hospitality, Inc.
Corporate General Partner
By: /s/ J. Mark Grosvenor Date: March 27, 1998
J. Mark Grosvenor
President and Director of GHG
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: GHG Hospitality, Inc.
Corporate General Partner
By: /s/ J. Mark Grosvenor Date: March 27, 1998
J. Mark Grosvenor
President and Director of GHG
By: /s/ Stephen D. Burchett Date: March 27, 1998
Stephen D. Burchett
Vice President of GHG
By: /s/ Sylvia Mellor Clark Date: March 27, 1998
Sylvia Mellor Clark
Controller of GHG
24
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 159,319
<SECURITIES> 0
<RECEIVABLES> 17,447
<ALLOWANCES> 0
<INVENTORY> 15,455
<CURRENT-ASSETS> 197,168
<PP&E> 4,199,817
<DEPRECIATION> 1,252,452
<TOTAL-ASSETS> 3,155,950
<CURRENT-LIABILITIES> 102,367
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,155,950
<SALES> 0
<TOTAL-REVENUES> 1,211,019
<CGS> 0
<TOTAL-COSTS> 1,167,844
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,133
<INCOME-PRETAX> 25,042
<INCOME-TAX> 0
<INCOME-CONTINUING> 25,042
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,042
<EPS-PRIMARY> 5.67
<EPS-DILUTED> 5.67
</TABLE>
