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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 30, 1997
Net 1 L.P.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 33-16973 13-3421566
(State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.)
</TABLE>
c/o Lexington Corporate Properties, Inc.
355 Lexington Avenue
New York, New York 10017
(Address of principal Executive offices) (zip code)
Registrant's telephone number, including area code (212) 692-7200
N/A
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 30, 1997, Net 1 L.P. ( the "Partnership") a limited partnership formed
under the Uniform Limited Partnership Act of the State of Delaware acquired a
property located at 1045 Mexico Boulevard in Brownsville, Texas (the "Texas
Property") for $3,525,000 from Brownsville Associates Limited Partnership, which
is unrelated to the Partnership. The Texas Property consists of an 85,334 square
foot warehouse style retail store building leased to Wal-Mart Stores, Inc.
pursuant to a triple net lease.
The lease has a remaining term of 10 years and 8 months expiring on January 31,
2008. The lease provides for annual base rental payments of $320,513 or $3.76
per square feet. In addition to net rent, Wal-Mart is required to pay percentage
rent equal to 1% of gross sales in excess of $12,237,437 during the fiscal year
February 1 to January 31 payable on April 1. The lease has five renewal terms of
five years each. Wal-Mart Stores, Inc. has the option to purchase the Texas
Property at a price of $2,849,000 plus expansion costs paid by the Partnership.
The purchase price of $3,525,000 was satisfied by a cash payment and by an
assumption of an existing note with a principal balance of $2,364,950. The note
which is being held by Principal Mutual Life Insurance Company bears interest at
a rate of 7.35% per annum, with a monthly debt service payment of principal and
interest in the amount of $26,709. The note matures on January 15, 2008.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of acquisition described in ITEM 2
Rule 3-14 Financial Statements
On May 30, 1997, the Partnership acquired the Property located in Brownsville,
Texas which is subject to net lease with Wal-Mart Stores, Inc.
which expires on January 31, 2008.
The following table sets forth selected historical operating data for the year
ended December 31, 1996. The selected operating data includes the revenue of the
Property. Interest, depreciation and other costs are not reflected in the
operating data and therefore the operating data is not intended to represent the
complete financial position or results of operations of the Property.
Texas Property
Rental revenue
Year ended December 31, 1996
----------------------------
Rental revenue from property $320,513
========
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(b) Pro Forma Financial Information
The following unaudited pro forma consolidated financial statements of Net 1
L.P. for the year ended December 31, 1996 and, as of and for the three months
ended March 31, 1997 have been prepared from the historical consolidated
financial statements of the Partnership for the year ended December 31, 1996
and, as of and for the three months ended March 31, 1997 as adjusted to give
effect to pro forma adjustment for the acquisition of the Texas Property. The
accompanying pro forma consolidated statements of income for the year ended
December 31, 1996 and the three months ended March 31, 1997 have been prepared
as if the events had been consummated as of January 1, 1996 and January 1, 1997,
respectively. The accompanying pro forma consolidated balance sheet has been
prepared as if the events had been consummated on March 31, 1997. The unaudited
pro forma consolidated financial statements do not purport to be indicative of
what the results of operations of the Partnership would have been had the
transaction been completed on the date assumed, nor is such financial data
necessarily indicative of the results of operations of the Partnership that may
exist in the future. The unaudited pro forma consolidated financial statements
must be read in conjunction with the notes thereto and with the historical
consolidated financial statements of the Partnership.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(FOR THE YEAR ENDED DECEMBER 31, 1996)
<TABLE>
<CAPTION>
Historical Total
(audited) Adjustments (1) Pro Forma
---------------- -------------- ----------------
<S> <C> <C> <C>
Revenues:
Rental (2) $ 2,706,557 $ 320,513 $ 3,027,070
Interest and other 117,486 -- 117,486
---------------- -------------- ----------------
Total Revenues 2,824,043 320,513 3,144,556
---------------- -------------- ----------------
Expenses:
Interest expense (3) 387,658 168,781 556,439
Depreciation (4) 392,545 79,689 472,234
General and administrative 496,412 3,205 499,617
---------------- -------------- ----------------
Total expenses 1,276,615 251,675 1,528,290
---------------- -------------- ----------------
Net Income $ 1,547,428 $ 68,838 $ 1,616,266
================ ============== ================
Net income per Unit of
limited partnership interest (*) $46.39 to $51.03 $2.06 to $2.27 $48.45 to $53.30
================ ============== ================
</TABLE>
(*) Amounts allocated to unit holders vary depending on the dates they became
unit holders.
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NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(FOR THE YEAR ENDED DECEMBER 31, 1996)
1) These amounts reflect the pro forma results of operations of the newly
acquired Texas Property.
2) Rental revenues in this pro forma consolidated statement of income (both
historical and pro forma) are generated from leases that are "net leases",
under which the tenant is responsible for substantially all costs or real
estate taxes, insurance and ordinary maintenance. Pro forma rental revenues
represent straight-line rent as provided by generally accepted accounting
principles, calculated as the difference between the cash rent paid under the
leases and the average rent due over the non-cancelable term of the leases.
3) Applicable pro forma interest expense is calculated based on the annual
interest rate of 7.35% on the existing mortgage note as if the acquisition
occurred on January 1, 1996.
4) Based on the purchase price of the property, including costs incurred on
the closing date, the depreciation expense in this pro forma consolidated
statement of income is computed based on a 40 year, straight-line recovery
period for building and improvements.
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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(FOR THE THREE MONTHS ENDED AND AS OF MARCH 31, 1997)
<TABLE>
<CAPTION>
Total
Historical Adjustments (1) Pro Forma
----------- --------------- -----------
<S> <C> <C> <C>
INCOME STATEMENT:
Revenues:
Rental (2) $ 899,786 $ 80,128 $ 979,914
Interest and other 27,713 -- 27,713
----------- ----------- -----------
Total Revenues 927,499 80,128 1,007,627
----------- ----------- -----------
Expenses:
Interest expense (3) 94,118 43,231 137,349
Depreciation (4) 98,136 19,922 118,058
General and administrative 98,267 801 99,068
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Total expenses 290,521 63,954 354,475
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Net Income $ 636,978 $ 16,174 $ 653,152
=========== =========== ===========
Net income per Unit
of limited partnership interest $ 20.29 $ 0.52 $ 20.81
=========== =========== ===========
BALANCE SHEET (AT END OF PERIOD):
Real estate at cost $22,871,003 $ 3,567,550 $26,438,553
Less: accumulated depreciation 2,394,535 -- 2,394,535
----------- ----------- -----------
Real estate, net 20,476,468 3,567,550 24,044,018
Other assets 2,980,529 (1,202,601) 1,777,928
----------- ----------- -----------
Total assets $23,456,997 $ 2,364,949 $25,821,946
=========== =========== ===========
Mortgage notes payable including
accrued interest) $ 3,546,552 $ 2,364,949 $ 5,911,501
Other liabilities 157,866 -- 157,866
Partners' capital 19,752,579 -- 19,752,579
----------- ----------- -----------
Total liabilities and capital $23,456,997 $ 2,364,949 $25,821,946
=========== =========== ===========
</TABLE>
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NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(FOR THE THREE MONTHS ENDED AND AS OF MARCH 31, 1997)
1) These amounts reflect the pro forma results of operations of the newly
acquired Texas Property.
2) Rental revenues in this pro forma consolidated statement of income (both
historical and pro forma) are generated from leases that are "net leases",
under which the tenant is responsible for substantially all costs or real
estate taxes, insurance and ordinary maintenance. Pro forma rental revenues
represent straight-line rent as provided by generally accepted accounting
principles, calculated as the difference between the cash rent paid under the
leases and the average rent due over the non-cancelable term of the leases.
3) Applicable pro forma interest expense is calculated based on the annual
interest rate of 7.35% on the existing mortgage note as if the acquisition
occurred on January 1, 1997.
4) Based on the purchase price of the property, including costs incurred on
the closing date, the depreciation expense in this pro forma consolidated
statement of income is computed based on a 40 year, straight-line recovery
period for building and improvements.
(c) Exhibits:
To be filed.
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Signatures
Pursuant to the requirements 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.
Net 1 L.P.
By: Lepercq Net 1 L.P.
its general partner
By: Lepercq Net 1 Inc.
its general partner
Date: June 26, 1997 By: ____________________
E. Robert Roskind
President
