<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
|X| Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
[Fee Required]
For the fiscal year ended December 31, 1998
|_| Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
[No Fee Required]
For the Transition period from ________to________
Commission File Number 33-16973
NET 1 L.P.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 13-3421566
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Lexington Corporate Properties Trust
355 Lexington Avenue
New York, NY 10017
-------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 692-7200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interests
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No|__|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|
State the aggregate market value of the voting stock held by non-affiliates of
the registrant.
There is no active public market for the units of limited partnership interests
issued by the Registrant.
Not Applicable.
Page 1 of 29
<PAGE> 2
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K into which the document is incorporated: (1) Any annual report
to security holders; (2) Any proxy or information statement; and (3) Any
prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of
1933. The listed documents should be clearly described for identification
purposes.
None.
2
<PAGE> 3
PART I.
Forward-Looking Statements
- --------------------------
When used in this Form 10-K Report, the words "believes", "expects", "estimates"
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties which could cause
actual results to differ materially. In particular, among the factors that could
cause actual results to differ materially are continued qualification as a real
estate partnership, general business and economic conditions, competition,
increases in real estate construction costs, interest rates, accessibility of
debt and equity capital markets and other risks inherent in the real estate
business including tenant defaults, potential liability relating to
environmental matters and illiquidity of real estate investments. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof. The Partnership undertakes no obligation to
publicly release the results of any revisions to these forward-looking
statements which may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
ITEM 1. BUSINESS
- -----------------
Net 1 L.P. (the "Partnership"), is a limited partnership formed on August 25,
1987 under the Uniform Limited Partnership Act of the State of Delaware for the
purpose of investing primarily in existing commercial properties which are
triple net leased to corporations or other entities. The Partnership Agreement
was amended and restated on September 30, 1994, which enables the Partnership
to make additional real estate investments.
The General Partner of the Partnership is Lepercq Net 1 L.P., a Delaware limited
partnership (the "General Partner"). Lepercq Net 1 Inc. is the general partner
of the General Partner. The directors and executive officers of Lepercq Net 1
Inc. are discussed in PART III, Item 10 (Directors and Executive Officers of the
Registrant). Leased Properties Management, Inc., an affiliate of Lepercq Net 1
Inc., performs certain property management services in connection with the
operation of the Partnership's business.
The Partnership commenced an offering to the public of 50,000 units at $1,000
per unit of limited partnership interests (the "Units") on November 20, 1987
pursuant to a Prospectus. The Prospectus was filed with the Securities and
Exchange Commission as part of the Partnership's Registration Statement on Form
S-11 (No. 33-16973). On January 17, 1989, the Partnership held the final
admission of Limited Partners, and the offering was terminated after a total of
31,001 Units had been sold, equaling $31.001 million in capital contributions.
On September 30, 1990, the Partnership repurchased 229 limited partnership Units
for an aggregate purchase price of $169,930. No Units have been repurchased
since 1990.
The Partnership invests in net leased real properties (or interests therein)
located throughout the United States, which offer the potential for (i)
preservation and protection of the capital of the limited partners of the
Partnership, (ii) providing increasing cash available for distributions,
(iii) providing tax benefits so that a portion of the cash distributions is
sheltered from current income taxation, and (iv) appreciation in value of the
Partnership's investments.
3
<PAGE> 4
Investments are made in various types of commercial real properties and
interests therein. Such investments may include, but are not limited to: fitness
centers, warehouses, distribution centers, office buildings, retail stores,
hotels, motels, nursing homes and congregate care facilities. Investments are
not restricted as to specific geographical areas, however, all of the
Partnership's investments are made within the United States.
Each of the following properties (as hereinafter defined) accounted for 10% or
more of consolidated rental revenues for the years ended December 31, follow:
<TABLE>
<CAPTION>
Property 1998 1997 1996
-------- ---- ---- ----
<S> <C> <C> <C>
Phoenix, AZ 24% 25% 25%
Autozone (*) 24% 26% 29%
Sumter, SC 16% 17% 18%
Brownsville, TX 12% - -
California (**) 11% 12% 13%
Gainesville, GA 10% 11% 12%
</TABLE>
(*) These properties consist of 16 retail stores located as
follows: two in Alabama, two in Florida, one in Georgia,
five in New Mexico, and six in Texas.
(**) These properties consist of three bus terminals located
in California.
The Partnership attempts to maintain a working capital cash reserve in an amount
equal to 3% of the gross proceeds of the offering, which is anticipated to be
sufficient to satisfy liquidity requirements. Liquidity of the Partnership could
be adversely affected by unanticipated costs, particularly costs relating to the
vacancy of properties, tenants experiencing financial difficulties, and greater
than anticipated operating expenses. To the extent that such working capital
reserves are insufficient to satisfy the cash requirements of the Partnership,
additional funds may be obtained either through short-term or permanent loans or
by reducing distributions to limited partners.
The Partnership operates in one industry segment, investment in net leased real
property.
The General Partner has granted Lexington Corporate Properties Trust (the
"Company"), whose chairman and Co-Chief Executive Officer is chairman of the
General Partner, an option exercisable at any time, to acquire the general
partnership interest. The Company provides the Partnership with various
administrative services. Under the terms of the option, the Company, subject to
review of any such transaction by the independent members of its Board of
Trustees, may acquire the general partnership interest at its fair market value
based upon a formula relating to partnership cash flows, with the Company
retaining the option of paying such fair market value in securities of the
Company, limited partnership units in controlled subsidiaries, cash or a
combination thereof.
Competition
- -----------
The real estate business is highly competitive and the Partnership competes with
numerous established companies having significantly greater resources and
experience. Competition may also come from other partnerships which have been or
may be formed by the General Partner or its affiliates.
4
<PAGE> 5
Environmental Matters
- ---------------------
Under various federal, state and local environmental laws, statutes, ordinances,
rules and regulations, an owner of real property may be liable for the costs of
removal or redemption of certain hazardous or toxic substances at, on, in or
under such property as well as certain other potential costs relating to
hazardous or toxic substances (including government fines and penalties and
damages for injuries to persons and adjacent property). Such laws often impose
liability without regard to whether the owner knew of, or was responsible for,
the presence or disposal of such substances. Although the Partnership's tenants
are responsible for any environmental damage and claims related to the leased
premises, in the event of the bankruptcy or inability of the tenant of such
premises to satisfy any obligations with respect thereto, the Partnership may be
required to satisfy such obligations. In addition, under certain environmental
laws, the Partnership, as the owner of such properties, may be held directly
liable for any such damages or claims irrespective of the provisions of any
lease.
From time to time, in connection with the conduct of the Partnership's business,
and prior to the acquisition of any property from a third party or as required
by the Partnership's financing sources, the Partnership authorizes the
preparation of Phase I environmental reports with respect to its properties.
Based upon such environmental reports and management's ongoing review of its
properties, as of the date of this report, management was not aware of any
environmental condition with respect to any of the Partnership's properties
which management believed would be reasonably likely to have a material adverse
effect on the Partnership. There can be no assurance, however, that (i) the
discovery of environmental conditions, the existence or severity of which were
previously unknown, (ii) changes in law, (iii) the conduct of tenants or (iv)
activities relating to properties in the vicinity of the Partnership's
properties will not expose the Partnership to material liability in the future.
Changes in laws increasing the potential liability for environmental conditions
existing on properties or increasing the restrictions on discharges or other
conditions may result in significant unanticipated expenditures or may otherwise
adversely affect the operations of the Partnership's tenants, which would
adversely affect the Partnership's funds from operations.
Employees
- ---------
The Partnership has no employees. All necessary personnel are provided by the
General Partner or its affiliates or agents. See Part III Item 10, "Directors
and Executive Officers of the Registrant" and Item 13, "Certain Relationships
and Related Transactions."
5
<PAGE> 6
ITEM 2. PROPERTIES
- -------------------
<TABLE>
<CAPTION>
Annualized Net
Acquisition Base Rent at Rentable
Date of Cost 12/31/98 Lease(s) Square
Acquisition Tenant Location ($000's) ($000's) Expires Feet
- ----------- -------------------- ----------------------- -------- -------- ------- ----
<S> <C> <C> <C> <C> <C> <C>
07-18-88 Scandinavian
US Swim & Fitness Phoenix, AZ $ 5,860 $ 706 07-08 36,556
08-26-88 Autozone Stores, Inc. Various (16 properties) 6,980 736 08-08 104,609
02-28-89 Greyhound Lines, Inc. Various (3 properties) 2,470 360 02-09 195,212
08-22-94 Circuit City Stores, Inc. Lynchburg, VA 751 86 11-06 9,300
11-27-95 Wal-Mart Stores, Inc. Sumter, SC 3,850 328 01-08 103,377
12-28-95 Wal-Mart Stores, Inc. Gainesville, GA 2,960 218 01-09 89,199
05-30-97 Wal-Mart Stores, Inc. Brownsville, TX 3,569 321 01-08 85,334
-------- ------ --------
$ 26,440 $2,755 623,587
======== ====== ========
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
- -------------------------
Neither the Partnership nor its properties are subject to any pending legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -----------------------------------------------------------
No matter was submitted during the fourth quarter of the fiscal year ended
December 31, 1998 to a vote of Unit holders.
6
<PAGE> 7
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
- -------------------------------------------------------------------------
MATTERS
- -------
An established public trading market for the Units does not exist, and it is not
anticipated that such a market will develop in the near future. Further, the
transfer of Units is subject to substantial restrictions. Accordingly,
information as to the market value of a Unit at any given date is not available.
As of December 31, 1998, there were 1,449 investors holding 30,772 limited
partnership units.
The Partnership makes quarterly cash distributions. Cash distributions paid per
Unit of limited partnership interest for each of the years in the three-year
period ended December 31, 1998 was $50.04.
7
<PAGE> 8
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
The following sets forth a summary of selected financial data for the
Partnership for the years ended December 31, ($000's except per unit data):
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Rental revenue $3,265 $2,992 $2,707 $1,903 $1,884
====== ====== ====== ====== ======
Income before
extraordinary item $1,813 $1,855 $1,547 $1,093 $2,592
====== ====== ====== ====== ======
Income before
extraordinary item
per Unit of limited
partnership interest (*) $54.82 to $59.50 $55.85 to $61.00 $46.39 to $51.03 $32.59 to $36.16 $ 76.23 to $86.34
================ ================ ================ ================ =================
Extraordinary item $ -- $ -- $ -- $ -- $1,200
====== ====== ====== ====== ======
Extraordinary item
per Unit of limited
partnership interest (*) $ -- $ -- $ -- $ -- $35.31 to $39.98
====== ====== ====== ====== ======
Net income $1,813 $1,855 $1,547 $1,093 $3,792
====== ====== ====== ====== ======
Net income per Unit
of limited partnership
interest (*) $ 54.82 to $59.50 $ 55.85 to $61.00 $ 46.39 to $51.03 $ 32.59 to $36.16 $111.54 to $126.32
================== ================== ================== ================== ==================
Total assets $25,534 $25,663 $23,179 $23,412 $21,420
====== ====== ====== ====== ======
Mortgage notes
payable $5,344 $5,676 $3,552 $3,687 $ --
====== ====== ====== ====== ======
Cash distributions -
limited partners
(per Unit) $50.04 $50.04 $50.04 $93.40 $50.04
====== ====== ====== ====== ======
</TABLE>
(*) Amounts allocated to unit holders vary depending on the dates they became
unit holders.
The above financial data should be read in conjunction with the Consolidated
Financial Statements and the related notes appearing elsewhere in this report.
8
<PAGE> 9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- -------------------------------------------------------------------------------
OF OPERATIONS
- -------------
Liquidity and Capital Resources
- -------------------------------
On November 20, 1987, the Partnership commenced the sale of up to 50,000 Units
of limited partnership interests at $1,000 per Unit with the option to offer an
additional 50,000 Units. As of January 17, 1989, the Partnership had raised a
total of $31.001 million in capital contributions (31,001 Units) and the
offering was terminated. The net offering proceeds consisting of aggregate gross
offering proceeds of $31.001 million less related offering costs of $3.781
million, along with the proceeds from a closing loan and other mortgage debt,
have been utilized by the Partnership to invest in triple net leased real estate
properties (or interests therein); to pay for related property acquisition
expenses, financing and acquisition fees; and to provide for a working capital
reserve. On September 30, 1990, the Partnership repurchased 229 limited
partnership Units for an aggregate purchase price of $169,930. No Units have
been repurchased since 1990.
Pursuant to the Partnership Agreement, limited partnership Units may be
repurchased at 90% of the net asset value 60 days after the offer to repurchase
has been made.
The Partnership attempts to maintain a working capital reserve in an amount
equal to 3% of the gross proceeds of its offering, an amount which is
anticipated to be sufficient to satisfy liquidity requirements. Liquidity of the
Partnership could be adversely affected by unanticipated costs, lessees
experiencing financial difficulties and greater than anticipated operating
expenses. To the extent that such working capital reserves are insufficient to
satisfy the cost requirements of the Partnership, additional funds may be
obtained through short-term or permanent loans or by reducing distributions to
limited partners.
The unpaid cumulative preferred return at December 31, 1998 totaled $12.701
million ($409.53 to $415.38 per Unit, per close), and was reduced by $384,958
($12.51 per Unit) with the fourth quarter 1998 distribution paid on January 29,
1999.
Except for the debt service requirements under the mortgages, there are no
material restrictions upon the Partnership's present or future ability to make
distributions in accordance with the provisions of its Partnership Agreement.
Impact of Year 2000
- -------------------
The Year 2000 compliance issue concerns the inability of computer systems to
accurately calculate, store or use a date after 1999. This could result in a
system failure or miscalculations causing disruptions of operations. The Year
2000 issue affects virtually all companies and organizations.
The General Partner has been taking the necessary steps to understand the nature
and extent of the work required to make its core information computer systems
and non-information embedded systems Year 2000 compliant. The General Partner
has determined that it will not be necessary to significantly modify, update or
replace its computer hardware and software applications.
9
<PAGE> 10
The vendor that provides the General Partner's existing general ledger software
has released a compliant version of its product which the General Partner is
currently using. The cost of the general ledger system did not have a material
effect on the Partnership's financial condition or results of operations. The
Partnership's properties, which have no scheduled lease expirations prior to
November 30, 2006, are subject to net leases and accordingly the Year 2000
compliance of embedded systems (e.g., security, HVAC, fire and elevator systems)
are the responsibility of the tenants. The General Partner has contacted each of
its tenants asking them to identify and evaluate the changes and modifications
necessary to make these systems compliant for Year 2000 processing. The cost
associated with the effect to make the embedded systems Year 2000 compliant are
the tenant's responsibility. However, no assurances can be given that the
properties embedded systems will be Year 2000 compliant by December 31, 1999 and
compliance costs, if any, incurred by the Partnership would not be significant.
The General Partner is communicating with significant third-party service
providers and vendors with which it does business to determine the efforts being
made on their part for compliance. The General Partner is attempting to receive
compliance certificates from all third parties that have a material impact on
the Partnership's operations, but no assurance can be given with respect to the
cost or timing of such efforts or the potential effects of any failure to
comply.
Management will closely monitor the General Partner's entire Year 2000
compliance function and will develop contingent plans no later than the third
quarter of 1999 if necessary.
Results of Operations (In thousands)
- ------------------------------------
<TABLE>
<CAPTION>
Increase (Decrease)
1998 1997 1996 1998-1997 1997-1996
---- ---- ---- --------- ---------
<S> <C> <C> <C> <C> <C>
Total revenues $ 3,347 3,080 2,824 $ 267 $ 256
----- ----- ----- --- ---
Total expenses:
Interest 510 469 388 41 81
Depreciation 476 439 393 37 46
General and administrative 548 317 496 231 (179)
----- ----- ----- --- -----
1,534 1,225 1,277 309 (52)
----- ----- ----- --- -----
Net income $ 1,813 1,855 1,547 $ (42) $ 308
===== ===== ===== === ===
</TABLE>
The changes in results of operations with respect to revenues, interest and
depreciation for the years ended December 31, 1998, 1997, and 1996 are primarily
attributable to the operations of the real property investment acquired and
related mortgage assumed in 1997 as described above.
General and administrative expenses increased in 1998 due to transactional
expenses incurred relating to the proposed partnership roll-up.
10
<PAGE> 11
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
- ------------------------------------------------------------------
There are no exposure to market risk due to the Partnership's fixed rate
long-term indebtedness.
11
<PAGE> 12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ---------------------------------------------------
NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
INDEX
Page
----
Independent Auditors' Report 13
Consolidated Balance Sheets at December 31, 1998 and 1997 14
Consolidated Statements of Income for the years ended
December 31, 1998, 1997 and 1996 15
Consolidated Statements of Changes in Partners' Capital (Deficit)
for the years ended December 31, 1998, 1997 and 1996 16
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996 17
Notes to Consolidated Financial Statements 18 - 23
Consolidated Financial Statement Schedule
- -----------------------------------------
Real Estate and Accumulated Depreciation Schedule III 24
12
<PAGE> 13
Independent Auditors' Report
----------------------------
The Partners
Net 1 L.P.:
We have audited the consolidated financial statements of Net 1 L.P. and
consolidated partnerships as listed in the accompanying index. In connection
with our audits of the consolidated financial statements, we also have audited
the financial statement schedule as listed in the accompanying index. These
consolidated financial statements and the financial statement schedule are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these consolidated financial statements and the financial
statement schedule 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Net 1 L.P. and
consolidated partnerships as of December 31, 1998 and 1997, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1998, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.
KPMG LLP
New York, New York
February 5, 1999
13
<PAGE> 14
NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED BALANCE SHEETS
(In thousands, except units and per unit amounts)
December 31, 1998 and 1997
<TABLE>
<CAPTION>
Assets 1998 1997
---- ----
<S> <C> <C>
Real estate, at cost:
Buildings $ 18,914 $ 18,914
Land 7,526 7,526
--------- ---------
26,440 26,440
Less: accumulated depreciation 3,211 2,735
--------- ---------
23,229 23,705
Cash and cash equivalents 1,688 1,312
Rent receivable 455 400
Other assets 162 246
--------- ---------
$ 25,534 $ 25,663
========= =========
Liabilities and Partners' Capital (Deficit)
Mortgage notes payable 5,344 5,676
Accrued interest payable 28 30
Accounts payable and other liabilities 128 165
--------- ---------
5,500 5,871
--------- ---------
Commitments and contingencies (note 5)
Partners' capital (deficit):
General Partner (169) (174)
Limited Partners ($1,000 per Unit,
50,000 Units authorized, 30,772 Units
issued and outstanding) 20,203 19,966
--------- ---------
Total partners' capital 20,034 19,792
--------- ---------
$ 25,534 $ 25,663
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
14
<PAGE> 15
NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per unit amounts)
Years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
---------------- ---------------- ----------------
<S> <C> <C> <C>
Revenues:
Rental $ 3,265 $ 2,992 $ 2,707
Interest and other 82 88 117
---------------- ---------------- ----------------
3,347 3,080 2,824
---------------- ---------------- ----------------
Expenses:
Interest 510 469 388
Depreciation 476 439 393
General and administrative 548 317 496
---------------- ---------------- ----------------
1,534 1,225 1,277
---------------- ---------------- ----------------
Net income $ 1,813 $ 1,855 $ 1,547
================ ================ ================
Net income per Unit of limited
partnership interest (*) $54.82 to $59.50 $55.85 to $61.00 $46.39 to $51.03
================ ================ ================
</TABLE>
(*) Amounts allocated to unit holders vary depending on the dates they became
unit holders.
See accompanying notes to consolidated financial statements.
15
<PAGE> 16
NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF CHANGES IN
PARTNERS' CAPITAL (DEFICIT)
(In thousands)
Years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
General Limited
Total Partner Partners
----- ------- --------
<S> <C> <C> <C>
Partners' capital (deficit) at December 31, 1995 $ 19,532 $(180) $19,712
Net income 1,547 31 1,516
Cash distributions (1,571) (31) (1,540)
-------- ---- -------
Partners' capital (deficit) at December 31, 1996 19,508 (180) 19,688
Net income 1,855 37 1,818
Cash distributions (1,571) (31) (1,540)
-------- ---- -------
Partners' capital (deficit) at December 31, 1997 19,792 (174) 19,966
Net income 1,813 36 1,777
Cash distributions (1,571) (31) (1,540)
-------- ---- -------
Partners' capital (deficit) at December 31, 1998 $ 20,034 $(169) $20,203
======== ==== =======
</TABLE>
See accompanying notes to consolidated financial statements.
16
<PAGE> 17
NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,813 $ 1,855 $ 1,547
------- ------- -------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 476 439 393
Increase in rent receivable (55) (85) (15)
Decrease (increase) in other assets 84 (79) 163
Decrease in accrued interest payable (2) (2) (1)
(Decrease) increase in accounts payable
and other liabilities (37) 78 (74)
------- ------- -------
Total adjustments 466 351 466
------- ------- -------
Net cash provided by operating activities 2,279 2,206 2,013
------- ------- -------
Cash flows from investing activities:
Acquisition of real estate -- (1,205) --
------- ------- -------
Cash flows from financing activities:
Principal payments on mortgage notes (332) (241) (135)
Cash distributions to partners (1,571) (1,571) (1,571)
------- ------- -------
Net cash used in financing activities (1,903) (1,812) (1,706)
------- ------- -------
Net increase (decrease) in cash and
cash equivalents 376 (811) 307
Cash and cash equivalents at beginning of year 1,312 2,123 1,816
------- ------- -------
Cash and cash equivalents at end of year $ 1,688 $ 1,312 $ 2,123
======= ======= =======
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 512 $ 471 $ 389
======= ======= =======
</TABLE>
Supplemental disclosure of non-cash investing and financing activities:
On May 30, 1997, in connection with the acquisition of a property in
Brownsville, Texas, the Partnership assumed approximately $2.4 million of first
mortgage financing.
See accompanying notes to consolidated financial statements.
17
<PAGE> 18
NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998, 1997 and 1996
1. The Partnership
Net 1 L.P. (the "Partnership") was formed as a limited partnership on
August 25, 1987 under the laws of the State of Delaware to invest in net
leased real estate properties or interests therein. The Partnership
terminates on December 31, 2027, unless sooner terminated by law.
On November 20, 1987, the Partnership commenced the sale of up to 50,000
Units of limited partnership interests at $1,000 per Unit with the option
to offer an additional 50,000 Units. As of the last admission of Limited
Partners, which occurred on January 17, 1989, the Partnership had raised a
total of $31.001 million (31,001 Units) from 1,638 investors and the
offering was terminated. On September 30, 1990, the Partnership repurchased
229 limited partnership Units for an aggregate purchase price of $169,930.
No Units have been repurchased since 1990.
Pursuant to the Partnership Agreement, limited partnership Units may be
repurchased at 90% of the net asset value 60 days after the offer to
repurchase has been made.
As of December 31, 1998, there was a total of 1,449 investors holding
30,772 limited partnership units.
2. Summary of Significant Accounting Policies
The Partnership's financial statements are prepared on the accrual basis of
accounting for financial reporting purposes.
The financial statements reflect the accounts of the Partnership, Net 1
Sumter L.P. and Net 1 Gainesville L.P., on a consolidated basis. The
Partnership owns a 99% limited partnership interest in each of Net 1 Sumter
L.P. and Net 1 Gainesville L.P. The minority interest is not significant
and is included in other liabilities and general and administrative
expenses in the accompanying consolidated financial statements.
Real estate assets are stated at cost, less accumulated depreciation. If
there is an event or change in circumstance that indicates an impairment in
the value of a property has occurred, the Partnership's policy is to assess
any impairment in value by making a comparison of the current and projected
operating cash flows of each such property over its remaining useful life,
on an undiscounted basis, to the carrying amount of the property. If such
carrying amounts are in excess of the estimated projected operating cash
flows of the property, the Partnership would recognize an impairment loss
equivalent to an amount required to adjust the carrying amount to its
estimated fair market value. No such impairment loss has occurred.
All direct costs associated with the acquisition of real estate are
capitalized.
Depreciation is determined by the straight-line method over the remaining
estimated economic useful lives of the properties. The Partnership
generally depreciates buildings over a 40-year period. Depreciation for tax
purposes is determined in accordance with the Modified Accelerated Cost
Recovery System.
(Continued)
18
<PAGE> 19
NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2., Continued
The leases relating to the properties are operating leases in accordance
with generally accepted accounting principles. Rental revenue is recognized
on a straight-line basis over the minimum lease terms. At December 31, 1998
and 1997, rent receivable primarily consists of the excess of rental
revenues recognized on a straight-line basis over the rents collectible
under the leases.
Percentage rent is recognized based on a cash basis. The percentage rents
received from the Autozone, the Sumter and the Gainesville Properties for
each of the years in the three-year ended December 31, 1998 were $366,000,
$319,000 and $312,000, respectfully. Percentage rent received from the
Brownsville Property for the year ended December 31, 1998 was $80,000. The
Partnership considers all highly liquid instruments with maturities of
three months or less from the date of purchase to be cash equivalents.
The Partnership uses the accrual basis of accounting for Federal income tax
purposes. No provision for income taxes has been made as the liability for
such taxes is that of the partners rather than the Partnership.
Income per Unit amounts were calculated by using the weighted average
number of Units outstanding for each year and allocating the income
attributable for that year to the Limited Partners. The weighted average
Units outstanding for each of the years in the three-year ended
December 31, 1998 was 30,772.
The Financial Accounting Standards Board's Statement of Financial
Accounting Standards (SFAS) No. 107, Disclosures about Fair Value of
Financial Instruments, defines fair value of a financial instrument as the
amount at which the instrument could be exchanged at a current transaction
between willing parties. The Partnership's cash, mortgage notes payable,
accounts payable and accrued liabilities are considered to be financial
instruments and except for certain mortgage notes payable, as described in
note 5, are carried at cost, which approximates fair value.
In June 1997, SFAS No. 130, "Reporting Comprehensive Income", and SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information,"
were issued. SFAS No. 130 established standards for reporting and
displaying comprehensive income and its components in a financial statement
that is displayed with the same prominence as other financial statements.
Reclassification of financial statements for earlier periods, provided for
comparative purposes, is required. The statement also requires the
accumulated balance of other comprehensive income to be displayed
separately from retained earnings and additional paid-in capital in equity
section of the balance sheet. SFAS No. 131 establishes standards for
reporting information about operating segments in annual and interim
financial statements. Operating segments are defined as components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how
to allocate resources and in assessing performance.
(Continued)
19
<PAGE> 20
NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2., Continued
Categories required to be reported as well as reconciled to the financial
statements are segment profit or loss, certain specific revenue and expense
items, and segment assets. SFAS No. 130 and No. 131 are effective for
fiscal years beginning after December 15, 1997. The adoption of these
standards had no impact on the Partnership's financial position and
operating results as of and for the year ended December 31, 1998.
Management of the Partnership has made a number of estimates and
assumptions relating to the reporting of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported amounts
of revenues and expenses to prepare these consolidated financial statements
in conformity with generally accepted accounting principles. Actual results
could differ from those estimates.
Certain amounts included in the prior years' financial statements have been
reclassified to conform with the current year's presentation.
3. The Partnership Agreement
Pursuant to the terms of the Partnership Agreement, the General Partner is
liable for all general obligations of the Partnership to the extent not
paid by the Partnership. The Limited Partners are not and will not be
liable for the debts of the Partnership beyond their contributed capital.
Distributable cash from operations, as defined in the Partnership
Agreement, is generally to be distributed 98% to the Limited Partners and
2% to the General Partner until each Limited Partner has received total
distributions from operations equal to an 11% cumulative non-compounded
preferred return. Thereafter, such distributions are to be made 90% to the
Limited Partners and 10% to the General Partner.
Distributable cash from capital transactions, as defined, is generally to
be distributed 99% to the Limited Partners and 1% to the General Partner
until each Limited Partner has received total distributions from capital
transactions equal to an 11%, cumulative non-compounded preferred return
plus a return of capital contributions. Thereafter, such distributions are
to be made 85% to the Limited Partners and 15% to the General Partner.
For financial statement reporting purposes, all items of income are
allocated in the same proportion as cumulative distribution of
distributable cash.
Distributable cash attributed to a particular limited partner's Unit is
calculated from the date of admission to the Partnership. The unpaid
cumulative preferred return at December 31, 1998 totaled $12.701 million
($409.53 to $415.38 per Unit, per close). On January 31, 1999, the unpaid
cumulative preferred return at December 31, 1998 was reduced by a cash
distribution to the Limited Partners for the quarter ended December 31,
1998 totaling $384,958 ($12.51 per unit). The General Partner received a
cash distribution of $7,856 on January 29, 1999.
(Continued)
20
<PAGE> 21
NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3., Continued
Cash distributions paid per Unit of limited partnership interest for each
of the years in the three-year period ended December 31, 1998 was $50.04.
Taxable income, as defined, before depreciation, generally is allocated in
the same proportion as cumulative distributions of distributable cash or
cumulative proceeds from capital transactions (other than the portion of
such proceeds constituting a return of capital). Depreciation and
amortization expense, to the extent that it does not exceed income before
depreciation for such year, shall be allocated in the same ratio as taxable
income. Any excess of such depreciation deductions shall be allocated 98%
to the Limited Partners and 2% to the General Partner. For financial
statement reporting purposes all items of income are allocated in the same
proportion as distributions of distributable cash or proceeds from capital
transactions.
4. Investments in Real Estate
Following is a detailed schedule of the Partnership's real estate and lease
terms at December 31, 1998:
<TABLE>
<CAPTION>
Annualized Lease(s) Net
Acquisition Base Rent at Expiration Rentable
Date of Cost 12/31/98 Date Square
Acquisition Tenant Location ($000's) ($000's) (month/year) Feet
- ----------- ------ -------- -------- -------- ---------- ----
<S> <C> <C> <C> <C> <C> <C>
07-18-88 Scandinavian
US Swim & Fitness Phoenix, AZ $ 5,860 $ 706 07-08 36,556
08-26-88 Autozone Stores, Inc. Various (16 properties) 6,980 736 08-08 104,609
02-28-89 Greyhound Lines, Inc. Various (3 properties) 2,470 360 02-09 195,212
08-22-94 Circuit City Stores, Inc. Lynchburg, VA 751 86 11-06 9,300
11-27-95 Wal-Mart Stores, Inc. Sumter, SC 3,850 328 01-08 103,377
12-28-95 Wal-Mart Stores, Inc. Gainesville, GA 2,960 218 01-09 89,199
05-30-97 Wal-Mart Stores, Inc. Brownsville, TX 3,569 321 01-08 85,334
-------- ------ --------
$ 26,440 $2,755 623,587
======== ====== ========
</TABLE>
5. Mortgage Notes Payable
On July 14, 1995, the Partnership acquired a 99% limited partnership
interest in Net 1 Sumter L. P. and in Net 1 Gainesville L. P., Delaware
special purpose limited partnerships. On November 27, 1995, Net 1 Sumter L.
P. acquired the property located in Sumter, South Carolina for
approximately $3.85 million by a cash payment and by an assumption of a
20-year, 10.375% secured note. The balance of the note on the date of
acquisition was $2.110 million. The debt service of $25,500, to fully
amortize the note by maturity on January 1, 2008, is payable monthly in
arrears.
(Continued)
21
<PAGE> 22
NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5., Continued
On December 28, 1995, Net 1 Gainesville L. P. acquired the property located
in Gainesville, Georgia by a cash payment and assumption of a 116-month,
13% first mortgage note and a 176-month, 7.5% second mortgage note. The
balances of the mortgage notes on the date of acquisition were $1.197
million and $440,476. The first mortgage note provides for debt service
payments of $18,182, to fully amortize the note by maturity on January 1,
2004, is payable monthly in arrears while interest on the second note is
accruing and being added to principal.
On May 30, 1997, the Partnership acquired the property located in
Brownsville, Texas for approximately $3.6 million by a cash payment and by
an assumption of an existing note with a principal balance of approximately
$2.365 million. The note 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 to fully amortize the note by maturity on January 15, 2008.
Required principal payments of the mortgage notes payable for the
succeeding five years are as follows ($000):
<TABLE>
<CAPTION>
Year ending December 31, Amount
------------------------ ------
<S> <C> <C>
1999 $ 416
2000 459
2001 507
2002 560
2003 620
</TABLE>
The estimated fair value of the mortgage notes payable at December 31, 1998
and 1997 are $5.671 million and $6.077 million, respectively, and is based
on a valuation of these debts using market rates of interest (approximately
7.5%) as of December 31, 1998 and 1997. At December 31, 1996, the carrying
value of the mortgage notes payable was not substantially different than
the fair value.
6. Leases
Minimum future rental payments receivable under noncancelable operating
leases for the properties as of December 31, 1998, are as follows:
<TABLE>
<CAPTION>
Year Ending Amounts
December 31, (In thousands)
------------ --------------
<S> <C> <C>
1999 $ 2,809
2000 2,809
2001 2,810
2002 2,824
2003 2,857
Thereafter 13,267
---------
$ 27,376
=========
</TABLE>
(Continued)
22
<PAGE> 23
NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6., Continued
The leases are triple net leases requiring the lessees to pay all taxes,
insurance, maintenance, and all other similar charges and expenses relating
to the properties and their use and occupancy.
Each of the following properties accounted for 10% or more of rental
revenues shown for the years ended December 31,:
<TABLE>
<CAPTION>
Property 1998 1997 1996
-------- ---- ---- ----
<S> <C> <C> <C>
Phoenix, AZ 24% 25% 25%
Autozone (*) 24% 26% 29%
Sumter, SC 16% 17% 18%
Brownsville, TX 12% - -
California (**) 11% 12% 13%
Gainesville, GA 10% 11% 12%
</TABLE>
(*) These properties consist of 16 retail stores located
as follows: two in Alabama, two in Florida, one in
Georgia, five in New Mexico, and six in Texas.
(**) These properties consist of three bus terminals located in
California.
7. Related Parties
The General Partner has granted Lexington Corporate Properties Trust (the
"Company"), whose chairman and Co-Chief Executive Officer is chairman of
the General Partner, an option exercisable at any time, to acquire the
general partnership interest. The Company provides the Partnership various
administrative services. Under the terms of the option, the Company,
subject to review of any such transaction by the independent members of
its Board of Trustees, may acquire the general partnership interest at its
fair market value based upon a formula relating to partnership cash flows,
with the Company retaining the option of paying such fair market value in
securities of the Company, limited partnership units in controlled
subsidiaries, cash or a combination thereof.
Leased Properties Management, Inc., an affiliate of the General Partner, is
entitled to receive a fee for managing the Partnership's properties in the
amount of 1% of gross annual rental receipts (or a greater amount in
certain circumstances). For the years ended December 31, 1998, 1997 and
1996, management fees which are included in general and administrative
expenses totaled $32,000, $29,000 and $27,000, respectively.
Two officers of affiliates of the General Partner received acquisition fees
totaling $35,000 for the year ended December 31, 1997.
Beginning in October 1996, Lexington Corporate Properties Trust, whose
chairman is chairman of the General Partner, has been reimbursed by the
Partnership for various administrative services performed. For the years
ended December 31, 1998, 1997 and 1996, such reimbursements totaled
$153,000, $109,000 and $88,000, respectively.
23
<PAGE> 24
Schedule III
NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
Real Estate and Accumulated Depreciation
December 31, 1998, 1997 and 1996
(In thousands)
Initial cost to Partnership and gross amount at which carried at
end of period (A)
<TABLE>
<CAPTION>
Life on which
depreciation
in latest income
Accumulated Date Date of statements
Description Encumbrances(B) Land Buildings Total(C) Depreciation(D) Acquired Construction is computed
----------- -------------- ---- --------- ------- --------------- -------- ------------ -----------
Health and tennis club facility,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Phoenix, AZ $ -- 1,117 4,743 5,860 1,240 July 1988 July 1988 40 years
Retail stores (E) -- 2,991 3,989 6,980 1,035 Aug. 1988 1986 & 1987(F) 40 years
Bus terminals (G) -- 1,086 1,384 2,470 359 Feb. 1989 (G) 40 years
Retail store, Lynchburg, VA -- 300 451 751 49 Aug. 1994 1986 40 years
Retail store, Sumter, SC 1,795 850 3,000 3,850 234 Nov. 1995 1983 40 years
Retail store, Gainesville, GA 1,430 802 2,158 2,960 164 Dec. 1995 1984 40 years
Retail store, Brownsville, TX 2,119 380 3,189 3,569 130 May 1997 1985 40 years
------ ----- ------ ------ -----
$5,344 7,526 18,914 26,440 3,211
====== ===== ====== ====== =====
</TABLE>
(A) The initial cost includes the purchase price paid by the Partnership and
acquisition fees and expenses. There is no difference between the initial
cost for financial reporting purposes and the initial cost for Federal
income tax purposes.
(B) See note 5 of Notes to Consolidated Financial Statements - Mortgage
Notes Payable.
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
(C) Reconciliation of real estate owned:
Balance at beginning of year $26,440 22,871 22,871
Acquisition of properties - 3,569 -
------- ------ -------
Balance at end of year $26,440 26,440 22,871
======= ====== ======
(D) Reconciliation of accumulated depreciation:
Balance at beginning of year $2,735 2,296 1,903
Depreciation expense 476 439 393
------ ------ ------
Balance at end of year $3,211 2,735 2,296
====== ====== ======
</TABLE>
(E) These properties consist of 16 retail stores, which are located as follows:
two in Alabama, two in Florida, one in Georgia, five in New Mexico and six
in Texas.
(F) The 16 retail stores were constructed in different years.
(G) These properties consist of three bus terminals, located and constructed
as follows:
San Bernardino, CA, constructed in 1987; Stockton, CA, constructed in
1967, San Luis Obispo, CA, constructed in 1963.
24
<PAGE> 25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- -----------------------------------------------------------------------
FINANCIAL DISCLOSURE
- --------------------
None.
25
<PAGE> 26
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -----------------------------------------------------------
The Partnership is a limited partnership and has no directors or officers.
The General Partner of the Partnership is Lepercq Net 1 L.P., a Delaware limited
partnership. Lepercq Net 1 Inc., a Delaware corporation, is the general partner
of the General Partner. The directors and executive officers of Lepercq Net 1
Inc. are discussed below. The directors and executive officers of Lepercq Net 1
Inc. are responsible for the management of the Partnership's business including,
but not limited to, the acquisition of, sale of, financing or refinancing of,
making certain major capital improvements to or leasing of Partnership
properties.
The General Partner has granted Lexington Corporate Properties Trust (the
"Company"), whose chairman and Co-Chief Executive Officer is chairman of the
General Partner, an option exercisable at any time, to acquire the general
partnership interest. The Company provided the Partnership various
administrative services. Under the terms of the option, the Company, subject to
review of any such transaction by the independent members of its Board of
Trustees, may acquire the general partnership interest at its fair market value
based upon a formula relating to partnership cash flows, with the Company
retaining the option of paying such fair market value in securities of the
Company, limited partnership Units in controlled subsidiaries, cash or a
combination thereof.
<TABLE>
<CAPTION>
Name Position
---- --------
<S> <C>
E. Robert Roskind President and Secretary
Denise E. DeBaun Vice President
David J. Walsh Vice President and Treasurer
Dianne R. Smith Assistant Secretary
</TABLE>
Certain biographical information relating to the directors and executive
officers of Lepercq Net 1 Inc. is set forth below.
E. Robert Roskind, age 54, has been associated with LCP since 1973 and has been
Chairman of LCP since September 1976. He also serves as Chairman of the Board
and Co-Chief Executive Officer of Lexington Corporate Properties Trust, a real
estate investment trust traded on the New York Stock Exchange. Mr. Roskind is a
graduate of the University of Pennsylvania and Columbia Law School, and has been
a member of the New York Bar since 1970. Mr. Roskind is a director of Berkshire
Realty Company, Inc., Krupp Government Income Trust I and Krupp Government
Income Trust II.
Denise E. DeBaun, age 48, has been employed by LCP since 1981. She was a member
of the marketing department from 1986 to 1990. She also serves as an
Administrative Assistant of Lexington Corporate Properties Trust, a real estate
investment trust traded on the New York Stock Exchange. Ms. DeBaun is a graduate
of Hunter College of the City of New York.
David J. Walsh, age 32, has been associated with LCP since 1993. He has served
as Senior Vice President of LCP since January 1997 and as Director of
Acquisitions since June 1993. Prior to joining LCP, Mr. Wash was associated with
Glaxo Inc., a Fortune 500 pharmaceutical company, as a Pharmaceutical Sales
Representative. Mr. Walsh received his bachelor's degree from Western New
England College in 1989.
Dianne R. Smith, age 52, has been associated with LCP since 1988 as their
paralegal. Ms. Smith also serves as the Paralegal to Lexington Corporate
Properties Trust, a real estate investment trust traded on the New York Stock
Exchange. Ms. Smith is a graduate of New York University where she received her
Paralegal degree.
26
<PAGE> 27
ITEM 11. EXECUTIVE COMPENSATION
- -------------------------------
The General Partner is entitled to receive a share of cash distributions when
and as cash distributions are made to the Limited Partners, and a share of
taxable income or loss. Cash distributions of $31,425 were made to the General
Partner in 1998.
The directors and executive officers of Lepercq Net 1 Inc. received no
remuneration from the Partnership.
The General Partner and its affiliates were paid certain fees and commissions
and reimbursed for certain expenses.
Information concerning the cash distributions to the General Partner, and fees,
commissions and reimbursements paid to it or its affiliates, is contained in the
Consolidated Statements of Changes in Partners' Capital (Deficit) and in notes 3
and 7 of Notes to Consolidated Financial Statements in Item 8 above.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -----------------------------------------------------------------------
(a) No person is known to the Partnership to be the beneficial owner of
more than 5% of the Units.
(b) Directors and executive officers of Lepercq Net 1 Inc. and affiliated
entities own 149 Units as of December 31, 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------------------------------------------------------
The Partnership reimburses the General Partner or its affiliates for expenses
incurred and may pay interest on loans made in connection with acquisitions.
Leased Properties Management, Inc., an affiliate of the General Partner, is
entitled to receive a fee for managing the Partnership's Properties in the
amount of 1% of gross annual rental receipts (or a greater amount in certain
circumstances). For the years ended December 31, 1998, 1997 and 1996,
management fees which are included in general and administrative expenses
totaled $32,000, $29,000 and $27,000 in 1998, 1997, and 1996, respectively.
Beginning in October 1996, Lexington Corporate Properties Trust, whose chairman
is chairman of the General Partner, has been reimbursed by the Partnership for
various administrative services performed. For the years ended December 31,
1998, 1997 and 1996, such reimbursements totaled $153,000, $109,000 and $88,000,
respectively.
Two officers of affiliates of the General Partner received acquisition fees
totaling $35,000 for the year ended December 31, 1997.
Additional information with respect to the directors and officers and
compensation of the General Partner and affiliates is contained in Items 8, 10
and 11 above.
27
<PAGE> 28
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
- ----------------------------------------------------------------
FORM 8-K
- --------
(a) The following documents are filed as part of this Annual Report:
1. Financial Statements (see index to Financial Statements filed
as part of Item 8 of this Annual Report).
2. Financial Statement Schedule (see Index to Financial
Statements filed as part of Item 8 of this Annual Report).
3. Exhibits.
(3) Amended and Restated Agreement of Limited Partnership dated as of
November 20, 1987 set forth as Exhibit A to the Prospectus included
in Registration Statement Number 33-16973 is incorporated herein by
reference.
Second Amended and Restated Agreement of Limited Partnership dated
as of September 30, 1994 is incorporated herein by reference.
(b) Reports on Form 8-K filed during the fourth quarter of 1998.
None.
(c) Exhibits. See (a)3 above.
Exhibit No. 27 Financial Data Schedule
(d) Financial Statement schedules excluded from the Annual Report to
Unit holders.
None.
28
<PAGE> 29
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Partnership has duly caused this annual 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
By: /s/ E. Robert Roskind By: /s/ Brenda Lubrin
---------------------------- -----------------------------
President Assistant Accounting Officer
Pursuant to the requirements of the Securities Act of 1934, this annual report
has been signed below by the following persons on behalf of the Partnership and
in the capacities and on the date indicated.
Signature Title
---------------------------- --------------------------
/s/ E. Robert Roskind President and Secretary
------------------------
E. Robert Roskind
/s/ Denise E. DeBaun Vice President
------------------------
Denise E. DeBaun
/s/ David J. Walsh Vice President and Treasurer
------------------------
David J. Walsh
/s/ Dianne R. Smith Assistant Secretary
------------------------
Dianne R. Smith
Date: March 31, 1999
------------------------
29
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1998 AND THE
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,688
<SECURITIES> 0
<RECEIVABLES> 455
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 26,440
<DEPRECIATION> (3,211)
<TOTAL-ASSETS> 25,534
<CURRENT-LIABILITIES> 0
<BONDS> 5,344
0
0
<COMMON> 0
<OTHER-SE> 20,034
<TOTAL-LIABILITY-AND-EQUITY> 25,534
<SALES> 0
<TOTAL-REVENUES> 3,347
<CGS> 0
<TOTAL-COSTS> 476
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 510
<INCOME-PRETAX> 1,813
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,813
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,813
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
