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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) September 27, 1999
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Net 1 L.P.
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(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.)
c/o Lexington Corporate Properties Trust
355 Lexington Avenue
New York, New York 10017
- ------------------------------------------ -----------------------------------
(Address of principal Executive offices) (Zip code)
Registrant's telephone number, including area code (212) 672-7200
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</TABLE>
N/A
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 27, 1999, Net 1 L.P. (the "Partnership") acquired a property
located in San Diego, California (the "San Diego Property") for approximately
$8.6 million from an unrelated party. The San Diego Property consists of a
two-story 65,755 square foot, office and research and development facility
situated on a 2.73 acres of land. The San Diego Property is leased to Cymer,
Inc., a Nevada Corporation ("Cymer"), under the terms of a net lease.
The current annual rent payable is approximately $778,000 and the average annual
rent is approximately $867,000. The lease expires on December 31, 2009. The
lease does not provide for any renewal options.
The purchase price was satisfied by a cash payment of approximately $4 million
and an assumption of approximately $4.6 million mortgage note. The mortgage note
bears interest at a rate of 7.5% per annum, with a monthly debt service payment
of principal and interest in the amount of $34,252. The note matures on January
1, 2011 with a balloon payment of approximately $3.4 million.
On September 28, 1999, the Partnership acquired a property located in Phoenix,
Arizona (the "Phoenix Property") for approximately $11.4 million from an
unrelated party. The Phoenix Property consists of a two-story 137,058 square
foot, office and research building situated on a 13.392 acres of land. The
Phoenix Property is leased to Bull HN Information Systems, Inc., a Delaware
Corporation ("Bull HN"), under the terms of a net lease.
The base rent is paid annually in advance. Bull HN receives a discount equal to
3.5% of the base rent for its prompt and timely payment. The current annual rent
payable, including the discount is approximately $970,000 and the average annual
rent is approximately $1.05 million. The lease expires on October 10, 2005. The
lease does not provide for any renewal options.
The purchase price was satisfied by a cash payment of approximately $4.7
million, the issuance of a $1.2 million 8% note and an assumption of
approximately $5.6 million mortgage note. The mortgage note bears interest at a
rate of 8.12% per annum, with an annual debt service payment of principal and
interest in the amount of $621,297. The mortgage note matures on October 10,
2005 with a balloon payment of approximately $4.4 million.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Cymer is a publicly held company and is listed on the Nasdaq
National Market. Cymer files consolidated financial statements and
as of June 30, 1999 reported total consolidated assets, liabilities
and stockholder's equity of approximately $369 million, $264 million
and $105 million, respectively. For the six months ended June 30,
1999, Cymer reported total consolidated revenues of approximately
$84 million and net loss of approximately $3.8 million.
Bull HN is a subsidiary of publicly traded Bull, headquartered in
Paris, France and traded on the Paris Stock Exchange. Bull files
consolidated financial statements and as of June 30, 1999 reported
total consolidated assets, liabilities and stockholder's equity of
approximately (in French francs) 17,527 million, 13,814 million and
3,713 million, respectively. For the six months ended June 30,
1999, Bull reported total consolidated revenues and net loss of
approximately (in French francs) 11,873 million and 85 million,
respectively.
(b) Pro Forma Financial Information
Estimated Taxable Operating Results and Cash Available from
Operations.
Notes to Estimated Taxable Operating Results and Cash Available from
Operations.
Pro Forma Balance Sheet at June 30, 1999.
Pro Forma Statements of Income for the year ended December 31, 1998
and for the six months ended June 30, 1999.
Notes to Pro Forma Financial Statements.
(c) Exhibits:
None.
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NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
Estimated Taxable Operating Results and Cash Available from Operations
(Unaudited and in thousands)
The following statement represents estimates of taxable operating results and
cash available from operations of the San Diego and Phoenix Properties, based
upon rents to be received in the first year of the lease. These estimated
results do not purport to represent results of operations of the San Diego and
Phoenix Properties in the future and were prepared on the basis described in the
accompanying notes which should be read in conjunction herewith. The General
Partner is not aware of any material supportable facts that would cause these
estimates to be misleading.
<TABLE>
<CAPTION>
Cymer Bull HN Total
Estimated Taxable Operating Results: ----- ------- -----
<S> <C> <C> <C>
Cash rent under net lease $ 778 $ 972 $1,750
Less:
Interest expense 344 548 892
Depreciation 193 239 432
--- --- ---
Estimated taxable operating results $ 241 $ 185 $ 426
=== === ===
Estimated Cash Available from Operations:
Estimated taxable operating results $ 241 $ 185 $ 426
Add:
Depreciation 193 239 432
--- --- ---
Estimated cash available from operations $ 434 $ 424 $ 858
=== === ===
</TABLE>
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NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
Notes to Estimated Operating Results and Cash Available from Operations
Basis of Presentation
Cash rent under the net lease represents the rental payments expected to
be received during the first year of the lease.
Interest expense represents tax deductible interest that is expected to be
incurred on the related mortgage debt.
The purchase price for the San Diego Property was allocated 10% to land
and 90% to buildings, while the Phoenix Property was allocated 16% to land
and 84% to buildings, based on appraisals. Depreciation is computed on a
straight-line basis over 40 years.
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NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
Pro Forma Consolidated Balance Sheet and Statements of Income
The accompanying Pro Forma Consolidated Balance Sheet of Net 1 L.P. as of June
30, 1999 gives effect to all 1999 acquisitions, as if such occurred on June 30,
1999.
The accompanying Pro Forma Consolidated Statements of Income for the year ended
December 31, 1998 and six months ended June 30, 1999, give effect to all 1999
acquisitions and dispositions, as if such occurred as of January 1, 1998.
The management of the Partnership prepared the Pro Forma Consolidated Balance
Sheet and Statements of Income. These pro forma consolidated statements may not
be indicative of the results that would have actually occurred if such had been
in effect on the dates indicated. Also, they may not be indicative of the
results that may be achieved in the future. The Pro Forma Consolidated Balance
Sheet and Statements of Income should be read in conjunction with the
Partnership's audited financial statements as of December 31, 1998, and for the
year then ended (which are contained in the Partnership's Form 10-K for the year
ended December 31, 1998), and the unaudited financial statements as of June 30,
1999, and for the six months then ended (which are contained in the
Partnership's Form 10-Q for the period ended June 30, 1999), and the
accompanying notes thereto.
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NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
Pro Forma Consolidated Balance Sheet
(In thousands, except Units and per Unit amounts)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
------ ---------- ----------- ---------
<S> <C> <C> <C>
Real estate, net $ 17,098 $ 20,072 $ 37,170
Cash and cash equivalents 1,792 1,792
Restricted cash 8,709 (8,709) -
Rent receivable 831 - 831
Other assets 15 - 15
------ ------ ------
Total assets $ 28,445 $ 11,363 $ 39,808
====== ====== ======
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Mortgage and notes payable $ 5,165 $ 11,363 $ 16,528
Accrued interest payable 27 - 27
Accounts payable and other liabilities 154 - 154
------ ------ ------
5,346 11,363 16,709
------ ------ ------
Partners' capital (deficit):
General Partner (108) - (108)
Limited Partners ($1,000 per Unit, 50,000 Units
authorized, 30,772 Units issued
and outstanding) 23,207 - 23,207
------ ------ ------
23,099 - 23,099
------ ------ ------
Total liabilities and partners' capital $ 28,445 $ 11,363 $ 39,808
====== ====== ======
</TABLE>
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NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
Notes to Pro Forma Consolidated Balance Sheet
1. Pro Forma Adjustments
The adjustment to real estate, net reflects the purchase price of the San
Diego and Phoenix Properties.
The adjustment to cash and cash equivalents reflects the net cash outflow
resulting from property acquisitions.
The adjustment to mortgage and notes payable reflects the financing of
these acquisitions.
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NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
Pro Forma Consolidated Statement of Income
(In thousands, except per Unit amounts)
Six months ended June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
Revenue: ---------- ----------- ---------
<S> <C> <C> <C>
Rental $ 1,829 $ 594 $ 2,423
Interest and other 39 - 39
------ ------ ------
1,868 594 2,462
------ ------ ------
Expenses:
Interest expense 242 446 688
Depreciation 211 192 403
General and administrative 232 - 232
------ ------ ------
685 638 1,323
------ ------ ------
Income before gain on sale of properties 1,183 (44) 1,139
Gain on sale of properties 2,668 (2,668) -
------ ------ -----
Net Income $ 3,851 $ (2,712) $ 1,139
====== ====== =====
Net income per Unit
of limited partnership interest $ 122.65 $ 36.27
====== =====
</TABLE>
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NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
Pro Forma Consolidated Statement of Income
(In thousands, except per Unit amounts)
Year ended December 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
Revenue: ---------- ----------- ---------
<S> <C> <C> <C>
Rental $ 3,265 $ 1,162 $ 4,427
Interest and other 82 - 82
----- ----- -----
3,347 1,162 4,509
----- ----- -----
Expenses:
Interest expense 510 892 1,402
Depreciation 476 332 808
General and administrative 548 - 548
----- ----- -----
1,534 1,224 2,758
----- ----- -----
Net Income $ 1,813 $ (62) $ 1,751
===== ===== =====
Net income per Unit of
limited partnership interest (*) $54.82 to $59.50 $52.94 to $57.46
================ ================
</TABLE>
(*) Amounts allocated to unit holders vary depending on the dates they became
unit holders.
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NET 1 L.P. AND CONSOLIDATED PARTNERSHIPS
Notes to Pro Forma Statements of Income
1. Pro Forma Adjustments
The adjustment to rental revenues relates to the net straight-lining of
rent under the remaining lease terms.
The adjustment to interest expense relates to the financing of the
acquisitions.
The adjustment to depreciation was based on an estimated useful life of 40
years, using the straight-line method.
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SIGNATURE
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: October 12, 1999 By: /s/ E. Robert Roskind
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E. Robert Roskind
President
