UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[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, 1995
OR
[ ] TRANSITION PERIOD PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (no fee required)
Commission file number: 33-17274
MANHATTAN BEACH HOTEL PARTNERS, L.P.
Exact name of registrant as specified in its charter
Delaware 95-4201183
State or other jurisdiction of I.R.S. Employer Identification No.
incorporation or organization
ATTN: Andre Anderson
3 World Financial Center, 29th Floor,
New York, New York 10285
Address of principal executive offices zip code
Registrant's telephone number, including area code: (212) 526-3237
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
DEPOSITARY UNITS OF LIMITED PARTNERSHIP INTEREST
Title of Class
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 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 the 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)
Aggregate market value of the voting stock held by non-affiliates of the
registrant: Not applicable.
Documents Incorporated by Reference:
Portions of Parts I, II, III and IV are incorporated by reference to the
Partnership's Annual Report to Unitholders for the year ended December 31,
1995, filed as an exhibit under Item 14.
PART I
Item 1. Business
(a) General Development of Business.
Manhattan Beach Hotel Partners, L.P., formerly Shearson California Radisson
Plaza Partners, L.P. (see Item 10. "Certain Matters Involving Affiliates of
Manhattan Beach Commercial Properties III Inc."), a Delaware limited
partnership (the "Registrant" or the "Partnership"), was formed on September 8,
1987. The Partnership will continue until December 31, 2037 in accordance with
the terms of its Amended and Restated Agreement of Limited Partnership (the
"Partnership Agreement"), unless terminated earlier pursuant thereto. The
affairs of the Partnership are conducted by its general partner, Manhattan
Beach Commercial Properties III Inc., formerly Shearson Lehman Commercial
Properties III, Inc. (see Item 10. "Certain Matters Involving Affiliates of
Manhattan Beach Commercial Properties III Inc."), a Delaware corporation (the
"General Partner"), and an affiliate of Lehman Brothers Inc.
Manhattan Beach Commercial Properties III Depositary, Inc. (the "Assignor
Limited Partner"), formerly Shearson Lehman Commercial Properties III
Depositary, Inc. (see Item 10. "Certain Matters Involving Affiliates of
Manhattan Beach Commercial Properties III Inc."), is the record owner of the
limited partnership interests, but the Unitholders are entitled to all the
economic and other substantive rights and interests of the underlying limited
partnership interests and are entitled to direct any voting of such limited
partnership interests. A Unitholder, subject to certain conditions, may
convert his Units into limited partnership interests.
Purchase of the Property. The Partnership was formed to acquire, own, lease
and ultimately sell a leasehold interest in the Radisson Plaza Hotel and Golf
Course (the "Property" or the "Hotel"), a 384-room, 287,965 square foot
commercial hotel and nine-hole executive golf course located on a 26.3 acre
site in the City of Manhattan Beach, Los Angeles County, California (the
"City"). The Property was acquired for a purchase price of $56,500,000 on
December 1, 1987 from Manhattan Beach Hotel Properties, Ltd., a California
limited partnership (the "Seller"), which developed the Property and opened it
for occupancy in January 1987.
The Hotel is operated subject to a license agreement with Radisson Hotels
International, Inc. ("Radisson"). Information regarding Radisson is
incorporated by reference to Note 5 "Real Estate Investments" of the Notes to
the Financial Statements contained in the Partnership's Annual Report to
Unitholders for the year ended December 31, 1995, filed as an exhibit under
Item 14. The Hotel is operated under a management agreement (the "Management
Agreement") with Manhattan Beach Management Company, an affiliate of Interstate
Hotels Corporation ("Interstate"). Details regarding the Management Agreement
are incorporated by reference to Note 6 "Hotel Management Agreement" of the
Notes to the Financial Statements contained in the Partnership's Annual Report
to Unitholders for the year ended December 31, 1995, filed as an exhibit under
Item 14. The golf course is operated under a long-term operating agreement
with Radisson Golf Course Company, Inc., an unaffiliated party.
Ground Lease. Information regarding the Ground Lease is incorporated by
reference to Note 5 "Real Estate Investments" of the Notes to the Financial
Statements contained in the Partnership's Annual Report to Unitholders for the
year ended December 31, 1995, filed as an exhibit under Item 14.
The Management Agreement and Hotel Leases. Incorporated by reference to Note 6
"Hotel Management Agreement" of the Notes to the Financial Statements contained
in the Partnership's Annual Report to Unitholders for the year ended December
31, 1995, filed as an exhibit under Item 14.
(b) Financial Information About Industry Segments.
The Partnership's sole business is to own and operate the Property. All of the
Partnership's revenues, operating profit or loss and assets relate solely to
such industry segment.
(c) Narrative Description of Business.
The Partnership's principal objectives are to (i) provide quarterly cash
distributions, a portion of which are anticipated to be non-taxable due to
depreciation deductions, (ii) preserve and protect capital and (iii) achieve
long-term appreciation in the value of the Property for distribution upon sale.
There can be no assurance that any of such objectives will be achieved by the
Partnership.
Competition
Competition and information with respect to market conditions in the area where
the Partnership's Property is located is incorporated by reference to the
section entitled Message to Investors of the Partnership's Annual Report to
Unitholders for the year ended December 31, 1995, filed as an exhibit under
Item 14.
Employees
The Partnership's business is managed by the General Partner and the
Partnership has no employees. The current hotel staff and other personnel are
employees of Interstate. Information regarding Interstate is incorporated by
reference to Note 6 "Hotel Management Agreement" of the Notes to Financial
Statements contained in the Partnership's Annual Report to Unitholders for the
year ended December 31, 1995, filed as an exhibit under Item 14.
Item 2. The Property
Incorporated by reference to Note 5 "Real Estate Investments" of the Notes to
Financial Statements and the Partnership's Annual Report to Unitholders for the
year ended December 31, 1995, filed as an exhibit under Item 14.
Item 3. Legal Proceedings
Incorporated by reference to Note 8 "Litigation" of the Notes to Financial
Statements contained in the Partnership's Annual Report to Unitholders for the
year ended December 31, 1995, filed as an exhibit under Item 14.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Unitholders at a meeting or
otherwise during the fourth quarter of the fiscal year for which this report
has been filed.
PART II
Item 5. Market for the Partnership's Limited Partnership interests and
Security Holder Matters
(a) Market Information. There is no established public market in which the
Units are currently traded.
(b) Holders. The number of Unitholders as of December 31, 1995 was 5,657.
(c) Dividends. No distributions were paid to Unitholders during the year ended
December 31, 1995. A distribution in the amount of $1,395,000 or $0.20 per
Unit was paid to limited partners on February 1, 1996. This distribution
represents a one-time distribution of 1995 annual cash flow and surplus
Partnership reserves, and does not indicate the reinstatement of regular cash
distributions. The General Partner received a cash distribution of $14,091,
representing its 1% share of the distribution paid February 1, 1996. No
distributions were declared payable to the General Partner for the year ended
December 31, 1994. Cumulative distributions paid to Unitholders since the
Partnership's inception total $2.24 per Unit. This amount includes $0.57 per
Unit paid to class member Unitholders (the "Settlement Class") pursuant to the
settlement of class actions brought against Shearson Lehman Hutton Inc., the
Partnership and other affiliated defendants (the "Settlement"). Such
distributions were drawn from the settlement fund (the "Settlement Fund")
established to pay such distributions to the Settlement Class. The Settlement
Fund was exhausted with the payment of the fourth quarter 1992 distribution.
The ability of the Partnership to make future distributions will be dependent
upon the cash flow generated from Hotel operations and the adequacy of cash
reserves which, in the future, will be evaluated on an annual basis. There
can be no assurance that future cash flow will be sufficient to fund
additional distributions.
Item 6. Selected Financial Data
Incorporated by reference to the section entitled Financial Results Comparison
of the Partnership's Annual Report to Unitholders for the year ended December
31, 1995, filed as an exhibit under Item 14.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Hotel's operations improved during 1995 as a result of strengthening
conditions in the Los Angeles Airport hotel market. The Hotel is dependent
primarily on business and leisure travel for its revenues. The improved
profitability of the Hotel during the year is largely attributable to the 10.8%
increase in average room rate, which was achieved as a result of management's
efforts to reduce the volume of airline contracts and increase the number of
business and group guests at higher rates.
At December 31, 1995, Manhattan Beach Hotel Partners, L.P. (the "Partnership")
had cash and cash equivalents of $4,414,032, including cash held at the
Property for working capital. Cash increased by $1,616,854 from December 31,
1994, due to cash flow generated by operating activities. Such cash balances
are expected to be sufficient to meet the anticipated cash requirements for
operations of the Partnership. Restricted cash decreased to $187,464 at
December 31, 1995, compared to $270,489 at December 31, 1994. The decrease in
1995 is due to expenditures related to the completion of a soft goods
renovation of the guest rooms. Pursuant to the management agreement (the
"Management Agreement") with Manhattan Beach Management Company, an affiliate
of Interstate Hotel Corporation ("Interstate"), contributions to the account
for furniture, fixtures and equipment ("FF&E reserve account") will be made
over time to protect and maintain the value of the Partnership's Hotel.
Accounts receivable increased to $992,941 at December 31, 1995 compared to
$906,721 at December 31, 1994. Accounts payable and accrued liabilities
increased to $1,309,672 at December 31, 1995 compared to $1,291,771 at December
31, 1994. The changes in both accounts receivable and accounts payable
primarily are due to the timing of payments. Due to affiliates increased to
$2,400,138 at December 31, 1995 from $2,121,394 at December 31, 1994, primarily
due to the accrual of property management oversight fees for 1995.
A distribution in the amount of $1,395,000 or $0.20 per Unit was paid to
limited partners on February 1, 1996. This distribution represents a one-time
distribution of 1995 annual cash flow and surplus Partnership reserves, and
does not indicate the reinstatement of regular cash distributions. The ability
of the Partnership to make future distributions will be dependent upon the cash
flow generated from Hotel operations and the adequacy of cash reserves which,
in the future, will be evaluated on an annual basis. There can be no assurance
that future cash flow will be sufficient to fund additional distributions.
On February 13, 1996, based upon, among other things, the advice of Partnership
counsel, Skadden, Arps, Slate, Meagher & Flom, the General Partner adopted a
resolution that states, among other things, if a Change of Control (as defined
below) occurs, the General Partner may distribute the Partnership's cash
balances not required for its ordinary course day-to-day operations. "Change
of Control" means any purchase or offer to purchase more than 10% of the Units
that is not approved in advance by the General Partner. In determining the
amount of the distribution, the General Partner may take into account all
material factors. In addition, the Partnership will not be obligated to make
any distribution to any partner, and no partner will be entitled to receive any
distribution, until the General Partner has declared the distribution and
established a record date and distribution date for the distribution. The
Partnership filed a Form 8-K disclosing this resolution on February 26, 1996.
Results of Operations
1995 versus 1994
For the year ended December 31, 1995, the Partnership had net income of
$232,226, compared to a net loss of $245,012 for the year ended December 31,
1994. The improvement in 1995 primarily is due to an increase in Hotel
Revenues, comprised of rooms, food and beverage, telephone and other
departmental income and Partnership interest income which was partially offset
by an increase in unallocated Hotel and Partnership operating expenses
including depreciation.
For the year ended December 31, 1995, the Hotel generated departmental income
of $7,618,135 compared to $6,985,451 for the year ended December 31, 1994. The
9.1% increase in departmental income in 1995 is due to a increase in total
Hotel revenues as a result of higher room rates, higher food and beverage and
telephone revenues, which was partially offset by a slight increase in
departmental expenses.
For the year ended December 31, 1995, unallocated Hotel and Partnership
operating expenses, including depreciation, were $7,564,513 compared to
$7,287,878 for the corresponding period in 1994. The increase primarily is due
to an increase in Hotel general and administrative expenses, which is largely
attributable to higher property insurance premiums at the Hotel in 1995
relative to 1994. Also contributing to the increase were higher management
fees, Partnership general and administrative expenses and depreciation and
amortization costs. Management fees increased due to higher gross sales on
which management receives a base percentage fee and higher incentive management
fees associated with Hotel performance. Partnership general and administrative
expenses increased due to increased legal expenses regarding the settlement of
the lawsuit with Satellite Programming Services. Depreciation increased due to
an increase in capitalized personal property.
Total other income for the year ended December 31, 1995 increased to $178,604
from $57,415 for the year ended December 31, 1994, primarily due to higher
interest income attributable to higher cash balances and higher interest rates
earned during the year.
The following summarizes the Hotel's performance for the twelve months ended
December 31 of the indicated years:
1995 1994 % Change
Average Occupancy 82.3% 85.5% (3.7%)
Average Room Rate $77.58 $70.02 10.8%
Hotel Sales $13,835,896 $13,186,812 4.9%
Hotel House Profit $4,013,122 $3,386,612 18.5%
Partnership Net Income (Loss) $232,226 ($245,012) *
* This percentage change is not relevant since the Partnership recognized net
income in 1995 compared to a net loss in 1994.
1994 versus 1993
For the year ended December 31, 1994, the Partnership had a net loss of
$245,012, compared to a net loss of $767,542 for the year ended December 31,
1993. The improvement in 1994 primarily was due to an increase in departmental
income, comprised of rooms, food and beverage, telephone and other departmental
income, which was partially offset by an increase in unallocated hotel
operating expenses.
For the year ended December 31, 1994, the Hotel generated departmental income
of $6,985,451 compared to $6,353,439, for the year ended December 31, 1993.
The 9.9% increase in departmental income in 1994 was due to an increase in
total Hotel revenues, primarily from room revenues, as well as decreased
departmental expenses for food and beverage and other costs.
For the year ended December 31, 1994, unallocated Hotel and Partnership
operating expenses, including depreciation, were $7,287,878 compared to
$7,154,595 for the corresponding period in 1993. The increase primarily was
due to an increase in Hotel general and administrative expenses, which is
largely attributable to an increase in insurance expense in 1994 relative to
1993 as a result of an adjustment made in 1993 for the self-insured employee
health insurance program which was terminated in 1992. Also contributing to
the increase were higher costs for utilities and maintenance and increased
Hotel operating lease expenses.
Total other income for the year ended December 31, 1994 increased to $57,415
from $33,614 at December 31, 1993, primarily due to higher interest income and
no interest expense during 1994. The increase in interest income primarily was
due to higher cash balances and higher interest rates during the year. The
decrease in interest expense was due to the pay-off of a note payable due to
the Carlson Group in 1993.
The following summarizes the Hotels' performance for the twelve months ended
December 31 of the indicated years:
1994 1993 % Change
Average Occupancy 85.5% 81.75% 4.7%
Average Room Rate $70.02 $70.10 (0.1%)
Hotel Sales $13,186,812 $12,996,520 1.5%
Hotel House Profit $3,386,612 $2,538,312 33.4%
Partnership Net Income (Loss) ($245,012) ($767,542) 68%
Item 8. Financial Statements and Supplementary Data
Incorporated by reference to Schedule III and the Partnership's Annual Report
to Unitholders for the year ended December 31, 1995, filed as an exhibit under
Item 14.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The Partnership has no directors or executive officers. The affairs of the
Partnership are conducted through the General Partner. The names and ages of,
as well as the positions held by, the principal directors and officers of the
General Partner are set forth below. All directors of the General Partner will
serve until the next meeting of the stockholders of the General Partner. There
are no family relationships between any officers or directors.
Certain officers of the General Partner are now serving (or in the past have
served) as officers or directors of entities which act as general partners of a
number of real estate limited partnerships which have sought protection under
the provisions of the Federal Bankruptcy Code. The partnerships which have
filed bankruptcy petitions own real estate which has been adversely affected by
the economic conditions in the markets in which that real estate is located
and, consequently, the partnerships sought the protection of the bankruptcy
laws to protect the partnerships' assets from loss through foreclosure.
The Officers and/or Directors of the General Partner are as follows:
Name Office
Jeffrey C. Carter President, Director and Chief
Financial Officer
Rocco F. Andriola Director and Vice President
Joseph Donaldson Vice President
Jeffrey C. Carter, 50, is a Senior Vice President of Lehman Brothers in the
Diversified Asset Group. Mr. Carter joined Lehman Brothers in September 1988.
From 1972 to 1988, Mr. Carter held various positions with Helmsley-Spear
Hospitality Services, Inc. and Stephen W. Brener Associates, Inc. including
Director of Consulting Services at both firms. From 1982 through 1987, Mr.
Carter was President of Keystone Hospitality Services, an independent hotel
consulting and brokerage company. Mr. Carter received his B.S. degree in Hotel
Administration from Cornell University and an M.B.A. degree from Columbia
University.
Rocco F. Andriola, 37, is a Senior Vice President of Lehman Brothers in its
Diversified Asset Group. Since joining Lehman Brothers in 1986, Mr. Andriola
has been involved in a wide range of restructuring and asset management
activities involving real estate and other direct investment transactions.
From 1986-89, Mr. Andriola served as a Vice President in the Corporate
Transactions Group of Shearson Lehman Brothers' office of the general counsel.
Prior to joining Lehman Brothers, Mr. Andriola practiced corporate and
securities law at Donovan Leisure Newton & Irvine in New York. Mr. Andriola
received a B.A. degree from Fordham University, a J.D. degree from New York
University School of Law, and an LL.M degree in Corporate Law from New York
University's Graduate School of Law.
Joseph Donaldson, 32, serves as a Vice President of Lehman Brothers in its
Diversified Asset Group and has held such position since November 1990. From
October 1988 to October 1990, Mr. Donaldson held the position of Assistant
Manager with the Internal Audit Department of Citibank's Investment Bank.
Prior to that, Mr. Donaldson was employed with Price Waterhouse and Company.
Mr. Donaldson received a B.B.A. in accounting from the University of Georgia
and is a Certified Public Accountant.
Certain Matters Involving Affiliates of Manhattan Beach
Commercial Properties III Inc.:
On July 31, 1993, Shearson Lehman Brothers Inc. ("Shearson") sold
certain of its domestic retail brokerage and asset management businesses to
Smith Barney, Harris Upham & Co. Incorporated ("Smith Barney"). Subsequent to
this sale, Shearson changed its name to Lehman Brothers Inc. The transaction
did not affect the ownership of the Partnership's General Partner. However,
the assets acquired by Smith Barney included the name "Shearson."
Consequently, the Shearson Lehman Commercial Properties III, Inc. general
partner changed its name to Manhattan Beach Commercial Properties III Inc.;
Shearson Lehman Commercial Properties III Depositary, Inc, the Assignor Limited
Partner, changed its name to Manhattan Beach Commercial Properties III
Depositary, Inc.; and the name of the Partnership was changed to Manhattan
Beach Hotel Partners, L.P. to delete any reference to "Shearson."
Item 11. Executive Compensation
All of the directors and executive officers of the General Partner are
employees of Lehman. They do not receive any salaries or other compensation
from the Partnership.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security ownership of certain beneficial owners. To the knowledge of
the General Partner, no person owns more than 5% of the outstanding
Units.
(b) Security ownership of management. No director or executive officer of
the General Partner owns any of the outstanding Units.
(c) Changes in control. No changes of control of the Partnership occurred
in 1995.
Item 13. Certain Relationships and Related Transactions
Incorporated by reference to Note 3 "Partnership Agreement," and Note 4
"Transactions with Related Parties" of the Notes to Financial Statements
contained in the Partnership's Annual Report to Unitholders for the year ended
December 31, 1995, filed as an exhibit under Item 14.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements:
Report of Independent Accountants (1)
Balance Sheets - At December 31, 1995 and 1994 (1)
Statements of Operations - For the years ended
December 31, 1995, 1994 and 1993 (1)
Statements of Partners' Capital - For the years ended
December 31, 1995, 1994 and 1993 (1)
Statements of Cash Flows - For the years ended
December 31, 1995, 1994 and 1993 (1)
Notes to Financial Statements (1)
(1) Incorporated by reference to the Partnership's Annual Report to
Unitholders for the year ended December 31, 1995, which is filed as an
exhibit under Item 14.
(b) Financial Statement Schedules: Independent Accountant's Report on
Schedule III - Real Estate and Accumulated Depreciation.
Exhibits: See Exhibit Index contained herein.
(c) Reports on Form 8-K: No reports on form 8-K were filed in the fourth
quarter of the calendar year 1995.
Exhibit Index
Exhibit Number
3.1 Amended and Restated Agreement of Limited Partnership of the
Registrant, as amended (included as, and incorporated herein by
reference to, Exhibit 3.1 of the Registrant's 1988 Annual Report on
Form 10-K filed on May 17, 1989).**
10.1 Depositary Agreement between the Registrant and Shearson Lehman
Commercial Properties Depositary III Inc., as Assignor Limited Partner
(included as, and incorporated herein by reference to Exhibit 10.3 to
the Registration Statement*).**
10.2 Purchase Agreement, as amended, relating to the acquisition of the
Registrant's hotel property (included as, and incorporated herein by
reference to Exhibit 10.4 to the Registration Statement*).**
10.3 Hotel Sublease, as amended (included as, and incorporated herein by
reference to Exhibit 10.3 of the Registrant's 1988 Annual Report on
Form 10-K filed on May 17, 1989).**
10.4 Hotel Ground Lease and Related Amendments (included as, and
incorporated herein by reference to Exhibit 10.6 to the Registration
Statement*).**
10.5 Radisson License (included as, and incorporated herein by reference to
Exhibit 10.7 to the Registration Statement*).**
10.6 License Agreement between Radisson Hotel Corporation and the
Registrant (included as, and incorporated herein by reference to
Exhibit 10.8 to the Registration Statement*).**
10.7 Guaranty of the Sublease (included as, and incorporated herein by
reference to Exhibit 10.9 of the Registration Statement*).**
10.8 Accounting Services Agreement between the Registrant and Boston Safe
Deposit and Trust Company (included as and incorporated herein
by reference to Exhibit 10.8 of the Registrant's 1988 Annual
Report on Form 10-K filed May 17, 1989).**
10.9 Investor Services Agreement between the Registrant and Boston Safe
Deposit and Trust Company (included as, and incorporated herein by
reference to the Registrant's 1988 Annual Report on Form 10-K filed
May 17, 1989).**
10.10 Sublease Agreement, dated October 2, 1989, between Manhattan Beach
Hotel Properties, Ltd., U.S. Hotel Properties Corporation, and Horst
Osterkamp, (collectively, the "Sublessor"), and Kentucky Hospitality
Employer, Inc., (the "Sublessee") (included as, and incorporated
herein by reference to the Registrant's 1989 Annual Report on Form
10-K filed March 14, 1990.**
10.11 Credit Agreement, dated September 1989, between the Registrant and
Carlson Hospitality Group, Inc. (included as, and incorporated herein
by reference to the Registrant's 1989 Annual Report on Form 10-K filed
March 14, 1990.**
10.12 Management Agreement, dated January 3, 1991, between the Registrant
and Interstate Hotels Corporation incorporated herein by reference to
Exhibit 10.12 of the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1990.**
10.13 Form of the Settlement Agreement dated August 27, 1990 between the
Partnership and class members incorporated herein by reference.**
10.14 Management Agreement, dated January 3, 1992, between the Registrant
and Interstate Hotels Corporation incorporated herein by reference to
Exhibit 10.14 of the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1991.**
13.1 Annual Report to the Unitholders for the year ended December 31, 1995.
27.1 Financial Data Schedule
- ------------------------------
* References to the "Registration Statement" are to the Registrant's
Registration Statement on Form S-11 (File No. 33-17274).
** Previously filed.
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.
MANHATTAN BEACH HOTEL PARTNERS, L.P.
BY: Manhattan Beach
Commercial Properties III Inc.
General Partner
Date: March 29, 1996
BY: s/Jeffrey C. Carter/
Name: Jeffrey C. Carter
Title: President, Director and
Chief Financial Officer
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.
MANHATTAN BEACH COMMERCIAL PROPERTIES III INC.
General Partner
Date: March 29, 1996
BY: s/Jeffrey C. Carter/
Name: Jeffrey C. Carter
Title: President, Director and
Chief Financial Officer
Date: March 29, 1996
BY: s/Rocco F. Andriola/
Name: Rocco F. Andriola
Title: Director and Vice President
Date: March 29, 1996
BY: s/Joseph Donaldson/
Name: Joseph Donaldson
Title: Vice President
EXHIBIT 13.1
MANHATTAN BEACH HOTEL PARTNERS, L.P.
1995 ANNUAL REPORT
In December 1987, Manhattan Beach Hotel Partners, L.P. acquired the Radisson
Plaza Hotel and Golf Course, a 384-room hotel located at 1400 Parkview Avenue
in the City of Manhattan Beach, Los Angeles County, California, three miles
south of the Los Angeles International Airport. The Hotel and adjoining
nine-hole executive golf course are situated on a 26.3 acre site leased from
the City of Manhattan Beach. The Hotel, which is managed by a subsidiary of
Interstate Hotels Corporation, features a unique array of amenities to appeal
to both business and leisure travelers including 17,200 square feet of
conference and banquet facilities, two restaurants, a lobby lounge and new
sports bar, a health club, a swimming pool, and shuttle service to the airport
and Manhattan Beach. The resort-like atmosphere at the Hotel combined with its
location near the airport and several large office complexes has made the Hotel
a popular destination for business and leisure travelers. The operations are
managed by its General Partner, Manhattan Beach Commercial Properties III Inc.
Property Highlights
Average Average
Occupancy Room Rate
1994 85.5% $70.02
1995 82.3% $77.58
% Change (3.7%) 10.8%
Administrative Inquiries Performance Inquiries/Form 10-Ks
Address Changes/Transfers First Data Investor Services Group
Service Data Corporation P.O. Box 1527
2424 South 130th Circle Boston, Massachusetts 02104-1527
Omaha, Nebraska 68144-2596 Attn: Financial Communications
800-223-3464 (select option 1) 800-223-3464 (select option 2)
Contents
1 Message to Investors
3 Financial Results Comparison
4 Financial Statements
7 Notes to Financial Statements
11 Report of Independent Public Accountants
MESSAGE TO INVESTORS
This 1995 Annual Report for Manhattan Beach Hotel Partners, L.P. (the
"Partnership") includes an update on the operations of the Radisson Plaza Hotel
and Golf Course (the "Hotel"), a discussion of the improving hospitality
environment, and the Partnership's audited financial statements for the year
ended December 31, 1995.
Cash Distribution
As previously reported, due to improved Hotel operations during 1995, and
following a review of the Partnership's anticipated cash needs and current cash
position, a distribution in the amount of $0.20 per Unit was paid to limited
partners on February 1, 1996. Please note that this distribution represents a
one-time distribution of 1995 annual cash flow and surplus Partnership
reserves, and does not indicate the reinstatement of regular cash
distributions. The ability of the Partnership to make future distributions
will be dependent upon the cash flow generated from Hotel operations and the
adequacy of cash reserves which, in the future, will be evaluated on an annual
basis.
Market Update
Improved performance of the national hospitality industry continued throughout
1995, as increased occupancy and room rates translated to overall higher
profits. According to market analysts Smith Travel Research, for the year
ended December 31, 1995, average occupancy and daily room rates for U.S. hotels
increased to 65.5% and $67.34, respectively, compared with 65.2% and $63.63,
respectively, for 1994. The Los Angeles Airport submarket also reported
improved results, with 1995 average occupancy rates increasing to 69.3% from
65.9% in 1994 and average room rates dropping slightly to $57.85 in 1995
compared to $58.36 in 1994. Increases in occupancy were reported across Los
Angeles County, which is important given that 1994 results were bolstered by
the World Cup soccer tournament and the aftermath of the January 1994
Northridge Earthquake.
Although the increased demand nationally has encouraged the construction of new
limited service hotels to gradually resume in select markets, it is expected
that few, if any, new full service hotels will be built in Los Angeles over the
next few years. Despite the lack of new construction, the Hotel faces
continued competition from existing hotels in the Los Angeles Airport Market.
Eleven hotels with a total of 6,755 rooms have been identified that currently
compete to varying degrees with the Hotel, including the Los Angeles Airport
Marriott, which is owned by a limited partnership sponsored by an affiliate of
the General Partner. There are numerous additional hotels in the vicinity,
which are not considered to be directly competitive with the Partnership's
Hotel due to disparities in markets served, quality of facilities, rate
structure, location and/or lack of affiliation with a major hotel chain.
(Two bar graphs showing the following information in graphic form: )
1. Average Occupancy Rates
1995 1994
United States 65.5% 65.2%
Los Angeles Airport market 69.3% 65.9%
Radisson Plaza Hotel 82.3% 85.5%
2. Average Room Rates
United States $67.34 $63.63
Los Angeles Airport Market $57.85 $58.36
Radisson Plaza Hotel $77.58 $70.02
Property Update
Operating results at the Hotel in 1995 reflected the improving conditions
discussed above. For the year ended December 31, 1995, the Hotel's average
occupancy and room rate were 82.3% and $77.58, respectively, compared with
85.5% and $70.02 for 1994. The improved profitability of the Hotel during the
year is largely attributable to the 10.8% increase in average room rate, which
was achieved as a result of our efforts to reduce the volume of airline
contracts and increase the number of business and group guests at higher rates.
Although there was a slight decrease in the Hotel's average occupancy level,
this was more than offset by the increased room rate and, as a result, the
Hotel's total room sales improved relative to last year. For the year ended
December 31, 1995, total Hotel sales increased 4.9% relative to 1994. This
improvement, coupled with relatively flat expenses, led to an 18.5% increase in
the Hotel's house profit. The Partnership reported net income of $232,226 in
1995 compared to a net loss of $245,012 in 1994.
Regular maintenance and capital improvements to the Hotel are an essential
component of our efforts to preserve the Hotel's long-term value and its
potential for appreciation. As you may recall, a soft-goods renovation was
completed on the majority of the Hotel's guest rooms in 1993. In December
1995, a soft-goods refurbishment of the remaining guest rooms commenced and
was ultimately completed during the first quarter of 1996. Additionally, in
1995 we created a sports bar called "Bleachers" in former storage space
fronting on the golf course. These renovations were entirely funded from the
Partnership's reserve for furniture, fixtures, and equipment.
Summary
The General Partner is encouraged by the overall improvement in industry
conditions, and is hopeful that a corresponding strengthening of industry
conditions for Los Angeles hotels will occur during 1996, thereby increasing
the prospect for higher operating profits and property values. Looking
forward, our focus will be on pursuing new techniques for enhancing operations
and improving the Hotel's market share. In addition, we will continue to work
closely with Hotel management in seeking to streamline operations by minimizing
expenses at both the Hotel and Partnership levels. We will keep you informed
of our progress in future investor reports.
Very truly yours,
Manhattan Beach Commercial Properties III Inc.
The General Partner
/S/ Jeffrey C. Carter
Jeffrey C. Carter
President
March 25, 1996
FINANCIAL RESULTS COMPARISON
The following chart summarizes the financial results of the Hotel and
Partnership for the indicated years.
As reported in the
As reported by Interstate Partnership's Financial Statements
Total Total Partnership
Hotel House Partnership Net Income
Sales Profit(1) Income(2) (Loss)
1994 $13,186,812 $3,386,612 $13,244,227 $ (245,012)
1995 $13,835,896 $4,013,122 $14,014,500 $ 232,226
% Change 4.9% 18.5% 5.8% *
(1) House profit is the Hotel's operating profit prior to the payment of
certain other items including property taxes, insurance, ground rent,
equipment leases, Partnership general and administrative expenses and
the funding of the reserve account established for furniture, fixtures
and equipment.
(2) Total Partnership income includes Hotel revenues, interest income and
other income.
* This percentage change is not relevant since the Partnership
recognized net income in 1995 compared to a net loss in 1994.
The Partnership's results of operations improved significantly in 1995 relative
to 1994, primarily due to an increase in total revenues and lower food and
beverage expenses. Please refer to the accompanying financial statements for
more detail concerning the Partnership's financial results.
Selected Financial Data
Selected Partnership financial data for the five years ended December 31 is
shown below. This data should be read in conjunction with the Partnership's
financial statements included in this report.
1995 1994 1993 1992 1991
Total Partnership
income(1) $14,014,500 $13,244,227 $13,070,254 $13,582,978 $ 13,761,418
Partnership net
income (loss) 232,226 (245,012) (767,542) (2,956,338) (4,072,561)
Net loss per
Limited Partnership
unit (2) 0 (.03) (.09) (.36) (.50)
Cash distributions
declared per unit (3) .20 0 0 .14 .20
Total assets at
December 31 48,895,202 48,366,331 48,680,580 49,853,208 52,366,837
(1) Total Partnership income includes Hotel revenues, interest income and
other income.
(2) There are 6,975,000 units outstanding.
(3) A distribution in the amount of $1,395,000 or $0.20 per Unit from 1995
annual cash flow and surplus Partnership reserves was paid to limited
partners on February 1, 1996. Future distributions will be dependent
on the results of operations of the Property and the level of net
operating income available to the Partnership. For 1991 and 1992, all
cash distributions were paid from the Settlement Fund.
Balance Sheets
December 31, 1995 and 1994
Assets 1995 1994
Real estate, at cost (note 2):
Building $ 47,975,974 $ 47,975,974
Furniture, fixtures and equipment 2,623,827 1,972,493
Leasehold improvements 3,333,141 3,333,141
--------- ---------
53,932,942 53,281,608
Less accumulated depreciation
and amortization 11,006,481 9,270,740
--------- ---------
42,926,461 44,010,868
Cash and cash equivalents 4,414,032 2,797,178
Restricted cash 187,464 270,489
Accounts receivable 992,941 906,721
Prepaid and other assets 374,304 381,075
--------- ---------
Total Assets $ 48,895,202 $ 48,366,331
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued liabilities $ 1,309,672 $ 1,291,771
Due to affiliates (note 4) 2,400,138 2,121,394
Distribution payable 1,409,091 0
--------- ---------
Total Liabilities 5,118,901 3,413,165
Partners' Capital (Deficit):
General Partner (1,591,658) (1,809,793)
Limited Partners (6,975,000 limited
partnership units authorized, issued
and outstanding) 45,367,959 46,762,959
---------- ----------
Total Partners' Capital 43,776,301 44,953,166
---------- ----------
Total Liabilities and Partners' Capital $ 48,895,202 $ 48,366,331
========== ==========
Statement of Partners' Capital (Deficit)
For the years ended December 31, 1995, 1994 and 1993
Limited General
Partners Partner Total
Balance at December 31, 1992 $ 47,623,630 $ (1,657,910) $ 45,965,720
Net loss (652,411) (115,131) (767,542)
---------- --------- ----------
Balance at December 31, 1993 46,971,219 (1,773,041) 45,198,178
Net loss (208,260) (36,752) (245,012)
---------- --------- ----------
Balance at December 31, 1994 46,762,959 (1,809,793) 44,953,166
Net income 0 232,226 232,226
Distributions (1,395,000) (14,091) (1,409,091)
---------- --------- ----------
Balance at December 31, 1995 $ 45,367,959 $ (1,591,658) $ 43,776,301
========== ========= ==========
Statements of Operations
For the years ended December 31, 1995, 1994 and 1993
Hotel Revenues 1995 1994 1993
Rooms $ 8,860,793 $ 8,301,912 $ 7,946,307
Food and beverage 4,256,995 4,250,324 4,358,632
Telephone 599,598 485,629 412,017
Other 118,510 148,947 279,564
--------- --------- ---------
Total Revenues 13,835,896 13,186,812 12,996,520
Departmental Expenses
Rooms 2,399,499 2,356,431 2,356,764
Food and beverage 3,458,417 3,494,320 3,708,418
Telephone 319,083 314,893 344,880
Other 40,762 35,717 233,019
--------- --------- ---------
Total Expenses 6,217,761 6,201,361 6,643,081
Departmental income 7,618,135 6,985,451 6,353,439
Unallocated Partnership and Hotel
Operating Expenses
Advertising and sales 549,649 596,360 690,698
General and administrative:
Hotel and other 2,034,318 1,875,222 1,795,386
Partnership 504,314 455,690 492,387
Utilities and maintenance 1,151,196 1,184,477 1,104,860
Ground rent (note 5) 655,948 623,457 619,458
Management fees (note 6) 424,773 304,261 302,037
Property taxes 393,194 417,494 429,215
Operating leases 115,380 150,645 85,259
Depreciation and amortization 1,735,741 1,680,272 1,635,295
--------- --------- ---------
7,564,513 7,287,878 7,154,595
--------- --------- ---------
Operating income (loss) 53,622 (302,427) (801,156)
Other Income (Expense)
Interest income 173,031 54,435 38,435
Other income, net 5,573 2,980 35,299
Interest expense 0 0 (40,120)
-------- -------- --------
178,604 57,415 33,614
-------- -------- --------
Net Income (Loss) $ 232,226 $ (245,012) $ (767,542)
======== ======== ========
Net Income (Loss) Allocated
To the General Partner $ 232,226 $ (36,752) $ (115,131)
To the Limited Partners 0 (208,260) (652,411)
-------- --------- ---------
$ 232,226 $ (245,012) $ (767,542)
======== ========= =========
Net Income (Loss)
Per limited partnership unit
(6,975,000 outstanding) $ 0 $ (.03) $ (.09)
======== ========= =========
Statements of Cash Flows
For the years ended December 31, 1995, 1994 and 1993
Cash Flows from Operating Activities: 1995 1994 1993
Net income (loss) $ 232,226 $ (245,012) $ (767,542)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 1,735,741 1,680,272 1,635,295
Increase (decrease) in cash arising
from changes in operating assets
and liabilities:
Restricted cash (568,309) (547,865) 0
Accounts receivable (86,220) (340,776) 538,359
Prepaid and other assets 6,771 (39,332) (37,479)
Accounts payable and accrued
liabilities 17,901 (331,882) (251,244)
Due to affiliates 278,744 262,645 214,734
--------- -------- ---------
Net cash provided by operating activities 1,616,854 438,050 1,332,123
--------- -------- ---------
Cash Flows from Investing Activities:
Proceeds from restricted cash 651,334 277,376 314,985
Additions to real estate (651,334) (101,658) (571,012)
-------- -------- ---------
Net cash provided by (used for)
investing activities 0 175,718 (256,027)
-------- -------- ---------
Cash Flows from Financing Activities:
Due to Radisson/Carlson Group 0 0 (368,576)
-------- -------- ---------
Net cash used for financing activities 0 0 (368,576)
-------- -------- ---------
Net increase in cash and cash equivalents 1,616,854 613,768 707,520
Cash and cash equivalents at beginning
of period 2,797,178 2,183,410 1,475,890
--------- --------- ---------
Cash and cash equivalents at end of
period $ 4,414,032 $ 2,797,178 $ 2,183,410
========= ========= =========
Supplemental Disclosure of
Cash Flow Information:
Cash paid during the period for interest $ 0 $ 0 $ 40,120
--------- --------- ---------
Notes to the Financial Statements
December 31, 1995, 1994 and 1993
1. Organization
Manhattan Beach Hotel Partners, L.P. (the "Partnership"), formerly Shearson
California Radisson Plaza Partners, L.P. (see below), a Delaware limited
partnership, was organized on September 8, 1987 under the laws of the State of
Delaware for the purpose of acquiring, owning, leasing or operating, and
eventually selling the Radisson Plaza Hotel and Golf Course (the "Property").
The Partnership purchased the Property on December 1, 1987 for $56,500,000.
The Partnership will terminate on December 31, 2037, or earlier, in accordance
with the terms of the Partnership Agreement.
The general partner of the Partnership is Manhattan Beach Commercial Properties
III, Inc., (the "General Partner"), formerly Shearson Lehman Commercial
Properties III, Inc. (see below), a Delaware corporation and a wholly-owned
subsidiary of DA Group Holdings, Inc. (the "Group"), formerly Shearson Lehman
Brothers Group Inc. The original limited partner of the Partnership was
Shearson Lehman Commercial Properties Depositary III, Inc. (the "Assignor
Limited Partner"), a Delaware corporation and a wholly-owned subsidiary of the
Group.
On July 31, 1993, Shearson Lehman Brothers Inc. ("Shearson") sold certain of
its domestic retail brokerage and asset management businesses to Smith Barney,
Harris Upham & Co. Incorporated ("Smith Barney"). Subsequent to the sale,
Shearson changed its name to Lehman Brothers Inc. ("Lehman"). The transaction
did not affect the ownership of the General Partner. However, the assets
acquired by Smith Barney included the name "Shearson." Consequently, effective
October 21, 1993, the Shearson Lehman Commercial Properties III, Inc. General
Partner changed its name to Manhattan Beach Commercial Properties III, Inc.,
and effective December 2, 1993, the Partnership changed its name to Manhattan
Beach Hotel Partners, L.P.
Prior to the admission of public investors as Limited Partners, the
Partnership's losses were allocated 99% to the Assignor Limited Partner and 1%
to the General Partner. Upon admission of public investors, the Assignor
Limited Partner assigned its rights of ownership to the purchasers of Limited
Partnership interests.
During the year ended December 31, 1988, the Partnership, on behalf of the
Assignor Limited Partner, sold 6,975,000 depositary units representing gross
capital contributions of $69,750,000. Net proceeds to the Partnership amounted
to approximately $62,937,000 after deduction of offering costs and selling
commissions. The proceeds of the public offering were utilized to pay off the
promissory note secured by the all-inclusive deed of trust.
On February 13, 1996, based upon, among other things, the advice of Partnership
counsel, Skadden, Arps, Slate, Meagher & Flom, the General Partner adopted a
resolution that states, among other things, if a Change of Control (as defined
below) occurs, the General Partner may distribute the Partnership's cash
balances not required for its ordinary course day-to-day operations. "Change
of Control" means any purchase or offer to purchase more than 10% of the Units
that is not approved in advance by the General Partner. In determining the
amount of the distribution, the General Partner may take into account all
material factors. In addition, the Partnership will not be obligated to make
any distribution to any partner, and no partner will be entitled to receive any
distribution, until the General Partner has declared the distribution and
established a record date and distribution date for the distribution. The
Partnership filed a Form 8-K disclosing this resolution on February 26, 1996.
2. Significant Accounting Policies
Depreciation Real estate investments, which consist of the Hotel building and
furniture, fixtures and equipment, and leasehold improvements are recorded at
cost less accumulated depreciation. Cost includes the initial purchase price
of the property plus closing costs, acquisition and legal fees and capital
improvements. Depreciation of the real property is computed using the
straight-line method based on the estimated useful life of 40 years.
Depreciation of the personal property is computed using the straight-line
method over an estimated useful life of five years. Leasehold improvements are
amortized over the remaining life of the ground lease using the straight-line
method.
When building and personal property are sold or otherwise disposed of, when
required, the asset account and related accumulated depreciation account are
relieved, and any gain or loss is included in operations.
Accounting for Impairment. In March 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 121 "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of" ("FAS 121"), which 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. FAS 121 also addresses the accounting
for long-lived assets that are expected to be disposed of. The Partnership has
adopted FAS 121 in the fourth quarter of 1995. Based on current circumstances,
the adoption had no impact on the financial statements.
Income Taxes. No income tax provision (benefit) has been recorded on the books
of the Partnership, as the respective shares of taxable income (loss) are
reportable by the partners on their individual tax returns.
For income tax purposes, the admission of Public Limited Partners on May 26,
1988 to the Partnership was treated as a deemed sale of the Assignor Limited
Partner's interest in accordance with the provision of Section 708(b)(1)(B) of
the Internal Revenue Code. The carrying values of the assets and related
capital accounts have been increased by the Limited Partners' interest for tax
purposes. There has been no readjustment of the carrying values of the assets
for financial reporting purposes.
Reclassifications. Certain prior year amounts have been reclassified in order
to conform to the current year's presentation.
Cash and Cash Equivalents. Cash and cash equivalents consist of highly liquid
short-term investments with maturities of three months or less from the date of
issuance. The carrying amount approximates fair value because of the short
maturity of these instruments.
Concentration of Credit Risk. Financial instruments which potentially subject
the Partnership to a concentration of credit risk principally consist of cash
in excess of the financial institutions' insurance limits. The Partnership
invests available cash with high credit quality financial institutions.
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. Partnership Agreement
Upon the admission of the Limited Partners, the following provisions of the
Partnership Agreement became effective.
Under the terms of the Partnership Agreement, the Partnership's net cash flow
from operations, as defined, will be distributed 99% to the Limited Partners
and 1% to the General Partner until the sum of the amounts distributed equals
the preferred return. The preferred return is a cumulative 12% return per
annum of the Limited Partners' adjusted capital contribution, as defined,
accruing on a cumulative but noncompounding basis. Thereafter, the
Partnership's cash flow from operations will be distributed 85% to the Limited
Partners and 15% to the General Partner.
In general, the Partnership Agreement provides that all income and gain will be
allocated first to those partners with negative capital accounts, as defined,
until no partner has a negative capital account; then 99% to the Limited
Partners and 1% to the General Partner to the extent the Limited Partners'
adjusted capital contributions exceed their capital accounts; then to the
General Partner to the extent it has received a 15% distribution of net cash
flow; then 99% to the Limited Partners and 1% to the General Partner until the
Limited Partners have been allocated an amount equal to the preferred return,
as defined; and then 85% to the Limited Partners and 15% to the General
Partner. In general, losses will be allocated 85% to the Limited Partners and
15% to the General Partner until the sum of cumulative losses equals the sum of
cumulative distributions, and then 99% to the Limited Partners and 1% to the
General Partner.
Net proceeds from a sale or refinancing of the Partnership's assets will be
distributed 99% to the Limited Partners and 1% to the General Partner until
each Limited Partner has received an amount equal to any unpaid cumulative
return and their unrecovered capital, as defined. Thereafter, such net
proceeds will be distributed 99% to the Limited Partners and 1% to the General
Partner until each Limited Partner's adjusted capital contribution equals zero.
In conjunction with the Settlement discussed in Note 8, any remaining net
proceeds will be allocated and distributed 95% to the Limited Partners and 5%
to the General Partner.
4. Transactions with Related Parties
Per the terms of the Partnership Agreement, the General Partner is entitled to
receive a management oversight fee of $250,000 per year to cover costs incurred
and time expended by the General Partner in overseeing the operator of the
Property to ensure that operations and management are being conducted in the
best interests of the Partnership and in accordance with the lease or
management contract. For the years ended December 31, 1995, 1994 and 1993, a
management fee in the amount of $250,000 has been accrued, but remains unpaid.
During 1989, certain legal and accounting fees were paid by the General Partner
in connection with the restructuring of the lease (see Note 6). The costs have
been deemed to be reimbursable by the Partnership. The total amount owed to
the General Partner at December 31, 1995 and 1994 was $587,804.
Under the terms of the Partnership Agreement, the General Partner and its
affiliates provide ongoing administrative, accounting and investor relation
services to the Partnership. Costs of such services were $68,964, $60,666 and
$79,663 for the years ended December 31, 1995, 1994 and 1993, respectively.
Upon sale of the Property, the General Partner may receive a brokerage
commission equal to 3% of the sales price less any amounts payable as
commissions to unaffiliated third parties.
Cash and Cash Equivalents. Certain cash accounts reflected on the Partnership's
balance sheet at December 31, 1995 and 1994 were on deposit with an affiliate
of the General Partner.
5. Real Estate Investments
On December 1, 1987, the Partnership acquired the Property, a seven-story,
384-room, 287,965 square foot commercial hotel and nine-hole executive golf
course located on a 26.3 acre site in the City of Manhattan Beach, Los Angeles
County, California (the "City"). A 166,382 square foot, 600-space parking
garage is also part of the Property. Construction of the Property was
substantially completed in January 1987, and its final certificate of occupancy
was issued on March 17, 1987. The land upon which the Property is situated was
leased to the seller by the City pursuant to a ground lease (the "Ground
Lease") entered into on March 1, 1983 for an initial term of 50 years. The
term is renewable for successive periods of 25 and 24 years.
Minimum ground lease payments for each of the next five years ending December
31, and thereafter, are as follows:
1996 $ 400,000
1997 400,000
1998 400,000
1999 400,000
2000 400,000
Thereafter 12,866,667
----------
Total $14,866,667
==========
In addition to the minimum ground lease payments, the lease provides for
additional rents based upon percentages, ranging from 2.5% to 6.25%, as applied
to the Hotel's various revenue. Percentage rent is only applicable to the
extent that the total of such percentages exceeds the minimum annual rent.
Such excess lease payments amounted to $255,948, $223,457 and $219,458 in 1995,
1994 and 1993, respectively.
The golf course is operated by a third party in accordance with an operating
lease agreement entered into on December 12, 1986 which the Partnership assumed
upon its purchase of the Hotel. The agreement has a term of 10 years and
provides for rents payable to the Partnership ranging from 2% to 5% of gross
revenues during the term of the agreement.
During 1993, the Partnership entered into third-party operating lease
agreements for the parking garage and gift shop.
6. Hotel Management Agreement
The Partnership entered into a management agreement with Manhattan Beach
Management Company (the "Management Company"), an affiliate of Interstate
Hotels Corporation, to manage and operate the hotel. The term of the agreement
commenced on January 3, 1991 and will continue through January 3, 1997. The
agreement provides for management fees of 1.75% of gross revenues with an
incentive fee calculated based upon a percentage, ranging from 10% to 17.5%, of
operating profits in excess of $1,500,000. The Partnership is responsible for
operating deficits and has committed to advance funds to the hotel so as to
maintain cash at $300,000.
7. Reconciliation of Financial Statement Net Income (Loss) and Partners'
Capital to Federal Income Tax Basis Net Loss and Partners' Capital
1995 1994 1993
Financial statement net
income (loss) $ 232,226 $ (245,012) $ (767,542)
Tax basis depreciation over
financial statement depreciation (760,812) (1,158,551) (1,296,211)
Reversal of prior year insurance
accrual 0 0 (228,515)
Other (48,337) (99,769) (83,038)
------- --------- ---------
Federal income tax basis net loss $ (576,923) $ (1,503,332) $ (2,375,306)
Financial statement partners'
capital $ 43,776,301 $ 44,953,166 $ 45,198,178
Current year financial statement
net income (loss) over federal
income tax basis net loss (809,149) (1,258,320) (1,607,764)
Cumulative financial statement net
loss over federal income tax
basis net loss 5,336,374 6,594,694 8,202,458
---------- ---------- ----------
Federal income tax basis
partners' capital $ 48,303,526 $ 50,289,540 $ 51,792,872
========== ========== ==========
Because many types of transactions are susceptible to varying interpretations
under Federal and state income tax laws and regulations, the amounts reported
above may be subject to change at a later date upon final determination by the
taxing authorities.
8. Litigation
As a result of the removal of the Original Tenants as operators of the Property
and the termination of a number of equipment leasing arrangements previously
entered into by the Original Tenants, a lawsuit related to the replacement of
the telephone system has been filed naming the Partnership, among others, as a
defendant. The suit, entitled Communication Facility Management Corporation
("CFMC") vs. Manhattan Beach Hotel Partners, L.P., et al, was filed in June
1990 in Los Angeles Superior Court (the "Court"). On November 7, 1994 the
Court executed a formal dismissal order. CFMC subsequently filed a motion to
vacate the dismissal which was denied by the Court on February 28, 1995. On
February 16, 1996, CFMC filed an application with the Court for an extension to
file an appellant's opening brief. The Court granted the extension and CFMC
now has until April 10, 1996 to file an opening brief to appeal the suit.
Should CFMC file an opening brief, the General Partner intends to vigorously
defend against the appeal.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Manhattan Beach Hotel Partners, L.P.:
We have audited the accompanying balance sheets of Manhattan Beach Hotel
Partners, L.P. (formerly Shearson California Radisson Plaza Partners, L.P.), a
Delaware limited partnership, as of December 31, 1995 and 1994, and the related
statements of operations, partners' capital (deficit) and cash flows for each
of the three years in the period ended December 31, 1995. 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 provides 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 Manhattan Beach Hotel
Partners, L.P. as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
March 4, 1996
To the Partners of
Manhattan Beach Hotel Partners, L.P.:
Our report on the financial statements of Manhattan Beach Hotel Partners, L.P.
(formerly Shearson California Radisson Plaza Partners, L.P.), a Delaware
Limited Partnership, has been incorporated by reference in this Form 10-K from
the Annual Report to Unitholders of Manhattan Beach Hotel Partners, L.P. for
the year ended December 31, 1995. In connection with our audit of such
financial statements, we have also audited the related financial statement
schedule listed in the index of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
March 4, 1996
MANHATTAN BEACH HOTEL PARTNERS, L.P.
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1995
Costs Capitalized
Subsequent
Initial Cost to Partnership To Acquisition
Building and Building and
Description Encumbrances Land Improvements Improvements
- ----------------------------------------------------------------------------
Commercial Property:
Hotel Complex,
Manhattan Beach, CA $ 0 $ 0 $ 56,500,000 $ 7,573,027
------------------------------------------------------
$ 0 $ 0 $ 56,500,000 $ 7,573,027
======================================================
Gross Amount at Which Carried at
Close of Period (2)
Building and
Description Write-off (4) Land Improvements Total
- -----------------------------------------------------------------------------
Commercial Property:
Hotel Complex
Manhattan Beach, CA $ 10,140,085 $ 0 $ 53,932,942 $ 53,932,942
------------------------------------------------------
$ 10,140,085 $ 0 $ 53,932,942 $ 53,932,942
======================================================
Life on Which
Depreciation
in Latest
Accumulated Date of Date Income Statements
Description Depreciation(1) Construction Acquired is Computed
- -----------------------------------------------------------------------------
Commercial Property:
Hotel Complex,
Manhattan Beach, CA $ 11,006,481 1987 12/01/87 40/5 (3)
--------------------------------------------------------
$ 11,006,481 - - -
(1) For Federal income tax purposes, the amount of accumulated depreciation is
approximately $23,386,929.
(2) For Federal income tax purposes, the basis ofland, building, and personal
property is $64,935,486.
(3) Building and improvements - 40 years; personal property - 5 years.
(4) Fully depreciated furniture, fixtures and equipment of $10,140,085 were
written off in 1994.
A reconciliation of the carrying amount of real estate and accumulated
depreciation for the years ended December 31, 1995, 1994 and 1993 follows:
Real Estate Investments: 1995 1994 1993
- -------------------------------------------------------------------------------
Beginning of year $ 53,281,608 $ 63,320,035 $ 62,749,023
Acquisitions 651,334 101,658 571,012
Write-off 0 (10,140,085) 0
-----------------------------------------------
End of year $ 53,932,942 $ 53,281,608 $ 63,320,035
===============================================
Accumulated Depreciation:
Beginning of year $ 9,270,740 $ 17,730,553 $ 16,095,571
Depreciation expense 1,735,741 1,680,272 1,634,982
Write-off 0 (10,140,085) 0
-----------------------------------------------
End of year $ 11,006,481 $ 9,270,740 $ 17,730,553
===============================================
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<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 4,601,496
<SECURITIES> 0
<RECEIVABLES> 992,941
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