<PAGE> 1
Form 10-KSB-Annual or Transitional Report
Under Section 13 or 15 (d)
Form 10-KSB
(Mark one)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission file number 33-20527
BRUNNER COMPANIES INCOME PROPERTIES L.P. I
----------------------------------------------
(Name of small business issuer in its charter)
Delaware
(State or other jurisdiction of 31-1234157
incorporation or organization) (IRS Employer
Identification No.)
3632 Wheeler Road, Suite 2
P.0. Box 204227
Augusta, Georgia 30917-4227
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (706) 863-2222
Securities registered under Section 12(b) of the Exchange Act:
None
----
Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Units
(Title of class)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB[X]
State issuer's revenues for its most recent fiscal year: $2,559,000
State the aggregate market value of the voting partnership interest held by
non-affiliates computed by reference to the price at which the partnership
interest were sold, or the average bid and asked prices of such partnership
interest, as of the specified date within the past 60 days: Market value
information for the registrant's partnership interest is not available. Should a
trading market develop for these interests, it is the Managing General Partner's
belief that the aggregate market value of the voting partnership's interest
would not exceed $25,000,000.
----------------------------
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Prospectus of Registrant dated June 10, 1988 (included in
Registration Statement, No. 33-20527, of Registrant) are incorporated by
reference into Parts I and III.
1
<PAGE> 2
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Brunner Companies Income Properties L.P. I (the "Registrant" or "Partnership")
is a Delaware limited partnership formed in February 1988. The Partnership will
continue in existence until December 31, 2008, unless earlier dissolved or
terminated. Brunner Management Limited Partnership (the "General Partner"), an
Ohio limited partnership formed in February 1988, is the sole general partner of
the Partnership. 104 Management, Inc. (the "Managing General Partner"), an Ohio
corporation formed in February 1988, is the sole general partner of the General
Partner, and in that capacity manages the business of the Partnership.
Commencing June 10, 1988, the Partnership offered through The Ohio Company up to
552,000 Units of Class A Limited Partnership Interests at $10 per unit
("Units"). Holders of Units are referred to as "Unitholders". An additional
61,333 units of Class B Limited Partnership Interests were issued by the
Partnership to certain affiliates of the Managing General Partner as a part of
the purchase price for an undivided interest in each retail center equivalent to
a then fair market value of $613,330 ("Subordinated Interest"). Holders of
Subordinated Interests are referred to as "Subordinated Limited Partners", and
Unitholders and Subordinated Limited Partners are collectively referred to as
"Limited Partners". Limited Partners are not required to make any additional
capital contributions. There are only two differences between the Class A and
Class B limited partnership interests. First, the holders of Class A units are
entitled to receive their Class A Priority Return before the holders of Class B
units are entitled to receive any portion of their Class B Priority Return.
Second, holders of Class B units, if such holders are affiliates of the General
Partner, are not entitled to vote upon the removal of the General Partner or
upon consideration of a sale of any Retail Center to the General Partner or any
affiliate of the General Partner.
The offering terminated on July 12, 1988. Upon termination of the offering, the
Partnership had accepted subscriptions for 552,000 Units and 61,333 Units of
Subordinated Interests for aggregate gross proceeds of $6,133,330. The
Partnership invested substantially all of the net offering proceeds in the
investment properties (the "Retail Centers"). The Partnership will not acquire
nor invest in any other properties or debt or equity securities of any other
issuers (other than short term investments of cash in high grade United States
government obligations during interim periods between the receipt of revenues
and the distribution of cash to the Limited Partners and pending payment of
operating expenses of the Partnership) and will not issue any additional limited
partnership interests or other equity securities in the Partnership. The
policies of the Partnership noted above can only be changed by an affirmative
vote of limited partners owning a majority in interest and the General Partner.
2
<PAGE> 3
The General Partner and the Managing General Partner are affiliates of a related
group of corporations and partnerships engaged generally in the real estate
development business. Pursuant to an agreement effective December 31, 1992,
IBGP, Inc., an affiliate of Insignia Financial Group, Inc. ("Insignia"),
acquired a majority of the outstanding stock of 104 Management Inc. on March 5,
1993. IBGP, Inc. was an indirect wholly-owned subsidiary of Metropolitan Asset
Enhancement, L.P. ("MAE"), an affiliate of Insignia. Both IBGP, Inc. and
Insignia Brunner, L.P. were affiliates of Metropolitan Asset Enhancement, L.P.
104 Management, Inc. is the managing general partner of Brunner Management
Limited Partnership, which is the general partner of the Registrant. On November
17, 1998, BCIP I & III, LLC purchased 104 Management, Inc. from IBGP, Inc. and
thereby acquired the general partnership interest in Brunner Management Limited
Partnership. BCIP I & III, LLC also purchased the limited partnership interest
in Brunner Management Limited Partnership and all of the outstanding Class B
Limited Partnership units of the Partnership and Brunner Companies Income
Properties L.P. I, an affiliated entity, from Insignia Brunner, L.P.
The Partnership is in the business of owning and operating three Retail Centers:
Georgetown Landing, Georgetown, South Carolina; White Horse Plaza, Greenville,
South Carolina; and Hitchcock Plaza, Aiken, South Carolina. See "Item 2.
Description of Properties" for additional information regarding the Retail
Centers. The real estate business is highly competitive. The Partnership's real
property investments are subject to competition from similar types of properties
in the vicinities in which they are located, and the Partnership is not a
significant factor in its industry. In addition, various limited partnerships
and limited liability companies have been formed by related parties to engage in
businesses which may be competitive with the Partnership.
The Partnership has no employees. Management and administrative services are
performed by affiliates of BCIP I & III, LLC. The property manager is
responsible for the day-to-day operations of each property. The Managing General
Partner has also selected affiliates of BCIP I & III, LLC to provide real estate
advisory and asset management services to the Partnership. As advisor, such
affiliates provide partnership accounting and administrative services,
investment management, and supervisory services over property management and
leasing. For a further discussion of property and partnership management, see
"Item 12", which descriptions are herein incorporated by reference.
There have been, and it is possible there may be, other federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
In certain cases environmental testing has been performed, which resulted in no
material adverse conditions or liabilities. In no case has the Partnership
received notice that it is a potentially responsible party with respect to an
environmental clean up site.
3
<PAGE> 4
ITEM 2. DESCRIPTION OF PROPERTY
The following table sets forth the Partnership's investments in properties:
<TABLE>
<CAPTION>
Property Purchase Type of Ownership Use
- ----------------------------- -------- ------------------------- -------------
<S> <C> <C> <C>
Hitchcock Plaza 7/12/88 Fee ownership, subject Retail Center
Aiken, South Carolina to first mortgage 233,000sf
White Horse Plaza 7/12/88 Fee ownership, subject to Retail Center
Greenville, South Carolina to first mortgage 166,000 sf
Georgetown Landing 7/12/88 Fee ownership, subject Retail Center
Georgetown, South Carolina to first mortgage 50,000 sf
</TABLE>
A significant feature of all the Retail Centers is the fact that approximately
73% of the leasable space is, in the aggregate, leased to anchor tenants with
national or regional name recognition. Although such anchor tenants generally
pay lower base rents than smaller tenants, anchor tenants offer greater security
and stability of long-term leases from well-established and more credit-worthy
tenants and tend to attract greater traffic to the retail centers.
Two major anchor tenants at White Horse Plaza have vacated their space.
Wal-Mart Stores ("Wal-Mart") continues to honor its lease obligation.
Winn-Dixie Charlotte, Inc ("Winn-Dixie") has ceased to pay. The Company is
pursuing legal action against Winn-Dixie as further described in Item 3 -- Legal
Proceedings.
SCHEDULE OF PROPERTIES (IN THOUSANDS)
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Useful Method Federal
Property Value Depreciation Life Tax Basis
- ---------------- -------- ------------ ---------- ------ ---------
<S> <C> <C> <C> <C> <C>
Hitchcock Plaza $ 14,219 $ 4,544 5-31.5 yrs S/L $14,200
White Horse
Plaza 8,782 2,523 5-31.5 yrs S/L 8,845
Georgetown
Landing 2,158 638 31.5 yrs S/L 2,136
------- ------- -------
$25,159 $ 7,705 $25,181
======= ======= =======
</TABLE>
See "Note A" of the Notes to Financial Statements included in "Item 7" for a
description of the Partnership's depreciation policy.
4
<PAGE> 5
SCHEDULE OF MORTGAGE NOTES (IN THOUSANDS):
<TABLE>
<CAPTION>
Principal balance Stated Principal Due
At December 31, Interest Period Maturity At Maturity
Property 1999 Rate (1) Amortized Date (1) (2)
- --------------- ----------------- -------- --------- -------- -------------
<S> <C> <C> <C> <C> <C>
Hitchcock
Plaza $10,004 7% 38 yrs 5/2000 $ 9,981
White Horse
Plaza 6,337 7% 38 yrs 5/2000 6,322
Georgetown
Landing 1,406 7% 38 yrs 5/2000 1,403
------- -------
Total $17,747 $17,706
======= =======
</TABLE>
(1) On December 29, 1999, the Partnership and, New York Life Insurance
Company (the "Lender") entered into a Loan Modification Agreement, effective May
10, 1999, to extend the maturity dates of the mortgage notes to May 10, 2000.
During the extension period, the mortgage notes bear interest at the rate of 7%
per annum and the Partnership is required to make monthly payments of principal,
interest and escrow of $131,261. Additionally, the Partnership is required to
make quarterly payments of net cash flow, as defined, into a separate escrow
account controlled jointly by the Lender and Partnership. See "Liquidity and
Capital Resources" below.
(2) The mortgages require a balloon payment at maturity for the remaining
principal balance. These notes are cross-collateralized and cross-defaulted and
are secured by the properties and by a pledge of revenues from the respective
properties.
SCHEDULE OF RENTAL RATES AND OCCUPANCY:
<TABLE>
<CAPTION>
Average Annual
Rental Rates Average Annual
(per square foot) Occupancy
------------------------ ---------------------------
1999 1998 1999 1998
------ ------- ------ ------
<S> <C> <C> <C> <C>
Hitchcock Plaza $ 5.68 $ 5.69 92% 91%
White Horse Plaza 5.21 5.64 42% 98%
Georgetown Landing 4.81 4.80 100% 94%
</TABLE>
Rental rates per square foot are based on rental income only. Average annual
occupancy is based on physical occupancy and does not include tenants which have
vacated space but continue to pay rent.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other retail centers in the area. The Managing General Partner
believes that all of the properties are adequately insured.
5
<PAGE> 6
The following is a schedule of the lease expirations for the years 2000-2012:
<TABLE>
<CAPTION>
Hitchcock Number of Annual Rent % of Gross
Plaza Expirations Square Feet (in thousands) Annual Rent
----- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
2000 4 42,200 220 16.29%
2001 1 1,000 11 .85%
2002 6 9,500 121 8.95%
2003 4 6,800 74 5.47%
2004 2 6,000 57 4.22%
2005 1 15,975 66 4.89%
2006 0 0 0 00.00%
2007 1 42,296 343 25.39%
2008 0 0 0 00.00%
2009 1 4,000 44 3.26%
2010-2011 0 0 0 00.00%
2012 2 90,139 414 30.68%
</TABLE>
<TABLE>
<CAPTION>
White Horse Number of Annual Rent % of Gross Annual
Plaza Expirations Square Feet (in thousands) Rent
----------- ---------- ----------- -------------- ------------------
<S> <C> <C> <C> <C>
2000 6 22,980 128 16.55%
2001 1 3,200 32 4.14%
2002 2 2,950 39 5.02%
2003 0 0 0 0.00%
2004 2 3,750 43 5.56%
2005 2 0 0 0.00%
2006 2 117,844 532 68.73%
</TABLE>
<TABLE>
<CAPTION>
Georgetown Number of Annual Rent % of Gross Annual
Landing Expirations Square Feet (in thousands) Rent
---------- ----------- ----------- -------------- -----------------
<S> <C> <C> <C> <C>
2000 1 1,200 11 4.53%
2001 0 0 0 0.00%
2002 2 2,400 24 10.02%
2003 3 6,120 46 19.17%
2004 0 0 0 0.00%
2005 0 0 0 0.00%
2006 1 39,824 158 66.28%
</TABLE>
6
<PAGE> 7
The following schedule presents information on tenants occupying 10% or more of
the leasable square feet for each property:
<TABLE>
<CAPTION>
Nature of Square footage Annual rent Lease
Business Leased Per Square foot Expiration
-------- ------ --------------- ----------
<S> <C> <C> <C> <C>
Hitchcock Plaza Grocery store 49,296 $ 6.95 2/28/07
- ---------------
Discount store 86,479 4.16 6/30/12
Clothing store 35,000 4.04 8/31/00
White Horse Plaza Discount store 81,922 3.64 10/31/06
- -----------------
Grocery store 35,922 6.50 11/05/06
Georgetown Landing Grocery store 39,824 3.97 11/22/06
- ------------------
</TABLE>
Both major anchor tenants at Whitehorse Plaza, Wal-Mart and Winn-Dixie, have
vacated their space. Wal-Mart is currently honoring its lease obligation.
Winn-Dixie ceased paying rent in June of 1999. The Partnership has taken legal
action against Winn-Dixie to enforce its lease. The Wal-Mart and Winn-Dixie
leases both expire in 2006. See Item 3 -- Legal Proceedings.
SCHEDULE OF REAL ESTATE TAXES (IN THOUSANDS) AND RATES:
1999 real estate taxes paid directly by the Partnership for 1999, which are
included in expenses and in income to the extent reimbursed by tenants, were as
follows:
<TABLE>
<CAPTION>
1999 Taxes 1999 Rate
---------- ---------
<S> <C> <C>
Hitchcock Plaza $93 1.99%
White Horse Plaza 76 1.58%
Georgetown Landing 37 1.96%
</TABLE>
For 1999 the partnership paid 80% of the White Horse Plaza property taxes and
filed an appeal for reduction of the assessed valuation. The appeals were
favorably settled in 2000.
Three tenants are responsible for payment of their real estate taxes directly to
the taxing authorities. These amounts are not included in Partnership income or
expenses. Real estate taxes paid directly by tenants in 1999 were as follows:
<TABLE>
<CAPTION>
1999 Taxes 1999 Rate
---------- ---------
<S> <C> <C>
Hitchcock Plaza $60 1.99%
White Horse Plaza 49 1.58%
Georgetown Landing - -
</TABLE>
7
<PAGE> 8
ITEM 3. LEGAL PROCEEDINGS
The Partnership is presently involved in litigation in the state courts of
Georgia and South Carolina with Winn-Dixie concerning collection of past due and
future rent under Winn-Dixie's lease at Whitehorse Plaza. Winn-Dixie vacated
the property and in June 1999 discontinued paying rent as called for in its
lease agreement. Management believes that Winn-Dixie's lease obligation, which
extends through August 2006, is enforceable. Rental income in future periods
will be substantially less than 1999 until this space is re-leased.
The partnership has set up an allowance for uncollectable rent for the past due
Winn-Dixie rent. At December 31, 1999, the allowance related to Winn-Dixie was
$107,018. For future periods, the allowance will increase by $19,458 per month
until this matter is resolved.
South Carolina Action
Winn-Dixie Charlotte Inc. (formerly Winn-Dixie Greenville, Inc.) Plaintiff vs.
Brunner Companies Income Properties, L.P. I, Defendant, In the Court of Common
Pleas, State of South Carolina, County of Greenville, C.A. No 99-CP-23-2229.
Georgia Action
Brunner Companies Income Properties, L.P. I, Plaintiff vs. Winn-Dixie Charlotte,
Inc., Defendant, In the Civil Court for the County of Richmond, State of
Georgia, Civil Action File Nos. 286198, 285861, 286142, 286075, 286020, 275765,
285917.
The Managing General Partner is aware of no additional significant pending or
outstanding litigation that would have a material adverse effect upon the
business, financial condition, or operations of the Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fiscal year ended December 31, 1999, no matters were submitted to a
vote of the Unitholders through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR PARTNERSHIP EQUITY AND RELATED PARTNER MATTERS
As of December 31, 1999, the number of holders of record of Limited Partnership
Units and Subordinated Interest Units was 429 and one, respectively. Neither the
Limited Partnership Units nor the Subordinated Interest Units are traded on any
established public trading market, and it is not anticipated that such a market
will develop in the future. See "Item 11. Security Ownership of Certain
Beneficial Owners and Management."
No cash distributions were paid during 1999 or 1998. Future distributions will
depend on the levels of cash generated from operations, refinancings, property
sales and the availability of cash reserves. At this time, the Managing General
Partner does not anticipate making cash distributions during 2000.
In March of 2000 the Company received notice that a tender offer from an outside
party to purchase Limited Partnership Units had been offered to the Unitholders.
The Partnership responded that it remained neutral and had no recommendation
concerning this matter.
8
<PAGE> 9
Item 6. Management's Discussion and Analysis or Plan of Operations
Results of Operations - 1999 vs. 1998
The Partnership realized a net loss of $65,000 in 1999 compared to $80,000 for
1998. Rental income declined 11% in 1999 as compared to 1998. Total expenses
decreased 10%. The decline in rental income was due to a charge of $233,000 to
the allowance for uncollectable receivables and increased vacancies at
Whitehorse Plaza. The decrease in expenses is primarily due to an increase in
operating expenses of $62,000 offset by a reduction in interest expense of
$343,000. Interest expense decreased due to a loan modification agreement
negotiated by management in December 1998, which reduced the interest rate of
the Partnership's three mortgage notes payable from 9% to 7% beginning October
10, 1998 through May 10, 1999. This agreement was subsequently extended to May
10, 2000.
Rental income includes all rent and reimbursements from tenants including taxes
and common area maintenance costs less any charges for uncollectable
receivables. Common area maintenance costs are included as operating expenses.
During 1999 Georgetown Landing and Hitchcock Plaza had average annual occupancy
rates of 100% and 92%, respectively. Whitehorse Plaza had an average annual
occupancy rate of 43%. An anchor tenant of White Horse Plaza, Wal-Mart, vacated
its 81,922 feet in January 1999 and moved across the street into a newer center.
Wal-Mart continues to pay its monthly rent as required by its lease. However,
in June 1999, the remaining anchor tenant in Whitehorse Plaza, Winn Dixie,
vacated its space and ceased paying rent. See Item 3. LEGAL PROCEEDINGS.
Lack of an anchor tenant will significantly impact the ability of Whitehorse
Plaza to attract and keep new tenants. Several of the remaining Whitehorse Plaza
tenants' monthly rentals have been reduced and converted to calculating rent
based on a percentage of sales, per clauses in their leases, due to the
departure of the anchor tenant. The vacancy rate at Whitehorse Plaza remains
high and is not expected to improve until a new anchor tenant is located. For
2000, legal fees are expected to increase significantly as the Partnership
pursues collections from the Whitehorse Plaza past due tenants.
Also, during 1999, the Partnership received $52,781 of override percentage of
sales rent from Wal-Mart based on 1998 sales, which will not recur in future
periods since Wal-Mart has vacated its space.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels, and protecting the partnership from the burden of inflation-related
increases in expenses by increasing rents and maintaining a high occupancy
level. However due to changing market conditions, which can result in the use of
rental concessions and rental reductions to offset softening market conditions,
there is no guarantee that the Managing General Partner will be able to sustain
such a plan.
9
<PAGE> 10
Liquidity and Capital Resources
The Partnership is highly leveraged and is in default on its original loan
agreements with the Lender. All three loans are cross-collateralized and
cross-defaulted. No cash flow is available for other than usual and routine
partnership operating expenses without the express permission of the Lender.
Under the covenants of its agreements with the Lender, within fifteen (15) days
following the end of each calendar quarter, the Partnership is required to
deposit all 'Net Cash Flow', as defined, into an account at a commercial bank
controlled jointly by the lender and Partnership, (the "Escrow Account") and to
submit written quarterly reports to the Lender, certified as to correctness by
an officer of the Partnership. Escrow Account funds are to be paid only for
tenant improvements, leasing commissions, capital improvements and/or debt
service shortfall as approved by the lender. Under the Partnership's loan
covenants, escrow cash is restricted and not available for payment to the
General or Limited Partners. Escrow Account cash at December 31, 1999 was
$561,000.
The Partnership held cash of $426,000 at December 31, 1999 as compared to
$480,000 at December 31, 1998. The Company's three mortgage loans mature in
full on May 20, 2000. The Lender may call the mortgage notes payable for full
repayment upon 15 days notice at any time. Should the Lender and the
Partnership not agree to a loan extension agreement, then the Partnership would
be forced to seek additional capital, sell assets, liquidate or surrender its
properties to the lender. There can be no assurance that debt restructuring
will continue to occur or that management will be able to raise sufficient
additional capital that will allow the Partnership to continue its operations
in its present form. Negotiations concerning restructuring the debt of the
three properties may also be influenced by changes in market interest rates and
other factors outside the control of management.
On December 29, 1999, effective May 10, 1999, the Partnership entered into a
loan modification agreement with the Lender to extend the maturity date of its
existing three loans to May 10, 2000 with interest accruing at 7%. Monthly
payments of principal and interest totaling $111,240 and monthly escrow payments
of $20,021 for a total of $131,261 are required under the agreement.
No cash distributions were made in 1999 or 1998. At present no future
distributions are expected.
Year 2000
The Partnership processes its records on computer hardware systems maintained by
Hull/Storey Development, LLC ("Hull/Storey"), the management company retained by
the General Partner of the partnership. The systems used by Hull/Storey are Year
2000 compliant. The Company experienced no Year 2000 related problems.
10
<PAGE> 11
Other
Certain items discussed in this annual report may constitute forward looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual performance or
achievements of the Partnership to be materially different from any future
results performance or achievements expressed or implied by such forward-looking
statements. Such forward-looking statements speak only as of the date of this
annual report. The Partnership expressly disclaims any obligation or undertaking
to release publicly any updates or revisions to any forward looking statements
contained herein to reflect any change in the Partnership's expectations with
regard thereto or any change in events, conditions or circumstances on which
such statement is based.
11
<PAGE> 12
ITEM 7. FINANCIAL STATEMENTS
BRUNNER COMPANIES INCOME PROPERTIES L.P. I
LIST OF FINANCIAL STATEMENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS
Balance sheet
Statements of operations
Statements of changes in partners' capital (deficit)
Statements of cash flows
Notes to financial statements
12
<PAGE> 13
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Partners
BRUNNER COMPANIES INCOME PROPERTIES L.P. I
We have audited the accompanying balance sheets of BRUNNER COMPANIES
INCOME PROPERTIES L.P. I (the Partnership) as of December 31, 1999 and 1998, and
the related statements of operations, changes in partners' capital (deficit) and
cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
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 the
Partnership's management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of BRUNNER COMPANIES
INCOME PROPERTIES L.P. I as of December 31, 1999 and 1998, and the results of
its operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Partnership will continue as a going concern. As discussed in Note I to the
financial statements, the Partnership's mortgage notes payable matured in
October of 1998. The Partnership received an initial extension from its lenders
which expired May, 1999. On December 29, 1999, the Partnership and its lenders
entered into a loan modification agreement extending the maturity date to May
2000. The Partnership's continued ability to operate is dependent on its ability
to either restructure its existing debt or raise additional capital.
13
<PAGE> 14
These conditions raise substantial doubt about the Partnership's ability to
continue as a going concern. Management's plans regarding these matters are also
described in Note I. The financial statements do not include any adjustments
that might result from the outcome of these uncertainties.
Augusta, Georgia
March 16, 2000
14
<PAGE> 15
BRUNNER COMPANIES INCOME PROPERTIES L.P. I
BALANCE SHEET
(IN THOUSANDS, EXCEPT UNIT DATA)
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Cash and cash equivalents $ 426
Accounts receivable - net and deposits 150
Restricted cash in escrow 561
Other assets 66
Investment properties - net 17,454
--------
$ 18,657
=========
LIABILITIES
Accounts payable and accrued expenses $ 127
Tenant security deposits payable 19
Mortgage notes payable 17,747
---------
17,893
PARTNERS' CAPITAL (DEFICIT)
General partner's $ (30)
Class A limited partners' - 552,000 units
issued and outstanding 545
Class B limited partners' - 61,333 units
issued and outstanding 249 764
-------- ---------
$ 18,657
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE> 16
BRUNNER COMPANIES INCOME PROPERTIES L.P. I
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT UNIT DATA)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-----------------------
1999 1998
------- -------
<S> <C> <C>
REVENUE
Rental income $ 2,507 $ 2,832
Other income 52 10
------- -------
2,559 2,842
------- -------
EXPENSES
Operating 424 362
General and administrative 96 105
Depreciation 672 667
Interest 1,245 1,588
Property taxes 187 200
------- -------
2,624 2,922
------- -------
NET LOSS FROM OPERATIONS $ (65) $ (80)
======= =======
Net loss allocated to general partner (1%) $ (1) $ (1)
Net loss allocated to Class A limited partners
(89.1%) (58) (71)
Net loss allocated to Class B limited partners
(9.9%) (6) (8)
------- -------
$ (65) $ (80)
======= =======
Net loss per limited partnership unit $ (.11) $ (.13)
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE> 17
BRUNNER COMPANIES INCOME PROPERTIES L.P. I
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(IN THOUSANDS)
<TABLE>
<CAPTION>
LIMITED PARTNERS
GENERAL -----------------
PARTNER CLASS A CLASS B TOTAL
------- ------- ------- -----
<S> <C> <C> <C> <C>
ORIGINAL CAPITAL
CONTRIBUTIONS $ 1 $ 5,520 $ 613 $ 6,134
==== ======= ===== =======
Partners' capital (deficit) at
December 31, 1997 $(28) $ 674 $ 263 $ 909
Net loss for the year ended
December 31, 1998 (1) (71) (8) (80)
---- ------- ----- -------
Partners' capital (deficit)
December 31, 1998 (29) 603 255 829
Net loss for the year ended
December 31, 1999 (1) (58) (6) (65)
---- ------- ----- -------
PARTNERS' CAPITAL (DEFICIT)
AT DECEMBER 31, 1999 $(30) $ 545 $ 249 $ 764
==== ======= ===== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE> 18
BRUNNER COMPANIES INCOME PROPERTIES L.P. I
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-----------------------
1999 1998
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (65) $ (80)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 672 667
Change in deferred and accrued amounts
Accounts receivable and deposits 192 10
Other assets 22 76
Accounts payable and accrued expenses 9 (26)
Accrued property taxes (176) (31)
Tenant security deposits payable (1) 3
------- -------
Net cash provided by operating activities 653 619
INVESTING ACTIVITIES
Purchase of property improvements and replacements (93) (22)
Net deposits to restricted escrows (561) --
------- -------
Net cash used in investing activities (654) (22)
FINANCING ACTIVITIES
Payments on mortgage notes payable (53) (450)
------- -------
Net increase (decrease) in cash and cash equivalents (54) 147
Cash and cash equivalents at beginning of year 480 333
------- -------
Cash and cash equivalents at end of year $ 426 $ 480
======= =======
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,245 $ 1,564
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE> 19
BRUNNER COMPANIES INCOME PROPERTIES L.P. I
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Brunner Companies Income Properties L.P. I (the "Partnership") is a
Delaware limited partnership formed on February 29, 1988 for the
purpose of acquiring and operating the following retail centers:
Hitchcock Plaza, in Aiken, South Carolina; White Horse Plaza, in
Greenville, South Carolina; and Georgetown Landing, in Georgetown,
South Carolina (collectively referred to as the "Retail Centers"). The
seller of these Retail Centers was related to the then general
partners of the Partnership.
The Partnership's term of existence expires December 31, 2008, unless
it is earlier dissolved and terminated pursuant to the provisions of
the partnership agreement.
The general partner of the Partnership is Brunner Management Limited
Partnership ("General Partner"). The General Partner is an Ohio
limited partnership whose general partner is 104 Management, Inc.
("Managing General Partner"). From March 5, 1993 until November 17,
1998, the majority of the outstanding stock of 104 Management, Inc.
was held by IBGP, Inc., an affiliate of Insignia Financial Group, Inc.
Prior to November 17, 1998, IBGP, Inc. effectively controlled the
Managing General Partner of the Partnership.
On November 17, 1998, BCIP I & III, LLC, (a Georgia limited liability
company and an affiliate of Hull/Storey Development, LLC) purchased
all of the outstanding stock of 104 Management, Inc. and thereby
acquired the general partnership interest in Brunner Management
Limited Partnership. BCIP I & III, LLC also purchased all of the
outstanding Class B Limited Partnership units of the Partnership. As a
result of this transaction, BCIP I & III, LLC effectively controls the
Managing General Partner of the Partnership.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
(Continued)
19
<PAGE> 20
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
CASH AND CASH EQUIVALENTS
The Partnership considers all highly liquid investments with a
maturity, when purchased, of three months or less to be cash
equivalents as well as operating cash held by the real estate
management company on behalf of the Partnership's individual
properties. At certain times, the amount of cash deposited at a bank
may exceed the limit on insured deposits.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
The Partnership records as an allowance for doubtful accounts 100% of
receivables over ninety days old, 50% of receivables over sixty but
less than ninety-one days old and 100% of receivables from former
tenants. The Partnership's allowance for doubtful accounts for the
years ended December 31, 1999 and 1998 was $322,000 and $28,000,
respectively.
RESTRICTED CASH IN ESCROW
The Partnership is required to make quarterly payments of net cash
flow, as defined, into a separate escrow account controlled jointly by
the lender and the Partnership. These funds are to be used only for
tenant improvements, leasing commissions, capital improvements and/or
debt service shortfall as approved by the lender.
LEASE COMMISSIONS
Lease commissions are capitalized and are amortized by the
straight-line method over the term of the applicable lease. Lease
commissions of approximately $125,000, net of accumulated amortization
of approximately $60,000, are included in other assets.
LOAN COSTS
Loan costs are amortized on a straight-line basis over the terms of
the respective loans. As of December 31, 1998, loan costs have been
fully amortized.
TENANT SECURITY DEPOSITS
The Partnership requires security deposits from lessees for the
duration of the lease. The security deposits are refunded when the
tenant vacates, provided the tenant has not damaged its space and is
current on its rental payments.
INVESTMENT PROPERTIES
Investment properties are stated at cost less reductions for permanent
impairments. Acquisition fees are capitalized as a cost of real
estate. The Partnership records impairment losses on long-lived assets
used in operations when events and circumstances indicate that the
assets might be impaired and the undiscounted cash flows estimated to
be generated by those assets are less than the carrying amounts of
those assets.
(Continued)
20
<PAGE> 21
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
DEPRECIATION
Buildings and improvements are depreciated on the straight-line basis
over an estimated useful life of 5 to 31.5 years. Tenant improvements
are depreciated over the term of the applicable leases.
For Federal income tax purposes, the Partnership depreciates a portion
(89 percent attributable to non tax-exempt investors) of the
property's basis using the straight-line method over thirty-one and
one-half years and the balance (11 percent attributable to tax-exempt
investors) using the straight-line method over forty years.
ADVERTISING
The Partnership expenses the costs of advertising as incurred.
LEASES
The Partnership leases certain commercial space to tenants under
various lease terms. For leases with fixed rental increases during
their term, rents are recognized on a straight-line basis over the
terms of the leases. For all other leases, rents are recognized over
the terms of the leases as earned.
INCOME TAXES
No provision has been made in the financial statements for Federal
income taxes because under current law, no Federal income taxes are
paid directly by the Partnership. The Partners are responsible for
their respective share of Partnership net income or loss.
FAIR VALUE
The Partnership believes that the carrying amount of its financial
instruments (except for long-term debt) approximates their fair value
due to the short term maturity of these instruments. The fair value of
the Partnership's long term debt, after discounting the scheduled loan
payments, based on estimated borrowing rates currently available to
the Partnership, approximate its carrying balance.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1998 information to
conform to the 1999 presentation.
21
<PAGE> 22
NOTE B - PARTNERSHIP ALLOCATIONS OF INCOME, LOSS AND DISTRIBUTIONS
Distributions of operating cash flow, as defined in the partnership
agreement, will be distributed as follows:
First, to the Class A Limited Partners until they have received a
cumulative noncompounded annual cash return of 10% (Class A priority
return) of their adjusted capital contributions;
Second, to the Class B Limited Partners until they have received a
cumulative noncompounded annual cash return of 10% (Class B priority
return) of their adjusted capital contributions;
Third, to the General Partner to the extent that taxable income for
the fiscal year is allocated to the General Partner; and
Fourth, to the Class A Limited Partners and to the Class B Limited
Partners an amount equal to 90% and 10%, respectively, of the balance,
if any, remaining.
Taxable income or loss from operations will be allocated 89.1% to the
Class A Limited Partners, 9.9% to the Class B Limited Partners and 1% to the
General Partner.
All excess proceeds from sales and debt refinancings generally will be
distributed in the following order:
First, to the Class A Limited Partners until their adjusted capital
contributions are reduced to zero;
Second, to the Class B Limited Partners until their adjusted capital
contributions are reduced to zero;
Third, to the Class A Limited Partners for any unpaid priority return
of cash distributions of operating cash flows;
Fourth, to the Class B Limited Partners for any unpaid priority return
of cash distributions of operating cash flows;
Fifth, to the General Partner until its original capital contribution
is reduced to zero; and
The balance, if any, 67.5% to the Class A Limited Partners, 7.5% to
the Class B Limited Partners and 25% to the General Partner.
(Continued)
22
<PAGE> 23
NOTE B - PARTNERSHIP ALLOCATIONS OF INCOME, LOSS AND DISTRIBUTIONS, CONTINUED
As of December 31, 1999, the Partnership had an undeclared
distribution arrearage of approximately $4,637,000 or $8.40 per Class A unit
and approximately $704,000 or $11.49 per Class B unit of the cumulative annual
10% cash returns.
NOTE C - MORTGAGE NOTES PAYABLE
The principle terms of the mortgage notes payable are as follows (in
thousands):
<TABLE>
<CAPTION>
PRINCIPAL MONTHLY
BALANCE AT PAYMENT STATED BALANCE DUE
DECEMBER 31, (INTEREST INTEREST RATE MATURITY DATE AT
PROPERTY 1999 ONLY) (1) (1) (1) MATURITY(2)
- --------------- ------------ ---------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Hitchcock Plaza $10,004 $ 59 7% 5/00 $9,981
White Horse
Plaza 6,337 37 7% 5/00 6,322
Georgetown
Landing 1,406 8 7% 5/00 1,403
------- ---- ------
TOTAL $17,747 $104 $17,706
======= ==== ======
</TABLE>
(1) On December 29, 1999, the Partnership and the lender entered into a loan
modification agreement, effective May 10, 1999 to extend the maturity
dates of the mortgage notes to May 10, 2000. During the extension period,
the mortgage notes bear interest at the rate of 7% per annum and the
Partnership is required to make monthly payments of principal, interest
and escrow of $131,261. Additionally, the Partnership is required to make
quarterly payments of net cash flow, as defined, into a separate escrow
account controlled jointly by the Lender and the Partnership.
(2) The mortgages require a balloon payment at maturity for the remaining
principal balance. These notes are all cross-collateralized and
cross-defaulted and are secured by the properties and by a pledge of
revenues from the respective properties.
The mortgage notes payable are nonrecourse and are secured by the
properties and by a pledge of revenues from the respective properties.
23
<PAGE> 24
NOTE D - OPERATING LEASES
Tenants are responsible for their own utilities, maintenance of their
space, and payment of their proportionate share of common area maintenance,
utilities, insurance and real estate taxes. Real estate taxes, insurance, and
common area maintenance expenses are paid directly by the Partnership. The
Partnership is then reimbursed by the tenants for their proportionate share.
The expenses paid by the Partnership are included in the accompanying
statements of operations as property taxes and operating expenses. Amounts
reimbursed by the tenants are included in rental income.
The future minimum rental payments to be received under operating
leases that have initial or remaining noncancellable lease terms in excess of
one year as of December 31, 1999, are as follows (in thousands):
<TABLE>
<S> <C>
2000 $ 2,018
2001 2,006
2002 1,877
2003 1,731
2004 1,608
Thereafter 5,399
---------
$ 14,639
=========
</TABLE>
Five anchor tenants represent $11,701,000 of the above minimum future
rentals under leases expiring 2006, 2007, and 2012.
NOTE E - MAJOR TENANTS
Rent from tenants (excluding tenant reimbursements) representing at
least 10% of rental income were as follows (in thousands):
<TABLE>
<CAPTION>
1999 1998
--------------------- -------------------
AMOUNT PERCENT AMOUNT PERCENT
------ --------- ------ --------
<S> <C> <C> <C> <C>
K-Mart Corporation $360 14% $360 13%
Kroger 343 14 343 12
Wal-Mart Stores, Inc. 298 12 298 11
</TABLE>
24
<PAGE> 25
NOTE F - INCOME TAXES
The Partnership is classified as a partnership for Federal income tax
purposes. Accordingly, no provision for income taxes is made in the financial
statements of the Partnership. Taxable income or loss of the Partnership is
reported in the income tax returns of its partners.
The following is a reconciliation of reported net loss and Federal
taxable loss (in thousands, except unit data):
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
1999 1998
-------- ---------
<S> <C> <C>
Net loss as reported $ (65) $ (80)
Add (deduct):
Depreciation differences 38 36
Allowance for doubtful accounts 322
Unearned income 1 (14)
Miscellaneous (13) (29)
------- ------
Federal taxable income (loss) $ 283 $ (29)
======= ======
Federal taxable income (loss) per
limited partnership unit $ .46 $ (.05)
======= ======
</TABLE>
The following is a reconciliation between the Partnership's reported
amounts and Federal tax basis of net assets and liabilities:
<TABLE>
<S> <C>
Net assets as reported $ 764
Allowance for doubtful accounts 322
Land and buildings
21
Accumulated depreciation 481
Syndication costs 667
Other 9
---------
Net assets - Federal tax basis $ 2,264
=========
</TABLE>
NOTE G - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the Managing
General Partner and its affiliates for the management and administration of all
partnership activities. The partnership agreement provides for payments to
affiliates for services and for reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following payments were made to
affiliates of the Managing General Partner in 1999 and 1998 (in thousands):
(Continued)
25
<PAGE> 26
NOTE G - TRANSACTIONS WITH AFFILIATED PARTIES, CONTINUED
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------
1999 1998
---- ----
<S> <C> <C>
Property management fees (included in
operating expenses) 87 $ 86
Reimbursement for services of affiliates
(included in general and administrative
expenses) 31 46
Lease commissions for new leases (included in other
assets and amortized over the term of the leases)
47 37
</TABLE>
NOTE H - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION (IN THOUSANDS)
INITIAL COST
TO PARTNERSHIP
------------------------------------------
<TABLE>
<CAPTION>
NET COSTS (REMOVED)
BUILDINGS AND CAPITALIZED
RELATED PERSONAL SUBSEQUENT TO
DESCRIPTION ENCUMBRANCES LAND PROPERTY ACQUISITION
- --------------------- -------------- --------- --------------- ------------------
<S> <C> <C> <C> <C>
Hitchcock Plaza $10,004 $1,797 $12,629 $(207)
Whitehorse Plaza 6,337 1,975 6,931 (124)
Georgetown
Landing 1,406 428 1,711 19
------- ------ ------- -----
TOTALS $17,747 $4,200 $21,271 $(312)
======= ====== ======= =====
</TABLE>
(Continued)
26
<PAGE> 27
NOTE H - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION (IN THOUSANDS),
CONTINUED
GROSS CARRYING VALUES
AT DECEMBER 31, 1999
-------------------------------------------------------------
<TABLE>
<CAPTION>
BUILDINGS AND
RELATED
PERSONAL ACCUMULATED DATE DEPRECIABLE
DESCRIPTION LAND PROPERTY TOTAL DEPRECIATION ACQUIRED LIFE-YEARS
- ----------------- -------- -------------- --------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Hitchcock
Plaza $ 1,756 $ 12,463 $ 14,219 $ 4,544 7/12/88 5-31.5
Whitehorse
Plaza 1,939 6,843 8,782 2,523 7/12/88 5-31.5
Georgetown
Landing 428 1,730 2,158 638 7/12/88 5-31.5
------- --------- -------- --------
$ 4,123 $ 21,036 $ 25,159 $ 7,705
======= ========= ======== ========
</TABLE>
The managing General Partner has evaluated the properties as if they
were a going concern and believes there is no impairment as of year end.
Reconciliation of "Investment Properties and Accumulated
Depreciation":
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
---------------------------
1999 1998
------- -------
<S> <C> <C>
INVESTMENT PROPERTIES
Balance at beginning of year $25,066 $25,044
Property improvements 93 22
------- -------
Balance at end of year $25,159 $25,066
======= =======
ACCUMULATED DEPRECIATION
Balance at beginning of year $ 7,033 $ 6,366
Additions charged to expense 672 667
------- -------
Balance at end of year $ 7,705 $ 7,033
======= =======
</TABLE>
The aggregate cost of the real estate for Federal income tax purposes
at December 31, 1999 and 1998, is $25,181,000 and $25,088,000, respectively.
The accumulated depreciation balance for Federal income tax purposes at
December 31, 1999 and 1998, is $7,225,000 and $6,591,000, respectively.
27
<PAGE> 28
NOTE I - CONTINGENCIES, LITIGATION, AND GOING CONCERN
During 1999, Wal-Mart, a major tenant at White Horse Plaza vacated the
premises. Wal-Mart's lease, and resulting rental obligations under the lease,
do not expire until October 31, 2006. The General Partner expects Wal-Mart to
honor its obligations under its lease, however this vacancy may impact
occupancy for the remainder of the property. Also during 1999, four additional
tenants, leasing a total of 11,150 square feet in the property, or
approximately 7% of the property's total square feet, terminated their leases
and vacated the property. In addition, a tenant which leases 35,922 square
feet, or approximately 22% of the property's total square feet, stopped
honoring its contractual lease obligations, including payment of rent. The
Managing General Partner intends to actively pursue the Partnership's legal
remedies to require this tenant to comply with its contractual lease
obligations. However, the Partnership has reserved uncollected past due rent
from these former tenants.
The cross-collateralized and cross-defaulted loans on Hitchcock Plaza,
White Horse Plaza, and Georgetown Landing matured in October 1998. The
Partnership received an initial extension from its lenders which expired May
1999. On December 29, 1999, the Partnership and lender entered into a loan
modification agreement to extend the maturity dates of the mortgage notes to May
2000. During the extension period, the mortgage notes bear interest at the rate
of 7% per annum and the Partnership is required to make monthly payments of
principal, interest and escrow totaling $131,261. Additionally, the Partnership
is required to make quarterly payments of net cash flow, as defined, into a
separate escrow account controlled jointly by the Lender and Partnership. The
Partnership's continued ability to operate is dependent on its ability to either
restructure its existing debt or raise additional capital. To that end the
managing General Partner is attempting to extend or modify the mortgage notes,
negotiating alternative financing sources requiring additional capital
infusions, and evaluating the Partnership's alternatives. However, there can be
no assurance that debt restructuring will occur or additional capital will be
raised in a manner that allows the Partnership to continue its operations in its
present form.
NOTE J - SUBSEQUENT EVENT
On March 1, 2000 MP FALCON FUND, LLC; MP VALUE FUND 6, LLC; PREVIOUSLY
OWNED MORTGAGE PARTNERSHIP INCOME FUND, L.P.; ACCELERATED HIGH YIELD
INSTITUTIONAL INVESTORS, LTD.; and MORAGA FUND 1, LLC collectively offered to
purchase up to 220,800 Class A units of the Partnership upon the terms and
subject to the conditions set forth in their offer filed with the Securities
and Exchange Commission.
The Partnership's Managing General Partner does not expect the offer
to have a material effect on the Partnership.
28
<PAGE> 29
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no disagreements with Elliott, Davis & Company, L.L.P. regarding the
1999 and 1998 audits of the Partnership's financial statements.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Partnership has no officers or directors. The Managing General Partner
manages and controls the Partnership and has general responsibility and
authority in all matters affecting its business. The names and ages of the
directors and executive officers of 104 Management, Inc., the Partnership's
Managing General Partner, and the nature of all positions with 104 Management,
Inc. presently held by them are set forth below. There are no family
relationships between or among any officers and directors.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
James M. Hull 48 President and Director
Wayne Grovenstein 31 Vice President and Secretary
Deborah Mosley 46 Chief Accounting Officer
</TABLE>
James M. Hull has been President and Director of the Managing General Partner
and the Member-Manager of BCIP I & III, LLC since November of 1998. BCIP I &
III, LLC is an affiliate of Hull/Storey Development, LLC ("Hull/Storey") Mr.
Hull has acted as Member-Manager of Hull/Storey since December, 1993.
Wayne Grovenstein has been Vice President of the Managing General Partner since
November 1998. Mr. Grovenstein joined Hull/Storey in July 1995 where he serves
as Hull/Storey's Director of Development and Counsel. Prior to joining
Hull/Storey, Mr. Grovenstein was in the private practice of law in Atlanta,
Georgia.
29
<PAGE> 30
Deborah Mosley has been the Chief Accounting Officer of the Managing General
Partner since November 1998. Ms. Mosley joined Hull/Storey in June 1994 and has
served as Hull/Storey's Chief Accounting Officer since that time.
ITEM 10. EXECUTIVE COMPENSATION
No direct form of compensation was paid by the Partnership to any director or
officer of the Managing General Partner for the year ended December 31, 1999.
The Partnership has no plans to pay any such remuneration to any director or
officer of the Managing General Partner in the future. However, reimbursements
and other payments have been made to the Partnership's Managing General Partner
and its affiliates, as described in "Item 12. Certain Relationships and Related
Transactions" below.
No direct form of compensation was paid by the Partnership to any director or
officer of the Managing General Partner for the year ended December 31, 1999.
The Partnership has no plans to pay any such remuneration to any director or
officer of the Managing General Partner in the future. However, reimbursements
and other payments have been made to the Partnership's Managing General Partner
and its affiliates, as described in "Item 12. Certain Relationships and Related
Transactions" below.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of February 29, 2000, there were 552,000 Class A Limited Partnership Units
("Units") and 61,333 units of Class B Limited Partnership Interest
("Subordinated Interest") issued and outstanding. The following table sets
forth certain information, as of January 1, 2000, with respect to the ownership
of Units and units of Subordinated Interest by: (i) any person or group who is
known to the Partnership to be the beneficial owner of more than 5% of either
the Units or units of Subordinated Interest; (ii) the directors and officers of
the Managing General Partner, naming them; and (iii) the directors and officers
of the Managing General Partner as a group.
<TABLE>
<CAPTION>
Units of Subordinated
Units(1) Interest(1)
----- --------
Amount Percent Amount Percent
------ ------- ------ -------
<S> <C> <C> <C> <C>
BCIP I & III, LLC
3632 Wheeler Road, Suite 2
P. O. Box 204227 -- -- 61,333 100%
Augusta, Georgia 30917-4227
All directors and officers of
The Managing General Partner
(3 persons) as a group -- -- -- --
</TABLE>
30
<PAGE> 31
(1) The Limited Partners have no right or authority to participate in the
management or control of the Partnership or its business. However, Limited
Partners do have limited rights to approve or disapprove certain fundamental
Partnership matters as provided in "Article 7" of the Partnership Agreement.
Transfer of Units are subject to certain restrictions set forth in "Article 9"
of the Partnership Agreement.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The partnership agreement provides for payments to
affiliates for services and for reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following payments were made to
affiliates of the Managing General Partner in 1999 and 1998 (in thousands):
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Property management fees $87 $86
Reimbursement for services of affiliates 31 46
</TABLE>
Additionally, the Partnership paid approximately $47,000 and $37,000 to an
affiliate of the Managing General Partner for lease commissions related to new
leases at the Partnership's commercial properties during the years ended
December 31, 1999 and 1998, respectively. These lease commissions are included
in other assets and are amortized over the terms of the respective leases.
If the Partnership requires additional funds, the General Partner or its
affiliates may, but are not obligated to, lend funds to the Partnership. Any
such loan and any disposition, re-negotiation or other subsequent transaction
involving such loan, shall be made only upon receipt from an independent and
qualified advisor of an opinion letter to the effect that such proposed loan or
disposition, re-negotiation or subsequent transaction is fair and at least as
favorable to the Partnership as a loan to an unaffiliated borrower in similar
circumstances. The advisors compensation must be paid by the General Partner
and is not reimbursable by the Partnership. No such loan has yet been made by
the General Partner.
A commission of up to 2% of the sale price may be paid to Brunner Management
Limited Partnership upon the sale of each of the Retail Centers, if it performs
substantial services in connection with the sale. Any such commission paid to
the Brunner Management Limited
31
<PAGE> 32
Partnership will be subordinated to the Limited Partners priority
distributions. Total commissions paid will not exceed those reasonable,
customary and competitive in light of the size and location of the Retail
Center sold.
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See Exhibit Index contained herein.
(b) No reports on Form 8-K were filed during the fourth quarter of 1999.
32
<PAGE> 33
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
BRUNNER COMPANIES INCOME PROPERTIES L.P. I
A Delaware Limited Partnership
By: Brunner Management Limited Partnership
Its General Partner
By: 104 Management, Inc.
Its Managing General Partner
By: /s/ James M. Hull
------------------------------------------
James M. Hull
President and Director
Date: April 14, 2000
-----------------------------------------
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
date indicated.
/s/ James M. Hull President and Date: April 14, 2000
- ---------------------------Director -------------------------
James M. Hull
/s/ Deborah Mosley Vice President and Date: April 14, 2000
- ---------------------------Chief Accounting -------------------------
Deborah Mosley Officer
33
<PAGE> 34
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
3.1 Partnership Agreement of Brunner Companies Income Properties L.P. I (the"Partnership");
incorporated by reference to Exhibit 4.3 to Form 10-Q for the fiscal quarter ended
September 30, 1988.
3.2 Certificate of Limited Partnership for the Partnership; incorporated by reference to
Exhibit 3.2 to Registration Statement No. 33-20527
on Form S-11.
4.1 Form of Class A limited Partnership Interest Unit Certificate; incorporated by reference
to Exhibit 3.1 to Pre-effective Amendment No. 1 to Registration Statement No. 33-20527
on Form S-11.
4.2 Form of Class B Limited Partnership Interest Unit Certificate; incorporated by reference
to Exhibit 3.1 to Pre-effective Amendment No. 1 to Registration Statement No. 33-20527 on
Form S-11.
10.1 Purchase Agreement for Hitchcock Plaza; incorporated by reference to Exhibit 19.1 to Form
10-Q for the fiscal quarter ended September 30, 1988.
10.2 Purchase Agreement for White Horse Plaza; incorporated by reference to Exhibit 19.2 to Form
10-Q for the fiscal quarter ended September 30, 1988.
10.3 Purchase Agreement for Georgetown Landing; incorporated by reference to Exhibit 19.3 to Form
10-Q for the fiscal quarter ended September 30, 1988.
10.4 Management Agreement for Hitchcock Plaza; incorporated by reference to Exhibit 19.4 to Form
10-Q for the fiscal quarter ended September 30, 1988.
10.5 Management Agreement for White Horse Plaza; incorporated by reference to Exhibit 19.5 to Form
10-Q for the fiscal quarter ended September 30, 1988.
</TABLE>
34
<PAGE> 35
<TABLE>
<S> <C>
10.6 Management Agreement for Georgetown Landing; incorporated by reference to Exhibit 19.6 to Form
10-Q for the fiscal quarter ended September 30, 1988.
10.7 Promissory Note secured by Mortgage on Hitchcock Plaza, with New York Life Insurance Company,
as Payee; incorporated by reference to Exhibit 19.7 to Form 10-Q for the fiscal quarter ended
September 30, 1988.
10.8 Security Agreement relating to Hitchcock Plaza with New York Life Insurance Company, as
Secured Party; incorporated by reference to Exhibit 19.8 to Form 10-Q for the fiscal quarter
ended September 30, 1988.
10.9 Assignment of Lessor's Interest in Lease(s) relating to Hitchcock Plaza with New York Life
Insurance Company, as Mortgagee/Assignee; incorporated by reference to Exhibit 19.9 to Form 10-Q
for the fiscal quarter ended September 30, 1988.
10.10 Hitchcock Plaza Mortgage with New York Life Insurance Company; incorporated by reference to
Exhibit 19.10 to Form 10-Q for the fiscal quarter ended September 30, 1988.
10.11 Promissory Note secured by Mortgage on White Horse Plaza, with New York Life Insurance Company,
as Payee; incorporated by reference to Exhibit 19.11 to Form 10-Q for the fiscal quarter ended
September 30, 1988.
10.12 Security Agreement relating to White Horse Plaza with New York Life Insurance Company, as Secured
Party; incorporated by reference to Exhibit 19.12 to Form 10-Q for the fiscal quarter ended
September 30, 1988.
10.13 Assignment of Lessor's Interest in Lease(s) relating to White Horse Plaza with New York Life
Insurance Company, as Mortgagee/Assignee; incorporated by reference to Exhibit 19.13 to Form
10-Q for the fiscal quarter ended September 30, 1988.
10.14 White Horse Plaza Mortgage with New York Life Insurance Company; incorporated by reference to
Exhibit 19.14 to Form 10-Q for the fiscal quarter ended September 30, 1988.
10.15 Promissory Note secured by Mortgage on Georgetown Landing, with New York Life Insurance Company,
as Payee; incorporated
</TABLE>
35
<PAGE> 36
<TABLE>
<S> <C>
by reference to Exhibit 19.15 to Form 10-Q for the fiscal quarter ended September 30, 1988.
10.16 Assignment of Lessor's Interest in Lease(s) relating to Georgetown Landing with New York
Life Insurance Company, as Mortgagee/Assignee; incorporated by reference to Exhibit 19.16
to Form 10-Q for the fiscal quarter ended September 30, 1988.
10.17 Security Agreement relating to Georgetown Landing with New York Life Insurance Company, as
Secured Party; incorporated by reference to Exhibit 19.17 to Form 10-Q for the fiscal
quarter ended September 30, 1988.
10.18 Georgetown Landing Mortgage with New York Life Insurance Company; incorporated by reference
to Exhibit 19.18 to Form 10-Q for the fiscal quarter ended September 30, 1988.
10.19 Commitment letter between New York Life Insurance Company and MBB Development Associates;
incorporated by reference to Exhibit 10.7 to Registration Statement No. 33-20527 on Form S-11.
10.20 Commitment letter between New York Life Insurance Company and Dayton & Associates VII;
incorporated by reference to Exhibit 10.8 to Registration Statement No. 33-20527 on Form S-11.
10.21 Commitment letter between New York Life Insurance Company and Dayton & Associates VII;
incorporated by reference to Exhibit 10.9 to Registration Statement No. 33-20527 on Form S-11.
10.22 Hitchcock Center Lease with Goody's Family Clothing, Inc.; incorporated by reference to Exhibit
10.10 to Pre-effective Amendment No. 1 to Registration Statement No. 33-20527 on Form S-11.
10.23 Hitchcock Center Lease with Franchise Enterprises, Inc.; incorporated by reference to Exhibit
10.11 to Pre-effective Amendment No. 1 to Registration Statement No. 33-20527 on Form S-11.
10.24 Hitchcock Center Lease with Key Wholesale Corporation; incorporated by reference to Exhibit
10.12 to Pre-effective Amendment No. 1 to Registration Statement No. 33-20527 on Form S-11.
</TABLE>
36
<PAGE> 37
<TABLE>
<S> <C>
10.25 Side Agreement Regarding Rent Guarantee between MBB Development Associates and the Partnership;
incorporated by reference to Exhibit 10.31 to Form 10-K for the fiscal year ended December 31,
1988.
10.26 Release and Termination of Lease between the Partnership and Key Wholesalers of Columbia, Inc.;
incorporated by reference to Exhibit 19.1 to Form 10-Q for the fiscal quarter ended June 30, 1989.
10.27 Hitchcock Center Lease between the Partnership and Southco, Inc.; incorporated by reference
to Exhibit 19.2 to Form 10-Q for the fiscal quarter ended June 30, 1989.
10.28 Construction Agreement between the Partnership and Gillam & Associates, Inc. regarding Southco
renovations; incorporated by reference to Exhibit 19.3 to Form 10-Q for fiscal quarter ended
June 30, 1989.
10.29 Agreement between the Partnership and MBB Development Associates regarding Southco renovations;
incorporated by reference to Exhibit 19.4 to Form 10-Q for the fiscal quarter ended June 30, 1989.
10.30 Hitchcock Center Lease with The Kroger Company; incorporated by reference to Exhibit 10.13 to
Pre-effective Amendment No. 1 to Registration Statement No. 33-20527 on Form S-11.
10.31 Hitchcock Center Lease with K-Mart Corporation; incorporated by reference to Exhibit 10.14 to
Pre-effective Amendment No. 1 to Registration Statement No. 33-20527 on Form S-11.
10.32 White Horse Plaza Lease with Wal-Mart Stores, Inc.; incorporated by reference to Exhibit 10.19
to Pre-effective Amendment No. 1 to Registration Statement No. 33-20527 on Form S-11.
10.33 Amendment to Wal-Mart lease with White Horse Plaza; incorporated by reference to Exhibit 19.1
to Form 10-Q for fiscal quarter ended September 30, 1989.
10.34 Second Amendment to Wal-Mart lease with White Horse Plaza; incorporated by reference to
Exhibit 19.2 to Form 10-Q for fiscal quarter ended September 30, 1989.
</TABLE>
37
<PAGE> 38
<TABLE>
<S> <C>
10.35 White Horse Plaza Lease with Winn-Dixie Greenville, Inc.; incorporated by reference to
Exhibit 10.20 to Pre-effective Amendment No. 1 to Registration Statement No. 33-20527
on Form S-11.
10.36 Georgetown Landing Transfer and Assignment of Lease with Rhonda and Leon Detzler;
incorporated by reference to Exhibit 10.24 to Pre-effective Amendment No. 1 to
Registration Statement No. 33-20527 on Form S-11.
10.37 Georgetown Landing Lease with Food Lion, Inc.; incorporated by reference to Exhibit
10.25 to Pre-effective Amendment No. 1 to Registration Statement No. 33-20527 on Form
S-11.
10.38 Letter Agreement dated January 14, 1991, amending the Georgetown Landing Lease with
Coast-to-Coast incorporated by reference to Exhibit 10.38 to Form 10-K as of fiscal
year end December 31, 1990.
10.39 Advisory Agreement made as of September 1, 1991 between Brunner Companies Income Properties
L.P. I and Insignia GP Corporation and Insignia Financial Group, Inc. incorporated by
reference to Exhibit 19.1 to Form 10-Q for the fiscal quarter ended September 30, 1991.
10.40 First Amendment to Advisory Agreement changing effective date from September 1, 1991 to
October 1, 1991 incorporated by reference to Exhibit 19.2 to Form 10-Q for the fiscal
quarter ended September 30, 1991.
10.41 Management Agreement for Georgetown Landing made as of December 1, 1991 between Brunner
Companies Income Properties L.P. and Insignia Management Group, L.P. Incorporated by
reference to Exhibit 10.41 to Form 10-K as of fiscal year end December 31, 1991.
10.42 Management Agreement for White Horse Plaza made as of December 1, 1991 between Brunner
Companies Income Properties L.P. I and Insignia Management Group, L.P. Incorporated by
reference to Exhibit 10.42 to Form 10-K as of fiscal year end December 31, 1991.
</TABLE>
38
<PAGE> 39
<TABLE>
<S> <C>
10.43 Hitchcock Center Lease with Consolidated Stores Corporation incorporated by reference
to Exhibit 10.43 to Form 10-K as of fiscal year end December 31, 1991.
10.44 Transfer Agent Agreement between Brunner Companies Income Properties L.P. I and Insignia
GP Corporation incorporated by reference to Exhibit 10.44 to Form 10-K as of fiscal year
end December 31, 1991.
10.45 Letter Agreement amending Georgetown Landing Lease with Coast-to- Coast incorporated by
reference to Exhibit 10.45 to Form 10-K as of fiscal year end December 31, 1991.
10.46 Closing Agreement dated October 16, 1992 showing the acquisition of a majority of the
outstanding stock of 104 Management, Inc. by IBGP, Inc. incorporated by reference to
Exhibit 2 to Form 8-K dated March 5, 1993.
10.47 Third loan modification and extension agreement, cross-pledge and default agreement,
and mortgage amendment agreement relating to Hitchcock Plaza effective September 29,
1995 by and between New York Life Insurance Company and Brunner Companies Income
Properties, L.P. I, a Delaware Limited Partnership incorporated by reference to Exhibit
10.47 to Form 10-QSB for the fiscal quarter ended September 30, 1995.
10.48 Third loan modification and extension agreement, cross-pledge and default agreement,
and mortgage amendment agreement relating to Whitehorse Plaza effective September 29,
1995 by and between New York Life Insurance Company and Brunner Companies Income
Properties, L.P. I, a Delaware Limited Partnership incorporated by reference to Exhibit
10.47 to Form 10-QSB for the fiscal quarter ended September 30, 1995.
10.49 Third loan modification and extension agreement, cross-pledge and default agreement,
and mortgage amendment agreement relating to Georgetown Landing effective September 29,
1995 by and between New York Life Insurance Company and Brunner Companies Income
Properties, L.P. I, a Delaware Limited Partnership incorporated by reference to Exhibit
10.47 to Form 10-QSB for the fiscal quarter ended September 30, 1995.
10.50 Modification Agreement relating to Hitchcock Plaza with New York Life Insurance Company,
as Secured Party; incorporated by
</TABLE>
39
<PAGE> 40
<TABLE>
<S> <C>
reference to Exhibit 10.50 to Form 10-KSB for the fiscal year ended December 31, 1998.
10.51 Modification Agreement relating to White Horse Plaza with New York Life Insurance
Company, as Secured Party; incorporated by reference to Exhibit 10.51 to Form 10-KSB
for the fiscal year ended December 31, 1998.
10.52 Modification Agreement relating to Georgetown Plaza with New York Life Insurance
Company, as Secured Party; incorporated by reference to Exhibit 10.52 to Form 10-KSB
for the fiscal year ended December 31, 1998.
10.53 Loan Modification Agreement dated December 29, 1999 relating to Hitchcock Plaza with New
York Life Insurance Company, as Secured Party.
10.54 Loan Modification Agreement dated December 29, 1999 relating to White Horse Plaza with
New York Life Insurance Company, as Secured Party.
10.55 Loan Modification Agreement dated December 29, 1999 relating to Georgetown Plaza with
New York Life Insurance Company, as Secured Party.
27.1 Financial Data Schedule. (for SEC use only)
</TABLE>
40
<PAGE> 1
Exhibit 10.53
STATE OF SOUTH CAROLINA )
) MODIFICATION AGREEMENT
COUNTY OF AIKEN ) RELATING INTER ALIA TO THE
) FOLLOWING:
)
) MORTGAGE, ASSIGNMENT OF
) LEASES AND RENTS AND
) SECURITY AGREEMENT
) DATED JUNE 6, 1988 TO
) BE EFFECTIVE JUNE 8, 1988
) AND RECORDED WITH THE
) REGISTER OF DEEDS
) FOR AIKEN COUNTY,
) SOUTH CAROLINA IN MORTGAGE
) BOOK 1052 AT PAGE 198
THIS MODIFICATION AGREEMENT (the "Agreement") executed this day of
December, 1999 to be effective as of the 10th day of May, 1999 by and between
BRUNNER COMPANIES INCOME PROPERTIES, L.P., I, as successor in interest to MBB
DEVELOPMENT ASSOCIATES, ("Borrower") and NEW YORK LIFE INSURANCE COMPANY, whose
address is 51 Madison Avenue, New York, New York 10010, ("NYLIC").
WITNESSETH:
WHEREAS, NYLIC previously made a loan available to the Borrower in the
original principal amount of Eleven Million Four Hundred Thousand and No/100
Dollars ($11,400,000.00) (the "Loan");
WHEREAS, the Loan was evidenced by that certain promissory note in the
original amount of $11,400,000.00 from Borrower for the benefit of NYLIC (the
"Note") and secured inter alia by a lien on that certain parcel of real
property and improvements thereon pursuant to that certain Mortgage, Assignment
of Leases and Rents and Security Agreement from Borrower dated June 6, 1988 to
be effective June 8, 1988 and recorded with the Register of Deeds for Aiken
County, South Carolina in Mortgage Book 1052 at Page 198 as amended by that
certain Loan Modification and Extension Agreement and Mortgage Amendment,
effective as of June 10, 1993 recorded in Mortgage Book 718, page 337, as
further amended by that certain Second Loan Modification and Extension
Agreement and Mortgage Amendment, effective as of June 10, 1994, recorded in
Mortgage Book 777, Page 324 and further amended by that certain Third Loan
Modification and Extension Agreement, Cross Pledge and Default Agreement, and
Mortgage Amendment Agreement, effective September 29, 1995 recorded in Mortgage
Book 805, Page 48 (the "Third Loan Modification Agreement") and further amended
by that certain Modification Agreement, effective December 10, 1998 recorded in
Mortgage Book 956, Page 41 (as amended, modified or assigned, the "Mortgage").
<PAGE> 2
WHEREAS, the Note and the Mortgage and any and all other documents
related to the Loan are collectively referred to as the "Loan Documents".
WHEREAS, except as otherwise provided, all terms herein shall have the
meanings ascribed thereto in the Loan Documents;
WHEREAS, the Loan became due and payable in full on May 10, 1999,
which was the maturity date of the Loan, NYLIC has notified Borrower of the
same and Borrower desires NYLIC to waive the maturity date and modify the terms
of the Loan Documents; and
WHEREAS, Borrower and NYLIC have agreed to amend certain terms of the
Loan and the Loan Documents to inter alia change the maturity date of the Loan
to May 10, 2000 and to provide a new repayment schedule.
NOW, THEREFORE, in consideration of the mutual promises contained
hereinbelow, the sum of Five and No/100 Dollars ($5.00) and other good and
valuable consideration, the receipt, sufficiency and adequacy of which the
parties do hereby acknowledge, the parties do hereby agree as follows:
1. The Note, and Loan Documents as applicable, are amended as
follows:
(a) From and after May 10, 1999 through May 10, 2000
(the "Extended Maturity Date"), the Loan will accrue
interest at a fixed rate per annum equal to seven
(7%) percent;
(b) Commencing June 10, 1999 and continuing on the tenth
day of each month thereafter until the Extended
Maturity Date, payments in the amount of $62,705.00
will be due and payable. Such payments will be
applied first to accrued and unpaid interest and
then to principal;
(c) Commencing June 10, 1999 and continuing on the tenth
day of each month thereafter until the Extended
Maturity Date, Borrower will deposit into escrow
with NYLIC payments for insurance and ad valorem
taxes as required under the Loan Documents (such
monthly payments currently being equal to
$9,258.00);
(d) Unless sooner demanded as provided herein, all
outstanding principal together with accrued unpaid
interest due under the Loan shall be due and payable
in full on May 10, 2000;
(e) The Borrower shall be entitled to prepay the Note in
full at par without fee or premium on a date which
is designated by Borrower in writing given to NYLIC
at least ten (10) days prior to such date; and,
2
<PAGE> 3
(f) Notwithstanding anything to the contrary in the Note
or Loan Documents, NYLIC shall have the right, at
its sole option, upon fifteen (15) days prior
written notice to Borrower, with or without cause
and irregardless of whether an event of default
shall exist or not, to accelerate repayment of the
Loan in full and demand Borrower repay the Loan in
full.
(g) The terms and provisions of Section 13. Covenants
Regarding Tenant Improvement, Leasing Commissions,
Capital Improvements and Debt Service Shortfall
Escrow Account of the Third Loan Modification
Agreement are hereby amended (i) to provide that for
the purpose of calculating Net Cash Flow, the term
"operating expenses" shall not include any "costs or
expenses" for repayment and/or recovery of
affiliates or related party loans, equity infusions
and/or such payments or returns of capital; and
shall include all legal fees and expenses incurred
by Borrower, as approved by NYLIC, in connection
with the Winn-Dixie Litigation, as such term is
defined in the Loan Documents; and (ii) to provide
that together with each quarterly statement of Net
Cash FLow, Borrower will provide Lender with a
written summary and description of all partnership
operating costs included in operating expenses for
such quarter together with evidence of Borrower's
payment of same and, at the request of Lender,
Borrower will also provide a description and
evidence of payment of any other operating expenses;
and, (iii) to provide that the designated depository
for the purposes of Section 13 shall be RegionsBank,
N.A. 204 Main Street, Thomson, Georgia, or at a
branch office of the same.
2. The Loan Documents are amended by deleting all references to
the maturity date of "May 10, 1999" and substituting in lieu
thereof the maturity date of May 10, 2000.
3. The principal balance due and owing under the Loan Documents
as of the date hereof, after giving effect to Borrower's
payment of all principal payments required to be paid
hereunder, is $10,002,941.53. 4.ab The Borrower represents
and warrants that, at the time of the execution and delivery
of this Agreement, Borrower has good and absolute title to
the real property encumbered by the Loan Documents, and has
full power and authority to subject the same to the lien of
the Loan Documents and the same is free and clear of all
liens, charges and encumbrances whatsoever, except those
created by the Loan Documents or those known to NYLIC and
those set forth in NYLIC's existing title insurance policy
for the Loan (the "Title Policy").
5. Except as otherwise modified hereby, the terms and provisions
of the Loan Documents shall remain in full force and effect.
6. As a condition precedent to NYLIC's agreement herein:
3
<PAGE> 4
(a) upon the execution of this Agreement, Borrower shall
pay all costs and expenses, including but not
limited to attorney's fees, recording fees and title
charges incurred in connection with this Agreement
and/or the consummation of the transaction
contemplated hereby.
(b) no default shall exist under the Loan Documents as
of the date hereof nor shall any event have occurred
which with the passage of time or the giving of
notice, or both, would constitute such a default;
(c) upon execution of this Agreement, Borrower shall
provide NYLIC evidence that the depository account
opened by Borrower with Regions Bank, N.A. in
account number 6801003992 (the "Account") for the
purpose of holding Net Cash Flow is correctly named
"Brunner Companies Income Properties, L.P., I for
the benefit of New York Life Insurance Company."
(d) Borrower shall provide or cause to be provided to
NYLIC an independent title report in form and
content acceptable to NYLIC opining that there are
no matters of record filed subsequent to December 1,
1998 except for such matters as are expressly
approved by NYLIC in its discretion.
(e) Borrower will assign all of Borrower's right title
and interest in and to any proceeds, monies, funds,
property, real or personal received by Borrower in
connection with a judgment or by settlement in lieu
thereof arising out of or obtained by Borrower in
connection with the litigation identified on
Schedule I attached hereto (the "Winn-Dixie
Litigation") pursuant to the terms of that certain
Assignment Agreement, the form of which is attached
hereto as Exhibit "A".
7. Borrower and NYLIC agree that it is the intent of the parties
that the execution of this Agreement or any documents as
contemplated by this Agreement or the consummation of any
transactions contemplated by this Agreement shall constitute
a modification, restatement and renewal under the Loan and
shall not be construed as a novation.
8. By executing this Agreement, Borrower is reconfirming the
accuracy and correctness of all representations contained in
the Loan Documents.
9. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of
which shall constitute one and the same instrument, and in
making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.
4
<PAGE> 5
10. Borrower hereby agrees that NYLIC, and its officers,
directors, employees and agents are irrevocably and
unconditionally released and discharged of any and all
claims, demands, obligations, liabilities, costs and
expenses, now existing (including, without limitation, any
obligations or commitment of NYLIC to provide any financial
accommodations to Borrower under the Loan Documents) arising
out of or related to the Loan Documents.
[THE REST OF THIS PAGE HAS BEEN LEFT BLANK]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement this day
of December, 1999 to be effective as of May 10, 1999.
WITNESSES AS TO BORROWER: BORROWER:
BRUNNER COMPANIES INCOME
PROPERTIES, L.P. I, as successor in
interest to MBB DEVELOPMENT
ASSOCIATES (SEAL)
By:
- ------------------------------ ---------------------------------
Name:
- ------------------------------ -------------------------------
Its:
- ------------------------------ --------------------------------
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement this day
of December, 1999 to be effective as of May 10, 1999.
WITNESS AS TO NYLIC: NYLIC:
NEW YORK LIFE INSURANCE COMPANY
(SEAL)
By:
- ------------------------------ ---------------------------------
Name:
- ------------------------------ -------------------------------
Its:
- ------------------------------ --------------------------------
7
<PAGE> 8
STATE OF GEORGIA )
) PROBATE
COUNTY OF RICHMOND )
PERSONALLY appeared before me the undersigned witness and made oath
that s/he saw the within-written Brunner Companies Income Properties, L.P. I,
as successor in interest to MBB Development Associates by ____________________
___________________________________, its _________________________________ ,
sign, seal, and as its act and deed, deliver the within-written instrument for
the uses and purposes therein mentioned, and that s/he with the other witness
whose signature appears above, witnessed the execution thereof.
------------------------------------
Witness
SWORN TO before me this
day of , 1999.
- ------- ------------------------
(L.S.)
- ----------------------------------------
Notary Public for Georgia
My Commission Expires:
------------------------
8
<PAGE> 9
STATE OF NEW YORK )
) PROBATE
COUNTY OF )
PERSONALLY appeared before me the undersigned witness and made oath
that s/he saw the within-written New York Life Insurance Company, by __________
_________________, its _______________________________, sign, seal, and as its
act and deed, deliver the within-written instrument for the uses and purposes
therein mentioned, and that s/he with the other witness whose signature appears
above, witnessed the execution thereof.
------------------------------------
Witness
SWORN TO before me this
day of , 1999.
- ------- ------------------------
(L.S.)
- ----------------------------------------
Notary Public for Georgia
My Commission Expires:
------------------------
9
<PAGE> 10
SCHEDULE I
Description of all parties and proceedings commenced in connection
with the collection of past due and future accruing rent for the Winn-Dixie
store at White Horse Plaza, Greenville, South Carolina.
<PAGE> 1
Exhibit 10.54
STATE OF SOUTH CAROLINA )
) MODIFICATION AGREEMENT
COUNTY OF GREENVILLE ) RELATING INTER ALIA TO THE
) FOLLOWING:
)
) MORTGAGE, ASSIGNMENT OF
) LEASES AND RENTS AND
) SECURITY AGREEMENT
) DATED JUNE 2, 1988
) AND RECORDED WITH THE
) REGISTER OF DEEDS
) FOR GREENVILLE COUNTY,
) SOUTH CAROLINA IN MORTGAGE
) BOOK 1936 AT PAGE 273
THIS MODIFICATION AGREEMENT (the "Agreement") executed this ____ day of
December, 1999 to be effective as of the 10th day of May, 1999 by and between
BRUNNER COMPANIES INCOME PROPERTIES, L.P., I, as successor in interest to DAYTON
& ASSOCIATES VII, ("Borrower") and NEW YORK LIFE INSURANCE COMPANY, whose
address is 51 Madison Avenue, New York, New York 10010, ("NYLIC").
WITNESSETH:
WHEREAS, NYLIC previously made a loan available to the Borrower in the
original principal amount of Seven Million Fifty Thousand and No/100 Dollars
($7,050,000.00) (the "Loan");
WHEREAS, the Loan was evidenced by that certain promissory note in the
original amount of $7,050,000.00 from Borrower for the benefit of NYLIC (the
"Note") and secured inter alia by a lien on that certain parcel of real property
and improvements thereon pursuant to that certain Mortgage, Assignment of Leases
and Rents and Security Agreement from Borrower dated June 2, 1988 and recorded
with the Register of Deeds for Greenville County, South Carolina in Mortgage
Book 1936 at Page 273 as amended by that certain Loan Modification and Extension
Agreement and Mortgage Amendment, effective as of June 10, 1993 recorded in
Mortgage Book 2442, page 450, as further amended by that certain Second Loan
Modification and Extension Agreement and Mortgage Amendment, effective as of
June 10, 1994, recorded in Mortgage Book 2632, Page 103 and further amended by
that certain Third Loan Modification and Extension Agreement, Cross Pledge and
Default Agreement, and Mortgage Amendment Agreement, effective September 29,
1995 recorded in Mortgage Book 2700, Page 1867 (the "Third Loan Modification
Agreement") and further amended by that certain Modification Agreement,
effective December 10, 1998 recorded in Mortgage Book 3208, Page 910 (as
amended, modified or assigned, the "Mortgage").
WHEREAS, the Note and the Mortgage and any and all other documents
related to the Loan are collectively referred to as the "Loan Documents".
<PAGE> 2
WHEREAS, except as otherwise provided, all terms herein shall have the
meanings ascribed thereto in the Loan Documents;
WHEREAS, the Loan became due and payable in full on May 10, 1999, which
was the maturity date of the Loan, NYLIC has notified Borrower of the same and
Borrower desires NYLIC to waive the maturity date and modify the terms of the
Loan Documents; and
WHEREAS, Borrower and NYLIC have agreed to amend certain terms of the
Loan and the Loan Documents to inter alia change the maturity date of the Loan
to May 10, 2000 and to provide a new repayment schedule.
NOW, THEREFORE, in consideration of the mutual promises contained
hereinbelow, the sum of Five and No/100 Dollars ($5.00) and other good and
valuable consideration, the receipt, sufficiency and adequacy of which the
parties do hereby acknowledge, the parties do hereby agree as follows:
1. The Note, and Loan Documents as applicable, are amended as follows:
(a) From and after May 10, 1999 through May 10, 2000 (the
"Extended Maturity Date"), the Loan will accrue interest at a
fixed rate per annum equal to seven (7%) percent;
(b) Commencing June 10, 1999 and continuing on the tenth day of
each month thereafter until the Extended Maturity Date,
payments in the amount of $39,720.00 will be due and payable.
Such payments will be applied first to accrued and unpaid
interest and then to principal;
(c) Commencing June 10, 1999 and continuing on the tenth day of
each month thereafter until the Extended Maturity Date,
Borrower will deposit into escrow with NYLIC payments for
insurance and ad valorem taxes as required under the Loan
Documents (such monthly payments currently being equal to
$7,337.53);
(d) Unless sooner demanded as provided herein, all outstanding
principal together with accrued unpaid interest due under the
Loan shall be due and payable in full on May 10, 2000;
(e) The Borrower shall be entitled to prepay the Note in full at
par without fee or premium on a date which is designated by
Borrower in writing given to NYLIC at least ten (10) days
prior to such date; and,
(f) Notwithstanding anything to the contrary in the Note or Loan
Documents, NYLIC shall have the right, at its sole option,
upon fifteen (15) days prior written notice to Borrower, with
or without cause and irregardless of
2
<PAGE> 3
whether an event of default shall exist or not, to accelerate
repayment of the Loan in full and demand Borrower repay the
Loan in full.
(g) The terms and provisions of Section 13. Covenants Regarding
Tenant Improvement, Leasing Commissions, Capital Improvements
and Debt Service Shortfall Escrow Account of the Third Loan
Modification Agreement are hereby amended (i) to provide that
for the purpose of calculating Net Cash Flow, the term
"operating expenses" shall not include any "costs or expenses"
for repayment and/or recovery of affiliates or related party
loans, equity infusions and/or such payments or returns of
capital; and shall include all legal fees and expenses
incurred by Borrower, as approved by NYLIC, in connection with
the Winn-Dixie Litigation, as such term is defined in the Loan
Documents; and (ii) to provide that together with each
quarterly statement of Net Cash Flow, Borrower will provide
Lender with a written summary and description of all
partnership operating costs included in operating expenses for
such quarter together with evidence of Borrower's payment of
same and, at the request of Lender, Borrower will also provide
a description and evidence of payment of any other operating
expenses; and, (iii) to provide that the designated depository
for the purposes of Section 13 shall be RegionsBank, N.A. 204
Main Street, Thomson, Georgia, or at a branch office of the
same.
2. The Loan Documents are amended by deleting all references to the
maturity date of "May 10, 1999" and substituting in lieu thereof the maturity
date of May 10, 2000.
3. The principal balance due and owing under the Loan Documents as of
the date hereof, after giving effect to Borrower's payment of all principal
payments required to be paid hereunder, is $6,336,420.34.
4. The Borrower represents and warrants that, at the time of the
execution and delivery of this Agreement, Borrower has good and absolute title
to the real property encumbered by the Loan Documents, and has full power and
authority to subject the same to the lien of the Loan Documents and the same is
free and clear of all liens, charges and encumbrances whatsoever, except those
created by the Loan Documents or those known to NYLIC and those set forth in
NYLIC's existing title insurance policy for the Loan (the "Title Policy").
5. Except as otherwise modified hereby, the terms and provisions of the
Loan Documents shall remain in full force and effect.
6. As a condition precedent to NYLIC's agreement herein:
(a) upon the execution of this Agreement, pay all costs and
expenses, including but not limited to attorney's fees,
recording fees and title charges incurred
3
<PAGE> 4
in connection with this Agreement and/or the consummation of
the transaction contemplated hereby;
(b) no default shall exist under the Loan Documents as of the date
hereof nor shall any event have occurred which with the
passage of time or the giving of notice, or both, would
constitute such a default;
(c) upon execution of this Agreement, Borrower shall provide NYLIC
evidence that the depository account opened by Borrower with
Regions Bank, N.A. in account number 6801003992 (the
"Account") for the purpose of holding Net Cash Flow is
correctly named "Brunner Companies Income Properties, L.P., I
for the benefit of New York Life Insurance Company".
(d) Borrower will assign all of Borrower's right title and
interest in and to any proceeds, monies, funds, property, real
or personal received by Borrower in connection with a judgment
or by settlement in lieu thereof arising out of or obtained by
Borrower in connection with the litigation identified on
Schedule I attached hereto (the "Winn-Dixie Litigation")
pursuant to the terms of that certain Assignment Agreement,
the form of which is attached hereto as Exhibit "A".
(e) Borrower shall provide or cause to be provided to NYLIC an
independent title report in form and content acceptable to
NYLIC opining that there are no matters of record filed
subsequent to December 1, 1998 except for such matters as are
expressly approved by NYLIC in its discretion.
7. Borrower and NYLIC agree that it is the intent of the parties that
the execution of this Agreement or any documents as contemplated by this
Agreement or the consummation of any transactions contemplated by this Agreement
shall constitute a modification, restatement and renewal under the Loan and
shall not be construed as a novation.
8. By executing this Agreement, Borrower is reconfirming the accuracy
and correctness of all representations contained in the Loan Documents.
9. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same instrument, and in making proof of this Agreement, it shall not be
necessary to produce or account for more than one such counterpart.
4
<PAGE> 5
10. Borrower hereby agrees that NYLIC, and its officers, directors,
employees and agents are irrevocably and unconditionally released and discharged
of any and all claims, demands, obligations, liabilities, costs and expenses,
now existing (including, without limitation, any obligations or commitment of
NYLIC to provide any financial accommodations to Borrower under the Loan
Documents) arising out of or related to the Loan Documents.
[THE REST OF THIS PAGE HAS BEEN LEFT BLANK]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement this day
of December, 1999 to be effective as of May 10, 1999.
WITNESSES AS TO BORROWER: BORROWER:
BRUNNER COMPANIES INCOME
PROPERTIES, L.P. I, as successor in
interest to DAYTON & ASSOCIATES VII
(SEAL)
_________________________ By:_________________________________
Name:_______________________________
_________________________ Its:________________________________
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement this day
of December, 1999 to be effective as of May 10, 1999.
WITNESS AS TO NYLIC: NYLIC:
NEW YORK LIFE INSURANCE COMPANY
(SEAL)
_________________________ By:_________________________________
Name:_______________________________
_________________________ Its:________________________________
7
<PAGE> 8
STATE OF GEORGIA )
) PROBATE
COUNTY OF RICHMOND )
PERSONALLY appeared before me the undersigned witness and made oath
that s/he saw the within-written Brunner Companies Income Properties, L.P. I, as
successor in interest to Dayton & Associates VII by ________________________,
its _____________________________, sign, seal, and as its act and deed, deliver
the within-written instrument for the uses and purposes therein mentioned, and
that s/he with the other witness whose signature appears above, witnessed the
execution thereof.
_____________________________
Witness
SWORN TO before me this
_______ day of ________________________, 1999.
____________________________________ (L.S.)
Notary Public for Georgia
My Commission Expires: _______________________
8
<PAGE> 9
STATE OF NEW YORK )
) PROBATE
COUNTY OF )
PERSONALLY appeared before me the undersigned witness and made oath
that s/he saw the within-written New York Life Insurance Company,
by __________________________ , its ____________________________, sign, seal,
and as its act and deed, deliver the within-written instrument for the uses and
purposes therein mentioned, and that s/he with the other witness whose signature
appears above, witnessed the execution thereof.
_____________________________
Witness
SWORN TO before me this
_______ day of ________________________, 1999.
____________________________________ (L.S.)
Notary Public for Georgia
My Commission Expires: _______________________
9
<PAGE> 10
SCHEDULE I
Description of all parties and proceedings commenced in connection with
the collection of past due and future accruing rent for the Winn-Dixie store at
White Horse Plaza, Greenville, South Carolina.
10
<PAGE> 1
Exhibit 10.55
STATE OF SOUTH CAROLINA )
) MODIFICATION AGREEMENT
COUNTY OF GEORGETOWN ) RELATING INTER ALIA TO THE
) FOLLOWING:
) MORTGAGE, ASSIGNMENT OF
) LEASES AND RENTS AND
) SECURITY AGREEMENT
) DATED JUNE 2, 1988
) AND RECORDED WITH THE
) REGISTER OF DEEDS
) FOR GEORGETOWN COUNTY,
) SOUTH CAROLINA IN MORTGAGE
) BOOK 337 AT PAGE 133
THIS MODIFICATION AGREEMENT (the "Agreement") executed this day of
December, 1999 to be effective as of the 10th day of May, 1999 by and between
BRUNNER COMPANIES INCOME PROPERTIES, L.P., I, as successor in interest to
DAYTON & ASSOCIATES XII, ("Borrower") and NEW YORK LIFE INSURANCE COMPANY,
whose address is 51 Madison Avenue, New York, New York 10010, ("NYLIC").
WITNESSETH:
WHEREAS, NYLIC previously made a loan available to the Borrower in the
original principal amount of One Million Six Hundred Thousand and No/100
Dollars ($1,600,000.00) (the "Loan");
WHEREAS, the Loan was evidenced by that certain promissory note in the
original amount of $1,600,000.00 from Borrower for the benefit of NYLIC (the
"Note") and secured inter alia by a lien on that certain parcel of real
property and improvements thereon pursuant to that certain Mortgage, Assignment
of Leases and Rents and Security Agreement from Borrower dated June 2, 1988 and
recorded with the Register of Deeds for Georgetown County, South Carolina in
Mortgage Book 337 at Page 133 as amended by that certain Loan Modification and
Extension Agreement and Mortgage Amendment, effective as of June 10, 1993
recorded in Mortgage Book 642, page 299, as further amended by that certain
Second Loan Modification and Extension Agreement and Mortgage Amendment,
effective as of June 10, 1994, recorded in Mortgage Book 742, Page 248 and
further amended by that certain Third Loan Modification and Extension
Agreement, Cross Pledge and Default Agreement, and Mortgage Amendment
Agreement, effective September 29, 1995 recorded in Mortgage Book 796, Page 144
(the "Third Loan Modification Agreement") and further amended by that certain
Modification Agreement, effective October 10, 1998 recorded in Mortgage Book
B1158 Page P249 (as amended, modified or assigned, the "Mortgage").
WHEREAS, the Note and the Mortgage and any and all other documents
related to the Loan are collectively referred to as the "Loan Documents".
<PAGE> 2
WHEREAS, except as otherwise provided, all terms herein shall have the
meanings ascribed thereto in the Loan Documents;
WHEREAS, the Loan became due and payable in full on May 10, 1999,
which was the maturity date of the Loan, NYLIC has notified Borrower of the
same and Borrower desires NYLIC to waive the maturity date and modify the terms
of the Loan Documents; and
WHEREAS, Borrower and NYLIC have agreed to amend certain terms of the
Loan and the Loan Documents to inter alia change the maturity date of the Loan
to May 10, 2000 and to provide a new repayment schedule.
NOW, THEREFORE, in consideration of the mutual promises contained
hereinbelow, the sum of Five and No/100 Dollars ($5.00) and other good and
valuable consideration, the receipt, sufficiency and adequacy of which the
parties do hereby acknowledge, the parties do hereby agree as follows:
1. The Note, and Loan Documents as applicable, are amended as
follows:
(a) From and after May 10, 1999 through May 10, 2000
(the "Extended Maturity Date"), the Loan will accrue
interest at a fixed rate per annum equal to seven
(7%) percent;
(b) Commencing June 10, 1999 and continuing on the tenth
day of each month thereafter until the Extended
Maturity Date, payments in the amount of $8,815.00
will be due and payable. Such payments will be
applied first to accrued and unpaid interest and
then to principal;
(c) Commencing June 10,1999 and continuing on the tenth
day of each month thereafter until the Extended
Maturity Date, Borrower will deposit into escrow
with NYLIC payments for insurance and ad valorem
taxes as required under the Loan Documents (such
monthly payments currently being equal to
$3,425.00);
(d) Unless sooner demanded as provided herein, all
outstanding principal together with accrued unpaid
interest due under the Loan shall be due and payable
in full on May 10, 2000;
(e) The Borrower shall be entitled to prepay the Note in
full at par without fee or premium on a date which
is designated by Borrower in writing given to NYLIC
at least ten (10) days prior to such date; and,
(f) Notwithstanding anything to the contrary in the Note
or Loan Documents, NYLIC shall have the right, at
its sole option, upon fifteen (15) days prior
written notice to Borrower, with or without cause
and irregardless of
2
<PAGE> 3
whether an event of default shall exist or not, to
accelerate repayment of the Loan in full and demand
Borrower repay the Loan in full.
(g) The terms and provisions of Section 13. Covenants
Regarding Tenant Improvement, Leasing Commissions,
Capital Improvements and Debt Service Shortfall
Escrow Account of the Third Loan Modification
Agreement are hereby amended (i) to provide that for
the purpose of calculating Net Cash Flow, the term
"operating expenses" shall not include any "costs or
expenses" for repayment and/or recovery of
affiliates or related party loans, equity infusions
and/or such payments or returns of capital; and
shall include all legal fees and expenses incurred
by Borrower, as approved by NYLIC, in connection
with the Winn-Dixie Litigation, as such term is
defined in the Loan Documents; and (ii) to provide
that together with each quarterly statement of Net
Cash Flow, Borrower will provide Lender with a
written summary and description of all partnership
operating costs included in operating expenses for
such quarter together with evidence of Borrower's
payment of same and, at the request of Lender,
Borrower will also provide a description and
evidence of payment of any other operating expenses;
and, (iii) to provide that the designated depository
for the purposes of Section 13 shall be RegionsBank,
N.A. 204 Main Street, Thomson, Georgia, or at a
branch office of the same.
2. The Loan Documents are amended by deleting all references to
the maturity date of "May 10, 1999" and substituting in lieu
thereof the maturity date of May 10, 2000.
3. The principal balance due and owing under the Loan Documents
as of the date hereof, after giving effect to Borrower's
payment of all principal payments required to be paid
hereunder, is $1,406,023.98.
4. The Borrower represents and warrants that, at the time of the
execution and delivery of this Agreement, Borrower has good
and absolute title to the real property encumbered by the
Loan Documents, and has full power and authority to subject
the same to the lien of the Loan Documents and the same is
free and clear of all liens, charges and encumbrances
whatsoever, except those created by the Loan Documents or
those known to NYLIC and those set forth in NYLIC's existing
title insurance policy for the Loan (the "Title Policy").
5. Except as otherwise modified hereby, the terms and provisions
of the Loan Documents shall remain in full force and effect.
6. As a condition precedent to NYLIC's agreement herein:
(a) upon the execution of this Agreement, Borrower shall
pay all costs and expenses, including but not
limited to attorney's fees, recording fees and title
charges incurred in connection with this Agreement
and/or the consummation of the transaction
contemplated hereby.
3
<PAGE> 4
(b) no default shall exist under the Loan Documents as
of the date hereof nor shall any event have occurred
which with the passage of time or the giving of
notice, or both, would constitute such a default;
(c) upon execution of this Agreement, Borrower shall
provide NYLIC evidence that the depository account
opened by Borrower with Regions Bank, N.A. in
account number 6801003992 (the "Account") for the
purpose of holding Net Cash Flow is correctly named
"Brunner Companies Income Properties, L.P., I for
the benefit of New York Life Insurance Company."
(d) Borrower shall provide or cause to be provided to
NYLIC an independent title report in form and
content acceptable to NYLIC opining that there are
no matters of record filed subsequent to December 1,
1998 except for such matters as are expressly
approved by NYLIC in its discretion.
(e) Borrower will assign all of Borrower's right title
and interest in and to any proceeds, monies, funds,
property, real or personal received by Borrower in
connection with a judgment or by settlement in lieu
thereof arising out of or obtained by Borrower in
connection with the litigation identified on
Schedule I attached hereto (the "Winn-Dixie
Litigation") pursuant to the terms of that certain
Assignment Agreement, the form of which is attached
hereto as Exhibit "A".
7. Borrower and NYLIC agree that it is the intent of the parties
that the execution of this Agreement or any documents as
contemplated by this Agreement or the consummation of any
transactions contemplated by this Agreement shall constitute
a modification, restatement and renewal under the Loan and
shall not be construed as a novation.
8. By executing this Agreement, Borrower is reconfirming the
accuracy and correctness of all representations contained in
the Loan Documents.
9. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of
which shall constitute one and the same instrument, and in
making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.
10. Borrower hereby agrees that NYLIC, and its officers,
directors, employees and agents are irrevocably and
unconditionally released and discharged of any and all
claims, demands, obligations, liabilities, costs and
expenses, now existing (including, without limitation, any
obligations or commitment of NYLIC to provide any financial
accommodations to Borrower under the Loan Documents) arising
out of or related to the Loan Documents.
[THE REST OF THIS PAGE HAS BEEN LEFT BLANK]
4
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Agreement this day
of December, 1999 to be effective as of May 10, 1999.
WITNESSES AS TO BORROWER: BORROWER:
BRUNNER COMPANIES INCOME
PROPERTIES, L.P. I, as successor in
interest to DAYTON & ASSOCIATES XII
(SEAL)
By:
- ------------------------- ----------------------------------
Name:
- ------------------------- --------------------------------
Its:
- ------------------------- ---------------------------------
5
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement this day
of December, 1999 to be effective as of May 10, 1999.
WITNESS AS TO NYLIC: NYLIC:
NEW YORK LIFE INSURANCE COMPANY
(SEAL)
By:
- ------------------------- ----------------------------------
Name:
- ------------------------- --------------------------------
Its:
- ------------------------- ---------------------------------
6
<PAGE> 7
STATE OF GEORGIA )
) PROBATE
COUNTY OF RICHMOND )
PERSONALLY appeared before me the undersigned witness and made oath
that s/he saw the within-written Brunner Companies Income Properties, L.P. I,
as successor in interest to Dayton & Associates XII by ________________________
____________________________________, its ___________________________________,
sign, seal, and as its act and deed, deliver the within-written instrument for
the uses and purposes therein mentioned, and that s/he with the other witness
whose signature appears above, witnessed the execution thereof.
-------------------------------
Witness
SWORN TO before me this
day of , 1999.
- ------- ------------------------
- ------------------------------------ (L.S.)
Notary Public for Georgia
My Commission Expires:
------------------------
7
<PAGE> 8
STATE OF NEW YORK )
) PROBATE
COUNTY OF )
PERSONALLY appeared before me the undersigned witness and made oath
that s/he saw the within-written New York Life Insurance Company, by __________
____________________________, its ________________________________, sign, seal,
and as its act and deed, deliver the within-written instrument for the uses and
purposes therein mentioned, and that s/he with the other witness whose
signature appears above, witnessed the execution thereof.
--------------------------------
Witness
SWORN TO before me this
day of , 1999.
- ------- --------------------------
(L.S.)
- -----------------------------------------
Notary Public for New York
My Commission Expires:
-------------------
8
<PAGE> 9
SCHEDULE I
Description of all parties and proceedings commenced in connection
with the collection of past due and future accruing rent for the Winn-Dixie
store at White Horse Plaza, Greenville, South Carolina.
9
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 426
<SECURITIES> 0
<RECEIVABLES> 150
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,137
<PP&E> 25,159
<DEPRECIATION> 7,705
<TOTAL-ASSETS> 18,657
<CURRENT-LIABILITIES> 127
<BONDS> 17,747
0
0
<COMMON> 0
<OTHER-SE> 764
<TOTAL-LIABILITY-AND-EQUITY> 18,657
<SALES> 2,559
<TOTAL-REVENUES> 2,559
<CGS> 0
<TOTAL-COSTS> 2,624
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,245
<INCOME-PRETAX> (65)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (65)
<EPS-BASIC> (.11)
<EPS-DILUTED> (.11)
</TABLE>
