SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT NO. 2
AMENDED AND RESTATED
FORM 10-K/A
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1992
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________________ to _________________________
LANDSING PACIFIC FUND
(Exact name of registrant as specified in its charter)
Delaware 94-3066597
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification Number)
155 Bovet Road, Suite 101
San Mateo, California 94402
(Address of principal executive (ZIP Code)
offices)
Registrant's telephone number, including area code: (415) 513-5252
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $.001 par value
Securities registered pursuant to section 12(g) of the Act:
None
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 1, 1993, was approximately $18,690,000.
The number of shares outstanding of the registrant's Common Stock as of March
1, 1993, was 6,093,137 shares.
DOCUMENTS INCORPORATED BY REFERENCE:
None
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
LANDSING PACIFIC FUND
(Registrant)
Date: January 21, 1994 By: /s/ Dean Banks
-------------------------------
Dean Banks
Chief Financial Officer
<PAGE>
<PAGE>
LANDSING PACIFIC FUND
ANNUAL REPORT ON FORM 10-K
For the Year Ended December 31, 1992
TABLE OF CONTENTS
FORM 10-K
ITEM NO. NAME OF ITEM PAGE
PART I
Item 1. Business 3
Item 2. Properties 4
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security 6
Holders
PART II
Item 5. Market for the Registrant's Common Stock 7
Item 6. Selected Financial Data 8
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of 9
Operations
Item 8. Financial Statements and Supplementary Data 15
Item 9 Changes In and Disagreements With Accountants
on Accounting and Financial Disclosure 15
PART III
Item 10. Directors and Executive Officers of the 16
Registrant
Item 11. Executive Compensation 17
Item 12 Security Ownership of Certain Beneficial Owners
and Management 19
Item 13. Certain Relationships and Related Transactions 20
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 22
Signatures 24
<PAGE>
<PAGE>
PART I
ITEM 1. BUSINESS
Landsing Pacific Fund ("the "Fund") is a Delaware corporation formed for the
purpose of merging the assets and liabilities of Landsing Institutional
Properties Trust-V, Landsing Institutional Properties Trust-VI and Landsing
Institutional Properties Trust-VII. The merger of these predecessor trusts was
completed on November 28, 1988. The Fund has elected to be treated as a real
estate investment trust under the Internal Revenue Code of 1986 and will not be
subject to federal income tax as long as real estate investment trust status is
maintained and 100% of its taxable income is distributed to shareholders.
The Fund is engaged in the business of acquiring, operating, developing, and
financing income-producing commercial real estate. The Fund's long-term
objectives are to (a) provide current income to shareholders and (b) maximize
the market value of the Fund's shares. It is the general policy of the Fund to
invest its available assets principally in the ownership of real estate or in
participation in the ownership of real estate, including the development of
income-producing real estate.
The Fund's portfolio as of December 31, 1992, consisted of fee title ownership
of 26 properties and two participating mortgage investments. The Fund owns
business parks, multi-tenant light-industrial properties, office buildings, and
shopping centers located in 9 western metropolitan areas. The results of the
Fund's operations depend primarily upon the successful operations of its
existing investments. The return on capital available from equity ownership of
investments in income-producing property and other types of real estate
investments depends to a large extent upon the ability to lease or rent
property, to invest in properties to increase rents, competition and other
factors, none of which can be predicted with any certainty. The Fund competes
for tenants with other owners of comparable types of properties in the local
geographical areas in which the Fund's properties are located. The principal
methods of competition include rental rate charged, term of lease, free rent
concessions, and tenant improvement allowances. In recent years, the
combination of overbuilding and the impact of economic recession has
significantly increased the level of competition. This intense competition has
resulted in decreasing rental rates, particularly in the Houston, Oklahoma
City, Southern California and Portland markets in which the Fund has
properties. See Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations, for a more specific discussion of the
impact of the foregoing factors on the Fund's financial condition, operations
and liquidity.
The Fund has not made, nor does it anticipate making, during the remainder of
its current fiscal year or during its succeeding fiscal year, any material
capital expenditures for environmental control facilities. The Fund does not
expect any material affects upon capital expenditures, earnings or competitive
position to result from compliance with present federal, state or local
environmental control provisions. The Fund has completed Phase I and, in
several cases, Phase II surveys of all of its properties relative to the
potential existence of hazardous materials as defined by environmental impact
legislation. With the exception of the Multnomah Building in Portland, Oregon,
only minor amounts of any such materials have been located. Those materials
representing a potential hazard, either now or in the future, have been or are
being removed. Materials which do not represent such a hazard, i.e., floor
tile, have not been removed but rather an abatement program has been
implemented. The Multnomah Building has been found to contain asbestos. The
clean-up for this project is estimated at between $250,000 and $750,000 which
will be completed as part of the redevelopment of the property.
The Fund has 15 employees. All of the Fund's operations are located in the
United States.
<TABLE>
ITEM 2. PROPERTIES
A description of the Fund's real estate investments and participating mortgage
loans is as follows:
Real Estate Investments
(Amounts in thousands, except square footage amounts)
Net Mortgage Funds
<CAPTION>
Percent Book Loan From
Area Occupied Value Balance Property
Name and Location (Sq.Ft.) 12/31/92 12/31/92(1) 12/31/92 Operations (2)
- ----------------- -------- -------- ----------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
PACIFIC WEST COAST REGION
Pacific International Business
Center
301 East Grand Building South San Francisco, 57,800 70% $ 3,156 $ - $ 212
CA
342 Allerton Building South San Francisco, 69,300 100% 3,246 - 434
CA
400 Grandview Building South San Francisco, 107,000 100% 6,187 44 628
CA
410 Allerton Building South San Francisco, 46,100 100% 1,352 - 190
CA
417 Eccles Building South San Francisco, 24,600 100% 1,265 - 59
CA
466 Forbes Building South San Francisco, 65,600 100% 3,358 - 6
CA
Auburn Court Industrial Park Fremont, CA 68,000 76% 5,599 - 342
Country Hills Towne Center Diamond Bar, CA 156,200 89% 17,981 14,307 838
Franklin Business Park Boise, ID 87,400 94% 2,796 1,116 270
Nohr Plaza San Leandro, CA 12,100 89% 2,451 1,490 198
Imperial Garage Portland, OR 70,000 97% 926 (3) 27
Twin Oaks Business Park Beaverton, OR 65,200 93% 3,918 3,982 220
Twin Oaks Executive Center Beaverton, OR 12,500 100% 1,114 - 85
Twin Oaks Technology Center Beaverton, OR 94,200 64% 5,546 (4) 307
Westinghouse Building Fremont, CA 24,000 100% 1,895 - 103
- -----------------------------------------------------------------------------------------------------------------
960,000 90% 60,790 20,939 3,919
------- --- -------- ------- ------
ROCKY MOUNTAIN/MIDWEST REGION
Academy Place Shopping Center Colorado Springs, CO 84,400 97% 6,357 3,937 676
Bryant Street Annex Denver, CO 55,000 100% 1,291 3,257 174
Bryant Street Quad Denver, CO 155,500 91% 4,662 (5) 322
St. Paul Business Center West Maplewood, MN 108,800 91% 5,284 2,983 321
St. Paul Distribution Center Maplewood, MN 77,000 96% 2,648 1,865 382
- -----------------------------------------------------------------------------------------------------------------
480,700 94% 20,242 12,042 1,875
------- --- -------- ------- ------
SOUTHWEST REGION
101 Park Avenue Office Oklahoma City, OK 189,100 86% 9,447 4,392 321
Building
BancFirst Office Building Oklahoma City, OK 105,800 75% 4,636 - 296
Camden Park Shopping Center Houston, TX 83,000 90% 6,833 90 (121)
Inwood Central Shopping Center Houston, TX 83,100 73% 5,237 - 271
6900 Place Oklahoma City, OK 49,400 84% 3,964 - 236
- -----------------------------------------------------------------------------------------------------------------
510,400 82% 30,117 4,482 1,003
------- --- -------- ------- ------
Portfolio Operations 749(6) 14,798(7) 193
TOTAL 1,951,100 89% 111,898 52,261 6,990
Real estate under development
Country Hills Towne Center(8) Diamond Bar, CA - 370 -
Imperial Garage(9) Portland, OR - 45 -
Multnomah Apartment Building Portland, OR 282 units - 6,090 1,496 -
- -----------------------------------------------------------------------------------------------------------------
TOTAL $118,403 53,757 $6,990
-------- ------- ------
<FN>
Footnotes
(1) Net book value represents total acquisition cost plus cost capitalized
subsequent to acquisition less provision for loss in value and accumulated
depreciation.
(2) Funds from Property Operations is the property's rental income less
operating expenses and represents each property's contribution to the
total Funds from Operations for the Fund. Funds from Property Operations
are not reduced for interest expense, general and administrative expense
or depreciation and amortization. Funds from Operations should not be
considered as an alternative to net income or loss as an indicator of the
Fund's operating performance or as an alternate to cash provided by
operating activities as a measure of liquidity. However, the Fund
believes that analysts of real estate investment trusts consider Funds
from Operations to be useful in comparing results in the industry.
(3) Imperial Garage is additional collateral on the loan on the Multnomah
Building.
(4) Twin Oaks Technology Center is additional collateral on the Twin Oaks
Business Park loan.
(5) Bryant Street Quad is additional collateral on the Bryant Street Annex
loan.
(6) Purchase price for trailing equity interest in properties, net of
amortization.
(7) Debt includes two lines of credit and one term loan for which $14,798,000
is outstanding in the aggregate and which are collateralized by the 301
East Grand, 342 Allerton, 400 Grandview, 410 Allerton, 417 Eccles, 466
Forbes, Auburn Court, BancFirst and Westinghouse properties.
(8) Outparcels of land are being developed to add rentable space at Country
Hills Towne Center.
(9) Reflects costs incurred at Imperial Garage which are part of the Multnomah
Apartment Building development.
</TABLE>
<TABLE>
Participating Mortgage Loans
<CAPTION>
Principal Stated
Type of Security Outstanding Maturity Interest
Loan Land Improvements 12/31/92 Date Rate
------- ----- ------------ -------- ----- ----
<S> <C> <C> <C> <C> <C> <C>
MacArthur 1st Mortgage 7 Single family $2,255,000(1) (1) Prime
Estates Acres home lots under + 2%(1)
Sonoma, CA development
Neptune Plaza 2nd Mortgage 2.3 Shopping Center $1,966,000(2) (2) Prime
Alameda, CA Acres (24,811 sq.ft.) + 2%(2)
<FN>
(1)The loan matured on November 30, 1992, and subsequent to December 31, 1992,
the borrower filed a petition under Chapter 11 of the Federal Bankruptcy
Code. The loan has been in a non-earning status since April 1, 1992, and
from that date to December 31, 1992, $123,000 of interest income has not
been recognized. At December 31, 1992, the Fund accounted for the loan by
writing down the investment to the $1,171,000 estimated value of the
collateral which the Fund would expect to receive if an actual foreclosure
occurred.
(2)The loan matured on December 31, 1992. In July 1992, the first mortgage
lender instituted a foreclosure action on the security for the loan and the
Fund has provided an allowance for loan loss for the full amount of the
loan. The loan has been in a non-earning status since October 1, 1990, and
from that date to December 31, 1992, $870,000 of interest income has not
been recognized.
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
On July 21, 1992, the first mortgage lender on the property in Alameda,
California, which secures the Fund's second mortgage, filed an action to
foreclose on its security. On July 22, 1992, the borrower filed a petition
under Chapter 11 of the Federal Bankruptcy Law. Because of the potential loss
of its security and the bankruptcy of the borrower, the Fund has provided an
allowance for loan loss for the full amount of the loan.
Other than ordinary routine litigation incidental to the Fund's business, there
are no other material legal proceedings to which the Fund is party or of which
any of its investments are subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter has been submitted to a vote of security holders, through
solicitation of proxies or otherwise, during the fourth quarter 1992.
<PAGE>
<PAGE>
PART II
ITEM 5. MARKET PRICE OF AND DIVIDENDS ON COMMON STOCK AND RELATED
SHAREHOLDER MATTERS
The Fund's Common Stock was listed on the American Stock Exchange effective
December 5, 1988.
The high and low sales price for each quarterly period during 1992 and 1991 is
as follows:
1992 1991
High Low High Low
---- ---- ---- ----
1st Quarter $5.250 $4.750 $7.625 $6.125
2nd Quarter 5.250 4.500 7.625 6.375
3rd Quarter 4.825 3.375 7.500 6.500
4th Quarter 3.625 3.000 6.825 4.625
There were approximately 10,000 holders of record of the Fund's shares of
common stock as of March 1, 1993. However, the Fund estimates the number of
shareholders to be in excess of 15,000 since certain shares of record are held
by nominees.
The following table sets forth distributions to holders of record during 1990,
1991 and 1992. Of the distributions paid during these three years, 100% were
non-taxable return of capital.
Amount Per Amount Per Amount Per
Date Paid Share Date Paid Share Date Paid Share
- --------- ----- --------- ----- --------- -----
03/15/90 $0.20 03/15/91 $0.20 03/23/92 $0.12
06/15/90 0.20 06/15/91 0.20 06/15/92 0.12
09/15/90 0.20 09/15/91 0.20
12/15/90 0.20 12/15/91 0.12
At a Board meeting held August 7, 1992, the Directors of the Fund voted to
suspend payment of a distribution for the remainder of calendar year 1992. The
Board reviewed the policy at a meeting held January 21, 1993, and while the
Board will regularly review the policy, the Fund is not expected to pay a
distribution during calendar year 1993. See Item 7, Management's Discussion
and Analysis of Financial Condition and Results of Operations, for a more
specific discussion of the Fund's liquidity and the availability of funds for
distribution.
The Fund has a Dividend Reinvestment Plan designed to enable shareholders to
have distributions, when they are paid by the Fund, automatically invested in
additional shares of the Fund. Registrar and Transfer Company, which is
unaffiliated with the Fund, acts as agent for those shareholders who wish to
participate in the Plan. The shares required to fulfill the requirements of
the Plan will be purchased on the open market or at the direction of the Fund's
Board of Directors, directly from the Fund at a 5% discount from the open
market price. The Fund registered 400,000 Common shares in December 1991 for
possible issuance under the Plan.
In the fourth quarter of 1989, the Board of Directors approved a stock
repurchase program under which the Fund may repurchase shares from time to time
on the open market. Since the inception of the program, 374,302 shares have
been acquired at an aggregate cost of $2,889,000.
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the Fund and should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the financial statements and notes
thereto included elsewhere in the Report.
Operating Results and Distributions
<CAPTION>
Years Ended December 31,
1992 1991 1990 1989 1988
---- ---- ---- ---- ----
(Amounts in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Revenues $ 13,565 $ 16,910 $ 16,406 $15,662 $15,551
Income (loss) before
gain or loss from sale $(12,249) $(2,845) $(12,545) $ 86 $(1,334)
of real estate
Gain (loss) on sale of 392 - (151) - (834)
real estate -------- ------- -------- ------- -------
Net income (loss) $(11,857) $(2,845) $(12,696) $ 86 $(2,168)
======== ======= ======== ======= =======
Per Share:
Net income (loss) $(1.89) $ (.46) $ (2.08) $ .01 $ (.35)
====== ======= ======== ====== ======
Distributions declared $ .24 $ .64 $ .80 $ .80 $ .77
====== ======= ======= ====== ======
Other Data
Funds from operations(1) $ (376) $ 2,381 $ 1,724 $4,540 $2,213
====== ======= ======= ====== ======
Balance Sheet Data
<CAPTION>
December 31,
1992 1991 1990 1989 1988
---- ---- ---- ---- ----
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
Total assets $124,455 $136,998 $134,532 $141,470 $142,405
======== ======== ======== ======== ========
Notes payable 53,757 53,309 43,162 33,427 27,824
======== ======== ======== ======== ========
Shareholders' equity 68,103 81,336 89,119 106,081 111,922
======== ======== ======== ======== ========
<FN>
(1) Funds from operations means net income(loss), excluding
gain(loss) on the sale of real estate and provisions for losses, plus
depreciation and amortization. Funds from operations should not be
considered an alternative to net income as an indicator of the Fund's
operating performance or to cash flows as a measure of liquidity.
However, the Fund believes that analysts of real estate investment trusts
consider Funds from operations to be useful in comparing results in the
industry.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
In June 1992, the Fund suspended its distributions to shareholders primarily
due to decreasing revenue from certain properties and the removal of the
Multnomah Building as a fully earning asset because of the expiration of the
lease for substantially all of the building in November 1991. Improvement in
operating results will depend in large part on improvement in the rental
revenue at the Fund's properties, which will require future capital
expenditures for tenant and building improvements.
The amount of capital expenditures for rental properties in 1993 is projected
to be approximately $2.8 million. In addition, development of outparcels of
land and remodeling of the anchor tenant's store at Country Hills Towne Center
in Southern California and the redevelopment of the Multnomah Apartment
Building is projected to require an additional $2.1 million during 1993. The
Fund proposes to contribute the Multnomah Building to a joint venture that
would develop the property, provided that a HUD loan guarantee and $4 million
of equity capital can be obtained from an equity partner for financing of the
project. Exclusive of the Fund's contribution of the real property and the
cost of renovation of the adjacent Imperial Garage, the total development cost
for the 283-unit apartment project is estimated to be $18 million, to be funded
by the HUD guaranteed loan and the equity capital which is being sought from
such partner. The development would include removal of asbestos in the
building at an estimated cost of between $250,000 and $750,000. If
construction commences in the first quarter of 1994, the project is expected to
be placed into service in early 1995 and substantially leased by 1996. If the
development does not proceed, the Fund will reevaluate the use of the property,
including potential sale, although the Fund reserves the right to review sales
proposals it may receive at any time.
At December 31, 1992, the Fund's available cash and undrawn lines of credit
were approximately $4.4 million. Preliminary cash flow projections for 1993
indicated that there could be a deficiency in the Fund's available cash as
early as mid-year 1993. Current information indicates that sources of
financing will generate sufficient funds to meet cash requirements in 1993.
The principal sources of liquidity for future cash requirements are the
financing of properties which do not currently collateralize mortgage loans and
the refinancing of existing indebtedness. The net book value of properties
which do not currently collateralize mortgage loans is $10,300,000. The Fund
is considering a number of potential sources of financing. It is also possible
that the Fund could elect to sell one or more properties in the event of an
unresolved cash need.
At December 31, 1992, the Fund had borrowings of $10,866,000 that mature prior
to December 31, 1993. Included are two lines of credit for $10,000,000 and
$2,000,000, respectively, which are used for working capital. The $10,000,000
line bears interest at the lender's prime rate plus 1.25% and matures on May
31, 1993. At December 31, 1992, there was $3,973,000 available to borrow under
the line of credit. The $2,000,000 line of credit bears interest at the
lender's prime rate plus 1.5%, matures on July 1, 1993 and had an outstanding
balance of $2,000,000 at December 31, 1992.
At December 31, 1992, the principal amount of the Fund's debt that will mature
in the next three years subsequent to 1993 is as follows: 1994 - $20,653,000;
1995 - $9,212,000; 1996 - $9,174,000.
Discussions have been held with a lender, from which the Fund is not a
borrower, regarding a potential new loan on certain of the Fund's properties
located in South San Francisco, California. The proceeds of the new loan would
be used to retire a significant portion of the Fund's borrowings under its $10
million line of credit and a significant portion of a four-year term loan that
was converted from a line of credit during 1992. As presently contemplated,
the new loan, if obtained, would be for a term of between 5 and 10 years with
monthly payments of interest and principal amortizing over 25 years and with a
fixed interest rate based on the Treasury Note rate.
Repayment of maturing debt and long-term liquidity is expected to be provided
by cash from operating activities, extension of loan maturities, and
refinancing of existing indebtedness. In addition, the Fund could elect to
sell one or more properties or seek to sell common shares as a potential means
of meeting cash requirements. It is anticipated that the Fund will utilize
increased borrowings as a source of cash provided by financing activities in
the near-term. Because the fund already has a significant amount of debt,
increased borrowings will be a limited source of additional liquidity in the
long-term. In addition, the Fund's recent net losses and suspension of
distributions currently limit its ability to access traditional sources of
equity capital. If the Fund is unable to obtain extension of the loan
maturities and the refinancing of existing indebtedness discussed above, it may
be necessary to liquidate a significant portion of its portfolio to repay
indebtedness.
ANALYSIS OF CASH FLOWS
During 1992, the Fund generated $1,453,000 in Net Cash Provided by Operating
Activities as presented in the accompanying Statements of Cash Flows. However,
this amount included the return of certain loan and other deposits of
approximately $1 million as well as an increase in accounts payable of
approximately $500,000, which are elements of cash provided by operating
activities that are not expected to be an ongoing source of liquidity.
Partially as a result of distributions of $1,347,000 to shareholders, Cash
Flows from Financing Activities, as presented in the accompanying Statements of
Cash Flows, were reduced in 1992. Such distributions were suspended as a means
to improve liquidity.
As a result of increased leasing activity during 1992, it is expected that
increased rental income will have a favorable affect on the Fund's 1993 and
1994 Net Cash Provided by Operating Activities. The Fund's operating
properties were 89% leased at December 31, 1992, as compared with 83% leased at
December 31, 1991. Also as a result of increased leasing activity, significant
cash was invested in 1992 when capital expenditures and construction costs were
$4,973,000 compared to $3,410,000 in 1991. Such increase was the result of
increased leasing activity and predevelopment expenditures at the Multnomah
Building and development costs at Country Hills Towne Center. Capital
expenditures are expected to continue to be significant, since the Fund is
committed to meet the competition it faces in leasing rentable space. However,
the level of expenditures as compared with 1992 and 1993 is expected to
decrease in years after 1994, since the annual rate of lease expirations is
projected to decrease. The amount of funds required for development projects
is expected to decline in years after 1993, since the Fund's two development
projects, the Multnomah Building and Country Hills Towne Center, will either be
substantially completed or no longer require capital expenditures. Future
capital expenditures for tenant and building improvements are expected to be
funded by Cash Provided by Operating Activities.
RESULTS OF OPERATIONS
Operating Trends
Substantially all of the Fund's investments are in rental properties. The Fund
has investments in three specific property types: industrial - representing
61% of rentable square footage of the portfolio, retail - representing 24% of
rentable square footage of the portfolio, and office - representing 15% of
rentable square footage of the portfolio. The table below presents occupancy
rates at the end of each of the past three years, for each of the three
specific property types in which the Fund has investments:
Occupancy Rate
Date Industrial Retail Office
---- ---------- ------ ------
December 31, 1990 91% 86% 87%
December 31, 1991 84% 76% 76%
December 31, 1992 91% 87% 82%
The primary reasons for the occupancy trends were the same for each property
type. During 1991, the impact of the economic recession was reflected in a
significant increase in tenant failures. Aggressive leasing activity since
1991 has resulted in improved occupancy. The percentage of industrial and
retail space leased at September 30, 1993 is equal to or greater than the
percentage of space leased at the end of 1990. The overall trend in the past
three years for each of the Fund's property types is as follows:
Industrial - Demand for the Fund's industrial space has been relatively
constant with generally stable occupancy rates over the past three years.
However, rental rates have declined as leases have expired and releasing has
been at lower rates reflecting the competition for space.
Retail - The demand for retail space has declined with the slowdown in economic
growth. This has the effect of reducing rental rates in order to maintain
occupancy rates over the past three years.
Office - The decline in the occupancy rate since 1990 for the Fund's office
properties reflects the inclusion of the Multnomah Building at 100% in the 1990
occupancy rate. At the end of 1991, the Building was vacant and in the initial
stages of redevelopment as an apartment building. The occupancy rate at the
end of 1990 for office buildings, excluding the Multnomah Building, was 76%.
Management believes that the geographic market in which a property is located
has been a critical factor in determining operating results. The trend in the
Fund's occupancy has been favorable in Northern California, and both occupancy
and rental rates have been favorable in Colorado and Idaho, reflecting the
relative strength of those economies. In Minnesota, the market has been stable
with occupancy rates of 90%, but at highly competitive rental rates due to weak
demand. The competition for rental space is intense in Oklahoma and Southern
California resulting in occupancy and rental rates below the portfolio average
and reflecting the weakness in the economies in those markets. In the Houston
and Portland markets, an oversupply of retail and industrial properties,
respectively, has resulted in intense price competition in order to maintain
occupancy levels.
Year Ended December 31, 1992 Compared to Year Ended December 31, 1991
Total revenue decreased by 20% in 1992 as compared with 1991. Such decrease
was primarily due to a 17% decrease in rental income resulting from the
expiration of the lease on the Multnomah Building in November 1991. In 1991,
the Fund recorded approximately $3.0 million of revenue from the property, or
approximately 18% of rental income for that fiscal year. During 1992, the
property generated no revenue as it was in the initial stage of redevelopment.
Interest from participating mortgage loans decreased by 84% in 1992 due to the
non-accrual of interest income on the Fund's first participating mortgage loan
collateralized by land in Sonoma, California.
Other revenue decreased by 69% in 1992 primarily because of a decrease in
interest income recorded on notes receivable from officers. Such notes were
given by officers of the Fund in exchange for shares of common stock issued to
them. Two of such notes in the principal amount of approximately $1.7 million
were canceled and 225,000 shares of Common Stock acquired in 1990 and 1991 were
returned to the Fund arising from the termination of the Fund's former chief
executive officer. See "Certain Relationships and Related Transactions."
Total expenses increased by 15% in 1992, largely because of a $3.3 million
provision for participating loan losses and a $3 million provision for loss in
value of investments in real estate. The provision for loan losses resulted
from financial problems encountered in 1992 by borrowers from the Fund on its
two participating mortgage loans and the foreclosure action taken by the first
mortgage lender on one of the loans. The provision for loss was $106,000 and
$243,000 in 1991 and 1990.
Based on an evaluation of the amount which can potentially be realized by the
Fund from the development of the Multnomah Building, the carrying value of that
investment was reduced by a $3.0 million provision for loss as of December 31,
1992. No provision for loss in value was recorded in 1991.
Operating expense decreased 12% in 1992 primarily because the Multnomah
Building was removed from service. The property's operating expenses in 1991
were approximately $1.1 million.
Most of the 6% increase in depreciation and amortization expense in 1992 was
due to the previous completion of additional rentable square footage at the
Country Hills Towne Center development and the commencement of depreciation on
those improvements in 1992.
Interest expense decreased by 9% in 1992, primarily as a result of a reduction
in the average interest rate on borrowings from 9.1% to 8.4% and the
capitalization of interest resulting from the Multnomah Building development.
The decrease was offset in part by interest on approximately $6.9 million of
increased weighted average borrowings in 1992.
General and administrative expense increased 16% in 1992, primarily due to
increased franchise taxes, directors and officer's insurance, and consulting
fees.
Other expense in 1992 was comprised primarily of costs associated with
litigation in which the Fund is engaged or has agreed to settlement. The
increase in 1992 costs resulted from management's initiative to accelerate the
completion of litigation and reduce the number of matters in dispute.
On June 29, 1992, the Fund sold the Lakeridge Business Park property in
Redmond, Washington, and realized a gain on the sale of $392,000. One property
was sold in 1991 which resulted in no gain or loss to the Fund.
The factors described above caused the Fund's net loss to increase from $2.8
million in 1991 to $11.8 million in 1992.
Year Ended December 31, 1991 Compared to Year Ended December 31, 1990
Rental revenue increased 3% in 1991 as compared with 1990, primarily due to
increases in gross rent at the Country Hills Towne Center, following the
leasing of new rentable space, and at the Multnomah Building, where the major
tenant's lease was extended for one year to November 1991 at a higher rental
rate.
In 1991, interest from participating mortgage loans decreased 40% due to the
non-accrual of interest income on the Fund's participating mortgage loan
secured by Neptune Plaza shopping center in Alameda, California, beginning
October 1, 1990. Such loan has been in default since September 1990.
Other income increased 47% in 1991 primarily because of an increase in interest
income on notes receivable from officers. In 1991, notes receivable in the
approximate principal amount of $1.5 million were recorded in payment for
225,000 shares of common stock acquired by officers of the Fund.
Operating expenses increased 6% in 1991. One component of the increase was
that the cost of utilities went up 17%. A significant part of this increase
was attributable to the 101 Park and BancFirst Office Buildings in Oklahoma
City. Property taxes increased 7% largely because of property tax increases at
Country Hills Towne Center due to the added value resulting from construction
and property tax reassessments. These increases were offset by a 9% reduction
in maintenance and repairs expense.
Interest expense increased 7% in 1991 primarily because of additional amounts
borrowed n the Fund's lines of credit and increases in new financings for
acquisitions and capital improvements. These increases were partially offset
by a reduction in the average interest rate to 9.1% in 1991 from 11% in 1990.
General and administrative expenses decreased 12% in 1991, primarily because of
the termination of the investment management services that were provided under
the Fund's advisory agreement with its former investment manager prior to March
1, 1990 and the Fund's becoming self-administered after that date.
Depreciation and amortization expense increased 4% in 1991 due to capital
improvements at 101 Park and 6900 Place complete in 1990, as well as normal
tenant improvements and additions to the Fund's computer system.
Other expense decreased by $656,000 in 1991. These costs were comprised of the
environmental cleanup at Auburn Court caused by a defaulting tenant, the
canceled acquisition of three public partnerships and legal expenses. The net
cost to the Fund of the environmental clean-up was $270,000. The cost to the
Fund for pursuing the acquisition of the public partnerships was $390,000.
In 1991, there was no provision for loss in value of investments in real
estate, while a $9.3 million provision was made in 1990 for the Multnomah
Building and the 101 Park and BancFirst Office Buildings in Oklahoma City,
Oklahoma.
As a result of the factors discussed above, the fund reduced its net loss from
$12.7 million in 1990 to $2.8 million in 1991.
Potential Factors Affecting Future Operating Results
The primary factor which will affect the Fund's operating results in the near-
term are the demand for rental space in the markets in which its properties are
located and the financial condition of the Fund's tenants. The decline in
demand for commercial rental space in the past few years has resulted in a
decline in rental rates for vacant and renewing space. In addition, economic
difficulties encountered by tenants has resulted in lease terminations in some
cases and rental concessions in others.
Management's objective is to improve cash provided by operating activities.
Since the Fund will continue to record significant non-cash charges for
depreciation and amortization, it is likely that the Fund will continue to
report net operating losses.
One measure of the Fund's commitment to meet the intense competition to lease
space is the overall physical occupancy rate. As discussed above, the weighted
average occupancy rate has increased from 83% at December 31, 1991 to 89% at
December 31, 1992.
The ability of the Fund to obtain financing for capital improvements and
working capital at reasonable interest rates will also affect future
performance. It is management's intention, when possible, to convert lines of
credit and other variable rate debt to intermediate term financing with fixed
rates.
In the longer term, the completion of development of the remaining outparcels
at Country Hills Towne Center and the potential completion of redevelopment of
the Multnomah Building could have a favorable impact on rental operating
results.
The Fund will continue to evaluate each of its real estate investments and each
of the markets in which those investments are located in order to determine if
they meet the long-range objectives of the Fund. If the Fund determines to no
longer hold an investment on a long-term basis and the current market value of
that investment is less than its net book value, a loss would be recognized at
the time such a determination is made.
Inflation
The Fund's rental revenues in certain overbuilt real estate markets, including
Oklahoma City, Houston, Southern California and Portland, have not followed the
overall inflationary trends of the economy. In the future, management believes
that changes in market rate rents in those areas may more closely follow the
rate of inflation. Operating costs for properties in most of the Fund's
markets have continued to follow inflationary trends. Because of the nature of
leases in place, the majority of these operating expenses are the
responsibility of the tenants and, therefore, the increase does not
significantly affect the Fund's financial results, provided that the tenant has
the financial capability to meet its lease obligations. The Fund's ability to
borrow at fixed interest rates is also affected by both current inflationary
forces and anticipated inflation.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is listed under Item 14(a).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
<PAGE>
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Director/Officer Term
Name Age Position Since Expires
---- --- -------- ----- -------
J. Arthur deBoer 68 Independent Director 1989 1993
Robert K. McAfee 62 Independent Director 1988 1995
Frank A. Morrow 53 Independent Director 1988 1994
Frederick P. 58 Independent Director 1989 1993
Rehmus
Norman H. Scheidt 58 Independent Director 1993 1993
Martin I. Zankel 58 Chief Executive 1991 1995
Officer and Director
R. Mark Wyman 42 Chief Operating 1989
Officer
Dean Banks 51 Chief Financial 1992
Officer, Treasurer &
Secretary
J. Arthur deBoer. Mr. deBoer, Director, has been Senior Vice President and
Manager of the Special Asset Department of The Pacific Bank since November
1992. He served as Senior Vice President at Westamerica Bank from 1987 to
1991 where he managed the Special Asset Department and then served as the
credit administrator for real estate construction loans.
Robert K. McAfee. Mr. McAfee, Director, has been President of Robert McAfee &
Associates, Penn Valley, California, a firm specializing in finance and
investment consultation since 1983. Mr. McAfee is a Director of XIOX
Corporation, a software development company.
Frank A. Morrow. Mr. Morrow, Director, has been a principal of Frank Morrow &
Associates, San Francisco, California, a real estate development firm since
1984. From 1980 through 1984, he served as director of real estate for
Stanford University, with responsibility for managing the real estate
investments of the University's endowment fund as well as management,
acquisition, leasing and sale of the real property owned directly by the
University.
Frederick P. Rehmus. Mr. Rehmus, Director, is President of Brownson, Rehmus &
Foxworth, a national financial advisory and investment counseling firm where he
has served as President since 1978.
Norman H. Scheidt. Mr. Scheidt, Director, is President of Independent
Holdings, a real estate management and development firm in San Francisco,
California. He is also a general partner of McDonald-Halliday Enterprises, a
partnership which owns and operates commercial real estate.
Martin I. Zankel. Mr. Zankel has served as Chairman of the Board since May 17,
1992, and Chief Executive Officer since July 17, 1992. He has been a Senior
Partner in the law firm of Zankel & McGrane or its predecessor since 1974, and
he is a director of Bedford Property Investors, Inc.
R. Mark Wyman. Mr. Wyman has served as Executive Vice President and Chief
Operating Officer of the Fund since 1989. He previously served as Executive
Vice President of Landsing Advisors, Inc., which served as the investment
advisor and manager to the Fund prior to 1990.
Dean Banks. Mr. Banks joined Landsing Pacific Fund in September 1992 as Chief
Financial Officer, Treasurer and Secretary. He served as Chief Financial
Officer for Grubb & Ellis Realty Income Trust and Grubb & Ellis Realty
Advisors, Inc. in San Francisco, California from 1985 to 1992.
Based solely upon review of copies of the following reports and upon written
representations furnished to the Fund, all filing requirements of Section 16(a)
of the Securities Exchange Act of 1934 applicable to fund officers, directors
and greater than ten-percent beneficial owners of the Fund's stock were filed
with respect to the 1992 fiscal year, except that: (i) Mr. McAfee filed a Form
4 which reported late the sale of 7,850 shares, and (ii) Mr. Wyman filed a Form
5 which reported late the acquisition of 3,731 shares through the Fund's 401(k)
Plan.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information regarding executive compensation:
Summary Compensation Table(1)
Annual Compensation
Name and Principal All Other
Position Year Salary Bonus Compensation(2)
-------- ---- ------ ----- ---------------
Martin Zankel, Chief 1992 $ 72,000(3) - -
Executive Officer
Mark Wyman, Chief 1992 $149,000 $30,000 $10,000
Operating Officer 1991 140,000 40,000 6,000
1990 137,000 42,000 7,000
Dean Banks, Chief
Financial Officer 1992 $ 26,000(4) - -
(1) No awards or pay-outs pursuant to long-term incentive plans were
made during the fiscal years shown.
(2) Includes a $6,000 per year automobile allowance and matching
funds contributed by the Fund under the Fund's 401(k) Plan, a defined
contribution plan pursuant to which eligible employees may contribute
through payroll deductions. The Fund makes contributions to the Plan equal
to 50% of up to the first 6% of each employee's contribution (subject to
certain limitations).
(3) Includes Mr. Zankel's 1992 compensation as a director prior to
November 1992. Mr. Zankel currently receives an annual salary of $150,000
and receives no separate compensation as director. Mr. Zankel has served as
Chief Executive Officer since July 17, 1992.
(4) Mr. Banks joined the Fund on September 28, 1992, and receives
annual compensation of $100,000.
Pursuant to an executive equity incentive program approved by the Fund's Board
of Directors, Mr. Wyman purchased 40,000 shares of the Fund's unregistered
common stock in June 1990 and 100,000 shares of unregistered common stock in
March 1991. In each case, the price per share was the closing price of the
Fund's common stock on the American Stock Exchange on the day preceding the
purchase. In payment of the purchase price for the stock, Mr. Wyman executed
promissory notes in the principal amounts of $360,000 and $650,000,
respectively. The June 1990 Note bears interest 9% per annum and the March
1991 Note at the rate of 10% per annum. Interest is due quarterly under the
Notes and principal is payable five years after the date of the Note. The
common stock purchased by Mr. Wyman is pledged as collateral for the Notes.
Mr. Wyman has a written employment contract with the Fund which sets forth his
annual base salary, subject to adjustment by agreement between Mr. Wyman and
the CEO of the Fund. Mr. Wyman's base salary was increased to $160,000 per
year in July 1992. The agreement also provides that the CEO will recommend,
and the Board of Directors of the Fund will consider, an annual bonus payable
to Mr. Wyman based on the performance of the Fund, his contribution to such
performance, increases in the cost of living, salaries paid to comparable
executives of comparable companies and other factors to be considered by the
Board in its discretion. The agreement also provided for the March 1991 loan
and share purchase described above. Under the agreement, if Mr. Wyman's
employment is terminated by the Fund without cause, he will receive severance
pay equal to six months' cash compensation for the period immediately preceding
such termination, plus any accrued but unpaid bonus as determined by the CEO.
None of the other executive officers of the Fund has a written employment
contract or any other plan, agreement or arrangement regarding employment or
compensation.
DIRECTOR COMPENSATION:
As of November 1992, the annual director compensation of the Fund is $10,000
per year and the regular meeting fee is $2,000 per meeting. Prior to that
time, each director who was not an employee of the Fund received $8,000 per
year and $1,500 for each regular meeting. Each director also receives $600 for
each special meeting he attends in person and $300 for each telephone
conference meeting in which he participates. Members of the Compensation and
Audit Committees receive $600 for each committee meeting, unless the meeting is
held on the same day as another type of meeting. When two or more types of
meetings are held on the same day, directors will be paid for one meeting at
the highest meeting rate. Prior to November 1992, directors who served on the
Fund's Audit Committee received an annual fee of $2,000 plus $600 per committee
meeting. The Fund reimburses each director for his travel expenses. A
majority of the Board of Directors may change the compensation arrangement at
any time.
Directors who are also salaried employees of the Fund receive no additional
compensation for board or committee service.
Directors providing consulting services to the Fund may also receive up to $150
per hour, subject to a limit of $1,000 per day. Since July 1992, the Fund has
had an unwritten arrangement with Mr. Frank A. Morrow pursuant to which he is
providing consulting services with respect to the redevelopment of the
Multnomah Building. Mr. Morrow monitors the performance of the predevelopment
project manager, represents the Fund relative to prospective sources of equity
and debt financing, coordinates with regulatory agencies and provides
consultation on other activities related to the redevelopment of the property.
Under his arrangement with the Fund, Mr. Morrow receives compensation for his
services at the rate the Fund regularly pays directors for consulting services
up to a maximum of $4,000 per month. In 1992, Mr. Morrow was paid a total of
$20,000 for consulting services. It is anticipated that this arrangement will
terminate in September 1993.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION:
The members of the Fund's Compensation Committee are Frederick P. Rehmus and J.
Arthur deBoer, neither of whom are current or former employees or officers of
the Fund or have a financial interest in any transaction with the Fund. There
are no compensation committee interlocks between the Fund and any other entity
involving any executive officer or director of the Fund who serves as executive
officer of any such entity.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of the close of business on March 1, 1993, there were outstanding 6,093,137
common shares and 200,000 warrants to purchase common shares at $9.50 per
share. There is no cumulative voting. Each common share entitles the holder
to one vote on all matters.
The following table sets forth, as of March 1, 1993, information with respect
to the ownership of common shares by any person who is known by the Fund to be
the beneficial owner of more than 5% of the outstanding common stock of the
Fund.
Number of Shares Percent of
Name and Address Beneficially Owned Outstanding Shares
---------------- ------------------ ------------------
Tweedy, Browne Company L.P. 311,285(1) 5.1%
and TBK Partners, L.P.
52 Vanderbilt Avenue
New York, New York 10017
David S. Gottesman,
Arthur Zankel and
Daniel Rosenbloom
(collectively) 452,100(2) 7.4%
Gary K. Barr 366,960(3) 6.0%
(1) According to a Schedule 13D, dated November 23, 1992, Tweedy Browne
Company L.P. ("TBC") reported that it may be deemed to beneficially own
278,985 shares of the Fund which are held in various TBC customers'
accounts with respect to which TBC has investment discretion. In the
Schedule 13D, TBK Partners, L.P. ("TBK") reported that TBK owns directly
32,300 shares of the Fund. TBC and TBK reported that they may be deemed
to be members of a group which may be deemed to be the beneficial owner in
the aggregate of 311,285 shares of common stock.
(2) As reported on Schedule 13D filed on May 22, 1992, Mr. Gottesman, Mr.
Arthur Zankel and Mr. Rosenbloom reported that such filing was made as a
group for informational purposes only, but disclaimed that they were a
group. Arthur Zankel is the brother of Martin Zankel, the Fund's Chief
Executive Officer and Chairman of the Board.
(3) Included in this amount are 10,900 shares held directly, 156,060 owned by
The Landsing Corporation for which Mr. Barr is an officer and director,
and 200,000 warrants to purchase common shares, as referenced in the first
paragraph of this Item, which are owned by The Landsing Corporation. Mr.
Barr formerly served as the Fund's Chief Executive Officer.
The following table sets forth the holdings of common stock of each Director
and Executive Officer of the Fund as of March 1, 1993, and all Directors and
Officers as a group.
Number of Percentage of
Shares Outstanding
Beneficially Shares
Name Position Owned
- -------------------- ---------------------- ---------------- -------------
J. Arthur deBoer Director 1,000 (1)
Robert K. McAfee Director 4,000 (1)
Frank A. Morrow Director 2,600 (1)
Frederick P. Rehmus Director 29,700 (1)
Norman H. Scheidt Director 72,900 1.2%
Martin I. Zankel Chief Executive Officer 85,700 1.4%
and Director
Dean Banks Chief Financial Officer - -
R. Mark Wyman Executive Vice President 145,436 2.4%
and Chief Operating
Officer
All Executive Officers and Directors as a Group 341,336 5.6%
(1) Less than 1%.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective March 1, 1990, the Fund became self-administered upon the
termination of an advisory agreement with the predecessor to Pacific Coast
Capital ("PCC"). In connection with the termination, the Fund acquired
certain preferred stock of PCC which gives the Fund a preference on dividends
paid by PCC. Gary K. Barr, who is the Chief Executive Officer and a
significant shareholder of PCC, served as a director of the Fund and its Chief
Executive Officer until mid-July 1992.
On October 15, 1992, in an agreement reflecting the termination of Mr. Barr's
employment, the Fund canceled certain contingent promissory notes which had
been issued to Mr. Barr and related parties in conjunction with the Fund's
self-administration. The Fund also canceled a note receivable from an
affiliate of PCC for which the Fund had previously provided an allowance for
the full amount of the note. The agreement also terminated various services
provided by PCC for legal and transactional support related to property
acquisition, disposition, financing, construction management and certain
office support. Amounts paid to PCC and its predecessor for such services and
for investment management were:
1992 1991 1990
---- ---- ----
Legal and transactional fees $543,000 $424,000 $415,000
General and administrative support 153,000 127,000 187,000
Investment management - - 124,000
-------- -------- --------
Total fees paid $696,000 $551,000 $726,000
======== ======== ========
The Fund and RavelUnited Property Services, Inc. ("United") have agreements
under which United provides property management and leasing services to the
Fund. An officer and shareholder of United served as a director of the Fund
from inception of the Fund until October 28, 1992. Amounts paid to United for
its services were:
1992 1991 1990
---- ---- ----
Property management $180,000 $352,000 $346,000
Leasing commissions 91,000 193,000 162,000
-------- -------- --------
Total fees paid $271,000 $545,000 $508,000
======== ======== ========
The Chairman of the Board and Chief Executive Officer of the Fund is a member
of a law firm which provided legal services to the Fund during 1992. Payments
for these services were $213,000.
<PAGE>
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
The following financial statements and schedules are filed as part of this
annual report:
Page
(a) 1. Financial Statements ----
Report of Independent Accountants 25
Balance Sheets - December 31, 1992 and 1991 26
Statements of Operations for the Years Ended 27
December 31, 1992, 1991 and 1990
Statements of Changes in Shareholders' Equity 28
for the Years Ended December 31, 1992, 1991
and 1990
Statements of Cash Flows for the Years Ended 29
December 31, 1992, 1991 and 1990
Notes to Financial Statements 31
(a) 2. Financial Statement Schedules
Schedule II - Amounts Receivable from 40
Employees and Related Parties
Schedule VIII - Valuation and Qualifying 41
Accounts for the Years Ended December 31,
1992, 1991 and 1990
Schedule X - Supplementary Statement of 42
Operations Information for the Years Ended
December 31, 1992, 1991, 1990
Schedule XI - Real Estate and Accumulated 43
Depreciation at December 31, 1992
All schedules not listed above are omitted because they are not
applicable, or the required information is presented in the
financial statements or in the related notes.
(a) 3. Exhibits
3.1 Articles of Incorporation, as amended. Incorporated by
reference to Exhibit 3.1 of Amendment No. 4 to Form S-11,
filed September 9, 1988.
3.2 Bylaws, as amended. Incorporated by reference to Exhibit
3.2 of Amendment No. 4 to Form S-11, filed September 9,
1988.
10.1 Asset Purchase Agreement between Landsing Pacific Fund and
The Landsing Corporation, a California corporation.
Incorporated by reference to Exhibit 2.1 of Form 8-K filed
May 3, 1990.
10.2 Settlement Agreement and Release of Claims, dated October
15, 1992, between Landsing Pacific Fund, Pacific Coast
Capital, The Landsing Corporation, and Gary K. Barr
(without exhibits).
10.3 Employment Agreement, dated March 1, 1990, between
Landsing Pacific Fund and R. Mark Wyman.
24 Consent of Coopers & Lybrand for incorporation in the Form
S- 3 by reference for the year ended December 31, 1992.
(b) Reports on Form 8-K
No report on Form 8-K was filed during the fourth quarter 1992.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
LANDSING PACIFIC FUND
(Registrant)
March 29, 1993 By: /s/ Martin I. Zankel
-----------------------------------
Martin I. Zankel, Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following person on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
Chief Executive Officer and
/s/ Martin I. Zankel Director March 29, 1993
- ------------------------- (Principal Executive Officer)
Martin I. Zankel
Treasurer and Secretary
(Principal Financial
and Accounting
/s/ Dean Banks Officer) March 29, 1993
- -------------------------
Dean Banks
/s/ J. Arthur deBoer Director March 29, 1993
- -------------------------
J. Arthur deBoer
/s/ Robert K. McAfee Director March 29, 1993
- -------------------------
Robert K. McAfee
/s/ Frank A. Morrow Director March 29, 1993
- -------------------------
Frank A. Morrow
/s/Frederick P. Rehmus Director March 29, 1993
- -------------------------
Frederick P. Rehmus
/s/ Norman H. Scheidt Director March 29, 1993
- -------------------------
Norman H. Scheidt
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Directors and Shareholders of
Landsing Pacific Fund
We have audited the accompanying balance sheets of Landsing Pacific Fund as of
December 31, 1992 and 1991, and the related statements of operations,
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 1992. These financial statements are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits 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 Landsing Pacific Fund as of
December 31, 1992 and 1991, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1992, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND
San Jose, California
March 25, 1993
<PAGE>
<PAGE>
LANDSING PACIFIC FUND
BALANCE SHEETS, DECEMBER 31, 1992 AND 1991
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
1992 1991
---- ----
A S S E T S
INVESTMENTS IN REAL ESTATE:
Rental properties $131,069 $140,325
Accumulated depreciation (19,171) (17,142)
-------- --------
Rental properties - net 111,898 123,183
Real estate under development 6,505 2,064
Non-performing participating mortgage loans (net
of allowance for loan losses of $1,966 in 1992
and $111 in 1991) - 4,360
Collateral for non-performing participating
mortgage loan 1,171 -
-------- --------
Total investments in real estate 119,574 129,607
CASH AND CASH EQUIVALENTS ($252 is restricted in
1992 and $264 in 1991) 706 1,377
-------- --------
OTHER ASSETS:
Accounts and interest receivable (net of
allowance for doubtful accounts of $449 in 1992
and $1,017 in 1991) 1,499 1,931
Deposits 129 1,118
Prepaid expenses and other assets 157 407
Deferred leasing commissions, loan costs, and
other assets (net of accumulated amortization
of $2,826 in 1992 and $2,394 in 1991) 2,390 2,558
-------- --------
Total other assets 4,175 6,014
-------- --------
TOTAL ASSETS $124,455 $136,998
======== ========
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
LIABILITIES:
Notes payable $ 53,757 $ 53,309
Accounts payable 873 367
Other liabilities 1,722 1,986
-------- --------
Total liabilities 56,352 55,662
-------- --------
COMMITMENTS: (Note 12)
SHAREHOLDERS' EQUITY:
Shares of preferred stock, par value of $.01;
shares authorized: 5,000,000; shares issued and
outstanding: none
Shares of common stock, par value of $.001;
shares authorized: 20,000,000; shares issued and
outstanding: 6,093,137 in 1992 and 6,284,792 in
1991 6 6
Capital in excess of par value 134,190 135,300
Treasury stock at cost: 280,707 shares in 1992
and 147,902 in 1991 (1,795) (1,300)
Notes receivable (1,025) (2,782)
Accumulated distributions in excess of retained
earnings (63,273) (49,888)
-------- --------
Total shareholders' equity 68,103 81,336
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $124,455 $136,998
======== ========
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
LANDSING PACIFIC FUND
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1992, 1991 AND 1990
(Amounts in thousands, except per share amounts)
1992 1991 1990
---- ---- ----
REVENUES:
Rental income $13,389 $16,210 $15,671
Interest on participating mortgage loans 41 264 439
Other income 135 436 296
------- ------- -------
Total revenues 13,565 16,910 16,406
------- ------- -------
EXPENSES:
Operating 6,399 7,312 6,902
Depreciation and amortization 5,526 5,226 5,019
Interest 4,052 4,464 4,171
General and administrative 1,738 1,496 1,696
Other expense 1,752 1,257 1,913
Provision for participating loan losses 3,336 - -
Provision for loss in value of investments
in real estate 3,011 - 9,250
------- ------- -------
Total expenses 25,814 19,755 28,951
------- ------- -------
Loss before gain (loss) on sale of real
estate (12,249) (2,845) (12,545)
Gain (loss) on sale of real estate 392 - (151)
-------- ------- --------
Net loss $(11,857) $(2,845) $(12,696)
======== ======= ========
NET LOSS PER SHARE $ (1.89) $(.46) $(2.08)
======== ======= ========
Weighted average shares outstanding 6,260 6,203 6,117
======== ======= ========
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
<TABLE>
LANDSING PACIFIC FUND
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Years Ended December 31, 1992, 1991, and 1990
(Amounts in thousands, except share amounts)
<CAPTION>
Accumulated
Capital Notes Distribution
Shares of in Excess and in Excess of Total
Common Stock of par Treasury Interest Retained Shareholders'
Shares Par Value Value Stock Receivable Earnings Equity
------ --------- ----- ----- ----------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1989 6,121,334 $ 6 $132,891 $ (814) $(1,620) $(24,382) $ 106,081
Treasury stock acquired (236,802) - - (1,923) - - (1,923)
Shares issued:
Self-administration 100,000 - 976 - - - 976
Note receivable 140,000 - 1,260 - (1,317) - (57)
Net loss - - - - - (12,696) (12,696)
Allowance for note - - - - 1,620 - 1,620
receivable - affiliate
Distributions - - - - - (4,882) (4,882)
--------- ---- -------- ------ ------ ------- --------
BALANCE, DECEMBER 31, 1990 6,124,532 6 135,127 (2,737) (1,317) (41,960) 89,119
Treasury stock acquired (100,300) - - (632) - - (632)
Treasury stock issued 225,000 - - 2,069 (1,479) (590) -
Shares issued:
Dividend reinvestment 35,560 - 173 - - - 173
program
Net loss - - - - - (2,845) (2,845)
Interest receivable - - - - 14 - 14
Distributions - - - - - (4,493) (4,493)
--------- ---- -------- ------ ------ ------- --------
BALANCE, DECEMBER 31, 1991 6,284,792 6 135,300 (1,300) (2,782) (49,888) 81,336
Treasury stock acquired (7,805) - - (57) - - (57)
Treasury stock reacquired (125,000) - (391) (438) - - (829)
Shares/notes receivable (100,000) - (900) - 1,729 - 829
canceled
Shares issued:
Dividend reinvestment 41,150 - 181 - - - 181
program
Net loss - - - - - (11,857) (11,857)
Interest receivable - - - - 28 - 28
Distributions - - - - - (1,528) (1,528)
--------- ---- -------- ------- ------- -------- --------
BALANCE, DECEMBER 31, 1992 6,093,137 $ 6 $134,190 $(1,795) $(1,025) $(63,273) $68,103
========= ==== ======== ======= ======= ======== ========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<PAGE>
LANDSING PACIFIC FUND
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1992, 1991 AND 1990
(AMOUNTS IN THOUSANDS)
1992 1991 1990
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(11,857) $(2,845) $(12,696)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Gain or loss on sale of real estate and
provision for loss in value 2,619 - 9,401
Depreciation and amortization 5,526 5,226 5,066
Provision for doubtful accounts 352 1,214 327
Provision for note receivable - - - 1,620
affiliate
Provision for participating loan losses 3,336 106 243
Changes in operating assets and
liabilities:
Increase in accounts and interest
receivable 9 (919) (600)
Increase in accrued interest on
participating mortgage loans (41) (918) (682)
Increase (decrease) in other
liabilities (264) 206 10
Decrease (increase) in deposits 989 (1,059) 79
Decrease (increase) in prepaid expenses 250 (113) (282)
and other assets
Increase (decrease) in accounts payable 506 (104) 301
Decrease in accrued interest receivable
- - affiliate 28 14 -
------- ------- -------
Net cash provided by operating
activities 1,453 808 2,787
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of partnership interests
and certain
assets in conjunction with self- - - (1,698)
administration
Proceeds from sale of rental property 5,303 2,810 -
Acquisitions, capital expenditures, and
construction (4,973) (8,358) (2,447)
Increase in deferred expenses (1,463) (1,115) (1,442)
Receipt on participating mortgage loan 2 750 -
Disbursement of participating mortgage
loans (37) (141) (360)
------- ------- -------
Net cash used in investing activities (1,168) (6,054) (5,947)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution to shareholders (1,347) (4,320) (4,882)
Acquisition of treasury stock (57) (632) (1,923)
Proceeds from notes payable 13,602 18,817 12,967
Payments on notes payable (13,154) (8,670) (3,134)
------- ------- -------
Net cash provided by (used) in
financing activities (956) 5,195 3,028
------- ------- -------
Decrease in cash and cash equivalents (671) (51) (132)
Cash and cash equivalents at beginning
of year 1,377 1,428 1,560
------- ------- -------
Cash and cash equivalents at end of
year $706 $1,377 $1,428
======= ======= =======
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
LANDSING PACIFIC FUND
STATEMENTS OF CASH FLOWS (Continued)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
(Amounts in thousands)
1992 1991 1990
---- ---- ----
Cash paid during the period for
interest, net of $671,000 capitalized
in 1992, $164,000 in 1991, and $121,000
in 1990 $3,983 $4,513 $4,166
======= ======= =======
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Gain (loss) on sale of rental $392 $ - $(151)
properties
Cost of rental properties sold (net of 4,906 2,671 1,560
accumulated depreciation)
Notes payable retired or forgiven - - (1,561)
Other liabilities retired or forgiven 5 139 152
------- ------- -------
Net proceeds from sale of rental
properties $5,303 $2,810 $ 0
======= ======= =======
Pay off line of credit $(7,250) - -
Refinance line of credit to term loan 7,250 - -
------- ------- -------
$ 0 - -
======= ======= =======
Note receivable canceled in exchange
for shares:
Treasury stock $ (438) - -
Note receivable 1,729 - -
Capital in excess of par (1,291) - -
------- ------- -------
$ 0 - -
======= ======= =======
Payment of stock dividends:
Dividend reinvestment shares $ 181 $ 173 -
Dividend distributions (181) (173) -
------- ------- -------
$ 0 $ 0 -
======= ======= =======
Real estate under development $ 6,505 $ 2,064 -
Rental properties - net (6,505) (2,064) -
------- ------- -------
$ 0 $ 0 -
======= ======= =======
Collateral for participating mortgage
loan $ 1,171 - -
Participating mortgage loans (1,171) - -
------- ------- -------
$ 0 - -
======= ======= =======
Issuance of shares in exchange for
notes receivable:
Treasury stock - $2,069 -
Shares issued - - 1,260
Notes receivable - (1,479) (1,317)
Cost in excess of notes receivable - (590) -
------- ------- -------
- $ 0 (57)
======= ======= =======
Acquisition of partners' interest in - - $ (850)
Country Hills Towne Center
Loan proceeds - - 600
------- ------- -------
Cash used for acquisition of partners' - - $ (250)
interest ======= ======= =======
Acquisition of certain assets in - - $(2,424)
conjunction with self-administration
Common shares issued - - 976
------- ------- -------
Cash used in the acquisition of the
Fund's advisor - - $(1,448)
======= ======= =======
Capital expenditures and construction:
Master lease from former partner - - $ 620
Capital expenditures and - - (3,813)
construction
Proceeds from construction loan - - 746
------- ------- -------
Net cash used for capital
expenditures and construction - - $(2,447)
======= ======= =======
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
LANDSING PACIFIC FUND
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Landsing Pacific Fund (the "Fund") is a Delaware
corporation formed for the purpose of merging the assets and liabilities
of Landsing Institutional Properties Trust-V, Landsing Institutional
Properties Trust-VI and Landsing Institutional Properties Trust-VII. The
merger was completed on November 28, 1988.
Rental and Development Properties - In connection with financings and
other needs, the Fund obtained third-party appraisals on certain of the
Fund's properties. In some cases, the appraisals indicated that the
Fund's properties had current market values below their book values. The
Fund, as a matter of policy, holds properties on a long-term basis and
believes the book value of the Fund's properties will be fully recovered
over the Fund's long-term holding period. This determination is based on
an analysis of the sum of a property's future cash flows as compared with
the carrying value of the property. If an impairment exists, an estimate
of the deficiency is recorded as an increase in the provision for loss in
value and a reduction in the property's carrying value. Accordingly, the
accompanying financial statements do not include any adjustments, except
as noted in Footnote 6, relating to the excess of property costs over
current market value. Minimum rental income from leases is recognized
on a straight-line basis over the term of occupancy in accordance with the
provisions of the leases. Additionally, leases provide for reimbursement
of certain operating expenses which are recognized as income when earned
and when the amounts can be reasonably estimated. Depreciation is
computed by the straight-line method over estimated useful lives ranging
from four to forty years. Construction interest and property tax costs
are capitalized as a cost of rental properties during the development and
construction phase and are expensed as incurred after the construction is
completed and the property is placed in service. Tenant improvements are
being amortized over the lives of the related leases. When assets are
retired or otherwise disposed of, the costs and related accumulated
depreciation are removed from the accounts, and any gain or loss on
disposal is included in the results of operations.
Accounting for Participating Mortgage Loans - Interest from participating
mortgage loans is accrued and recognized for financial reporting purposes
to the extent such interest is recoverable. The Fund follows a practice
of establishing an allowance for losses on participating mortgage loans
based on a regular management evaluation of the investment. If the
collateral for a participating mortgage loan is considered to be in-
substance foreclosed, the carrying value of the investment is reduced to
the estimated fair value of the collateral. An allowance for possible
loan loss has been established against the loan balances and as of
December 31, 1992 was $1,966,000.
Deferred Leasing Commissions and Loan Costs - Leasing commissions are
amortized over the lives of the tenant leases. Amounts paid to obtain
loans are deferred and amortized over the lives of the related notes
payable.
Cash and Cash Equivalents - The Fund considers all highly liquid
investments with a maturity of three months or less at the time of
purchase to be cash equivalents. As of December 31, 1992, approximately
$470,000 of the Fund's cash was held in money market accounts at two U.S.
commercial banks. At times, such investments may exceed federally insured
limits.
Income Taxes - The Fund has elected to be treated as a real estate
investment trust under the provisions of the Internal Revenue Code. Under
these provisions, the Fund will not be subject to any federal income tax
if 100% of its real estate investment trust taxable income is distributed
to shareholders. Since the Fund has distributed amounts in excess of its
taxable income, no provision for federal income taxes has been made in the
accompanying financial statements.
Net Loss Per Share - Net loss per share is computed by dividing net loss
by the weighted average number of shares outstanding of 6,260,079 in 1992,
6,203,084 in 1991, and 6,117,114 in 1990. The effect of the outstanding
warrants on the calculation of net loss per share was anti-dilutive.
Reclassifications - Certain amounts in the 1991 and 1990 financial
statements have been reclassified to conform to the 1992 presentation.
2. RENTAL PROPERTIES AND REAL ESTATE UNDER DEVELOPMENT
Rental properties consist of the following:
December 31,
1992 1991
---- ----
Land $ 28,439,000 $ 33,038,000
Building and improvements 102,240,000 107,131,000
Construction in progress 390,000 156,000
------------- -------------
Total rental
properties $131,069,000 $140,325,000
============= ============
The Fund is developing additional retail space at Country Hills Towne
Center in Diamond Bar, California and is renovating a portion of the
existing shopping center. Interest capitalized as part of the
construction cost was $10,000 in 1992, $164,000 in 1991, and $121,000 in
1990. In January 1990, the Fund completed the purchase of the portion of
the property which it did not already own. As part of this purchase, the
Fund entered into a master lease agreement with the seller under which the
seller paid $620,000 to compensate the Fund for vacant space. The 1990
master lease payments were applied to reduce the Fund's basis in Country
Hills Towne Center.
During 1992, the Fund initiated the redevelopment of the Multnomah
Building in Portland, Oregon into a 282-unit apartment building. Interest
capitalized as part of the redevelopment was $661,000.
Real estate under development consists of the following:
December 31,
1992 1991
---- ----
Country Hills Towne Center $370,000 $1,936,000
Imperial Garage 45,000 -
Multnomah Apartment Building 6,090,000 128,000
---------- ----------
$6,505,000 $2,064,000
========== ==========
3. NON-PERFORMING PARTICIPATING MORTGAGE LOANS AND RELATED COLLATERAL
As of December 31, 1992, the Fund had investments in two participating
mortgage loans.
The first of the loans is collateralized by a first mortgage on land in
Sonoma, California with an outstanding balance of $2,255,000 at December
31, 1992. This loan bears interest at the rate of prime plus 2% (8.0% on
December 31, 1992). Substantially all of the principal balance of the
loan matured on November 30, 1992, and the Fund is considering the
borrower's request for an extension of the maturity. The loan has been in
a non-interest bearing status since April 1, 1992 and, from that date to
December 31, 1992, $123,000 of interest income has not been recognized.
Based on an evaluation of the current fair value of the collateral for the
loan and the financial condition of the borrower, the Fund has accounted
for the loan by making a $1,084,000 provision for loss and writing down
the investment to the estimated value of the collateral which the Fund
would expect to receive if an actual foreclosure occurred. The collateral
consists primarily of land under development as single family home lots.
The second of the loans is collateralized by a second mortgage on a retail
shopping center in Alameda, California and has an outstanding balance of
$1,966,000. This loan bears interest at prime plus 2% (8.0% on December
31, 1992), includes a provision for minimum interest of 10.5%, and was due
on December 31, 1992. The first mortgage lender has instituted a
foreclosure action and, as a result, the Fund has provided an allowance
for loan loss for the full amount of the loan. The Fund has accounted for
this note as a non-earning asset since October 1, 1990, and, from that
date to December 31, 1992, $870,000 of interest income has not been
recognized.
4. NOTES PAYABLE
Most of the Fund's rental properties are pledged as collateral for notes
payable. The notes bear interest at rates ranging from 6% to 11.5% per
annum and are payable through 2012 with principal payments required in
future years as follows:
1993 $10,866,000
1994 20,653,000
1995 9,212,000
1996 9,174,000
1997 3,080,000
1998 and thereafter 772,000
-----------
Total $53,757,000
===========
The Fund has two lines of credit for $10,000,000 and $2,000,000,
respectively. These lines of credit are used for working capital.
The $10,000,000 line of credit is collateralized by four of the Fund's
properties located in South San Francisco, California, and one property in
Fremont, California. The line bears interest at the lender's prime rate
plus 1.25% (7.25% as of December 31, 1992), matures on May 31, 1993, and
had outstanding balances at December 31, 1992 and 1991 of $6,027,000 and
$10,000,000, respectively.
The $2,000,000 line of credit is collateralized by the BancFirst Building
in Oklahoma City, Oklahoma. The line of credit bears interest at the
lender's prime rate plus 1.5% (7.5% as of December 31, 1992), matures on
July 1, 1993 and had an outstanding balance of $2,000,000 at December 31,
1992 and 1991.
On June 19, 1992, a $7,250,000 line of credit was converted to a four-year
term loan with an interest rate of 8.5% per annum, increasing annually,
and maturing on June 19, 1996. The loan is secured by two of the Fund's
properties located in South San Francisco, California, and one property in
Fremont, California. Under the provisions of the loan agreement, the Fund
has various affirmative covenants, including a minimum ratio of operating
income to interest expense, minimum income from property operations, and a
minimum ratio of debt to the carrying value of real estate. As of
December 31, 1992, there was no breach of any of the covenants.
The aggregate outstanding balances for the lines of credit at December 31,
1992, 1991 and 1990 were $8,027,000, $18,347,000 and $13,797,000,
respectively. The maximum balances outstanding under lines of credit
during the years ended December 31, 1992, 1991 and 1990 were $19,250,000,
$20,747,000 and $13,797,000, respectively. The average monthly balances
outstanding were $13,389,000, $17,307,000 and $8,270,000 for the years
ended December 31, 1992, 1991 and 1990, respectively. The weighted
average interest rates on those balances were 8.36%, 8.06% and 11.12%,
respectively.
On September 25, 1992, the Fund received the proceeds of a $4,000,000
first mortgage loan collateralized by Twin Oaks Business Park and Twin
Oaks Technology Center in Beaverton, Oregon.
5. OTHER EXPENSE
The following presents certain charges included in other expense incurred
in each of the three years ended December 31, 1992:
1990 1991 1992
---- ---- ----
Write-down of non-real estate $1,620,000 $ 74,000 $246,000
assets
Terminated partnership - 390,000 -
acquisitions
Environmental cleanup costs - 271,000 -
Settlement of litigation - 355,000 1,374,000
Other 293,000 167,000 132,000
---------- ---------- ----------
$1,913,000 $1,257,000 $1,752,000
========== ========== ==========
6. GAIN (LOSS) FROM SALE OF INVESTMENTS IN REAL ESTATE AND PROVISION FOR LOSS
IN VALUE
On June 30, 1992, the Fund sold the Lakeridge Business Park in Redmond,
Washington, in a transaction which resulted in a gain of $392,000.
As of December 31, 1992, the Fund reduced the carrying value of the
Multnomah Building in Portland, Oregon, by recording a $3,011,000
provision for loss. During 1990, the Fund reduced the carrying values of
the Multnomah Building and the 101 Park and BancFirst Office Buildings in
Oklahoma City, Oklahoma, by recording a $9,250,000 provision for loss.
7. RELATED PARTY TRANSACTIONS
Effective March 1, 1990, the Fund became self-administered upon the
termination of an advisory agreement with the predecessor to Pacific Coast
Capital ("PCC"). In connection with the termination, the Fund acquired
certain preferred stock of PCC which gives the Fund a preference on
dividends paid by PCC. Gary K. Barr, who is the Chief Executive Officer
and a significant shareholder of PCC, served as a director of the Fund and
its Chief Executive Officer until mid-July, 1992.
On October 15, 1992, in an agreement reflecting the termination of Mr.
Barr's employment, the Fund canceled certain contingent promissory notes
which had been issued to Mr. Barr and related parties in conjunction with
the Fund's self-administration. The Fund also canceled a note receivable
from an affiliate of PCC, for which the Fund had previously provided an
allowance for the full amount of the note. The agreement also terminated
various services provided by PCC for legal and transactional support
related to property acquisition, disposition, financing, construction
management and certain office support. Amounts paid to PCC and its
predecessor for such services and for investment management were:
1992 1991 1990
Legal and transactional fees $543,000 $424,000 $415,000
General and administrative 153,000 127,000 187,000
support
Investment management - - 124,000
-------- -------- --------
Total fees paid $696,000 $551,000 $726,000
======== ======== ========
The Fund and RavelUnited Property Services, Inc. ("United") have
agreements under which United provides property management and leasing
services to the Fund. An officer and shareholder of United served as a
director of the Fund from inception of the Fund until October 28, 1992.
Amounts paid to United for its services were:
1992 1991 1990
---- ---- ----
Property management $180,000 $352,000 $346,000
Leasing commissions 91,000 193,000 162,000
-------- -------- --------
Total fees paid $271,000 $545,000 $508,000
======== ======== ========
The Chairman of the Board and Chief Executive Officer of the Fund is a
member of a law firm which provided legal services to the Fund during
1992. Payments for these services were $213,000.
8. DISTRIBUTIONS TO SHAREHOLDERS
The Fund paid per-share distributions of $.24 in 1992, $.72 in 1991 and
$.80 in 1990. The distributions were treated as a return of capital for
federal income tax purposes.
9. RENTAL PROPERTIES UNDER OPERATING LEASES
Minimum future revenues from rental properties under operating leases
having initial or remaining non-cancelable lease terms in excess of one
year at December 31, 1992, are as follows:
1993 $ 10,131,000
1994 7,674,000
1995 5,285,000
1996 4,311,000
1997 3,526,000
1998 and thereafter 15,701,000
------------
Total $ 46,628,000
============
10. CAPITAL STOCK AND NOTES RECEIVABLE
On October 15, 1992, the Fund executed an Agreement reflecting the
termination of Mr. Gary Barr's employment as Chief Executive Officer under
the terms of which the Fund received 225,000 shares of common stock held
by Mr. Barr, the cancellation of a substantial portion of contingent notes
which the Fund had issued to Barr and related parties, and transfer to the
Fund of certain other assets and other considerations. In return, the
Fund paid $200,000 and certain other cash advances to Mr. Barr or related
entities, and canceled Mr. Barr's receivable notes which he had executed
in connection with his original acquisition of the 225,000 shares of
common stock. The Fund recorded the return of 125,000 shares to the
treasury, cancellation of 100,000 shares and cancellation of $1,729,000 of
notes receivable.
The Fund's authorized capital stock consists of 20,000,000 shares of
common stock, having a par value of $.001 and 5,000,000 shares of
preferred stock, having a par value of $.01. The Fund may issue the
preferred stock in classes or series and with any rights, privileges and
preferences the Fund's Board of Directors may determine without any action
or consent by the Fund's shareholders of common stock or preferred stock.
Warrants to purchase 200,000 common shares at $9.50 per share were
outstanding as of December 31, 1992. The warrants are fully exercisable
and expire on March 31, 1995.
11. COMMON STOCK PURCHASE RIGHTS
On July 26, 1990, the Fund declared a distribution to shareholders of
record on August 27, 1990, of one common stock purchase right for each
outstanding share of common stock. Each right entitles the holder to
purchase one share of common stock at an exercise price of $25.00. The
rights become exercisable if a person acquires 15% or more of the Fund's
common stock or announces a tender offer for 30% or more of the Fund's
common stock. The rights may be redeemed by the Fund at a price of $.01
per right at any time prior to the tenth day after a 15% position has been
acquired.
If the Fund is acquired in a merger or other business combination, each
right will entitle its holder to purchase common shares of the acquiring
company having a market value of twice the exercise price of each right,
i.e., at a 50% discount. Each right will also entitle its holder to
purchase the Fund's common stock at a similar 50% discount in the event an
acquirer merges into the Fund and leaves the Fund's stock unchanged.
12. COMMITMENTS
In November 1990, the Fund signed a five-year lease for office space.
Under the terms of the lease, the Fund is also responsible for its
proportionate share of property taxes, utilities and other operating
expenses. The Fund has subleased a portion of its office space to PCC
until May 31, 1993.
Further minimum rental payments under the lease and the future sublease
receipts are as follows:
Rental Sublease
Payments Receipts
--------- ----------
1993 $ 127,300 $12,500
1994 147,000 -
1995 147,000 -
--------- -------
Total $ 421,300 $12,500
========= =======
Rent expense was $60,000 and $74,000 in 1992 and 1991,
respectively, net of sublease income of $51,000 in 1992 and $55,000 in
1991.
<TABLE>
13. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following presents a summary of the unaudited quarterly financial
information for the years ended December 31, 1992 and 1991 (amounts in
thousands, except per share amounts):
<CAPTION>
1992 1991
------------------------------------------- --------------------------------------------
First Second Third Fourth First Second Third Fourth
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $3,437 $3,380 $3,362 $3,386 $4,513 $4,330 $4,219 $3,848
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) before
gain on sale of
real estate and
provision for loss
in value (l,246) (4,328) (1,492) (2,172) 29 (580) (223) (2,071)
Gain (loss) on sale
of real estate - 417 (32) 7 - - - -
Provision for loss
in value of
investments in
real estate - - - (3,011) - - - -
------- ------- ------- ------- ------- ------- ------- -------
Net income (loss) $(1,246) $(3,911) $(1,524) $(5,176) $ 29 $(580) $(223) $(2,071)
======= ======= ======= ======= ======= ======= ======= =======
Per share:
Net income (loss)
$ (.20) $(.62) $(.24) $(.83) - $(.09) $(.04) $(.33)
======= ======= ======= ======= ======= ======= ======= =======
Distributions
declared $ .12 $.12 $ - $ - $.20 $.20 $.12 $.12
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Directors and Shareholders of
Landsing Pacific Fund:
Our report on the financial statements of Landsing Pacific Fund is
included on page 25 of this Form 10-K. In connection with our audits of such
financial statements, we have also audited the related financial statement
schedules listed in the index on page 22 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND
San Jose, California
March 25, 1993
<PAGE>
<PAGE>
SCHEDULE II
LANDSING PACIFIC FUND
AMOUNTS RECEIVABLE FROM EMPLOYEES AND RELATED PARTIES
(Amounts in thousands)
Balance at
Beginning Amounts Balance at
Name of Debtor of Period Additions Collected End of Period
-------------- --------- --------- --------- -------------
R. Mark Wyman
Year ended
12/31,
1990 $ - $ 360(1) $ - $ 360
1991 360 650(2) - 1,010
1992 1,010 - - 1,010
Gary K. Barr
Year ended
12/31,
1990 $ - $ 900(3) $ - $ 900
1991 900 829(4) - 1,729
1992 1,729 - 1,729(5) -
(1)Includes $360,000 note with interest at 9.0% per annum and the principal
balance due on December 31, 1995. The note is collateralized by 40,000
shares of common stock.
(2)Includes $650,000 note with interest at 10% per annum and the principal
balance due on March 20, 1996. The note is collateralized by 100,000
shares of common stock.
(3)Includes $900,000 note with interest at 9.0% per annum and the principal
balance due on December 31, 1995. The note is collateralized by 100,000
shares of common stock.
(4)Includes $829,000 note with interest at 10% per annum and the principal
balance due on March 15, 1996. The note is collateralized by 125,000
shares of common stock.
(5)On October 15, 1992, the Fund canceled the $1,729,000 balance of notes
receivable from Mr. Barr in exchange for the 225,000 shares of common stock
which were collateral for the notes.
<PAGE>
<PAGE>
SCHEDULE VIII
LANDSING PACIFIC FUND
VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1992, 1991 and 1990
(Amounts in thousands)
Allowance Provision for
Allowance for Note
for Doubtful Participating Receivable
Accounts Loan Losses Affiliate
----------- ------------- -----------
BALANCE, DECEMBER 31, 1989 $ 445 $ - $ -
Additions charged to income 327 243 1,620
Write-off of uncollectible
accounts, net z (473) - -
------- -------- ---------
BALANCE, DECEMBER 31, 1990 299 243 1,620
Additions charged to income 824 106 -
Additions charged to nonrecurring
expense 390
Write-off of uncollectible
accounts, net (496) (238) -
------- -------- ---------
BALANCE, DECEMBER 31, 1991 1,017 111 1,620
Additions charged to income 352 3,336
Write-off of uncollectible
accounts, net (920) (1,481) (1,620)
------- -------- ---------
BALANCE, DECEMBER 31, 1992 $ 449 $1,966 $ -
======= ======== =========
<PAGE>
<PAGE>
SCHEDULE X
LANDSING PACIFIC FUND
SUPPLEMENTARY STATEMENT OF OPERATIONS INFORMATION
For The Years Ended December 31, 1992, 1991 and 1990
(Amounts in thousands)
Column A Column B
Item Charged to Costs and
---- Expenses
------------------------
1992 1991 1990
---- ---- ----
1. Maintenance and repairs $1,239 $1,479 $1,452
2 a. Depreciation 3,895 4,146 3,699
2 b. Amortization of deferred costs 1,631 1,080 1,320
3. Property taxes 1,811 1,939 1,810
As to items omitted, amounts did not exceed one percent of total revenue.
<PAGE>
<PAGE>
<TABLE>
SCHEDULE XI
LANDSING PACIFIC FUND
REAL ESTATE AND ACCUMULATED DEPRECIATION AT
December 31, 1992
(Amounts in thousands)
<CAPTION> Accumu-
Initial Costs Cost lated
--------------------------------- Capitalized Depre-
Ecum- Building and Subsequent to Total(3) ciation Date
Description brances Land Improvements Total(1) Acquisition(3) (4) (2)(5) Acquired
- ----------- ------- ---- ------------ -------- -------------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
101 Park Avenue Office Building
Oklahoma City, Oklahoma $4,392 $ 816 $12,706 $13,522 $(1,694) $11,828 $2,381 07/01/87
301 East Grand Building
South San Francisco, 1,634 1,392 3,026 549 3,575 419 07/01/87
California
342 Allerton Building
South San Francisco, 1,075 2,152 3,227 478 3,705 459 12/19/86
California
400 Grandview Building
South San Francisco, 44 1,725 4,750 6,475 827 7,302 1,115 07/31/85
California
410 Allerton Building
South San Francisco, 655 796 1,451 71 1,522 170 07/31/85
California
417 Eccles Building
South San Francisco, 422 940 1,362 122 1,484 219 07/01/87
California
466 Forbes Building
South San Francisco, 1,436 1,587 3,023 605 3,628 270 12/19/86
California
Academy Place Shopping Center
Colorado Springs, Colorado 3,937 1,551 5,499 7,050 147 7,197 840 07/01/87
Auburn Court Industrial Park
Fremont, California 1,587 4,762 6,349 81 6,430 831 04/09/86
BancFirst Building
Oklahoma City, Oklahoma 986 6,060 7,046 (1,499) 5,547 911 07/01/87
Bryant Street Annex
Denver, Colorado 3,257 381 1,030 1,411 264 1,675 384 07/01/87
Bryant Street Quad
Denver, Colorado 1,324 3,405 4,729 547 5,276 614 07/01/87
Camden Park Shopping Center
Houston, Texas 90 2,359 4,579 6,938 (30) 6,908 1,046 04/17/84
Camden Shopping Center II
Houston, Texas 968 0 968 3 971 0 12/31/84
Country Hills Towne Center
Diamond Bar, California 14,307 4,089 3,802 7,891 11,882 19,773 1,792 12/23/86
Franklin Business Park
Boise, Idaho 1,116 577 2,045 2,622 831 3,453 657 07/01/87
Imperial Garage
Portland, Oregon 813 100 913 42 955 29 07/01/87
Inwood Central Shopping Center
Houston, Texas 1,163 5,293 6,456 120 6,576 1,339 06/29/84
6900 Place
Oklahoma City, Oklahoma 536 3,590 4,126 483 4,609 645 07/01/87
Nohr Plaza
San Leandro, California 1,490 677 1,831 2,508 4 2,512 61 09/26/91
St. Paul Business Center West
Maplewood, Minnesota 2,983 891 5,147 6,038 492 6,530 1,246 10/31/85
St. Paul Distribution Center
Maplewood, Minnesota 1,865 367 2,073 2,440 266 2,706 58 12/23/91
Twin Oaks Business Park
Beaverton, Oregon 3,982 841 3,364 4,205 744 4,949 1,031 03/30/84
Twin Oaks Executive Center
Beaverton, Oregon 243 971 1,214 41 1,255 141 07/01/87
Twin Oaks Technology Center
Portland, Oregon 1,293 5,173 6,466 355 6,821 1,275 12/20/84
Westinghouse Building
Fremont, California 544 1,461 2,005 149 2,154 259 12/27/85
Landsing Pacific Fund 14,798(A) 1,728 1,728(B) - 1,728 979 03/01/90
------- ------- ------- -------- ------- ------- -------
52,261 28,953 86,236 115,189 15,880 131,069 19,171
Real estate under development:
Country Hills Towne Center 370 370
Imperial Garage 45 45
Multnomah Apartment Building 1,496 2,585 8,107 10,692 (4,602) 6,090 - 07/01/87
------- ------- ------- -------- ------- ------- -------
$53,757 $31,538 $94,343 $125,881 $11,693 $137,574 $19,171
======= ======= ======= ======== ======= ======= =======
<FN>
(A) Principal outstanding on bank lines of credit secured by 301
East Grand, 342 Allerton, 400 Grandview, 410 Allerton, 417 Eccles, 466
Forbes, Auburn Court, BancFirst and Westinghouse.
(B) Cost allocated to trailing equity interest in the self-
administration transaction.
</TABLE>
<PAGE>
<PAGE>
SCHEDULE XI
LANDSING PACIFIC FUND
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1992
(Amounts in thousands)
NOTES:
(1) The Fund's general policy is to purchase completed and development
projects. Costs incurred subsequent to purchase are included in
costs capitalized subsequent to acquisition.
(2) Depreciation is computed by the straight-line method over the lives of
the related assets which range from four to forty years. Landsing
Pacific Fund's assets include the trailing equity interest in the Fund's
assets acquired in the self-administration transaction which is being
amortized over five years.
(3) Real estate:
BALANCE, DECEMBER 31, 1989 $142,876
Cost of properties sold (1,647)
Improvements capitalized subsequent to acquisition 5,137
Provision for loss in property value (9,250)
--------
BALANCE, DECEMBER 31, 1990 $137,116
Cost of properties sold (2,810)
Improvements capitalized subsequent to acquisition 8,083
--------
BALANCE, DECEMBER 31, 1991 $142,389
Cost of properties sold (5,853)
Improvements capitalized subsequent to acquisition 4,968
Provision for loss in property value of Multnomah (3,011)
Building
Adjust basis of Multnomah Building (919)
--------
BALANCE, DECEMBER 31, 1992 $137,574
========
(4) The aggregate cost at December 31, 1992 for Federal
income tax purposes $149,067
========
(5) Accumulated depreciation:
BALANCE, DECEMBER 31, 1989 $9,715
Additions charged to expense 3,699
Depreciation on property sold (143)
--------
BALANCE, DECEMBER 31, 1990 $13,271
Additions charged to expense 4,146
Depreciation on property sold (275)
--------
BALANCE, DECEMBER 31, 1991 $ 17,142
Additions charged to expense 3,895
Depreciation on property sold (947)
Adjust basis of Multnomah Building (919)
--------
BALANCE, DECEMBER 31, 1992 $19,171
========
<PAGE>
<PAGE>
E X H I B I T I N D E X
Exhibit Number Exhibit Description
3.1 Articles of Incorporation, as amended. Incorporated by
reference to Exhibit 3.1 of Amendment No. 4 to Form S-
11, filed September 9, 1988.
3.2 Bylaws, as amended. Incorporated by reference to
Exhibit 3.1 of Amendment No. 4 to Form S-11, filed
September 9, 1988.
10.1 Asset Purchase Agreement between Landsing Pacific Fund
and The Landsing Corporation, a California corporation.
Incorporated by reference to Exhibit 2.1 of Form 8-K
filed May 3, 1990.
10.2 Settlement Agreement and Release of Claims, dated
October 15, 1992, between Landsing Pacific Fund, Pacific
Coast Capital, The Landsing Corporation, and Gary K.
Barr (without exhibits). Incorporated by reference to
original Annual Report on Form 10-K for the fiscal year
ended December 31, 1992 filed with the Commission on
March 30, 1993.
10.3 Employment Agreement, dated March 1, 1990, between
Landsing Pacific Fund and R. Mark Wyman. Incorporated
by reference to original Annual Report on Form 10-K for
the fiscal year ended December 31, 1992 filed with the
Commission on March 30, 1993.
24 Consent of Coopers & Lybrand for incorporation in the
Form S-3 by reference for the year ended December 31,
1992. Incorporated by reference to original Annual
Report on Form 10-K for the fiscal year ended
December 31, 1992 filed with the Commission on March 30,
1993.
