UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q/A
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 For the quarter ended March 31, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number 33-24129
Historic Preservation Properties 1989 Limited Partnership
(Exact name of registrant as specified in its charter)
Delaware 04-3021042
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
Batterymarch Park II, Quincy, Massachusetts 02169
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 472-1000
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Voting stock held by non-affiliates of the registrant: Not
Applicable.
HISTORIC PRESERVATION PROPERTIES 1989 LIMITED PARTNERSHIP
FORM 10-Q/A
MARCH 31, 1996
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Financial Statements
Balance Sheets 3
Statements of Operations 4
Statements of Partners' Equity (Deficiency) 5
Statements of Cash Flows 6
Notes to Financial Statements 7-15
Management's Discussion and Analysis of Financial
Condition and Results of Operations 16-19
PART II - OTHER INFORMATION 20
Financial Data Schedule-Exhibit 27 21
Signatures 22
HISTORIC PRESERVATION PROPERTIES 1989 LIMITED PARTNERSHIP
BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
ASSETS
1996 1995
INVESTMENT IN REAL ESTATE:
Building and building improvements $ - $ 15,922,298
Land and land improvements - 1,171,079
Furniture and equipment - 526,875
17,620,252
Accumulated depreciation - (2,853,348)
- 14,766,904
INVESTMENTS IN INVESTEE ENTITIES 4,580,772 3,923,802
Less reserve for realization of
investments in Investee Entities (3,469,267) (3,469,267)
1,111,505 454,535
CASH, of which $542,088 was
restricted in 1995 151,137 788,602
DEFERRED EVALUATION AND ACQUISITION COSTS,
net of accumulated amortization
of $186,640 in 1995 - 1,057,739
OTHER ASSETS 92,075 92,939
$ 1,354,717 $17,160,719
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Mortgage payable $ - $ 17,579,606
Less discount on mortgage payable - (1,059,719)
- 16,519,887
Accounts payable 2,858 5,366
Accrued expenses and other liabilities 26,940 262,618
Total liabilities 29,798 16,787,871
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY
Limited Partners' Equity-Units of Investor
Limited Partnership Interest, $1,000 stated
value per Unit-Issued and outstanding 26,588
units 1,543,005 600,455
General Partner's equity (deficiency) (218,086) (227,607)
Total partners' equity 1,324,919 372,848
$ 1,354,717 $ 17,160,719
The accompanying notes are an integral part of these financial
statements.
3
HISTORIC PRESERVATION PROPERTIES 1989 LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
1996 1995
REVENUES:
Rental income $ 533,027 $ 506,855
Interest and other income 12,347 29,408
545,374 536,263
EXPENSES:
Operating and administrative 36,863 29,218
Professional fees 14,895 5,000
Depreciation and amortization 124,804 130,885
Property operating expenses:
Payroll services 52,597 48,890
Utilities 84,691 73,477
Real estate taxes 85,698 87,008
Other operating 87,266 97,226
486,814 471,704
58,560 64,559
PROVISION FOR IMPAIRMENT OF REAL ESTATE AT
TRANSFER OF OWNERSHIP INTEREST IN REAL
ESTATE TO INVESTEE ENTITY (7,787,963) -
INCOME (LOSS) FROM OPERATIONS (7,729,403) 64,559
INTEREST EXPENSE (507,513) (383,067)
EQUITY IN INCOME (LOSS) OF INVESTEE
ENTITY 6,970 (10,410)
EXTRAORDINARY GAIN ON EXTINGUISHMENT
OF DEBT 9,182,017 -
NET INCOME (LOSS) $ 952,071 (328,918)
NET INCOME (LOSS) ALLOCATED TO GENERAL
PARTNER $ 9,521 $ (3,289)
NET INCOME (LOSS) ALLOCATED TO LIMITED
PARTNERS $ 942,550 $ (325,629)
NET INCOME (LOSS) PER UNIT OF INVESTOR
LIMITED PARTNERSHIP INTEREST,
BASED ON 26,588 UNITS $ 35,45 $ (12.25)
OUTSTANDING
The accompanying notes are an integral part of these financial statements.
<TABLE>
4
HISTORIC PRESERVATION PROPERTIES 1989 LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<CAPTION>
Units of
Investor Investor
Limited Limited General
Partnership Partners' Partner's
Interest Equity (Deficiency) Total
<S> <C> <C> <C> <C>
BALANCE,December 31,1994 26,588 $ 2,509,185 $ (208,327) $2,300,858
Net loss - (1,908,730) (19,280) (1,928,010)
BALANCE,December 31,1995 26,588 600,455 (227,607) 372,848
Net income - 942,550 9,521 952,071
BALANCE, March 31, 1996 26,588 $ 1,543,005 $(218,086) $1,324,919
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
HISTORIC PRESERVATION PROPERTIES 1989 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 952,071 $(328,918)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 124,804 130,885
Amortization of discount on mortgage payable 233,893 81,496
Provision for impairment of real estate at
transfer of ownership interest in real
estate to investee entity 7,787,963 -
Extraordinary gain on extinguishment of debt (9,182,017) -
Deferred interest expense added to
the principal of mortgage payable 104,085 92,934
Equity in (income) loss in investee entity (6,970) 10,410
Increase in due from investee entity - (5,100)
Increase in other assets (29,429) (14,810)
Increase in accounts payable (2,508) (8,019)
Increase in accrued expenses and other liabilities 37,904 69,003
Net cash provided by operating activities 19,796 27,881
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and equipment (2,694) -
Cash payment at transfer of ownership interest in
investment in real estate to investee entity (654,567) -
Net cash used in investing activities (657,261) -
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of mortgage payable - (1,310,625)
NET DECREASE IN CASH (637,465) (1,282,744)
CASH, BEGINNING OF PERIOD 788,60 2,213,934
CASH, END OF PERIOD $151,137 $931,190
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $169,535 $222,213
Noncash financing activity:
During the three months ended March 31, 1996
and 1995 interest expense not paid from net
cash flow was added to the mortgage payable
balance $104,185 $ 92,934
The accompanying notes are an integral part of these financial statements.
6
(1) Basis of Presentation
The accompanying unaudited financial statements of Historic Preservation
Properties 1989 Limited Partnership (HPP'89) have been prepared in
accordance with generally accepted accounting principles for interim
financial information and generally with instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three months ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the year ending December
31, 1996. For further information, refer to the unaudited financial
statements and footnotes thereto included in the Annual Report on Form 10-K
for the year ended December 31, 1995 for HPP'89, as filed with the
Securities and Exchange Commission.
(2) General Partner
The general partner of HPP'89 is Boston Historic Partners Limited
Partnership (BHP), a Massachusetts limited partnership. BHP was formed in
November 1986 for the purpose of organizing, syndicating and managing
publicly offered real estate limited partnerships (Public Rehabilitation
Partnerships). As of March 31, 1996, BHP has established three such
partnerships, including HPP'89.
(3) Investments in Investee Entities and Real Estate; Commitments and
Contingencies
During 1989, HPP'89 acquired a general partnership interest in the
Investee Partnerships, as well as a direct interest in a property located
in St. Paul, Minnesota (Note 4). Each Investee Partnership placed a
property in service in December 1989 and commenced initial leasing
activity. HPP'89's current allocable percentage of operating losses in the
Investee Entities (see below) ranges from 50% to 99%.
As discussed in Note 4, in March 1996, HPP'89 completed a transaction by
which the mortgage note on property directly owned was purchased and the
property was refinanced. As part of the transaction, HPP'89 contributed
title and deed of the property to a limited liability company in which
HPP'89 maintains a 50% ownership interest.
The Investee Partnerships and the Investee Limited Liability Company
(see below) are herein collectively referred to as "the Investee Entities."
Each of the Investee Entities' agreements is different but, in general,
provides for a sharing of management duties and decisions among HPP'89 and
the respective local general partners and certain priorities to HPP'89 with
respect to return on and return of invested capital. Significant Investee
Entity decisions require the approval of both HPP'89 and the local general
partners or other manager/member. In addition, each Investee Entity has
entered into various agreements with its local general partners, or their
affiliates, to provide development, management and other services, for
which the local general partners, other manager/member (or their
affiliates), are paid fees by the respective Investee Entity.
Following is summary information regarding the Investee Entities and
HPP'89's investments therein:
Jenkins Court Associates Limited Partnership (Jenkins Court) is a
Delaware limited partnership formed on December 20, 1988 to acquire,
construct, rehabilitate, operate and manage a 144,000 net rentable square
foot five-story building and 30,000 net rentable square feet of new retail
space, including storage areas and parking facilities, located at Old York
Road and Rydal Road, Jenkintown Borough, Pennsylvania.
7
(3) Investments in Investee Entities and Real Estate; Commitments and
Contingencies (Continued)
HPP'89 contributed $6,563,064 through March 31, 1996, to the capital of
Jenkins Court and acquired a general partnership interest therein.
HPP'89's investment in Jenkins Court represented approximately 36% of the
aggregate amount which HPP'89 had originally contributed to the capital of
its three Investee Partnerships and to purchase its direct interest in the
Cosmopolitan Building.
Due to the slow leasing activity, Jenkins Court had difficulty making
debt service payments on its construction loan since the origin of its
loan. In July 1992, Jenkins Court and the lender entered into an agreement
by which the construction loan was bifurcated into two notes and a
substantial amount of accrued interest, late fees and extension fees was
forgiven. In June 1993, the lender extended the maturity date of the notes
to June 15, 1994.
Management of Jenkins Court was negotiating with the lender to extend
the Notes to June 15, 1995. On September 30, 1994, the lender sold Notes A
and B to a real estate investment entity, the current holder of the notes.
Management of Jenkins Court entered negotiations with the current holder to
extend or restructure the notes. On November 23, 1994, the current holder
presented a demand for payment in full of the balance of the Notes and
accrued interest thereon. On November 23, 1994, Jenkins Court filed a
petition for relief under Chapter 11 of the federal bankruptcy laws in
United States Bankruptcy Court for the jurisdiction of the Eastern District
of Pennsylvania. Under Chapter 11, certain claims against the Partnership
in existence prior to the filing of the petition for relief under federal
bankruptcy laws are stayed while Jenkins Court continues business
operations as Debtor-in-Possession. The acceptance of a plan of
reorganization through the bankruptcy proceeding was highly unlikely and
Jenkins Court had maximized the vesting of the majority of its remaining
tax credits on June 30, 1995.
On August 31, 1995, Jenkins Court and the mortgage holder entered into a
settlement agreement to resolve the bankruptcy litigation. As part of the
settlement agreement, Jenkins Court transferred the deed and title to the
property to the mortgage holder in lieu of foreclosure proceedings. The
mortgage holder agreed to release Jenkins Court and its guarantors for the
entire indebtedness and Jenkins Court received $25,000 to pay certain
professional fees incurred during the bankruptcy proceedings. The transfer
of deed and title of the property to the mortgage holder resulted in a
recapture of Rehabilitation Tax Credits in 1995 of $44,451 to HPP'89, of
which $44,007 was allocated to the Limited Partners of HPP'89. Tax credits
allocated to the Limited Partners of HPP'89 totaling $2,758,113 were vested
on or before June 15, 1995. Therefore, 98.4% of the Limited
Partners' tax credits were vested prior to the loss of the property.
Although Jenkins Court no longer owns its investment property and will
no longer have property operations, the Jenkins Court partnership will
remain in existence until the resolution of certain partnership assets and
liabilities. Partnership assets include approximately $312,000 of
unsecured receivables from the developer and its affiliates; partnership
liabilities include approximately $94,000 of trade payables, as well as a
$250,000 default loan and accrued interest thereon which had been provided
by HPP'89 and secured by the developer's interest in an unaffiliated
limited partnership.
HPP'89 has reserved against its investment in Jenkins Court in the
accompanying financial statements, reducing such investment to zero due to
the substantial doubt that Jenkins Court would continue as a going concern.
Since Jenkins Court no longer owns its investment property, it is not
expected to continue as a going concern. HPP'89 might be liable as a
general partner of Jenkins Court for certain trade creditor claims, with
recourse to HPP'89, that cannot be satisfied by Jenkins Court or the
developer general partner.
8
(3) Investments in Investee Entities and Real Estate; Commitments and
Contingencies (Continued)
402 Julia Street Associates Limited Partnership (402 Julia) is a
Delaware limited partnership formed on July 25, 1989 to acquire, construct,
rehabilitate, operate and manage a 19,000 square foot site and the building
situated thereon and to rehabilitate the building into 24 residential units
and approximately 3,500 net rentable square feet of commercial space
located thereon at 402 Julia Street, New Orleans, Louisiana. At March 31,
1996, 402 Julia had leased approximately 96% of its residential units and
commercial space.
HPP'89 contributed $775,000 through March 31, 1996 to the capital of 402
Julia and acquired a general partnership interest therein. HPP'89's
investment in 402 Julia represents approximately 4% of the aggregate amount
which HPP'89 had originally contributed to the capital of its three
Investee Partnerships and to purchase its direct interest in the
Cosmopolitan Building.
On September 16, 1993, HPP'89 sold one-third of its general partnership
interest in 402 Julia to the developer general partner for $185,000.
HPP'89's percentage of interest in 402 Julia was thereby reduced from 98%
to 65%. The terms of the sale require an initial payment of $100,000,
which was received in September 1993, followed by annual payments of $3,500
from 1994 to 2016 and a final payment of $4,500 in 2017. A total of
$78,000 remains uncollected as of March 31, 1996 and is secured by the
interest sold to the developer general partner. The sale transaction did
not generate any Investment Tax Credit recapture.
Portland Lofts Associates Limited Partnership (Portland Lofts) is a
Delaware limited partnership formed on August 8, 1989 to acquire,
construct, rehabilitate, operate and manage three buildings containing 107
residential units including ground floor space useable as either commercial
space or as home/studio space for artists, located at 555 Northwest Park
Avenue in Portland, Oregon. At March 31, 1996, Portland Lofts had leased
97% of its residential units and approximately 100% of its net rentable
commercial space.
HPP'89 contributed $3,820,000 through December 31, 1995 to the capital
of Portland Lofts and acquired a general partnership interest therein.
HPP'89's investment in Portland Lofts represents approximately 21% of the
aggregate amount which HPP'89 has contributed to the capital of its three
Investee Partnerships and to purchase its direct interest in the
Cosmopolitan Building (Note 4).
Portland Lofts' $6,800,000 construction loan matured on March 1, 1992.
On June 30, 1992, Portland Lofts refinanced the construction loan through a
variable rate mortgage note maturing on April 1, 1997. The note is
collateralized by the property, rents and other income, and guaranteed by
the developer general partner.
In July 1993, the mortgage loan and a $550,000 unsecured note were
purchased by a real estate investment entity (the current holder of the
mortgage and unsecured notes). The current holder claims that the
unsecured note matured on March 1, 1992 and is in technical default. It is
Portland Lofts' position that the maturity date of the unsecured note had
been effectively extended to correspond to the maturity date of the
mortgage note. Also, the current holder claims that a default for non-
payment of the unsecured note constitutes a default of the mortgage note.
On October 7, 1994, the current holder demanded full payment of the
unsecured note by November 10, 1994. The guarantors of the note maintained
that they were unable to make full payment on the note. On November 11,
1994, the current holder filed judicial foreclosure proceedings against
Portland Lofts for non-payment of the unsecured note. Portland Lofts
successfully contested through the court the right of the current holder to
foreclose on the property. Portland Lofts' position was that the default
claimed on the unsecured note does not constitute a default on the mortgage
note. On August 25, 1995, the court issued a summary judgment in favor of
Portland Lofts.
9
(3) Investments in Investee Entities and Real Estate; Commitments and
Contingencies (Continued)
However, the current holder continues to pursue the payment of the
$550,000 unsecured note through litigation. While this case is still in
the discovery phase, debt service payments on the unsecured note have been
paid by Portland Lofts and accepted by the current holder. The current
holder maintains that acceptance of debt service payments does not
constitute a waiver of its rights under the note. Portland Lofts continues
to negotiate with the current holder to resolve the dispute out of court.
The result of such negotiations or a court decision cannot be determined at
this time.
On June 30, 1995, Portland Lofts extended the maturity date of a
$400,000 note payable which matured on February 28, 1994, and which is
secured by the developer general partner's interest in an unrelated
property. The note payable was originally extended until December
31,1995, with options to further extend for five additional successive one
year periods, and has been further extended through December 31, 1996.
HPP'89 has reserved against its investment in Portland Lofts in the
accompanying financial statements, reducing such investment to zero due to
the substantial doubt that Portland Lofts would continue as a going
concern. At March 31, 1996, HPP'89 had unrecorded losses of approximately
$1,356,000 associated with Portland Lofts.
If Portland Lofts were no longer able to continue as a going concern,
HPP'89 might be liable as a general partner of Portland Lofts for certain
creditor claims, with recourse to HPP'89, that cannot be satisfied by
Portland Lofts or the developer general partner and there might be adverse
tax consequences to the Limited Partners of HPP'89.
The Cosmopolitan at Mears Park, LLC (TCAMP). On December 18, 1989,
HPP'89 acquired land and a building containing 255 residential units and
approximately 1,700 square feet of commercial space located at 250 6th
Street and 366 Wacouta Street, St. Paul, Minnesota (the Cosmopolitan). The
building has been renovated, and certain renovation costs have qualified
for Rehabilitation Tax Credits. HPP'89 purchased the Cosmopolitan for one
dollar and assumed mortgage indebtedness with a face value of $22,500,000.
In accordance with the terms of the Purchase and Sale Agreement, HPP'89
paid $5,000,000 at the closing which was used to repay a portion of the
outstanding mortgage loan principal.
The building was originally recorded at the net purchase price of the
net indebtedness assumed by HPP'89 plus the amount paid at the closing.
Subsequent improvements have been recorded at cost. HPP'89's investment in
The Cosmopolitan represents approximately 39% of the aggregate amount which
HPP'89 originally contributed to the capital of its three Investee
Partnerships and to purchase its direct interest in the Cosmopolitan.
On March 20, 1996, the Partnership completed a transaction by which the
mortgage note was purchased and the property was refinanced. As part of
the transaction, the Partnership contributed title and deed of the property
to The Cosmopolitan at Mears Park, LLC (TCAMP), a Delaware limited
liability company, for a 50% ownership interest in TCAMP. An affiliate of
Claremont Management Corporation (see Note 5) contributed $650,000 in cash
to TCAMP for a 50% ownership interest in TCAMP. A $7,000,000 mortgage note
on the property was obtained by TCAMP from a new lender. Simultaneously on
March 20, 1996, the previous holder of the Cosmopolitan's mortgage was paid
$7,650,000, the agreed upon purchase price of the mortgage note. The
transaction resulted in a provision for impairment of real estate of
$7,787,963 to recognize a write-down of the real estate to its fair market
value at transfer to TCAMP and an extraordinary gain of $9,182,017 on the
extinguishment of the original mortgage debt. This transaction will not
generate any recapture of Rehabilitation Tax Credits to the Partnership.
The new mortgage note on the property: bears interest at 9.14%;
amortizes over a 25 year schedule; requires monthly payments of principal
and interest, real estate tax escrow and replacement reserve payments of
$59,416, $28,069 and $4,250, respectively; and matures in April 2003,
at which time all unpaid principal and accrued interest is due.
10
(3) Investments in Investee Entities and Real Estate; Commitments and
Contingencies (Continued)
HPP'89's investments in the Investee Entities at March 31, 1996 and
December 31, 1995 are summarized as follows:
Cumulative: 1996 1995
(Unaudited) (Unaudited)
Investments and advances made in cash $ 4,845,000 $ 4,845,000
Transfer of investment of real estate
interest to investee entity 650,000 -
Evaluation and acquisition costs 835,709 835,709
Interest capitalization and other costs 39,615 39,615
Equity in losses of Investee Entities (1,507,147) (1,514,930)
Reserves for realization of investments (3,469,267) (3,469,267)
Amortization of certain costs (40,785) (39,972)
Sale of one third interest of Investee
Partnership (241,620) (241,620)
$1,111,505 $454,535
The above summary of HPP'89's investments in Investee Entities does
not include the investment in Jenkins Court and accumulated activity
thereon.
For the three months ended March 31, 1996 and 1995, the equity in losses
of Investee Partnerships reflected in the accompanying statements of
operations includes the unaudited allocated income (loss) from Investee
Partnerships of $7,783 and ($9,597), respectively, and the amortization of
certain costs of $813.
11
(3) Investments in Investee Entities and Real Estate; Commitments and
Contingencies (Continued)
Summary combined balance sheets of the Investee Entities as of March 31,
1996 and 1995, and summary combined statements of operations for the three
months ended March 31, 1996 and 1995 are as follows:
COMBINED BALANCE SHEETS
ASSETS
1996 1995
(Unaudited (Unaudited)
Buildings and improvements, net of accum
depreciation (1996, $1,955,265;
1995 ,$1,882,175) $ 17,532,649 $ 26,629,368
Land 2,099,576 7,506,133
Other assets, net of accumulated amort
(1996, $56,407; 1995,$55,591) 523,990 2,306,067
Cash 376,821 145,217
Total assets $ 20,533,036 $ 36,586,785
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Mortgage and construction notes payable $14,547,984 $ 7,637,797
Other liabilities 2,099,110 1,115,061
Liabilities subject to compromise* - 23,818,609
Total liabilities 16,647,094 32,571,467
Partners' equity:
HPP'89 2,373,063 3,084,728
Other partners 1,512,879 930,590
Total partners' equity 3,885,942 4,015,318
Total liabilities and partners' equity $20,533,036 $36,586,785
* Jenkins Court had $23,818,609 (unaudited) of liabilities as of March 31,
1995 that are subject to compromise due to Jenkins Court's filing for
protection through Chapter 11 Federal bankruptcy proceedings. This amount
consisted of $23,460,356 of construction notes payable and accrued interest
and $358,253 of other liabilities. With the transfer of the deed and title
to the mortgage holder in August 1995, all liabilities associated with the
building were satisfied and the case was dismissed from Federal Bankruptcy
Court. Approximately $681,200 of partnership liabilities, including
approximately $94,000 of trade payables, has been classified as other
liabilities as of March 31, 1996.
The balance sheet as of March 31, 1996 includes amounts from TCAMP, but
not Jenkins Court. No operating activity was recorded for TCAMP nor
Jenkins Court for the three months ended March 31, 1996. Operating
activity for the Cosmopolitan property for the quarter ended March 31, 1996
has been recorded in HPP'89's statement of operations.
12
(3) Investments in Investee Entities and Real Estate; Commitments and
Contingencies (Continued)
COMBINED STATEMENTS OF OPERATIONS
1996 1995
(Unaudited) (Unaudited)
Revenues:
Rental revenue $ 354,982 $ 873,260
Interest and other income 11,220 12,107
366,202 885,367
Expenses:
Interest expense* 189,050 203,769
Depreciation and amortization 85,331 339,685
Operating expenses 105,677 290,286
380,058 833,740
Net income (loss) $ (13,856) $ 51,627
Net income (loss) allocated to
HPP'89 $ (17,729) $ 51,459
Net income allocated to other
partners $ 3,873 $ 168
* Due to the Chapter 11 Federal Bankruptcy proceedings and the
August 31, 1995 transfer of deed and title of the
property to the mortgage holder, no interest on Jenkins Court's
construction notes was recorded for the three
months ended March 31, 1996 and 1995.
(4) Mortgage Payable and Restricted Cash
As discussed in Note 3, the original mortgage that HPP'89 assumed
relating to its original purchase of the Cosmopolitan was purchased and the
property was transferred to TCAMP on March 20, 1996. The original mortgage
note had an original maturity date of December 18, 1999. In December 1992,
the Cosmopolitan's original mortgage lender was purchased by Mellon Bank,
N.A., referred to as the holder of the mortgage note.
For the first 36 months, interest due was at the lesser of the contract
interest rate (principal outstanding at 7% interest) or net cash flow, as
defined under the note. During the 37th through the 120th months of the
note, interest is due at the contract interest rate. To the extent that
contract interest exceeded net cash flow during the 37th (January 1993)
through the 120th month, such amounts accrued were added to the principal
balance (Additional Principal). The entire unpaid principal balance,
including Additional Principal, contract interest and Contingent Interest,
as defined, was to be due and payable at maturity.
In accordance with the terms of the original mortgage agreement related
to the Cosmopolitan, HPP'89 was required to establish an interest bearing
operating account (Operating Account) with the mortgage lender for the
Cosmopolitan in the initial amount of $1,000,000. An additional $1,000,000
was added to this account on January 15, 1990. Principal funds could have
been withdrawn from the operating account if the expenditures were in
accordance with the approved budget between the mortgage lender and HPP'89,
with the approval of the mortgage lender, or after HPP'89 makes six
consecutive debt service payments. Any principal funds remaining in this
account may have been returned to HPP'89 under the terms of the original
loan agreement.
13
(4) Mortgage Payable and Restricted Cash (Continued)
Contract interest due from January 1, 1996 through March 20, 1996 and
for the three months ended March 31, 1995 totaled $273,618 and $301,652,
respectively, of which $169,535 and $92,934, respectively, exceeded net
cash flow and has been added to the principal balance. Net cash flow due
for the period January 1, 1996 to March 20, 1996 totaled $169,535 and was
paid in full as of March 20, 1996.
In January 1995, HPP'89 consummated an agreement with the holder of the
mortgage note to amend certain provisions within the mortgage note
including the maturity date.
For financial reporting purposes, the discount on the mortgage note
payable has been recorded to reflect an effective interest rate of 10% over
the life of the loan. Due to the advancement of the maturity date, as
discussed below, the effective interest rate was amended on January 1, 1995
to 14.04% to amortize the remaining discount over the remaining life of the
mortgage note. Amortization of the discount amounted to $233,893 and
$81,496 for the period January 1, 1996 to March 20, 1996, and for the
three months ended March 31, 1995, and is reflected as interest expense.
On January 5, 1995, HPP'89 consummated the Second Amendment to the Loan
Agreement (Second Amendment) with the holder of the mortgage note on the
Cosmopolitan to resolve a dispute over funds in the restricted escrow
account (which had a balance of approximately $1,732,000). HPP'89
maintained that the interest earned from the escrow account of
approximately $300,000 and a previous overfunding of approximately $120,000
should be paid to HPP'89. The holder maintained that interest earned was
additional security on the mortgage note. The terms of the Second
Amendment allowed HPP'89 to be paid the interest earned on the escrow
account and overfunded amount. Also, HPP'89 received an option to buy the
mortgage note for the fair market value of the property. In exchange,
HPP'89 released the principal funds of the escrow account (approximately
$1,311,000) for payment to the outstanding mortgage and agreed to reduce
the maturity date of the note from December 18, 1999 to December 18, 1996.
In summary, at the January 5, 1995 closing of the Second Amendment, HPP'89
received approximately $286,000 (consisting of the overfunding, interest
earned thereon, and one-half of interest earned on principal funds of the
original Operating Account) and released for payment approximately
$1,311,000 for mortgage principal and approximately $15,000 for finance
fees. As of December 31, 1995, $122,593 remained in the escrow account.
Also in accordance with the Cosmopolitan's mortgage agreement, HPP 1989
established a working capital reserve (Working Capital Account) for
apartment rollover expenses and working capital items. As of December 31,
1995, the balance of the Working Capital Account totaled $123,129.
Furthermore, due to HPP'89's cash flow debt service mortgage agreement, the
cash accounts maintained for the daily operations of the Cosmopolitan are
effectively reserved for the Cosmopolitan only. As of December 31, 1995,
the balance of Cosmopolitan's operating accounts equaled $202,172.
HPP'89 was paid the remaining amounts in the escrow account and working
capital reserve on March 20, 1996, the date of purchase of the mortgage
note.
(5) Transactions With Related Parties and Commitments
In July 1993, HPP'89 engaged Portfolio Advisory Services, Inc. (PAS),
corporate general partner of BHP, to provide asset management,
accounting, and investor services to HPP'89. PAS performed such services
for no fee, but was reimbursed for all operating costs of providing such
services. This agreement extended until September 30, 1995.
14
(5) Transactions With Related Parties and Commitments (Continued)
On October 1, 1995, HPP'89 engaged Claremont Management Corporation
(CMC), an unaffiliated Massachusetts corporation, to provide asset
management, accounting and investor services. The initial term of the
contract with CMC extends until June 30, 1997, and is automatically
extended on a yearly basis unless otherwise terminated as provided for in
the agreement. According to the contract, CMC is reimbursed for all
operating costs and is paid an annual fee of $76,800. For the three months
ending March 31, 1996, CMC was paid fees of $19,200 and was reimbursed for
operating costs totaling approximately $16,300.
HPP'89 paid accounting and other fees on behalf of certain Investee
Partnerships totaling $7,500 in 1995 and 1994 respectively.
(6) Fair Value of Financial Instruments
The carrying amounts of cash, other assets, accounts payable, accrued
expenses, and other liabilities approximate their fair values due to their
short maturities. As of December 31, 1995, the fair value of HPP'89's
mortgage note payable in the carrying amount of $16,519,887 was
approximately $7,650,000 based on the amount accepted by the holder in full
settlement of amounts due under the mortgage note payable on March 20,
1996. The mortgage note payable was held for nontrading purposes.
15
HISTORIC PRESERVATION PROPERTIES 1989 LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
MARCH 31, 1996
(UNAUDITED)
Liquidity and Capital Resources. The Partnership terminated its
offering of Units on December 29, 1989, at which time Limited Partners had
purchased 26,588 Units, representing gross capital contributions of
$26,588,000. As of March 31, 1996, the Partnership had invested an
aggregate of $11,158,064 in three Investee Entities which owned or acquired
real properties, the rehabilitation of which has qualified for
Rehabilitation Tax Credits. The Partnership had also originally invested
$5,000,000 in real property that the Partnership has purchased directly and
was required to place a total of $2,000,000 in an escrow account with the
mortgage lender for this property for the purpose of funding operating
deficits. As discussed below, on March 20, 1996, HPP'89 consummated a
transaction by which it transferred its ownership interest in this property
to a new enttity, in which HPP'89 has a 50% interest. Such amounts
contributed represent approximately 100% of the Limited Partners' capital
contributions after deduction of selling commissions, organizational and
sales costs, acquisition fees and reserves. The Partnership does not
expect to make any additional investments in new real estate.
On March 20, 1996, the Partnership completed a transaction by which
the mortgage note was purchased and the property was refinanced. As part
of the transaction, the Partnership contributed title and deed of the
property to the Cosmopolitan at Mears Park, LLC (TCAMP), a Delaware limited
liability company, for a 50% ownership interest in TCAMP. An affiliate of
CMC contributed $650,000 in cash to TCAMP for a 50% ownership interest in
TCAMP. A $7,000,000 mortgage note on the property was obtained by TCAMP
from a new lender. Simultaneously on March 20, 1996, the previous holder of
the Cosmopolitan's mortgage was paid $7,650,000, the agreed upon purchase
price of the mortgage note. The transaction resulted in a provision for
impairment of real estate of $7,787,963 to recognize a write-down of the real
estate to its fair market value at transfer to TCAMP and an extraordinary
gain of $9,182,017 on the extinguishment of the original mortgage debt. This
transaction will not generate any recapture of Rehabilitation Tax Credits
to the Partnership. The new mortgage note on the property: bears
interest at 9.14%; amortizes over a 25 year schedule; requires monthly
payments of principal and interest, real estate tax escrow and
replacement reserve payments of $59,416, $28,069 and $4,250, respectively;
and matures in April 2003, at which time all unpaid principal and accrued
interest is due.
As of March 31, 1996, the Partnership had approximately $151,137 of
total cash, all of which was insured by the Federal Deposit Insurance
Corporation.
As further discussed later under Results of Operations, Jenkins Court
filed for protection under Chapter 11 federal bankruptcy laws on November
23, 1994. Considering the unlikelihood of a successful plan of
reorganization, Jenkins Court negotiated a transfer to the mortgage holder
of the deed and title to the property in lieu of foreclosure on August 31,
1995, after maximum vesting of the remaining Rehabilitation Tax Credits had
been achieved for 1995. Also, the current holder of the Portland Lofts'
unsecured note continues litigation proceedings against Portland Lofts for
non-payment of the unsecured note.
Portland Lofts and 402 Julia have reached stabilized occupancy levels
which currently allow each of these Investee Partnerships to pay respective
operating and debt service obligations. However, until market conditions
improve allowing for increased rental rates, these Investee Entities will
not generate any additional cash flow to distribute to the Partnership.
On September 16, 1993, the Partnership sold one-third of its general
partnership interest in 402 Julia to the developer general partner for
$185,000. The Partnership's percentage of interest in 402 Julia was
thereby reduced from 98% to 65%. The terms of the sale require an initial
payment of $100,000 which was paid in September 1993, followed by annual
payments of $3,500 from 1994 to 2016 and a final payment of $4,500 in 2017.
The sale transaction did not generate any Rehabilitation Tax Credit
recapture.
As mentioned above, the Partnership refinanced the mortgage loan of
the Cosmopolitan property and transferred deed and title to the property to
TCAMP in March 1996. The Partnership does expect to strengthen its short
term liquidity position through a low to moderate amount of cash flow
from TCAMP. An additional source of future liquidity may be the sale of
the remaining interest in 402 Julia. The Partnership expects these two
Investee Entities to be the primary sources of future long-term liquidity.
16
HISTORIC PRESERVATION PROPERTIES 1989 LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS (CONTINUED)
MARCH 31, 1996
(UNAUDITED)
Results of Operations. The Partnership's allocable share of operating
losses in the Investee Entities ranges from 50% to 99%. For the three
months ended March 31, 1996, income allocated from the Investee Entities to
the Partnership totaled approximately $7,000 which represents the income
from 402 Julia of approximately $7,800 and includes amortization of
approximately $800. Generally, under the equity method of accounting, an
investment may not be carried below zero. Accordingly, since the Jenkins
Court and Portland Lofts investments were fully reserved for in 1990, the
Partnership has not recorded its share of losses beyond its 1992 investment
in and advances to these Investee Partnerships. At March 31, 1996,
approximately $1,356,000 of losses are unrecorded for Portland Lofts. In
the future, income from Portland Lofts will not be recorded until all the
unrecorded losses have been offset.
The Partnership incurred total income under generally accepted
accounting principles of approximately $952,000 for the three months ended
March 31, 1996, including its allocable share of income from an Investee
Entity of approximately $7,000. Since inception, the Partnership has
received $4,351,001 of Rehabilitation Tax Credits from its direct interest
in the St. Paul, Minnesota property and was allocated an additional
$4,861,910 from its three original Investee Entities. Such amounts were in
turn allocated to the Partnership's partners.
As a result of the March 20, 1996 transfer of 50% of the ownership of
the Cosmopolitan property, HPP'89 will no longer have operations directly
due to real esate activity. HPP'89 will account for its investment in
TCAMP under the equity method of accounting.
The property operations for the quarter ending March 31, 1996 were
relatively consistent with those of the quarter ending March 31, 1995.
The increases in operating and administrative and professional fees are
due to the fees and other administrative expenses associated with engaging
a third party entity to perform asset management, accounting and investor
services for HPP'89.
In general, the Investee Entities, including TCAMP, have completed the
lease-up phase. Three properties have essentially met leasing
expectations, albeit in some cases at rents below original expectations,
while Jenkins Court had slower leasing than was originally projected.
Both 402 Julia and the Cosmopolitan are residential properties with
traditional, annual leases to individuals that expire within one year of
signing. Portland Lofts is a mixed-use building with 91 residential units
and 29,250 square feet of commercial space. The residential leases are
traditional, annual leases to individual that expire within one year of
signing. There are 19 commercial units, with leases which range in length
from one to seven years. The largest commercial tenant occupies only 5.8%
of the total square feet of the property.
402 Julia has had better than 90% occupancy levels since July 1990 and
was 96% leased at March 31, 1996. This 24 unit residential building has
benefited from a relatively strong New Orleans market.
TCAMP had leased approximately 98% of its units at March 31, 1996 and
has met occupancy projections. This 255 unit property operates in a very
competitive lowertown St. Paul market and has leased over 95% of its units
since 1992. Consequently, increased rental operations resulted in
increased expenses, particularly expenses associated with utilities and
real estate taxes.
Due to slow leasing activity and a decline in office rental rates,
Jenkins Court had difficulty making debt service payments since the start
of its loan on its construction loan. In July 1992, Jenkins Court and the
lender entered into an agreement by which the construction loan was
bifurcated into two notes and a substantial amount of accrued interest,
late fees and extension fees were forgiven. In June 1993, the lender
extended the maturity date of the notes to June 15, 1994.
Management of Jenkins Court was negotiating with the lender to further
extend the Notes. On September 30, 1994, the lender sold Notes A and B to
a real estate investment entity, the current holder of the notes.
Management of Jenkins Court entered into negotiations with the current
holder to extend or restructure the notes. On November 23, 1994, the
current holder presented a demand for payment in full of the balance of the
Notes and accrued interest thereon. On November 23, 1994, Jenkins Court
filed a petition for relief under Chapter 11 of the federal bankruptcy laws
in United States Bankruptcy Court for the jurisdiction of the Eastern
District of Pennsylvania. Under Chapter 11, certain claims against the
Partnership in existence prior to the filing of the petition for relief
under federal bankruptcy laws were stayed while Jenkins Court continued
business operations as Debtor-in-Possession.
Considering the unlikelihood of a successful plan of reorganization,
and that maximum vesting of the remaining Rehabilitation Tax Credits had
been achieved for 1995 as of June 30, 1995, Jenkins Court negotiated with
the current holder for a resolution to the bankruptcy litigation. On
August 31, 1995, Jenkins Court and the mortgage holder entered into a
settlement agreement by which: Jenkins Court transferred the deed and
title to the property to the mortgage holder; the mortgage holder released
Jenkins Court and its Guarantors from all indebtedness; and Jenkins Court
was provided $25,000 to pay certain professional fees incurred during the
bankruptcy proceedings.
17
HISTORIC PRESERVATION PROPERTIES 1989 LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS (CONTINUED)
MARCH 31, 1996
(UNAUDITED)
Although Jenkins Court no longer owns its investment property and will
no longer have property operations, the Jenkins Court partnership will
remain in existence until the resolution of certain partnership assets and
liabilities. Partnership assets include approximately $312,000 of
unsecured receivables from the developer and its affiliates; partnership
liabilities include approximately $94,000 of trade payables, as well as a
$250,000 default loan and accrued interest thereon which had been provided
by HPP'89 and secured by the developer's interest in an unaffiliated
limited partnership.
As of March 31, 1996, Portland Lofts had approximately 97% occupancy
of residential units and 100% occupancy of net rentable commercial space
for a combined occupancy of approximately 98%. The construction loan on
this property and an unsecured note were extended to March 1, 1992. On
June 30, 1992, Portland Lofts refinanced its construction loan to a
variable rate mortgage note requiring monthly principal and interest
payments and maturing on April 1, 1997.
In July 1993, the mortgage note and the unsecured note were purchased
by a real estate investment entity, referred to as the current holder of
the mortgage and unsecured notes. The current holder claims that the
unsecured note has matured and is in default. It is Portland Lofts'
position that the maturity date of the unsecured note had been effectively
extended to correspond with the maturity date of the mortgage note. Also,
the current holder claims that a default on the unsecured note constitutes
a default on the mortgage note.
On October 7, 1994, the current holder demanded full payment of the
unsecured note by November 10, 1994. The guarantors of the unsecured note
maintained that they did not have the funds to payoff the unsecured note.
On November 11, 1994, the current holder filed judicial foreclosure
proceedings against Portland Lofts for non-payment of the unsecured note.
Portland Lofts successfully contested through the Circuit Court of Oregon,
Multnomah County, the current holder's right to foreclose on the property.
Portland Lofts' position was that the default claimed on the unsecured note
does not constitute a default on the mortgage note. On August 25,1995, the
court issued a summary judgment in favor of Portland Lofts and affirmed
that the current holder cannot foreclose on the property due to the default
claimed on the unsecured note.
However, the current holder continues to pursue the payment of the
$550,000 unsecured note through litigation. While this case is still in
the discovery phase, debt service payments on the unsecured note have been
paid by Portland Lofts and accepted by the current holder. The current
holder maintains that acceptance of debt service payments does not
constitute a waiver of any rights under the note. Portland Lofts is
continuing to negotiate with the current holder to resolve this dispute out
of court. The result of such negotiations or a court decision cannot be
determined at this time.
Certain factors mentioned previously, among others, raise substantial
doubt about the ability of Portland Lofts to continue as a going concern.
On August 31, 1995, Jenkins Court transferred title and ownership of its
property to the current holder of the mortgage through a deed in lieu of
foreclosure to maximize the vesting of Rehabilitation Tax Credits. Such a
transfer resulted in only a partial recapture of Rehabilitation Tax Credits
generated in 1991. Also, if Portland Lofts were not able to continue as a
going concern, there could be further adverse consequences to the
Partnership which could include a loss of significant economic benefits
from the Portland Lofts Investee Partnership. Both Jenkins Court and
Portland Lofts are fully reserved for at March 31, 1996. Also, the
Partnership, as a general partner of the Investee Partnerships, may be
liable for certain creditor claims with recourse that cannot be satisfied
by the Investee Partnerships. If the above mentioned events were to happen,
the Partnership itself would still own ownership interests in its remaining
Investee Entities, 402 Julia and TCAMP.
18
HISTORIC PRESERVATION PROPERTIES 1989 LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS (CONTINUED)
MARCH 31, 1996
(UNAUDITED)
Inflation and Other Economic Factors. Recent economic trends have
kept inflation relatively low, although the Partnership cannot make any
predictions as to whether recent trends will continue. The assets of the
Partnership are highly leveraged in view of the fact that each property is
subject to a large construction or long-term first mortgage loan.
Operating expenses and rental revenues of each property are subject to
inflationary factors. Low rates of inflation could result in slower rental
rate increases, and to the extent that these factors are outpaced by
increases in property operating expenses (which could arise as a result of
general economic circumstances such as an increase in the cost of energy or
fuel, or from local economic circumstances), the operations of the
Partnership could be adversely affected. Actual deflation in prices
generally would, in effect, increase the economic burden of the mortgage
debt service with a corresponding adverse effect.
High rates of inflation, on the other hand, raise the operating
expenses for projects, and to the extent they cannot be passed on to
tenants through higher rents, such increases could also adversely affect
Partnership operations. Although, to the extent rent increases are
commensurable, the burden imposed by the mortgage leverage is reduced with
a favorable effect. Low levels of new construction of similar projects and
high levels of interest rates may foster demand for existing properties
through increasing rental income and appreciation in value.
19
HISTORIC PRESERVATION PROPERTIES 1989 LIMITED PARTNERSHIP
PART II - OTHER INFORMATION
MARCH 31, 1996
Item 1. Legal Proceedings
The Partnership is not a party to, to the best knowledge of
the General Partner, any material pending legal proceedings.
As mentioned in the Results of Operations section, on August
31, 1995, Jenkins Court and the mortgage holder entered into a
settlement agreement to resolve the bankruptcy litigation. As
part of the settlement agreement, Jenkins Court transferred the
deed and title to the property to the mortgage holder in lieu of
foreclosure proceedings. The mortgage holder agreed to release
Jenkins Court and its guarantors for the entire indebtedness and
Jenkins Court received $25,000 to pay certain professional fees
incurred during the bankruptcy proceedings. Although Jenkins
Court no longer owns its investment property and will no longer
have property operations, the Jenkins Court partnership will
remain in existence until the resolution of certain partnership
assets and liabilities.
Also, as mentioned in the Results of Operations section, on
November 11, 1994 the current holder of the mortgage note and an
unsecured note of Portland Lofts filed judicial foreclosure
proceedings against Portland Lofts for non-payment of the
unsecured note. It was Portland Lofts' position that the
unsecured note is not due and that the maturity date of the
unsecured note had been effectively extended to correspond with
the maturity date of the mortgage note. The current holder
claimed that a default on the unsecured note constitutes a
default on the mortgage note. Portland Lofts successfully
contested through the Circuit Court of Oregon, Multnomah County,
the current holder's right to foreclose on the property.
Portland Lofts' position was that the default claimed on the
unsecured note does not constitute a default on the mortgage
note. On August 25, 1995, the court issued a summary judgment in
favor of Portland Lofts, affirming that the current holder cannot
foreclose on the property due to the claimed default on the
unsecured note. However, the current holder continues to pursue
the payment of the unsecured note through direct negotiations
with Portland Lofts, as well as through the court.
To the best knowledge of the General Partner, Jenkins Court,
402 Julia nor The Cosmopolitan at Mears Park is currently
subject to any material pending legal proceedings.
Item 2. Changes in Securities - Not applicable.
Item 3. Defaults Upon Securities - Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders - Not
applicable.
Item 5. Other Information - Not applicable.
Item 6. Exhibits and Reports from Form 8-K
(a) Exhibits
None.
(b) Reports from Form 8-K
None.
20
HISTORIC PRESERVATION PROPERTIES 1989 LIMITED PARTNERSHIP
21
HISTORIC PRESERVATION PROPERTIES 1989 LIMITED PARTNERSHIP
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.
HISTORIC PRESERVATION PROPERTIES 1989
LIMITED PARTNERSHIP
By: Boston Historic Partners Limited Partnership
General Partner
By: Portfolio Advisory Services, Inc.
General Partner
Date: May 15, 1996 By: /s/Terrence P. Sullivan
Terrence P. Sullivan,
President
and
Date: May 15, 1996 By: /s/ Terrence P. Sullivan
Terrence P. Sullivan,
General Partner
22
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<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-mos YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-END> MAR-31-1996 DEC-31-1995
<CASH> 151,137 788,602
<SECURITIES> 0 0
<RECEIVABLES> 92,075 92,939
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 0 17,620,252
<DEPRECIATION> 0 2,853,348
<TOTAL-ASSETS> 1,354,717 17,160,719
<CURRENT-LIABILITIES> 0 0
<BONDS> 0 16,519,887
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 1,354,717 17,160,719
<SALES> 0 0
<TOTAL-REVENUES> 545,374 2,164,691
<CGS> 0 0
<TOTAL-COSTS> 8,274,777 1,912,838
<OTHER-EXPENSES> 6,970 (16,186)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 507,513 2,163,677
<INCOME-PRETAX> (8,229,946) (1,928,010)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 9,182,017 0
<CHANGES> 0 0
<NET-INCOME> 952,071 (1,928,010)
<EPS-PRIMARY> 35.45 (71.79)
<EPS-DILUTED> 35.45 (71.79)
</TABLE>
