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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 20, 2000
NET 2 L. P.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 33-25984 13-3497738
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
c/o Lexington Corporate Properties Trust
355 Lexington Avenue
New York, New York 10017
(Address of principal Executive offices) (zip code)
Registrant's telephone number, including area code (212) 692-7200
</TABLE>
N/A
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 20, 2000, NET 2 L.P. (the "Partnership") acquired a property in
Hampton, Virginia (the "Hampton Property"), for approximately $12 million.
The purchase price was satisfied by the proceeds of a first mortgage note of
approximately $7.5 million with the remainder in cash. The note bears interest
at a rate of 8.27% per annum and requires monthly payments of principal
and interest of $56,438 beginning May 1, 2000. The note matures on April 1,
2010.
The Hampton Property consists of approximately 100,632 square foot office
building net leased to Nextel Communications of the Mid-Atlantic, Inc., owned by
Nextel Communications, Inc. ("Nextel"). The lease has a term of ten years
expiring on December 31, 2009. The lease provides for four renewal options of
five years each. The fixed annual net rent payable for the base term is
approximately $1.17 million, which increases 2% per annum.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND EXHIBITS
(a) Financial Statements
Since Nextel is a publicly held company and is listed on the NASDAQ
National Market individual financial statements for this, presently are
not required. As of December 31, 1999, Nextel reported total consolidated
assets, liabilities and stockholders' equity of approximately $18.4
million, $15.8 million and $2.6 million, respectively. For the year ended
December 31, 1999, Nextel reported total consolidated revenues and net
loss of approximately $3.3 million and $1.3 million, respectively.
(b) Pro Forma Financial Information
Estimated Taxable Operating Results and Cash Available from Operations
of the Hampton Property.
Notes to Estimated Taxable Operating Results and Cash Available from
Operations of the Hampton Property.
Pro Forma Consolidated Balance Sheet as of December 31, 1999.
Pro Forma Consolidated Statement of Income for the Year Ended December
31, 1999.
Notes to Pro Forma Consolidated Financial Statements.
(c) Exhibits
None.
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NET 2 L.P. AND CONSOLIDATED SUBSIDIARIES
Estimated Taxable Operating Results and
Cash Available from Operations
of the Hampton Property
(Unaudited and in thousands)
The following statement represents estimates of taxable operating results and
cash available from operations of the Hampton Property, based upon rents to be
received in the first year of the lease. These estimated results do not purport
to represent results of operations of the Hampton Property in the future and
were prepared on the basis described in the accompanying notes which should be
read in conjunction herewith. The General Partner is not aware of any material
supportable facts that would cause these estimates to be misleading.
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Estimated Taxable Operating Results:
Cash rent under net lease $1,167
Less:
Interest expense 620
Depreciation 269
------
Estimated taxable operating results $ 278
======
Estimated Cash Available from Operations:
Estimated taxable operating results $ 278
Add:
Depreciation 269
------
Estimated cash available from operations $ 547
======
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NET 2 L.P. AND CONSOLIDATED SUBSIDIARIES
Notes to Estimated Operating Results and
Cash Available from Operations
of the Hampton Property
Basis of Presentation
Cash rent under the net lease represents the rental payments expected to be
received during the first year of the lease.
Interest expense is the amount that is expected to be incurred on the
related mortgage debt.
The purchase price was allocated to land (10%) and to buildings (90%),
based on an appraisal. Depreciation is computed on a straight-line basis
over 39 years.
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NET 2 L.P. AND CONSOLIDATED SUBSIDIARIES
Pro Forma Consolidated Balance Sheet and Statement of Income
The accompanying Pro Forma Consolidated Balance Sheet of NET 2 L.P. as of
December 31, 1999 gives effect to the purchase of the Hampton Property, as if
such occurred on December 31, 1999.
The accompanying Pro Forma Consolidated Statement of Income for the year ended
December 31, 1999, gives effect to all 1999 property sales and acquisitions
(which are contained in the Partnership's Form 10-K for the year ended
December 31, 1999), as if such occurred as of January 1, 1999.
The Pro Forma Consolidated Balance Sheet and Statement of Income was prepared
by the management of the Partnership. These pro forma statements may not be
indicative of the results that would have actually occurred if such had been in
effect on the dates indicated. Also, they may not be indicative of the results
that may be achieved in the future. The Pro Forma Consolidated Balance Sheet and
Statement of Income should be read in conjunction with the Partnership's
audited financial statements as of December 31, 1999 and for the year then ended
(which are contained in the Partnership's Form 10-K for the year ended December
31, 1999), and the accompanying notes thereto.
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NET 2 L.P. AND CONSOLIDATED SUBSIDIARIES
Pro Forma Consolidated Balance Sheet
December 31, 1999
(Unaudited and dollars in thousands)
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<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
Real estate, net ............................... $ 75,957 $ 11,960 $ 87,917
Cash and cash equivalents ...................... 566 -- 566
Restricted cash ................................ 12,508 (4,532) 7,976
Deferred expenses, net ......................... 305 72 377
Rent receivable ................................ 957 -- 957
Other assets ................................... 140 -- 140
-------- -------- --------
Total assets ................................. $ 90,433 $ 7,500 $ 97,933
======== ======== ========
LIABILITIES AND PARTNERS' CAPITAL
Mortgage and notes payable ..................... $ 51,927 $ 7,500 $ 59,427
Accrued interest payable ....................... 225 -- 225
Accounts payable and other liabilities ......... 301 -- 301
-------- -------- --------
52,453 7,500 59,953
-------- -------- --------
Partners' capital (deficit):
General Partner .............................. (254) -- (254)
Limited Partners ($100 per Unit, 500,000 Units
authorized, 477,167 Units issued
and outstanding) ............................ 38,234 -- 38,234
-------- -------- --------
37,980 -- 37,980
-------- -------- --------
Total liabilities and partners' capital ...... $ 90,433 $ 7,500 $ 97,933
======== ======== ========
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NET 2 L.P. AND CONSOLIDATED SUBSIDIARIES
Notes to Pro Forma Consolidated Balance Sheet
(Unaudited)
1. Pro Forma Adjustments
The adjustment to real estate, net reflects the purchase price of the Hampton
Property.
The adjustment to mortgage and notes payable reflects the financing of the
acquisition.
The adjustment to deferred expenses reflects costs incurred in obtaining
financing of the acquisition.
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NET 2 L.P. AND CONSOLIDATED SUBSIDIARIES
Pro Forma Consolidated Statement of Income
Year ended December 31, 1999
(Unaudited and dollars in thousands, except per Unit amounts)
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<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
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<S> <C> <C> <C>
Revenue:
Rental ........................................ $10,086 $ 57 $10,143
Interest and other ............................ 248 -- 248
------- -------- -------
10,334 57 10,391
------- -------- -------
Expenses:
Interest expense .............................. 4,696 200 4,896
Depreciation .................................. 2,049 4 2,053
Amortization of deferred expenses ............. 187 1 188
General and administrative .................... 775 -- 775
------- -------- -------
7,707 205 7,912
------- -------- -------
Income before net gain on sale of properties .... 2,627 (148) 2,479
Net gain on sale of properties ................ 784 (784) --
------- -------- -------
Net Income ...................................... $ 3,411 $ (932) $ 2,479
======= ======== =======
Net income per Unit of
limited partnership interest (*) $6.24 to $7.53 $4.53 to $5.48
============== ==============
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(*) Amounts allocated to unit holders vary depending on the dates they became
unit holders.
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NET 2 L.P. AND CONSOLIDATED SUBSIDIARIES
Notes to Pro Forma Consolidated Statement of Income
(Unaudited)
1. Pro Forma Adjustments
The adjustment to rental revenues relates to the establishment of a new
measurement date in the straight-lining of rents under the lease term
resulting from the acquisition of the properties.
The adjustment to interest expense relates to the additional debt incurred in
financing the acquisitions.
The adjustment to depreciation relates to an increase in building basis which
is depreciated over an estimated useful life of 40 years, using the
straight-line method.
The adjustment to amortization relates to an increase in deferred costs which
is amortized over the life of the loan of 10 years, using the straight-line
method.
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SIGNATURE
Pursuant to the requirements of the securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NET 2 L. P.
By: Lepercq Net 2 L. P.
its general partner
By: Lepercq Net 2 Inc.
its general partner
Date: 4/4/00 By: /s/ E. Robert Roskind
------------------------ -------------------------
E. Robert Roskind
President
