SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-19180
Exact name of registrant as specified in its charter:
T. ROWE PRICE RENAISSANCE FUND, LTD., A SALES-COMMISSION-FREE
REAL ESTATE INVESTMENT
State or other jurisdiction of incorporation or organization:
Maryland
IRS Employer Identification Number: 52-1657028
Address of principal executive offices:
100 East Pratt Street, Baltimore, Maryland 21202
Registrant's telephone number: 1-800-638-5660
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Shares of Common Stock
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
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 [X]
Shares of common stock outstanding as of March 16, 1997:
1,607,757. The aggregate sales price of these shares was
$20,060,906. This does not reflect market value. Although it is
possible that a current market for these shares will develop, no
such market currently exists.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Prospectus of the Registrant dated November 1,
1989, filed with the Commission pursuant to Rule 424(b) under the
Securities Act of 1933 are incorporated herein in Parts I, II,
III, and IV by reference.
Index to Exhibits is located on page 19.
T. ROWE PRICE RENAISSANCE FUND, LTD.,
A SALES-COMMISSION-FREE REAL ESTATE INVESTMENT
INDEX
Page
PART I.
Item 1. Business 4
Item 2. Properties 8
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vot 9
of Security Holders
PART II.
Item 5. Market for Registrant's Common Equity and 9
Related Stockholder Matters
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and Analysis of 11
Financial Condition and Results of
Operations
Item 8. Financial Statements and Supplementary Data 15
Item 9. Changes in and Disagreements with 16
Accountants on Accounting and Financial
Disclosure
PART III.
Item 10. Directors and Executive Officers of the 16
Corporation
Item 11. Executive Compensation 18
Item 12. Security Ownership of Certain Beneficial 18
Owners and Management
Item 13. Certain Relationships and Related Transactions 18
PART IV.
Item 14. Exhibits, Financial Statement Schedules, 19
and Reports on Form 8-K
PART I
Item 1. Business
T. Rowe Price Renaissance Fund, Ltd., A Sales-Commission-Free
Real Estate Investment (the "Corporation"), was formed on June
14, 1989, under the General Corporation Law of the State of
Maryland for the primary purpose of investing in quality income-
producing properties that its
adviser believes are priced below
their intrinsic worth. On November 1, 1989, the Corporation
commenced an offering of $25,000,000 of Shares of Common Stock
($12.50 per Share) pursuant to a Registration Statement on Form
S-11 under the Securities Act of 1933 (Registration No. 33-29400)
(the "Registration Statement"). The Prospectus filed pursuant to
Rule 424(b) under the Securities Act of 1933 (the "Prospectus")
sets forth a complete description of the business of the
Corporation in the sections entitled "Investment Objectives" and
"Fund Policies" on pages 19 - 29 of the Prospectus, which pages
are incorporated by reference herein. The gross proceeds from
the initial public offering totaled $16,510,000, including
$200,000 invested by T. Rowe Price Real Estate Group, Inc. in
connection with the original capitalization of the Corporation.
The initial public offering terminated on April 30, 1990, and
additional Shares will be sold, if at all, only in connection
with the Corporation's reinvestment plan. As of February 1,
1997,$5,257,329 additional Shares had been sold under the
Corporation's reinvestment plan. There were 2,606 stockholders
as of February 1, 1997.
In December of 1991, LaSalle Advisors Limited Partnership
("LaSalle") entered into a contract with the Corporation to
perform day-to-day management and real estate advisory services
for the Corporation under the supervision of Corporate management
and its Affiliates. LaSalle's duties under the contract include
acquisition, disposition, and asset management services,
including record-keeping, contracting with tenants and service
providers, and preparation of financial statements and other
reports for management use. Management of the Corporation
continues to be responsible for overall supervision and
administration of the Corporation's operations, including setting
policies and making all acquisition and disposition decisions.
T. Rowe Price Real Estate Group, Inc. ("Real Estate Group")
continues to provide administrative, advisory, and oversight
services to the Corporation.
Annual compensation to LaSalle from the Corporation consists of a
fee of .50% of the "fair market value" of the Corporation's
assets, plus reimbursement of accountable expenses, which are
subject to a fixed maximum amount per year. Annual compensation
to the Real Estate Group is .45% of the "fair market value" of
the Corporation's assets, plus reimbursement of accountable
expenses which are subject to a fixed maximum amount per year.
Under the Corporation's contracts with LaSalle and Real Estate
Group, payment of these fees is subject to expense limitations
adopted by the Corporation pursuant to Guidelines promulgated by
the North American Securities Administration Association
("NASAA").
Any Disposition Fees payable by the Corporation will be paid 25%
to LaSalle and 75% to Real Estate Group; the aggregate
Disposition Fee to be paid by the Corporation will remain
constant. Payment of acquisition and disposition fees is also
contractually subject to limitations pursuant to the NASAA
Guidelines.
In 1994, the Corporation owned interests in four properties:
Valley Business Center, Buckley Square, Post Oak Place, and
Gatehall I, and each of these investments accounted for 15% or
more of the Corporation's revenue. In June of 1995, the
Corporation acquired Buschwood III, and in that year Valley
Business Center, Buckley Square and Gatehall I each accounted for
15% or more of the Corporation's revenue. In 1996, each property
except Post Oak Place accounted for more than 15% of the
Corporation's revenue. In 1994 and 1995 no tenant accounted for
10% or more of the Corporation's revenues. In 1996 only one
tenant, Liberty Mutual at Buschwood III, produced more than 10%
of the Corporation's revenue related to real estate activity,
producing 10.1% of such revenue.
The Corporation has received unsolicited offers to purchase one
or more of its properties, and is pursuing some of these offers.
Information regarding the properties or interests therein owned
by the Corporation is set forth in Schedule III to this report,
"Consolidated Real Estate and Accumulated Depreciation," which
contains information as to acquisition date and total cost of
each of the properties, and is hereby incorporated by reference
herein, and in Exhibit 99(b) to this report, "Real Estate
Investment," which is hereby incorporated by reference herein and
contains information regarding the size of these properties
and/or interests, and percentage leased as of December 31, 1996.
A brief narrative description of each property or investment
therein which the Corporation has acquired is as follows.
Valley Business Center
The Corporation owns a 100% interest in the Valley Business
Center which is located in the southwest market sector very close
to the border of the central industrial market in downtown
Denver, Colorado. It contains 202,000 square feet of space.
This site consists of five free-standing buildings which are a
hybrid of R&D and traditional distribution warehouse space set on
9.3 acres of land.
At year-end 1996, this property was 87% leased versus 94% twelve
months earlier. Although there were three new leases totaling
12,124 square feet or 6% of the property signed during the year,
the loss of two tenants, the largest of which vacated at the end
of the year, caused occupancy to decline. A lease for part of
the vacant space was signed after year-end, resulting in
occupancy increasing to 96% as of the beginning of 1997. In 1997,
leases covering 43,627 square feet, or 22% of the property
expire.
The combined southwest and central Denver submarkets contain
approximately 36.7 million square feet. Although vacancy in this
area increased from approximately 2% to 3% over the past twelve
months, the results were due to frictional vacancy and not market
deterioration. Market rates averaged a net effective rent of
$5.00 to $6.00 per square foot for Class A buildings such as
Valley Business Center. This was approximately 9% higher than
the 1995 levels.
There are a number of tenants looking for between 15,000 and
20,000 square feet with dock-high loading, and the low vacancy
is encouraging speculative construction. However, the lack of
available industrial parcels in the submarket is limiting the
number of projects. Thus, only one 150,000 square foot building
is under construction in the submarket. Consequently, Valley
Business Center should continue to remain one of the newer and
higher quality projects in the two submarkets for the foreseeable
future.
Post Oak Place
The Corporation owns a 100% interest in 4615 Post Oak Place,
located in the Galleria/West Loop section of the Houston, Texas
market. It contains 57,000 square feet. This property consists
of one two-story office building set on 2.4 acres of land.
During 1996, the Partnership recorded a provision for value
impairment in connection with Post Oak Place of $907,000. The
General Partner determined that this adjustment was a prudent
course of action based upon the uncertainty of the Partnership's
ability to recover the net carrying value of Post Oak Place
through future operations over a shorter anticipated holding
period and the ultimate sale of the property.
At year-end 1996, the property was 81% leased versus 75% one year
ago. Leasing in 1996 included four new leases representing 7,059
square feet and five renewal or expansion leases totaling 4,931
square feet. Five tenants totaling 6,390 square feet did not
renew there leases. One of the four new leases signed, included
a deal for 4165 square feet. The new tenant will occupy almost
7.5% of the building. Leases covering 32% of the building's space
are scheduled to expire in 1997.
According to published reports, Houston continued to experience
modest positive absorption citywide in 1996. The Galleria/West
Loop submarket has the second greatest concentration of office
space in the Houston area. It has 211 office buildings which
have a total of approximately 33 million square feet of net
rentable area. Vacancy in the submarket declined to
approximately 15% versus 17% in 1995.
The office market has remained very competitive for tenants over
the past year. Quoted Class A and Class B rents have risen only
slightly. One reason is that several buildings which were
"mothballed" when the market deteriorated, are still being
renovated and returned to the market. In Post Oak's immediate
area, one building totaling 150,000 square feet recently
reopened. This new competition places considerable pressure on
all of the vacant spaces and rental rates in the market. Post
Oak Place, a Class B property, is achieving above-market rates of
between $12.50 and $13.50 per square foot. There is no
significant speculative construction of office buildings
anticipated for 1997.
Gatehall I
The Corporation owns a 100% interest in Gatehall I, located in
the submarket of Parsippany, New Jersey, which is a major
component of the Morris County marketplace. It contains
approximately 112,000 square feet. This property consists of one
four-story office building set on approximately 9.7 acres of
land.
At year-end 1996, the property was 82% leased versus 71% one year
ago. Four new leases totaling 31,073 square feet were signed.
In addition, one renewal and five expansion leases representing
12,406 square feet were signed during the year. Despite two
tenants that did not renew and one whose lease was terminated for
credit reasons, occupancy increased 11% during the year.
The Parsippany submarket is comprised of approximately 10 million
square feet of office space. The vacancy rate for all classes of
space is approximately 15% versus 16% last year. The shortage of
Class A space available is expected to continue to tighten the
Class B vacancy rates in properties such as Gatehall I. Although
there is not any new speculative space being built in the market,
new build-to-suits like the 450,000 square foot, four building
Florham Park project are expected to start appearing. Gross
rental rates for Class A space are approximately $25.15 per
square foot while the Class B rates are up slightly over the
prior year to approximately $17.65 per square foot. One
continuing issue which could have a negative impact on occupancy
and rental rates in the market is the reduction of employees by
AT&T, which currently leases a significant amount of space in the
area. The effect of this reduction is still not determinable at
this time.
Buschwood III
The Corporation owns a 100% interest in Buschwood III, located in
the suburban submarket of Carrollwood, Florida near Tampa.
Purchased in June 1995, this two-story office building contains
approximately 77,000 square feet and is set on approximately 7.6
acres of land.
The asset has remained 100% leased since it was purchased. Three
leases totaling 12% of the building expire in 1997. The tenants'
interest and intent will not be known until later in 1997, but
there is a reasonable possibility that all will renew their
leases. In addition, during the first quarter of 1997 the energy
management system at the property is scheduled for replacement,
at estimated costs of between $50,000 and $100,000.
The Carrollwood Class A submarket in which Buschwood III competes
comprises approximately 692,000 square feet. The vacancy rate
for the submarket is approximately 11% versus 14% at the prior
year end. Gross rental rates for Class A space range between
$13.25 and $15.00 per square foot. At this time, plans have been
made for the building of a 40,000 square foot speculative
development in the subjects submarket. In 1997 approximately two
million square feet of build-to-suit projects are scheduled to be
built within the Tampa Bay, St. Petersburg markets.
Employees
The Corporation has no employees. Reference is made to Item 9
for the identity of the Corporation's officers. The
Corporation's investment adviser, LaSalle, the Corporation's
investment manager, Real Estate Group, and their affiliates and
independent contractors perform services on behalf of the
Corporation in connection with administering the affairs of the
Corporation and acquiring and operating properties for the
Corporation. LaSalle and Real Estate Group and their affiliates
receive compensation in connection with such activities, as
described above. Compensation to the Corporation's investment
manager and its affiliates, and the terms of transactions between
the Corporation and the investment manager and its affiliates are
set forth in Items 10 and 12, below, to which reference is made
for a description of those terms and the transactions involved.
Item 2. Properties
The Corporation owns the properties referred to under Item 1,
above, to which reference is made for the name, location and
description of such property.
Item 3. Legal Proceedings
The Corporation is not aware of any material pending legal
proceedings against it, nor did any proceedings terminate during
the period ended December 31, 1996.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
On February 1, 1997, there were 2,606 record holders. Although
the Corporation's shares of common stock are fully transferable,
there is no active public market for the shares, and it is not
anticipated that a public market for the shares will develop.
The Corporation has a Reinvestment Plan through which
stockholders may elect to have their dividends automatically
reinvested in additional shares, or fractions thereof, instead of
receiving cash payments. The per-share price under the plan was
initially set at $12.50 per share in 1990. The Board of Directors
determines the value of the shares to be sold pursuant to the
plan on at least an annual basis, based on its good faith
estimate of the amount stockholders would receive if the
Corporation's real estate investments were sold for their
estimated values and if such proceeds, together with the other
assets of the Corporation, were distributed in a liquidation of
the Corporation. The Board has determined the per-share value
to be $12.45 for reinvestments in 1997 (subject to adjustment in
the case of any material changes). Historical activity in the
Reinvestment Plan is discussed in the "Liquidity and Capital
Resources" section of "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section of this
report, below, which section is hereby incorporated by reference
herein. The plan may be terminated at any time.
The Corporation also has a Liquidity Enhancement Plan, which
provides stockholders with the opportunity to present some or all
of their shares to the Corporation for repurchase, and to have
those shares repurchased if the Corporation has sufficient
proceeds from the Reinvestment Plan available for this purpose.
The Liquidity Enhancement Plan was implemented in the second
quarter of 1992. Under the Plan, the repurchase price per share
is 90% of the fair market value ($11.21 in 1997). Completed
repurchase requests must be received in good order by the
Corporation at least 30 days prior to the end of a quarter for
the shares to qualify for repurchase at the end of that quarter.
Historical activity in the Liquidity Enhancement Plan is
discussed in the "Liquidity and Capital Resources" section of
"Management's Discussion and Analysis and Results of Operations"
in this report, below, which section is hereby incorporated by
reference herein. The Corporation may terminate the Plan at any
time.
The Corporation intends to pay dividends on a quarterly basis,
payable within 45 days after the end of each calendar quarter, to
stockholders of record on the record date or dates declared for
such quarter as determined by the Board of Directors. The
Corporation intends to pay dividends each year to stockholders in
an amount at least equal to 100% of its taxable income in order
to continue to qualify as a real estate investment trust in
accordance with the Internal Revenue Code of 1986, as amended,
and to avoid the payment of federal income tax at the corporate
level. Quarterly dividends declared during the past two years
were: $.18 for each of the first three quarters of 1995, $.05 for
the fourth quarter of 1995, $.15 for each of the first three
quarters of 1996, and $.99 for the fourth quarter of 1996.
Dividends declared for the first three quarters of 1995 and 1996
were based on estimates of cash flows and net income for tax
purposes made at the beginning of each year. Fourth quarter
dividends were declared in order to set the total dividends paid
for each year equal to 100% of taxable income. The dividend for
the fourth quarter of 1996 included a capital gain dividend of
$.912.
Item 6. Selected Financial Data
The following table sets forth a summary of the selected
financial data for the Corporation.
Years Ended December 31
(Dollars in thousands except per-share amounts)
1996 1995 1994
Total Assets at year end $22,980 $28,036 $22,472
Debt at year end $ 4,106 $ 8,976 $ 3,522
Revenues $ 5,320 $ 4,878 $ 3,364
Net Income $ 1,145 $ 678 $ 860
Net Income per share $ .75 $ .45 $ .58
Dividends declared
per share $ 1.44 $ .59 $ .64
Years Ended December 31
(Dollars in thousands except per-share amounts)
1993 1992
Total Assets at year end $20,696 $20,716
Debt at year end $ 2,100 $ 2,100
Revenues $ 2,507 $ 2,761
Net Income $ 490 $ 940
Net Income Per Share $ .34 $ .65
Dividends declared
per share $ .68 $ .56
NOTES:
1. The above financial data should be read in conjunction with
the financial statements and the related notes appearing
elsewhere in this report.
2. The figure above for Net income in 1996 includes a provision
for value impairment of $907 at Post Oak Place, and a gain from
the sale of Buckley Square (net of minority interest) of $1,368.
3. The figure above for Net Income per share in 1996 includes
$.59 per share attributable to the provision for value impairment
discussed at Note 2 above, and $.89 per share attributable to the
gain on sale discussed at Note 2 above.
4. All of the foregoing dividends were paid from cash flows
from operating activities with the exception of the dividends for
1996, which included $.912 per share from the taxable gain on the
sale of Buckley Square.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
The Corporation sold 1,306,559 shares in connection with the
public offering of shares in 1990, for a total of $16,310,000,
including the purchase of 16,000 shares for $200,000 by T. Rowe
Price Real Estate Group, Inc. After deduction of organizational
and offering costs of $976,000, the Corporation had $15,534,000
available for investment and capital reserves.
Additional shares have been and will continue to be sold, if at
all, only in connection with the Corporation's reinvestment plan.
Additional capital in the amount of $5,257,329 was raised from
dividend distributions reinvested through February 1, 1997, and
420,290 additional shares were issued in connection therewith.
The amount of additional capital to be raised from this source in
the future will depend on the size of the Corporation's dividends
per share and the number of shares in the Reinvestment Plan at
any given time. There are no organizational or offering expenses
associated with or deducted from such proceeds. This capital has
been and will be used, to the extent necessary, to repurchase
shares in connection with the Corporation's Liquidity Enhancement
Plan; the balance will be available for investment in or
improvements to real estate, including the repayment of debt. As
of February 1, 1997, 135,092 shares had been repurchased under
the Liquidity Enhancement Plan for a total of $1,511,000.
In 1996, the Corporation sold Buckley Square and received net
proceeds after deduction of minority interest of $6,189,000. The
net book value of the Corporation's interest at the date of sale
was $4,821,000. As of December 31, 1996, the Corporation held
four properties for a total investment in real estate, before
deduction of accumulated depreciation and amortization, of
$21,683,000, representing initial acquisition costs and
subsequent improvements. This figure also includes an adjustment
of $907,000 for a valuation impairment at Post Oak Place in 1996.
The Corporation recognized this impairment based on management's
belief that the Corporation may be unable to recover the net
carrying value of this property through future operations and
sale.
Initial acquisition costs were partially funded by a $2.1 million
loan secured by Valley Business Center, bearing interest at
9.875% per annum, all due and payable in 1997 and a $1.4 million
loan secured by Gatehall I, bearing interest at a floating rate
which as of February 2, 1997, stood at 7.29% per annum, due and
payable in 1998 (subject to the Corporation's option to extend
the loan for two one-year terms), and a $5.5 million loan secured
by Buschwood III bearing interest at 8.5% per annum. In February
1996, the Corporation made an optional $200,000 payment on the
latter, reducing the principal balance to $6.7 million. In
addition, in 1996, the Corporation repaid a portion of this loan
using proceeds from the Buckley Square disposition, leaving a
loan balance of $2 million.
For 1996, the ratio of revenue produced by the Corporation's
properties to total debt service under these loans is
approximately 7 to 1. Based on the portion of debt utilized to
acquire the properties, each of Valley Business Center, Gatehall
I, and Buschwood III generated sufficient revenue in 1996 to
cover debt service related to the property and contribute to
dividends paid to the Corporation's stockholders. Management
anticipates such a level will continue to be maintained in 1997
for Gatehall I, Buschwood III, and Valley Business Center.
The Corporation expects to incur capital expenditures during 1997
totaling approximately $1,200,000 for tenant improvements, lease
commissions, and other major repairs and improvements;
approximately 73% of these expenditures are dependent on the
execution of leases with new and renewing tenants. As of
December 31, 1996, the Corporation maintained cash and cash
equivalents aggregating $2,738,000, an increase of $1,130,000
from the prior year end. Cash from financing activities resulted
in net outflows in 1996 as compared to net inflows in 1995,
primarily as a result of the receipt of the proceeds of the
mortgage loan utilized to purchase Buschwood III in 1995 and the
repayment of a substantial portion of the loan in 1996. Net cash
provided by operating activities remained generally unchanged
from the prior year. Cash from investing activities increased by
$12,160,000 as a result of the purchase of Buschwood III in 1995
and the sale of Buckley Square in 1996.
The Corporation maintains cash balances to fund its operating and
investing activities including the costs of tenant improvements
and leasing commissions, costs which must be disbursed prior to
the collection of any resultant revenues. The Corporation also
has additional borrowing capacity of $778,000 for use in
connection with tenant improvements, leasing commissions and
other capital expenditures at Gatehall I. Management believes
that year-end cash balances, cash generated from operating
activities in 1997, and its borrowing capacity will be adequate
to fund its current operating needs.
1996 v. 1995
The Corporation's net income of $1,145,000 for 1996 equates to
$0.75 per share compared with $678,000, or $0.45 per share, in
1995. The increase was driven by the $1,368,000 gain on the sale
of Buckley Square. Excluding the gain on the sale of Buckley
Square, the Corporation experienced a loss from operations of
$223,000 in 1996. The difference between 1995 and 1996 was a
direct result of a valuation impairment of $907,000 at Post Oak
Place.
Revenues from rental income and interest resulted in total
revenues of $5,320,000 for the year compared with $4,878,000 a
year earlier. Revenues and operating expenses, excluding the
Post Oak Place impairment, were up by comparable amounts,
$442,000 and $436,000, respectively, due primarily to the
inclusion of Buschwood III for the full year in 1996. Increases
in operating income at Buckley Square prior to the sale, and at
Buschwood III for a full year, offset operating declines at
Gatehall I due to a lower average leased status over the year,
and at Post Oak Place due to greater depreciation and bad debt
expenses.
Leases representing 16% of the portfolio's leasable square
footage are scheduled to expire in 1997. These leases represent
approximately 18% of the portfolio's rental income for 1996.
This amount of potential lease turnover is normal for the types
of properties in the portfolio, which typically lease to tenants
under three to five year leases. There are no single-tenant
properties in the Corporation's portfolio, and only one tenant,
Liberty Mutual at Buschwood III, accounted for more than 10% of
the Corporation's revenue in 1996, providing slightly in excess
of 10%. The Corporation therefore does not expect any material
adverse effect on revenue in the event of the failure of any
single tenant in 1997.
The directors of the Corporation declared dividends of $1.44 per
share during 1996. The gain on the sale of Buckley Square
resulted in higher per-share dividends than last year's $0.59
per share. Total dividends declared in 1996 were $2,201,000,
compared to $891,000 in 1995. All of the 1995 dividends were
paid from the Corporation's cash flow. Of the 1996 dividends,
$1,394,000 derived from the proceeds of the sale of Buckley
Square, and the balance from the Corporation's cash flow.
1995 v. 1994
The Corporation's net income of $678,000 for 1995 equated to
$0.45 per share compared with $860,000, or $0.58 per share, in
1994. The decrease was driven by a lower leased level at Post
Oak Place (which was partially offset by lower operating
expenses), and by increased operating expenses and higher
depreciation expenses relating to charge-offs of tenant
improvements at Valley Business Center.
Rental revenue was up $1,576,000 over the prior year, with
Gatehall I contributing $1,002,000 of the total (up $349,000 over
the increase in 1994), and Buschwood III contributing $600,000.
Gatehall I was held for only four months in 1994, versus 12
months in 1995 and Buschwood III was held for only 6 months in
1995. Interest expense on the debt incurred to purchase Gatehall
I and Buschwood III, together with operating expenses at these
properties, offset almost completely the improvements in rental
revenue.
Other Information.
Information or statements provided by or on behalf of the
Corporation from time to time may contain certain "forward-looking
information", including information relating to
anticipated growth in revenues or net income, anticipated
disposition of properties, anticipated expense levels, and
expectations regarding real estate market conditions. The
cautionary statements provided below are being made pursuant to
the Private Securities Litigation Reform Act of 1995 and with the
intention of obtaining the benefits of the "safe harbor"
provisions of the Act for any such forward-looking information.
Many of the following important factors discussed below as well
as other factors have also been discussed in the Corporation's
prior public filings. The Corporation cautions readers that any
forward-looking information provided by or on behalf of the
Corporation is not a guarantee of future performance and that
actual results may differ materially from those in the forward-looking
information as a result of various factors, including but
not limited to those discussed below. Further, such forward-looking
statements speak only as of the date on which such
statements are made, and the Corporation undertakes no obligation
to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made or
to reflect the occurrence of unanticipated events.
The Corporation's future revenues may fluctuate due to factors
such as: changes in demand for space in its properties, due to
either local conditions or general economic trends; changes in
demand by purchasers for the types of properties owned by the
Corporation, or changes in the prices prospective purchasers are
willing to pay for properties.
The Corporation's future operating results are also dependent
upon the level of operating expenses, which are subject to
fluctuation for the following or other reasons: expenses and
capital costs, including depreciation, amortization and other
non-cash charges, incurred by the Corporation to maintain its
properties and procure tenants and purchasers; assessed value of
real estate or local tax rates; and costs of environmental
remediation.
Item 8. Financial Statements and Supplementary Data
The financial statements appearing on pages 5 through 12 of the
Corporation's 1996 Annual Report to Stockholders are incorporated
by reference in this Form 10-K Annual Report. The report on such
financial statements of KPMG Peat Marwick LLP dated January 24,
1997, is filed as Exhibit 99(c) to this form 10-K Annual Report
and is hereby incorporated by reference herein. Financial
Statement Schedule III, Consolidated Real Estate and Accumulated
Depreciation, is filed as Exhibit 99(b) to this Form 10-K Annual
Report, and is hereby incorporated by reference herein. All
other schedules are omitted either because the required
information is not applicable or because the information is shown
in the financial statements or notes thereto.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Corporation
The Directors and principal officers of the Corporation are as
follows:
Name Office With the Corporation
James S. Riepe Chairman of the Board, President
and Managing Director
Jeffrey H. Donahue Director*
A. MacDonough Plant Director*
Lucy B. Robins Vice President
Mark B. Ruhe Vice President
Kenneth J. Rutherford Vice President
Joseph P. Croteau Treasurer and Principal
Financial Officer
Mark S. Finn Chief Accounting Officer for the
Partnership
There is no family relationship among any of the foregoing
individuals or the directors of the Fund. All have been in their
present capacities with the Fund since its inception except for
Mr. Croteau and Mr. Rutherford. Mr. Croteau was elected
Treasurer in 1992 and Vice President in 1996, and Mr. Rutherford
was elected a Vice President in 1994. Mr. Finn was designated as
Chief Accounting Officer in 1996.
James S. Riepe (Born 1943) is Managing Director and Director,
T. Rowe Price Associates, Inc. ("Associates") and Director of its
Investment Services Division; President and Chairman of T. Rowe
Price Real Estate Group, Inc., (the "Investment Manager") and
each of the general partners of T. Rowe Price Realty Income Fund
I, A No-Load Limited Partnership, T. Rowe Price Realty Income
Fund II, America's Sales-Commission-Free Real Estate Limited
Partnership, T. Rowe Price Realty Income Fund III, America's
Sales-Commission-Free Real Estate Limited Partnership, and T.
Rowe Price Realty Income Fund IV, America's Sales-Commission-Free
Real Estate Limited Partnership (the "Realty Income Funds");
Chairman of six of the 42 mutual funds sponsored by Associates on
which he serves as a director or trustee; Chairman of New Age
Media Fund; Director, Rhone-Poulenc Rorer, Inc., a
pharmaceuticals company. Mr. Riepe joined Associates in 1982.
*Messrs. Donahue and Plant are the Independent Directors of the
Corporation.
Jeffrey H. Donahue (Born 1946) is Senior Vice President and
Chief Financial Officer of the Rouse Company, a full-service real
estate and development company, Columbia, Maryland, since 1993.
From 1985 to 1993, Mr. Donahue was Vice President and Treasurer
of the Rouse Company. Also Director, T. Rowe Price Spectrum
Fund, Inc., and New Age Media Fund, Inc.
A. MacDonough Plant (Born 1937) is a Partner at the law firm
of Stewart, Plant & Blumenthal, Baltimore, Maryland, since 1991.
Also Director, T. Rowe Price Spectrum Fund, Inc., and New Age
Media Fund, Inc.
Kenneth J. Rutherford (Born 1963) is Marketing Manager for
Associates since 1996 and Vice President of each of the general
partners of the Realty Income Funds. Mr. Rutherford joined
Associates in 1992. From 1992 to 1996 he was Assistant to the
Director of Associates' Investment Services Division. From 1990
to 1992 he was a student at the Stanford Graduate School of
Business.
Lucy B. Robins (Born 1952) is Vice President and Associate
Legal Counsel of Associates and Vice President of the Investment
Manager and each of the general partners of the Realty Income
Funds. Ms. Robins joined Associates in 1986.
Mark B. Ruhe (Born 1954) is an Asset Manager for the
Investment Manager, and Vice President of the Investment Manager
and each of the general partners of the Realty Income Funds. Mr.
Ruhe joined Associates in 1987.
Joseph P. Croteau (Born 1954) is a Vice President and
Controller of Associates, and Director and Controller of each of
the general partners of the Realty Income Funds. Mr. Croteau
joined Associates in 1987.
Mark S. Finn (Born 1963) is Assistant Vice President of
Associates, and Chief Accounting Officer of the Realty Income
Funds and the Renaissance Fund. Mr. Finn joined Associates in
1990.
There have been no legal proceedings during the past five years
which are material to an evaluation of the ability or integrity
of any of the aforementioned directors or officers.
No Forms 3 or 4 or amendments to Forms 3 or 4 were furnished to
the registrant for its most recent fiscal year. Based on a
review of Forms 5's furnished to the registrant pursuant to Rule
16a-3(e) for its most recent fiscal year and written
representations pursuant to Item 405(b)(2)(i) of Regulation S-K,
none of the directors or officers of the Corporation or Real
Estate Group, nor any beneficial owner of more than 10% of the
shares of the Corporation, if any, failed to file on a timely
basis reports required by Section 16(a) of the Exchange Act
during the most recent fiscal or prior fiscal years.
Item 11. Executive Compensation
The executive officers of the Corporation and the affiliated
director receive no current or proposed remuneration from the
Corporation. The independent directors each receive a fee of
$5,000 per year plus $500 for each meeting of the Board of
Directors which they attend ($250 for attendance by telephone).
For the fiscal year ended December 31, 1996, Mr. Donahue and Mr.
Plant each received a fee of $5,000, plus $2,250 for five
meetings held and attended (including one by telephone). There
are no compensatory plans or arrangements resulting from
resignation or retirement of a director or executive officer
which require payments from or to be paid by the Corporation.
Certain officers and directors of the Corporation receive
compensation from Associates and/or its affiliates (but not from
the Corporation) for services performed for various affiliated
entities, which may include services performed for the
Corporation or the Investment Manager. Such compensation may be
based, in part, on the performance of the Corporation. Any
portion of such compensation which may be indirectly attributable
to such performance is not material.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
As of March 17, 1997, no Stockholder is known by the Corporation
to own beneficially more than 5% of the outstanding interests of
the Corporation.
The percentage of outstanding interests of the Corporation held
by each director is less than 1%. A total of 16,000 shares (1%)
are owned of record by Real Estate Group, as to which Mr. Riepe
holds joint voting and investment power, but in which he
disclaims all beneficial ownership. The percentage of
outstanding interests held by all directors and officers as a
group is 1%. No officer or director other than Mr. Riepe
beneficially owns 1% or more of the Corporation's outstanding
common stock.
There exists no arrangement, known to the Corporation, the
operation of which may at any subsequent date result in a change
in control of the Corporation.
Item 13. Certain Relationships and Related Transactions
Pursuant to contracts executed in 1991, the Corporation pays
advisory fees to Real Estate Group, an affiliate of the sponsor
("Investment Manager"), and LaSalle ("Investment Advisor"). The
Investment Manager provides communications, cash management,
administrative and other related services to the Corporation for
an advisory fee of .45% per year of the fair market value, as
defined, of the Corporation's assets and earned $133,000 in 1996.
The Investment Advisor provides the Corporation with real estate
advisory, accounting and other related services for an advisory
fee of .50% per year of the fair market value, as defined, of the
Corporation's assets and earned $147,000 in 1996. Under the
contracts, payment of each of these fees is subject to expense
limitations adopted by the Corporation pursuant to Guidelines
promulgated by the North American Securities Administrators
Association.
Under the contracts referenced above the Corporation is obligated
to pay acquisition fees for services rendered in connection with
the purchase of properties. Such fees equal 2% of the proceeds
from sale of common stock. The Investment Adviser received
$58,000 in connection with the acquisition of Gatehall I in 1994
and $52,500 in connection with the Buschwood III acquisition in
1995. The Investment Manager received $23,000 in connection with
the acquisition of Gatehall I in 1994, and $52,500 in connection
with the Buschwood III acquisition in 1995.
An affiliate of the General Partner received a fee of $3,000 from
the money market mutual funds in which the Partnership made its
interim cash investments in 1996.
The Corporation has also reimbursed the Investment Manager and
the Investment Advisor for certain defined expenses incurred in
operating and administering the affairs of the Corporation. The
Investment Manager received $40,000 in expense reimbursement in
1996. The Investment Advisor received $30,000 in expense
reimbursements in 1996.
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements:
Incorporated by reference from the indicated pages of the
Partnership's 1996 Annual Report to Stockholders:
PAGES IN
ANNUAL REPORT
Consolidated Balance Sheets at 5
December 31, 1996 and 1995
Consolidated Statements of Operations 6
for each of the three years in the
period ended December 31, 1996
Consolidated Statements of Stockholders' 7
Equity for each of the three years
in the period ended December 31, 1996
Consolidated Statements of Cash Flows 8
for each of the three years in the
period ended December 31, 1996
Notes to Consolidated Financial Statements 9-12
Independent Auditors' Report - Incorporated by reference from
Exhibit 99(c) hereof.
(2) Financial Statement Schedules:
III - Consolidated Real Estate and Accumulated
Depreciation, incorporated by reference to Exhibit 99(b)
hereof.
All other schedules are omitted because they are not
applicable or the required information is presented in
the financial statements and notes hereto.
(3) Exhibits
3,4. (a) Articles of Amendment of the Corporation,
as filed on June 30, 1994, incorporated by
reference to Exhibit 3,4(a) to Registrant's
Report on Form 10-K for the year ended
December 31, 1994 ("the 1994 10-K").
(b) Second Amended and Restated By-Laws of the
Corporation, as amended as of April 26, 1994,
incorporated by reference to Exhibit 3,4(b) to
the 1994 10-K.
10. (a) Advisory Agreement by and between the
Corporation and LaSalle Advisors Limited
Partnership dated as of July 15, 1991,
incorporated by reference to Exhibit 10(a) to
Registrant's Report on Form 10-K for the year
ended December 31, 1991 (the "1991 10-K")
(b) Agreement of General Partnership of Buckley
Square Associates, incorporated by reference
to Exhibit 10(e) to the 1991 10-K.
(c) Purchase and Sale Agreement between
Aetna Life Insurance Company as Seller and the
Corporation as Purchaser, dated August 19,
1994, relating to Gatehall I, incorporated by
reference to Exhibit 10(d) to the 1994 10-K.
(d) Loan Agreement between Harris Trust and
Savings Bank and the Corporation, dated June
27, 1995, relating to the loan secured by
Gatehall I and Buschwood III, incorporated by
reference to Exhibit 10(d) to Registrant's
Report on Form 10-K for the year ended
December 31, 1995 ("the 1995 10-K").
(e)Purchase and Sale Agreement between
CrossLand Federal Savings Bank as Seller and
LaSalle Advisors Limited as Purchaser, dated
April 26, 1995, relating to Buschwood III,
incorporated by reference to Exhibit 10(e) to
the 1995 10-K.
(f) Assignment of Purchase and Sale Agreement
from LaSalle Advisors Limited to the
Corporation, dated June 29, 1995, relating to
Buschwood III, incorporated by reference to
Exhibit 10(f) to the 1995 10-K.
(g) Real Estate Sale Agreement between Pacific
Retail Trust as Purchaser and Buckley Square
Associates as Seller, dated September 4, 1996,
relating to the sale of Buckley Square.
13. Annual Report for the year ended December 31,
1996, distributed to stockholders on or about
February 28, 1997, furnished for the
information of the Commission.
24. Accountants' Consent of KPMG Peat Marwick LLP
99. (a) Pages 7-9, 19-29, 34, and 55-56 of the
Prospectus.
(b) Financial Statement Schedule III -
Consolidated Real Estate and Accumulated
Depreciation.
(c) Report of KPMG Peat Marwick LLP dated
January 24, 1997 regarding the financial
statements of the Corporation.
(b) Reports on Form 8-K
The following reports on Form 8-K were filed for the last
quarter of the period covered by this report. - None.
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:
Dated: March 27, 1997 T. ROWE PRICE RENAISSANCE FUND,
LTD., A SALES-COMMISSION-FREE REAL
ESTATE INVESTMENT
By:
/s/James S. Riepe
James S. Riepe,
President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated:
/s/James S. Riepe Date: March 27, 1997
James S. Riepe, President,
Director, Chairman of the Board,
and Principal Executive Officer,
T. Rowe Price Renaissance Fund,
Ltd., A Sales-Commission-Free
Real Estate Investment
/s/Jeffrey H. Donahue Date: March 27, 1997
Jeffrey H. Donahue,
Director, T. Rowe Price
Renaissance Fund, Ltd., A
Sales-Commission-Free
Real Estate Investment
/s/A. MacDonough Plant Date: March 27, 1997
A. MacDonough Plant,
Director, T. Rowe Price
Renaissance Fund, Ltd., A
Sales-Commission-Free
Real Estate Investment
/s/Joseph P. Croteau Date: March 27, 1997
Joseph P. Croteau,
Principal Financial Officer,
T. Rowe Price Renaissance Fund,
Ltd., A Sales-Commission-Free
Real Estate Investment
/s/Mark S. Finn Date: March 27, 1997
Mark S. Finn
Chief Accounting Officer
T. Rowe Price Renaissance Fund,
Ltd., A Sales-Commission-Free
Real Estate Investment<PAGE>
REAL ESTATE SALE AGREEMENT
(MAIN PARCEL)
THIS AGREEMENT is entered into as of September 4, 1996, by
and between the following parties:
PACIFIC RETAIL TRUST, a Maryland real estate investment
trust, its nominee or assignee ("Purchaser"); and Buckley Square
Associates, a Colorado general partnership ("Seller");
RECITALS
Seller desires to sell, and Purchaser desires to buy, the
property hereafter described, at the price and on the terms and
conditions hereafter set forth.
In consideration of the recitals, the mutual covenants
hereafter set forth, One Hundred Dollars ($100) in hand paid by
Purchaser to Seller (for which the parties bargained and agreed
to as consideration for Seller's execution and delivery of this
Agreement, and which amount shall be retained by Seller
notwithstanding any other provision of this Agreement) and other
good and valuable consideration, the receipt and sufficiency of
which are mutually acknowledged, the parties agree as follows:
1. Premises
The real estate which is the subject of this Agreement is
legally described on Exhibit A (the "Land") and [together with
the real estate described on Exhibit A-1 (the "Out Parcel")] is
commonly known as Buckley Square Shopping Center. The Land,
together with all improvements and fixtures located thereon (the
"Improvements"), and all the rights, benefits, privileges,
easements, tenements, hereditaments, and appurtenances thereon or
in anyway appertaining to such real property, and all right,
title, and interest of Seller in and to all strips and gores and
any land lying in the bed of any street, road or alley, open or
proposed, adjoining such Land, is referred to as the "Premises".
2. Personal Property
The "Personal Property", as referred to herein, shall
consist of all right, title, and interest of Seller in all
property, tangible and intangible, not constituting part of the
real estate, which is located on or used in connection with the
Premises, including but not limited to furniture, heating,
ventilating, and air conditioning equipment, trade fixtures,
office equipment and supplies, tools and maintenance equipment,
shades and blinds, carpeting, sculptures and art work, plans and
specifications, warranties, guarantees, licenses, permits,
approvals, books and records and trade names and trademarks and
telephone exchange numbers.
3. Sale and Conveyance
Seller agrees to sell to Purchaser, and Purchaser agrees
to buy from Seller, upon the terms and conditions of this
Agreement (i) the entire fee simple estate in the Premises and
(ii) the Personal Property. The Premises and the Personal
Property are sometimes referred to together as the "Property".
4. Survey
Within fifteen (15) days after the date this Agreement is
fully executed by both Seller and Buyer (the "Execution Date"),
Seller shall deliver to Purchaser, at Seller's expense, ten (10)
copies of an updated survey of the Premises (the "Survey"),
meeting the "Minimum Standard Detail Requirements" for ALTA/ACSM
Land Title Surveys as adopted by the American Land Title
Association/American Society and American Congress on Surveying
and Mapping in 1992 ("Survey Standards"), prepared by Burdick
Engineering Company, with the certificate of the surveyor in the
form of Exhibit B attached hereto and containing a flood plain
certification, which Survey shall be in a form required by the
Title Insurer (hereafter defined) to allow it to issue the title
policy required by this Agreement.
5. Title
(a) Title to the Premises shall be conveyed to
Purchaser by a recordable special warranty deed subject
only to the following matters ("Permitted Exceptions"):
(1) Real estate taxes and assessments not
due and payable as of the date of Closing (hereafter
defined);
(2) The Leases (hereafter defined); and
(3) The matters accepted by Purchaser
pursuant to Paragraph 5(b) below.
(b) Seller shall deliver to Purchaser a
commitment ("Commitment") from North American Title, 44
Cook Street, Suite 300, Denver, Colorado ("Title Insurer")
on behalf of an underwriter approved by Purchaser for the
title insurance policy described in Paragraph 12(a)(4)
together with copies of all documents and other matters
referred to therein, within fifteen (15) days after the
Execution Date. The Commitment shall contain the express
commitment of the Title Insurer to issue the Title Policy
(hereafter defined) to Purchaser in the amount of the
Purchase Price, insuring such title to the Property as is
specified in the Commitment, with the standard printed
exceptions endorsed or deleted in accordance with
Paragraph 12(a)(4).
Purchaser shall be entitled to object to any title
matters shown on the Commitment or on the Survey, in its
sole discretion, by a written notice of objections
delivered to Seller on or before ten (10) business days
after receipt of the Commitment. Seller shall have ten
(10) business days from the receipt of Purchaser's notice
of objections either to have such exceptions removed or,
if acceptable to Purchaser, to provide affirmative title
insurance protection for such exceptions satisfactory to
Purchaser in Purchaser's sole discretion. If Seller fails
either to provide for the removal of such exceptions or to
obtain affirmative title insurance protection for such
exceptions satisfactory to Purchaser in Purchaser's sole
discretion within such ten-day period, then this
Agreement, at Purchaser's option, shall be terminated upon
written notice to Seller within ten (10) days following
such period or by failing to terminate this Agreement by
written notice delivered to Seller prior to the expiration
of such period, Purchaser shall be deemed to have waived
all uncured objections to the Commitment and Survey and
all uncured matters reflected thereon shall also
constitute Permitted Exceptions for purposes hereof. Upon
delivery of such termination notice by Purchaser, this
Agreement shall automatically terminate, the parties shall
be released from all further obligations under this
Agreement except for the indemnity provisions of
Paragraph 7(b) hereof, and the Earnest Money (hereafter
defined) shall be immediately returned to the Purchaser.
If any endorsement issued subsequent to the date of any of
the Commitment contains exceptions other than those in the
Commitment and previous endorsements, Purchaser shall be
entitled to object to any such exceptions by a written
notice of objections to Seller on or before the date ten
(10) days following Purchaser's receipt of such
endorsement. Seller shall have ten (10) business days
from the receipt of Purchaser's notice either to have such
exceptions removed or, if acceptable to Purchaser, to
procure affirmative title insurance protection for such
exceptions satisfactory to Purchaser in Purchaser's sole
discretion. If Seller fails either to provide for the
removal of such exceptions or to provide affirmative title
insurance protection for such exceptions satisfactory to
Purchaser in Purchaser's sole discretion within such ten-day period,
then this Agreement, at Purchaser's option,
shall be terminated upon written notice to Seller within
ten (10) days following such period. Upon delivery of
such termination notice, this Agreement shall
automatically terminate, the parties shall be released
from all further obligations under this Agreement except
for the indemnity provision of Paragraph 7(b) hereof , and
the Earnest Money shall be immediately returned to
Purchaser. Permitted Exceptions shall not include any
liens of an ascertainable amount created by, under or
through Seller, which Seller shall cause to be released at
Closing.
Promptly upon receipt of the items set forth in
Paragraph 7(a), Purchaser shall notify Seller and Title
Insurer, in writing, of the date it received this
Agreement fully executed by Seller and shall set forth in
such notice the date which is the first (1st) business day
following the expiration of thirty (30) days after the
date of receipt of this Agreement fully executed by Seller
(the "Initial Expiration Date"). The "Expiration Date"
hereunder shall be the latter to occur of (A) the Initial
Expiration Date or (B) three (3) business days after the
date on which World Savings' right of first refusal
described in Paragraph 19(ii) shall have expired or been
waived or accepted.
(c) The Personal Property shall be conveyed to
Purchaser by bill of sale and assignment (the "Bill of
Sale and Assignment"). Purchaser shall request promptly
after execution of this Agreement Uniform Commercial Code
searches in the name of Seller issued by the Title Insurer
or a search company acceptable to Purchaser ("UCC
Searches").
6. Purchase Price; Earnest Money
(a) The purchase price ("Purchase Price") for the
Property shall be Seven Million and No/100
($7,000,000.00), payable as set forth in Subparagraphs (b)
and (c).
(b) No later than three (3) business days after
the Execution Date, Purchaser will deposit in escrow with
the Title Insurer pursuant to the agreement attached
hereto as Exhibit D, as earnest money hereunder, the sum
of Fifty Thousand Dollars ($50,000.00). All amounts
deposited pursuant to this Paragraph 6(b) are referred to
as "Earnest Money". All interest earned on the Earnest
Money shall be considered Earnest Money for purposes of
this Agreement.
(c) The Purchase Price, plus or minus prorations
and adjustments as provided for herein, shall be paid by
Purchaser to Seller by federal funds wire transfer or
certified check at Closing through the Title Insurer. At
Purchaser's option, the Earnest Money shall be returned to
Purchaser at Closing following the payment in full by
Purchaser of the Purchase Price or added to the balance of
the Purchase Price due at Closing.
7. Due Diligence Period; Early Termination
(a) Within five (5) days after the Execution
Date, Seller shall provide to Purchaser the following (the
"Property Information"):
(1) Rent Roll. A rent roll of the Premises
("Rent Roll") containing the information set forth
on Exhibit E and, in addition, Seller's most recent
rent roll of the Premises;
(2) Leases. Copies of all agreements for
occupancy or use of any portion of the Premises,
including all amendments and guarantees (the
"Leases");
(3) Tax Statements. Copies or a summary of
ad valorem tax statements relating to the Property
for the current year or other current tax period (if
available) and, to the extent in Seller's
possession, for the thirty-six (36) months preceding
the Agreement, including tax identification number;
(4) Tangible Personal Property. A current
inventory of all tangible personal property and
fixtures owned by Seller and located on, attached
to, or used in connection with the Premises (the
"Inventory");
(5) Tenant Information. (i) To the extent
in Seller's possession, copies of financial
statements of all tenants under Leases covering the
two (2) years prior to this Agreement, (ii) to the
extent in Seller's possession, information relative
to tenant payment history, which information shall
be made available at Seller's office, (iii) CAM,
real estate taxes and insurance reconciliations of
the prior two (2) years, (iv) tenants' allocation of
CAM, real estate taxes and insurance reimbursements,
(v) to the extent in Seller's possession, a gross
sales report for the last three (3) years (and
current year if available) for each tenant paying
percentage rent, and (vi) to the extent in Seller's
possession, all tenant correspondence, which
correspondence shall be made available at Seller's
office;
(6) Contracts. A list together with copies
of all management, service, supply, equipment
rental, and other contracts related to the operation
of the Property (the "Contracts");
(7) Maintenance Records. All maintenance
work orders for the twelve (12) months preceding
this Agreement, to the extent in Seller's
possession, will be made available at Seller's
office and may be reviewed by Purchaser and, to the
extent desired, copies of same made by Purchaser;
(8) List of Capital Improvements. A list of
all capital improvements performed on the Premises
within the twenty-four (24) months preceding this
Agreement, if any;
(9) Reports. Any environmental, soil,
structural engineering and drainage reports,
assessments, audits and surveys related to the
Property in Seller's possession or control;
(10) As-Built Survey. In addition to the
Survey, all as-built surveys of the Property in
Seller's possession;
(11) Site Plans. All site plans in
Seller's possession relating to the Property;
(12) (Intentionally left blank);
(13) As-Built Plans and Specifications. All
as-built construction, architectural, mechanical,
electrical, plumbing, landscaping and grading plans
and specifications in Seller's possession relating
to the Premises and any major capital repairs or
tenant improvements, including, but not limited to,
bay depth and fire protection information will be
made available at Seller's office;
(14) Parking Information. To the extent
in Seller's possession, a parking plan (which may be
reflected on the Survey) reflecting the number of
parking spaces for the Premises and a comparison to
the number of parking spaces for the Premises
required by zoning requirements applicable to the
Property;
(15) Permits and Warranties. To the extent
in Seller's possession, copies of all warranties and
guaranties, permits, certificates of occupancy,
licenses and other approvals relating to the
Property will be made available, at Seller's office
and may be reviewed by Purchaser and, to the extent
desired, copies of same made by Purchaser;
(16) Financial Statements. Copies of a
statement of operations reflecting the operation of
the Property for the calendar years ended December
31, 1994 and 1995, and calendar year 1996 to date,
including statements of cash flow and year-end
balance sheets and statements of income, expense,
accounts payable and accounts receivable for each
such year, and fairly presenting the financial
position of Seller with respect to the Property at
the end or each such year and the results of the
operations thereof for such year;
(17) Operating Information. Copies of (a) to
the extent in Seller's possession, all utilities
bills relating to the Premises for the last twelve
(12) full calendar months, and a list of any utility
company deposits, (b) all insurance policies, a loss
history and any current claims relating to the
Property, (c) to the extent in Seller's possession,
all service contract billings, (d) to the extent in
Seller's possession all certificates of insurance of
each tenant, (e) all tax returns relating to the
Property for the past calendar year that are in
Seller's possession or control or in the possession
or control of Seller's agents or independent
contractors; (f) to the extent in Seller's
possession, details of any reserves and the back-up
for any projections upon which the reserves are
based; (g) year-to-date general ledger will be made
available at Seller's office; and (h) accounts
receivable aging report; all of which will be made
available, at Seller's office and may be reviewed by
Purchaser and, to the extent desired, copies of same
made by Purchaser;
(18) Management Report. To the extent in
Seller's possession copies of monthly management
reports for the Property for the calendar year 1995
and for the current year-to-date monthlies;
(19) Budget. Copy of Seller's most
recent budget for the Property including the
forthcoming calendar year, if applicable;
(20) Insurance. Copy of Seller's
certificate of insurance for the Property and the
Premises;
(21) Proceedings. Copies of any documents or
materials relating to any litigation, investigation,
condemnation, or proceeding of any kind, pending or
threatened, affecting any of the Property or the
ability of Seller to consummate the transaction
contemplated by this Agreement; and
(22) Information and Audit Cooperation. At
Purchaser's request, at any time before or after the
Closing, Seller shall provide to Purchaser's
designated independent auditor access to the books
and records of the Property, and all related
information regarding the period for which Purchaser
is required to have the Property audited under the
regulations of the Securities and Exchange
Commission, and Seller shall provide to such auditor
a representation letter regarding the books and
records of the Property, in substantially the form
of Exhibit I attached hereto, in connection with the
normal course of auditing the Property in accordance
with generally accepted auditing standards. The
Purchaser agrees to indemnify, defend and hold
harmless the Seller from any claim, damage, loss,
liability or cost to which Seller is at any time
subjected by any person who is not a party to this
Agreement as a result of Seller's compliance with
this paragraph.
Seller shall provide to Purchaser any documents
described above and coming into Seller's possession or
produced by Seller after the initial delivery above and
continue to provide same until Closing.
(b) From the date hereof until the Expiration
Date (the "Due Diligence Period"), Purchaser and its
consultants may inspect the Property and perform tests
thereto at Purchaser's expense; provided, however, that no
intrusive testing of any nature shall take place unless
Purchaser shall provide three (3) days advance written
notice of same, articulating in detail the nature of the
testing, the identity of the persons or firms retained to
conduct such testing, and providing proof of insurance in
an amount reasonably acceptable to Seller and otherwise
reasonably satisfactory to Seller, and Seller shall have
approved such testing; provided, however, such approval
shall not be unreasonably withheld. For non-invasive
testing, Purchaser shall notify Seller two (2) business
days prior to the date when Purchaser's agents or
consultants intend to make any entries, investigations or
inspections called for herein. In the event that
Purchaser or Purchaser's employees intend to meet with any
tenants, Purchaser will contact Seller at least 48 hours
in advance by telephone or fax to inform Seller regarding
Purchaser's intended meeting with any tenant and to allow
Seller the opportunity to attend such meeting if Seller
desires. In conducting any such entry, investigation,
test, or inspection, no party permitted entry hereunder
will unreasonably interfere with the operation of the
Property or the peaceable possession by individual tenants
of their respective premises or cause more than the
minimum disruption possible, and Purchaser will schedule
such testing and investigations to assure compliance
herewith. Upon the completion of any such inspection or
test, Purchaser shall restore the Property to its
condition prior to such inspection or test. Purchaser
shall indemnify, hold harmless and defend Seller from any
loss, cause of action or claim arising out of or resulting
from Purchaser's actions under this Subparagraph (b),
including without limitation any lien asserted against the
Property arising as a result of any such inspections or
tests. In the course of its investigations Purchaser may
make inquiries to third parties including, without
limitation, tenants, lenders, contractors, property
managers, parties to Contracts, and municipal, local and
other government officials and representatives, and Seller
consents to such inquiries. The obligations of the
Purchaser under this Subparagraph (b) shall survive the
termination of this Agreement.
To facilitate Purchaser's evaluation, Seller
shall give Purchaser and its counsel, accountants, and
representatives full access, at all reasonable times, to
all of its books and records with respect to ownership,
construction and operation of the Property, and the right
to copy the same, and shall furnish Purchaser with all
such documents and information concerning the same as
Purchaser may reasonably request and that are in the
possession or control of Seller or Seller's agents or
independent contractors.
(c) Purchaser may terminate this Agreement upon
written notice given to Title Insurer by the expiration of
the Due Diligence Period if Purchaser is not satisfied, in
Purchaser's sole and absolute discretion, with the
Property, the Property Information, or any other matter
whatsoever regarding the Property, for any reason or for
no reason. Title Insurer shall promptly deliver a copy of
such notice to Seller.
(d) Upon termination pursuant to this Paragraph
7, the Earnest Money shall be returned to Purchaser, and
neither party shall have any further liability or
obligation to the other except for the indemnity
provisions of Paragraph 7(b) hereof.
(e) During the Due Diligence Period, the
Purchaser will notify Seller which Contracts Purchaser
will assume and which Contracts are to be terminated by
Seller at Closing. Purchaser will assume the obligations
arising from and after Closing under those Contracts that
are not in default as of Closing and which Purchaser has
notified Seller that Purchaser will assume. Seller shall
terminate effective as of Closing all Contracts that are
not so assumed.
(f) As a condition to the Closing of the purchase
and sale hereunder, Purchaser must receive approval from
its Investment Committee on or before the Expiration Date.
In the event such condition is not satisfied or waived by
Purchaser, then Purchaser shall be entitled to terminate
this Agreement by written notice to Title Insurer on or
before the Expiration Date. Upon delivery of such notice,
the parties shall be released from all further obligations
under this Agreement, and the Earnest Money shall be
immediately returned to Purchaser and neither party shall
have any further liability or obligation to the other
except for the indemnity provisions of Paragraph 7(b)
hereof.
(g) Seller will deliver to each tenant shown on
the Rent Roll and to any ground lessee no later than five
(5) business days after the Execution Date the request
letter in the form attached hereto as a part of Exhibit G
(including such additions or modifications thereto as
Purchaser may request based upon its review of the
Leases), and will use commercially reasonable efforts to
cause each tenant and each ground lessee to execute and
deliver to Purchaser an estoppel certificate in the form
attached hereto as a part of Exhibit G (including such
additions or modifications thereto as Purchaser may
request based upon its review of the Leases), on or before
the date which is five (5) business days prior to the
Expiration Date.
8. Representations, Warranties and Covenants of Seller
Seller hereby makes the following representations,
warranties and covenants to and with Purchaser, which
representations, warranties and covenants are material, are being
relied upon by Purchaser (notwithstanding any independent
inspections or inquiries of Purchaser or Purchaser's
representatives), shall continue to be true at Closing and shall
survive Closing:
(a) (Intentionally left blank)
(b) (Intentionally left blank)
(c) To Seller's actual knowledge, the Property
Information delivered to Purchaser is, in each case, true,
complete and correct and accurately and completely
reflects the information it purports to provide.
(d) To Seller's actual knowledge, each tenant
shown on the Rent Roll is in possession of the respective
space; to Seller's actual knowledge, each Lease relating
to the Rent Roll is in full force and effect and has not
been amended, assigned or modified; no tenant has
asserted, or to Seller's actual knowledge has, any defense
to any Lease nor any claim against the lessor with respect
to or arising out of the tenancy; all obligations of
Seller, as landlord, under the Leases that have accrued
prior to Closing will be performed; to Seller's actual
knowledge no tenant is in default under their Lease except
as disclosed on Exhibit H; all work required to be done by
Seller, as landlord, has been or by Closing will be done
or finished unless otherwise agreed by the parties as
provided below and, to Seller's actual knowledge, no
tenant is entitled to any additional work during the term
of its Lease; no tenant has paid any rent in advance
except for the current month; to Seller's actual
knowledge, no tenant is entitled to any concession,
improvement, rebate, allowance, abatement or other benefit
except as set forth in the Rent Roll and Seller has
satisfied all of Seller's obligations as landlord under
the Leases that are conditions to the obligation of any
tenant to pay rent; to Seller's actual knowledge, except
for World Savings, no tenant has any option or other right
to purchase the Premises or any part thereof or interest
therein; to Seller's actual knowledge, there are no
adverse or other parties in possession of the Premises, or
of any part thereof, except Seller and tenants under the
written Leases; to Seller's actual knowledge, no tenant
has initiated or had initiated against it any insolvency,
bankruptcy, receivership or other similar proceeding; and
there are no leasing or other commissions due, nor will
any become due, in connection with any Lease, any renewal
or extension of any Lease and no understanding or
agreement with any party exists as to a payment of any
leasing commissions or fees regarding future leases or as
to procuring of tenants; and it is expressly understood
that any commission or referral fees with respect to new
or renewal Leases or other rental agreements for the
Premises, including any present or future renewals
thereof, will be paid or otherwise discharged or released
on or before the date of Closing.
(e) Except as scheduled on the list of Contracts
described in Paragraph 7(a)(6), there are no service
agreements, management agreements or other contracts as to
which Seller is a party with respect to the Property or
any part thereof. To Seller's actual knowledge, each
Contract is in full force and effect, neither party is in
default thereunder, and each Contract is terminable by
Seller at will without cost upon not more than thirty (30)
days notice.
(f) (Intentionally left blank)
(g) To Seller's actual knowledge, Seller has
received no written notice from any governmental authority
or other person of, and has no actual knowledge of: (i)
any violation of zoning, building, fire, health,
environmental, or other statutes, ordinances, regulations
or orders (including those respecting the Americans with
Disabilities Act), or any restriction, condition, covenant
or consent, in regard to the Property or any part thereof
which have not been corrected; (ii) any special tax or
assessment to be levied against the Premises, except as
may be disclosed on the Commitment; or (iii) any change in
the tax assessment or zoning of the Premises. To Seller's
actual knowledge, the Premises are zoned for its current
use and operation without relying for compliance upon a
variance or a preexisting, nonconforming use and all
requirements imposed by the Americans With Disabilities
Act have been satisfied with respect to the premises.
(h) There is no pending or, to Seller's actual
knowledge, threatened litigation, condemnation proceeding,
governmental investigation or like proceeding before any
court, tribunal, or other governmental agency respecting
the Property or the operation of the Property by Seller,
nor to Seller's actual knowledge is there any basis for
any such action.
(i) To Seller's actual knowledge, except as may
be disclosed on the Commitment, there are no donations of
monies or land or payments, other than real estate taxes,
for schools, parks, fire departments or any other public
facilities or for any other reason which are or will be
required to be made by an owner of the Premises.
(j) To Seller's actual knowledge, except as may
be disclosed on the Commitment, there are no obligations
or bonds burdening the Premises created by any agreement
involving sewer or water extension or other improvement to
any sewer or water systems, utility, lighting or other
expense or charge for work or services done upon or
relating to the Premises which will bind the Purchaser or
the Premises from and after the Closing.
(k) Neither Seller nor, to Seller's actual
knowledge, any other person has ever caused or permitted
any Hazardous Material (hereinafter defined) to be placed,
held, located or disposed of on, under or at the Property
or any part thereof in violation of Environmental Laws,
and the Property has never been used (whether by Seller
or, to the best knowledge of Seller, by any other person)
as a dump site or storage (whether permanent or temporary)
site for any Hazardous Material, except as expressly
disclosed in any environmental reports which were prepared
for Seller with respect to the Property and which were
delivered pursuant to Paragraph 7(a)(9) to Purchaser. To
Seller's actual knowledge, the soils comprising the
Property contain no Hazardous Material with respect to
which the removal, clean-up or taking of other remedial
action is or would be required under Environmental Law
(hereafter defined), except as expressly disclosed in any
environmental reports which were prepared for Seller with
respect to the Property and which were delivered pursuant
to Paragraph 7(a)(9) to Purchaser. For the purposes of
this Agreement, the term "Hazardous Material" means and
includes any hazardous, toxic or dangerous waste substance
or material defined as a "hazardous waste", "hazardous
material", "hazardous substance", "extremely hazardous
waste", "restricted hazardous waste" or similar term in or
for purposes of (i) any provision of state law; (ii) the
Comprehensive Environmental Response, Compensation and
Liability Act, as amended (42 U.S.C. Section 9601 et
seq.); (iii) the Clean Water Act, as amended (33 U.S.C.
Section 1251 et seq.); (iv) the Resource Conservation and
Recovery Act, as amended, (42 U.S.C. Section 6901 et
seq.); (v) any so-called "Superfund" or "Superlien" law;
or (vi) any other federal, state or local statute, law,
ordinance, code, rule, regulation, order, decree or other
requirement of any governmental authority regulating,
relating to, or imposing liability or standards of conduct
concerning, any hazardous, toxic or dangerous waste,
substance or material, as now or at any time hereafter in
effect. The term "Environmental Laws" shall mean all
statutes specifically described in the preceding sentence
and all federal, state and local environmental health and
safety statutes, ordinances, codes, rules, regulations,
orders and decrees applicable to the Property now or
hereafter in effect regulating, relating to or imposing
liability or standards of conduct concerning or in
connection with Hazardous Materials, the environment,
pollution or occupational health and safety.
Notwithstanding any other provision hereof to the
contrary, Seller hereby advises Purchaser that a dry
cleaner has operated at the Property since the opening of
the Property for business, and Seller makes no
representation or warranty with respect to the compliance
of such dry cleaner with Environmental Laws.
(l) To Seller's actual knowledge, there is not
now, nor has there been in the past, any asbestos or
asbestos-containing materials located on, incorporated in,
or otherwise contained in the Property or any portion
thereof, and there are not now, and have not in the past
been, any underground storage tanks or similar facilities
located on the Property or any portion thereof, except as
expressly disclosed in any environmental reports which
were prepared for Seller with respect to the Property and
which were delivered pursuant to Paragraph 7(a)(9) to
Purchaser. Notwithstanding any other provision hereof to
the contrary, Seller hereby discloses to Purchaser that
asbestos has been removed from certain roof flashings on
the Property, and Seller makes no representation or
warranty that all asbestos previously contained in the
roof flashings has been removed.
(m) Seller does not participate in any multi-employer plan
subject to Title IV of ERISA.
(n) Seller is validly existing as a Colorado
general partnership, and Seller is in good standing and is
qualified to do business in the state where the Premises
are located. Seller has the full right and authority and
has obtained any and all consents required therefor to
enter into and fully perform this Agreement. This
Agreement and all of the documents to be delivered by
Seller at the Closing have been and will be duly
authorized and properly executed and will constitute the
valid and binding obligations of Seller, enforceable in
accordance with their terms. There is no agreement to
which Seller is a party or, to Seller's knowledge, binding
on Seller which is in conflict with this Agreement. No
consent, waiver, approval, or authorization of, or filing,
registration, or qualification with, or notice to, any
governmental instrumentality or any other entity or person
(including without limitation, its directors or
shareholders if Seller is a corporation, or its partners,
if Seller is a partnership) is required to be made,
obtained, or given by Seller in connection with the
execution, delivery, and performance of this Agreement.
There are no attachments, executions, assignments for the
benefit of creditors or voluntary or involuntary
proceedings in bankruptcy, or under any other debtor
relief laws contemplated by, pending against or threatened
against Seller or the Property.
(o) Seller (i) to Seller's actual knowledge has
obtained all certificates of occupancy, licenses, and
permits which, to Seller's knowledge, are required for
operating the Property and all of such certificates of
occupancy, licenses, and permits are in full force and
effect, (ii) to Seller's actual knowledge has not taken
(or failed to take) any action that would result in the
revocation of such certificates of occupancy, licenses, or
permits, and (iii) has not received any written notice of
an intention to revoke any certificate of occupancy,
license, or permit issued in connection with the Property.
(p) Except for service contracts which are
terminable by Purchaser after Closing by thirty (30) day's
prior written notice and debts, liabilities, and
obligations for which provision is herein made for
proration or other adjustment at Closing, there will be no
debts, liabilities, liens on the Property (other than
general and special real estate taxes and assessments
identified on the Commitment) which secure obligations of
Seller with respect to the Property outstanding as of
Closing.
(q) Seller has not received written notice from
any insurance company or board of fire underwriters
requesting the performance of any work or alteration with
respect to the Property, or requiring an increase in the
insurance rates applicable to the Property, or that the
Property is not in compliance with the requirements of any
insurance carriers providing insurance therefor.
(r) To Seller's actual knowledge, the Property
(including but not limited to the water, sewer, heating,
electrical, plumbing, air conditioning, and other
mechanical systems) are, and as of the Closing will be, in
good repair, condition, and working order, free from
latent and apparent defects, normal wear and tear
excepted. Without limiting the generality of the
foregoing, to the best of Seller's actual knowledge the
roofs, walls, and foundations of the Improvements are free
from leaks and seepage of moisture, and are in sound
structural condition. The representations set forth in
this Paragraph 8(r) are qualified by any disclosures made
by Seller on Exhibit H.
(s) To Seller's actual knowledge, all water,
sewer, gas, electric, telephone, and drainage facilities,
and other utilities required by law for the normal and
proper operation of the Property are installed to the
property line of the Property and are connected with valid
permits, and are adequate to serve the Property for its
current use and to permit full compliance with all
requirements of law and the Leases. All permits and
connection fees are fully paid and, to Seller's actual
knowledge, no action is necessary on the part of Purchaser
to transfer such permits to it. To Seller's actual
knowledge, all utilities serving the Property enter it
through currently effective public or private easements.
To Seller's actual knowledge, no fact or condition exists
which would result in the termination of such utilities
services to the Property.
(t) The Premises has direct access to all streets
and roadways abutting the Premises, all of which are
completed and, to Seller's actual knowledge, dedicated
streets and roadways that have been accepted for public
maintenance by the appropriate governmental
instrumentality. To Seller's actual knowledge no fact or
condition exists which would result in the termination of
ingress and egress.
(u) To Seller's actual knowledge, the Premises is
an independent unit which does not now rely on any
facilities (other than facilities covered by Permitted
Exceptions or facilities of municipalities or public
utilities) located on any property that is not part of the
Premises to fulfill any municipal or other governmental
requirement, or for the furnishing to the Premises of any
essential building systems or utilities (including
drainage facilities, catch basins, and retention ponds).
To Seller's actual knowledge, no other building or other
property that is not part of the Premises relies upon any
part of the Premises to fulfill any municipal or other
governmental requirement, or to provide any essential
building systems or utilities.
(v) None of the employees of Seller at the
Premises are employed pursuant to a written agreement and
all employees may be terminated at will. Seller has not
entered into any union contracts pertaining to employees
at the Premises nor is the Premises subject to any union
contract, nor is Seller aware of any efforts to organize
any or all of the employees of Seller at the Premises into
a union or other collective bargaining arrangement. The
services of all employees of Seller have been or will be
terminated in connection with the Premises effective as of
Closing, Seller agreeing and representing that Purchaser
shall have no obligation whatsoever to any of the
officers, agents or employees of Seller relating to any
employment with respect to the Premises or otherwise, and
Seller agrees to indemnify, defend and save Purchaser
harmless from any liability or obligation arising under
any claim to such employment.
(w) The sale and conveyance of the Property by
Seller to Purchaser pursuant to this Agreement shall not
cause a violation of any law, statute, ordinance,
regulation or order.
(x) Between the date of this Agreement and
Closing:
(1 Seller will continue to operate and
maintain the Property in good condition and repair
in accordance with past practices and Seller's
ordinary course of business and will not make any
removals, alterations, or changes thereto except in
accordance with Seller's ordinary course of
business;
(2) Seller will not sell, transfer, lease
(except as expressly provided herein), convey or
encumber, or cause to be sold, transferred, leased,
conveyed or encumbered, the Property, or any part
thereof or interest therein, or alter the zoning
classification of the Premises, or otherwise perform
or permit any act which will diminish, encumber or
affect Seller's rights in and to the Property or
prevent it from performing fully its obligations
hereunder;
(3) Seller will not commit any default under
any of the Leases or any of the Contracts;
(4) Seller will not amend or cancel any
Lease except for nonpayment of rent, will not renew
or extend any Lease or Contract, and will not enter
into any new lease or contract for all or any part
of the Property (except for retail space which is
not leased on the Execution Date as and to the
extent expressly provided below), without in each
case the prior express written consent of
Purchaser, which consent may be granted or withheld
in Purchaser's sole discretion; provided, however,
Seller may, prior to the end of the Due Diligence
Period, enter into new leases for retail space which
is not leased on the Execution Date in the ordinary
course of business, provided that any such lease
satisfies the written leasing parameters which
Seller has provided to Purchaser concurrent with, or
prior to, the execution of this Agreement (it is
expressly understood that the leasing parameters
will include a requirement that the tenants will be
responsible for any tenant finish work) and,
provided further, however, any such new lease must
be approved by Purchaser, which approval will not be
unreasonably withheld or delayed. Notwithstanding
anything to the contrary contained in this
Agreement, if Purchaser so approves any such new
lease, then (i) if Seller has paid any tenant finish
allowance to or for the benefit of the tenant or
leasing commissions to third parties, then Purchaser
shall reimburse Seller at Closing for such costs
prorated based on the length of the lease term
following Closing; or (ii) if the tenant has not
occupied the space and Seller has not paid any
tenant finish allowance to the tenant or leasing
commissions to third parties, then Purchaser shall
assume such obligations for the period from and
after the Closing. Notwithstanding anything to the
contrary contained herein, Seller may, prior to the
end of the Due Diligence Period, renew or extend any
Lease or Contract in the ordinary course of business
without the prior consent of Purchaser.
(5) Seller will maintain fire and extended
coverage casualty insurance in force with respect to
the Premises in an amount equal to the full
replacement cost of the Premises, with a deductible
amount not exceeding Ten Thousand Dollars
($10,000.00);
(6) Subject to the provisions of Paragraph
7(b) Seller will permit Purchaser and its
representatives at all reasonable times to inspect
the Property and to inspect and make copies of all
books, records, documents, and other papers and
information in the possession of Seller relating to
the Property;
(7) Seller will promptly disclose in writing
to Purchaser any material matter hereafter arising
which, if existing, occurring or known at the date
of this Agreement would have been required to be
disclosed to Purchaser or which would render
inaccurate any of the representations, warranties or
statements set forth in this Agreement. No
information provided shall be deemed to cure any
breach of any representation, warranty or covenant
made in this Agreement.
Seller expressly acknowledges and agrees that
(i) Purchaser (and any assignee of Purchaser
permitted hereunder) is and will be relying upon the
representations and warranties of Seller as
aforesaid, (ii) the same are a material inducement
to Purchaser to enter into this Agreement and to any
assignee of Purchaser to accept an assignment of
Purchaser's rights and obligations hereunder, and
(iii) all such representations and warranties shall
survive the delivery of the Deed and the
consummation of this transaction for a period of one
(1) year following the delivery of the Deed. Seller
agrees to, and does hereby, indemnify Purchaser and
any and all assignees from Purchaser, and hold them
harmless from and against any and all liability,
loss, cost, or expense (including reasonable
attorney's fees) arising out of or in any way
connected with material misrepresentation or breach
of warranty of Seller contained in this Agreement,
provided action thereon is filed within one (1) year
following delivery of the Deed. The terms "Seller's
actual knowledge" and "Seller's best knowledge," as
used in this Agreement, mean the present and
conscious awareness or knowledge, without
investigation or inquiry, of John Leineweber, the
individual employed by Seller's asset manager having
the most current knowledge of the Property, who in
no event shall incur any personal liability
whatsoever; it does not include constructive
knowledge, imputed knowledge, or knowledge Seller or
such person does not have but could have obtained
through further investigation or inquiry. No
broker, agent, or party other than Seller is
authorized to make any representation or warranty
for or on behalf of Seller. Seller makes no
warranty or representation not expressly set forth
in this Agreement. In no event shall Seller have
liability hereunder for breach or inaccuracy of any
representations or warranties made to Seller's
actual knowledge or best knowledge in the absence of
a judicial determination that John Leineweber had
actual conscious knowledge that such representation
or warranty was false when made.
Notwithstanding anything to the contrary
contained in this Paragraph 8, Seller's
representations in Paragraphs 8 (r), (s), (t) and
(u) are qualified by the disclosures, if any, listed
on Exhibit H attached hereto and made a part hereof.
9. Closing
(a) The closing ("Closing") shall occur through
the escrow referred to in Subparagraph (b), and shall take
place at the offices of the Title Insurer on the date
which is fifteen (15) days after the Expiration Date
[subject to extension as provided in Paragraph 19(u)] or
on such earlier date as Purchaser may elect by at least
three (3) days' prior written notice to Seller, provided
that all conditions precedent to the Closing have been
fulfilled or have been waived in writing by the respective
party entitled to waive same.
(b) All Closing deposits, except for funds, shall
be deposited in escrow with the Title Insurer at least
three (3) business days prior to Closing.
10. Conditions to Purchaser's Obligations to Close
(a) Purchaser shall not be obligated to proceed
with the Closing unless and until each of the following
conditions has been either fulfilled or waived in writing
by Purchaser:
(1) There shall have been no uncured breach
of any representation, warranty or covenant given by
Seller herein; for purposes of this Clause (1), a
representation shall be false for the purposes only
of this Clause (1) if the factual matter that is the
subject of the representation is false
notwithstanding any lack of knowledge or notice to
the party making the representation;
(2) This Agreement shall not have been
previously terminated pursuant to any other
provision hereof;
(3) Title Insurer or Seller shall be
prepared to unconditionally deliver to Purchaser all
instruments and documents to be delivered to
Purchaser at Closing pursuant to Paragraph 12 or any
other provision of this Agreement; and
(4) Purchaser has received from each Major
Tenant (as hereinafter defined) under the Leases an
estoppel certificate substantially in the form
attached hereto as a part of Exhibit G (including
such additions or modifications thereto as Purchaser
may have requested), duly executed by each Major
Tenant and showing rental and other obligations of
the Major Tenants to be consistent with the Rent
Roll to be provided pursuant to Paragraph 7(a)(1).
Notwithstanding anything contained herein to the
contrary, in the event that as of the Closing date
there is a disclosure or statement by any Major
Tenant in any estoppel certificate delivered
pursuant to this Paragraph 10(a)(4) which indicates
or asserts a default or other issue of a material
nature, then same shall be construed as an
unsatisfied condition to Purchaser's obligations to
perform hereunder. As used herein, "Major Tenant"
shall mean a ground lessee or any tenant under a
Lease who has leased more than 2,000 rentable square
feet of space in the Premises and "Major Tenants"
shall mean all ground lessees and all tenants under
the Leases who have individually leased more than
2,000 square feet of rentable space in the Premises.
This Paragraph 10(a)(4) is intended by Seller and
Purchaser as a condition precedent to Purchaser's
obligation hereunder only and the failure of such
condition will not be a default of Seller.
(b) In the event that any of the foregoing
conditions shall not have been fulfilled on or before the
time for Closing hereunder, Purchaser may elect, upon
notice to Seller, to terminate this Agreement, in which
event the Earnest Money shall be returned to Purchaser,
and unless Seller is in default hereunder, in which case
Paragraph 15(b) shall apply, neither party shall have any
further liability or obligation to the other except for
the indemnity provisions of Paragraph 7(b) hereof.
11. Conditions to Seller's Obligation to Close
(a) Seller shall not be obligated to proceed with
the Closing unless and until each of the following
conditions have been fulfilled or waived in writing by
Seller:
(1) Purchaser shall be prepared to pay to
Seller all amounts due Seller at Closing pursuant to
the provisions of this Agreement;
(2) This Agreement shall not have been
previously terminated pursuant to any other
provision hereof; and
(3) Title Insurer or Purchaser shall be
prepared to deliver to Seller all instruments and
documents to be delivered to Seller at the Closing
pursuant to any provision of this Agreement.
(b) In the event that any of the foregoing
conditions are not fulfilled on or before the time for
Closing hereunder, then Seller may elect, upon notice to
Purchaser, to terminate this Agreement, in which event the
Earnest Money shall be returned to Purchaser, unless
Purchaser is in default hereunder, in which case
Paragraph 15(a) shall apply, neither party shall have any
further liability or obligation to the other except for
the provisions of Paragraph 7(b) hereof.
12. Documents to be Delivered to Purchaser At Closing
(a) At or prior to Closing, Seller shall deliver
or cause to be delivered to Purchaser through the Title
Insurer or otherwise, each of the following instruments
and documents:
(1) A special warranty deed in form provided
for under the law of the state where the Premises is
located and otherwise in conformity with the custom
in such jurisdiction and mutually satisfactory to
the parties, executed and acknowledged by Seller,
conveying to Purchaser good, indefeasible and
marketable fee simple title to the Premises, subject
only to the Permitted Exceptions (the "Deed").
(2) The Bill of Sale and Assignment in the
form of Exhibit C, executed by Seller.
(3) A notice to each tenant and guarantor in
the form of Exhibit F attached hereto.
(4) An owner's title insurance policy issued
by Title Insurer (or a proforma of same in form
acceptable to Purchaser) on behalf of an underwriter
approved by Purchaser, dated the date of Closing, in
the full amount of the Purchase Price, the form of
which shall be American Land Title Association
Owner's Policy, Standard Form B, subject only to the
standard exclusions from coverage contained in such
policy (the "Title Policy"). The Title Policy may
contain the Permitted Exceptions. The Title Policy
shall insure good, fee simple, indefeasible, and
marketable title to the Property in Purchaser with
full extended coverage over all general exceptions,
and containing the following endorsements (or
equivalent endorsements) if available in the
jurisdiction where the Premises are located and
requested by Purchaser (and confirmed in writing by
the Title Insurer to be available prior to the
Expiration Date) and at the Purchaser's expenses:
zoning 3.1 with parking and loading; location;
contiguity, access; restrictions; creditor's rights;
separate tax lot and survey and such other
endorsements as Purchaser may reasonably request.
Purchaser shall not be obligated to close the
transaction herein contemplated unless at Closing
the Title Insurer has committed in writing to issue
the Title Policy.
(5) A certificate of Seller that all
representations and warranties made by Seller in
this Agreement are true as of Closing or reflecting
any necessary corrections, provided, however if such
certificate contains any exceptions or corrections,
then the condition precedent to Purchaser's
obligations under the Agreement which is set forth
in Paragraph 10(a)(1) of the Agreement shall be
deemed to be unsatisfied, unless Purchaser, at its
sole option, elects to waive such condition
precedent as it relates to the Seller's certificate;
(6) An estoppel certificate from each ground
lease and each Major Tenant of the Premises, in the
form attached hereto as Exhibit G. Such estoppel
certificates: (i) must be consistent with the Rent
Roll delivered pursuant to Paragraph 7(a)(1), and
(ii) must be dated no earlier than thirty (30) days
before the Closing date. If Seller fails to provide
estoppel certificates in such form, then this
Agreement, at Purchaser's sole option, may be
terminated upon written notice to Title Insurer
prior to the Closing. Upon delivery of such
termination notice, this Agreement shall
automatically terminate, the parties shall be
released from all further obligations under this
Agreement except as set forth in Paragraph 7(b), and
the Earnest Money shall be immediately returned to
Purchaser;
(7) Original copies of any required real
estate transfer tax declarations executed by Seller
or any other similar documentation, if applicable,
required to evidence the payment of any tax imposed
by the state, county and city on the transaction
contemplated hereby;
(8) An affidavit stating Seller's U.S.
taxpayer identification number and that Seller is a
"United States person", as defined by Internal
Revenue Code Section 1445(f)(3) and Section 7701(b);
(9) To the extent in Seller's possession,
original Leases and assumed Contracts, the
certificate of occupancy for the Premises and all
assignable licenses and permits relating to the use,
occupancy or operation of the Premises, copies or
originals of all books and records of account,
contracts, copies of correspondence with tenants and
suppliers, receipts for deposits, unpaid bills and
other papers or documents which pertain to the
Property together with all advertising materials,
booklets, keys and other items, if any, used in the
operation of the Property, and the original "as-built" plans
and specifications and all other
available plans and specifications;
(10) Settlement or closing statement;
(11) Rent roll as of a date not more than
five (5) days prior to the Closing certified by
Seller as true and complete and showing no adverse
changes from the Rent Roll delivered pursuant to
Paragraph 7(a)(1) hereof (the factual accuracy of
this Paragraph 12(a)(11) is intended by Seller and
Purchaser as a condition precedent to Purchaser's
obligations hereunder only and if the rent roll so
provided by Seller shows adverse changes, then same
shall be deemed to be an unfulfilled condition to
Purchaser's obligations and not a default of
Seller); and
(12) Such other documents and instruments as
may be required by any other provision of this
Agreement or as may reasonably be required by Title
Insurer or otherwise to carry out the terms and
intent of this Agreement.
(b) At or prior to Closing, Purchaser shall
deliver or cause to be delivered to Seller through the
Title Insurer or otherwise, the following:
(1) The Purchase Price plus or minus
prorations and credits;
(2) The Bill of Sale and Assignment of
Leases;
(3) Settlement or closing statement; and
(4) Such other documents and instruments as
may be required by any other provision of this
Agreement or as may reasonably be required by Title
Insurer or otherwise to carry out the terms and
intent of this Agreement.
13. Prorations and Adjustments
(a) The following shall be prorated and adjusted
between Seller and Purchaser as of midnight of the day
preceding the Closing, except as otherwise specified:
(1) Tenant rents (including payments for
taxes, utilities, common area maintenance, insurance
and other operating costs ("Charges"). In the event
that any refunds or credits are due and owing to a
tenant at the end of a lease year for Charges,
Seller shall promptly remit Seller's pro rata
portion of such amount to Purchaser upon receipt of
a notice from Purchaser that same shall be due and
payable.
(2) Delinquent tenant rents (including
payments for taxes, utilities, common area
maintenance, insurance and other operating costs),
if and when collected by Purchaser, shall be paid to
Seller to the extent of Seller's interest therein,
and if not collected within one hundred twenty (120)
days after Closing, the right to collect same will
be assigned to Seller without recourse. For
purposes of this Subparagraph (2), all rents
received by Purchaser shall first be applied to the
current months' rents, and then to delinquent rent
in the inverse order of delinquency.
(3) Percentage rents shall be separately
prorated under each Lease on the basis of the lease
year set forth in such Lease for the payment of
percentage rents. All percentage rent payments for
the lease year including Closing made prior to
Closing shall be credited to Purchaser. All
payments of percentage rent for the lease year
including Closing received by either party on or
after Closing shall be retained by, or remitted to,
Purchaser, as the case may be, until determination
of Seller's allocable share thereof in each
instance. Upon final determination of percentage
rents owed by a tenant under its Lease for the lease
year under such Lease in which Closing occurs,
Seller and Purchaser shall adjust between themselves
amounts owed for such lease year on account of
percentage rents, and Seller's allocable share of
such percentage rents shall be an amount equal to
(A) the amount by which the tenant's sales for that
portion of such lease year occurring prior to
Closing exceeds (1) the amount specified in such
tenant's Lease as being the amount of gross sales of
such tenant for such year before such tenant shall
be obligated to pay percentage rent for such lease
year multiplied by (2) a fraction the numerator of
which is the number of days in such lease year prior
to Closing and the denominator of which is the total
number of days in such lease year; multiplied by
(B) the percentage specified in such tenant's Lease
to be used in determining such tenant's percentage
rent for such lease year.
(4) The amount of all unapplied tenant
security deposits, and any accrued interest due
tenants thereon, shall be credited to Purchaser.
(5) The amount of any other credits due
tenants shall be credited to Purchaser.
(6) Prepaid charges in connection with any
Contracts that Purchaser elects to assume, or
licenses or permits, shall be credited to Seller.
Accrued charges in connection with such Contracts,
or licenses or permits, shall be credited to
Purchaser.
(7) All real property taxes for the year
immediately preceding the year of Closing that are
payable in the year of Closing, and for years prior
thereto, shall be paid by Seller on or before the
Closing. Real property taxes for the year of
Closing shall be prorated on the basis of the most
recent assessment and levy. Any and all claims or
rights to appeal the amount of any real property
taxes or other taxes charged in connection with the
Premises, shall belong to Purchaser following the
Closing.
(8) Special assessments for work commenced
as of the date of this Agreement shall be prorated
between Seller and Purchaser such that Seller shall
be responsible for all installment payments due
prior to Closing and Purchaser shall be responsible
for all installment payments due following the
Closing. Special assessments for improvements as to
which no work has commenced as of the date of this
Agreement shall be paid exclusively by Purchaser.
(9) Any assessments imposed by private
covenant.
(10) Except to the extent such items are the
responsibility of tenants, prepaid water, sewer, and
other utility charges shall be credited to Seller,
and accrued water, sewer, and other utility charges
shall be credited to Purchaser.
(11) Except as provided in the last sentence
of Subparagraph 8(x)(4), any and all commissions of
leasing and rental agents for any Lease entered into
before the date of Closing shall be paid by Seller
prior to Closing.
(12) All other items customarily prorated or
required by any other provision of this Agreement to
be prorated or adjusted.
(b) At Closing, the amount of prorations and
adjustments as aforesaid shall be determined or estimated
to the extent practicable, and monetary adjustment shall
be made between Seller and Purchaser. As the amounts of
the respective items become finally ascertained, further
adjustment shall be promptly made between the parties in
cash within 180 days after the Closing.
14. Indemnity
(a) Subject to the limitations in the last two
full paragraphs of Paragraph 8 immediately following
Subparagraph 8(x)(7), Seller agrees to indemnify and hold
Purchaser harmless of and from any and all liabilities,
claims, demands and expenses (except those items which by
this Agreement specifically become the obligation of
Purchaser), arising or accruing prior to Closing as a
result of (i) any injury relating to the Property that
shall have occurred to persons or the property of third
parties prior to the Closing, other than as the result of
the acts or wrongful omissions of Purchaser and/or any of
its officers, employees, agents, representatives and/or
contractors, and (ii) any breach by Seller of any of its
obligations as landlord under the Leases or any Lease
occurring prior to the Closing, and all expenses related
thereto, including, without limitation, court costs and
attorneys' fees.
(b) Purchaser agrees to indemnify and hold Seller
harmless of and from any and all liabilities, claims,
demands and expenses arising or accruing after Closing and
which are in any way related to (i) any injury relating to
the Property that shall have occurred to persons or the
property of third parties after the Closing, and (ii) any
breach by Purchaser of any of its obligations as landlord
under the Leases or any Lease occurring after the Closing,
and all expenses related thereto, including, without
limitation, court costs and attorney's fees.
(c) The indemnities set forth in this Paragraph
14 shall survive Closing.
15. Default
(a) If Purchaser defaults hereunder, then
provided Seller is not in default hereunder, Seller's sole
and exclusive remedy shall be to terminate this Agreement
by giving written notice thereof to Purchaser, whereupon
the Earnest Money shall be paid to Seller as liquidated
damages, as Seller's sole and exclusive remedy on account
of such default hereunder by Purchaser, and neither party
shall have any further liability or obligation to the
other except as set forth in Paragraph 7(b). The parties
acknowledge and agree that actual damages in such event
are uncertain in amount and difficult to ascertain and
that said amount of liquidated damages was reasonably
determined.
(b) If Seller defaults hereunder, then provided
Purchaser is not in default hereunder, Purchaser may, at
its sole election do one of the following:
(1) Terminate this Agreement, whereupon the
Earnest Money shall be returned and paid to
Purchaser, and neither party shall have any further
liability or obligation to the other except as set
forth in Paragraph 7(b);
(2) Enforce specific performance of this
Agreement against Seller, in which event Purchaser
shall be deemed to have accepted Seller's title to
the Property; or
(3) In the event of any willful, knowing, or
intentional default by Seller, exercise any other
right or remedy Purchaser may have at law or in
equity by reason of such default including, but not
limited to, the recovery of attorneys' fees incurred
by Purchaser in connection therewith.
16. Expenses
(a) All recording fees, conveyance fees, fees for
releasing liens and encumbrances, title insurance charges
(except as provided in (b) below), state, county and local
transfer or documentary stamp taxes (or similar items),
Survey cost, and one-half (1/2) of the escrow fee shall be
paid by Seller.
(b) The Title Policy endorsements which are
identified in Paragraph 12(a)(4) as Purchaser's expenses
and one-half (1/2) of the escrow fee shall be paid by
Purchaser.
(c) Other costs, charges and expenses shall be
paid as provided in this Agreement, or in the absence of
such provisions, in accordance with local custom.
17. Intermediaries
(a) Purchaser and Seller acknowledge and agree
that Grubb & Ellis Co. (the "Principal Agent") has acted
as broker in connection with this transaction. If, as and
when the Closing occurs, Seller agrees to pay a commission
to the Principal Agent pursuant to a separate commission
agreement between Seller and the Principal Agent. The
right of the Principal Agent to such commission shall
irrevocably vest upon the Closing. No such commission
shall be earned or payable if the Closing fails to occur
for any reason whatsoever. The Principal Agent may divide
its commission with any other licensed real estate brokers
or salesmen but, notwithstanding any such agreement for
division of the commission, Seller and Purchaser shall be
fully protected in paying the commission set forth above
to the Principal Agent. Such commission shall be payable
in cash or current funds at the Closing.
(b) Seller hereby represents and warrants to
Purchaser that it has not contacted or entered into any
agreement with any real estate broker, agent, finder, or
any other party in connection with this transaction, other
than the Principal Agent, and that it has not taken any
action which would result in any real estate broker's,
finder's, or other fees or commissions being due or
payable to any other party with respect to the transaction
contemplated hereby. Purchaser hereby represents and
warrants to Seller that Purchaser has not contacted or
entered into any agreement with any real estate broker,
agent, finder, or any other party in connection with this
transaction, other than the Principal Agent, and that it
has not taken any action which would result in any real
estate broker's, finder's, or other fees or commissions
being due or payable to any other party with respect to
the transaction contemplated hereby. Each party hereby
indemnifies and agrees to hold the other party harmless
from any loss, liability, damage, cost, or expense
(including reasonable attorneys' fees) resulting to the
other party by reason of a breach of the representation
and warranty made by such party herein. Notwithstanding
anything to the contrary contained herein, the indemnities
set forth in this Paragraph 17(b) shall survive the
Closing.
18. Destruction of Improvements; Condemnation
(a) If, prior to Closing, any of the Improvements
are damaged or destroyed, such that either (i) the cost of
repair is reasonably likely to exceed $250,000, or
(ii) any tenant of the Premises is entitled to terminate
its lease; or condemnation proceedings against the
Premises are threatened or commenced ("Condemnation"),
Seller shall notify Purchaser of such damage, destruction,
or Condemnation and Purchaser shall elect within fourteen
(14) days from and after receipt of such notice, by
written notice to Seller, either:
(1) To terminate this Agreement, in which
event the Earnest Money shall be returned to
Purchaser and, except for the indemnity provisions
of Paragraph 7(b), this Agreement shall be void and
of no further force and effect;
(2) To close the transaction contemplated
hereby without a reduction in Purchase Price, in
which event (A) Seller shall assign to Purchaser at
Closing Seller's rights in any insurance proceeds or
Condemnation award to be paid to Seller in
connection with such damage, destruction or
Condemnation, and (B) in the case of damage or
destruction, at Closing Purchaser shall receive a
credit against the Purchase Price in an amount equal
to the deductible amount under Seller's casualty
insurance.
If Purchaser does not make such election within the
aforesaid 14-day period, Purchaser shall be deemed to have
elected to close the transaction contemplated hereby in
accordance with Clause (2) of this Subparagraph (a).
(b) If, prior to Closing, any Improvements are
damaged such that the cost of repair is reasonably likely
not to exceed $250,000, and no tenant is entitled to
terminate its Lease by reason thereof, Seller shall cause
such repairs to be made at Seller's expense prior to
Closing (and Purchaser may elect to delay Closing until
completion of said repairs).
19. General Provisions
(a) This written Agreement, including all
exhibits attached hereto and documents to be delivered
pursuant hereto, shall constitute the entire agreement and
understanding of the parties, and there are no other prior
or contemporaneous written or oral agreements,
undertakings, promises, warranties, or covenants not
contained herein.
(b) This Agreement may be amended only by a
written agreement or memorandum subsequently executed by
both of the parties hereto.
(c) No waiver of any provision or condition of
this Agreement by any party shall be valid unless in
writing signed by such party. No such waiver shall be
taken as a waiver of any other or similar provision or of
any future event, act, or default.
(d) Time is of the essence of this Agreement. In
the computation of any period of time provided for in this
Agreement or by law, the day of the act or event from
which said period of time runs shall be excluded, and the
last day of such period shall be included, unless it is a
Saturday, Sunday, or legal holiday, in which case the
period shall be deemed to run until the end of the next
day which is not a Saturday, Sunday, or legal holiday.
(e) In the event that any provision of this
Agreement shall be unenforceable in whole or in part, such
provision shall be limited to the extent necessary to
render the same valid, or shall be excised from this
Agreement, as circumstances require, and this Agreement
shall be construed as if said provision had been
incorporated herein as so limited, or as if said provision
has not been included herein, as the case may be.
(f) Headings of paragraphs are for convenience of
reference only, and shall not be construed as a part of
this Agreement.
(g) This Agreement shall be binding upon and
shall inure to the benefits of the parties hereto, and
their respective heirs, executors, personal
representatives, successors, and assigns; provided,
however, that this Agreement may not be assigned by
Purchaser without the consent of Seller which consent will
not be unreasonably withheld or delayed; and upon said
assignment and assumption by the assignee of Purchaser,
Purchaser shall not be relieved of any further obligation
under this Agreement or under any document or instrument
executed pursuant hereto.
(h) All notices and other communications required
or permitted hereunder shall be in writing and shall be
mailed, hand delivered, sent by Federal Express or other
recognized overnight courier service, or sent by facsimile
transmission, to the parties as follows:
(1) To Purchaser:
Pacific Retail Trust
8140 Walnut Hill Lane, Suite 400
Dallas, Texas 75231
Attn: Dennis H. Alberts
Facsimile: 214/696-9512
With a copy at the same time to Purchaser's counsel:
Haynes and Boone, L.L.P.
3100 NationsBank Plaza
901 Main Street
Dallas, Texas 75202-3789
Attn: Steven R. Jenkins
Facsimile: 214/651-5940
(2) To Seller:
Buckley Square Associates
c/o LaSalle Advisors Limited
1601 Response Road
Sacramento, California 95815
Attn: Michael D. Westfall
Facsimile: 916/920-0205
With a copy at the same time to Seller's counsel:
David W. Greenman, Esq.
Bainbridge Group
Suite 220
18301 Von Karman Avenue
Irvine, California 92715
Facsimile: 714/442-6609
(3) To Title Insurer:
North American Title
44 Cook Street, Suite 300
Denver, Colorado
Attn: Richard Cook
Facsimile:
or to such additional or other persons, at such other
address or addresses as may be designated by notice from
Purchaser or Seller, as the case may be, to the other.
Notices by mail shall be sent by United States certified
or registered mail, return receipt requested, postage
prepaid, and shall be deemed given and effective two (2)
business days following posting in the United States
mails. Notices by hand delivery shall be deemed given and
effective upon the delivery thereof. Notices by overnight
courier shall be deemed given and effective on the first
business day following the delivery thereof to Federal
Express or another recognized overnight courier service.
Notices by facsimile shall be deemed given upon
transmission.
(i) This Agreement shall be governed in all
respects by the internal laws of the State of Colorado.
(j) This Agreement may be executed in any number
of identical counterparts, any or all of which may contain
the signatures of less than all of the parties, and all of
which shall be construed together as but a single
instrument.
(k) This Agreement shall not be construed more
strictly against Purchaser merely by virtue of the fact
that the same has been prepared by Purchaser or its
counsel, it being recognized both of the parties hereto
have contributed substantially and materially to the
preparation of this Agreement. All words herein which are
expressed in the neuter gender shall be deemed to include
the masculine, feminine and neuter genders and any word
herein which is expressed in the singular or plural shall
be deemed, whenever appropriate in the context, to include
the plural and the singular.
(l) (Intentionally left blank.)
(m) In the event of litigation between the
parties with respect to this Agreement or the transaction
contemplated hereby, the prevailing party therein shall be
entitled to recover from the losing party therein its
attorneys' fees and costs of suit.
(n) This Agreement is solely for the benefit of
the parties hereto and, to the extent provided herein,
their respective partners, directors, officers, employees,
agents and representatives, and no provision of this
Agreement shall be deemed to confer upon other third
parties any remedy, claim, liability, reimbursement, cause
of action or other right.
(o) TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(p) Purchaser may consummate the purchase of the
Property as part of a like kind exchange (the "Exchange")
pursuant to Section 1031 of the Internal Revenue Code of
1986, as amended (the "Code"), provided that Purchaser
shall pay any additional costs that would not otherwise
have been incurred by Purchaser or Seller had Purchaser
not consummated its purchase through the Exchange. Seller
shall not by such agreement to the Exchange (1) have its
rights under this Agreement affected or diminished in any
manner, (2) be responsible for compliance with or be
deemed to have warranted to Purchaser that the Exchange in
fact complies with Section 1031 of the Code, or (3) incur
any additional costs or liabilities other than as
expressly set forth in this Agreement. Purchaser shall
indemnify and hold Seller harmless from and against any
and all costs, liabilities or obligations (including
attorney's fees) arising from the Exchange, which
indemnification agreement shall expressly survive the
Closing.
(q) Seller desires to effect a tax-deferred like-kind exchange
with respect to its disposition of the
Property the "Seller's Exchange") pursuant to Section 1031
of the Internal Revenue Code of 1986, as amended. The
Seller's Exchange will be structured by Seller at its sole
cost and expense such that Purchaser will have no
obligation to (i) acquire or enter into the chain of title
to any property other than the Property, (ii) accept title
to the Property from any party other than Seller or a
designated intermediary of Seller under an exchange
agreement between Seller and its designated intermediary
or (iii) incur any cost, liability or obligation of any
nature whatsoever as a result of its limited participation
in the Seller's Exchange. The acceptance of title to the
Property from Seller's designated intermediary shall not
impair, amend, modify, reduce or in any other manner
whatsoever affect the representations, warranties and
covenants of Seller to Purchaser under this Agreement or
the survival thereof pursuant to this Agreement.
Purchaser shall have no obligation to extend any dates for
performance, including but not limited to, the Closing
date, or enter into any modifications to this Agreement as
a result of the Seller's Exchange. to the extent that the
Seller's Exchange would cause either any delay,
modification to this Agreement, or additional costs,
liabilities or obligations to be imposed upon Purchaser,
then, in any or all such events, Purchaser shall have the
absolute right to decline to participate in the exchange
and to close the acquisition of the Property from Seller
otherwise in strict accordance with the terms of this
Agreement. Seller shall indemnify and hold Purchaser
harmless from and against any and all costs, liabilities
or obligations (including attorney's fees) arising from
the Seller's Exchange, which indemnification agreement
shall expressly survive the Closing. Seller further
acknowledges that the Seller's Exchange is at the request
and initiation, and Purchaser in no manner, expressly or
implicitly, participated in or offered tax advice or
planning to or for the benefit of Seller. Seller is
relying solely upon the advice and counsel of
professionals of Seller's choice in structuring, executing
and consummating the Seller's Exchange.
(r) In accordance with the declaration of trust
of Purchaser, notice is hereby given that all persons
dealing with Purchaser shall look solely to the assets of
Purchaser for the enforcement of any claim against
Purchaser as neither the trustees, officers, employees nor
shareholders of Purchaser assume any personal liability
for obligations entered into by or on behalf of Purchaser.
(s) In addition to the acts and deeds recited
herein and contemplated to be performed, executed and/or
delivered by Seller to Purchaser at Closing, Seller agrees
to perform, execute and deliver, on or after Closing, any
further deliveries and assurances as may be reasonably
necessary to consummate the transactions contemplated
hereby or to further perfect the conveyance, transfer and
assignment of the Property to Purchaser.
(t) The offer of Purchaser extended by the
delivery of this Agreement to Seller shall be
automatically revoked unless Seller shall execute at least
two (2) copies of this Agreement and deliver same to
Purchaser on or before 5:00 p.m. on the date which is five
(5) business days after the date on which Purchaser has
executed this Agreement.
(u) Seller and Purchaser hereby acknowledge and
agree that (i) Seller is also the current owner of the Out
Parcel, (ii) Seller and Purchaser have heretofore executed
and entered into that certain Real Estate Sale Agreement
(the "Out Parcel Contract") dated of even date herewith
covering the Out Parcel, (iii) World Savings and Loan
Association, a Colorado corporation ("World Savings"), has
a right of first refusal to purchase the Out Parcel
pursuant to Article XXIX of that certain Lease (the "World
Savings Lease") dated November 9, 1978 between Iliff and
Buckley Investments, as landlord, and World Savings, as
tenant, covering the Out Parcel, and (iv) if World Savings
fails to purchase the Out Parcel pursuant to Article XXIX
of the World Savings Lease, then (A) the Closing of this
Agreement and the closing of the Out Parcel Contract shall
occur simultaneously and (B) the Closing Date of this
Agreement shall be extended, if necessary, in order for
the Closing of this Agreement and the closing of the Out
Parcel Contract to occur simultaneously.
In addition, if it is necessary for the Property and
the Out Parcel to be replatted and/or other regulatory
action to be taken in order for the conveyance of the
Property pursuant to this Agreement and the conveyance of
the Out Parcel pursuant to the Out Parcel Contract to
comply with all applicable laws, statutes, ordinances,
regulations and orders, then (A) after Purchaser, in
Purchaser's reasonable discretion, shall have approved the
replatting and/or other regulatory actions proposed by
Seller, Seller, at Seller's sole cost, shall promptly
commence such replatting and/or other regulatory actions
and shall proceed thereafter with due diligence until
completion and (B) the Closing Date shall be extended
until the tenth (10th) day after all of the necessary
replatting and other regulatory actions shall have been
completed and Purchaser shall have received written notice
thereof from Seller; provided, however, that
notwithstanding anything contained in this Agreement to
the contrary, Purchaser, at Purchaser's option, shall have
the right to terminate this Agreement by delivering
written notice of termination to Seller within 112 days
after the Expiration Date if all of the necessary
replatting and other regulatory actions have not been
completed within 105 days after the Expiration Date, in
which event the Earnest Money shall be returned to
Purchaser and neither Seller nor Purchaser shall have any
further duties or obligations under this Agreement except
for certain indemnity obligations that are otherwise
expressly provided herein to survive the Closing. In
addition, if (i) Purchaser fails to deliver written notice
of termination to Seller within 112 days after the
Expiration Date and (ii) all of the necessary replatting
and other regulatory actions have not been completed
within 165 days after the Expiration Date, then Purchaser,
at Purchaser's option, shall also have the right to
terminate this Agreement by delivering written notice of
termination to Seller at any time prior to the date on
which all of the necessary platting and other regulatory
actions have been completed, in which event the Earnest
Money shall be returned to Purchaser and neither Seller
nor Purchaser shall have any further duties or obligations
under this Agreement except for certain indemnity
obligations that are otherwise expressly provided herein
to survive the Closing.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed as of the day and year first above written.
PURCHASER:
PACIFIC RETAIL TRUST,
a Maryland real estate investment trust
Date Executed: _______________ By:
Name:
Title:
SELLER:
BUCKLEY SQUARE ASSOCIATES,
a Colorado general partnership
By: T. ROWE PRICE
RENAISSANCE FUND,
LTD., A SALES-COMMISSION-FREE REAL
ESTATE INVESTMENT,
a Maryland corporation, its
partner
Date Executed: ______________ By:
Michael D. Westfall,
its authorized agent
<PAGE>
The Annual Report to Limited Partners for the Year ended December
31, 1996 should be inserted here.
T. Rowe Price
Renaissance
Fund, Ltd.
A Sales-Commission-Free
Real Estate Investment
For information on your
Renaissance Fund account, call:
1-800-962-8300 toll free
For information on your
mutual fund account, call:
1-800-225-5132 toll free
625-6500 Baltimore area
T. Rowe Price Real Estate Group
100 East Pratt Street
Baltimore, Maryland 21202
Annual Report
For The Period Ended
December 31, 1996
FELLOW STOCKHOLDER:
The sale of Buckley Square during the fourth quarter had a major
impact on Fund results. We realized net proceeds after closing
costs and minority interest distributions of $6,189,000. After
distributing the taxable gain to shareholders, the remaining $4.8
million was used to pay down part of the Fund's debt on Buschwood
III under the terms of the loan agreement requiring all net
proceeds, except for the gain, to be applied against the
outstanding loan amount.
Excluding the $1,368,000 gain on the sale of Buckley, the
Fund experienced a loss from operations of $223,000 in 1996
compared with income of $678,000 in 1995. The difference between
1995 and 1996 was a direct result of a valuation impairment of
$907,000 at Post Oak Place. Including the gain from the sale, the
Fund's net income in 1996 was $1,145,000.
Revenues from rental income and interest resulted in total
revenues of $5,320,000 for the year compared with $4,878,000 a
year earlier. Revenues and operating expenses, excluding the Post
Oak impairment, were up by comparable amounts, $442,000 and
$436,000, respectively, due primarily to the inclusion of
Buschwood for the full year in 1996. Increases in operating
income at Buckley prior to the sale, and at Buschwood for a full
year, offset operating declines at Gatehall I due to a lower
average leased status over the year, and at Post Oak Place due to
greater depreciation and bad debt expense.
We signed new, renewal, and expansion leases totaling 26% of
the Fund's total square footage in 1996. Declines because of
tenant turnover at Valley Business Center in the fourth quarter
offset gains at Gatehall I and Post Oak Place, resulting in the
overall leased status of the Fund remaining unchanged at 87% from
the prior year-end.
Real Estate Investments (Dollars in thousands)
_________________________________________________________________
Average Contribution
Leased Status Leased Status to Net Income
___________ _____________ ____________
Gross Twelve Twelve
Leasable Months Ended Months Ended
Property Area December 31, December 31, December 31,
Name (Sq. Ft.) 1996 1995 1996 1995 1996
_________ __________ __________ _____ _____ ____ ____
Valley
Business
Center 202,500 87% 98% 97% $253 $ 256
Post Oak
Place 56,400 81 75 76 48 (933)
Gatehall I 113,600 82 82 73 157 (52)
Buschwood
III 76,900 100 100 100 7 154
________ ____ ____ ____ _____ _____
449,400 87 91 89 465 (575)
Properties
Sold - - - - 357 1,958
Fund
Expenses
Less
Interest
Income - - - - (144) (238)
________ ____ ____ ____ _____ _____
Total 449,400 87% 91% 89% $678 $1,145
At Valley Business Center, we signed three new and five
renewal leases representing 25% of the property. Near year-end,
however, the loss of two tenants caused a decline in occupancy,
but in January we signed a new lease for most of the remaining
vacancy.
The gains at Post Oak Place were a result of four new
leases, three renewals, and two expansion leases totaling 21% of
this Houston office property. The market is slowly improving, but
we cannot be sure this trend will continue and thought it prudent
to record the valuation impairment.
While the average leased status at Gatehall I fell from a
year earlier, the year-end leased rate increased 11 percentage
points. The rise at this Parsippany, New Jersey, property was
attributable to four new leases, one renewal, and five expansion
leases encompassing 28% of the property. Occupancy had been hurt
earlier by the loss of two tenants that did not renew and one
whose lease was terminated for credit reasons. We successfully
appealed taxes on the property, which resulted in an $86,000
refund.
Buschwood III, an office building located in Tampa, Florida,
has been 100% leased since June 1995, when the Fund acquired it.
There is a problem with the existing energy management system,
and we will be making the necessary changes shortly. We will have
more to say in our first quarter 1997 report.
Share Valuation
As you know, at the end of each year we employ a third-party
appraiser to review and assess the analysis and assumptions used
to prepare an estimated current value of the properties held in
your Fund. The Fund then uses these valuations to prepare an
estimated share value, which is approved by the Fund's Board of
Directors. The estimated share value may not be representative of
the value of your shares when the Fund ultimately liquidates. Nor
is there any assurance that you could sell your shares today at a
price equal to the current estimated value.
At December 31, 1996, the estimated share value of the Fund
was $13.44. After adjusting for our February distribution of
$0.99, the estimated value per share is $12.45.
Dividend
The Fund declared a fourth quarter dividend of $0.99 per share,
of which $0.912 was from the taxable gain on the sale of Buckley
Square. This brings the total dividends for the year to $1.44,
100% of taxable income. During the first three quarters of 1996,
the dividend had been set at $0.15 per unit. Going forward, we
expect Buschwood to become more profitable now that part of its
debt has been paid down, and increased income from this property
should partly offset the loss of income from Buckley Square.
However, we will determine future dividends each quarter based on
cash flows, anticipated capital requirements, and the status of
property dispositions.
Outlook
Currently, the Fund has no properties held for sale, but we
anticipate that some will be put on the market through the course
of the year. Some of you have asked why we are interested in
selling now, just as the market has been exhibiting signs of
strengthening.
Our primary goal is to take advantage of rising property
values while the market is improving and using the opportunity to
capture higher prices for investors. As usually happens in
improving markets, the turnaround in real estate is broadly
encouraging an increasing supply of new properties, which could
eventually lead to an oversupply and softer prices down the road.
This is normal as the real estate cycle runs its course. While we
do not expect a recession in either real estate or the general
economy to emerge in the near future, the country's economic
expansion is almost six years old and is approaching an advanced
stage, by historical measures.
It is possible that by selling Fund properties during the
next few years, we might miss some further advances in real
estate values. However, with prices currently rising due to
strong tenant and investor demand, supply growing in many
markets, and the Fund nearing the end of its expected lifespan,
we believe it is prudent to sell into that strength while prices
are on the upswing.
Sincerely,
James S. Riepe
Chairman
February 7, 1997
REAL ESTATE HOLDINGS
December 31, 1996
(In thousands)
Date Carrying
Property Name Type and Location Acquired Amount
_______________ _______________ _________ ________
Valley Business Industrial 6/90 $6,219
Center Denver, Colorado
Post Oak Place Office 2/92 1,982
Houston, Texas
Gatehall I Office 8/94 6,192
Corporate Center Parsippany, New Jersey
Buschwood III Office 6/95 5,424
Tampa, Florida
_________
$19,817
_________
_________
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
December 31,December 31,
1996 1995
_______________________
Assets
Real Estate Property Investments
Land. . . . . . . . . . . . . . . . $ 5,438 $ 6,037
Buildings and Improvements. . . . . 16,245 15,971
_______ _______
21,683 22,008
Less: Accumulated Depreciation
and Amortization . . . . . . . . (1,866) (1,387)
_______ _________
19,817 20,621
Held for Sale . . . . . . . . . . . - 5,332
_______ ________
19,817 25,953
Cash and Cash Equivalents. . . . . . 2,738 1,608
Accounts Receivable
(less allowances of $10 and
$11) . . . . . . . . . . . . . . 277 281
Other Assets . . . . . . . . . . . . 148 194
________ ________
$22,980 $ 28,036
________ ________
________ ________
Liabilities and Stockholders' Equity
Liabilities
Mortgage Loans Payable. . . . . . . $ 4,106 $ 8,976
Security Deposits and Prepaid
Rents. . . . . . . . . . . . . . 268 326
Accrued Real Estate Taxes . . . . . 175 284
Accounts Payable and
Other Accrued Expenses . . . . . 346 285
Dividends Declared. . . . . . . . . 1,514 76
Minority Interest . . . . . . . . . - 541
_______ ________
Total Liabilities. . . . . . . . . . 6,409 10,488
_______ ________
Stockholders' Equity
Common Stock, $.001 Par Value,
Authorized 5,500,000 Shares;
Issued and Outstanding 1,529,446
and 1,527,191 Shares . . . . . . 1 1
Additional Paid-In Capital. . . . . 18,526 18,447
Dividends in Excess of Net Income . (1,956) (900)
________ ________
Total Stockholders' Equity . . . . . 16,571 17,548
________ ________
$22,980 $ 28,036
The accompanying notes are an integral part of the consolidated
financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per-share amounts)
Years Ended December 31,
1996 1995 1994
_________ _________ _________
Revenues
Rental Income. . . . . . . . . $ 5,231 $ 4,822 $ 3,246
Interest Income. . . . . . . . 89 56 118
_________ _________ _________
5,320 4,878 3,364
_________ _________ _________
Expenses
Property Operating
Expenses . . . . . . . . . . 2,055 1,749 948
Real Estate Taxes. . . . . . . 512 566 373
Depreciation and
Amortization . . . . . . . . 816 807 466
Decline of Property
Values . . . . . . . . . . . 907 - -
Investment Advisory Fees . . . 280 251 157
Fund Management Expenses . . . 203 169 202
Interest Expense . . . . . . . 705 588 262
Amortization of
Organization Costs . . . . . - 23 45
Minority Interest in
Operations . . . . . . . . . 65 47 51
_________ _________ _________
5,543 4,200 2,504
_________ _________ _________
Income (Loss) from Operations before
Gain on Real Estate Sold . . (223) 678 860
Gain on Real Estate Sold
(Net of minority interest
of $309) . . . . . . . . . . 1,368 - -
_________ _________ _________
Net Income . . . . . . . . . . $ 1,145 $ 678 $ 860
_________ _________ _________
_________ _________ _________
Activity per Share
Net Income . . . . . . . . . . $ 0.75 $ 0.45 $ 0.58
_________ _________ _________
_________ _________ _________
Dividends Declared . . . . . . $ 1.44 $ 0.59 $ 0.64
_________ _________ _________
_________ _________ _________
Weighted Average Number of
Shares Outstanding . . . . . 1,529,663 1,509,428 1,487,108
_________ _________ _________
_________ _________ _________
The accompanying notes are an integral part of the consolidated
financial statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands except share data)
Additional Dividends
Common Stock Paid-In In Excess
Of Net
SharesAmount Capital Income Total
______ _____ ______ _____ _____
Balance,
December 31, 1993 . . .1,479,199 $1 $17,727 $ (597) $17,131
Net Income . . . . . . . - - - 860 860
Dividend
Reinvestments . . . . . 45,557 0 565 - 565
Share Repurchases. . . . (38,013) 0 (404) - (404)
Dividends Declared . . . - - - (950) (950)
________ ___ _______________ ______
Balance,
December 31, 1994 . . .1,486,743 1 17,888 (687) 17,202
Net Income . . . . . . . - - - 678 678
Dividend Reinvestments . 59,602 0 787 - 787
Share Repurchases. . . . (19,154) 0 (228) - (228)
Dividends Declared . . . - - - (891) (891)
________ ___ _______________ ______
Balance,
December 31, 1995 . . .1,527,191 1 18,447 (900) 17,548
Net Income . . . . . . . - - - 1,145 1,145
Dividend
Reinvestments . . . . . 39,491 0 523 - 523
Share Repurchases. . . . (37,236) 0 (444) - (444)
Dividends Declared . . . - - - (2,201) (2,201)
________ ___ _______________ ______
Balance,
December 31, 1996 . . .1,529,446 $1 $18,526 $(1,956)$16,571
________ ___ _______________ ______
________ ___ _______________ ______
The accompanying notes are an integral part of the consolidated
financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Years Ended December 31,
1996 1995 1994
_______ _______ _______
Cash Flows from Operating Activities
Net Income . . . . . . . . . . . . . $1,145 $ 678 $ 860
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating
Activities
Depreciation and Amortization. . 816 807 466
Decline of Property Values . . . 907 - -
Amortization of Organization
Costs . . . . . . . . . . . . - 23 45
Minority Interest in
Operations. . . . . . . . . . 65 47 51
Gain on Real Estate Sold . . . . (1,368) - -
Change in Accounts Receivable,
Net of Allowances . . . . . . 4 (99) (79)
Change in Other Assets . . . . . 46 (37) 53
Change in Security Deposits and
Prepaid Rents . . . . . . . . (58) 32 131
Change in Accrued Real Estate
Taxes . . . . . . . . . . . . (109) 2 10
Change in Accounts Payable and Other
Accrued Expenses. . . . . . . 61 (12) 8
_______ _______ _______
Net Cash Provided by Operating
Activities . . . . . . . . . . . . 1,509 1,441 1,545
_______ _______ _______
Cash Flows from Investing Activities
Proceeds from Property
Disposition. . . . . . . . . . . . 7,036 - -
Investments in Real Estate . . . . . (946) (6,070) (6,222)
_______ _______ _______
Net Cash Provided by (Used in)
Investing Activities . . . . . . . 6,090 (6,070) (6,222)
_______ _______ _______
Cash Flows from Financing Activities
Dividends Paid . . . . . . . . . . . (763) (1,141) (830)
Dividend Reinvestments . . . . . . . 523 787 565
Share Repurchases. . . . . . . . . . (444) (228) (404)
Minority Interest Distributions. . . (915) (54) (37)
Proceeds of Mortgage Loan, Net of
Debt Issuance Costs. . . . . . . . - 5,459 1,400
Repayment of Mortgage Loan . . . . . (4,870) (46) -
_______ _______ _______
Net Cash Provided by (Used in)
Financing Activities . . . . . . . (6,469) 4,777 694
_______ _______ _______
Cash and Cash Equivalents
Net Increase (Decrease)
during Year. . . . . . . . . . . . 1,130 148 (3,983)
At Beginning of Year . . . . . . . . 1,608 1,460 5,443
_______ _______ _______
At End of Year . . . . . . . . . . . $2,738 $1,608 $ 1,460
The accompanying notes are an integral part of the consolidated
financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION
T. Rowe Price Renaissance Fund, Ltd., A Sales-Commission-Free
Real Estate Investment (the "Fund"), was incorporated on June 14,
1989, in the state of Maryland. The Fund intends to continue to
qualify and elect to be taxed as a Real Estate Investment Trust
(REIT) under the Internal Revenue Code of 1986, as amended, and
accordingly will not be subject to federal income taxes on
amounts distributed to stockholders, provided it distributes at
least 95% of its taxable income and meets certain other
conditions. The Fund believes that it has met the requirements
for qualification as a REIT from inception through December 31,
1996. The Fund has declared dividends of at least 100% of its
taxable income since inception. There are, therefore, no
provisions for federal income taxes in the accompanying
consolidated financial statements.
T. Rowe Price Real Estate Group, Inc., a wholly-owned
subsidiary of T. Rowe Price Associates, Inc. (the "Sponsor"),
provided the initial capital for the Fund through its purchase of
16,000 shares of common stock at $12.50 per share.
The Fund has a reinvestment plan whereby stockholders may
elect to have dividends automatically reinvested in additional
shares of the Fund, or fractions thereof, instead of receiving
cash payments. Through December 31, 1996, 336,806 shares had been
purchased under this plan for total reinvestment of $4,218,000.
The purchase price of shares acquired through the reinvestment
plan is established at least annually by the Fund's Board of
Directors based upon its estimate of the fair market value of the
net assets of the Fund.
The Fund also provides a Liquidity Enhancement Plan (the
"Plan") pursuant to which stockholders may request that the Fund
repurchase their shares. The Fund utilizes reinvestment proceeds
to repurchase shares of stock. Through December 31, 1994, shares
were repurchased at the lesser of 90% of the estimated fair
market value or $10.625 per share. Subsequently, the repurchase
price of a share has been 90% of the estimated fair market value
of the share, which during 1996 was $11.93 per share. As of
December 31, 1996, 129,919 shares had been repurchased under the
Plan for a total cost of $1,453,000.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund's financial statements are prepared in accordance with
generally accepted accounting principles which requires the use
of estimates and assumptions by the Fund's management.
The consolidated financial statements include the accounts
of the Fund and the accounts of Buckley Square Associates, a
Colorado general partnership, in which the Fund had a 90%
controlling general partnership interest until its disposition in
late 1996.
The Fund will review its real estate property investments
for impairment whenever events or changes in circumstances
indicate that the property carrying amounts may not be
recoverable. Such a review will result in the Fund recording a
provision for impairment of the carrying value of its real estate
property investments if the estimated future cash flows from a
property's operations and projected sale are less than the
property's net carrying value. Whenever a provision for
impairment is recorded, the estimated fair value of the property
will become its new cost basis. The Fund's management believes
that the estimates and assumptions used in evaluating the
carrying value of the Fund's properties are appropriate; however,
changes in market conditions and circumstances could occur in the
near term which would cause these estimates to change.
Depreciation is calculated primarily on the straight-line
method over the estimated useful lives of buildings and
improvements, which range from five to 40 years. Lease
commissions and tenant improvements are capitalized and amortized
over the life of the lease using the straight-line method.
On January 1, 1996, the Fund adopted Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of." The impact of adopting this SFAS is that
depreciation expense is not recognized on properties held for
sale after 1995.
Cash equivalents consist of all short-term, highly liquid
investments including money market mutual funds and marketable
U.S. Treasury debt securities with maturities at the time of
acquisition of three months or less. The cost of such investments
approximates fair value.
The Fund uses the allowance method of accounting for
doubtful accounts. Provisions for uncollectible tenant
receivables in the amounts of $78,000, $6,000, and $16,000 were
recorded in 1996, 1995, and 1994, respectively. Bad debt expense
is included in Property Operating Expenses.
Rental income is recognized on a straight-line basis over
the term of each lease. Rental income accrued, but not yet
billed, is included in Other Assets and aggregates $86,000 and
$94,000 at December 31, 1996 and 1995, respectively.
Organization costs were amortized over a five-year period.
NOTE 3 - TRANSACTIONS WITH RELATED PARTIES
Pursuant to contracts executed in 1991, the Fund pays advisory
fees to T. Rowe Price Real Estate Group, Inc. (the "Investment
Manager"), an affiliate of the Fund's Sponsor, and LaSalle
Advisors Limited Partnership (the "Investment Advisor"). The
Investment Manager provides communications, cash management,
administrative, and other related services to the Fund for an
advisory fee of .45% per year of the fair market value, as
defined, of the Fund's assets and earned $133,000, $119,000, and
$75,000 in 1996, 1995, and 1994, respectively. The Investment
Advisor provides the Fund with real estate advisory, accounting,
and other related services for an advisory fee of .50% per year
of the fair market value, as defined, of the Fund's assets and
earned $147,000, $132,000, and $82,000 in 1996, 1995, and 1994,
respectively. Recognition of these investment advisory fees is
subject to limitations adopted by the Fund pursuant to guidelines
promulgated by the North American Securities Administrators
Association.
An affiliate of the Investment Manager earned a normal and
customary fee of $3,000, $4,000, and $7,000 from the money market
mutual funds in which the Fund made its interim cash investments
during 1996, 1995, and 1994, respectively.
The Fund also reimburses the Investment Manager and
Investment Advisor for certain defined expenses incurred in
operating and administering the affairs of the Fund. Expense
reimbursements for the Investment Manager totaled $40,000,
$32,000, and $26,000 for 1996, 1995, and 1994, respectively.
Reimbursements for the Investment Advisor totaled $30,000 for
each of the last three years.
In addition, the Fund is obligated to pay acquisition fees
for services rendered in connection with the purchase of
properties. Acquisition fees equal two percent of the aggregate
proceeds from the sale of common stock, issuance of debt and
reinvestment of dividends which are used by the Fund to acquire
properties. In 1995, the Investment Manager and Investment
Advisor each received $52,500 in connection with the Buschwood
III acquisition and in 1994 received $23,000 and $58,000,
respectively, related to the Gatehall I purchase.
One director of the Fund is also a director of the
Investment Manager and its affiliates. Certain officers of the
Fund are also officers of the Investment Manager or its
affiliates.
NOTE 4 - PROPERTY DISPOSITION
In November 1996, Buckley Square was sold, and the Fund received
net proceeds of $6,189,000 for its 90% interest. The net book
value of the Fund's interest at the date of sale was $4,821,000
after deduction of accumulated depreciation and minority
interest. Accordingly, the Fund recognized a $1,368,000 gain on
the sale of this property in the fourth quarter of 1996.
Proceeds from this property sale will be distributed in January
1997 to Fund shareholders in the amount of $1,394,000, the gain
on disposition for tax purposes. Proceeds of $4,552,000 were
used to repay a significant portion of the Fund's outstanding
debt in 1996. Subsequent to December 31, 1996, the residual
proceeds of $243,000 were also used to reduce debt.
NOTE 5 - PROPERTY VALUATIONS
Based upon a review of current market conditions, estimated
holding period, and future performance expectations, the Fund's
management has determined that the net carrying value of Post Oak
Place may not be fully recoverable from future operations and
disposition and recognized an impairment charge of $907,000 in
1996.
NOTE 6 - REAL ESTATE PROPERTY INVESTMENTS AND MORTGAGE LOANS
PAYABLE
The Fund entered into a Note and Deed of Trust in conjunction
with the acquisition of Valley Business Center in 1990. The $2.1
million non-recourse loan bears interest at a rate of 9.875% per
annum and is secured by the Fund's interest in the property. The
loan requires monthly interest payments with full principal due
on September 15, 1997.
On August 19, 1994, the Fund acquired Gatehall I, an office
building located in Parsippany, New Jersey, for $5,795,000,
including the proceeds of a $1,422,000 bank borrowing. On June
29, 1995, the Fund acquired Buschwood III, an office building
located in Tampa, Florida, for $5,536,000, primarily from the
proceeds of a $5,500,000 bank borrowing which was combined with
the Gatehall I loan for an aggregate borrowing of $6,922,000.
The new mortgage loan is secured by both properties and bears
interest at the Fund's option of either LIBOR plus 1.75% for up
to six months or the prime rate plus .25%. Monthly payments
include principal in the amount of $9,200 plus accrued interest.
The remaining principal balance is due in June 1998. The debt
terms also require that a significant portion of any proceeds
from the sale of Valley Business Center be applied as a repayment
of the outstanding principal balance. At December 31, 1996,
outstanding borrowings under this loan agreement were $2,006,000.
Debt issuance costs are amortized on a straight-line basis
over the expected life of the related loan. Unamortized amounts
are included in Other Assets and aggregate $14,000 at December
31, 1996 and $63,000 at December 31, 1995.
Interest paid on mortgage loans totaled $707,000, $508,000,
and $234,000 in 1996, 1995, and 1994, respectively.
NOTE 7 - LEASES
Future minimum rentals (in thousands) to be received by the Fund
under noncancelable operating leases in effect at December 31,
1996 are:
1997 $ 3,139
1998 2,413
1999 1,520
2000 573
2001 204
Thereafter -
_______
Total $ 7,849
_______
_______
NOTE 8 - RECONCILIATION OF FINANCIAL STATEMENT TO TAXABLE INCOME
As described in Note 1, the Fund intends to continue to be taxed
as a REIT. Accordingly, the Fund has not provided for an income
tax liability; however, certain timing differences exist between
amounts reported for financial statements and federal income tax
purposes. These differences are summarized below for the last
three years:
1996 1995 1994
________ ________ ________
(in thousands)
Book net income. . . . . . $1,145 $ 678 $ 860
Decline in property
value. . . . . . . . . . 907 - -
Depreciation . . . . . . . 140 192 44
Other items. . . . . . . . 8 21 45
________ ________ ________
Taxable income
before REIT dividend
deduction. . . . . . . . $2,200 $ 891 $ 949
________ ________ ________
________ ________ ________
NOTE 9 - DIVIDEND DECLARATION
The Fund declared a quarterly cash dividend of $.99 per share,
including $.912 related to the gain on the Buckley Square sale,
payable to stockholders of record at December 31, 1996. The
dividend will be paid in January 1997.
MARKET FOR THE FUND'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
On February 1, 1997, there were 2,606 record holders. Although
the Fund's shares of common stock are fully transferable, there
is no public market for the shares, and it is not anticipated
that a public market for the shares will develop.
The Fund has a Reinvestment Plan through which stockholders
may elect to have their dividends automatically reinvested in
additional shares, or fractions thereof, instead of receiving
cash payments. The per-share price under the plan was initially
set at $12.50 in 1990. The Board of Directors determines the
value of the shares to be sold pursuant to the plan on at least
an annual basis, based on its good faith estimate of the amount
stockholders would receive if the Fund's real estate investments
were sold for their estimated values and if such proceeds,
together with the other assets of the Fund, were distributed in a
liquidation of the Fund. The Board has determined the per-share
value to be $12.45 for reinvestments in 1997 (subject to
adjustment in the case of any material changes). Historical
activity in the Reinvestment Plan is discussed in the "Liquidity
and Capital Resources" section of "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
section of this report, below, which section is hereby
incorporated by reference herein. The plan may be terminated at
any time.
The Fund also has a Liquidity Enhancement Plan, which
provides stockholders with the opportunity to present some or all
of their shares to the Fund for repurchase, and to have those
shares repurchased if the Fund has sufficient proceeds from the
Reinvestment Plan available for this purpose. The Liquidity
Enhancement Plan was implemented in the second quarter of 1992.
Under the Plan, the repurchase price per share is 90% of the fair
market value ($11.21 in 1997). Completed repurchase requests must
be received in good order by the Fund at least 30 days prior to
the end of a quarter for the shares to qualify for repurchase at
the end of that quarter. Historical activity in the Liquidity
Enhancement Plan is discussed in the "Liquidity and Capital
Resources" section of "Management's Discussion and Analysis and
Results of Operations" in this report, below, which section is
hereby incorporated by reference herein. The Fund may terminate
the Plan at any time.
The Fund intends to pay dividends on a quarterly basis,
payable within 45 days after the end of each calendar quarter, to
stockholders of record on the record date or dates declared for
such quarter as determined by the Board of Directors. The Fund
intends to pay dividends each year to stockholders in an amount
at least equal to 100% of its taxable income in order to continue
to qualify as a real estate investment trust in accordance with
the Internal Revenue Code of 1986, as amended, and to avoid the
payment of federal income tax at the corporate level. Quarterly
dividends declared during the past two years were: $.18 for each
of the first three quarters of 1995, $.05 for the fourth quarter
of 1995, $.15 for each of the first three quarters of 1996, and
$.99 for the fourth quarter of 1996. Dividends declared for the
first three quarters of 1995 and 1996 were based on estimates of
cash flows and net income for tax purposes made at the beginning
of each year. Fourth quarter dividends were declared in order to
set the total dividends paid for each year equal to 100% of
taxable income. The dividend for the fourth quarter of 1996
included a capital gain dividend of $.912.
MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
The Fund sold 1,306,559 shares in connection with the public
offering of shares in 1990, for a total of $16,310,000, in
addition to the purchase of 16,000 shares for $200,000 by T. Rowe
Price Real Estate Group, Inc., at the time the corporation was
formed. After deduction of organizational and offering costs of
$976,000, the Fund had $15,534,000 available for investment and
capital reserves.
Additional shares have been and will continue to be sold, if
at all, only in connection with the Fund's reinvestment plan.
Additional capital in the amount of $5,257,329 was raised from
dividend distributions reinvested through February 1, 1997, and
420,290 additional shares were issued in connection therewith.
The amount of additional capital to be raised from this source in
the future will depend on the size of the Fund's dividends per
share and the number of shares in the Reinvestment Plan at any
given time. There are no organizational or offering expenses
associated with or deducted from such proceeds. Substantially
all of this capital has been used to repurchase shares in
connection with the Fund's Liquidity Enhancement Plan and for
investment in or improvements to real estate, including the
repayment of debt. As of February 1, 1997, $160,000 remained
available. As of February 1, 1997, 135,092 shares had been
repurchased under the Liquidity Enhancement Plan for a total of
$1,511,000.
In 1996, the Fund sold Buckley Square and received net
proceeds after deduction of minority interest of $6,189,000. The
net book value of the Fund's interest at the date of sale was
$4,821,000. As of December 31, 1996, the Fund held four
properties for a total investment in real estate, before
deduction of accumulated depreciation and amortization, of
$21,683,000, representing initial acquisition costs and
subsequent improvements after an adjustment of $907,000 for a
valuation impairment at Post Oak Place in 1996. The Fund
recognized this impairment based on the Investment Manager's
belief that the Fund may be unable to recover the net carrying
value of this property through future operations and sale.
Initial acquisition costs were partially funded by a $2.1
million loan secured by Valley Business Center, bearing interest
at 9.875% per annum, all due and payable in 1997, a $1.4 million
loan secured by Gatehall I, bearing interest at a floating rate
which as of February 2, 1997, stood at 7.29% per annum, due and
payable in 1998 (subject to the Fund's option to extend the loan
for two one-year terms), and a $5.5 million loan secured by
Buschwood III which was combined with the Gatehall loan. In
February 1996, the Fund made an optional $200,000 payment on the
latter, reducing the combined principal balance to $6.7 million.
In addition, in 1996, the Fund repaid a portion of this loan,
using proceeds from the Buckley Square disposition and leaving a
loan balance of $2 million.
For 1996, the ratio of revenue produced by the Fund's
properties to total debt service under these loans is
approximately 7 to 1. Based on the portion of debt utilized to
acquire the properties, each of Valley Business Center, Gatehall
I, and Buschwood III generated sufficient revenue in 1996 to
cover debt service related to the property and contributed to
dividends paid to the Fund's stockholders. Management
anticipates such a level will continue to be maintained in 1997
for Gatehall I, Buschwood III, and Valley Business Center.
The Fund expects to incur capital expenditures during 1997,
totaling approximately $1,200,000 for tenant improvements, lease
commissions, and other major repairs and improvements;
approximately 73% of these expenditures are dependent on the
execution of leases with new and renewing tenants. As of
December 31, 1996, the Fund maintained cash and cash equivalents
aggregating $2,738,000, an increase of $1,130,000 from the prior
year-end. Cash from financing activities resulted in net outflows
in 1996 as compared to net inflows in 1995, primarily as a result
of the receipt of the proceeds of the mortgage loan utilized to
purchase Buschwood III in 1995 and the repayment of a substantial
portion of the loan in 1996. Net cash provided by operating
activities remained generally unchanged from the prior year.
Cash from investing activities increased by $12,160,000 as a
result of the purchase of Buschwood III in 1995 and the sale of
Buckley Square in 1996.
The Fund maintains cash balances to fund its operating and
investing activities, including the costs of tenant improvements
and leasing commissions, costs which must be disbursed prior to
the collection of any resultant revenues. The Fund also has
additional borrowing capacity of $778,000 for use in connection
with tenant improvements, leasing commissions, and other capital
expenditures at Gatehall I. Management believes that year-end
cash balances, cash generated from operating activities in 1997,
and its borrowing capacity will be adequate to fund its current
operating needs.
Results of Operations
1996 v. 1995
The Fund's net income of $1,145,000 for 1996 equates to $0.75 per
share compared with $678,000, or $0.45 per share, in 1995. The
increase was driven by the $1,368,000 gain on the sale of Buckley
Square. Excluding the gain on the sale of Buckley Square, the
Fund experienced a loss from operations of $223,000 in 1996. The
difference between 1995 and 1996 was a direct result of recording
a valuation impairment of $907,000 at Post Oak Place.
Revenues from rental income and interest resulted in total
revenues of $5,320,000 for the year compared with $4,878,000 a
year earlier. Revenues and operating expenses, excluding the
Post Oak Place impairment, were up by comparable amounts,
$442,000 and $436,000, respectively, due primarily to the
inclusion of Buschwood for the full year in 1996. Increases in
operating income at Buckley Square prior to the sale, and at
Buschwood III for a full year, offset operating declines at
Gatehall I due to a lower average leased status over the year,
and at Post Oak Place due to greater depreciation and bad debt
expenses.
Leases representing 16% of the portfolio's leasable square
footage are scheduled to expire in 1997. These leases represent
approximately 18% of the portfolio's rental income for 1996.
This amount of potential lease turnover is normal for the types
of properties in the portfolio, which typically lease to tenants
under three to five year leases. There are no single-tenant
properties in the Fund's portfolio, and only one tenant, Liberty
Mutual at Buschwood III, accounted for more than 10% of the
Fund's revenue in 1996, providing slightly in excess of 10%. The
Fund, therefore, does not expect any material adverse effect on
revenue in the event of the failure of any single tenant in 1997.
The directors of the Fund declared dividends of $1.44 per
share during 1996. The gain on the sale of Buckley Square
resulted in higher per-share dividends than last year's $0.59
per share. Total dividends declared in 1996 were $2,201,000,
compared to $891,000 in 1995. All of the 1995 dividends were
paid from the Fund's cash flow. Of the 1996 dividends,
$1,394,000 derived from the proceeds of the sale of Buckley
Square and the balance from the Fund's cash flow.
1995 v. 1994
The Fund's net income of $678,000 for 1995 equated to $0.45 per
share compared with $860,000, or $0.58 per share, in 1994. The
decrease was driven by a lower leased level at Post Oak Place
(which was partially offset by lower operating expenses) and by
increased operating expenses and higher depreciation expenses
relating to charge-offs of tenant improvements at Valley Business
Center.
Rental revenue was up $1,576,000 over the prior year, with
Gatehall I contributing $1,002,000 of the total (up $349,000 over
the increase in 1994), and Buschwood III contributing $600,000.
Gatehall I was held for only four months in 1994, versus 12
months in 1995 and Buschwood III was held for only six months in
1995. Interest expense on the debt incurred to purchase Gatehall
I and Buschwood III, together with operating expenses at these
properties, offset almost completely the improvements in rental
revenue.
Other Information
Information or statements provided by or on behalf of the Fund
from time to time may contain certain "forward-looking
information," including information relating to anticipated
growth in revenues or net income, anticipated disposition of
properties, anticipated expense levels, and expectations
regarding real estate market conditions. The cautionary
statements provided below are being made pursuant to the Private
Securities Litigation Reform Act of 1995 and with the intention
of obtaining the benefits of the "safe harbor" provisions of the
Act for any such forward-looking information. Many of the
following important factors discussed below, as well as other
factors, have also been discussed in the Fund's prior public
filings. The Fund cautions readers that any forward-looking
information provided by or on behalf of the Fund is not a
guarantee of future performance and that actual results may
differ materially from those in the forward-looking information
as a result of various factors, including but not limited to
those discussed below. Further, such forward-looking statements
speak only as of the date on which such statements are made, and
the Fund undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of
unanticipated events.
The Fund's future revenues may fluctuate due to factors such
as: changes in demand for space in its properties or in market
rental rates, due to either local conditions or general economic
trends; and changes in demand by purchasers for the types of
properties owned by the Fund, or changes in the prices
prospective purchasers are willing to pay for properties.
The Fund's future operating results are also dependent upon
the level of operating expenses, which are subject to fluctuation
for the following or other reasons: expenses and capital costs,
including depreciation, amortization and other non-cash charges,
incurred by the Fund to maintain its properties and procure
tenants and purchasers; assessed value of real estate or local
tax rates; and costs of environmental remediation.
INDEPENDENT AUDITORS' REPORT
To the Stockholders
T. Rowe Price Renaissance Fund, Ltd.,
A Sales-Commission-Free Real Estate Investment:
We have audited the accompanying consolidated balance sheets of
T. Rowe Price Renaissance Fund, Ltd., A Sales-Commission-Free
Real Estate Investment and its consolidated partnership, as of
December 31, 1996 and 1995, and the related consolidated
statements of operations, stockholders' equity and cash flows for
each of the years in the three-year period ended December 31,
1996. These consolidated financial statements are the
responsibility of the Fund's management. Our responsibility is
to express an opinion on these consolidated 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 consolidated financial statements are free from
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
financial position of T. Rowe Price Renaissance Fund, Ltd., A
Sales-Commission-Free Real Estate Investment and its consolidated
partnership as of December 31, 1996 and 1995, and the results of
their operations and their cash flows for each of the years in
the three-year period ended December 31, 1996, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
January 24, 1997
<PAGE>
ACCOUNTANTS' CONSENT
To the Stockholders
T. Rowe Price Renaissance Fund, Ltd.,
A Sales-Commission-Free Real Estate Investment:
We consent to incorporation by reference in the registration
statement (No. 33-66140) on Form S-3 of T. Rowe Price
Renaissance Fund, Ltd., A Sales-Commission-Free Real Estate
Investment of our report dated January 24, 1997, relating to
the consolidated balance sheets of T. Rowe Price Renaissance
Fund, Ltd., A Sales-Commission-Free Real Estate Investment
and its consolidated partnership as of December 31, 1996 and
1995, and the related consolidated statements of operations,
changes in stockholders' equity, and cash flows and related
schedule for each of the years in the three-year period ended
December 31, 1996, which report appears in the December 31,
1996 Annual Report on Form 10-K of T. Rowe Price Renaissance
Fund, Ltd., A Sales-Commission-Free Real Estate Investment
and to the reference to our firm under the heading "Experts"
in the prospectus, which is a part of the registration
statement.
Chicago, Illinois
March 26, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the unaudited condensed consolidated financial statements
of T. Rowe Price Renaissance Fund, Ltd., A Sales-Commission-Free
Real Estate Investment included in the accompanying Form 10-K
for the year ended December 31, 1996 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000852160
<NAME> T. ROWE PRICE RENAISSANCE FUND, LTD., A
SALES-COMMISSION-FRE
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,738,000
<SECURITIES> 0
<RECEIVABLES> 287,000
<ALLOWANCES> 10,000
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 21,683,000
<DEPRECIATION> 1,866,000
<TOTAL-ASSETS> 22,980,000
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 4,106,000
0
0
<COMMON> 1,000
<OTHER-SE> 16,570,000
<TOTAL-LIABILITY-AND-EQUITY> 22,980,000
<SALES> 0
<TOTAL-REVENUES> 5,320,000
<CGS> 0
<TOTAL-COSTS> 5,543,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,145,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,145,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,145,000
<EPS-PRIMARY> .75
<EPS-DILUTED> 0
<FN>
<F1>Not contained in registrant's unclassified balance sheet.
</FN>
<PAGE>
<PAGE>1
T. Rowe Price Renaissance Fund, Ltd.
A Sales-Commission-Free Real Estate Investment
Consolidated Real Estate and Accumulated Depreciation
December 31, 1996
Dollars in Thousands (000's)
Description Type Encumbrances
Properties Held for Real
Estate Investment
Valley Business Center Industrial $2,100
Denver, Colorado
Post Oak Place (1) Office 0
Houston, Texas
Gatehall I Office 1,362
Parsippany, New Jersey
Buschwood III Office 644
Tampa, Florida
_________
Totals $4,106
<PAGE>
Initial Cost
Costs
Capitalized
Buildings and Subsequent to
Description Land Improvements Acquisition (1,4)
Properties Held for Real
Estate Investment
Valley Business Center $ 1,600 $ 5,022 $ 662
Denver, Colorado
Post Oak Place (1) 1,600 893 (511)
Houston, Texas
Gatehall I 894 4,879 1,040
Parsippany, New Jersey
Buschwood III 1,942 3,594 68
Tampa, Florida
_______ _______ __________
Totals $6,036 $14,388 $ 1,259
<PAGE>
Gross Amounts at which Carried at
Close of Period
Buildings and
Description Land Improvements Total (2)
Properties Held for
Real Estate Investment
Valley Business Center $ 1,600 $ 5,684 $ 7,284
Denver, Colorado
Post Oak Place (1) 1,001 981 1,982
Houston, Texas
Gatehall I 894 5,919 6,813
Parsippany, New Jersey
Buschwood III 1,942 3,662 5,604
Tampa, Florida
_______ _______ _______
Totals $5,437 $16,246 $21,683
<PAGE>
Accumulated Date of Date
Description Depreciation (3,4) Construction Acquired
Properties Held for Real
Estate Investment
Valley Business Center $1,065 1982 06/90
Denver, Colorado
Post Oak Place (1) 0 1971 02/92
Houston, Texas
Gatehall I 621 1983 08/94
Parsippany, New Jersey
Buschwood III 180 1989 06/95
Tampa, Florida
______
Totals $1,866
<PAGE>
Life on which
Depreciation
in Latest
Statement of
Operations is
Description Computed
Properties Held for Real Estate Investment
Valley Business Center 5 - 40 years
Denver, Colorado
Post Oak Place 5 - 40 years
Houston, Texas
Gatehall I 5 - 40 years
Parsippany, New Jersey
Buschwood III 5 - 40 years
Tampa, Florida
<PAGE>
Notes:
(1) The Fund recorded a provision for value impairment in
connection with Post Oak of $907 in 1996.
(2) Reconciliation of real estate owned for Real Estate Property
Investments:
1996 1995 1994
Balance at beginning of period $28,029 $22,083 $15,883
Additions during period 946 6,070 6,222
Property dispositions during
period (6,167) -- --
Decline of Property Values(1) (907) -- --
Reductions during period (4) (218) (124) (22)
________ ________ ________
Balance at end of period $21,683 $28,029 $22,083
(3) Reconciliation of accumulated depreciation for Real Estate
Property Investments:
1996 1995 1994
Balance at beginning of period $ 2,076 $ 1,392 $ 926
Depreciation and amortization
expense 816 737 466
Property dispositions during
period (808) -- --
Reductions during period (4) (218) (53) --
_______ ________ ________
Balance at end of period $ 1,866 $ 2,076 $ 1,392
(4) Reductions during 1996 reflect the offset of accumulated
depreciation to the cost basis in establishing the new basis for
Post Oak.
(5) Aggregate cost of real estate owned at December 31, 1996 for
Federal income tax purposes was approximately $24,371.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders
T. Rowe Price Renaissance Fund, Ltd.,
A Sales-Commission-Free Real Estate Investment:
We have audited the consolidated balance sheets of T. Rowe Price
Renaissance Fund, Ltd., A Sales-Commission-Free Real Estate Investment,
and its consolidated partnership as of December 31, 1996 and 1995, and
the related consolidated statements of operations, stockholders' equity
and cash flows for each of the years in the three-year period ended
December 31, 1996. In connection with our audits of the consolidated
financial statements, we have also audited the related financial
statement schedule. These consolidated financial statements and
financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule 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 consolidated financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of T.
Rowe Price Renaissance Fund, Ltd., A Sales-Commission-Free Real Estate
Investment, and its consolidated partnership as of December 31, 1996 and
1995, and the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 1996, in
conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set
forth therein.
KPMG Peat Marwick LLP
Chicago, Illinois
January 24, 1997
<PAGE>
