SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
- ---
OF 1934
For the fiscal year ended December 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)
For the transition period from .......................................
to ........................................
Commission File Number
33-36336
INTERVEST MORTGAGE ASSOCIATES L.P.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 13-3575243
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10 Rockefeller Plaza, New York, New York 10020-1903
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 757-7300
-----------------------------
Securities Registered Pursuant to Section 12(b) of the Act:
None
----------------
(Title of Class)
Securities Registered Pursuant to Section 12(g) of the Act:
None
----------------
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to item 405
of Regulation SK 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 to this Form 10-K or any amendment to this
Form 10-K (X) .
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TABLE OF CONTENTS
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PART I
Pages
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Item 1 Description of Business 3
Item 2 Properties 6
Item 3 Legal Proceedings 6
Item 4 Submission of Matters to a Vote of Security Holders 6
PART II
Item 5 Market for the Registrant's Units of Limited Partnership Interest ("Units") 6
Item 6 Selected Financial Data 7
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations 7
Item 7A Quantitative and Qualitative Disclosures about Market Risk 8
Item 8 Financial Statements and Supplementary Data 9
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure 27
PART III
Item 10 Directors and Executive Officers of the Registrant 27
Item 11 Executive Compensation 27
Item 12 Security Ownership of Certain Beneficial Owners and Management 27
Item 13 Certain Relationships and Related Transactions 28
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K 28
SIGNATURES 29
Supplemental Information to be Furnished with Reports Filed Pursuant to Section 29
15(d) of the Act.
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PART I
Item 1. Description of Business
Organization
The registrant, Intervest Mortgage Associates L.P. (the "Partnership") is a
Delaware limited partnership organized in June 1990. The Partnership's principal
executive offices are located at 10 Rockefeller Plaza, Suite 1015, New York, New
York 10020-1903, and its telephone number is 212-757-7300.
The General Partner is Intervest Funds Management Corporation (the "General
Partner"), a Delaware corporation which was incorporated in June 1990. All of
the stock of the General Partner is owned by Lowell S. Dansker and Lawrence G.
Bergman, who are also Special Limited Partners of the Partnership. The General
Partner manages and controls the affairs of the Partnership and has agreed to
pay all Partnership expenses.
During 1991, a public offering of $10,000,000 of units of limited partnership
interest was completed. The Partnership's objectives are to invest in mortgages,
which will preserve and protect the Partnership's capital and provide for
monthly distribution to unitholders at a floating annual interest rate on their
adjusted contributions equal to two percentage points over the prime rate of
Chase Manhattan Bank of New York, with a minimum rate of 9 1/2% and a maximum
rate of 15%.
The Partnership invests in mortgages secured by income-producing properties,
primarily residential apartment buildings. Mortgages generally will have
maturities ranging from one to seven years. Mortgage investments may include
first mortgages, junior mortgages and wraparound mortgages.
The term of the partnership expires on December 31, 1999.
Present Business
Proceeds from the sale of the $10,000,000 of units were principally used to
acquire mortgages, which at December 31, 1997, had a carrying value of
$10,682,000. Funds of the partnership not invested in mortgages are mostly
invested in cash equivalents.
For financial statement reporting purposes, all mortgages sold to the
Partnership by affiliates have been recorded at the historical cost of the
affiliate, adjusted for a discount to reflect an appropriate market interest
rate at the date of acquisition.
Each of the Partnership's twelve mortgages is a first mortgage lien on
multifamily residential apartment buildings. Seven of the residential apartment
buildings are located in New York City, two are located in suburbs of New York
City, one is located in the State of Connecticut, one is located in the State of
New Jersey and one is located in the State of Pennsylvania.
Future Business Operations
The Partnership plans to engage in the real estate business, including the
acquisition and origination of additional mortgages in the future. Such
additional mortgages may be purchased from affiliates of the Partnership or from
unaffiliated parties. It is anticipated that such mortgages will be acquired or
originated by reinvesting a substantial part of the proceeds resulting from the
sale, repayment or prepayment of the present mortgage portfolio.
The Partnership's mortgage loans will include: (i) wraparound mortgage loans;
(ii) junior mortgage loans; (iii) interim mortgage loans; and (iv) first
mortgage loans.
3
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The Partnership's mortgage loans will generally be secured by income-producing
properties. In determining whether to make mortgage loans, the Partnership will
analyze relevant real property and financial factors which may in certain cases
include such factors as the condition and use of the subject property, its
income-producing capacity and the quality, experience and creditworthiness of
the owner of the property. The Partnership's mortgage loans will generally not
be personal obligations of the borrower and will not be insured or guaranteed by
governmental agencies or otherwise.
The Partnership may make both long- and short-term mortgage loans. The
Partnership anticipates its mortgage loans will typically mature within
approximately five years. However, the Partnership may also invest in mortgage
loans with shorter maturities and then reinvest the proceeds from such mortgage
loans in additional mortgage loans. The Partnership anticipates that generally
its mortgage loans will provide for balloon payments due at the time of their
maturity.
Mortgage Investment Policy
To the extent that proceeds from existing mortgages are available, the
Partnership anticipates that it will acquire or originate senior and junior
mortgages, primarily on multifamily residential properties located in the New
York metropolitan area. Such mortgages generally will not be insured by the
Federal Housing Administration or guaranteed by the Veterans Administration or
otherwise guaranteed or insured in any way. The Partnership requires that all
mortgaged properties be covered by property insurance in amounts deemed adequate
in the opinion of management.
In addition, prior to funding any mortgage, the Partnership will obtain a real
property appraisal prepared by an independent MAI appraiser and a mortgagee's or
owner's title insurance policy or commitment as to the priority of the mortgage
or the condition of title. The General Partner will generally rely on its own
independent analysis and not exclusively on appraisals in determining whether or
not to make a particular mortgage loan. The principal amount of each mortgage
made by the Partnership will not exceed, when added to the amount of any other
mortgages on the underlying property, 85% of the appraised value of the
underlying property.
An independent advisor has been retained to issue letters of opinion that each
proposed mortgage to an affiliated borrower is fair and at least as favorable to
the Partnership as a loan to an unaffiliated borrower in similar circumstances.
Temporary Investment by Affiliates on Behalf of the Partnership
An affiliate of the Partnership may make a mortgage loan or purchase a mortgage
in its own name and temporarily hold such investment for the purpose of
facilitating the making of an investment of the Partnership, provided that any
such investment is acquired by the Partnership at a cost no greater than the
cost of such investment to the affiliate plus carrying costs and provided there
is no other benefit to the affiliate arising out of such transaction.
Certain Characteristics of the Partnership's Mortgage Investments
Mortgages typically provide for periodic payments of interest and, in some
cases, principal during the term of the mortgage, with the remaining principal
balance and any accrued interest due at the maturity date. The mortgages owned
by the Partnership provide for monthly payments of interest and balloon payments
at maturity, which means that a substantial part or all of the original
principal of the mortgage is due in one lump sum payment at maturity. The
property on which the mortgage is a lien provides the security for the mortgage.
If the net revenue from the property is not sufficient to make all debt service
payments due on mortgages on the property, or if at maturity or the due date of
any balloon payment the owner of the property fails to raise the funds to make
the payment (by refinancing, sale or otherwise), the Partnership could sustain a
loss on its investment in the mortgage. To the extent that the aggregate net
revenues from the Partnership's mortgage investments are insufficient to pay the
4
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monthly distributions to the unitholders, the General Partner has agreed to pay
the Partnership any shortfall.
With respect to any wraparound mortgages which may be originated by the
Partnership in the future, such wraparound mortgages are generally negotiated
and structured on an individual, case by case basis, and may be structured to
include any or all of the following provisions:
(i) The Partnership may lend money to a real property owner who would be
obligated to repay the senior underlying mortgage debt as well as the new
wraparound indebtedness owed to the Partnership.
(ii) The Partnership may legally assume the obligation to make the
payments due on the senior underlying mortgage debt.
(iii) The real property owner-debtor may agree to make payments to the
Partnership in satisfaction of both the senior underlying mortgage debt and the
new wraparound indebtedness owed to the Partnership.
(iv) The Partnership may receive a mortgage on the real property to secure
repayment of the total amount of indebtedness (wraparound indebtedness and the
senior underlying mortgage indebtedness).
The mortgages owned by the Partnership are first mortgages. In all cases, in the
opinion of management, the current value of the underlying property
collateralizing the mortgage loan is in excess of the stated amount of the
mortgage loan. Therefore, in the opinion of management of the Partnership, each
property on which a mortgage owned by the Partnership is a lien constitutes
adequate collateral for the related mortgage loan. Accordingly, in the event the
owner of a property fails to make required debt service payments, management
believes that, based upon current value, upon a foreclosure of the mortgage and
sale of the property, the Partnership would recover its entire investment.
However, there can be no assurance that the current value of the underlying
property will be maintained.
Loan Loss Experience
For financial reporting purposes, the Partnership considers a loan as delinquent
or non-performing when it is contractually past due 90 days or more as to
principal or interest payments. To date, the Partnership has not experienced any
defaults or delinquencies in its mortgage portfolio. The Partnership evaluates
its portfolio of mortgage loans on an individual basis, comparing the amount at
which the investment is carried to its estimated net realizable value. Since the
Partnership has not experienced any defaults or delinquencies, no allowance for
loan losses is presently maintained.
Tax Accounting Treatment of Payments Received on Mortgages
The Partnership derives substantially all of its cash flow from debt service
payments which it receives on mortgages owned by it. The tax accounting
treatment of such debt service payments, as income or return of capital, depends
on the particular mortgage. In the case of mortgages which pay interest only,
the entire debt service payment prior to maturity received by the Partnership is
treated as income and the repayment of principal is generally considered a
return of capital. In the case of mortgages which include amortization of
principal in the debt service payment received by the Partnership, the amount
representing amortization of principal is generally treated as a return of
capital for tax accounting purposes.
Financial Accounting Treatment of Payments Received on Mortgages
For financial reporting purposes, the Partnership's basis in certain mortgages
is less than the face amount outstanding. This difference is attributable to
discounts recorded by the Partnership to reflect a market rate of interest at
the date the loans were acquired. These discounts will be amortized over the
lives of the mortgages.
5
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Effect of Government Regulation
Investment in mortgages on real properties presently may be impacted by
government regulation in several ways. Residential properties may be subject to
rent control and rent stabilization laws. As a consequence, the owner of the
property may be restricted in its ability to raise the rents on apartments. If
real estate taxes, fuel costs and maintenance of and repairs to the property
were to increase substantially, and such increases are not offset by increases
in rental income, the ability of the owner of the property to make the payments
due on the mortgage as and when they are due might be adversely affected.
Laws and regulations relating to asbestos have been adopted in many
jurisdictions, including New York City, which require that whenever any work is
undertaken in a property in an area in which asbestos is present, the asbestos
must be removed or encapsulated in accordance with such applicable local and
federal laws and regulations. The cost of asbestos removal or encapsulation may
be substantial, and if there were not sufficient cash flow from the property,
after debt service on mortgages, to fund the required work, and the owner of the
property fails to fund such work from other sources, the value of the property
could be adversely affected, with consequent impairment of the security for the
mortgage.
Laws regulating the storage, disposal and clean up of hazardous or toxic
substances at real property have been adopted at the federal, state and local
levels. Such laws may impose a lien on the real property superior to any
mortgages on the property. In the event such a lien were imposed on any property
which serves as security for a mortgage owned by the Partnership, the security
for such mortgage could be impaired.
Item 2. Properties
None.
Item 3. Legal Proceedings
The Partnership is not engaged in any litigation, nor does it presently know of
any threatened or pending litigation in which it is contemplated that the
Partnership will be made a party.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for the Registrant's Units of Limited Partnership Interest
("Units")
There is no established trading market for the Units.
6
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Item 6. Selected Financial Data
Income Statement Data
Year Ended December 31,
1997 1996 1995 1994 1993
----------- ------------ ------------ -------------- ---------
Revenue:
<S> <C> <C> <C> <C> <C>
Interest income.................................. $1,367,000 $1,218,000 $1,209,000 $1,190,000 $1,130,000
Gain on early repayment of
discounted mortgages..................... 22,000 47,000 9,000
Other income.................................... 7,000 2,000 17,000
----------- ----------- -----------
................................................. $1,396,000 $1,267,000 $1,235,000 $1,190,000 $1,130,000
Expenses:
General and administrative...................... 5,000 3,000 6,000 5,000 5,000
------------ ------------ ------------ ------------ ------------
Net income...........................................$1,391,000 $1,264,000 $1,229,000 $1,185,000 $1,125,000
========== ========== ========== ========== ==========
Balance Sheet Data
December 31,
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1997 1996 1995 1994 1993
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<S> <C> <C> <C> <C> <C>
Cash and cash equivalents............................. $2,087,000 $ 5,730,000 $ 6,566,000 $ 3,726,000 $ 1,002,000
Mortgages receivable................................... 10,682,000 6,575,000 5,542,000 7,578,000 10,195,000
Total assets........................................... 12,952,000 12,386,000 12,177,000 11,418,000 11,289,000
Partner's Capital...................................... 10,249,000 10,104,000 10,045,000 10,039,000 10,190,000
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources:
The Partnership is engaged in the real estate business, including the
originating and purchase of real estate mortgage loans, consisting of first
mortgages, junior mortgages, wraparound mortgages and interim mortgage loans.
The Partnership's current investment policy emphasizes the investment in
mortgage loans on income producing properties. The majority of the Partnership's
loans are expected to mature within approximately five years.
The Partnership's liquidity is managed to ensure that sufficient funds are
available to preserve and protect the Partnership's capital and to provide for
monthly distributions to unitholders at a floating annual rate based on their
adjusted capital contributions equal to two percentage points over the prime
rate of Chase Manhattan Bank, New York with a minimum rate of 9 1/2% and a
maximum of 15%.
7
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Results of Operations:
Year ended December 31, 1997 and 1996
For the year ended December 31, 1997 interest income was $1,367,000 as compared
to $1,218,000 for the same period a year ago. The increase of $149,000 resulted
mainly from an increase in mortgages receivable.
Year ended December 31, 1996 and 1995
For the year ended December 31, 1996 interest income was $1,218,000 as compared
to $1,209,000 for the same period a year ago. The increase of $9,000 resulted
mainly from an increase in mortgages receivable in the fourth quarter 1996, and
offset in part by a decrease in interest rate subsequent to July 1995.
Since the Partnership is engaged in the real estate business, its results of
operations are affected by general economic trends in real estate markets, as
well as by trends in the general economy and the movement of interest rates.
Since the properties underlying the Partnership's mortgages are concentrated in
the New York City area, the economic condition in that area can also have an
impact on the Partnership's operations.
The rental housing market in New York City remains stable and the Partnership
expects that such properties will continue to appreciate in value with little or
no reduction in occupancy rates. The Partnership's mortgage portfolio is
composed predominantly of mortgages on multi-family residential properties, most
of which are subject to applicable rent control and rent stabilization statutes
and regulations. In both cases, any increases in rent are subject to specific
limitations. As such, properties of the nature of those constituting the most
significant portion of the Partnership's mortgage portfolio are not affected by
the general movement of real estate values in the same manner as other
income-producing properties.
Impact of Inflation:
Inflation has not had an effect on the Partnership's objectives of making
monthly distributions to unitholders from interest received from its mortgage
portfolio. Since certain mortgages bear interest at a fixed rate, rising
interest rates as a result of inflation may require the Partnership to rely on
the guarantee of the General Partner to pay to the Partnership a sufficient
amount to make the monthly distributions to the unitholders.
Business:
The Partnership is engaged in the real estate business and has historically
invested primarily in real estate mortgage loans secured by income producing
real property. It is anticipated that a substantial portion of the loans to be
made by the Partnership will be loans with terms of approximately five years.
Such transactions typically require an understanding of the underlying real
estate transaction and rapid processing and funding as a principal basis for
competing in the making of these loans. The Partnership does not finance new
construction.
At December 31, 1997, seven of the twelve Partnership loans were secured by
properties located in the greater New York metropolitan area.
Competition:
The Company competes for acceptable investments with real estate investment
trusts, commercial banks, insurance companies, savings and loan associations,
pension funds and mortgage banking firms, many of which have greater resources
with which to compete for desirable mortgage loans.
Item 7A. Quatitative and Qualitative Disclosures about Market Risk
Not Applicable
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Item 8. Financial Statements and Supplementary Data
INTERVEST MORTGAGE ASSOCIATES L.P.: Page
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Report of Independent Auditors ................................................................................. 11
Balance Sheets as of December 31, 1997 and 1996................................................................. 12
Statements of Operations for the years ended December 31, 1997, 1996 and 1995................................... 13
Statements of Partners' Capital for the years ended December 31, 1997, 1996 and 1995............................ 14
Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995................................... 15
Notes to Financial Statements................................................................................... 16
Schedule IV -- Mortgage Loans on Real Estate -- December 31, 1997............................................... 19
</TABLE>
Other financial statement schedules and inapplicable periods with respect to
schedules listed above are omitted because the conditions requiring their filing
do not exist or the information required thereby is included in the financial
statements filed, including the notes thereto.
9
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INTERVEST FUNDS MANAGEMENT CORPORATION: Pages
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<S> <C>
Report of Independent Auditors ................................................................................. 21
Balance Sheets as of December 31, 1997 and 1996................................................................. 22
Statements of Operations for the years ended December 31, 1997, 1996 and 1995................................... 23
Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995................................... 24
Notes to Financial Statements................................................................................... 25
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Richard A. Eisner & Company, LLP
- --------------------------------------------------------------------------------
Accountants and Consultants
RAE
AUDITORS' REPORT
To the Partners
Intervest Mortgage Associates L.P.
New York, New York
We have audited the accompanying balance sheets of Intervest Mortgage Associates
L.P. (a Delaware limited partnership) as of December 31, 1997 and 1996 and the
related statements of operations, partners' capital and cash flows for each of
the years in the three-year period ended December 31, 1997. Our audits also
included the financial statement schedule referred to in the Index at Item
14(a). These financial statements and related schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and related 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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present fairly, in all
material respects, the financial position of Intervest Mortgage Associates L.P.
as of December 31, 1997 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1997 in
conformity with generally accepted accounting principles. Also, in our opinion
the schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
New York, New York
January 23, 1998
<PAGE>
INTERVEST MORTGAGE ASSOCIATES L.P.
Balance Sheets
December 31,
---------------------------
1997 1996
---- ----
ASSETS
Cash and cash equivalents $ 2,087,000 $ 5,730,000
Mortgages receivable, including
due from affiliates of $1,300,000
in 1997 and 1996 (Note C) 10,682,000 6,575,000
Interest receivable 183,000 81,000
----------- -----------
$12,952,000 $12,386,000
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LIABILITIES AND PARTNERS' CAPITAL
Distributions payable (Note F) $ 2,366,000 $ 2,101,000
Escrow deposits payable 295,000 173,000
Deferred fee income 42,000 8,000
----------- -----------
Total liabilities 2,703,000 2,282,000
Partners' capital 10,249,000 10,104,000
----------- -----------
$12,952,000 $12,386,000
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INTERVEST MORTGAGE ASSOCIATES L.P.
Statements of Operations
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Revenue:
Interest income, includes $136,000, $241,000 and $294,000
from affiliates (Note G) $1,367,000 $1,218,000 $1,209,000
Gain on early repayment of discounted mortgages (Note C) 22,000 47,000 9,000
Other income 7,000 2,000 17,000
---------- ---------- ----------
1,396,000 1,267,000 1,235,000
Expenses:
General and administrative 5,000 3,000 6,000
---------- ---------- ----------
Net income $1,391,000 $1,264,000 $1,229,000
========== ========== ==========
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<CAPTION>
INTERVEST MORTGAGE ASSOCIATES L.P.
Statements of Partners' Capital
Special Limited
General Limited Partners
Total Partner Partners (Unitholders)
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<S> <C> <C> <C> <C>
Balances - January 1, 1995 $ 10,039,000 $ 37,200 $ 1,800 $ 10,000,000
Partnership expenses paid by the
general partner (Note D) 6,000 6,000
Net income 1,229,000 1,229,000
Distributions (Note E)
(1,229,000) (1,229,000)
------------ ------------ ------------ ------------
Balances - December 31, 1995 10,045,000 43,200 1,800 10,000,000
Partnership expenses paid by the
general partner (Note D) 3,000 3,000
Net income 1,264,000 55,400 600 1,208,000
Distributions (Note E)
(1,208,000) (1,208,000)
------------ ------------ ------------ ------------
Balances - December 31, 1996 10,104,000
101,600 2,400 10,000,000
Partnership expenses paid by the
general partner (Note D) 5,000 5,000
Net income 1,391,000 138,600 1,400 1,251,000
Distributions (Note E)
(1,251,000) (1,251,000)
------------ ------------ ------------ ------------
Balances - December 31, 1997 $ 10,249,000 $ 245,200 $ 3,800 $ 10,000,000
============ ============ ============ ============
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INTERVEST MORTGAGE ASSOCIATES L.P.
<TABLE>
<CAPTION>
Statements of Cash Flows
Year Ended
December 31,
--------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,391,000 $ 1,264,000 $ 1,229,000
Adjustments to reconcile net income to net cash provided
by operating activities:
Amortization of discount on mortgages receivable (61,000) (17,000) (18,000)
Gain on early repayment of discounted mortgages (22,000) (47,000) (9,000)
Expenses paid by general partner 5,000 3,000 6,000
Changes in:
Interest receivable (102,000) (12,000) 45,000
Deferred fee income 34,000 (19,000) 26,000
---------- ---------- ---------
Net cash provided by operating activities 1,245,000 1,172,000 1,279,000
---------- ---------- ---------
Cash flows from investing activities:
Collection of mortgages receivable 2,441,000 9,118,000 3,884,000
Mortgages receivable acquired (6,465,000) (10,087,000) (1,821,000)
Increase (decrease) in escrow deposits payable 122,000 (194,000) 303,000
---------- ---------- ---------
Net cash (used in) provided by investing activities (3,902,000) (1,163,000) 2,366,000
---------- ---------- ---------
Cash flows from financing activities:
Partners' distributions (986,000) (845,000) (805,000)
---------- ---------- ---------
Net (decrease) increase in cash and cash equivalents (3,643,000) (836,000) 2,840,000
Cash and cash equivalents at beginning of the year 5,730,000 6,566,000 3,726,000
---------- ---------- ---------
Cash and cash equivalents at end of the year $ 2,087,000 $ 5,730,000 $ 6,566,000
=========== ============ ============
</TABLE>
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INTERVEST MORTGAGE ASSOCIATES L.P.
Notes to Financial Statements
Note A - Organization and Business
Intervest Mortgage Associates L.P., a Delaware limited partnership (the
"Partnership"), was formed for the primary purpose of investing in mortgages on
improved income-producing real properties. The Partnership will continue until
December 31, 1999, unless terminated sooner in accordance with the provisions of
the partnership agreement.
The special limited partners, Lowell S. Dansker and Lawrence G. Bergman each own
50% of the common stock of Intervest Funds Management Corporation, the general
partner.
Note B - Significant Accounting Policies
[1] Cash equivalents:
The Partnership considers all highly liquid instruments purchased with an
original maturity of three months or less to be cash equivalents.
[2] Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the
reported period. Actual results could differ from those estimates.
[3] Mortgage loans:
Loans are stated at their outstanding principal balances, net of any deferred
fees or costs on originated loans and unamortized discounts on purchased loans.
Interest income is accrued on the unpaid principal balance. Discounts are
amortized to income over the life of the related receivables using the constant
interest method. Loan origination fees net of certain direct origination costs
are deferred and recognized as an adjustment of the yield of the related loans.
[4] Allowance for losses:
An allowance for loss related to loans that are impaired is based on discounted
cash flows using the loan's initial effective interest rate or the fair value of
the collateral. Management's periodic evaluation of the need for, or adequacy of
the allowance is based on the Company's past loan loss experience, known and
inherent risks in the portfolio, adverse situations that may affect the
borrower's ability to repay (including the timing of future payments), the
estimated value of the underlying collateral and other relevant factors. This
evaluation is inherently subjective as it requires material estimates including
the amounts and timing of future cash flows expected to be received on any
impaired loans that may be susceptible to significant change.
Note C - Mortgages Receivable
Mortgages receivable consist of first mortgages on residential properties.
Interest rates on mortgages range from 10% to 15 1/2%. Certain mortgages have
been discounted utilizing rates ranging from 11% to 16 3/4%.
During 1997 and 1996, mortgages were paid in full prior to their maturity date.
This resulted in the recognition of a gain, which represents the balance of the
unamortized discount applicable to these mortgages.
16
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INTERVEST MORTGAGE ASSOCIATES L.P.
Notes to Financial Statements
Note C - Mortgages Receivable (continued)
Annual maturities of mortgages receivable during the next five years are
summarized as follows:
Year EndingDecember 31,
1998 $ 4,942,000
1999 3,941,000
2000 512,000
2001 84,000
2002 87,000
Thereafter 1,250,000
-----------
10,816,000
Less unearned discount 134,000
-----------
$10,682,000
===========
The Partnership evaluates its portfolio of mortgage loans on an individual
basis, comparing the amount at which the investment is carried to its estimated
net realizable value. At December 31, 1997 and 1996, no allowance for losses was
required.
Note D - Duties and Obligations of the General Partner
As more fully described in the partnership agreement, the General Partner has
agreed, among other things, to:
[1] Manage and control the business of the Partnership;
[2] Pay all organization costs and operating expenses of the Partnership
and the expenses in connection with the public offering. Operating
expenses for 1997 and 1996 have been reflected in the financial
statements of the Partnership;
[3] Pay to the Partnership any shortfall with respect to cash distributions
due to unitholders;
[4] Repurchase each year, on a noncumulative basis, a maximum of 10% of
units outstanding as of January 1 of each year if requested by the
unitholders; and
[5] Maintain a net worth of at least 10% of the adjusted contribution of
the unitholders, but in no event less than $500,000. At December 31,
1997 and 1996, the audited financial statements of the general partner
showed a net worth of $1,256,000 and $1,134,000, respectively,
including notes receivable from stockholders of $1,000,000.
Note E - Allocation of Income, Losses and Distributions
As more fully described in the partnership agreement, income, losses and
distributions are to be allocated as follows:
[1] Net income and operating cash distributions, first to unitholders in an
amount equal to their investment return (equal to 2% above prime rate
of Chase Manhattan Bank, subject to a minimum rate of 9 1/2% and a
maximum rate of 15% per annum) and then to the general partner (99%)
and special limited partners (1%).
17
<PAGE>
INTERVEST MORTGAGE ASSOCIATES L.P.
Notes to Financial Statements
Note E - Allocation of Income, Losses and Distributions (continued)
[2] Net loss, other than from a disposition, as defined, 99% to the general
partner and 1% to the special limited partners.
[3] Net loss from a disposition, to unitholders to the extent of their
positive capital account balances and then to the general partner and
special limited partners.
[4] Disposition proceeds will generally be distributed to unitholders until
each has received an amount equal to his original invested capital and
then to the general partner and special limited partners.
Note F - Distribution Accrual Plan
Under the partnership agreement, unitholders can elect to have the Partnership
retain distributions they are entitled to receive. Such retained amounts will
earn interest at Chase Manhattan Bank's prime rate, compounded monthly, with a
floor of 9 1/2% and a ceiling of 15%.
Note G - Related Parties
[1] During 1995, the Partnership received payments of mortgages in the
amount of $2,000,000 due from affiliates.
[2] Under the terms of the partnership agreement, the Partnership will
invest in mortgages on improved income-producing real properties owned
by either unaffiliated or affiliated borrowers. If the property owner
is an affiliated entity, certain conditions must be met before the
investment can be made by the Partnership.
Note H - Income Taxes
The Partnership will not be required to provide for, or pay, any federal income
taxes. Income tax liabilities and/or benefits that arise from its operations
will be passed directly to the individual partners. The Partnership may be
subject to state and local taxes in jurisdictions in which it operates.
Note I - Unit Repurchase Rights
Beginning January 1, 1999, or at an earlier date, in the event the Partnership
is to be terminated, the General Partner will have the right to purchase all
Units from the unitholders.
18
<PAGE>
<TABLE>
<CAPTION>
INTERVEST MORTGAGE ASSOCIATES L. P.
SCHEDULE IV--MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1997
EFFECTIVE ACTUAL FINAL
INTEREST INTEREST MATURITY
DESCRIPTION RATE RATE DATE PERIODIC PAYMENT TERMS
- ------------------------------ --------- --------- --------- -----------------------
<S> <C> <C> <C> <C> <C>
RESIDENTIAL FIRST MORTGAGES,
RENTAL APARTMENT BUILDINGS:
BRONX, NEW YORK 13.00 13.00 (A) 07/01/12 INTEREST ONLY MONTHLY
NEW YORK, NEW YORK 14.30 12.50 (B) 04/21/98 (E)
NEW YORK, NEW YORK 11.60 10.00 03/01/05 (C)
NEW ROCHELLE, NEW YORK 10.50 10.50 (B) 10/01/99 (D)
FREEPORT, NEW YORK 13.83 12.50 (B) 11/05/98 (E)
BRONX, NEW YORK 16.50 15.00 (B) 03/31/98 (E)
NEW YORK, NEW YORK 16.40 14.50 (B) 09/17/98 (E)
HARTFORD, CONNECTICUT 14.50 12.50 (B) 10/10/98 (E)
NEW YORK, NEW YORK 13.50 13.50 04/15/99 (D)
PHILADELPHIA, PENNSYLVANIA 16.65 14.50 (B) 01/17/99 (E)
NEW YORK, NEW YORK 14.00 12.50 (B) 11/28/98 (E)
JERSEY CITY, NEW JERSEY 14.00 12.50 (B) 10/06/00 (E)
(A) INTEREST PAYMENTS ARE FIXED. INTEREST RATE SHWON IS APPROXIMATE.
(B) INTEREST AT FLUCTUATING RATE BASED ON BANK PRIME RATE.
(C) INTEREST MONTHLY, ADDITIONAL PRINCIPAL PAYMENT DUE ON EVERY MARCH 1.
(D) INTEREST MONTHLY, PRINCIPAL AT MATURITY.
(E) PRINCIPAL AND INTEREST MONTHLY.
(F) NOT PREPAYALE.
(G) NO PREPAYMENT PENALTY.
(H) NO MORTGAGE LOAN IS DELINQUENT AS TO PRINCIPAL AND/OR INTEREST.
</TABLE>
<TABLE>
<CAPTION>
INTERVEST MORTGAGE ASSOCIATES L. P.
SCHEDULE IV--MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1997
ORIGINAL
FACE CARRYING
PRIOR AMOUNT OF AMOUNT OF
DESCRIPTION LIEN MORTGAGES MORTGAGES PREPAYMENT PENALTY
- ------------------------------ ------- ------------ ------------ -----------------------------------
<S> <C> <C> <C>
RESIDENTIAL FIRST MORTGAGES,
RENTAL APARTMENT BUILDINGS:
BRONX, NEW YORK $800,000 $800,000 (F)
NEW YORK, NEW YORK 1,000,000 983,000 ONE MONTH'S INTEREST
NEW YORK, NEW YORK 950,000 798,000 1% FEE IF PRIOR TO 3/2/2004.
NEW ROCHELLE, NEW YORK 1,300,000 1,300,000 (G)
FREEPORT, NEW YORK 575,000 562,000 NOT PREPAYABLE PRIOR TO 06/05/1998;
THEN ONE MONTH'S INTEREST.
BRONX, NEW YORK 670,000 521,000 1% FEE
NEW YORK, NEW YORK 850,000 839,000 ONE MONTH'S INTEREST
HARTFORD, CONNECTICUT 975,000 960,000 NOT PREPAYABLE PRIOR TO 07/10/1998;
THEN ONE MONTH'S INTEREST.
NEW YORK, NEW YORK 1,050,000 1,050,000 AFTER 3/15/1999, 1% FEE NOT NEEDED.
PHILADELPHIA, PENNSYLVANIA 1,550,000 1,504,000 NOT PREPAYABLE PRIOR TO 04/17/1998;
THEN ONE MONTH'S INTEREST.
NEW YORK, NEW YORK 890,000 879,000 NOT PREPAYABLE PRIOR TO 03/28/1998;
THEN ONE MONTH'S INTEREST.
JERSEY CITY, NEW JERSEY 500,000 486,000 NOT PREPAYABLE PRIOR TO 01/06/1999;
------- ------------ ------------ THEN ONE MONTH'S INTEREST.
$0 $11,110,000 $10,682,000
======= ============ ============
(A) INTEREST PAYMENTS ARE FIXED. INTEREST RATE SHWON IS APPROXIMATE.
(B) INTEREST AT FLUCTUATING RATE BASED ON BANK PRIME RATE.
(C) INTEREST MONTHLY, ADDITIONAL PRINCIPAL PAYMENT DUE ON EVERY MARCH 1.
(D) INTEREST MONTHLY, PRINCIPAL AT MATURITY.
(E) PRINCIPAL AND INTEREST MONTHLY.
(F) NOT PREPAYALE.
(G) NO PREPAYMENT PENALTY.
(H) NO MORTGAGE LOAN IS DELINQUENT AS TO PRINCIPAL AND/OR INTEREST.
</TABLE>
19
<PAGE>
SCHEDULE IV--MORTGAGES LOANS ON REAL ESTATE--continued
The following summary reconciles mortgages receivable at their carrying values:
Year Ended December 31
______________________
1997 1996 1995
____________ ____________ ____________
Balance at beginning of period $ 6,575,000 $ 5,542,000 $ 7,578,000
Additions during period:
Mortgages acquired 6,465,000 10,087,000 1,821,000
----------- ----------- -----------
13,040,000 15,629,000 9,399,000
Deductions during period:
Collections of principal, net
of amortization of discounts 2,358,000 9,054,000 3,857,000
----------- ----------- -----------
BALANCE AT CLOSE OF PERIOD $10,682,000 $ 6,575,000 $ 5,542,000
=========== =========== ===========
20
<PAGE>
AUDITORS' REPORT
Board of Directors
Intervest Funds Management Corporation
New York, New York
We have audited the accompanying balance sheets of Intervest Funds Management
Corporation as of December 31, 1997 and 1996, and the related statements of
operations and cash flows for each of the years in the three-year period ended
December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present fairly, in all
material respects, the financial position of Intervest Funds Management
Corporation as of December 31, 1997 and 1996, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1997 in conformity with generally accepted accounting principles.
Richard A. Eisner & Company, LLP
New York, New York
January 23, 1998
<PAGE>
INTERVEST FUNDS MANAGEMENT CORPORATION
Balance Sheets
December 31,
----------------------------
1997 1996
---- ----
ASSETS
Cash and cash equivalents $ 11,000 $ 32,000
Investment in partnership (Notes A, B and C) 245,000 102,000
----------- -----------
$ 256,000 $ 134,000
=========== ===========
Commitments and contingent liabilities (Note C)
STOCKHOLDERS' EQUITY
Common stock, no par value; authorized
3,000 shares; issued and outstanding 20 shares $ 20 $ 20
Additional paid-in capital 1,907,980 1,907,980
Deficit (652,000) (774,000)
----------- -----------
Total stockholders' equity 1,256,000 1,134,000
Less notes receivable - stockholders (Note C) 1,000,000 1,000,000
----------- -----------
$ 256,000 $ 134,000
=========== ===========
22
<PAGE>
INTERVEST FUNDS MANAGEMENT CORPORATION
Statements of Operations
<TABLE>
<CAPTION>
Year Ended
December 31,
--------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Revenue:
Interest income $ 1,000 $ 1,000 $ 1,000
--------- --------- ---------
Expenses:
General
and administrative 3,000 3,000 3,000
Payment to partnership (Note C) 14,000
--------- --------- ---------
3,000 3,000 17,000
--------- --------- ---------
Operating loss (2,000) (2,000) (16,000)
Equity in income of partnership 138,000 56,000
State and city (taxes) benefit (Note B[2]) (14,000) (5,000) 1,000
--------- --------- ---------
Net income (loss) 122,000 49,000 (15,000)
Deficit at beginning of period (774,000) (823,000) (808,000)
--------- --------- ---------
Deficit at end of period $(652,000) $(774,000) $(823,000)
========= ========= =========
</TABLE>
23
<PAGE>
INTERVEST FUNDS MANAGEMENT CORPORATION
<TABLE>
<CAPTION>
Statements of Cash Flows
Year Ended
December 31,
--------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 122,000 $ 49,000 $ (15,000)
Adjustments to reconcile
net income (loss) to net cash used in
operating activities:
Equity in income of partnership (138,000) (56,000)
Changes in:
Prepaid taxes 5,000 (4,000)
--------- --------- ---------
Net cash used in operating activities (16,000) (2,000) (19,000)
--------- --------- ---------
Cash flows from investing activities:
Purchase of units of limited partnership (30,000)
Sale of units of limited partnership 30,000
Expenses paid on behalf of partnership (5,000) (3,000) (6,000)
--------- --------- ---------
Net cash (used in) provided by investing activities (5,000) 27,000 (36,000)
--------- --------- ---------
Cash flows from financing activities:
Capital contributions 15,000
---------
Net (decrease) increase in cash and cash equivalents (21,000) 25,000 (40,000)
Cash and cash equivalents at beginning of the period 32,000 7,000 47,000
--------- --------- ---------
Cash and cash equivalents at end of period $ 11,000 $ 32,000 $ 7,000
========= ========= =========
</TABLE>
24
<PAGE>
INTERVEST FUNDS MANAGEMENT CORPORATION
Notes to Financial Statements
Note A - Organization
Intervest Funds Management Corporation (the "Company"), a Delaware corporation,
was formed by Lowell S. Dansker and Lawrence G. Bergman, who each own 50% of the
Company's issued and outstanding common shares. The Company is the general
partner and its stockholders are special limited partners in a limited
partnership, Intervest Mortgage Associates L.P. (the "Partnership").
Note B - Significant Accounting Policies
[1] Cash equivalents:
The Company considers all highly liquid instruments purchased with an
original maturity of three months or less to be cash equivalents.
[2] Income taxes:
The Company has elected to be treated as an S corporation for federal
income tax purposes and for state and local jurisdictions which permit such
election. As a result, income is generally taxed directly to the
stockholders for such purposes.
[3] Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenue
and expenses during the reported period. Actual results could differ from
those estimates.
[4] Investment in partnership:
The Company records its investment in the Partnership under the equity
method whereby increases are made for the Company's share of undistributed
earnings and decreases are made for the Company's share of losses from the
Partnership.
Note C - The Partnership
The Partnership invests in mortgages on improved income-producing real
properties owned by either unaffiliated or affiliated borrowers. The Partnership
has sold 1,000 units of limited partnership interest at $10,000 per unit. Each
unitholder is generally entitled to a return on his investment equal to 2% above
the prime rate of Chase Manhattan Bank subject to a minimum rate of 9 1/2% and a
maximum rate of 15% per annum.
The Company, as general partner, has agreed, among other things to:
[1] Manage and control the business of the Partnership;
[2] Pay all operating costs of the Partnership;
[3] Pay to the Partnership any shortfall with respect to cash distributions due
to the unitholders described above;
25
<PAGE>
INTERVEST FUNDS MANAGEMENT CORPORATION
Notes to Financial Statements
Note C - The Partnership (continued)
[4] Repurchase each year on a noncumulative basis, a maximum of 10% of units
outstanding as of January 1 of each year if requested by the unitholders,
and
[5] Maintain a net worth of at least 10% of the adjusted contribution of the
unitholders, but in no event less than $500,000. Notes receivable were
contributed to capital by the stockholders to maintain a net worth of at
least 10% of the adjusted contribution of the unitholders. The notes will
become interest-bearing at a defined rate only for the period from the date
payment is demanded by the Company until such payment is made.
In addition, the Company has paid all organization costs and expenses of the
Partnership in connection with the sale of the units of limited partnership
interest.
As more fully described in the partnership agreement, income, losses and
distributions are to be allocated as follows:
[1] Net income and operating cash distributions, first to unitholders in an
amount equal to their investment return and then to the general partner
(99%) and special limited partners (1%).
[2] Net loss, other than from a disposition, as defined, 99% to the general
partner and 1% to the special limited partners.
[3] Net loss from a disposition, to unitholders to the extent of their positive
capital account balances and then to the general partner and special
limited partners.
[4] Disposition proceeds will generally be distributed to unitholders until
each has received an amount equal to his original invested capital and then
to the general partner and special limited partners.
The following are condensed financial statements of the Partnership:
December 31,
--------------------------
1997 1996
---- ----
Total assets $12,952,000 $12,386,000
Total liabilities 2,703,000 2,282,000
----------- -----------
Partners' capital $10,249,000 $10,104,000
=========== ===========
December 31,
--------------------------
1997 1996
---- ----
Revenue $ 1,396,000 $ 1,267,000
Expenses 5,000 3,000
----------- -----------
Net income $ 1,391,000 $ 1,264,000
=========== ===========
Note D - Unit Repurchase Rights
Beginning January 1, 1999 or at an earlier date, in the event the Partnership is
to be terminated, the Company will have the right to purchase all units from the
unitholders.
26
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
The General Partner of the Partnership, Intervest Funds Management Corporation,
is wholly owned by Lowell S. Dansker and Lawrence G. Bergman. The Partnership
will be managed by the General Partner, which was incorporated in Delaware on
June 13, 1990. It has an office located at 10 Rockefeller Plaza, New York, New
York 10020-1903 (telephone: 212-757-7300).
The current directors and executive officers of the General Partner are as
follows:
Lowell S. Dansker, age 47, serves as a Director, and as Co-Chairman, President
and Treasurer of the General Partner. Mr. Dansker received a Bachelor of Science
in Business Administration from Babson College, a law degree from the University
of Akron School of Law, and is admitted to practice as an attorney in New York,
Ohio, Florida and the District of Columbia.
Lawrence G. Bergman, age 53, serves as a Director, and as Co-Chairman, Vice
President and Secretary of the General Partner. Mr. Bergman received a Bachelor
of Science degree and a Master of Engineering (Electrical) degree from Cornell
University, and a Master of Science in Engineering and a Ph.D degree from The
Johns Hopkins University.
For more than the past fifteen years, Mr. Dansker and Mr. Bergman have been
actively involved in the ownership and operation of real estate and mortgages
primarily through 100% family owned partnerships, corporations and family
trusts.
Mr. Bergman, his wife, Mr. Dansker and Mr. Dansker's father are the sole owners,
partners and trustees, respectively, of such family corporations, partnerships
and trusts. Mr. Dansker and Mrs. Bergman are brother and sister.
Item 11. Executive Compensation
No compensation of any kind is paid to or accrued by the Partnership for any
executive officer or director of the General Partner.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information concerning the ownership of common
stock of the General Partner.
27
<PAGE>
Amount of
Name and Address of Beneficial Owner Beneficial Ownership Percent of Class
- ------------------------------------ -------------------- ----------------
Lowell S. Dansker.................... 10 shares 50.0%
360 West 55th Street,
New York, New York 10019
Lawrence G. Bergman................... 10 shares 50.0%
201 East 62nd Street
New York, New York 10021
Item 13. Certain Relationships and Related Transactions
During 1995, the partnership received payments of mortgages in the amount of
$2,000,000 due from affiliates.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1) Financial Statements:
See Item 8 "Financial Statements and Supplementary Data"
(a) (2) Financial Statement Schedules:
See Item 8 "Financial Statements and Supplementary Data"
(a) (3) Exhibits:
4 Certificate of Limited Partnership and Certificate of Amendment
to Certificate of Limited Partnership. (1)
10.1 Form of Escrow Agreement. (1)
10.2 Form of Independent Advisor Agreement. (1)
25 Power of Attorney. (1)
27 Financial Data Schedule
(b) Reports on Form 8-K
None
(1) Incorporated by reference to Registrant's Registration Statement as
amended on Form S-11 (File No. 33-36336), declared effective on
November 20, 1990.
28
<PAGE>
SIGNATURES
PURSUANT to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
INTERVEST MORTGAGE ASSOCIATES L.P.
By:INTERVEST FUNDS MANAGEMENT CORPORATION
General Partner
Dated: March 26, 1998 By: /S/ Lawrence G. Bergman
-----------------------
Lawrence G. Bergman
Executive Vice 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.
Signatures
President, Co-Chairman,
Treasurer and Director
of Intervest Funds
/S/ Lowell S. Dansker Management Corporation
Lowell S. Dansker (Principal Executive Officer)
Dated: March 26, 1998
Executive Vice President,
Co-Chairman, Secretary
/S/ Lawrence G. Bergman and Director of Intervest
Lawrence G. Bergman Funds Management Corporation
Dated: March 26, 1998 (Principal Operating Officer)
Supplemental Information to be Furnished with Reports Filled Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act:
The annual report to Unitholders has not as yet been distributed.
When the annual report has been distributed to the Unitholders, four copies will
be sent to the Commission.
29
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains information extracted from form 10-K at December 31,
1997, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 2,087
<SECURITIES> 0
<RECEIVABLES> 10,682
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,952
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,952
<SALES> 0
<TOTAL-REVENUES> 1,396
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,391
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,391
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
