<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d)
of Securities Exchange Act of 1934
Commission File
For the fiscal year ended December 31, 1997 Number 33-45291
-----------------
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 04-3131735
- ----------------------- ---------------------------------
(State of organization) (IRS Employer Identification No.)
5 Cambridge Center, Cambridge, Massachusetts 02142
- -------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (617) 234-3000
--------------
Securities registered pursuant to Section 12(b) of the Act: None
----
Securities registered pursuant to Section 12(g) of the Act: None
----
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 S-B 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-KSB or any amendment to
this Form 10-KSB. []
Registrant's revenues for its most recent fiscal year were $12,508,989.
No market exists for the limited partnership interests of the Registrant, and,
therefore, a market value for such interests cannot be determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I
Item 1. Description of Business.
Organization
Winthrop Miami Associates Limited Partnership (the "Registrant") is a
Delaware limited partnership formed pursuant to a Certificate of Limited
Partnership filed on August 27, 1991 with the Delaware Secretary of State, for
the purpose of investing in (a) a 37-story commercial office building located
at 100 Southeast Second Street, Miami, Florida, and (b) a ground floor retail
arcade located in the same building by becoming the managing general partner
of, and acquiring an approximate 88% interest in each of, Miami Tower
Associates Limited Partnership and Miami Retail Associates Limited Partnership
(individually, an "Operating Partnership" and collectively, the "Operating
Partnerships"). The general partner of the Registrant is One International
Associates Limited Partnership, a Delaware limited partnership (the "General
Partner"). (See "Change in Control.")
Each of the Operating Partnerships, Miami Tower Associates Limited
Partnership ("Miami Tower") and Miami Retail Associates Limited Partnership
("Miami Retail"), are Florida limited partnerships formed on July 24, 1991 for
the purpose of acquiring the interests in the "Property" (as hereinafter
defined) and improving and operating their respective interests in the
Property. Miami Tower was formed to acquire the interest in the office tower
portion of the Property and Miami Retail was formed to acquire the interest in
the retail arcade located on the ground floor of the building.
The general partners of each of the Operating Partnerships are the
Registrant, as the managing general partner, and Winthrop Financial
Associates, A Limited Partnership ("WFA"), an affiliate of the General
Partner. The Registrant, as managing general partner, has responsibility for
managing the affairs of the Operating Partnerships. The General Partner
controls the activities of the Registrant and exercises the Registrant's
authority as the managing general partner of each of the Operating
Partnerships. The Registrant and WFA, as general partners of the Operating
Partnerships, control the activities of the Operating Partnerships.
In 1992, the Registrant sold pursuant to a Registration Statement on
Form S-11 filed with the Securities and Exchange Commission 270 units of
limited partnership interest (the "Units") at a purchase price of $100,000 per
Unit. The business of the Registrant is investing as an 88% general partner in
each of the Operating Partnerships which own interests in the
2
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Property. See Item 2, "Description of Properties" for information with
respect to the Property.
Employees
As of December 31, 1997, the Registrant did not have any employees.
Services are generally performed for the Registrant by the General Partners
and their affiliates and agents retained by them.
Property Management
Affiliates of the General Partner have performed the day to day
management services for the Property since the acquisition by the Operating
Partnerships, including preparation of operating budgets, collection of rents,
repairs and maintenance, advertising, maintenance of records, maintenance of
insurance and financial reporting. See Item 12 "Certain Relationships and
Related Party Transactions."
Partnership Agreement Amendment
In August 1995, the General Partner amended the Registrant's
partnership agreement to clarify and remove certain ambiguities pertaining to
the requirements for calling and voting at a meeting of limited partners, or
taking action by written consent of partners in lieu thereof. Such
requirements include, among other matters, that any action by written consent
may be initiated only by the General Partner or by one or more Investor
Limited Partners holding not less than 10% of the outstanding Units.
Change in Control
The general partner of the General Partner is One International, Inc.
("One International"), a Delaware corporation, and the sole limited partner of
the General Partner is WFA. One International, Inc. is a wholly owned
subsidiary of First Winthrop Corporation ("First Winthrop"), which in turn is
controlled by WFA. The general partner of WFA is Linnaeus Associates Limited
Partnership, a Maryland limited partnership ("Linnaeus"). On July 18, 1995
Londonderry Acquisition II Limited Partnership, a Delaware limited partnership
("Londonderry II"), an affiliate of Apollo Real Estate Advisors, L.P.
("Apollo"), acquired, among other things, a general partner interest in W.L.
Realty, L.P. ("W.L. Realty") and a sixty four percent (64%) limited
partnership interest in W.L. Realty. WFA owns the remaining thirty-five
percent (35%) limited partnership interest. As a result of the foregoing
acquisitions, Londonderry II is the sole general partner of W.L. Realty which
is the sole
3
<PAGE>
general partner of Linnaeus, which in turn was, until October 27, 1997, the
sole, and currently is the managing, general partner of WFA. As a result of
the foregoing, effective July 18, 1995, Londonderry II became the controlling
entity of the General Partner. In connection with the transfer of control, the
officers and directors of One International resigned and Londonderry II
appointed new officers and directors. See "Item 9, Directors, Executive
Officers, Promoters and Control Persons; Compliance With Section 16(a) of the
Exchange Act."
Item 2. Description of Properties
The Registrant does not own any interest in real property other than
its general partnership interest in the Operating Partnerships. The Operating
Partnerships do not own any interests in real property other than the
Property.
The Property is a premium quality office building located in downtown
Miami, Florida, and is comprised of (a) a 37-story office tower (the "Office
Tower") containing approximately 557,000 net rentable square feet of office
space located over a 10-story parking garage (the "Parking Garage") and (b) a
ground floor retail arcade containing 18,344 net rentable square feet (the
"Retail Space" and together with the Office Tower, collectively, the
"Property"). Miami Tower acquired the Office Tower in November, 1991 for a
purchase price of $42,622,000, subject to an air-rights lease (the "Air Rights
Lease") with the City of Miami which owns the land under the building as well
as the Parking Garage. Miami Retail acquired the leasehold estate in the
Retail Space in November, 1991 for $1,378,000, which is also owned by the City
of Miami and leased pursuant to a space lease (the "Retail Space Lease").
In connection with its purchase of the Property, the Operating
Partnerships obtained financing in the amount of $36,800,000 (the "Permanent
Loan").
In December 1995, the Resolution Trust Company, the then holder of
the Permanent Loan, notified WFA of a net worth deficiency under the Permanent
Loan documents due to WFA's net worth being less than the required minimum of
$10,000,000. Under the terms of the Permanent Loan documents, the Operating
Partnerships was able to cure this deficiency if an independent appraisal of
the Property indicated that the sum of the amount by which the fair market
value of the Property exceeds $44,000,000 plus WFA's net worth is $10,000,000
or greater. In addition, the deficiency could have been cured by WFA
depositing with the lender an amount equal to $10,000,000 less the sum of
WFA's net worth and the amount by which the fair value of the Property
exceeded $44,000,000.
4
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On May 30, 1997, Travelers Insurance Company and an affiliate of the
General Partner purchased the Permanent Loan and the alleged default was
waived. In connection with the purchase, the Permanent Loan was modified and
now bears interest at 9.5% per annum and requires interest only payments until
July 1999 when principal payments of $48,660 per month become due. The
Permanent Loan is scheduled to mature on May 30, 2001 at which time a balloon
payment of $50,039,000 will be due. See Item 6, "Management's Discussion and
Analysis or Plan of Operation" for additional information with respect to the
Permanent Loan.
The following table sets forth the occupancy rates for the last two
years and the associated gross rental per square foot amount (based on
generally accepted accounting principles) at the Property:
Percentage Average Annual Total
Occupancy Gross Rental Per SF
Year Rate of Occupied Space
---- ---------- --------------------
1996 84% $19.91
1997 87% $22.23
The following table sets forth certain information concerning lease
expirations (assuming no renewals for this property for the period from
January 1, 1998 through December 31, 2007):
<TABLE>
<CAPTION>
# of Tenants Whose Aggregate SF Covered by Annualized Rental for Percentage of Total
Leases Expire Expiring Leases Leases Expiring Annualized Rental
------------------ ----------------------- --------------------- -------------------
<S> <C> <C> <C> <C>
1998 9 84,961 2,439,254 19.63%
1999 4 32,872 818,466 8.13%
2000 5 27,116 665,010 6.59%
2001 10 76,374 1,942,728 21.50%
2002 5 40,686 1,316,742 16.61%
2003 6 37,053 965,796 18.55%
2004 5 71,115 1,575,689 38.19%
2005 0 0 0 0
2006 1 9,334 252,018 8.42%
2007 1 11,249 275,604 9.57%
</TABLE>
In February 1996, Great Western Bank ("Great Western") and the
Operating Partnerships entered into a negotiated settlement agreement in
connection with a dispute relating to 16,484 square feet leased by Great
Western. Pursuant to the settlement agreement, Great Western agreed to pay the
Operating Partnerships approximately $950,000, which amount was paid to the
Operating Partnerships in 1996. Their lease was also restructured, resulting
in higher base lease rates over the remaining lease
5
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term; a reduction in leased space of approximately 6,000 square feet; and a
full service lease with a 1996 base year.
In the opinion of the Registrant, the Property is adequately insured.
Set forth below is a table showing the gross carrying value and
accumulated depreciation and federal tax basis of the Property as of December
31, 1997:
Gross Federal
Carrying Accumulated Tax
Value Depreciation Rate Method Basis
- -------------- -------------- ------------ ------------ --------------
$59,914,870 $12,240,282 5-35 yrs. S/L $43,096,992
The realty tax rate and realty taxes paid for the Property in 1997
were $3.0571/100 and$1,635,573, respectively.
Item 3. Legal Proceedings.
As of March 1, 1998, the Registrant is not a party, nor are the
Operating Partnerships or any of their properties, subject to any material
pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the
period covered by this report.
6
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
There is no public trading market for the Units of limited
partnership interest in the Registrant. Trading is infrequent and occurs only
through private transactions. Furthermore, transfers of Units are subject to
significant limitations contained in the Registrant's limited partnership
agreement, including a restriction that any transfer be made only with the
consent of the General Partner (under certain circumstances as provided
therein). A copy of the Registrant's limited partnership agreement (the
"Partnership Agreement") was filed as Exhibit A to the Registration Statement.
In addition, the Permanent Loan agreement prohibits the transfer or assignment
of Units to certain persons more particularly described in the related loan
documents.
The Partnership Agreement provides that Cash Flow (as defined
therein) will be distributed to the partners in specified proportions at
reasonable intervals during the fiscal year, but in any event no less often
than 60 days after the close of each fiscal year. There are no restrictions
under the Partnership Agreement on the Registrant's present or future ability
to make distributions of cash flow. The Registrant, at the sole discretion of
the General Partner, may retain all or any portion of the Registrant's net
distributable cash flow to the extent deemed necessary to cover anticipated
expenses and to provide reserves for unexpected future property and
partnership financial needs. Cash flow distributed to partners will be net of
any such amounts so retained. The Registrant did not make any cash
distributions in 1996. In 1997, the Registrant distributed $2,727,273 to its
partners. See "Item 6, Management's Discussion and Analysis or Plan of
Operation," for information relating to Registrant's future distributions.
As of March 15, 1998, there were 336 holders of 270 outstanding
Units.
7
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Item 6. Management's Discussion and Analysis or Plan of
Operation.
The matters discussed in this Form 10-KSB contain certain
forward-looking statements and involve risks and uncertainties (including
changing market conditions, competitive and regulatory matters, etc.) detailed
in the disclosure contained in this Form 10-KSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time.
The discussion of the Registrant's business and results of operations,
including forward-looking statements pertaining to such matters, does not take
into account the effects of any changes to the Registrant's business and
results of operation. Accordingly, actual results could differ materially from
those projected in the forward-looking statements as a result of a number of
factors, including those identified herein.
Capital Resources and Liquidity
The Registrant has invested as a general partner in the Operating
Partnerships and as such receives distributions of cash flow as its sole
source of revenues. There were no distributions received from the Operating
Partnerships in 1996 or 1997. The Registrant used cash from its reserves to
satisfy administrative and other expenses.
The Registrant's level of liquidity based on cash and cash
equivalents decreased by $5,715,244 for the year ended December 31, 1997 as
compared to December 31, 1996. The decrease is attributed to $1,081,870 of
cash used by operating activities, $1,793,224 of cash used by investing
activities and $2,8401,150 of cash used by financing activities.
Cash used by operating activities decreased in 1997 primarily as a
result of the increase in restricted cash required by the new loan payable.
Cash used in investing activities consisted of $1,340,895 of cash used for
tenant improvements and $452,329 of cash expended on leasing costs and
commissions. Cash used in financing activities consisted of distributions to
partners of $2,727,273, which was partially offset by the release of
$1,446,680 from mortgage escrows. At December 31, 1997, the Registrant and the
Operating Partnerships held unrestricted cash of $2,707,906.
In addition to unrestricted cash, the Registrant maintains escrow
accounts, as required under the loan held by Travelers Insurance Company. The
escrow account was established to fund tenant improvements and leasing costs.
At December 31, 1997, the balance in this account was $5,504,478.
8
<PAGE>
The property was 86% occupied at December 31, 1997 and 88% at March
1, 1998. The Registrant is currently attempting to lease the remaining
unoccupied space. The Registrant has budgeted to expend a significant portion
of its mortgage escrows for tenant improvements and leasing commissions during
the next twelve months. No other significant capital improvements are budgeted
for the near future. The Registrant invests its working capital reserves in
money market accounts.
In December 1995, the Resolution Trust Company, the then holder of
the Permanent Loan, notified WFA of a net worth deficiency under the Permanent
Loan documents due to WFA's net worth being less than the required minimum of
$10,000,000. Under the terms of the Permanent Loan documents, the Operating
Partnerships was able to cure this deficiency if an independent appraisal of
the Property indicated that the sum of the amount by which the fair market
value of the Property exceeds $44,000,000 plus WFA's net worth is $10,000,000
or greater. In addition, the deficiency could have been cured by WFA
depositing with the lender an amount equal to $10,000,000 less the sum of
WFA's net worth and the amount by which the fair value of the Property
exceeded $44,000,000.
On May 30, 1997, Travelers Insurance Company and an affiliate of the
General Partner purchased the Permanent Loan together with the accrued
interest thereon (approximately $14,358,000). The accrued interest was
evidenced by a separate note and was subsequently consolidated with the
Permanent Loan into a single note (the "Consolidation Note"). The
Consolidation Note was restructured into two separate notes, the First Note
and the Subordinate Note, and was amended and restated. The First Note, in the
amount of $40,000,000, was amended to, among other things, reduce the interest
rate from 10% to a rate per annum equal to 180 basis points plus the Base
LIBOR Rate and the debt covenant which required the guarantor, Winthrop
Financial Associates ("WFA"), to maintain a minimum net worth of $10,000,000
was removed.
The Subordinate Note, in the amount of $11,157,938, was amended to
provide for a reduction in the interest rate from 10% to 9.5% per annum. The
calculation of interest on the Subordinate Note is based on the outstanding
balance of the Subordinate Note plus accrued interest plus the outstanding
principal balance on the First Note all multiplied by 7.5% minus the amount of
interest due and payable with respect to the First Note. In addition, the
restatement and amendment of the Subordinate Note released the lien of the
mortgage on the Property as security for the Subordinate Note, subrogating
that right solely to the First Note.
9
<PAGE>
The result of the restatement and amendment of these notes changed
the combined effective interest rate on the entire principal balance of these
notes to a rate of 9.5%. The effect of this change resulted in the recognition
of a gain to the Operating Partnerships of approximately $1,895,000 for
financial reporting purposes, representing amounts previously recorded under
generally accepted accounting principals using the effective interest method.
For additional information with respect to the restructuring of the Permanent
Loan, see Item 7 "Consolidated Financial Statements - Note 5."
The Registrant is dependent upon the General Partner for management
and administrative services. The General Partner has completed an assessment
and believes that its computer system will function properly with respect to
dates in the year 2000 and thereafter (the "Year 2000 Issue"). Accordingly, it
is not expected that the Registrant will incur any material costs associated
with, or be materially affected by, the Year 2000 Issue.
Results of Operations
Total revenue was increased by $1,789,090 for the year ended 1997, as
compared to 1996, due to increases in rental income of $1,908,876 partially
offset by decreases in escalation reimbursement of $53,470 and interest income
of $66,316. Rental income increased as a result of increased average
occupancy, from 84% in 1996 to 87% in 1997, while average rental rates
increased from $19.91 per square foot in 1996 to $22.23 per square foot in
1997.
Expenses increased by $917,108 for the year ended December 31, 1997,
as compared to 1996, primarily due to increases in depreciation and
amortization of $262,714, interest expense of $369,041, real estate and other
taxes of $325,045, lease costs and rental expense of $52,392 and cleaning
expense of $31,539. The increase in depreciation and amortization expense was
due to expenditures for tenant improvements and leasing commissions made in
connection with an increase in leasing activity. Interest expense increased
for financial reporting purposes as a result of the modification of the
Permanent Loan. Prior to the modifications, interest expense was reported
using the effective interest method which resulted in a level yield interest
rate of 8.64%. The accrual interest rate under the restated and amended loans
is 9.5%. Real estate and other taxes increased as a result of an increase in
the assessed value of the property. Lease costs and cleaning expense increased
principally as the result of increased occupancy. All other expenses remained
relatively constant.
10
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General
The Partnership did not make a distribution to its partners in 1996.
In 1997, the Partnership made a distribution to its partners totaling
$2,727,273. Given the current occupancy of the property and the level of
liquidity, it is currently anticipated that the Registrant will make a
distribution from operations in the second quarter of 1998. The performance of
the property and the Registrant's distribution policy will continue to be
reviewed on a quarterly basis. The General Partner believes that the
Partnership's existing liquid assets are sufficient to meet future liquidity
and capital expenditure requirements until maturity of the First Note and
Subordinate Note.
11
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Item 7. Financial Statements.
<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
AND CONSOLIDATED ENTITIES
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT 13
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31,
1997 AND 1996:
Consolidated Balance Sheets 14
Consolidated Statements of Operations 16
Consolidated Statements of Changes in Partners' Capital (Deficit) 16
Consolidated Statements of Cash Flows 17
Notes to Consolidated Financial Statements 18
SUPPLEMENTAL SCHEDULES FOR THE YEAR ENDED DECEMBER 31, 1997:
Schedule II - Valuation and Qualifying Accounts 26
Schedule XII - Real Estate Owned and Rental Income 27
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
Winthrop Miami Associates Limited Partnership:
We have audited the accompanying consolidated balance sheets of Winthrop Miami
Associates Limited Partnership and Consolidated Entities (the "Partnership")
as of December 31, 1997 and 1996, and the related consolidated statements of
operations, changes in partners' capital (deficit), and cash flows for the
years then ended. In connection with our audits of these consolidated
financial statements, we have also audited the consolidated financial
statement schedules of valuation and qualifying accounts and of real estate
owned and rental income for the year ended December 31, 1997. These
consolidated financial statements and financial statement schedules are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these consolidated financial statements and financial
statement schedules 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the
Partnership as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
Deloitte & Touche LLP
Boston, Massachusetts
March 13, 1998
<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
AND CONSOLIDATED ENTITIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
ASSETS 1997 1996
<S> <C> <C>
BUILDING AND IMPROVEMENTS, Net of accumulated depreciation
of $12,240,282 and $9,676,283, respectively $ 47,674,588 $ 48,897,692
TENANT RECEIVABLES, Net of allowance for doubtful accounts
of $19,884 and $26,627, respectively 327,287 206,925
PREPAID EXPENSES AND OTHER ASSETS 262,906 291,451
DEFERRED RENTS RECEIVABLE 4,254,398 3,820,128
DEFERRED COSTS, Net 1,462,078 1,366,301
CASH AND CASH EQUIVALENTS 2,707,906 8,423,150
RESTRICTED CASH AND CASH EQUIVALENTS 5,670,743 4,708,322
------------ ------------
TOTAL ASSETS $ 62,359,906 $ 67,713,969
============ ============
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Loans payable $ 51,157,938 $ 36,800,000
Accrued interest payable - 16,378,067
Prepaid tenant rent 263,768 224,641
Accounts payable and accrued liabilities 877,460 491,266
Due to affiliates - 55,968
Security deposits 297,621 533,049
------------ ------------
Total liabilities 52,596,787 54,482,991
------------ ------------
COMMITMENTS
MINORITY INTEREST 956,752 1,144,686
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General partner (4,082,213) (3,999,675)
Limited partners - 270 units issued and outstanding 12,888,580 16,085,967
------------ ------------
Total partners' capital 8,806,367 12,086,292
------------ ------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 62,359,906 $ 67,713,969
============ ============
</TABLE>
See notes to consolidated financial statements.
- 2 -
<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
AND CONSOLIDATED ENTITIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
1997 1996
<S> <C> <C>
REVENUES:
Rental income $11,402,754 $ 9,493,878
Operating expense and tax escalation reimbursements 627,132 680,602
Interest income 479,103 545,419
----------- -----------
Total revenues 12,508,989 10,719,899
----------- -----------
EXPENSES:
Repairs and maintenance 726,088 726,933
Utilities 1,113,260 1,133,407
Payroll 651,453 629,054
Security 396,892 390,221
Lease costs and rental expense 897,526 845,134
Insurance 149,245 149,068
Real estate and other taxes 1,820,308 1,495,263
Management fees 576,677 568,473
General and administrative 249,657 387,858
Advertising 142,000 136,653
Cleaning 547,365 515,826
Bad debt expense 15,480 22,739
Miscellaneous 5,333 5,302
Interest expense 4,820,460 4,451,419
Depreciation and amortization 2,920,552 2,657,838
----------- -----------
Total expenses 15,032,296 14,115,188
----------- -----------
LOSS BEFORE EXTRAORDINARY ITEM (2,523,307) (3,395,289)
EXTRAORDINARY GAIN DUE TO REFINANCING 1,895,598 -
----------- -----------
LOSS BEFORE MINORITY INTEREST (627,709) (3,395,289)
MINORITY INTEREST IN LOSS 75,057 441,667
----------- -----------
NET LOSS $(552,652) $(2,953,622)
=========== ===========
NET LOSS ALLOCATED TO GENERAL PARTNER $ (55,265) $ (295,362)
=========== ===========
NET LOSS ALLOCATED TO INVESTOR
LIMITED PARTNERS $(497,387) $(2,658,260)
=========== ===========
NET LOSS PER INVESTOR LIMITED
PARTNER UNIT $ (1,842) $ (9,845)
=========== ===========
NUMBER OF INVESTOR LIMITED PARTNER
UNITS OUTSTANDING 270 270
=========== ===========
</TABLE>
See notes to consolidated financial statements.
- 3 -
<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
AND CONSOLIDATED ENTITIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Limited General
Partners Partner Total
<S> <C> <C> <C>
BALANCE, JANUARY 1, 1996 $ 18,744,227 $ (3,704,313) $ 15,039,914
Net loss (2,658,260) (295,362) (2,953,622)
------------ ------------ ------------
BALANCE, DECEMBER 31, 1996 16,085,967 (3,999,675) 12,086,292
Net loss (497,387) (55,265) (552,652)
Distributions (2,700,000) (27,273) (2,727,273)
------------ ------------ ------------
BALANCE, DECEMBER 31, 1997 $ 12,888,580 $ (4,082,213) $ 8,806,367
============ ============ ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
AND CONSOLIDATED ENTITIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (552,652) $ (2,953,622)
Minority interest in loss (75,057) (441,667)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization 2,920,552 2,657,838
Bad debt expense 15,480 22,739
Extraordinary gain due to refinancing (1,895,598) -
Changes in operating assets and liabilities:
Tenant receivables (135,842) 596,677
Insurance proceeds receivable - 554,107
Prepaid expenses and other assets 28,545 76,519
Deferred rents receivable (434,270) 395,257
Restricted cash and cash equivalents (962,421) 3,686,769
Accounts payable, accrued liabilities and security deposits 150,766 (3,613,227)
Accrued repairs - (550,000)
Due to affiliates (55,968) (10,313)
Prepaid tenant rent 39,126 17,572
Accrued interest payable (124,531) 2,759,546
----------- -----------
Net cash (used for) provided by operating activities (1,081,870) 3,198,195
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for building improvements (1,340,895) (1,679,702)
Expenditures for deferred costs (452,329) (333,313)
----------- -----------
Net cash used for investing activities (1,793,224) (2,013,015)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Minority interest capital contributions received 60,958 529,910
----------- -----------
Distributions paid to partners (2,727,273) -
Distributions paid to minority partner (173,835) -
----------- -----------
Net cash (used for) provided by financing activities (2,840,150) 529,910
----------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (5,715,244) 1,715,090
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 8,423,150 6,708,060
----------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 2,707,906 $ 8,423,150
----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
Cash paid for interest $ 4,989,991 $ 1,691,873
=========== ===========
</TABLE>
See notes to consolidated financial statements.
- 5 -
<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION
Winthrop Miami Associates Limited Partnership (the "Investor
Partnership"), a Delaware limited partnership, was organized on August
27, 1991 to own an interest in Miami Tower Associates Limited
Partnership ("Miami Tower") and Miami Retail Associates Limited
Partnership ("Miami Retail"), both Florida limited partnerships (the
"Operating Partnerships" or "Consolidated Entities"), and to serve as
the managing general partner for the Operating Partnerships. On November
7, 1991, Miami Tower acquired a 37-story office tower (the "Office
Tower") located in downtown Miami, Florida, consisting of 567,572 net
rentable square feet of office space, acquired subject to an air rights
lease and Miami Retail acquired a leasehold estate of 18,344 net
rentable square feet of retail space (the "Retail Space") located on the
ground floor in the same building as the Office Tower (the Retail Space
together with the Office Tower [the "Property"]).
The purchase price paid for the property was $44,000,000, excluding
commissions, fees and other transaction costs. Additional acquisition
costs of $3,175,818 were incurred and capitalized. C.P. Tower, Ltd. and
C.P. Retail, Ltd. (the "Sellers"), two limited partnerships previously
controlled by CenTrust Savings Bank (a failed savings and loan
association under control of the Resolution Trust Corporation ("RTC") as
receiver), provided the Operating Partnerships with a nonrecourse loan
in the amount of $36,800,000 (the "Permanent Loan") was refinanced in
1997, and the remaining balance of $7,200,000 was provided by the
general partners of the Operating Partnerships.
The general partners of the Operating Partnerships are the Investor
Partnership, which holds an interest of approximately 87.6% in each of
the Operating Partnerships, and Winthrop Financial Associates, a Limited
Partnership ("WFA"), which holds approximately a direct 12.4% interest
in each of the Operating Partnerships. The Investor Partnership and WFA
are obligated to contribute, in the aggregate, $21,180,000 and
$3,000,000, respectively, to the Operating Partnerships. Through
December 31, 1997 the Investor Partnership and WFA had contributed
$17,963,445 and $2,512,241, respectively.
The general partner of the Investor Partnership is One International
Associates Limited Partnership, a Delaware limited partnership (the
"General Partner"). WFC Realty Co., Inc., a Massachusetts corporation,
was the initial limited partner of the Investor Partnership (the
"Initial Partner") and withdrew as a limited partner upon the first
admission of investor limited partners.
The Investor Partnership will terminate on December 31, 2041, or earlier
upon the occurrence of certain events specified in the Investor
Partnership Agreement. The Operating Partnerships will terminate on
December 31, 2040, or earlier upon the occurrence of certain events
specified in the Operating Partnership Agreements.
The Investor Partnership offered 270 units of limited partnership
interests at $100,000 per unit pursuant to a registration filed on Form
S-11 (the "Offering"). Limited partners were first admitted during July
1992, and all 270 units offered were sold as of December 31, 1992.
- 6 -
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The accompanying consolidated financial statements
have been prepared using the accrual basis of accounting in accordance
with generally accepted accounting principles. The accompanying
consolidated balance sheets as of December 31, 1997 and 1996 reflected
the financial position of the Investor Partnership consolidated with the
Operating Partnerships. WFA's ownership interest in the Operating
Partnerships has been reflected as a minority interest in the
accompanying consolidated balance sheets, statements of operations and
statements of cash flows. All significant intercompany accounts and
transactions have been eliminated in consolidation.
Real Estate - The Operating Partnerships provide for depreciation of
real property using the straight-line method over a 35-year recovery
period. Tenant improvements are amortized over the terms of the lease.
Under 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," real estate assets to be held and used are to
be reviewed for possible impairment whenever events or circumstances
indicate that the carrying amount of the asset may not be recoverable.
Although not an issue at December 31, 1997, if indications are that the
carrying amount of the asset may not be recoverable, SFAS No. 121
requires an estimate of future undiscounted cash flows expected to
result from the use of the asset and its eventual disposition. If these
cash flows are less than the carrying amount of the asset, an impairment
loss must be recognized for the amount by which the carrying value of
the asset exceeds the asset's estimated fair value.
Preparation of such estimated expected future cash flows is inherently
subjective and is based on management's best estimate of current
conditions and assumptions about expected future conditions, including
future occupancy and average rates. It is reasonably possible that the
estimates of future expected cash flows or the fair value of the
property will be reduced significantly in the near term due to changes
in economic conditions or competitive pressures. As a result, the
carrying amount of the property may be reduced materially in the near
term.
Cash Equivalents - For consolidated financial statement purposes, the
Investor Partnership considers investments with original purchased
maturities of three months or less to be cash equivalents.
Deferred Costs - Financing costs and lease commissions are capitalized
and amortized using the straight-line method over the term of the
related agreements, as discussed in Note 3.
Income Taxes - No provision has been made for federal, state or local
income taxes in the accompanying consolidated financial statements of
the Investor Partnership. Partners are required to report on their
individual income tax returns their allocable share of income, gains,
losses, deductions and credits of the Investor Partnership.
Allocation of Profits and Losses - In accordance with the Investor
Partnership Agreement, income, cash flow and expenses allocable to the
period prior to the initial escrow release date, the date on which the
investor limited partners were first admitted, were allocated 99% to the
general partner and 1% to the initial limited partner. After the initial
escrow release date in 1992, income, cash flow and expenses are
allocated 10% to the general partner and 90% to limited partners.
Allocation to limited partners was reduced proportionately by the ratio
of unsold units to the total units offered until all 270 limited partner
units were sold.
- 7 -
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Rental Income - The Operating Partnerships have determined that all
leases associated with the rental of space at the Property are operating
leases. Rental income is recognized using the straight-line method over
the related lease terms. The excess of rental income recognized over
rental payments required by the leases is reflected as deferred rents
receivable in the accompanying consolidated financial statements.
Disclosures About Fair Value of Financial Instruments - The accompanying
consolidated balance sheets contain certain trade receivables and payables
and the loans payable, which are considered financial instruments within
the context of SFAS No. 107, "Disclosures About Fair Value of Financial
Instruments and SFAS No. 119 "Disclosure about Derivative Financial
Instruments and Fair Value of Financial Instruments." Management believes
that the carrying value of tenant and other receivables, payables and
long-term debt approximates fair value at December 31, 1997 and 1996.
As discussed in Note 5, the Investor Partnership is a party to and is
protected by an interest rate cap agreement which limits the impact of
increases in interest rates on its floating rate debt. The carrying
amount and fair value of this agreement is disclosed in Note 5.
Use of Estimates - The preparation of consolidated 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 and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates.
Reclassifications - Certain reclassifications have been made to the 1996
amounts to conform to the current year presentation.
3. DEFERRED COSTS
The following is a summary of deferred costs at December 31:
<TABLE>
<CAPTION>
Amortization
Period 1997 1996
<S> <C> <C> <C>
Financing costs 10 Years $ - $ 44,226
Lease commissions Various 2,709,707 2,278,648
Miscellaneous 21,270 -
----------- -----------
2,730,977 2,322,874
Less accumulated amortization (1,268,899) (956,573)
----------- -----------
$ 1,462,078 $ 1,366,301
=========== ===========
</TABLE>
- 8 -
<PAGE>
4. BUILDING AND IMPROVEMENTS
Building and improvements are stated at cost. At December 31, building
and improvements consisted of the following:
<TABLE>
<CAPTION>
Depreciation/
Amortization
Period 1997 1996
<S> <C> <C> <C>
Building 35 Years $ 45,766,453 $ 45,766,453
Improvements 35 Years 3,654,682 3,353,131
Tenant improvements Lease Term 10,493,735 9,454,391
------------ ------------
59,914,870 58,573,975
Less accumulated depreciation (12,240,282) (9,676,283)
------------ ------------
$ 47,674,588 $ 48,897,692
============= ============
</TABLE>
5. LOANS PAYABLE
On November 7, 1991, Miami Tower Associates Limited Partnership and
Miami Retail Associates Limited Partnership (the "Operating
Partnerships") obtained a nonrecourse loan in the amount of $36,800,000
(the "Permanent Loan") from C.P. Tower, Ltd. and C.P. Retail Ltd. (the
"Sellers"). On that date, the Sellers assigned all of their right, title
and interests in the Permanent Loan to the Resolution Trust Corporation
(the "RTC") which was subsequently assigned to the Federal Deposit
Insurance Corporation ("FDIC"). The Permanent Loan was secured by a
mortgage on the Property, an assignment of rents and leases with respect
to the Property, a security interest in certain personal property, and
secured interests in all escrow accounts required to be established by
the Operating Partnerships.
The terms of the Permanent Loan called for interest payments to be
payable on the principal amount of the Permanent Loan on a quarterly
basis at a rate of 8% per annum through November 6, 1996 and 10%
thereafter. In accordance with generally accepted accounting principles,
the Operating Partnerships recognized interest expense using the
effective-interest method. Accordingly, interest expense was accrued for
consolidated financial statement purposes using a level yield interest
rate of 8.64%.
During the first five years of the Permanent Loan, however, if net
operating income (as defined in the Permanent Loan agreement) was
insufficient to make any quarterly interest payments, the Operating
Partnerships would not be required to make any quarterly interest
payments on the interest due date, but instead would be permitted to
defer such interest payments until the maturity date (plus interest at a
current rate of 10% per annum). The net operating income threshold was
not met through May 28, 1997. Accrued interest through that date,
calculated using the effective interest method, totaled approximately
$16,253,000.
- 9 -
<PAGE>
5. LOANS PAYABLE (CONTINUED)
On that date, AP Nations LLC ("AP Nations"), a related party, acquired
the outstanding balance of the Permanent Loan, together with contractual
interest due of $14,357,938, from the FDIC for $47,000,000. AP Nations
then entered into an agreement with the Operating Partnerships whereby
the interest due was rolled into a separate note, referred to as the
Capitalized Interest Note. Under this agreement, the combined balance of
the Permanent Loan and the Capitalized Interest Note were subsequently
consolidated into a single note, referred to as the Consolidation Note.
The terms and conditions of the Capitalized Interest Note and the
Consolidation Note were identical to those contained in the Permanent
Loan. As a result of the restructuring, the Operating Partnerships
recognized an extraordinary gain of approximately $1,895,000 for
financial reporting purposes, representing amounts previously recorded
under generally accepted accounting principles to reflect the effective
interest on the Permanent Loan.
This agreement further called for the Consolidation Note to be
restructured into two separate notes, the First Note and the Subordinate
Note. The First Note, in the amount of $40,000,000, was amended and
restated to change or remove certain of the conditions and debt
covenants which were contained in the Consolidation Note. Most notably,
the interest rate was changed from the current rate of 10% to a rate per
annum equal to LIBOR plus 180 basis points (7.49% at December 31, 1997)
and the debt covenant which required the guarantor, Winthrop Financial
Associates ("WFA"), to maintain a minimum net worth of $10,000,000 was
removed. The First Note is collateralized by the Office Tower and the
Retail Space.
The Subordinate Note, in the amount of $11,157,938, was also restated
and amended. The most significant change to the Subordinate Note was to
change the interest rate from the current rate of 10% to a calculation
based on the outstanding balance of the Subordinate Note plus accrued
interest at a rate of 9.5% per annum plus the outstanding principal
balance on the First Note at 9.5% per annum less the amount of the
interest due and payable with respect to the First Note. In addition to
this change, the restatement and amendment of the Subordinate Note
released the mortgage lien on the Property as security for the
Subordinate Note, surrogating that right solely to the First Note. The
Subordinate Note is collateralized by the general-partnership interest
in the Operating Partnerships.
The result of the restatement and amendment of these notes changed the
combined effective interest rate on the entire principal balance of
these notes to a rate of 9.5%.
In connection with the restatement and amendment of these notes, the
subordinate loan holder has also been required to enter into an interest
rate protection agreement in order to provide the Operating Partnerships
with a readily available source of funds in the event that the
adjustable rate of interest under the First Note should exceed an amount
equal to 9.5% per annum. The interest rate protection agreement requires
premium payments to a counterparty based upon a notional principal
amount of $40,000,000. The effective date of this agreement was July 1,
1997 with a scheduled maturity date of June 1, 2001. At December 31,
1997, the carrying amount and fair market value of the loan payable is
approximately the same.
The First Note and the Subordinate Note both contain provisions that are
relevant to the structure and operations of the Operating Partnership.
During the term of the Notes, WFA and/or its affiliates are required to
be an operating general partner and must retain total management and
operation control of the Operating Partnerships and any affiliate of the
Operating Partnerships that is the manager of the Property. Also, the
Operating Partnership and the Maker of the notes cannot be considered,
in any event, partners and they cannot be involved in a joint venture
together. If these conditions are not satisfied, all amounts due under
the First Note and the Subordinate Note may become currently due.
- 10 -
<PAGE>
5. LOANS PAYABLE (CONTINUED)
The First Note and the Subordinate Note combined require interest-only
payments until July 1999 when principal payments of $48,660 per month
become due.
The maturity date for the First Note is the earliest to occur of May 30,
2001, or the acceleration, prepayment in full, refinancing or other
termination of the First Note by operation of law or pursuant to the
provisions of the First Note.
The maturity date for the Subordinate Note is the earliest to occur of
May 30, 2001, any permitted sale, any equity interest conveyance, or the
acceleration, prepayment in full, refinancing or other termination of
the Subordinate Note by operation of law or pursuant to the provisions
of the Subordinate Note.
Subsequent to the amendment and restatement, on May 30, 1997, the First
Note was assigned to the Travelers Insurance Company. The Operating
Partnerships were required to deposit in an escrow account that is
maintained by Travelers $6,071,942; $920,964 of which was deposited in
the Capital Reserve and $5,150,978 of which was deposited in the Leasing
Reserve. As of December 31, 1997, the balance in these escrow accounts
is $5,504,478. Such balances are included in restricted cash and cash
equivalents on the consolidated balance sheets.
6. LEASES
Leasing Operations - The Property's operations consist primarily of
leasing office and retail space to various tenants under a variety of
terms, including escalation provisions, renewal options, and obligations
of the tenants to reimburse operating expenses and pay additional rents.
The aggregate future minimum lease payments receivable under existing
leases at December 31, 1997 are as follows:
1998 $ 12,427,472
1999 10,068,865
2000 10,092,509
2001 9,037,939
2002 7,296,787
Thereafter 24,967,066
-----------
$ 73,890,638
============
Future minimum rentals do not include contingent rentals that may be
received on certain leases due to increases in operating costs.
As of December 31, 1997, two tenants accounted for approximately 65% and
8% of the deferred rents receivable balance. As of December 31, 1996,
two tenants accounted for approximately 63% and 10%, respectively, of
the deferred rents receivable balance.
Two tenants accounted for, in the aggregate, approximately 38% and 41%,
respectively, of the Operating Partnerships' rental income for the years
ended December 31, 1997 and 1996.
- 11 -
<PAGE>
6. LEASES (CONTINUED)
Retail Space and Air Rights Leases - The Operating Partnerships have
assumed the retail space and air rights leases with the City of Miami as
follows:
Retail Space - The leased area includes 18,344 net rentable square
feet of retail space located on the ground floor of the building.
The lease expires on July 1, 2015 but provides for two renewal
periods: the first for thirty years and the second for an additional
twenty-five years. Rent is $17.50, per square foot, payable in
monthly installments in advance, and may be adjusted annually by 70%
of the change in the Consumer Price Index. The annual rent expense
under the retail space lease for the years ended December 31, 1997
and 1996 was approximately $423,000 and $417,000, respectively.
Pursuant to the terms of the retail lease, Miami Retail is
responsible for all taxes, utilities and normal repairs and
maintenance costs associated with the retail space. Miami Retail is
reimbursed by the City of Miami for common area maintenance costs.
Air Rights Lease - The leased area includes air rights above the
city-owned parking garage on top of which the Office Tower is
situated. The lease expires on July 1, 2015 but provides for two
renewal periods: the first for thirty years and the second for an
additional twenty-five years. Pursuant to the terms of the air
rights lease, annual rent must be paid to the City of Miami on a
monthly basis in an amount which is calculated based on fixed
amounts adjusted annually based on the Consumer Price Index. The
annual rent expense for the years ended December 31, 1997 and 1996
under the air rights lease was approximately $387,000 and $364,000,
respectively, with respect to the Office Tower.
In addition, Miami Tower is required to use its best efforts to cause a
majority of the Office Tower to be used for purposes related directly or
indirectly to international banking, law, finance, insurance,
transportation, communications, government, technology, trade, tourism,
import and export business and other international business and activity
("Trade Purpose"). If Miami Tower is unsuccessful in satisfying this
requirement, the City of Miami has the right: (a) under certain
circumstances, to lease, on behalf of Miami Tower, portions of the
Office Tower for the Trade Purposes; and (b) to increase the rent
payable by Miami Tower with respect to the Office Tower.
The aggregate future minimum payments due under the existing retail
space and air rights leases, exclusive of Consumer Price Index
increases, as of December 31, 1997 are as follows:
1998 $ 799,000
1999 799,000
2000 799,000
2001 799,000
2002 799,000
Thereafter 10,387,000
------------
$ 14,382,000
============
7. TRANSACTIONS WITH AFFILIATES
The general partner and its affiliates received fees for various
services provided to the Operating Partnerships paid out of operations
as follows:
Management and leasing fees are paid to an affiliate of the General Partner
and are based on 6% of cash receipts. Management and leasing fees paid or
payable to affiliates totaled $692,011 and $672,405 for the years ended
December 31, 1997 and 1996, respectively
- 12 -
<PAGE>
7. TRANSACTIONS WITH AFFILIATES (CONTINUED)
Legal fees paid or payable to affiliates totaled $0 and $6,270 for the
years ended December 31, 1997 and 1996, respectively.
The Operating Partnerships owed affiliates $0 and $55,968 at December
31, 1997 and 1996, respectively, as reimbursement for various costs
incurred in the normal course of operations.
8. TAXABLE LOSS
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Net loss for financial reporting purposes $ (552,652) $ (2,953,622)
Minority interest (75,057) (441,667)
Plus (less):
Tax basis depreciation less than depreciation for
financial reporting purposes 997,158 821,412
Revenues recognized for tax-reporting purposes
but not for financial-reporting purposes (2,911,586) (1,876,187)
Amortization expense currently recognized for
tax-reporting purposes but not for financial-reporting purposes (129,248) (44,198)
Bad debt expense and other revenue write-offs
recognized for financial-reporting purposes but not for
tax-reporting purposes (6,743) -
Casualty gain recognized for financial reporting
purposes but not for tax-reporting purposes - 208,601
Write off of accounts receivable for tax purposes previously
recognized in financial statements - (1,286,930)
Interest expense recognized for tax purposes in
excess of interest expense for financial reporting purposes (2,782,528) -
Interest expense recognized for financial-reporting
purposes in excess of interest expense for
tax-reporting purposes - 870,458
Lower tier losses consolidated for reporting purposes 2,872,980 2,613,340
------------- ------------
Consolidated loss for federal income
tax-reporting purposes $ (2,587,676) $ (2,088,793)
============== =============
The Partners' capital account balances for federal income tax purposes
were $6,025,356 and $11,391,820 as of December 31, 1997 and 1996,
respectively.
</TABLE>
* * * * * *
- 13 -
<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
AND CONSOLIDATED ENTITIES
SCHEDULE II - VALUATION AND QAULIFYING ACCOUNTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Additions
Balance, Charged to Charged to Balance,
Beginning Costs and Other End of
Description of Year Expenses Accounts (A) Deductions (B) Year
Allowance for doubtful accounts:
<S> <C> <C> <C> <C> <C>
'1996 $ 1,313,557 $ 22,739 $ 310,113 $ 1,619,782 $ 26,627
'1997 26,627 15,480 4,500 26,723 19,884
</TABLE>
(A) Rental income, operating expense and tax escalation income, and sales tax
recovery.
(B) Bad debt write-offs.
- 14 -
<PAGE>
WINTHROP MIAMI ASSOCIATES LIMITED PARTNERSHIP
SCHEDULE XII - REAL ESTATE OWNED AND RENTAL INCOME
DECEMBER 31, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Part 1 - Real Estate owned at End of Year
----------------------------------------------------------------------------------------------
Initial Amount at Which Reserve
Cost to Cost of Carried at Close for
Classification of Property Encumbrances (A) Company Improvements of Period (B)(C) Depreciation
<S> <C> <C> <C> <C> <C>
Commercial office property $ 40,000,000 $ 44,000,000 $ 15,914,870 $ 59,914,870 $ (12,240,282)
=============== ============= ============= ============= ==============
</TABLE>
(A) See Note 5 to consolidated financial statements for information regarding
the terms of the various encumbrances.
B) The aggregate cost of the property for federal income tax purposes was
$52,011,196 at December 31, 1997.
(C) Reconciliation of costs:
Balance as of December 31, 1996 $ 58,573,975
Improvements 1,340,895
Disposals -
-
------------
Balance as of December 31, 1997 $ 59,914,870
============
<TABLE>
<CAPTION>
Part 2 - Rental Income
--------------------------------------------------------------------------------------------
Net Loss
Total Rental Expended Applicable to
Rents Due and Income for Interest, Year Before
Accrued at Applicable Other Taxes, Repairs Minority
Classification of Property End of Year to Year Income (C) and Expenses Interest
<S> <C> <C> <C> <C> <C>
Commercial office property $ 327,287 $ 11,402,754 $ 3,001,833 $ 15,032,296 $ (627,709)
========== ============= ============ ============= ===========
</TABLE>
(C) Includes extraordinary gain due to refinancing of $1,895,598.
- 15 -
<PAGE>
Item 8. Changes in and Disagreements on Accounting and
Financial Disclosure.
None.
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act.
Neither the Registrant nor its general partner, One International
Associates L.P. (the "General Partner"), have directors or officers. The
general partner and sole limited partner of the General Partner are One
International, Inc. and WFA, respectively. One International, Inc. manages and
controls substantially all of the General Partner's affairs and has general
responsibility and ultimate authority in all matters affecting its business.
As of March 1, 1998, the names of the directors and executive officers of One
International, Inc. and the position held by each of them, are as follows:
Has Served as
Position Held with the a Director or
Name One International Inc. Officer Since
- ---- ---------------------- -------------
Michael L. Ashner Chief Executive Officer 1-96
and Director
Edward Williams Chief Financial Officer 4-96
Vice President and
Treasurer
Peter Braverman Senior Vice President 1-96
and Director
Carolyn Tiffany Vice President and 10-95
Secretary
Michael L. Ashner, age 46, has been the Chief Executive Officer of
Winthrop Financial Associates, A Limited Partnership ("WFA") since January 15,
1996. From June 1994 until January 1996, Mr. Ashner was a Director, President
and Co-chairman of National Property Investors, Inc., a real estate investment
company ("NPI"). Mr. Ashner was also a Director and executive officer of NPI
Property Management Corporation ("NPI Management") from April 1984 until
January 1996. In addition, since 1981 Mr. Ashner has been President of Exeter
Capital Corporation, a firm which has organized and administered real estate
limited partnerships.
Edward V. Williams, age 57, has been the Chief Financial Officer of
WFA since April 1996. From June 1991 through March 1996, Mr. Williams was
Controller of NPI and NPI Management. Prior to 1991, Mr. Williams held other
real estate related
<PAGE>
positions including Treasurer of Johnstown American Companies and Senior
Manager at Price Waterhouse.
Peter Braverman, age 46, has been a Senior Vice President of WFA
since January 1996. From June 1995 until January 1996, Mr. Braverman was a
Vice President of NPI and NPI Management. From June 1991 until March 1994, Mr.
Braverman was President of the Braverman Group, a firm specializing in
management consulting for the real estate and construction industries. From
1988 to 1991, Mr. Braverman was a Vice President and Assistant Secretary of
Fischbach Corporation, a publicly traded, international real estate and
construction firm.
Carolyn Tiffany, age 31, has been employed with WFA since January
1993. From 1993 to September 1995, Ms. Tiffany was a Senior Analyst and
Associate in WFA's accounting and asset management departments. From October
1995 to present Ms. Tiffany has been a Vice President in the asset management
and investor relations departments of WFA.
Each of the above persons are also directors or officers of a general
partner (or general partner of a general partner) of the following limited
partnerships which either have a class of securities registered pursuant to
Section 12(g) of the Securities and Exchange Act of 1934, or are subject to
the reporting requirements of Section 15(d) of such Act: Winthrop Partners 79
Limited Partnership; Winthrop Partners 80 Limited Partnership; Winthrop
Partners 81 Limited Partnership; Winthrop Residential Associates I, A Limited
Partnership; Winthrop Residential Associates II, A Limited Partnership;
Winthrop Residential Associates III, A Limited Partnership; 1626 New York
Associates Limited Partnership; 1999 Broadway Associates Limited Partnership;
Nantucket Island Associates Limited Partnership; One Financial Place Limited
Partnership; Presidential Associates I Limited Partnership; Riverside Park
Associates Limited Partnership; Springhill Lake Investors Limited Partnership;
Twelve AMH Associates Limited Partnership; Winthrop California Investors
Limited Partnership; Winthrop Growth Investors I Limited Partnership; Winthrop
Interim Partners I, A Limited Partnership; Southeastern Income Properties
Limited Partnership; and Southeastern Income Properties II Limited
Partnership.
Except as indicated above, neither the Registrant nor the General
Partner has any significant employees within the meaning of Item 401(b) of
Regulation S-B. There are no family relationships among the officers and
directors of the General Partner or One International Inc.
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Registrant under Rule 16a-3(e) during
<PAGE>
the Registrant's most recent fiscal year and Forms 5 and amendments thereto
furnished to the Registrant with respect to its most recent fiscal year, the
Registrant is not aware of any director, officer or beneficial owner of more
than ten percent of the units of limited partnership interest in the
Registrant that failed to file on a timely basis, as disclosed in the above
Forms, reports required by section 16(a) of the Exchange Act during the most
recent fiscal year or prior fiscal years.
Item 10. Executive Compensation.
Registrant is not required to and did not pay any compensation to the
officers or directors of the general partner of the General Partner. The
general partner of the General Partner does not presently pay any compensation
to any of its officers and directors (See "Item 12, Certain Relationships and
Related Transactions").
Item 11. Security Ownership of Certain Beneficial Owners And Management.
(a) Security Ownership of Certain Beneficial Owners.
The General Partner owns all the outstanding general partnership
interests in the Registrant. In addition, an unrelated third party, Norwest
Bank Minnesota, N.A., Norwest Corporation Pension Plan owns 31.5 Units which
comprises an approximate 10.5% limited partnership interest in the Registrant.
No other person or group is known by the Registrant to be the beneficial owner
of more than 5% of the outstanding partnership interests as of March 15, 1998.
(b) Security Ownership of Management.
None of the officers, directors or general partners of the General
Partner or its affiliates beneficially own any Units.
(c) Changes in Control.
There exists no arrangements known to the Registrant the operation of
which may at a subsequent date result in a change in control of the
Registrant.
Item 12. Certain Relationships and Related Transactions.
The partners of the General Partner and the partners, directors and
officers of its affiliates receive no remuneration
<PAGE>
or other compensation from the Registrant or the Operating Partnerships.
Under the terms of the Registrant's limited partnership agreement,
the General Partner and its affiliates are entitled to receive various fees,
commissions, cash distributions, allocations of taxable income and loss and
expense reimbursements from the Registrant. Further, Winthrop Management (an
affiliate of the General Partner) has entered into a management contract with
the Operating Partnerships to perform various services for the Operating
Partnership.
The following table sets forth the amounts of fees, commissions and
cash distributions which the Registrant and the Operating Partnerships accrued
for the account of the General Partner, WFA and their affiliates for the years
ended December 31, 1997 and 1996:
Recipient Type of Compensation 1997 1996
- --------- -------------------- ---- ----
Winthrop Management Property Management and $663,189 $568,473
Leasing Fees
WFA (or affiliates) Legal Fees $ -- $ 6,270
There is no indebtedness to the Registrant by the General Partner, or
its affiliates, or by any of their respective officers, directors or general
partners. Winthrop Management LLC ("Winthrop Management") is engaged to
provide these services under a management agreement which provides for a base
management fee equal to 5% of the gross collections from the Property
(including rents or other charges for use and occupancy of the Property,
income from vending machines and other concessions, and net proceeds from
business interruption or other loss of income insurance, but excluding, among
other things, interest income, sales or other excise tax, condemnation or
casualty loss proceeds and proceeds of any sale of the Property or any other
capital asset). In addition, Winthrop Management has performed leasing
services for the Property for a fee not to exceed 1% of total gross revenues
from the Property, and in no event greater than the customary leasing
commissions that would be payable in the downtown Miami commercial business
district. Winthrop Management is not reimbursed for payroll and related costs
for off-site personnel not approved by the Operating Partnership and other
specified items. The management agreement may be terminated by either party
upon 30 days' notice.
From December 1993 to January 1996, The Guardian Force (a
Massachusetts limited partnership and a former affiliate of the General
Partner) provided security services to the Property. These services included
administration of the building's security program, responsibility for
access/control of the building,
<PAGE>
planning protection programs, responsibility for the fire safety program,
coordinating building evacuations in case of emergency, among other security
related matters. The agreement with The Guardian Force provided for an annual
flat fee of $285,000 and was terminable by the Operating Partnerships upon
sixty (60) days notice. The fee represented a 10% discount to market as
determined in a competitive bid process. As of January 1996, WFA elected to
discontinue its building security operation and the business operations of The
Guardian Force were transferred to and assumed by a former employee of WFA.
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibits:
The Exhibits listed on the accompanying Index to Exhibits
are filed as part of this Annual Report and incorporated in
this Annual Report as set forth in said Index.
(b) Reports on Form 8-K - None
<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 on Form
10-KSB to be signed on its behalf by the undersigned, thereunto duly
authorized.
WINTHROP MIAMI ASSOCIATES LIMITED
PARTNERSHIP
By: One International Associates, L.P.,
its sole General Partner
By: One International, Inc.
its sole General Partner
By: /s/ Michael L. Ashner
-------------------------------------
Michael L. Ashner
Chief Executive Officer
Date: March 30, 1998
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.
Signature/Name Title Date
- -------------- ----- ----
/s/ Michael L. Ashner Chief Executive March 30, 1998
- ------------------------ Officer and Director
Michael L. Ashner
/s/ Edward V. Williams Chief Financial Officer March 30, 1998
- ------------------------
Edward V. Williams
/s/ Peter Braverman Senior Vice President March 30, 1998
- ------------------------ and Director
Peter Braverman
<PAGE>
Index to Exhibits
Exhibit
Number Document
- ------- --------
3,4 Amended and Restated Limited Partnership Agreement of
Winthrop Miami Associates Limited Partnership (incorporated
by reference to Exhibit A to the Prospectus)
Amended and Restated Limited Partnership Agreement of Miami
Tower Associates Limited Partnership (incorporated by
referenced to Exhibit B to the Prospectus)
Amended and Restated Limited Partnership Agreement of Miami
Retail Associates Limited Partnership (incorporated by
reference to Exhibit C to the Prospectus)
Amendment to Amended and Restated Partnership Agreement of
Winthrop Miami Associates Limited Partnership dated August
23, 1995 (incorporated by reference to Registrant's Current
Report on Form 8-K filed September 5, 1995)
4 (a) Note dated November 7, 1991 made by Miami Retail Associates
Limited Partnership and Miami Tower Associates Limited
Partnership, collectively as maker, for the benefit of C.P.
Tower, Ltd. and C.P. Retail, Ltd., collectively as payee
(incorporated by reference to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1992 and filed
on March 31, 1993 (Commission File No. 33-45291))
4 (b) Mortgage dated November 7, 1991 made by Miami Tower
Associates Limited Partnership and Miami Retail Associates
Limited Partnership, collectively as mortgagor, to C.P.
Tower, Ltd. and C.P. Retail, Ltd., collectively as mortgagee
(incorporated by reference to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1992 and filed
on March 31, 1993)
4 (c) Escrow Agreement dated November 7, 1991 among Miami Tower
Associates Limited Partnership, Miami Retail Associates
Limited Partnership, C.P. Tower, Ltd., C.P. Retail, Ltd. and
Bankers Trust Company (incorporated by reference to the
Partnership's Annual Report on Form 10-K for the year ended
December 31, 1992 and filed on March 31, 1993)
8 Tax Opinion of Morgan, Lewis and Bockius (incorporated by
reference to Exhibit D to the Prospectus)
<PAGE>
10 (a) Commercial Management Agreement dated November 7, 1991
between Miami Tower Associates Limited Partnership and Miami
Retail Associates Limited Partnership, collectively as owner
and Winthrop Management, as manager (incorporated by
reference to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1992 and filed on March 31,
1993)
10 (b) Lease Agreement dated July 30, 1985 between the City of
Miami and CenTrust Realty and Construction Company covering
the Retail Space (incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992 and filed on March 31, 1993)
10 (c) Lease Agreement dated July 1, 1980 between the City of
Miami, Florida and Dade Savings and Loan Association
covering the air space in which the Office Tower is located
(incorporated by reference to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1992 and filed
on March 31, 1993)
16. Letter dated October 10, 1996 from KPMG Peat Marwick LLP.
(incorporated by reference to the Registrant's Current
Report on Form 8-K dated October 4, 1996)
27. Financial Data Schedule
