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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 (Fee Required)
For the fiscal year ended December 31, 1997
[X] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange act of 1934 (No Fee Required).
For the transition from _________to____________
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COMMISSION FILE NO. 0-19916
TMP INLAND EMPIRE V, LTD.,
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0368324
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
801 N. PARKCENTER DRIVE, SUITE 235 92705
SANTA ANA, CALIFORNIA (Zip Code)
(Address of principal executive office)
(714) 836-5503
(Registrant's telephone number, including area code)
----------------
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
N/A N/A
Securities to be registered pursuant to Section 12 (g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
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(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 [ ]
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PART I
ITEM 1. BUSINESS
INTRODUCTION
TMP INLAND EMPIRE V, LTD., a California Limited Partnership (the
"Partnership"), is a California limited partnership formed in November, 1989, of
which TMP Investments, Inc., a California corporation, and TMP Properties, a
California general partnership, are the General Partners (the "General
Partners"). The Partnership was formed to acquire, from nonaffiliated persons,
parcels of unimproved real property (the "Properties") located primarily in
Riverside and San Bernardino County, California. Some of the Properties are or
will be planned, zoned and mapped for single family residential purposes, while
others are or will be planned, zoned and mapped for commercial or industrial
uses. Actions by the Partnership to obtain the desired general/specific plan,
zoning and parcel/tract map changes by or approvals of governmental entities and
to subdivide and site plan, are commonly referred to as "pre-development."
The Properties will be held for investment, appreciation, and ultimate
sale and/or improvement of all or a portion thereof either alone or in
conjunction with a joint venture partner. If the Properties or portions thereof
are developed, the Partnership intends to hold and manage the same for the
production of income until such time that they determine a sale would be in the
best interests of the Partnership intends to hold and manage the same for the
production of income until such time that they determine a sale would be in the
best interests of the Partnership and its limited partners (the "Limited
Partners"). Upon the sale of the last Property, the payment of all debts and the
distribution of any remaining proceeds, less necessary reserves, to those
persons entitled there pursuant to the Partnership's Agreement of to those
persons entitled thereto pursuant to the Partnership's Agreement of Limited
Partnership (the "Partnership Agreement"), the Partnership will be dissolved.
TMP Inland Empire V, Ltd., a California Limited Partnership, has been
formed under the Revised Limited Partnership Act of the State of California. The
rights and obligations of the Partners in the Partnership are governed by the
Partnership's Agreement of Limited Partnership.
DESCRIPTION OF LIMITED PARTNERSHIP UNITS. The Partnership Agreement
authorizes the issuance and sale of Limited Partnership Units for all cash in
multiples of $1,000 per Unit. A total of 10,000 Limited Partnerships Units are
outstanding and it is not anticipated that any additional Limited Partnership
Units will be issued in the future.
Outstanding Units are fully paid and nonassessable.
THE RESPONSIBILITIES OF THE GENERAL PARTNERS. The General Partners have
the exclusive management and control of all aspects of the business of the
Partnership. In the course of their management, the General Partners may, in
their absolute discretion, acquire, mortgage, encumber, hold title to, pledge,
sell, release, or otherwise dispose of real property and interests therein when
and upon such terms as they determine to be in the best interest of the
Partnership and employ such persons, including, under certain circumstances,
Affiliates of the General Partners, as they deem necessary for the efficient
operation of the Partnership. It is provided, however, that the Limited Partners
holding, in aggregate, more
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than 50% of the then outstanding Units must consent to the sale of substantially
all of the assets of the Partnership other than a sale occurring in the ordinary
course of the Partnership's business. The General Partners shall receive only
such compensation as is provided in the Partnership Agreement.
LIABILITIES OF LIMITED PARTNERS/NONASSESSABILITY OF INTERESTS. A Limited
Partner's capital contributed to the Partnership is subject to the risks of the
Partnership's business. Except as specifically provided in the Partnership
Agreement, he is not permitted to take any part in the management or control of
the business and he may not be assessed for additional capital contributions.
Assuming that the Partnership is operated in accordance with the terms of the
Partnership Agreement, a Limited Partner will not be liable for the liabilities
of the Partnership in excess of his capital contribution and share of his
undistributed profits. Notwithstanding the foregoing, a Limited Partner is
liable for any Distributions made to him if, after such Distributions, the
remaining assets of the Partnership are not sufficient to pay its then
outstanding liabilities, exclusive of liabilities of Limited Partners on account
of their contributions, and liabilities for which recourse is limited to
specific Partnership assets.
The Partnership Agreement provides that the Limited Partners shall not
be bound by, or be personally liable for, the expenses, liabilities, or
obligations of the Partnership.
TERM AND DISSOLUTION. The Partnership will continue for a maximum period
ending December 31, 2019, but may be dissolved at an earlier date, if certain
contingencies occur. Prior to dissolution, Limited Partners may not withdraw
from the Partnership but may, under certain circumstances, assign their Units to
others. (See "Transferability of Units," below.) The contingencies whereby the
Partnership may be dissolved are as follows:
1. The withdrawal, adjudication of bankruptcy, dissolution, or
death of a General Partner, unless the remaining General Partner
agrees to continue the business of the Partnership, or if there
is no remaining General Partner, all the Limited Partners agree
to continue the Partnership's business and elect, byconsent, one
or more new General Partners to continue its business;
2. A Majority Vote of the total outstanding Units in favor of
dissolution and termination of the Partnership; or
3. The removal of a General Partner, unless the remaining General
Partner agrees to continue the business of the Partnership, or
if there is no remaining General Partner, a majority of the
Limited Partners agree to continue the business of the
Partnership and elect, by a Majority Vote of the total
outstanding Units, one or more new General Partners to continue
the Partnership business.
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VOTING RIGHTS OF LIMITED PARTNERS. The voting rights of the Limited
Partners are set forth in Section 6 of the Partnership Agreement. The Limited
Partners have the right to vote upon the following matters affecting the basic
structure of the Partnership:
1. Amendment of the Partnership Agreement (except for amendments
not affecting the rights of the Limited Partners);
2. Removal of a General Partner;
3. Admission of a General Partner;
4. The sale of all, or a substantial part, of the assets of the
Partnership other than in the ordinary course of business;
5. The election to continue the business of the Partnership and the
appointment of successor General Partner after the withdrawal,
adjudication of bankruptcy, death, or dissolution of the sole
remaining General Partner;
6. The election to continue the business of the Partnership and
appointment of a successor General Partner after the removal of
the sole remaining General Partner; or
7. Termination and dissolution of the Partnership, other than after
sale of all the Properties and receipt of all amounts due on any
seller carryback financing.
A majority Vote of the Limited Partnership shall be required for the
matters set forth above to pass and become effective, except for the matters
specified in Item 5, which shall require the unanimous consent of the Limited
Partners.
The General Partners may at any time call a meeting of the Limited
Partners or for a vote, without a meeting, of the Limited Partners on matters on
which they are entitled to vote, and shall call for such meeting or vote
following receipt of written request therefore of Limited Partners holding 10%
or more of the total outstanding Units.
Each Limited Partnership Unit shall have equal voting rights.
TRANSFERABILITY OF UNITS. Holders of Units shall have the right to
assign one or more whole Units by written instrument the terms of which are not
in contravention of any of the provisions of the Partnership Agreement.
An assignee of record shall be entitled to receive Distributions from
the Partnership attributable to the Units acquired by reason of such assignment
from and after the effective date of the assignment of such Units to him;
however, the Partnership and the General Partners shall be entitled to treat the
assignor of such Units as the absolute owner there of in all respects, and shall
incur no liability for allocations of Net Income, Net Loss, or Distributions, or
transmittal of reports and notices required to be given to Limited Partners
which made in good faith to such assignor until such time as written instrument
of assignment has been received by the Partnership and recorded on its books.
The effective date of an assignment of Units
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(of which assignment the Partnership has actual notice) on which the Assignee
shall be deemed an Assignee of record shall not be later than the first day of
the fiscal quarter following the date set forth on the written instrument of
assignment.
Any assignment, sale, exchange or other transfer in contravention of any
of the provisions of the Partnership Agreement shall be void and ineffectual,
and shall not bind or be recognized by the Partnership.
An Assignee may only be substituted as a Limited Partner in the place of
the assignor Limited Partner with the prior consent of the General Partners. Any
substituted Limited Partner must agree to be bound by the provisions of the
Partnership Agreement.
BOOKS AND RECORDS. At all times during the term of the Partnership, the
General Partners will keep true and accurate books of account of all the
financial activities of the Partnership. These books of account are kept open
for inspection by the Limited Partners or their representatives at any
reasonable time. The General Partners may make such elections for federal and
state income tax purposes as they deem appropriate and the fiscal year of the
Partnership is the calendar year unless changed by the General Partners with the
consent of the Commissioner of Internal Revenue.
DISTRIBUTIONS, NET INCOME AND NET LOSS
ALLOCATION OF NET INCOME AND NET LOSS FROM OPERATIONS. Until such time
that all Limited Partners have received allocations of Net income from the
Partnership equal to a 6% cumulative, but not compounded, preferred return on
adjusted Capital Contributions (the "Preferred Return"), Net Income shall be
allocated 99% to all Limited Partnership Units, which will be further allocated
among such Units on a pro rata basis, and 1% to the General Partners. Until such
time that all Limited Partners have received Distributions equal to their
Capital Contributions plus their Preferred Return, Net Losses shall be allocated
99% to all Limited Partnership Units, allocated among them on a pro rata basis,
and 1% to the General Partners. Thereafter, Partnership Net Income, Net Loss,
and all items of Partnership deduction and credit shall be allocated 15% to the
General Partners and 85% to all Limited Partners, pro rata, according to the
number of Units owned. The foregoing allocations are subject to certain
requirements of the Internal Revenue Code of 1986, as amended (the "Code"), as
set forth in Section 4.5 of the Partnership Agreement.
ALLOCATION OF PROFITS AND LOSSES ON SALES OF PROPERTY. Profits and
Losses on Sales of Property are allocated as set forth in Section 4.5(f) and
4.5(g), respectively, of the Partnership Agreement.
DISTRIBUTIONS. Distributions of Distributable Cash from Operations, if
any, will be made annually within 90 days after the end of the Partnership's
fiscal year and shall be allocated 99% to the Limited Partners and 1% to the
General Partners until the Limited Partners have received cumulative
Distributions in an amount equal to their Capital Contributions plus their
unpaid Preferred Return, after which time Distributions of Distributable Cash
from Operations shall be allocated 85% to the Limited Partners and 15% to the
General Partners. Except for Distributions on Dissolution described in Section
8.2 of the Partnership Agreement, Distributions of Cash from Sale or Refinancing
of Partnership Properties shall be distributed to the Partners at such times as
the General Partners shall determine in the same manner as
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Distributions of Distributable Cash from Operations. The General Partners have
the right to use Cash from the Sale of Refinancing of Partnership Properties to
pay seller financed debt without making a Distribution to Partners; provided,
however, that sufficient funds, if available, shall be distributed to the
Limited Partners to pay any resulting state or federal income tax, assuming that
all such Limited Partners are in a 28% tax bracket.
INVESTMENT OBJECTIVES; RISKS
In general, the investment objectives of the Partnership may be
summarized as follows:
(a) Preservation and return of the Partners' capital.
(b) Capital appreciation.
(c) Added value through pre-development activity (zoning,
subdivision, site planning, and engineering).
(d) Cash flow after return of capital.
(e) Minimization of risk by maintaining minimum partnership debt.
The General Partners are, at all times, guided by a policy of realizing
profit intended to result in gain for the Limited Partners upon ultimate
disposition of the Properties. There can, however, be no assurance or guarantee
that the decisions made by the General Partners will result in the realization
of any profit.
The Partnership is subject to the risks generally incident to the
ownership of real estate, including the uncertainty of cash flow to meet fixed
or variable obligations; adverse changes in national economic conditions;
changes in the investment climate for real estate investment; lack of geographic
diversification; adverse changes in local market conditions, such as changes in
the supply of, or demand for competing properties in an area; changes in
interest rates and the availability of permanent mortgage funds, which may
render the sale or refinancing of a property difficult or unattractive; changes
in real estate tax rate and other operating expenses, governmental rules
(including, without limitations, zoning laws and fiscal policies); known and
unknown environmental conditions on the property and acts of God that may result
in uninsured losses (including, without limitation, earthquakes and floods).
The purchase of property to be developed or constructed is subject to
more risks than is involved in the purchase of property with an operating
history. In the event the General Partners decide to develop the Properties, the
Partnership will be subject to the risk that there may be unanticipated delays
in, or increases in costs of, development and construction as a result of
factors beyond the control of the General Partners. These factors may include,
among others, strikes, adverse weather, material shortages, and increases in the
cost of labor and materials. Such factors can result in the increased cost of a
project and corresponding depletion of the Partnership's working capital and
reserves, or loss of the Partnership's investment as a result of foreclosure by
a construction or other lender. Additional risks may be incurred where the
Partnership makes periodic progress payments or other advances to the builders
prior to completion of the
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construction. It should also be noted that the development of unimproved real
property is a time-consuming process which often involves governmental approval
of site and development plans, environmental studies and reports, traffic
studies, and similar items.
The Partnership may enter into joint ventures in order to accomplish the
development of the Properties. Such transactions may create risks not otherwise
present, such as the joint venturer's investment objectives may be inconsistent
with the investment objectives of the partnership.
If the Partnership develops the Properties, either alone or in
conjunction with joint venture partners, construction arrangements will be made
at that time. As of the date of this Form 10K, no arrangements have been entered
into or negotiated with any person for the development of any of the Properties.
If the Partnership requires a loan to finance pre-development or
development activities, or to pay off or refinance an existing loan on a given
property, the availability and cost of such a loan is uncertain due to money
market fluctuations. The General Partners are unable to predict the effects of
such fluctuations on the Partnership. Money market conditions which may exist if
and when the Partnership seeks to obtain any financing with respect to the
Partnership for development or other purposes may make such financing difficult
or costly to obtain and may have an adverse effect on the Partnership's ability
to develop the Properties. Additionally, such conditions may also adversely
affect the ability of the Partnership to sell the Properties when a sale is
determined to be in the best interests of the Partnership, and may affect the
terms of any such sale.
The Partnership's investment objectives must be considered speculative
and there is no assurance that the Partnership will fulfill them.
SELLING POLICY
The Partnership seeks to sell all Properties for all cash. However, if
the General Partners deem it to be in the best interests of the Partnership and
its Limited Partners, the Partnership will sell one or more of the Properties in
exchange for receiving part of the purchase price in cash at the time of sale
and receiving the balance of the purchase price on a deferred basis. The
deferred amount will be evidenced by an interest-bearing promissory note secured
by a deed of trust on the Property sold. However, the Partnership does not
intend to carry bank any promissory notes unless it obtains a first priority
lien against the Property sold.
COMPETITION
It is anticipated that the Partnership will encounter considerable
competition in the pre-development, development, operation, and eventual sale of
the Properties. Even under the most favorable marketing conditions, there is no
guarantee that the Properties can be pre-developed, developed, operated, or
sold, and if sold, that such sale will be made upon terms favorable to the
Partnership. Similarly, there is no guarantee that the Partnership will be able
to conduct profitable operations on the Properties, if and when they are
developed.
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GOVERNMENTAL POLICIES
The Partnership's pre-development and development plans for the
Properties, as well as the value of the Properties, are dependent in large part
on governmental action. the following is a partial list of some, but not all, of
the potential problems which could arise due to governmental action or inaction.
ZONING/PLANS/MAPS/PERMITS. Certain of the parcels are not zoned for the
uses anticipated by the Partnership. Applications have been or will be made to
change the zoning for certain of those parcels.. As described under Item
2."Properties," some Properties have already been rezoned, but no assurances can
be given that all such rezoning changes will be approved. Zoning changes are
dependent on, among other things, whether or not such change would be consistent
with the General and Specific Plan for a given area. Further, final parcel/tract
maps have not been approved for all Properties, nor have any grading or building
permits been obtained. In the event that such Properties do not receive the
zoning desired by the General Partners, or if final maps are not approved or
permits not obtained, the value of those parcels to the Partnership and to
others may be reduced and the investment results of the Partnership may be
adversely affected.
GROWTH INITIATIVES. Many counties and cities in California have been
subject to so called "slow growth" initiatives which could seriously affect the
ability to timely develop properties located within a county or city passing
such an initiative. Although no such initiatives are currently pending, such an
initiative could adversely affect the use or value of those of the Properties
located within such county or city.
PROPERTY TAX REFORM AND RENT CONTROL. Statewide property tax reform has
reduced real property taxes in California. However, subsequently enacted
statewide implementing legislation may cause real property taxes in California
to increase at a more rapid rate than previously experienced and legislation
enacted in certain municipalities in response to the statewide reform requires
owners of real property to pass through property tax saving to residential and
certain commercial tenants by various means, including rent reduction. It is
also possible that legislation at the state or local level may be enacted in
California which include some form of rent control applicable to the
Partnership. In addition, certain fees and charges associated with the
acquisition and ownership of real property in California have been increased to
offset decreases in local revenue resulting from the property tax reduction.
OTHER GOVERNMENTAL INTERVENTION. There can be no assurance that there
will be no governmental intervention with respect to the Properties that would
adversely affect the use or value of the Properties. For example, building
moratoriums, changes in general or specific plans, down-zoning of the Properties
or unanticipated environmental regulation or similar considerations could impair
the value of the Properties, either to the partnership or to others.
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ENVIRONMENTAL
The Partnership may be required in certain instances to obtain
environmental impact, biological impact or other similar reports prior to
development of the Properties. Such reports may indicate conditions which make
it more expensive (or in rare cases, impossible) to develop a Property in a
manner anticipated by the Partnership, or may cause delays in the development of
a Property. If a Property is contaminated by hazardous materials, the
Partnership could incur substantial clean up costs under federal, state and
local laws which could adversely affect the investment results of the
Partnership.
The General Partners know of no environmental conditions on the
Properties that would adversely affect the investment results of the
Partnership.
EMPLOYEES
The Partnership has no employees. Management of the Partnership is
provided by the General Partners. See Item 10 "Directors and Executive Officers"
for information about the General Partners.
ITEM 1(D). FOREIGN OPERATIONS
The Partnership has no foreign operations in foreign countries.
ITEM 2. PROPERTIES
The Partnership acquired for cash, free of monetary encumbrances, a
total of fourteen Properties, some of which consist of more than one parcel. All
of the Properties are in the area of Southern California known as the "Inland
Empire." While no fixed geographical boundary identifies the Inland Empire, the
General Partners consider the Inland Empire to include most of the western
portion of Riverside and San Bernardino counties and to be roughly bounded by
the cities of Corona on the west, the Coachella Valley (Palm Springs area) on
the east, the City of Victorville on the north and Murietta (formerly Rancho
California) on the south.
Included in this area are the communities of Perris, Sun City, Moreno
Valley, Riverside, Beaumont, San Jacinto, Palm Desert, Murietta (formerly Rancho
California) and Elsinore in Riverside County, and Fontana, Rialto, Rancho
Cucamonga, Ontario, San Bernardino Highlands and Chino in San Bernardino County.
The Properties are unimproved and presently produce no operating income.
It is possible that future economic conditions, governmental actions or other
factors may deter or prevent the Partnership form pre-developing or developing
the Properties, or an of them. In such event, the potential profitability, if
any, with respect to the Properties would be dependent upon appreciation of the
Properties and the Partnership's ability to refinance and sell the same. There
can be no assurance that the Properties, even if developed by the Partnership,
can be operated or ultimately sold for a profit.
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The Partnership owns or has owned the following properties:
<TABLE>
<CAPTION>
Date Purchase Date Sales
Property Purchased Price Sold Price
- -------- --------- ----- ---- -----
<S> <C> <C> <C> <C>
Perris 4.85 10-03-89 $ 87,000 * *
Perris 4.09 10-03-89 $ 82,000 * *
Rialto 10 06-08-90 $ 452,000 * *
Adelanto 10** 11-07-89 $ 90,000 07-25-90 $200,000
Adelanto 40 03-08-90 $ 450,000 * *
Mojave 7 07-10-90 $ 543,900 * *
Mojave 10 03-12-90 $1,000,000 * *
Victorville 40**** 01-12-90 $ 870,000 11-22-95 $241,000
Victorville 10*** 11-26-91 $ 181,000 03-09-92 $ 52,830
Victorville 76.97 02-21-90 $1,100,500 * *
Victorville 64 04-10-90 $ 864,000 * *
Victorville 75 04-10-90 $1,012,000 * *
Victorville 63.41 04-24-90 $ 768,000 * *
Adelanto 4.49 05-25-90 $ 260,000 * *
</TABLE>
- -------------
* These Properties were still owned by the Partnership as of December 31,
1997.
** Seller first trust deed was foreclosed on and property subsequently resold.
*** An easement was sold to Southern California Edison and the Partnership
retained 8 acres.
**** 29 acres were sold.
PERRIS 4.85 AND 4.09. These two Properties are contiguous parcels located
at the northwest corner of the intersection of Ethanac Road and Sophie Street in
the County of Riverside. The Properties consist of approximately 4.85 and 4.09
acres, respectively. The southeast corner of the Properties abut the City of
Perris city limits.
Ethanac Road is currently unpaved as it fronts the Properties and the
nearest paved roads are Margarth and Marie Streets, about one-half mile to the
west. The terrain is somewhat hilly. Ethanac is designated to become Highway 74
and to provide a straightening of the Highway from its current configuration.
The Properties are approximately 2.5 miles west of I-215, the Escondido
Expressway and one mile south of the present alignment of Highway 74 (the Ortega
Highway).
Currently there is well water, electricity and septic tank sewage available
to the Properties. It is anticipated that a Community Facilities District will
be formed which will provide water service, sewer and paved roads. Current
zoning is rural residential, but rezoning to R-1 is contemplated by the General
Partners.
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RIALTO 10. In place of the Perris 18 parcel discussed in the Offering
Circular, the Partnership purchased the Rialto 10 parcel, a 10 acre parcel zoned
for Industrial. Rialto 10 is located at Tamarind and Alder, north of Baseline.
Current zoning is industrial.
The expansion for the Rialto Airport to the property across the street as
well as FAA funding for the project have been approved and completed.
ADELANTO 10. The Property was sold in July 1990 subject to a $155,000
seller first trust deed due July 1992. During July 1992, the note maturity was
extended to July 30, 1993 for a principal reduction of $15,000. The property was
foreclosed upon when the note matured and subsequently resold in August 1993 for
$105,000.
ADELANTO 40. This approximately 40 net acre parcel is located at the
southwest corner of Air Base Road and Beaver Street in the City of Adelanto. It
is currently zoned R-1, but the City of Adelanto is processing a new general
plan which indicates that one-half may be planned industrial (20 acres) and
one-half may become commercial. The City has, from its own funds, paved Air Base
Road to within 1/4 mile of the Property and water is now supplied to the
Property.
MOJAVE 7 AND MOJAVE 10. These two Properties of approximately seven acres
and ten acres, respectively, occupy the Southwest and Northwest corners of
Mojave Drive and Amethyst in the City of Victorville.
The Properties are both zoned C-2, general commercial, and utilities and
sewer are currently approximately one mile to the east. A community Facilities
District has been formed and sewer, water and electricity brought to the
Properties. Mojave Drive is now a four lane paved road through Victorville from
Interstate 15 to Highway 395. The 7 acre parcel has all offsite improvements
completed.
VICTORVILLE 40. This Property actually consists of two 20-acre parcels
separated by an intervening property but both having frontage of Mesa Linda
Street in the City of Victorville. Ten acres are zoned commercial and thirty
acres are zoned residential (4 units per acre).
Sewer, water and electricity is currently approximately 2.5 miles to the
east along Mojave Road, and the Community Facilities District, which will bring
those amenities to the Property, has already been formed and approved by the
City Council of Victorville, and construction plans are substantially completed.
In November 1995, the Partnership sold 29 acres for $241,000, retaining 11
acres that have been rezoned to commercial use.
VICTORVILLE 10. This 10 acre parcel is zoned R-1 and the General Partners
have initiated the engineering to process an application for a 35 lot
single-family home subdivision on the Property. It is located on Seneca Road
west of Mesa Linda. It is also in the previously mentioned Victorville Community
Facilities District which will, when funded, bring sewer, water and electricity
to the edge of the Property. In March, 1992, the Partnership sold approximately
2.43 acres for $52,830 to Southern California Edison.
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VICTORVILLE 76.97, 64, 75, AND 63.41. These four Properties are all
contiguous from El Evado Road to Amethyst fronting on Rancho Road in the City of
Victorville. The Properties actually consist of a full one-half section (320
acres), but approximately 40 acres are lost to a Southern California Edison
easement. The zoning consists of 50 acres of industrial and 15.5 acres of
commercial. The balance of the acres are zoned residential. A federal prison is
to be housed at George Air Force Base bringing about 500 jobs to the area. The
first phase of the prison is under construction.
All utilities are currently available at the eastern border of the Property
and Rancho Road is a fully improves paved road fronting the entire property.
ADELANTO 4.49. The Adelanto 4.49 parcel, located on the northwest corner of
Yucca and Bellflower, is currently zoned Industrial. The prior zoning was Desert
Scenic. No further pre-development is necessary and the Property is currently
offered for sale.
ITEM 3. LEGAL PROCEEDINGS
There are no matters requiring disclosure under Item 3.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of Registrants security holders during
the fourth quarter of 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
As of December 31, 1997, there were approximately 1,014 record holders
of Units of Limited Partnership Interest. There is no other class of security
outstanding or authorized. To the General Partner knowledge, there has not been,
and currently there does not exist, any trading market for the Units.
Accordingly, there was no trading activity during the fiscal year ended December
31, 1997, 1996 or 1995.
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CASH DISTRIBUTIONS
There were no cash distributions during the years ended December 31,
1997, 1996 and 1995.
A summary of the provisions of the Partnership Agreement regarding
distributions of cash and allocations of net income and losses is set forth in
Item 1 "Business", under the subcaption "Distributions, Net Income and Net
Loss."
ITEM 6. FINANCIAL INFORMATION
SELECTED FINANCIAL DATA FOR THE YEARS ENDED DECEMBER 31
The following table summarizes selected financial data of the
Partnership for the years ended December 31, 1997, 1996, 1995, 1994 and 1993,
and should be read in conjunction with the more detailed financial statements
contained in Item 8 below.
(UNAUDITED)
YEAR ENDED DECEMBER 31
(Not Covered By Auditor's Report)
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income from Sale of Property $ $ $ 241,000 $ $ 105,000
Less cost of Property sold - (802,841) $ - (180,291)
----------- ---------- ---------- ----------
Gross profit (loss) (561,841) (75,291)
Interest Income 8,417 2,002 118 700 6,615
Other income - - - - -
---------- ----------- ---------- ---------- ----------
Total income (loss) $1,790,778 $ 2,202 $ (561,723) $ 700 $ (68,676)
========== ----------- ---------- ========== ==========
Net income (loss) $1,789,978 $(3,926,654) $ (568,823) $ (6,400) $ (75,776)
========== ----------- ---------- ========== ==========
Net income (loss) per Unit* $ 177.21 $ (388.73) $ (56.31) $ (.63) $ (7.50)
========== ----------- ---------- ========== ==========
Cash distribution per Unit* $ - $ $ $ $ -
========== ----------- ---------- ========== ==========
Total assets $6,623,519 $ 4,785,795 $8,546,983 $9,084,663 $9,057,223
========== ----------- ---------- ========== ==========
</TABLE>
- ----------
* (Based on 10,000 Units outstanding at December 31, 1997, 1996, 1995, 1994,
and 1993)
RESULTS OF OPERATIONS
During the period from inception (November 16, 1989) through December 31,
1990, the Partnership was engaged primarily in the sale of Units of Limited
Partnership Interest and the investment of the subscription proceeds to purchase
parcels of unimproved real property. During 1990, the Partnership sold the
Kletka/Adelanto for a gross profit, net of all acquisition, carrying and selling
costs, of $109,346. The sales price was $225,000, with the Partnership carrying
a first trust deed of $155,000 with a maturity date
13
<PAGE> 14
of July 30, 1992. In July 1992, the Partnership extended the maturity date of
the note to July 30, 1993 in exchange for a $15,000 principal reduction on the
note. In July 1993, the Partnership foreclosed on the note and subsequently
resold the property in August 1993 for $105,000. The resale resulted in a loss
of $75,291, net of all carrying and selling costs. In total, the partnership
realized a profit of $34,055 on the sale and resale of the Kletka/Adelanto
property.
Other revenues received during the fiscal years ended December 31, 1993,
1994, 1995, 1996 and 1997 consisted primarily of interest income earned on funds
held, and income from the forfeiture by potential buyers of non-refundable
escrow deposits.
In 1995, the Partnership sold 29 acres of the "Victorville 40" property
for a loss of $561,841. The sale generated cash of $69,327 and a note for
$141,000. Interest income from the note will provide some of the cash
requirements of the Partnership.
The Partnership loss in 1996 was due to a write-down in value of the
Partnership land due to a decline in market value of the land. However, the
Partnership gain in 1997 represents a recovery of value due to favorable market
conditions in Southern California real estate.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership raised a total of $8,918,182, net of syndication costs,
from the sale of Limited Partnership Units. During the period from inception
through December 31, 1995, the Partnership acquired a total of fourteen
Properties for all cash at a total expenditure of $8,891,712, including carrying
costs (such as interest expense and property taxes). All costs associated with
the acquisition of the Properties, as well as carrying costs and administrative
expenses, are capitalized (i.e., added to the cost of the Properties) and are
deducted from the sale prices to determine gains (or losses) when the Properties
are sold.
The Partnership does not intend to acquire any additional Properties.
The remaining twelve Properties are being held for resale. Upon sale, the
Partnership intends to distribute the sales proceeds, less any reserves needed
for operations, to the Partners.
The Partnership owns land in the Riverside and San Bernardino counties.
This region of Southern California continues to experience a significant
economic recession that has substantially eroded the value of all real estate in
the area. The unemployment rate in many parts of this region continues to exceed
fifteen percent, and consumer purchasing power is weak.
Lower home and commercial property prices has driven down the value of
vacant land, and in many instances has made new development financially
unfeasible. This has made it difficult to sell the Partnership land at anything
but liquidation prices. The general partners expect the economic recovery in
this region to be slow. Accordingly, the General Partners intend to meet
currently anticipated cash requirements for at least the next twelve months by
first using cash on hand; second, funds from interest income and rental income;
third, the sale of properties; and fourth, from additional loans or credit
facilities secured by the properties.
The General Partners believe that the Partnership has sufficient funds
to meet currently anticipated cash requirements for the next twelve months.
During 1996, the Partnership procured a $125,000 loan secured by Partnership
land to provide cash for anticipated Partnership cash requirements. Management
is also attempting to sell one or more of the remaining parcels of land. There
can be no assurance that the General Partners will be successful in selling one
or more of the remaining parcels of land.
14
<PAGE> 15
The Partnership has no current plans to develop any of the Properties, and
it is expected that no such plans would be undertaken unless adequate funding
could be obtained, either form the sale or refinancing of Properties or from a
joint venture partner.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements are filed as a part of this Form 10K:
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
For the fiscal years ended December 31, 1997, 1996 and 1995:
Independent Auditor's Report FS-1
Balance Sheets as of December 31, 1997 and 1996 FS-2
Statements of Income for the years ended
December 31, 1997, 1996 and 1995 FS-3
Statements of Partners Capital for the years ended
December 31, 1997, 1996, 1995 and 1994 FS-4
Statements of Cash Flow for the years ended
December 31, 1997, 1996 and 1995 FS-5
Notes to Financial Statements FS-6
Financial Statement Schedules FS-10
</TABLE>
All other schedules are omitted since the required information is not present or
is not present in amounts sufficient to require submission of the schedule, or
because the information required is included in the Financial Statements and
Notes thereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The accounting firm of Balser, Horowitz, Frank & Wakeling ("BHF&W),
whose report is included elsewhere herein with respect to the Partnership's
financial statements for the fiscal years ended December 31, 1997 and 1996, has
provided accounting services to this Partnership and to other limited
partnerships of which the General Partners are the general partners, for many
years.
15
<PAGE> 16
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The Partnership has no employees and no directors or executive officers.
Management of the Partnership is provided by the General Partners.
TMP Properties, a California general partnership, and TMP Investments,
Inc., a California corporation, are the General Partners of the Partnership. TMP
Properties was formed on July 14, 1978. TMP Properties' principal business has
been the acquisition of undeveloped land and the coordination of activities
necessary to add value to such land, primarily through the pre-development
process. It has syndicated numerous private real estate limited partnerships,
and eleven public real estate limited partnerships. All of the properties
purchased by such partnerships were located in the Western United States,
primarily in the State of California. Each of such limited partnerships involved
a specified real property program in which TMP Properties or TMP Investments,
Inc was the general partner. The general partners of TMP Properties are William
O. Passo, Anthony W. Thompson and Scott E. McDaniel, and the shareholders of TMP
Investments, Inc. are William O.Passo and Anthony W. Thompson.
The individual partners of TMP Properties are listed below, together
with information regarding their employment experience and background.
TMP Investment Inc., a California corporation, was formed on December
12, 1984. TMP Investments Inc. has served in the capacity of a co-general
partner in all of the TMP sponsored programs since December 1984. In 1993, TMP
Investments Inc. began serving as sole general partner in all TMP sponsored
partnerships. TMP Investments Inc. has been and will continue to be engaged in
asset management, real estate accounting, budgetary services, and partnership
management on behalf of existing limited partnerships and limited partnerships
which it sponsors in the future. The shareholders of TMP Investments, Inc. were
William O. Passo, Anthony W. Thompson, and Scott E. McDaniel until September
1993, when Mr. McDaniel sold his share of TMP Investments Inc. to Mr. Passo and
Mr. Thompson.
WILLIAM O. PASSO, 56, is a Director and the President of TMP Investments
Inc. He practiced law for 18 years, has been a licensed real estate broker since
1974 and holds registered representative and general principals securities
licenses through the National Association of Securities Dealers, Inc. Mr. Passo
received his Juris Doctorate Degree from UCLA School of Law in 1967. He has been
a senior partner first of Passo, Yates, and Nissen until 1975, then of Passo &
Davis until March 1983 when he resigned from the partnership to take a leading
role in the management of the affairs of TMP Properties. Mr. Passo has been
involved in public and private real estate syndication since 1970, and has acted
as principal, investor, general partner, and counsel in real estate transactions
involving apartments, office buildings, agricultural groves, and unimproved
land. Mr. Passo is a director and officer of William O. Passo, Inc. (dba TMP
Management), a property management company, an officer of TMP Capital Corp., an
NASD registered broker-dealer, and an officer of TMP Realty, a registered real
estate broker.
16
<PAGE> 17
SCOTT E. MCDANIEL, 51, is a Director and Vice President of TMP
Investments Inc. He is a graduate of the U.S. Naval Academy at Annapolis,
majoring in engineering. Mr. McDaniel is a California licensed general
contractor and has been a licensed California real estate broker since 1976. He
was the founder and President of Scott E. McDaniel, Inc. (dba Regal Realty). Mr.
McDaniel has developed office complexes and industrial space in Southern
California and has personally brokered over $125 million of real estate since
1982. Through an affiliated company, DeVille Construction Co. Inc., Mr. McDaniel
has directed general contracting operations in Southern California since 1982.
ANTHONY W. "TONY" THOMPSON, 51, is Director and Vice-President of TMP
Investments Inc. A graduate of Sterling College in 1969, with a Bachelors Degree
in Science and Economics, Mr. Thompson holds the professional designations of
Charter Life Underwriter and chartered Financial Consultant form the American
College. Mr. Thompson is a registered principal with the NASD and is a principal
in TMP Capital Corp., a NASD registered Broker Dealer. Mr. Thompson has been
involved in the securities and the real estate investment fields since 1970, and
a General Partner of TMP since its formation in 1978. Mr. Thompson's primary
responsibility is marketing TMP offerings through the broker dealer community.
ITEM 11. EXECUTIVE COMPENSATION
During the period since the formation of the Partnership (November 16,
1989) through the fiscal year ended December 31, 1997, the Partnership paid fees
to the General Partners for various services in the amount of $140,326 of which
$17,491 was paid in the year ended December 31, 1997. (See Item 13. "Certain
Relationships and Related Transaction".) The Partnership has no officers or
employees and, therefore, paid no other compensation other
than that paid to the General Partners as indicated above.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 1997, the Partnership had 10,000 units of Limited
Partnership interest (the "Units") issued and outstanding. To the knowledge of
the General Partners, no person beneficially owns more the 5% of the Units. The
following table set forth the number of Units beneficially owned as of December
31, 1997 by each officer, director and general partner of the General Partners
and by all such persons as a group.
<TABLE>
<CAPTION>
Number of Percent of
Name of Beneficial Owner Units Class
- ------------------------ --------- ----------
<S> <C> <C>
William O. Passo 40 0.40%
Anthony W. Thompson 10 0.10%
All officers, directors and 50 0.50%
general partners as a group
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH AFFILIATES
The following information summarizes the forms and amounts of
compensation (some of which involve cost reimbursements) paid either by the
Partnership, or others, to the General Partners and their affiliates since the
formation of the Partnership (November 16, 1989) through the fiscal year ended
December 31, 1997. The information under "Operating and Liquidation Stage" and
"Summary of Compensation" below also describes the amounts of compensation to be
paid to the General Partners and their affiliates in the future. None of these
amounts were determined by arm's-length negotiations. Reference is also made to
the Notes to the Financial Statements included elsewhere in this Form 10K for
additional information regarding transactions with affiliates.
17
<PAGE> 18
OFFERING AND ORGANIZATION STAGE OF PARTNERSHIP
<TABLE>
<CAPTION>
Amount Paid from
Form of Compensation Formation through
and Recipient Description of Payment December 31, 1997
------------- ---------------------- -----------------
<S> <C> <C>
Selling Commission and Due Up to a maximum of 10% of gross $1,009,704
Diligence Reimbursement (TMP proceeds, a minimum of which was
Capital Corp.) reallocated to participating Soliciting
Dealers (which included TMP Capital
Corp.) from Units sold by them. Up to
an additional 0.5% paid to Soliciting
Dealers (which included TMP Capital
Corp.) for due diligence activities.
Reimbursement for Organizational Expenses paid to the $ 29,753
Organizational Expenses General Partners to reimburse them
(General Partners) (without markup or profit) for
organizational costs actually incurred
such as advertising, mailing, printing
costs, clerical expenses, legal and
accounting fees.
Reimbursement for Property The General Partners were reimbursed $708,896
Expenses (General Partners) (without markup or profit) for all out
of pocket expenses directly related to
the Properties, including the purchase
price of Properties acquired prior to
Partnership formation, out of pocket
carrying costs of such Properties (such as
interest and property taxes) including actual
interest incurred on all funds advanced for the
benefit of the Partnership, deposits, escrow
extension payments, appraisal fees, expenses of
feasibility and other studies performed by third
parties unaffiliated with the General Partners
and similar expenses, but not including the
General Partners' overhead, salaries, travel or
like expenses.
Property Acquisition Fees For services rendered in connection
(General Partners or an with the acquisition of the Properties
affiliate) acquired by the Partnership, the
General Partners, or an affiliate, received
acquisition compensation (either denominated as
such, or as a real estate brokerage commission,
or otherwise) in the following amounts:
(I) Acquisition fees: $625,000
(ii) Real estate brokerage $193,616
commissions
</TABLE>
18
<PAGE> 19
OFFERING AND ORGANIZATION STAGE OF PARTNERSHIP
<TABLE>
<CAPTION>
Amount Paid from
Form of Compensation Formation through
and Recipient Description of Payment December 31, 1997
------------- ---------------------- -----------------
<S> <C> <C>
Partnership Management Fee A Partnership Management Fee with $140,326
(General Partners) respect to each Property until a
Property is sold or improvement of the
Property commences in an annual amount
of 1/4 of 1% (.225%) of the cost of the
property, but not to exceed 2% of such
cost in the aggregate.
Leasing and Property For leasing an improved Property, or a $-0-
Management Fees (General portion thereof, a commission equal to
Partners or an affiliate) 7% for the first year's rent (net
lease) or 6% of the first year's rent
(gross lease) decreasing to 2.5% (net
lease) or 2% (gross lease) of the rent
for years eleven through thirty. Upon
development of the Properties, or any of them, an
amount up to 5% of the gross revenues of the
Properties for supervision for the operation and
maintenance of the Properties. Such leasing and
property management fees shall not exceed the
competitive rates that would be charged by
unaffiliated persons.
Interest in Partnership 1% interest in all Partnership $3,030
Allocation of Each Material allocations of Net Income, Net Loss and
Item (General Partners) Distributions of Distributable Cash
from Operations and of Cash from Sale
or refinancing of the Properties.
Subordinated Participation A 15% interest in all Partnership $-0-
(General Partners) allocations of Net Income and
Distributions of Distributable Cash from
Operations and of Cash from the Sale or
Refinancing of the Properties subordinated to a
return of all Limited Partners' Capital
Contributions plus a cumulative, non-compounded
return of 6% per annum on their Adjusted Capital
Contributions.
Subordinated Real Estate Real estate commissions with respect to $-0-
Commission (General Partners the sale of Properties which are equal
or an Affiliate) to the lesser of: (I) 3% of the gross
sales price of a Properties; equal to one-half
the normal and competitive rate charged by
unaffiliated parties, but payment shall be
subordinated to a return of all Limited Partners'
Capital contributions, plus a cumulative,
noncompounded return of 6% per annum on their
Adjusted Capital Contributions.
</TABLE>
19
<PAGE> 20
SUMMARY OF COMPENSATION. In summary, the Partnership paid securities
brokerage commissions for services performed by TMP Capital Corp. in the sale of
the Units in the amount of $1,009,704 (including due diligence fees) and
reimbursed the General Partners for expenses incurred in organizing the
Partnership and documenting the offering in the amount of $29,753. The General
Partners also received Property Acquisition Fees and real estate brokerage
commissions in the amounts set forth above, and were reimbursed for out of
pocket expenditures made in connection with the acquisition and carrying costs
for the Properties or studies related thereto. During the operating stage, the
partnership will pay the General Partners an annual Partnership Management Fee
for managing the Partnership equal to 1/4 of 1% of the cost of the Properties,
payable annually in advance with respect to each Property until such time as the
Properties are sold or improvement of the land commences; provided such fee, in
the aggregate, shall not exceed 2% of the cost of the Properties. At such time,
if at all, that the Properties, or any of them, are developed, the General
Partners will receive leasing commissions as described above, and a property
management fee in an amount up to 5% of the gross property revenues, but not to
exceed the competitive rate charged by nonaffiliated persons providing similar
services. The General Partners have a 1% interest in all allocations of
Partnership Net Income until the limited Partners have received allocations of
Net Income equal to a cumulative, noncompounded return of 6% on their Adjusted
Capital Contributions (the "Preferred Return"); and thereafter, the General
Partners will have a 15% interest in all Partnership allocations of Net Income,
Distributions of Distributable Cash from Operations, and Cash from Sale or
Refinancing of Partnership Property and the Limited partners will have an 85%
interest therein. Net Losses will be allocated to the Partners with positive
Capital Accounts, in accordance with the ratio of their positive Capital Account
balances until no Partner has a positive Capital Account; and thereafter, Net
Losses will be allocated 100% to the General Partners. If the General Partners
or an Affiliate provide a substantial amount of services with respect to the
sale of a Partnership Property, the General Partners or an Affiliate may receive
a real estate commission in an amount up to one-half of the amount of
competitive real estate commissions, not to exceed 3% of the sales price of such
Property. Both the 15% General Partners' participation and the Partners' real
estate commission on three sale are subordinated to a return of all Limited
Partners' Capital Contribution plus a cumulative, non-compounded return of 6%
per annum on their Adjusted Capital contributions.
Thus, only after the Limited Partners have recovered their Capital
Contributions plus the cumulative 6% return discussed above, will the General
Partners' allocation of Distributions of Distributable Cash from Operations and
Cash from Sale or Refinancing of Partnership Property exceed a nominal 1%
ownership interest therein. Such allocation provides built-in incentive for the
General Partners to seek the optimum performance from the Partnership's
Properties.
CONFLICTS OF INTEREST
The Partnership is subject to various conflicts of interest from its
relationship with the General Partners. These conflicts include, but are not
limited to:
CONFLICTS IN GENERAL. The interests for the Limited Partners may be
inconsistent with those of the General Partners or their Affiliates when the
General Partners must make policy decisions on behalf of the Partnership. The
General Partners, for instance, might not desire to sell a Property when a sale
would be advantageous to the Limited Partners because of the General Partner's
interest in Distributions of Distributable Cash from Operations and Net Proceeds
from the Sale or Refinancing of the Property. Subject in certain circumstances
to the approval of the holders of a majority or other specified voting
percentage of the Units, the General Partners will have the discretion as to
when to sell a Property or portion thereof. The timing of the sale of a Property
or any portion thereof and the terms on which such sale will be made may result
in a conflict of interest. Furthermore, the sale of a Property may result in the
recognition of substantial taxable gain to the General or Limited Partners in
different ratios depending
20
<PAGE> 21
upon the timing of such sale. Accordingly, the decisions as to when to sell a
Property may be advantageous to the General Partners and disadvantageous to the
Limited Partners, or vice versa. The General Partners in any event will be
compelled to make any decisions with respect to the sale or retention of a
Property based upon the best interests of the Partnership and its Limited
Partners because of the fiduciary duty which they owe to the Limited Partners.
AVAILABILITY OF MANAGEMENT SERVICE. The Partnership will not have
independent management, as it will rely on the General Partners and affiliates
for all its management decisions. Other investment projects in which the General
Partners and affiliates participate, either individually or as a general
partner, real estate broker, or investment adviser, may compete with the
Partnership for the time and resources of the General Partners and their
affiliates. The General Partners will, therefore, have conflicts of interest in
allocating management time, services, and functions among the Partnership and
other existing partnerships and businesses, as well as any partnerships or
business entitles which may be organized in the future. Under the Partnership
Agreement, the General Partners are obligated to devote as much time as they, in
their sole discretion, deem to be reasonably required for the proper management
of the Partnership and its assets. The General Partners believe that they have
the capacity to discharge their responsibilities to the Partnership
notwithstanding participation in other investment programs and projects.
INTERESTS IN OTHER ACTIVITIES. The General Partners, or any of their
affiliates, may engage for their own account, or for the account of others, in
other business ventures, whether real estate or otherwise, and neither the
Partnership nor any Limited Partner shall be entitled to any interest therein
solely by reason of any relationship with or to each other arising from the
Partnership.
RECEIPT OF COMPENSATION BY THE GENERAL PARTNERS. The payments to the
General Partners set forth above have not been determined by arm's-length
negotiations.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8K.
(a) For a listing of financial statements, reference is made to Item 8
included in this Form 10K.
(b) The registrant filed no reports on Form 8K during the fourth quarter of
the fiscal year ended December 31, 1997.
(c) Exhibits - Those exhibits required by Item 601 of Regulation S-K which
are applicable to the Registrant are as follows:
(3), (4) and (10.1) Agreement of Limited Partnership and other
material agreements are incorporated by reference
to Exhibits (3), (4) and (10.1) to the Form 10
Registration Statement, SEC File No. 0-19916
filed on March 12, 1992.
27 Financial Data Schedule
21
<PAGE> 22
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: March 19, 1998
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
By: TMP INVESTMENTS INC.,
A California corporation as co-General Partner
By: /s/ WILLIAM O. PASSO
----------------------------------------
William O. Passo, President
By: /s/ ANTHONY W. THOMPSON
----------------------------------------
Anthony W. Thompson,
Executive Vice President
By: /s/ RICHARD T. HUTTON, JR.
----------------------------------------
Richard T. Hutton, Jr., Controller
and by TMP Properties, a California General
Partnership, as co-General Partner
By: /s/ WILLIAM O. PASSO
----------------------------------------
William O. Passo, General Partner
By: /s/ SCOTT E. MCDANIEL
----------------------------------------
Scott E. McDaniel, General Partner
By: /s/ ANTHONY W. THOMPSON
----------------------------------------
Anthony W. Thompson, General Partner
22
<PAGE> 23
TMP INLAND EMPIRE V, LTD.
(A CALIFORNIA LIMITED PARTNERSHIP)
FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
<PAGE> 24
TMP INLAND EMPIRE V, LTD.
(A California Limited Partnership)
Financial Statements
December 31, 1997 and 1996
Table of Contents
-----------------
<TABLE>
<S> <C>
Independent Auditor's Report......................................... 1
Balance Sheets....................................................... 2
Statements of Income................................................. 3
Statements of Partners' Capital...................................... 4
Statements of Cash Flows............................................. 5
Notes to Financial Statements........................................ 6-9
Supplementary Information............................................ 10-12
</TABLE>
<PAGE> 25
[BALSER, HOROWITZ, FRANK & WAKELING LETTERHEAD]
Independent Auditor's Report
----------------------------
To the Partners
TMP Inland Empire V, Ltd.
(A California Limited Partnership)
We have audited the accompanying balance sheets of TMP Inland Empire V, Ltd. (A
California Limited Partnership) as of December 31, 1997 and 1996, and the
related statements of income, partners' capital, and cash flows for the years
ended December 31, 1997, 1996 and 1995. These financial statements are the
responsibility of the Partnership'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 audits 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 referred to above present fairly, in
all material respects, the financial position of TMP Inland Empire V, Ltd. (A
California Limited Partnership) as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for the years ended December 31,
1997, 1996 and 1995, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information contained
in Schedule I is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is stated fairly in all material
respects in relation to the basic financial statements taken as a whole.
Balser, Horowitz, Frank & Wakeling
BALSER, HOROWITZ, FRANK & WAKELING
An Accountancy Corporation
Santa Ana, California
January 26, 1998
<PAGE> 26
TMP INLAND EMPIRE V, LTD.
(A California Limited Partnership)
Balance Sheets
December 31, 1997 and 1996
Assets
------
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash $ 32,509 $ 68,795
Notes receivable 92,010 117,000
Investment in unimproved land,
at lower of cost or fair value 6,499,000 4,600,000
----------- -----------
Total assets $ 6,623,519 $ 4,785,795
=========== ===========
Liabilities and Partners' Capital
---------------------------------
Property taxes payable $ 180,150 $ 134,338
Interest payable 1,563 0
Commissions payable 5,400 5,400
Due to affiliates 932 561
Franchise tax payable 800 800
Notes payable 125,000 125,000
----------- -----------
Total liabilities 313,845 266,099
----------- -----------
Partners' capital (deficit)
General partners (26,084) (43,984)
Limited partners; 10,000 equity units
authorized and outstanding 6,335,758 4,563,680
----------- -----------
Total partners' capital 6,309,674 4,519,696
----------- -----------
Total liabilities and partners' capital $ 6,623,519 $ 4,785,795
=========== ===========
</TABLE>
See Accompanying Notes and Independent Auditor's Report
FS-2
<PAGE> 27
TMP INLAND EMPIRE V, LTD.
(A California Limited Partnership)
Statements of Income
For the Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Income
- ------
Sale of property $ 0 $ 0 $ 241,000
Cost of property sold 0 0 802,841
----------- ----------- -----------
Gross profit or (loss) 0 0 (561,841)
Appreciation in fair value of
unimproved land 1,782,361 0 0
Interest income 8,417 2,002 118
----------- ----------- -----------
Total income or (loss) 1,790,778 2,002 (561,723)
----------- ----------- -----------
Expenses
- --------
Amortization 0 5,126 6,300
Decline in fair value of unimproved land 0 3,922,730 0
----------- ----------- -----------
Total expenses 0 3,927,856 6,300
----------- ----------- -----------
Income (loss) before income taxes 1,790,778 (3,925,854) (568,023)
State franchise tax 800 800 800
----------- ----------- -----------
Net income (loss) $ 1,789,978 $(3,926,654) $ (568,823)
=========== =========== ===========
Allocation of net income (loss):
General partners, in the aggregate $ 17,900 $ (39,267) $ (5,688)
=========== =========== ===========
Limited partners, in the aggregate $ 1,772,078 $(3,887,387) $ (563,135)
=========== =========== ===========
Limited partners, per equity unit $ (177.21) $ (388.74) $ (56.31)
=========== =========== ===========
</TABLE>
See Accompanying Notes and Independent Auditor's Report
FS-3
<PAGE> 28
TMP INLAND EMPIRE V, LTD.
(A California Limited Partnership)
Statements of Partners' Capital
For the Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
Partners' capital,
December 31, 1994 $ 971 $ 9,014,202 $ 9,015,173
Net (loss) for 1995 (5,688) (563,135) (568,823)
----------- ----------- -----------
Partners' capital,
December 31, 1995 (4,717) 8,451,067 8,446,350
Net (loss) for 1996 (39,267) (3,887,387) (3,926,654)
----------- ----------- -----------
Partners' capital (deficit),
December 31, 1996 (43,984) 4,563,680 4,519,696
Net income for 1997 17,900 1,772,078 1,789,978
----------- ----------- -----------
Partners' capital (deficit),
December 31, 1997 $ (26,084) $ 6,335,758 $ 6,309,674
=========== =========== ===========
</TABLE>
See Accompanying Notes and Independent Auditor's Report
FS-4
<PAGE> 29
TMP INLAND EMPIRE V, LTD.
(A California Limited Partnership)
Statements of Cash Flows
For the Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash flow from operating activities
Net income or (loss) $ 1,789,978 $(3,926,654) $ (568,823)
Adjustments to reconcile net income or (loss)
to net cash used in operating activities:
Loss on sale of property 0 0 561,841
Increase in prepaid expenses 0 500 (500)
Increase in carrying costs (116,639) (129,764) (132,871)
Increase in property taxes payable 45,812 40,114 31,784
Increase in interest payable 1,563 0 0
Increase or (decrease) in due to
affiliates 371 352 (605)
(Increase) decline in fair value of
unimproved land (1,782,361) 3,922,730 0
----------- ----------- -----------
Net cash (used in) operating
activities (61,276) (87,597) (102,874)
----------- ----------- -----------
Cash flow from investing activities
(Increase) or decrease in notes receivable 24,990 24,000 (141,000)
Proceeds from sale of property 0 0 241,000
----------- ----------- -----------
Net cash provided by investing
activities 24,990 24,000 100,000
----------- ----------- -----------
Cash flow from financing activities
Proceeds from notes payable 0 125,000 0
----------- ----------- -----------
Net cash provided by financing
activities 0 125,000 0
----------- ----------- -----------
Net increase or (decrease) in cash (36,286) 61,403 (2,874)
Cash, beginning of year 68,795 7,392 10,266
----------- ----------- -----------
Cash, end of year $ 32,509 $ 68,795 $ 7,392
=========== =========== ===========
Supplemental disclosures of cash flow information
- -------------------------------------------------
Income taxes paid $ 800 $ 800 $ 800
Interest paid 18,750 8,594 0
</TABLE>
Other disclosures
For the years ended December 31, 1997 and 1996, the Partnership did not enter
into any non-cash investing or financing activities. In 1995, the Partnership
received a note of $141,000 from the sale proceeds of a land parcel. The
Partnership did not have any short-term highly liquid investments for the years
ended December 31, 1997, 1996 and 1995.
See Accompanying Notes and Independent Auditor's Report
FS-5
<PAGE> 30
TMP INLAND EMPIRE V, LTD.
(A California Limited Partnership)
Notes to Financial Statements
December 31, 1997, 1996 and 1995
Note 1 - Summary of significant accounting policies
Accounting Method - The Partnership's policy is to prepare its
financial statements on the accrual basis of accounting.
Organization Costs - Organization costs include expenses incurred in
the formation of the Partnership. These costs were capitalized and
amortized over a period of 40 years prior to 1992 and were changed to a
5-year amortization schedule in 1992. Organization costs were fully
amortized in 1996.
Investment in Unimproved Land - Investment in unimproved land is stated
at lower of cost or fair value (see Note 10). All costs associated with
the acquisition of a property are capitalized. Additionally, the
Partnership capitalizes all carrying costs (such as interest expense
and property taxes.) These costs are added to the cost of the
properties and are deducted from the sales prices to determine gains
when properties are sold.
Syndication Costs - Syndication costs (such as commissions, printing,
and legal fees) totaling $1,081,818 represent costs incurred to raise
capital and, accordingly, are recorded as a reduction in partners'
capital (see Note 3).
Income Taxes - The entity is treated as a partnership for income tax
purposes and any income or loss is passed through and taxable to the
individual partners. Accordingly, there is no provision for federal
income taxes in the accompanying financial statements. However, the
minimum California Franchise tax due by the Partnership at December 31,
1997 and 1996 is $800.
Cash and Cash Equivalents - For purposes of the statements of cash
flows, the Partnership considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents.
Estimates - In preparing financial statements in conformity with
generally accepted accounting principles, management is required to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and revenues and
expenses during the reporting period. Actual results could differ from
these estimates.
Concentration - All unimproved land parcels held for investment are
located in the Inland Empire area of Southern California. The eventual
sales price of all parcels is highly dependent on the real estate
market condition. The Partnership attempts to mitigate any potential
risk by monitoring the market condition and holding the land parcels
until the real estate market recovers.
FS-6
<PAGE> 31
TMP INLAND EMPIRE V, LTD.
(A California Limited Partnership)
Notes to Financial Statements
December 31, 1997, 1996 and 1995
Note 2 - Organization of the Partnership
On November 16, 1989, the Partnership was formed with TMP Properties (A
California General Partnership) and TMP Investments, Inc. (A California
Corporation) as the general partners. The partners of TMP Properties
are William O. Passo, Anthony W. Thompson and Scott E. McDaniel.
William O. Passo and Anthony W. Thompson were the shareholders of TMP
Investments, Inc. until October 1, 1995, when they sold their shares to
TMP Group, Inc., and then became the shareholders of TMP Group, Inc.
The Partnership originally acquired thirteen separate parcels of
unimproved real property in Riverside and San Bernardino Counties,
California. The properties were to be held for investment,
appreciation, and ultimate sale and/or improvement of all or a portion
thereof, either alone or in conjunction with a joint venture partner. A
portion of one parcel was sold in 1992 and the proceeds were retained
for working capital. During 1993, the Partnership foreclosed on
property underlying a note receivable and subsequently sold the
property. During 1995, the Partnership sold a portion of one parcel.
The partnership agreement provides for two types of investments:
Individual Retirement Accounts (IRA) and others. The IRA minimum
purchase requirement was $2,000 and all others were a minimum purchase
requirement of $5,000. The maximum liability of the limited partners is
the amount of their capital contribution.
Note 3 - Partners' contributions
The Partnership offered for sale 10,000 units at $1,000 each to
qualified investors. By December 31, 1990, all 10,000 units had been
sold for total limited partner contributions of $10,000,000. There have
been no contributions made by the general partners. As described in
Note 1, syndication costs have been recorded as a reduction in
partners' capital.
Note 4 - Allocation of profits, losses and cash distributions
Profits, losses and cash distributions are allocated 99% to the limited
partners and 1% to the general partners until the limited partners have
received an amount equal to their capital contributions plus a
cumulative, non-compounded return of 6% per annum on their adjusted
capital contributions. At that point, the limited partners are
allocated 83.5% and the general partners 16.5% of profits, losses and
cash distributions. There were no distributions in 1997, 1996 or 1995.
FS-7
<PAGE> 32
TMP INLAND EMPIRE V, LTD.
(A California Limited Partnership)
Notes to Financial Statements
December 31, 1997, 1996 and 1995
Note 5 - Related party transactions
Syndication costs (see Note 1) netted against partners' capital
contributions include $1,000,000 in selling commissions paid in prior
years to TMP Capital Corp. for the sale of partnership units of which a
portion was then paid to unrelated registered representatives. William
O. Passo and Anthony W. Thompson were the shareholders of TMP Capital
Corp. until October 1, 1995, when they sold their shares to TMP Group,
Inc.
Investment in unimproved land includes acquisition fees of
approximately $617,562 paid in prior years to TMP Properties and TMP
Investments, Inc., the general partners, for services rendered in
connection with the acquisition of the properties.
The Partnership paid $17,491, $17,491 and $19,089 in partnership
management fees to the general partners for each of the years ended
December 31, 1997, 1996 and 1995. Sales commissions payable to Regal
Realty, which is wholly owned by Scott E. McDaniel, total $5,400 at
December 31, 1997, 1996 and 1995. Mr. McDaniel is a partner of TMP
Properties and he was a shareholder of TMP Investments, Inc. until
September 1993 when he sold his shares to Mr. Passo and Mr. Thompson.
The Partnership was also charged $9,505, $9,365 and $9,504 during the
years ended December 31, 1997, 1996 and 1995, respectively, by the
general partner and an affiliated company of the general partner for
office, secretarial and advertising expenses. At December 31, 1997 and
1996 the Partnership had a payable of $932 and $561, respectively, to
the general partner and the affiliated company.
Note 6 - Sale and related cost of property sold
The following summarizes 29 acres of Victorville property sold in 1995:
<TABLE>
<S> <C>
Sale price $241,000
--------
Cost of parcel 630,750
Development costs 34,089
Acquisition fees 52,622
Carrying costs 62,666
Closing costs 22,714
-------
Total costs 802,841
--------
Loss on sale of property $(561,841)
=========
</TABLE>
FS-8
<PAGE> 33
TMP INLAND EMPIRE V, LTD.
(A California Limited Partnership)
Notes to Financial Statements
December 31, 1997, 1996 and 1995
Note 7 - Notes receivable
The Partnership sold a parcel of land and as a part of the sale
proceeds received a note for $141,000. The note is secured by a deed of
trust and is due on September 1, 2002. Interest accrues at 7% per
annum, and the borrower is to make monthly payments of $3,000 starting
August 6, 1996, however, interest begins accruing December 29, 1996. As
of December 31, 1997, $7,280 of interest has been received.
Note 8 - Notes payable
The Partnership borrowed $125,000 from a private mortgage company. The
note is secured by a deed of trust on a parcel of land owned by the
Partnership in Victorville, California. The note is due on August 1,
1998. Interest accrues at 15% per annum payable in monthly installments
of $1,562.50 starting September 1, 1996. As of December 31, 1997,
$27,344 of interest has been paid and is capitalized to land carrying
cost.
Note 9 - Property taxes payable
Property taxes payable at December 31, 1997 are as follows:
<TABLE>
<S> <C> <C>
1994 $ 48,201
1995 56,269
1996 29,868
1997 45,812
---------
$180,150
========
</TABLE>
If the property taxes remain delinquent for five years, then the County
can foreclose on the property. Management plans to take necessary
actions to prevent foreclosures.
Note 10 - Changes in the fair value of investment in unimproved land
As of December 31, 1996, the total carrying amount of the investment in
unimproved land was reduced by $3,922,730. This reduction represents the
decline in fair value, as determined by the general partners, and is due
mainly to the downturn in Southern California's real estate market and
apparent slow recovery.
As of December 31, 1997, the total carrying amount of the investment in
unimproved land was increased by $1,782,361. This increase is due to
various favorable market conditions within the Southern California real
estate market during 1997. The general partners have thus reevaluated
the prior years valuation of unimproved land and determined the
corresponding recovery in value is appropriate.
FS-9
<PAGE> 34
SUPPLEMENTARY INFORMATION
<PAGE> 35
TMP INLAND EMPIRE V, LTD.
(A California Limited Partnership)
Schedule I - Real Estate and Accumulated Depreciation
(Schedule XI, Rule 12-28, For SEC Reporting Purposes)
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H COLUMN I
- ---------------------------------------------------------------------------------------------------------------------------------
COSTS CAPITALIZED
SUBSEQUENT Gross
TO ACQUISITION amount
---------------------- at which Estimated
Description of Initial Carrying Carried at Accumulated Date of Date Depreciable
Assets Encumbrances Costs Improvements Costs Year-End Depreciation Construction Acquired Life
------ ------------ ----- ------------ ----- -------- ------------ ------------ -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unimproved land -
Perris, CA -0- $ 95,786 -0- $ 10,863 $ 106,649 -0- n/a 10/3/89 n/a
Unimproved land -
Perris, CA -0- 93,088 -0- 11,322 104,410 -0- n/a 10/3/89 n/a
Unimproved land -
Rialto, CA -0- 490,180 -0- 68,998 559,178 -0- n/a 6/8/90 n/a
Unimproved land -
Adelanto, CA -0- 287,351 -0- 32,532 319,883 -0- n/a 5/25/90 n/a
Unimproved land -
Adelanto, CA -0- 490,593 -0- 64,681 555,274 -0- n/a 3/8/90 n/a
Unimproved land -
Mojave, CA -0- 591,209 -0- 84,562 675,771 -0- n/a 7/10/90 n/a
Unimproved land -
Mojave, CA -0- 1,090,017 -0- 122,624 1,212,641 -0- n/a 3/12/90 n/a
Unimproved land -
Victorville, CA -0- 272,140 -0- 30,059 302,199 -0- n/a 1/12/90 n/a
Unimproved land -
Victorville, CA -0- 1,204,302 -0- 162,102 1,366,404 -0- n/a 2/20/90 n/a
Unimproved land -
Victorville, CA -0- 859,635 722 101,157 961,514 -0- n/a 4/23/90 n/a
Unimproved land -
Victorville, CA -0- 1,107,264 -0- 129,713 1,236,977 -0- n/a 4/16/90 n/a
Unimproved land -
Victorville, CA -0- 958,623 -0- 110,668 1,069,291 -0- n/a 4/10/90 n/a
Unimproved land -
Victorville, CA -0- 138,751 -0- 30,427 169,178 -0- n/a 11/26/91 n/a
--- ----------- --- -------- ----------
-0- $ 7,678,939 722 $959,708 $8,639,369 -0-
=== =========== === ======== ========== ===
Reconciliation of carrying amount
Beginning balance $ 8,522,730
Additions
Improvements $ -0-
Carrying costs 116,639
--------
Total additions 116,639
-----------
8,639,369
Allowance for decline in fair
value of unimproved land (2,140,369)
-----------
Ending balance $ 6,499,000
===========
</TABLE>
See Accompanying Notes and Independent Auditor's Report
FS-10
<PAGE> 36
TMP INLAND EMPIRE V, LTD.
(A California Limited Partnership)
Schedule I - Real Estate and Accumulated Depreciation
(Schedule XI, Rule 12-28, For SEC Reporting Purposes)
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H COLUMN I
- ---------------------------------------------------------------------------------------------------------------------------------
COSTS CAPITALIZED
SUBSEQUENT Gross
TO ACQUISITION amount
---------------------- at which Estimated
Description of Initial Carrying Carried at Accumulated Date of Date Depreciable
Assets Encumbrances Costs Improvements Costs Year-End Depreciation Construction Acquired Life
------ ------------ ----- ------------ ----- -------- ------------ ------------ -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unimproved land -
Perris, CA -0- $ 95,786 -0- $ 9,316 $ 105,102 -0- n/a 10/3/89 n/a
Unimproved land -
Perris, CA -0- 93,088 -0- 9,666 102,754 -0- n/a 10/3/89 n/a
Unimproved land -
Rialto, CA -0- 490,180 -0- 59,288 549,468 -0- n/a 6/8/90 n/a
Unimproved land -
Adelanto, CA -0- 287,351 -0- 28,138 315,489 -0- n/a 5/25/90 n/a
Unimproved land -
Adelanto, CA -0- 490,593 -0- 57,152 547,745 -0- n/a 3/8/90 n/a
Unimproved land -
Mojave, CA -0- 591,209 -0- 77,015 668,224 -0- n/a 7/10/90 n/a
Unimproved land -
Mojave, CA -0- 1,090,017 -0- 106,106 1,196,123 -0- n/a 3/12/90 n/a
Unimproved land -
Victorville, CA -0- 272,140 -0- 27,432 299,572 -0- n/a 1/12/90 n/a
Unimproved land -
Victorville, CA -0- 1,204,302 -0- 143,563 1,347,865 -0- n/a 2/20/90 n/a
Unimproved land -
Victorville, CA -0- 859,635 722 87,890 948,247 -0- n/a 4/23/90 n/a
Unimproved land -
Victorville, CA -0- 1,107,264 -0- 112,792 1,220,056 -0- n/a 4/16/90 n/a
Unimproved land -
Victorville, CA -0- 958,623 -0- 96,208 1,054,831 -0- n/a 4/10/90 n/a
Unimproved land -
Victorville, CA -0- 138,751 -0- 28,503 167,254 -0- n/a 11/26/91 n/a
--- ---------- ---- -------- ---------- ---
-0- $ 7,678,939 $722 $843,069 $8,522,730 -0-
=== =========== ==== ======== ========== ===
Reconciliation of carrying amount
- ---------------------------------
Beginning balance $ 8,392,966
Additions
Improvements $ 0
Carrying costs 129,764
-------
Total additions 129,764
----------
8,522,730
Allowance for decline in fair
value of unimproved land (3,922,730)
----------
Ending balance $ 4,600,000
===========
</TABLE>
See Accompanying Notes and Independent Auditor's Report
FS-11
<PAGE> 37
TMP INLAND EMPIRE V, LTD.
(A California Limited Partnership)
Schedule I - Real Estate and Accumulated Depreciation
(Schedule XI, Rule 12-28, For SEC Reporting Purposes)
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H COLUMN I
- ---------------------------------------------------------------------------------------------------------------------------------
COSTS CAPITALIZED
SUBSEQUENT Gross
TO ACQUISITION amount
---------------------- at which Estimated
Description of Initial Carrying Carried at Accumulated Date of Date Depreciable
Assets Encumbrances Costs Improvements Costs Year-End Depreciation Construction Acquired Life
------ ------------ ----- ------------ ----- -------- ------------ ------------ -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unimproved land -
Perris, CA -0- $ 95,786 -0- $ 8,140 $ 103,926 -0- n/a 10/3/89 n/a
Unimproved land -
Perris, CA -0- 93,088 -0- 8,479 101,567 -0- n/a 10/3/89 n/a
Unimproved land -
Rialto, CA -0- 490,180 -0- 46,997 537,177 -0- n/a 6/8/90 n/a
Unimproved land -
Adelanto, CA -0- 287,351 -0- 22,990 310,341 -0- n/a 5/25/90 n/a
Unimproved land -
Adelanto, CA -0- 490,593 -0- 49,034 539,627 -0- n/a 3/8/90 n/a
Unimproved land -
Mojave, CA -0- 591,209 -0- 69,479 660,688 -0- n/a 7/10/90 n/a
Unimproved land -
Mojave, CA -0- 1,090,017 -0- 87,767 1,177,784 -0- n/a 3/12/90 n/a
Unimproved land -
Victorville, CA -0- 272,140 -0- 23,848 295,988 -0- n/a 1/12/90 n/a
Unimproved land -
Victorville, CA -0- 1,204,302 -0- 124,168 1,328,470 -0- n/a 2/20/90 n/a
Unimproved land -
Victorville, CA -0- 859,635 722 72,100 932,457 -0- n/a 4/23/90 n/a
Unimproved land -
Victorville, CA -0- 1,107,264 -0- 93,005 1,200,269 -0- n/a 4/16/90 n/a
Unimproved land -
Victorville, CA -0- 958,623 -0- 81,120 1,039,743 -0- n/a 4/10/90 n/a
Unimproved land -
Victorville, CA -0- 138,751 -0- 26,178 164,929 -0- n/a 11/26/91 n/a
--- ---------- ---- -------- ---------- ---
-0- $7,678,939 $722 $713,305 $8,392,966 -0-
=== ========== ==== ======== ========== ===
Reconciliation of carrying amount
Beginning balance $9,062,972
Additions
Improvements $ 722
Carrying costs 132,113
-------
Total additions 132,835
Reductions
Initial costs (717,461)
Carrying costs (85,380)
-------
Total reductions (802,841)
--------
Ending balance $8,392,966
==========
</TABLE>
See Accompanying Notes and Independent Auditor's Report
FS-12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 32,509
<SECURITIES> 0
<RECEIVABLES> 92,010
<ALLOWANCES> 0
<INVENTORY> 6,499,000
<CURRENT-ASSETS> 6,623,519
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,623,519
<CURRENT-LIABILITIES> 313,845
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,309,674
<TOTAL-LIABILITY-AND-EQUITY> 6,623,519
<SALES> 0
<TOTAL-REVENUES> 1,790,778
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,790,778
<INCOME-TAX> 800
<INCOME-CONTINUING> 1,789,978
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,789,978
<EPS-PRIMARY> 177.21
<EPS-DILUTED> 177.21
</TABLE>
