SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
- - - - - - - - - - - - -
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1997
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 033-80104
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GRANITE DEVELOPMENT PARTNERS, L.P.
----------------------------------
(Exact name of registrant as specified in its charter)
Delaware 34-1754061
- ---------------------------- ----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1250 Terminal Tower, 50 Public Square, Cleveland, Ohio 44113
- ------------------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 216-416-3778
------------
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. FINANCIAL INFORMATION
<TABLE>
GRANITE DEVELOPMENT PARTNERS, L.P.
(A Delaware Limited Partnership)
BALANCE SHEETS
<CAPTION>
July 31, January 31,
1997 1997
----------- ----------
(Unaudited) (Restated)
<S> <C> <C>
ASSETS
- --------
LAND $ 4,055,904 $ 4,472,219
LAND IMPROVEMENTS 2,666,581 2,476,446
----------- -----------
6,722,485 6,948,665
RESTRICTED CASH EQUIVALENTS 2,144,464 4,602,891
MORTGAGE NOTES RECEIVABLE 5,666,314 6,323,446
INVESTMENTS IN AND ADVANCES TO
JOINT VENTURES 26,961,508 25,866,537
OTHER ASSETS
Mortgage procurement costs, net of
accumulated amortization of
$1,676,118 at July 31, 1997 and
$1,446,575 at January 31, 1997 604,483 826,126
Organization costs, net of
accumulated amortization of
$578,770 at July 31, 1997 and
$449,697 at January 31, 1997 169,347 298,420
Cash 106,079 286,988
Interest receivable 6,401,278 5,207,019
Other 80,500 55,000
Commission receivable - 17,392
Administrative fee receivable 90,000 60,000
----------- -----------
7,451,687 6,750,945
----------- -----------
$48,946,458 $50,492,484
=========== ===========
LIABILITIES,
PARTNERS'SPECIAL UNITS
& PARTNERS' DEFICIT
- -----------------------
SENIOR NOTES PAYABLE $36,000,000 $36,000,000
MORTGAGE NOTES PAYABLE 562,355 910,472
LOAN PAYABLE - SUNRISE 921,768 921,768
OTHER LIABILITIES
Accounts payable 112,855 48,632
Accrued fees, partners 1,209,952 935,796
Accrued interest 1,072,101 1,009,139
Accrued real estate taxes 124,642 134,913
Deposits 2,029,045 3,199,100
Deferred income 5,554,449 4,656,074
----------- -----------
10,103,044 9,983,654
PARTNERS' EQUITY (DEFICIT)
Partners' special units 9,000,000 9,000,000
Partners' deficit (7,640,709) (6,323,410)
----------- -----------
1,359,291 2,676,590
----------- -----------
$48,946,458 $50,492,484
=========== ===========
<FN>
See notes to financial statements.
</FN>
</TABLE>
<TABLE>
GRANITE DEVELOPMENT PARTNERS, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
July 31, July 31,
-------------------------- --------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
(Restated) (Restated)
<S> <C> <C> <C> <C>
REVENUES
Sales of developed
property $ 830,000 $ 67,000 $ 1,621,497 $ 67,000
Cost of sales (510,365) (47,702) (1,034,263) (47,702)
----------- ----------- ----------- -----------
319,635 19,298 587,234 19,298
Interest 250,273 229,496 482,146 339,097
Commission 30,135 58,064 54,277 58,064
Other 37,600 60,593 68,844 76,136
----------- ----------- ----------- -----------
637,643 367,451 1,192,501 492,595
----------- ----------- ----------- -----------
EXPENSES
Interest 1,032,349 1,134,965 2,042,181 2,249,406
Fees, partners 131,231 317,515 274,156 519,145
Real estate taxes 42,073 43,531 88,410 141,034
Operating and
other 31,153 58,106 54,288 124,040
Amortization 178,840 156,976 358,616 312,437
----------- ----------- ----------- -----------
1,415,646 1,711,093 2,817,651 3,346,062
----------- ----------- ----------- -----------
(778,003) (1,343,642) (1,625,150) (2,853,467)
Income from
joint ventures 130,461 374,279 307,851 362,042
----------- ----------- ----------- -----------
NET LOSS $ (647,542) $ (969,363) $(1,317,299) $(2,491,425)
=========== =========== =========== ===========
<FN>
See notes to financial statements.
</FN>
</TABLE>
<TABLE>
GRANITE DEVELOPMENT PARTNERS, L.P.
(A Delaware Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
<CAPTION>
Sunrise FC-Granite, Limited
Land Co. Inc. Partners Total
-------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Balance at January 31, 1994 $ 100 $ (4,350,570) $ - $(4,350,470)
Distribution of interest on
special units - (963,870) - (963,870)
Net loss (restated) (39,032) (3,864,124) - (3,903,156)
-------- ------------ ----------- ------------
Balance at January 31, 1995
(restated) (38,932) (9,178,564) - (9,217,496)
Net loss (restated) (1,585) (156,902) - (158,487)
-------- ------------ ----------- ------------
Balance at January 31, 1996
(restated) (40,517) ( 9,335,466) - ( 9,375,983)
Capital contribution -
exercise of warrants - - 3,999,960 3,999,960
Withdrawal of original
limited partner 40,517 (40,517) - -
Distribution of interest
on special units - (1,914,202) - (1,914,202)
Net income (restated) - 966,815 - 966,815
-------- ------------ ----------- ------------
Balance at January 31, 1997
(restated) - (10,323,370) 3,999,960 (6,323,410)
Net loss for the six months
ended July 31, 1997
(unaudited) - (329,325) (987,974) (1,317,299)
-------- ------------ ---------- ------------
Balance at July 31, 1997
(unaudited) $ - $(10,652,695) $3,011,986 $ (7,640,709)
======== ============ ========== ============
<FN>
See notes to financial statements.
</FN>
</TABLE>
<TABLE>
GRANITE DEVELOPMENT PARTNERS, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended
July 31,
------------------------
1997 1996
----------- ----------
(Restated)
<S> <C> <C>
Cash Flow from Operating Activities:
Net loss $(1,317,299) $(2,491,425)
Adjustments to reconcile net loss to net cash
provide by (used in) operating activities:
Amortization 358,616 312,437
Income from joint ventures (307,851) (362,042)
Changes in operating assets and liabilities:
Decrease (increase) in land and
land improvements 226,180 (317,685)
Decrease (increase) in restricted
cash equivalents 2,458,427 (2,702,955)
Decrease in mortgage notes receivable 657,132 668,023
Increase in interest receivable (1,194,259) (1,052,092)
Increase in other assets (25,500) -
Decrease in commission receivable 17,392 -
Increase in administrative fee receivable (30,000) (40,000)
Increase in accounts payable 64,223 88,975
Increase in accrued fees, partner 274,156 345,925
Increase in accrued interest 62,962 58,293
Decrease in accrued real estate taxes (10,271) (116,197)
(Decrease) increase in deposits (1,170,055) 2,311,214
Increase in deferred income 898,375 863,690
----------- -----------
Net cash provided by (used in)
operating activities 962,228 (2,433,839)
----------- -----------
Cash Flow from Investing Activities:
Distribution from affiliate 642,600 -
Investments in and advances to affiliates (1,429,720) (893,089)
----------- -----------
Net cash used in investing activities (787,120) (893,089)
----------- -----------
Cash Flow from Financing Activities:
Proceeds from loan payable - Sunrise - 190,000
Repayment of mortgage notes payable (348,117) (245,756)
Increase in mortgage procurement costs (7,900) (17,000)
----------- -----------
Net cash used in financing activities (356,017) (72,756)
----------- -----------
Decrease in cash (180,909) (3,399,684)
Cash at beginning of the period 286,988 3,635,578
----------- -----------
Cash at end of the period $ 106,079 $ 235,894
=========== ===========
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest $ 1,979,219 $ 2,191,113
Real estate taxes $ 98,681 $ 257,231
<FN>
See notes to financial statements.
/<FN>
</TABLE>
GRANITE DEVELOPMENT PARTNERS, L.P.
(A Delaware Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS (Unaudited)
NOTE A - FINANCIAL STATEMENT DISCLOSURES
Certain information and footnote disclosures, which are normally
included in financial statements prepared in accordance with
generally accepted accounting principles, have been condensed or
omitted. It is suggested that these financial statements be read
in conjunction with the financial statements and notes thereto
included in the Partnership's January 31, 1997 Annual Report on
Form 10K.
NOTE B - RESTATEMENT
The Partnership has restated its previously issued financial
statements for the years ended January 31, 1997, 1996 and 1995 and
the six months ended July 31, 1996 to correct an error in
accounting for interest income recorded on certain advances. The
Partnership recorded interest income on advances for the period
from February 1, 1994 to January 31, 1997. The previously issued
financial statements have been restated to reverse the interest
income recorded on certain advances. As a result of the
restatement, interest receivable and interest income decreased and
net loss increased by $367,959 for the year ended January 31, 1995,
interest receivable, interest income and net income decreased by
$385,959 and $294,407 for the years ended January 31, 1996 and
1997, respectively. For the six months ended July 31, 1996,
interest receivable and interest income decreased and net loss
increased by $147,203 for the restatement.
NOTE C - PARTNERS' SPECIAL UNITS
Until the senior notes payable are paid in full, $9,000,000 of the
partners' special units bear interest at 10.83% and will be paid
pari-passu with interest on the Senior Notes.
Interest earned on the partners' special units amounted to $490,057
for the six months ended July 31, 1997 and has not been
distributed. As of January 31, 1997, $243,676 of the interest
earned on the special units remained undistributed. Total interest
earned of $733,733 as of July 31, 1997 will be distributed pari-
passu with the interest on the Senior Notes when funds are
available.
NOTE D - MORTGAGE NOTES PAYABLE
The Partnership entered into mortgage notes payable aggregating
$442,080 at July 31, 1997 and $597,510 at January 31, 1997,
respectively, to purchase certain properties. Amounts borrowed of
$442,080 bear interest at a fixed rate of 8% per annum. The notes
payable are collateralized by mortgages on the properties.
Principal and interest are generally payable one year after the
date of the notes payable.
During the year ended January 31, 1997, the Partnership entered
into a construction loan agreement collateralized by a promissory
note in an amount not to exceed $1,600,000. The note bears
interest at the prime rate (8.50% at July 31, 1997) and matures on
August 1, 1998. As of July 31, 1997, the outstanding balance
related to this loan was $120,275. The loan was established for
the funding of the Fairfax Meadows development.
The Partnership held a mortgage note payable aggregating $4,000,000
during the year ended January 31, 1996. The note was
collateralized by a mortgage on the 194th Street Property. On
October 2, 1996, the 194th Street Property was sold to a third
party purchaser. The purchaser assumed the $4,000,000 note payable
and there is no recourse to the Partnership.
NOTE E - TRANSACTIONS WITH AFFILIATES
The sole general partner is FC-Granite, Inc., an Ohio corporation
("FC-Granite"). FC-Granite is a wholly-owned subsidiary of Sunrise
Land Company ("Sunrise"), the land division subsidiary of Forest
City Enterprises, Inc.
FC-Granite and Sunrise are reimbursed for all direct costs of
operations of the Partnership's affairs and development activities.
FC-Granite is paid a monthly administrative fee as compensation for
its services in administering the business of the partnership which
is equal to one-sixth of 1% of the book value of the partnership
properties, as defined. Total administrative fees accrued for the
six months ended July 31, 1997 and 1996, were $121,291 and
$350,643, respectively. Fees outstanding as of January 31, 1997,
were $212,040. Total outstanding fees of $333,331 as of July 31,
1997, will be paid when funds are available.
Pursuant to a management agreement, Sunrise is paid a semi-annual
development fee equal to 4% of gross revenues as compensation for
its services in managing the development of the partnership
properties. Total development fees accrued for the six months
ended July 31, 1997 and 1996 were $81,528 and $89,868,
respectively. Fees outstanding as of January 31, 1997, were
$386,003. Total outstanding fees of $467,531 as of July 31, 1997,
will be paid when funds are available.
In addition, accrued real estate commissions due to FC-Granite were
$71,337 and $78,634 for the six months ended July 31, 1997 and
1996, respectively. Commissions outstanding as of January 31,
1997, were $337,753. Total outstanding commissions of $409,090 as
of July 31, 1997, will be paid when funds are available.
Pursuant to the Amended and Restated Silver Canyon Partnership
agreement, the Partnership is to receive a monthly administrative
fee in the amount of $5,000 per month. Fees earned during the six
months ended July 31, 1997 and 1996, were $30,000. Fees earned for
the year ended January 31, 1997, were $60,000. Total fees due the
Partnership as of July 31, 1997 are $90,000.
In addition, the Partnership is to receive a commission equal to 1%
of gross sales, as defined in the Amended and Restated Silver
Canyon Partnership agreement, as compensation for its services in
conducting marketing and sales duties and authorization of sales
contracts. The Partnership earned $54,277 during the six months
ended July 31, 1997. Commissions of $58,064 were earned during the
six month period ended July 31, 1996.
The Partnership has advanced $21,964,072 at July 31, 1997 and
$20,710,431 at January 31, 1997 to its joint ventures. Total
interest earned on the advances amounted to $1,072,516 and
$1,009,324 for the six months ended July 31, 1997 and 1996,
respectively. Interest income is deferred by the Partnership until
the interest capitalized on the joint ventures is recognized as
cost of sales by the joint ventures. Interest recognized as income
for the six months ended July 31, 1997 and 1996, was $136,571 and
$110,868, respectively.
During the six months ended July 31, 1996, Sunrise loaned the
Partnership an additional $190,000 to fund additional development
expenditures. Total funds advanced of $921,768 bear interest at
10% and will be paid back when excess funds are available.
Interest accrued on the loan was $46,342 and $46,335 for the six
month periods ended July 31, 1997 and 1996, respectively. Total
outstanding interest due Sunrise as of July 31, 1997, is $202,621.
Included in restricted cash equivalents and deposits at July 31,
1997 and January 31, 1997 is $1,897,635 and $3,124,950,
respectively, which represents sales proceeds invested on behalf of
Eaton Estate Partnership in short-term commercial paper. The
funds, together with interest earned, will be returned to the Eaton
Estate Partnership as funding of development expenditures is
needed.
NOTE F - INVESTMENTS IN AND ADVANCES TO JOINT VENTURES
The Partnership has a 33 1/3% interest in Silver Canyon Partnership
and a 30% interest in Eaton Estate Partnership. The Partnership's
investments in Silver Canyon Partnership at July 31, 1997 and
January 31, 1997, were $3,176,736 and $2,929,217, respectively, and
in Eaton Estate Partnership at July 31, 1997 and January 31, 1997,
were $2,018,257 and $2,332,049, respectively.
The Partnership has also advanced $21,964,072 at July 31, 1997 and
$20,710,431 at January 31, 1997 to the partnerships. Pursuant to
the Amended and Restated Partnership Agreement for Silver Canyon
Partnership, funds advanced to Silver Canyon Partnership as of
January 31, 1996 bear interest at ten percent (10%) and funds
advanced subsequent to January 31, 1996 bear interest at the rate
of prime plus 1 3/4% (8.50% at July 31, 1997). Funds advanced to
Eaton Estate Partnership bear interest at prime plus three percent
(3%).
The Eaton Estate Partnership made a cash distribution during the
six month period ended July 31, 1997. The total distribution was
$2,142,000, of which the Partnership received its 30% share, or
$642,600.
For the six months ended July 31, 1997, the Silver Canyon
Partnership generated net income of $380,799. Of this amount,
$247,519 has been recorded by the Partnership under the equity
method.
For the six months ended July 31, 1997, the Eaton Estate
Partnership generated net income of $201,104. Of this amount,
$60,332 has been recorded by the Partnership under the equity
method.
NOTE G - JOINT VENTURE STATEMENT OF OPERATIONS
<TABLE>
Shown below is the statement of operations for the Silver Canyon
Partnership:
<CAPTION>
Six Months Ended
July 31,
-------------------------
1997 1996
----------- ----------
<S> <C> <C>
REVENUES
Operating income $ 1,108,778 $1,529,637
EXPENSES
Fees, partners 60,000 70,000
Commissions 243,758 215,293
Legal and professional 12,327 105,244
Travel and entertainment 35,717 18,899
Operating and other 273,182 183,688
Depreciation and amortization 102,995 73,537
----------- ----------
Subtotal 727,979 666,661
----------- ----------
NET INCOME $ 380,799 $ 862,976
=========== ==========
</TABLE>
NOTE H - LITIGATION
The Partnership is involved in litigation related to its
operations. The Partnership and several affiliates are defendants
in a proceeding arising out of the October 1996 sale of the 194th
Street property located in Miami Beach, Florida. The plaintiff is
a third-party broker seeking a commission on the premise that the
plaintiff initiated the initial contact between the ultimate buyer
and the Partnership. In the opinion of management and legal
counsel the maximum damages based on the litigation proceedings is
approximately $400,000. However, the Partnership and the other
defendants deny that any commission has been earned by the
Plaintiff and legal counsel of the Partnership is seeking a summary
judgment seeking dismissal of the case.
The enclosed financial statements have been prepared on a
basis consistent with accounting principles applied in the prior
periods and reflect all adjustments which are, in the opinion of
management, necessary for a fair representation of the results of
the operations for the periods presented. All adjustments for the
six months ended July 31, 1997 were of a normal recurring nature.
Results of operations for the six months ended July 31, 1997 are
not necessarily indicative of results of operations which may be
expected for the full year.
Item 2. Management's Discussion and Analysis of Financial
Condition
The following discussion and analysis of Granite Development
Partners, L.P. should be read in conjunction with the audited
financial statements as of January 31, 1997 contained in the Annual
Report on Form 10-K.
Results of Operations
The Partnership recorded sales of $830,000 of developed
property for the three month period ended July 31, 1997 versus
sales of $67,000 for the three month period ended July 31, 1996.
During the period ended July 31, 1997, the Partnership sold four
lots of the Harmony Glen subdivision, three lots of the River Oaks
subdivision, and six lots located in the Fairfax Meadows
subdivision. The Partnership sold two lots located in the Royal
Valley development for the period ended July 31, 1996.
For the six month periods ended July 31, 1997 and 1996, the
Partnership recorded sales of $1,621,497 and $67,000, respectively.
The increase in sales is mainly attributable to the increase in the
availability of developed land inventory.
Silver Canyon Partnership, a joint venture of the Partnership
accounted for under the equity method, reported sales of $1,804,506
and $3,835,500 for the three month periods ended July 31, 1997 and
1996, respectively. For the six month periods ended July 31, 1997
and 1996, the Silver Canyon Partnership recorded sales of
$3,250,445 and $3,835,500, respectively.
As of July 31, 1997, the following significant sales were
under contract: eleven sublots located in the Fairfax Meadows
subdivision for $428,600; 27 lots located within the Ledges
subdivision for $1,507,000; four lots of the River Oaks subdivision
for $500,000; 335 lots located in the Seven Hills development for
$14,521,081; and 100 sublots in the Eaton Estates subdivision for
$5,067,000. None of the contracts are guaranteed to close.
Interest income totalled $250,273 and $229,496 for the three
months ended July 31, 1997 and 1996, respectively. Interest income
totalled $482,146 and $339,097 for the six months ended July 31,
1997 and 1996, respectively. Interest income is comprised of
interest related to receivables from the sale of developed property
on terms, from funds advanced to the joint ventures and from the
investment of proceeds from the sale of land in short-term
commercial paper. Interest income earned on funds advanced to the
Silver Canyon Partnership is being deferred. The increase in
interest income for both the three month and six month periods
ended July 31, 1997 versus July 31, 1996, is due to the increase in
interest due on receivables from the sale of developed property and
also the recognition of $136,571 of interest due on the Silver
Canyon Partnership loan during the period ended July 31, 1997
versus $110,868 recognized during the period ended July 31, 1996.
Real estate tax expense totalled $42,073 and $43,531 for the
three months ended July 31, 1997 and 1996, respectively, and
$88,410 and $141,034 for the six months ended July 31, 1997 and
1996, respectively. The reduction in real estate tax expense is
attributable to the decrease in land held for development.
Operating and other expenses totalled $31,153 and $58,106 for
the three months ended July 31, 1997 and 1996, respectively, and
$54,288 and $124,040 for the six months ended July 31, 1997 and
1996, respectively. The decrease in operating expenses for fiscal
1997 as compared to fiscal 1996 is mainly attributable to a
decrease in legal and professional fees.
For the three months ended July 31, 1997, the Partnership
reported a net loss of $647,542 versus a net loss of $969,363 for
the three months ended July 31, 1996. For the six months ended
July 31, 1997, the Partnership recorded a net loss of $1,317,299
versus a net loss of $2,491,425 for the six months ended July 31,
1996. The decrease in net loss for the three month and six month
periods ended July 31, 1997 versus 1996, is mainly attributable to
an increase in sales revenues and a decrease in fees due the
general partner.
Financial Condition and Liquidity
Net cash provided by operating activities was $962,228 for the
six month period ended July 31, 1997 versus net cash used of
$2,433,839 for the six month period ended July 31, 1996.
Contributing to an increase in funds generated from results of
operations in the six month period ended July 31, 1997 versus 1996,
was a decrease in net loss of $1,172,050 for the Partnership. The
decrease in restricted cash equivalents and deposits was the result
of funds distributed on behalf of the Eaton Estate Partnership from
its investment funds to its respective partners. The decrease in
mortgage notes receivable primarily resulted from payments of
$319,068 received toward the mortgage note receivable related to
the 194th Street property. The cash used in operating activities
for the six months ended July 31, 1996, was mainly the result of an
increase in interest receivable and an increase in land
improvements. An increase in restricted cash was offset by an
increase in deposits. Included in restricted cash and deposits as
of July 31, 1996, is $2,754,728 which represents sales proceeds
invested on behalf of the Eaton Estate Partnership (Note D). The
increase in interest receivable is mainly comprised of interest
earned on funds advanced to the joint ventures.
Net cash used in investing activities was $787,120 and
$893,089 for the six months ended July 31, 1997 and 1996,
respectively. Cash used in investing activities is attributable to
funds advanced for development expenditures to the Silver Canyon
property.
Net cash used in financing activities for the six months ended
July 31, 1997 was $356,017 versus $72,756 for the six months ended
July 31, 1996. The net cash used during the six months ended July
31, 1997 was primarily the result of principal payments on mortgage
notes of $348,117. The net cash used during the six months ended
July 31, 1996 was the result of principal payments on mortgage
notes of $245,756 and an increase in mortgage procurement costs of
$17,000 offset by funds advanced from Sunrise Land Company to the
Partnership to fund additional development expenditures.
Short-term external financing is being pursued to provide the
funds necessary for the development of the Thornbury development
(Solon Estates) located in Solon, Ohio. On August 27, 1997, the
Partnership received approval from a local lending institution for
a $1,400,000 loan secured by a promissory note. The note carries
interest at the rate of one-half of one percent (1/2%) in excess of
the prime rate. The term of the loan is three years and is secured
by a first mortgage on 206 acres of property. The closing of the
loan shall take place as soon as possible, but in no event later
than November 10, 1997.
Subsequent to July 31, 1997, several events have occurred
concerning the Silver Canyon Partnership, a joint venture owned by
the Partnership. The Seven Hills development, which is owned by
the Silver Canyon Partnership, is being developed in conjunction
with a privately owned golf course. The golf course owner and
developer, Seven Hills Golf L.P., has indicated its intention to
sell the golf course to The Rio Hotel of Las Vegas. Further
indications have been that The Rio intends to operate the course as
a highly exclusive, private facility, with very limited play. This
has greatly concerned the Silver Canyon Partnership, which has
entered into discussions with the golf course's present and future
owners to address the situation. In August, 1997, a class-action
lawsuit was filed by the current homeowners in Seven Hills against
the Silver Canyon Partnership, the golf course owners, The Rio, and
other entities. In addition, a separate lawsuit was filed by one
of the production homebuilding companies at Seven Hills, against
the same parties. Both suits seek a commitment for public play on
the golf course, among other remedies. The Silver Canyon
Partnership is responding to both suits, and is attempting to reach
an appropriate resolution with all parties involved. The
partnership's management and legal counsel cannot yet determine the
outcome of the lawsuits. Sales efforts are continuing at the Seven
Hills development, and because these events are recent, it is not
yet possible to determine any impact on the Silver Canyon
Partnership's performance.
Information Relating to Forward-Looking Statements
This Quarterly Report, together with other statements and
information publicly disseminated by the Partnership, contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such statements
reflect management's current views with respect to financial
results related to future events and are based on assumptions and
expectations which may not be realized and are inherently subject
to risks and uncertainties, many of which cannot be predicted with
accuracy and some of which might not even be anticipated. Future
events and actual results, financial or otherwise, may differ from
the results discussed in the forward-looking statements. Risks and
other factors that might cause differences, some of which could be
material, include, but are not limited to, the effect of economic
and market conditions on a nation-wide basis as well as regionally
in areas where the Partnership has a geographic concentration of
land; failure to consummate financing arrangements; development
risks, including lack of satisfactory financing, construction and
cost overruns; the level and volatility of interest rates; the rate
of revenue increases versus expenses increases; as well as other
risks listed from time to time in the Partnership's reports filed
with the Securities and Exchange Commission. The Partnership has
no obligation to revise or update any forward-looking statements as
a result of future events or new information. Readers are
cautioned not to place undue reliance on such forward-looking
statements.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - none.
(b) No reports on Form 8-K have been filed by the Registrant
during the quarter ended July 31, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Granite Development Partners, L.P.
----------------------------------
(Registrant)
DATE: 9/12/97 /s/ Robert F. Monchein
----------- ------------------------------------
Robert F. Monchein
President
FC-Granite, Inc., the general partner
of Granite Development Partners, L.P.
DATE: 9/12/97 /s/ Mark A. Ternes
----------- ------------------------------------
Mark A. Ternes
Controller
FC-Granite, Inc., the general partner
of Granite Development Partners, L.P.
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