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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
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Commission File Number 0-24816
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NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
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(Exact name of Registrant as Specified in its Charter)
Delaware 23-2610414
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(State of other jurisdiction (IRS Employer Identification No.)
incorporation or organization)
230 S. Broad Street, Mezzanine, Philadelphia, Pennsylvania 19102
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(215)790-4700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class to Name of exchange on
be so registered which each class
is to be registered
None N/A
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Securities 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, (2) has been subject to such filing requirements for
the past 90 days.
Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporate by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
Aggregate Market Value of Voting and Non-Voting Common Equity Held by non-
affiliates of the Registrant: N/A
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes /X/ No / /
DOCUMENTS INCORPORATED BY REFERENCE
Part I Part II Part III Part IV
(None) (None) (None) Exhibits from Form 10
Registration Statement
and from Form 10-K
Annual Report filed
April 1, 1996
No. 0-24816
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INDEX
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Page
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PART I
Item 1. Business................................................. 1
I. Summary............................................ 1
II. MLP Objectives and Policies........................ 2
III. Glossary........................................... 4
Item 2. Properties............................................... 6
Item 3. Legal Proceedings........................................ 6
Item 4. Submission of Matters to a Vote of
Security Holders......................................... 7
PART II
Item 5. Market Price for the Registrant's Common
Equity and Related Stockholder Matters.................. 15
I. No Trading Market.................................. 15
II. Distributions of Cash Flow From Operations......... 15
III. Proceeds of Sales Distributions.................... 15
IV. Certain Income Tax Considerations.................. 15
Item 6. Selected Financial Data.................................. 17
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations........... 18
I. Liquidity and Capital Resources.................... 18
II. Results of Operations.............................. 20
III. Year 2000.......................................... 22
IV. Indebtedness Secured by the Properties............. 22
Item 8. Financial Statements and Supplementary Data.............. 24
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure..................... 24
PART III
Item 10. Directors and Executive Officers of the
Registrant.............................................. 25
Item 11. Executive Compensation................................... 25
Item 12. Security Ownership of Certain Beneficial Owners
and Management.......................................... 25
Item 13. Certain Relationships and Related Party Transactions..... 25
I. Compensation and Fees.............................. 25
II. Property and Management Affiliate.................. 26
III. Conflicts of Interest.............................. 27
IV. Summary of Relationships........................... 27
V. Related Party Transactions......................... 28
PART IV.
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K..................................... 28
I. Documents Filed as Part of this Report............. 28
II. Reports of Form 8-K................................ 29
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PART I
ITEM 1. BUSINESS
I. SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in the Annual Report.
Reference is made to the Glossary which appears at the end of this section for
the definition of certain capitalized terms used in the Summary and elsewhere in
this Report.
A. THE MASTER LIMITED PARTNERSHIP
National Property Analysts Master Limited Partnership (the "MLP") was
organized under the Delaware Revised Uniform Limited Partnership Act in January,
1990 as part of a consolidation of the operation of properties owned by certain
limited partnerships (the "Partnerships") previously sponsored by National
Property Analysts, Inc. and its affiliates ("NPA"). The term of the MLP will
continue until December 31, 2015, unless sooner terminated in accordance with
the terms of the limited partnership agreement of the MLP (the "Partnership
Agreement").
The MLP's principal executive offices are located at 230 South Broad
Street, Mezzanine, Philadelphia, Pennsylvania 19102 (telephone: 215-790-4700).
B. THE GENERAL PARTNERS
The General Partners of the MLP are EBL&S, Inc., an affiliate of NPA (the
"Managing General Partner") and Feldman International, Inc. (the "Equity General
Partner). The Managing General Partner and the Equity General Partner are
collectively referred to as the "General Partners". The Managing General Partner
manages and controls all aspects of the business of the MLP. The Managing
General Partner is owned 100% by E & H Properties, Inc., an affiliate of NPA and
holds no ownership interest in the MLP. The Equity General Partner holds a 1%
general partner interest in the MLP. See "Item 13. Certain Relationships and
Related Party Transactions.
C. THE PROPERTIES AND INDEBTEDNESS SECURED BY THE PROPERTIES
The MLP owns 48 properties as of December 31, 1999 which consist
primarily of shopping centers and free standing, single tenant retail stores
(the "Properties"). The Properties are subject to certain indebtedness which
was incurred in connection with the acquisition of the Properties by the
Partnerships. See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations."
D. MLP OBJECTIVES AND POLICIES
The MLP intends to hold the Properties until such time as it is deemed
prudent to dispose of the Properties. However, the Partnership in accordance
with the terms of the Partnership Agreement will terminate on December 31, 2015.
See "Item 1. Business - MLP Objectives and Policies."
The Limited Partners are prohibited from transferring their interests in
the MLP except by will, inheritance or operation of law and no additional
Limited Partners may be admitted as partners of the MLP.
E. LIMITED PARTNERS' SHARE OF CASH FLOW FROM OPERATIONS
The Limited Partners will receive, on an annual basis, 99% of the Cash
Flow from Operations as defined in the Partnership Agreement. It is not
anticipated that the MLP will be in a position to distribute Cash Flow from
Operations to its partners in the foreseeable future.
F. LIMITED PARTNERS' SHARE OF PROCEEDS OF SALES DISTRIBUTIONS
Proceeds of Sales of the Properties available to be distributed by the MLP
will be distributed 99% to the Limited Partners and 1% to the Equity General
Partner.
G. ALLOCATIONS OF PROFITS AND LOSSES
Taxable income from MLP operations or from a capital transaction will be
allocated 99% to the Limited Partners and 1% to the Equity General Partner.
Taxable losses from MLP operations or from capital transactions generally will
be allocated 99% to the Limited Partners and 1% to the Equity General Partner.
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H. COMPENSATION TO THE GENERAL PARTNER AND AFFILIATES
The Managing General Partner will receive certain compensation for its
services including reimbursement of certain of its expenses and the Equity
Partner will receive a portion of Cash Flow from Operations and Proceeds of
Sales of the Properties. An affiliate of the Managing General Partner will
receive a management fee for managing the Properties and a leasing fee for
obtaining or renewing leases. See "Item 13. Certain Relationships and Related
Party Transactions - Compensation and Fees."
I. FISCAL YEAR
The MLP's fiscal year will begin on January 1, and end on December 31 of
each year.
II. MLP OBJECTIVES AND POLICIES
A. MLP OBJECTIVES
The MLP intends to hold the Properties until such time as it is deemed
prudent to dispose of one or more or all of the Properties. The precise timing
of disposition of Properties is in the discretion of the Managing General
Partner. However, the Partnership in accordance with the terms of the
Partnership Agreement will terminate on December 31, 2015.
It is anticipated that the forgiveness of Wrap Mortgages and the process
of selling Properties, which are owned by Unaudited Partnerships, and applying
sales proceeds to make payments on the Wrap Mortgages will result in the Limited
Partners having to report substantial taxable income when the Properties are
sold without the corresponding receipt of any cash proceeds therefrom (unless
and until the Threshold Amount has been exceeded). It is intended, however, that
by avoiding a foreclosure of Properties, the Consolidation and Restructuring may
preserve for Limited Partners the potential for deriving an economic benefit
from the future sales of the Properties, while at the same time possibly
deferring the recognition of taxable income for some Limited Partners.
The objectives of the MLP are, to attempt to implement, with respect to
the Properties, effective management, leasing, cost control and capital
improvement policies and techniques and thereby to (i) preserve and protect the
MLP's Properties in order to avoid the loss of any Properties to foreclosure;
(ii) enhance the potential appreciation in the value of the MLP's Properties;
and (iii) provide Cash Flow from Operations. It is not anticipated that the MLP
will be in a position to distribute Cash Flow from Operations to its partners in
the foreseeable future.
The determination of whether a Property should be sold or otherwise
disposed of will be made by the Managing General Partner after consideration of
relevant factors, including performance of the Property, market conditions, the
financial requirements of the MLP and the tax consequences to Limited Partners,
with a view toward achieving the principal investment objectives of the MLP. In
connection with a sale of a Property, a purchase money obligation secured by a
mortgage may be taken as part payment; there are no limitations or restrictions
on the MLP's taking such purchase money obligations. The terms of payment to the
MLP will be affected by custom in the area in which each Property is located and
the then-prevailing economic conditions. To the extent the Partnership receives
notes and other property instead of cash on sales, such proceeds (other than any
interest payable thereon) will not be included in Proceeds of Sales of the
Properties until and to the extent the notes or other property are actually
paid, sold, refinanced or otherwise disposed of; and therefore, the distribution
of such proceeds to the MLP may be delayed until such time.
The MLP may not acquire additional properties. However, in the Managing
General Partner's discretion, the MLP may, in appropriate circumstances,
exchange Properties for new properties in transactions structured to be
non-taxable events in whole or in substantial part under Section 1031 of the
Internal Revenue Code, and the proceeds or an involuntary conversion may be
invested in property in transactions structured to be non-taxable in whole or in
part under Section 1033 of the Internal Revenue Code.
B. COMPETITION FOR TENANTS
The MLP's Properties consist primarily of shopping centers and free
standing, single tenant retail stores located in 24 states. Of the 48 Properties
owned by the MLP, 29 properties have only 1 or 2 tenants ("Single Tenant
Properties"). The tenants in the Single Tenant Properties are primarily national
retailers or supermarkets ("Anchor Tenants"). The 19 remaining properties are
multi-tenant shopping center properties ("Shopping Center Properties"). The
tenants in the Shopping Center Properties generally
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include Anchor Tenants and a variety of tenants occupying less substantial
portions of the property ("Local Tenants").
1. ANCHOR TENANTS
The Anchor Tenant leases are usually for 20 to 25 years. These Anchor
Tenant leases are at various stages of maturity. Upon expiration of the initial
lease term renewal options are usually available to the Anchor Tenants. See
"Item 2. Properties." The high concentration of minimum rent received from
Anchor Tenants under the terms of long term leases provide the MLP with
protection against a significant reduction in rental income; however, this also
restricts the growth opportunity for the MLP.
As of December 31, 1999, there were five Properties which had been vacated
by Anchor Tenants, four of which are stores owned or operated by Kmart
Corporation ("Kmart"). The Anchor Tenants continue to make rental payments for
these properties under the terms of their leases. The Anchor Tenants are
attempting to market the space to other users. To date, the MLP cooperated with
the Anchor Tenant in its effort to market space it has vacated. To the extent
that Anchor Tenant space becomes available at the end of a lease term, the MLP
will attempt to re-lease the Anchor Tenant space in the same manner in which
Local Tenant space is marketed (see below).
The MLP's primary Anchor Tenant is Kmart Corporation and its subsidiaries
which in 1999 accounted for approximately 55% of the rental income received by
the MLP. The Managing General Partner has had regularly scheduled meetings with
representatives of Kmart to review and discuss with them their plans for the
various Kmart stores. In the past, in instances where Kmart stores were
determined to be undersized and inadequate to accommodate Kmart's current needs,
expansions of the existing facilities were undertaken wherever possible. In some
cases, Kmart determined to vacate Anchor Tenant space although they continued to
pay the required rental payments.
Each of the four Kmart stores which are vacant but continuing to make
rental payments are Anchor Tenants in Single Tenant Properties. Kmart has
subleased two of the four properties to other users. Kmart remains obligated
under the terms of its leases at the four property locations for terms ranging
from two to eighteen years.
In past years Kmart experienced a downgrading of its credit rating as a
result of its recent financial performance. Although Kmart's financial
performance has improved, its credit rating has not been upgraded to its prior
level. As a result, the MLP could have difficulty refinancing the balloon
payments due on the Third Party Underlying Obligations on Properties where
Kmart is the Anchor Tenant. See "Item 2. Properties."
2. LOCAL TENANTS
Marketing of Local Tenant space is accomplished through signage, direct
mailing, advertisements and through coordinated listings with local leasing
brokers.
The MLP Properties' occupancy rate for Local Tenant space is 77%. The
lease terms for Local Tenant space typically range from 3 years to 10 years. The
competitive conditions applicable to Local Tenant space vary from Property to
Property. However, as a general matter, it can be said that the market for Local
Tenant space is highly competitive and, with respect to the MLP Properties, is
typically a function of the MLP's rental rates as compared to the local
market's. However, in instances where a multi-tenant Property has Anchor Tenant
space and the Anchor Tenant space is vacant (currently three Shopping Center
Properties have Anchor Tenant space which is vacant), the vacancy in the Anchor
Tenant space makes the rental of the Local Tenant space more difficult.
C. PROHIBITED ACTIVITIES AND INVESTMENTS
The MLP will not engage in any business not related to the operations of
the Properties. Additionally, the MLP will not (i) sell additional limited
partnership interests in the MLP; (ii) issue limited partnership interests in
exchange for property; (iii) issue senior securities or make loans or
investments in real estate mortgages other than in connection with a
contemplated purchase or sale or disposition of the Properties; (iv) make loans
to the General Partners or its affiliates (v) invest in or underwrite the
securities of other issuers for any purpose, including investing in securities
for the purpose of exercising control; (vi) operate in such a manner as not to
be exempt from classification as an "investment company" for purposes of the
Investment Company Act of 1940; (vii) purchase or lease any property from or
sell or lease any property to the General Partners or its affiliates, except
that with respect to leases, the General Partners and its affiliates may lease
space in the Properties on terms no more favorable than those offered to
non-affiliated persons; (viii) invest in junior mortgages or
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deeds of trust, except that the acquisition or granting of junior mortgages or
deeds of trust in connection with the sale, purchase, financing or refinancing
of a Property shall not be deemed to be investing in junior mortgages or deeds
of trust; (ix) commingle the funds of the MLP with any other person's; (x)
invest in limited partnership interests; (xi) construct or develop properties;
(xii) enter into joint venture agreements; or (xiii) receive rebates or give-ups
in connection with the MLP.
D. INSURANCE ON PROPERTIES
The Managing General Partner has obtained liability insurance covering the
Properties. The third party liability coverage insures, among others, the MLP
and the General Partners. Property insurance has also been obtained that insures
the MLP for fire and other casualty losses in an amount which covers the
replacement cost of the Properties. In addition, the MLP is covered under
fidelity insurance policies in amounts which the Managing General Partner deems
sufficient. Such insurance coverage is reviewed at least annually and adjusted
to account for variations in value.
III. GLOSSARY.
"CAPITAL IMPROVEMENT" shall mean any improvement to any Property which is
required to be capitalized or amortized by the MLP, pursuant to generally
accepted accounting principles.
"CAPITAL IMPROVEMENT DEBT" shall mean indebtedness incurred by the MLP for
Capital Improvements.
"CASH FLOW FROM OPERATIONS" shall mean, with respect to the MLP, Operating
Revenues less Operating Cash Expenses and Reserves.
"CONSOLIDATION" shall mean the consolidation of the ownership and
operations of the Properties in the MLP.
"DEBT SERVICE" shall mean the aggregate principal and interest payments
required on the Third Party Underlying Obligations in calendar year 1990 with
respect to the Properties owned by the MLP.
"EQUITY GENERAL PARTNER" shall mean Feldman International, Inc., a
Delaware corporation.
"EXCESS PROCEEDS" shall mean the Proceeds of Sales of the Properties in
excess of the Minimum Payoff Amount and Capital Improvement Debt.
"GENERAL PARTNERS" shall mean EBL&S, Inc., the Managing General Partner
of the MLP and Feldman International, Inc., the Equity General Partner of the
MLP.
"INVESTOR NOTE PAYMENTS" shall mean the payment by Investor Note Payors of
amounts becoming due on or after June 1, 1989 on the Investor Notes.
"INVESTOR NOTE PAYORS" shall mean the Limited Partners of Partnerships who
made payments which became due on or after June 8, 1989 on the Investor Notes.
"INVESTOR NOTE RECOVERY" shall mean the Excess Proceeds available for
distribution to the MLP after the first $28 million of Excess Proceeds has been
retained by the MLP, in an amount equal to the lesser of the Investor Note
Payments or $25 million.
"INVESTOR NOTES" shall mean the promissory notes executed and tendered by
Limited Partners as payments for a portion of the purchase price of their
interest in a Partnership.
"LIMITED PARTNERS" shall mean all persons who hold limited partnership
interests in the MLP.
"MANAGEMENT AGREEMENT" shall mean the agreement entered into by and
between the MLP and EBL&S Property Management, Inc. pursuant to which the
Property Manager will manage the Properties in consideration of a property
management fee (equal to five percent (5%) of the MLP's gross operating
revenues) and a leasing fee (equal to the fee customarily charged in the
geographic areas in which the Properties are located).
"MANAGING GENERAL PARTNER" shall mean EBL&S, Inc, a Delaware
corporation.
"MINIMUM PAYOFF AMOUNT" shall mean the payment made by the MLP pursuant to
the Restructuring Agreement equal to the sum of (i) the balance of the Third
Party Underlying Obligations on a Property on January 1, 1990 and (ii) any
prepayment penalties or premiums.
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"MLP" shall mean National Property Analysts Master Limited Partnership,
a Delaware limited partnership.
"MLPG" shall mean Main Line Pension Group, a Delaware limited partnership.
"NPA" shall mean National Property Analysts, Inc. and the corporations
and partnerships now or previously controlled by, related to or affiliated
with, directly or indirectly, National Property Analysts, Inc. and Mr. Edward
Lipkin, including, but not limited to E & H Properties, Inc., National
Property Analysts Management Company, and National Property Management Corp.
"NPAEP" shall mean National Property Analysts Employee Partnership, a
Delaware limited partnership.
"OPERATING CASH EXPENSES" shall mean the amount of cash paid by the MLP
for costs and expenses incurred in the ordinary course of its business
including, without limitation, (i) Debt Service, (ii) debt service payments on
Capital Improvement Debt, (iii) fees to be paid to the Property Manager and (iv)
repairs and maintenance, utilities, taxes and certain Tenant Improvements,
employee salaries, travel on MLP business, advertising and promotion, supplies,
legal, accounting, statistical or bookkeeping services, and printing and mailing
of reports and communications.
"OPERATING REVENUES" shall mean the cash receipts of the MLP, other than
(i) the Proceeds of Sales of the Properties and (ii) proceeds of borrowings of
the MLP, received in cash during the MLP's fiscal year.
"PARTNERSHIP AGREEMENT" shall mean the limited partnership agreement
entered into between the General Partners and the Limited Partners of the MLP.
"PARTNERSHIPS" shall mean certain limited partnerships previously
sponsored by NPA.
"PENSION GROUPS" shall mean the limited partnerships comprised of various
pension and profit sharing trusts which sold the Properties to the Partnerships,
and includes Main Line Pension Group (the "MLPG"), a Delaware limited
partnership which acquired the ownership of the Wrap Mortgages from the original
holders and National Property Analysts Employee Partnership ("NPAEP") and Penn
Valley Pension Group ("PVPG"), both Delaware limited partnerships which
subsequently acquired ownership of certain Wrap Mortgages from MLPG.
"PROCEEDS OF SALES DISTRIBUTIONS" shall mean the distributions made by the
MLP from the proceeds of sales of the Properties as defined in the Partnership
Agreement.
"PROCEEDS OF SALES OF THE PROPERTIES" shall mean, for purposes of the
Restructuring Agreement and as of and at the time of the calculation thereof,
(a) the gross sales proceeds (including the then-outstanding principal amount of
indebtedness for borrowed money assumed or taken subject to) from the sale of
any Property or Properties occurring and after the date the Properties were
transferred to the MLP, minus (b) all reasonable costs and expenses incurred by
a Partnership or a successor to a Partnership (including the MLP), in connection
with any such sale, including without limitation, brokerage commissions to
independent third parties, legal fees and costs, transfer taxes, mortgage taxes,
prepayment penalties payable to independent third parties, title insurance and
all other customary closing costs and expenses.
"PROPERTY" OR "PROPERTIES" shall mean one, some or all of the parcels of
real property owned by the MLP.
"PVPG" shall mean Penn Valley Pension Group, a Delaware limited
partnership.
"PROPERTY MANAGER" shall mean EBL&S Property Management, Inc.
"REFINANCING" shall mean either (i) a restructuring of indebtedness of the
MLP or the Partnerships which only changes the terms thereof without increasing
the indebtedness being restructured or (ii) refinancing indebtedness of the MLP
or the Partnerships for the purpose of making a Capital Improvement.
"RESERVES" shall mean the amount determined by the Managing General
Partner, in its sole discretion, to be set aside for future requirements of the
MLP. At the end of each year, any unexpended reserves not continued as Reserves
will be treated as Cash Flow from Operations.
"RESTRUCTURING" shall mean the restructuring of the Wrap Mortgages and
the Second Mortgages.
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"RESTRUCTURING AGREEMENT" shall mean the agreement entered into by and
between the MLP, the Pension Groups and certain NPA affiliates to restructure
the Wrap Mortgages and the Second Mortgages.
"RESTRUCTURED WRAP MORTGAGES" shall mean the Wrap Mortgages as modified by
the Restructuring Agreement.
"SECOND MORTGAGE" shall mean any purchase money mortgage or deed of trust
created by a Pension Group upon its purchase of a Property that is a subordinate
lien against the Property in favor of an NPA affiliate and evidenced by a
promissory note.
"TENANT IMPROVEMENTS" shall mean construction to the Properties completed
for the benefit of the tenants' use of the Property.
"THIRD PARTY DEBT SERVICE" shall mean payments of principal and interest
on Third Party Underlying Obligations.
"THIRD PARTY UNDERLYING OBLIGATIONS" shall mean those obligations secured
by the Property underlying the Wrap Mortgages held by persons or entities other
than NPA, or its affiliates.
"THRESHOLD AMOUNT" shall mean payments on the Wrap Mortgages generated by
Proceeds of Sales of the Properties in an amount equal to $45,000,000 in excess
of the Third Party Underlying Obligations as of January 1, 1990 secured by such
Properties. As of December 31, 1999, approximately $36,422,000 had been applied
in reduction of the Threshold Amount.
"UNAUDITED PARTNERSHIPS" shall mean the Partnerships included in the MLP
which were not audited by the Internal Revenue Service.
"UNITS" shall mean units of limited partnership interest in the MLP.
"WRAP MORTGAGES" shall mean the mortgages securing the Wrap Notes which
were delivered to the Pension Groups by the Partnerships at the time of the
acquisition of the Property.
"WRAP NOTES" shall mean the promissory notes secured by the Wrap
Mortgages.
ITEM 2. PROPERTIES.
The MLP's Properties consist primarily of shopping centers and free
standing, single tenant retail stores. As of December 31, 1999, the MLP owned
and operated 48 Properties located in 24 states. Approximately 60% of the
Properties are Single Tenant Properties and 40% are Shopping Center
Properties.
Set forth below are schedules providing information with respect to the
Properties and the indebtedness secured by the Properties. Schedule 1 provides a
description of the Properties and certain tenant information. Schedule 2
provides certain information regarding tenant lease expirations. Schedule 3
provides information regarding the Third Party Underlying Obligations secured by
the Properties.
Under applicable law, in certain circumstances, the owner or operator of
real property has an obligation to clean up hazardous and toxic substances on
the property. This obligation is often imposed without regard to the timing,
cause or person responsible for such substances on the property. The presence of
such substances on a Property would have an adverse impact on the operating
costs and sale or refinancing of such Property. None of the Properties are
presently the subject of any environmental enforcement actions under any such
statutes, and the General Partners do not have any information or knowledge
about the presence of such substances on any of the Properties. If it is claimed
or determined that such substances do exist on any of such Properties, the MLP
could be subject to such cleanup obligations. The presence of such substances
may make a Property unmarketable or substantially decrease its value. Any
environmental cleanup expenses incurred in connection with a sale would directly
reduce proceeds derived from the sale of the Property.
ITEM 3. LEGAL PROCEEDINGS.
The MLP is involved in various claims and legal actions arising in the
ordinary course of property operations. In the opinion of the General Partners,
the ultimate disposition of these matters will not have a material adverse
effect on the MLP's financial position, results of operations or liquidity.
Ten of the Partnerships combined in the MLP filed for protection under the
provisions of Chapter 11 of the U.S. Bankruptcy Code during the period from 1990
through 1999 following the filing of actions by secured creditors seeking
foreclosure. All of these bankruptcies have been dismissed at the
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Partnership's motion or the Partnership's bankruptcy plan was confirmed and the
case closed.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
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SCHEDULE 1
DESCRIPTION OF PROPERTY AND TENANT INFORMATION
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TOTAL AVERAGE
PROPERTY TOTAL OCCUPANCY MINIMUM RENT
LOCATION GLA RATE RENT PSF
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Ardmore, OK 216,890 93.3% $900,528 $4.45
Borger, TX 31,750 100.0% 29,100 0.92
Bowling Green, OH 135,187 91.9% 377,877 3.04
Cahokia, IL 26,000 100.0% 24,133 0.93
Chesapeake, VA 162,020 100.0% 402,725 2.49
Clackamas, OR 58,543 100.0% 227,808 3.89
Cottage Grove, MN 167,114 68.5% 921,426 8.05
Crescent City, CA 33,000 100.0% 60,000 1.82
Dunmore, PA 26,475 100.0% 78,696 2.97
East Haven, CT 155,877 83.7% 790,694 6.06
Escanaba, MI 40,175 100.0% 114,715 2.86
Fairborn, OH 136,555 94.5% 479,945 3.72
Fairfield, IA 33,000 100.0% 23,544 0.71
Federal Way, WA 37,560 100.0% 45,000 1.20
Fond du Lac, WI 194,487 96.7% 768,635 4.09
Fort Wayne, IN 778,500 100.0% 607,726 0.78
Huntington, WV 142,055 92.5% 378,319 2.88
Huntsville, AL 104,000 100.0% 244,400 2.35
Huron, SD 52,030 55.2% 70,635 2.46
Hutchinson, MN 60,842 100.0% 229,800 3.78
Independence, MO 134,634 97.2% 369,534 2.82
International Falls, MN 60,842 100.0% 237,000 3.90
Kalamazoo, MI 120,958 100.0% 393,495 3.25
Lake Mary, FL 107,400 100.0% 923,640 8.60
Lockport, IL 100,838 98.0% 334,537 3.39
Marquette, MI 254,756 94.5% 1,257,988 5.22
Maryville, MO 34,955 95.0% 114,528 3.45
Menominee, MI 82,611 100.0% 197,848 2.39
New Hope, MN 115,492 100.0% 319,462 2.77
Newberry, SC 55,552 100.0% 194,083 3.49
North Augusta, SC 109,134 18.3% 63,600 3.19
North Sarasota, FL 134,805 100.0% 534,596 3.97
O' Fallon, MO 91,061 100.0% 351,965 3.87
Oak Lawn, IL 163,197 100.0% 861,912 5.28
Ocala, FL 103,964 100.0% 226,310 2.18
Philadelphia, PA 128,006 100.0% 556,500 4.35
San Mateo, CA 84,704 100.0% 476,546 5.63
Sault Ste. Marie, MI 92,650 100.0% 234,884 2.54
Seven Hills, OH 121,677 100.0% 325,095 2.67
Sparks, NV 1,579,000 100.0% 1,696,878 1.07
Steger, IL 87,678 100.0% 261,013 2.98
Taylorville, IL 43,127 100.0% 362,955 8.42
Urbana, IL 55,531 100.0% 436,536 7.86
Wahpeton, ND 49,320 100.0% 21,963 0.45
Washington, IA 35,600 100.0% 24,506 0.69
Waverly, OH 55,102 100.0% 265,504 4.82
Wheelersburg, OH 125,958 71.7% 145,000 1.61
Yazoo City, MS 79,996 97.9% 192,122 2.45
</TABLE>
8
<PAGE> 11
SCHEDULE 1, CONTINUED
DESCRIPTION OF PROPERTY AND TENANT INFORMATION
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
MAJOR TENANT INFORMATION
PROPERTY ANNUAL LEASE
LOCATION NAME GLA RENT EXPIRATION OPTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ardmore, OK Hobby Lobby 57,120 $106,243 28-Feb-2006 2 / 5 YR
Beall 25,632 83,304 30-Apr-2005 3 / 5 YR
Staples 22,720 124,900 28-Feb-2009 4 / 5 YR
Goody's Family Clothing 26,432 218,064 31-Oct-2011 2 / 5 YR
Borger, TX Safeway 31,750 29,100 31-Aug-2003 6 / 5 YR
Bowling Green, OH Kmart 87,543 224,000 30-Nov-2012 10 / 5 YR
Cahokia, IL Goodyear Service Center 26,000 24,133 28-Feb-2004
Chesapeake, VA Kmart 162,020 402,725 31-Oct-2005 6 / 10 YR
Clackamas, OR Safeway (regional office) 58,543 227,808 14-Jun-2003 6 / 5 YR
Cottage Grove, MN Rainbow Foods 70,130 606,624 11-Jul-2016 6 / 5 YR
Crescent City, CA Safeway 33,000 60,000 31-May-2004 6 / 5 YR
Dunmore, PA Price Chopper 26,475 78,696 30-Nov-2000 4 / 5 YR
East Haven, CT V F Factory Outlet 78,000 386,100 31-May-2002 2 / 5 YR
Escanaba, MI Kmart 40,175 114,715 30-Sep-2001 10 / 5 YR
Fairborn, OH Kmart 84,180 268,000 31-Jul-2005 9 / 5 YR
Kroger 30,975 106,120 31-Mar-2001 4 / 5 YR
Fairfield, IA Pamida 33,000 23,544 30-Jun-2004 3 / 5 YR
Federal Way, WA Safeway 37,560 45,000 31-Oct-2003 6 / 5 YR
Fond du Lac, WI Kmart 93,800 267,806 31-Oct-2011 10 / 5 YR
Roundy's 54,213 162,805 31-Oct-2004 3 / 5 YR
Fort Wayne, IN Kmart (distribution center) * 778,500 607,726 15-Nov-2003 6 / 5 YR
Huntington, WV Ames 85,817 184,000 31-Jul-2003 5 / 5 YR
Office Depot 25,900 98,420 28-Feb-2005 4 / 5 YR
Huntsville, AL Kmart 104,000 244,400 30-Nov-2010 4 / 5 YR
Huron, SD Fairway Foods 28,720 70,635
Hutchinson, MN Kmart 60,842 229,800 30-Sep-2006 10 / 5 YR
Independence, MO Kmart 116,799 308,634 31-Mar-2010 5 / 5 YR
International Falls, MN Kmart 60,842 237,000 31-Jul-2006 10 / 5 YR
Kalamazoo, MI Kmart 84,180 248,770 28-Feb-2005 9 / 5 YR
Ace Hardware 30,650 101,829 26-Jul-2000 3 / 5 YR
Lake Mary, FL Builder's Square * 107,400 923,640 31-Dec-2017 10 / 5 YR
Lockport, IL Kmart 54,000 133,684 30-Jun-2004 10 / 5 YR
Sterk's Super Foods, Inc. 35,170 121,603 31-May-2006 3 / 5 YR
Marquette, MI Kmart 85,480 218,657 30-Nov-2004 9 / 5 YR
Younker's 44,068 92,543 01-Oct-2001 1 /10 YR
J.C. Penney 33,996 118,286 31-Aug-2009 4 / 5 YR
Maryville, MO J.C. Penney 22,060 65,502 31-Oct-2001 3 / 5 YR
Menominee, MI Kmart 82,611 197,848 30-Apr-2010 8 / 5 YR
New Hope, MN Kmart 115,492 319,462 30-Jun-2012 9 / 5 YR
Newberry, SC Kmart * 55,552 194,083 30-Jun-2005 10 / 5 YR
North Augusta, SC Vacant 84,000
North Sarasota, FL Kmart 84,180 280,440 30-Nov-2003 10 / 5 YR
Bealls 40,000 141,040 20-Nov-2003 5 / 5 YR
O' Fallon, MO Kmart 83,061 279,415 30-Nov-2005 10 / 5 YR
Oak Lawn, IL Kmart* 104,622 447,150 31-May-2003 10 / 5 YR
Jewel Foods 58,575 414,762 03-Jan-2004 3 / 5 YR
Ocala, FL Kmart 103,964 226,310 30-Jun-2002 9 / 5 YR
Philadelphia, PA Kmart 91,033 388,500 31-Mar-2005 10 / 5 YR
Acme 36,973 168,000 30-Jun-2005 6 / 5 YR
San Mateo, CA Kmart 84,704 476,546 31-Jan-2005 1 /10 YR
Sault Ste. Marie, MI Kmart 92,650 234,884 30-Sep-2016 10 / 5 YR
Seven Hills, OH Kmart 121,677 325,095 31-Aug-2002 9 / 5 YR
Sparks, NV Kmart (distribution center) 1,579,000 1,696,878 12-Dec-2006 7 / 5 YR
Steger, IL Kmart 87,678 261,013 30-Nov-2010 10 / 5 YR
Taylorville, IL Kroger 27,958 237,761 31-Mar-2007 5 / 5 YR
CVS 10,069 81,319 31-Mar-2007 5 / 5 YR
Urbana, IL Jerry's IGA 43,667 370,648 31-Mar-2007 5 / 5 YR
Wahpeton, ND Pamida 49,320 21,963 30-Jun-2004 3 / 5 YR
Washington, IA Pamida 35,600 24,506 30-Jun-2004 3 / 5 YR
Waverly, OH Kroger 38,268 154,558 30-Nov-2004 4 / 5 YR
Wheelersburg, OH Quality Farm & Fleet 53,844 53,844 28-Feb-2005 2 / 5 YR
Kroger 25,168 62,290 31-Jul-2004 3 / 5 YR
Yazoo City, MS Miss. Baptist Medical Ctr. 20,116 47,273 31-May-2000 2 / 5 YR
</TABLE>
* Tenant is vacant and continues to pay rent under the terms of its lease .
9
<PAGE> 12
SCHEDULE 2
TENANT LEASE EXPIRATIONS
<TABLE>
<CAPTION>
/------------2000---------------/ /--------------2001-----------/
- --------------------------------------------------------- --------------------------------- -------------------------------
TOTAL NUMBER NUMBER
PROPERTY TOTAL MINIMUM OF MINIMUM OF MINIMUM
LOCATION GLA RENT TENANTS RENT S.F. TENANTS RENT S.F.
- --------------------------------------------------------- --------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ardmore, OK 216,890 $900,528 7 $49,627 19,059 7 $107,612 20,821
Borger, TX 31,750 29,100
Bowling Green, OH 135,187 377,877 1 19,660 28,194
Cahokia, IL 26,000 24,133
Chesapeake, VA 162,020 402,725
Clackamas, OR 58,543 227,808
Cottage Grove, MN 167,114 921,426 2 158,726 20,223
Crescent City, CA 33,000 60,000
Dunmore, PA 26,475 78,696 1 78,696 26,475
East Haven, CT 155,877 790,694 1 38,400 4,800 1 23,750 2,500
Escanaba, MI 40,175 114,715 1 114,715 40,175
Fairborn, OH 136,555 479,945 1 63,825 6,900 2 148,120 37,975
Fairfield, IA 33,000 23,544
Federal Way, WA 37,560 45,000
Fond du Lac, WI 194,487 768,635 1 33,950 4,850 1 24,831 3,375
Fort Wayne, IN 778,500 607,726
Huntington, WV 142,055 378,319 1 6,615 735 3 36,666 8,803
Huntsville, AL 104,000 244,400
Huron, SD 52,030 70,635
Hutchinson, MN 60,842 229,800
Independence, MO 134,634 369,534 1 13,800 3,795 2 16,200 2,400
International Falls, MN 60,842 237,000
Kalamazoo, MI 120,958 393,495 2 131,818 34,875
Lake Mary, FL 107,400 923,640
Lockport, IL 100,838 334,537 1 28,651 3,755
Marquette, MI 254,756 1,257,988 11 245,902 20,288 8 208,866 61,390
Maryville, MO 34,955 114,528 1 9,800 2,450 3 90,728 29,499
Menominee, MI 82,611 197,848
New Hope, MN 115,492 319,462
Newberry, SC 55,552 194,083
North Augusta, SC 109,134 63,600
North Sarasota, FL 134,805 534,596 3 50,841 3,600
O' Fallon, MO 91,061 351,965 1 19,500 2,000 1 27,600 3,000
Oak Lawn, IL 163,208 861,912
Ocala, FL 103,964 226,310
Philadelphia, PA 128,006 556,500
San Mateo, CA 84,704 476,546
Sault Ste. Marie, MI 92,650 234,884
Seven Hills, OH 121,677 325,095
Sparks, NV 1,579,000 1,696,878
Steger, IL 87,678 261,013
Taylorville, IL 43,127 362,955 1 19,196 2,100 1 2,500
Urbana, IL 55,531 436,536 1 6,678 1,050 1 8,960 1,400
Wahpeton, ND 49,320 21,963
Washington, IA 35,600 24,506
Waverly, OH 55,102 265,504 1 32,869 4,800 2 20,504 3,000
Wheelersburg, OH 125,958 145,000 1 6,927 1,600
Yazoo City, MS 79,996 192,122 2 59,439 20,116 1 25,728 9,600
- --------------------------------------------------------- ------------------------------ -------------------------------
TOTALS 6,800,619 18,155,705 38 1,024,078 208,065 37 907,621 227,538
- --------------------------------------------------------- ------------------------------ -------------------------------
- --------------------------------------------------------- --------------------- --------------------
ANNUAL % TO TOTAL 100.0% 100.0% 5.6% 3.1% 5.0% 3.3%
- --------------------------------------------------------- --------------------- --------------------
- --------------------------------------------------------- --------------------- --------------------
CUMULATIVE % 5.6% 3.1% 10.6% 6.4%
- --------------------------------------------------------- --------------------- --------------------
</TABLE>
10
<PAGE> 13
SCHEDULE 2, CONTINUED
TENANT LEASE EXPIRATIONS
<TABLE>
<CAPTION>
/-------------2002------------/ /---------------2003-------------/
- ------------------------------------------------------- ------------------------------- ---------------------------------
TOTAL NUMBER NUMBER
PROPERTY TOTAL MINIMUM OF MINIMUM OF MINIMUM
LOCATION GLA RENT TENANTS RENT S.F. TENANTS RENT S.F.
- ------------------------------------------------------- ------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ardmore, OK 216,890 $900,528 6 $94,467 14,479 1 $44,080 4,425
Borger, TX 31,750 29,100 1 29,100 31,750
Bowling Green, OH 135,187 377,877
Cahokia, IL 26,000 24,133
Chesapeake, VA 162,020 402,725
Clackamas, OR 58,543 227,808 1 227,808 58,543
Cottage Grove, MN 167,114 921,426 4 44,600 10,300
Crescent City, CA 33,000 60,000
Dunmore, PA 26,475 78,696
East Haven, CT 155,877 790,694 1 431,600 78,000 2 171,785 14,740
Escanaba, MI 40,175 114,715
Fairborn, OH 136,555 479,945
Fairfield, IA 33,000 23,544
Federal Way, WA 37,560 45,000 1 45,000 37,560
Fond du Lac, WI 194,487 768,635 4 132,827 12,275
Fort Wayne, IN 778,500 607,726 1 607,726 778,500
Huntington, WV 142,055 378,319 2 14,380 1,585 4 225,093 94,352
Huntsville, AL 104,000 244,400
Huron, SD 52,030 70,635
Hutchinson, MN 60,842 229,800
Independence, MO 134,634 369,534
International Falls, MN 60,842 237,000
Kalamazoo, MI 120,958 393,495
Lake Mary, FL 107,400 923,640
Lockport, IL 100,838 334,537 1 23,000 2,760 1 33,015 3,100
Marquette, MI 254,756 1,257,988 7 184,636 14,698 2 112,830 6,749
Maryville, MO 34,955 114,528 1 14,000 1,400
Menominee, MI 82,611 197,848
New Hope, MN 115,492 319,462
Newberry, SC 55,552 194,083
North Augusta, SC 109,134 63,600 1 63,600 19,964
North Sarasota, FL 134,805 534,596 1 40,000 5,000 2 421,480 124,180
O' Fallon, MO 91,061 351,965 1 26,037 3,000
Oak Lawn, IL 163,208 861,912 1 447,150 104,633
Ocala, FL 103,964 226,310 1 226,310 103,964
Philadelphia, PA 128,006 556,500
San Mateo, CA 84,704 476,546
Sault Ste. Marie, MI 92,650 234,884
Seven Hills, OH 121,677 325,095 1 318,595 121,677
Sparks, NV 1,579,000 1,696,878
Steger, IL 87,678 261,013
Taylorville, IL 43,127 362,955 1 25,500 3,000
Urbana, IL 55,531 436,536 2 44,220 7,664
Wahpeton, ND 49,320 21,963
Washington, IA 35,600 24,506
Waverly, OH 55,102 265,504 2 29,740 4,200
Wheelersburg, OH 125,958 145,000 1 12,360 2,060 1 9,194 14,238
Yazoo City, MS 79,996 192,122 2 19,240 3,400 1 12,750 3,000
- ------------------------------------------------------- ----------------------------------- --------------------------------------
TOTALS 6,800,619 18,155,705 39 1,745,112 409,426 19 2,387,010 1,275,770
- ------------------------------------------------------- ----------------------------------- --------------------------------------
- ------------------------------------------------------- ----------------------- ------------------------
ANNUAL % TO TOTAL 100.0% 100.0% 9.7% 6.0% 13.1% 18.8%
- ------------------------------------------------------- ----------------------- ------------------------
- ------------------------------ ----------------------- ------------------------
CUMULATIVE % 20.3% 12.4% 33.4% 31.2%
- ------------------------------ ----------------------- ------------------------
</TABLE>
11
<PAGE> 14
SCHEDULE 2, CONTINUED
TENANT LEASE EXPIRATIONS
<TABLE>
<CAPTION>
/----------------2004-----------------/
- ------------------------------------------------------- --------------------------------------
TOTAL NUMBER
PROPERTY TOTAL MINIMUM OF MINIMUM
LOCATION GLA RENT TENANTS RENT S.F.
- ------------------------------------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C>
Ardmore, OK 216,890 $900,528 1 $18,488 1,485
Borger, TX 31,750 29,100
Bowling Green, OH 135,187 377,877
Cahokia, IL 26,000 24,133 1 24,133 26,000
Chesapeake, VA 162,020 402,725
Clackamas, OR 58,543 227,808
Cottage Grove, MN 167,114 921,426 1 39,600 11,000
Crescent City, CA 33,000 60,000 1 60,000 33,000
Dunmore, PA 26,475 78,696
East Haven, CT 155,877 790,694 3 68,420 14,052
Escanaba, MI 40,175 114,715
Fairborn, OH 136,555 479,945
Fairfield, IA 33,000 23,544
Federal Way, WA 37,560 45,000
Fond du Lac, WI 194,487 768,635 3 224,991 60,013
Fort Wayne, IN 778,500 607,726
Huntington, WV 142,055 378,319
Huntsville, AL 104,000 244,400
Huron, SD 52,030 70,635
Hutchinson, MN 60,842 229,800
Independence, MO 134,634 369,534 1 37,650 9,840
International Falls, MN 60,842 237,000
Kalamazoo, MI 120,958 393,495
Lake Mary, FL 107,400 923,640
Lockport, IL 100,838 334,537 1 133,684 54,000
Marquette, MI 254,756 1,257,988 5 331,572 93,750
Maryville, MO 34,955 114,528
Menominee, MI 82,611 197,848
New Hope, MN 115,492 319,462
Newberry, SC 55,552 194,083
North Augusta, SC 109,134 63,600
North Sarasota, FL 134,805 534,596
O' Fallon, MO 91,061 351,965
Oak Lawn, IL 163,208 861,912 1 414,762 58,575
Ocala, FL 103,964 226,310
Philadelphia, PA 128,006 556,500
San Mateo, CA 84,704 476,546
Sault Ste. Marie, MI 92,650 234,884
Seven Hills, OH 121,677 325,095
Sparks, NV 1,579,000 1,696,878
Steger, IL 87,678 261,013
Taylorville, IL 43,127 362,955
Urbana, IL 55,531 436,536
Wahpeton, ND 49,320 21,963 1
Washington, IA 35,600 24,506 1
Waverly, OH 55,102 265,504 1 154,557 38,268
Wheelersburg, OH 125,958 145,000 1 62,290 25,168
Yazoo City, MS 79,996 192,122
- ------------------------------------------------------- --------------------------------------
TOTALS 6,800,619 18,155,705 22 1,570,147 425,151
- ------------------------------------------------------- --------------------------------------
- ------------------------------------------------------- ------------------------
ANNUAL % TO TOTAL 100.0% 100.0% 8.6% 6.3%
- ------------------------------------------------------- ------------------------
- ------------------------------ --------------------------
CUMULATIVE % 42.0% 37.5%
- ------------------------------ --------------------------
</TABLE>
12
<PAGE> 15
SCHEDULE 3
THIRD PARTY UNDERLYING OBLIGATIONS
<TABLE>
<CAPTION>
PRINCIPAL
PROPERTY MORTGAGE INTEREST BALANCE AT
LOCATION MORTGAGEE (S) TYPE RATE DUE DATE 31-DEC-99
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ardmore, OK Pacific Life Insurance Company 1st 9.50% 01-Aug-2010 $5,092,431
Borger, TX First Oxford Corporation (c) 1st 10.00% 01-Mar-2005 232,809
Bowling Green, OH Credit Suisse First Boston (b) 1st 7.05% 31-Jul-2008 2,537,037
Cahokia, IL NONE
Chesapeake, VA John Hancock Real Estate Finance 1st 8.00% 01-Jan-2004 1,146,505
Lawrence Kadish 2nd 9.00% 01-Jan-2006 492,849
Clackamas, OR First Oxford Corporation 1st 9.00% 01-Jul-2003 1,145,519
Cottage Grove, MN IDS Life Insurance (d) 1st 8.75% 01-Nov-2016 5,607,802
Crescent City, CA First Oxford Corporation (c) 1st 9.50% 01-Mar-2005 407,977
Dunmore, PA NONE
East Haven, CT Aetna Life Insurance Company 1st 8.88% 01-Sep-2005 1,719,928
Beal Bank 2nd 8.53% 01-Aug-2005 1,132,052
Escanaba, MI Developers Diversified 1st 9.75% 01-Nov-2012 826,717
Fairborn, OH Aetna Life Insurance Company 1st 9.50% 01-Sep-2004 1,253,259
Federal Deposit Insurance Corporation 2nd 10.35% 27-May-2004 790,091
Fairfield, IA Shopko Stores, Inc. 1st 10.25% 01-Jul-1999 52,082
Federal Way, WA First Oxford Corporation (c) 1st 9.50% 01-Mar-2005 220,401
Fond du Lac, WI Associated Commercial Mortgage 1st 8.75% 12-Sep-2002 4,405,337
Fort Wayne, IN New York Life Insurance Company 1st 8.63% 15-Nov-2003 2,030,866
Huntington, WV Suburban Capital Markets, Inc. (a) 1st 9.13% 01-Feb-2007 1,689,737
Huntsville, AL Credit Suisse First Boston (b) 1st 7.05% 31-Jul-2008 700,893
Huron, SD Shopko Stores, Inc. 1st 10.25% 01-Jul-1999 67,496
Hutchinson, MN Developers Diversified Wrap 8.75% 01-Jul-2013 1,811,048
Independence, MO Credit Suisse First Boston (b) 1st 7.05% 31-Jul-2008 1,589,349
International Falls, MN Developers Diversified Wrap 8.75% 01-Aug-2013 1,869,275
Kalamazoo, MI New York Life Insurance Company 1st 8.63% 10-Dec-2000 733,901
Lake Mary, FL Kidder Peabody Mortgage Capital 1st 7.88% 01-Jan-2016 8,374,343
Lockport, IL Credit Suisse First Boston (b) 1st 7.05% 31-Jul-2008 1,648,581
Marquette, MI Union Labor Life Insurance Company 1st 7.88% 01-Nov-2003 6,143,087
Maryville, MO NONE
Menominee, MI NONE
New Hope, MN Credit Suisse First Boston (b) 1st 7.05% 31-Jul-2008 1,737,426
Newberry, SC Western National Life Insurance Co. (c) 1st 13.00% 01-Mar-2005 975,191
North Augusta, SC NONE
North Sarasota, FL Credit Suisse First Boston (b) 1st 7.05% 31-Jul-2008 3,158,956
O' Fallon, MO Credit Suisse First Boston (b) 1st 7.05% 31-Jul-2008 2,309,986
Oak Lawn, IL Board of Trustees NECA
Pension Benefit Trust Fund 1st 8.50% 30-Jun-2003 2,713,170
Ocala, FL B & K Properties 1st 9.00% 01-Mar-2013 1,604,045
Philadelphia, PA Equitable Life Assurance Society 1st 9.25% 01-Jun-2010 2,645,137
San Mateo, CA Meritor Savings Bank 1st 8.25% 01-Feb-2005 2,003,387
Sault Ste. Marie, MI EDC County of Chippewa, MI 1st 6.70% 01-Jan-2007 930,000
Seven Hills, OH B & K Properties 1st 9.75% 01-Nov-2012 1,947,496
Sparks, NV Prin & Company 1st 8.60% 12-Dec-2006 5,428,771
Teachers Retirement of Texas 1st 9.75% 12-Dec-2006 3,065,227
Bank of Nevada 1st 8.60% 12-Dec-2006 243,138
Steger, IL Credit Suisse First Boston (b) 1st 7.05% 31-Jul-2008 2,250,756
Taylorville, IL Suburban Capital Markets, Inc. (a) 1st 9.13% 01-Feb-2007 1,457,226
Urbana, IL Credit Suisse First Boston (b) 1st 7.05% 31-Jul-2008 2,448,191
Wahpeton, ND Shopko Stores, Inc. 1st 10.25% 01-Jul-1999 24,506
Washington, IA Shopko Stores, Inc. 1st 10.25% 01-Jul-1999 21,963
Waverly, OH Suburban Capital Markets, Inc. (a) 1st 9.13% 01-Feb-2007 1,457,226
Wheelersburg, OH Equitable Life Assurance Society 1st 10.00% 31-Dec-2000 1,169,274
Yazoo City, MS Credit Suisse First Boston (b) 1st 7.05% 31-Jul-2008 1,135,250
</TABLE>
(a) Mortgages are cross - collateralized and cross - defaulted
(b) Mortgages are cross - collateralized and cross - defaulted
(c) Refinanced with Firstrust Bank @ 9.37% on February 4, 2000. As of
this date, Mortgages are cross - collateralized and cross -
defaulted
(d) Loan is callable on November 1, 2006
13
<PAGE> 16
SCHEDULE 3, CONTINUED
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
THIRD PARTY UNDERLYING OBLIGATIONS OWNERSHIP
ANNUAL BALLOON INTEREST
PROPERTY MORTGAGE DEBT DUE AT FEE/
LOCATION MORTGAGEE (S) TYPE SERVICE EXPIRATION LEASEHOLD
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ardmore, OK Pacific Life Insurance Company 1st $694,308 $1,275,803 Fee
Borger, TX First Oxford Corporation (c) 1st 29,100 87,285 Fee
Bowling Green, OH Credit Suisse First Boston (b) 1st 206,220 2,207,962 Fee
Cahokia, IL NONE Fee
Chesapeake, VA John Hancock Real Estate Finance 1st 334,776 0 Leasehold
Lawrence Kadish 2nd 44,356 0
Clackamas, OR First Oxford Corporation 1st 227,100 637,586 Fee
Cottage Grove, MN IDS Life Insurance (d) 1st 636,272 105,663 Fee
Crescent City, CA First Oxford Corporation (c) 1st 60,000 180,014 Fee
Dunmore, PA NONE Leasehold
East Haven, CT Aetna Life Insurance Company 1st 381,258 0 Fee
Beal Bank 2nd 116,716 985,836
Escanaba, MI Developers Diversified 1st 112,032 19,146 Fee
Fairborn, OH Aetna Life Insurance Company 1st 329,406 0 Leasehold
Federal Deposit Insurance Corporation 2nd 88,044 751,017
Fairfield, IA Shopko Stores, Inc. 1st 23,549 52,080 Fee
Federal Way, WA First Oxford Corporation (c) 1st 45,000 135,011 Fee
Fond du Lac, WI Associated Commercial Mortgage 1st 488,701 4,085,686 Fee
Fort Wayne, IN New York Life Insurance Company 1st 605,724 0 Fee
Huntington, WV Suburban Capital Markets, Inc. (a) 1st 177,949 1,454,799 Fee
Huntsville, AL Credit Suisse First Boston (b) 1st 56,976 609,982 Leasehold
Huron, SD Shopko Stores, Inc. 1st 30,512 67,496 Fee
Hutchinson, MN Developers Diversified Wrap 229,632 0 Fee
Independence, MO Credit Suisse First Boston (b) 1st 129,192 1,383,198 Fee
International Falls, MN Developers Diversified Wrap 236,250 0 Fee
Kalamazoo, MI New York Life Insurance Company 1st 283,500 524,638 Leasehold
Lake Mary, FL Kidder Peabody Mortgage Capital 1st 919,440 0 Fee
Lockport, IL Credit Suisse First Boston (b) 1st 134,004 1,434,746 Fee
Marquette, MI Union Labor Life Insurance Company 1st 615,161 5,542,557 Leasehold
Maryville, MO NONE Leasehold
Menominee, MI NONE Leasehold
New Hope, MN Credit Suisse First Boston (b) 1st 141,216 1,512,067 Fee
Newberry, SC Western National Life Insurance Co. (c) 1st 189,900 569,688 Fee
North Augusta, SC NONE Leasehold
North Sarasota, FL Credit Suisse First Boston (b) 1st 256,764 2,749,213 Fee
O' Fallon, MO Credit Suisse First Boston (b) 1st 187,764 2,010,362 Fee
Oak Lawn, IL Board of Trustees NECA
Pension Benefit Trust Fund 1st 433,810 1,888,273 Leasehold
Ocala, FL B & K Properties 1st 217,350 0 Fee
Philadelphia, PA Equitable Life Assurance Society 1st 395,220 0 Leasehold
San Mateo, CA Meritor Savings Bank 1st 474,046 0 Leasehold
Sault Ste. Marie, MI EDC County of Chippewa, MI 1st 131,320 0 Fee
Seven Hills, OH B & K Properties 1st 263,917 66,537 Leasehold
Sparks, NV Prin & Company 1st 1,040,954 0 Fee
Teachers Retirement of Texas 1st 609,303 0
Bank of Nevada 1st 46,621 0
Steger, IL Credit Suisse First Boston (b) 1st 182,952 1,958,814 Fee
Taylorville, IL Suburban Capital Markets, Inc. (a) 1st 153,404 1,254,615 Fee
Urbana, IL Credit Suisse First Boston (b) 1st 198,996 2,130,640 Fee
Wahpeton, ND Shopko Stores, Inc. 1st 24,504 65,091 Fee
Washington, IA Shopko Stores, Inc. 1st 21,960 48,581 Fee
Waverly, OH Suburban Capital Markets, Inc. (a) 1st 153,404 1,254,615 Fee
Wheelersburg, OH Equitable Life Assurance Society 1st 116,927 1,169,274 Fee
Yazoo City, MS Credit Suisse First Boston (b) 1st 92,280 987,998 Fee
</TABLE>
(a) Mortgages are cross - collateralized and cross - defaulted
(b) Mortgages are cross - collateralized and cross - defaulted
(c) Refinanced with Firstrust Bank @ 9.37% on February 4, 2000. As of
this date, Mortgages are cross - collateralized and cross -
defaulted
(d) Loan is callable on November 1, 2006
14
<PAGE> 17
PART II
ITEM 5. MARKET PRICE FOR THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS.
I. NO TRADING MARKET
There is no trading market for the Units in the MLP. MLP Units are not
transferable except by will, inheritance or operation of law. To date no
transfers other than those by will, inheritance and operation of law have been
permitted.
In addition, the Partnership Agreement places additional restrictions on
the transferability of the Units. The Limited Partners of the MLP are prohibited
from selling their Units unless such sale is at the Managing General Partner's
direction, is accomplished in a single transaction involving all Limited
Partners' interests to a single purchaser, and is accomplished simultaneously
with the sale of the Equity General Partner's interest in the MLP.
As of December 31, 1999, there were 97,752 Units outstanding held by
approximately 2,600 Limited Partners.
II. DISTRIBUTIONS OF CASH FLOW FROM OPERATIONS
The MLP may make annual distributions to its partners in an aggregate
amount equal to its Cash Flow from Operations. It is not anticipated that the
MLP will be in a position to distribute Cash Flow from Operations to its
partners in the foreseeable future.
The MLP may not reinvest Cash Flow from Operations in additional real
estate investments.
III. PROCEEDS OF SALES DISTRIBUTIONS
The Proceeds of Sales of the Properties may not be reinvested in
additional real properties, except as permitted with respect to transactions
that are non-taxable in whole or in substantial part under Section 1031 or 1033
of the Internal Revenue Code. The Proceeds of Sales of the Properties, after
payment of related expenses and indebtedness and provision for reasonable
reserves, will be available for MLP purposes, including paying Debt Service or
providing for Capital Improvements with respect to other Properties owned by the
MLP. All proceeds not utilized for MLP purposes will, after making the payments
required by the Restructuring Agreement with respect to the Wrap Mortgages, be
distributed to the partners of the MLP.
The Restructuring Agreement provides for a sharing of cash from the
Proceeds of Sales of the Properties after repayment of the Third Party
Underlying Obligations once the net Proceeds of Sale of the Properties exceed
the Threshold Amount. Additionally, the Limited Partners of the MLP receive 40%
of the Cash Flow from Operations, if any, in excess of Debt Service and any
Capital Improvements and Reserves as considered necessary. The remaining cash
flow, if any, is applied to the Wrap Mortgages in payment of accrued interest
and then principal.
The MLP has not made any Proceeds of Sales Distributions to its partners
since its organization.
IV. CERTAIN INCOME TAX CONSIDERATIONS
A. RECOGNITION OF GAIN
It is anticipated that any future forgiveness of Wrap Mortgages, if any,
and the potential of selling Properties, which are owned by Unaudited
Partnerships, and applying sales proceeds to make payments on the Wrap Mortgages
may require the Limited Partners to report substantial taxable income when the
Properties are sold without the corresponding receipt of any cash proceeds
therefrom (unless and until the Threshold Amount has been exceeded).
Limited Partners are allocated their share of the MLP's taxable income and
gain even if they receive no cash distributions from the MLP with which to pay
any resulting tax liability, and will be allocated their share of the MLP's tax
losses, including depreciation deductions. It is anticipated that the MLP will
generate gradually increasing amounts (which will ultimately be substantial) of
taxable income, inasmuch as interest expense and depreciation expense are
gradually decreasing each year.
15
<PAGE> 18
As and when the Properties are sold or otherwise disposed of (and whether
or not any cash is distributed to Limited Partners in respect of such sales),
all taxable income will be allocated among those Limited Partners who were
partners in the Partnership which owned the Property prior to the Consolidation
up to the amount by which the fair market value of such Properties exceeded
their adjusted basis at the time of contribution to the MLP (gain in excess of
such amounts will be allocated ratably among all Limited Partners). This rule
does not apply to tax-free exchanges except to the extent of cash or "other
property" received.
B. TREATMENT OF DISTRIBUTIONS BY THE MLP
Cash distributions made to a Limited Partner are not, per se, taxable;
rather, they represent a return of capital up to the amount of his adjusted
basis in his interest in the MLP. A return of capital generally does not result
in any recognition of gain or loss for federal income tax purposes, but reduces
the recipient's adjusted basis in his investment. Certain partners whose returns
were audited and adjusted (in connection with their investment in NPA sponsored
limited partnerships) may have signed a closing agreement with the Internal
Revenue Service ("IRS"); pursuant to the terms of such closing agreement, their
tax treatment may vary from the foregoing; such partners are urged to consult
with their own tax advisors with respect to this issue.
Distributions, if any, in excess of a Limited Partner's adjusted basis in
his MLP interest immediately prior thereto will result in the recognition of
gain to that extent. Except in the unlikely event that the MLP is treated for
tax purposes as a "dealer" in real property, such gain generally should be
capital gain.
C. OPERATING INCOME (LOSS) OF THE MLP
Each Limited Partner will receive an annual Schedule K-1 (U.S. Form 1065)
to indicate his share of the MLP's taxable income (loss) for each tax year. Such
income (loss), rather than the distributions described in Part B above, is
reportable by the Limited Partner. Since any loss generated by the MLP is, with
respect to Limited Partners, a passive loss, the deductibility of such loss is
governed by Section 469, Internal Revenue Code of 1986, and may be limited
thereby.
Certain Partnerships were audited by the IRS (the "Audited Partnerships")
and the partners thereof executed an agreement relating to their past and future
federal tax liability (the "Closing Agreement"). The foregoing paragraph applies
to those investors who have not signed a Closing Agreement with IRS with respect
to their Units. As to those Limited Partners who have signed such a Closing
Agreement, the appropriate tax treatment may differ from the foregoing and is
governed by the Closing Agreement. Again, each affected Limited Partner is urged
to consult with his own tax advisors on this issue.
16
<PAGE> 19
ITEM 6. SELECTED FINANCIAL DATA
The following is selected financial data for the MLP for the five years
ended December 31, 1999 derived from the audited financial statements of the MLP
prepared in conformity with generally accepted accounting principles. The
selected financial data set forth below should be read in conjunction with
"Managements Discussion and Analysis of Financial Condition and Results of
Operations" and with the Combined Financial Statements of the MLP and the notes
thereto included elsewhere in this Form 10-K.
Year Ended December 31
(In Thousands, except per unit data)
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INCOME:
Rental income $ 19,533 $ 21,782 $ 22,876 $ 23,984 $ 23,976
Other charges to tenants 5,563 6,682 6,884 6,819 9,849
Interest income 228 200 136 129 299
Other income 150 62 97 -- --
--------- --------- --------- --------- ---------
TOTAL INCOME 25,474 28,726 29,993 30,932 34,124
--------- --------- --------- --------- ---------
OPERATING EXPENSES:
Interest expense 16,596 18,035 23,038 23,054 23,770
Other operating expenses 9,125 9,886 11,797 12,365 12,173
Depreciation and
amortization 7,301 8,141 8,865 8,839 8,885
--------- --------- --------- --------- ---------
Total operating expenses 33,022 36,062 43,700 44,258 44,828
--------- --------- --------- --------- ---------
OPERATING LOSS (7,548) (7,336) (13,707) (13,326) (10,704)
--------- --------- --------- --------- ---------
OTHER EXPENSES:
Net (loss) gain on
disposition of properties (3,415) (11,894) (866) 454 103
Write down of rental
property -- -- (1,000) (1,100) --
--------- --------- --------- --------- ---------
LOSS BEFORE EXTRAORDINARY
ITEM (10,963) (19,230) (15,573) (13,972) (10,601)
--------- --------- --------- --------- ---------
EXTRAORDINARY ITEM:
Forgiveness of wraparound
mortgages payable on
disposition of properties 4,240 51,183 373 493 12
--------- --------- --------- --------- ---------
NET (LOSS) INCOME $ (6,723) $ 31,953 $ (15,200) $ (13,479) $ (10,613)
========= ========= ========= ========= =========
PER UNIT DATA:
Operating loss $ (77.22) $ (74.05) $ (137.07) $ (133.26) $ (107.04)
========= ========= ========= ========= =========
Net (loss) income $ (68.78) $ 322.55 $ (152.00) $ (134.79) $ (106.13)
========= ========= ========= ========= =========
Weighted average units
outstanding 97,752 99,063 100,000 100,000 100,000
========= ========= ========= ========= =========
ASSETS:
Rental property - net $ 116,667 $ 127,093 $ 151,286 $ 161,874 $ 168,945
Other assets 7,420 7,811 4,199 6,423 7,294
--------- --------- --------- --------- ---------
TOTAL ASSETS $ 124,087 $ 134,904 $ 155,485 $ 168,297 $ 176,239
========= ========= ========= ========= =========
LIABILITIES AND PARTNERS' DEFICIT:
Wraparound mortgages
payable less
unamortized discount(1) $ 144,223 $ 149,265 $ 198,662 $ 196,928 $ 193,835
Other liabilities 8,205 7,257 10,394 9,740 7,296
--------- --------- --------- --------- ---------
Total liabilities $ 152,428 $ 156,522 209,056 206,668 201,131
Partners' deficit (28,341) (21,618) (53,571) (38,371) (24,892)
--------- --------- --------- --------- ---------
TOTAL LIABILITIES AND
PARTNERS' DEFICIT $ 124,087 $ 134,904 $ 155,485 $ 168,297 $ 176,239
========= ========= ========= ========= =========
</TABLE>
- ------------------------------
(1) Unamortized discount is based on imputed interest at 12%.
17
<PAGE> 20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the MLP's
combined financial statements and notes thereto appearing elsewhere in this
Report.
I. LIQUIDITY AND CAPITAL RESOURCES
A. GENERAL
As previously noted, the Properties owned by the MLP are encumbered by the
Wrap Mortgages. As a result of the Restructuring, the Debt Service on the Wrap
Mortgages was adjusted to be the same as the 1990 debt service required on the
Third Party Underlying Obligations. The MLP's ability to meet its obligations on
the Wrap Mortgages is dependent on the Properties generating sufficient cash
flow to meet the Debt Service.
B. THIRD PARTY DEBT SERVICE
As of December 31, 1999, the Third Party Underlying Obligations were
current for all the Properties except for the properties located in Borger,
Texas; Crescent City, California; Fairfield, Iowa; Federal Way, Washington;
Huron, South Dakota; Wahpeton, North Dakota; and Washington, Iowa. In February
2000, the MLP refinanced the Third Party Underlying Obligations on the Borger,
Crescent City and Federal Way properties. See "D. Loan Obligations" for further
discussion of the Fairfield, Huron, Wahpeton and Washington properties.
As of December 31, 1999, the net book value and net Wrap Mortgage balance
for these Properties were as follows:
<TABLE>
<CAPTION>
Property Net Book Value Net Wrap Mortgage Balance
- -------- -------------- -------------------------
<S> <C> <C>
Fairfield $ 263,000 $ 244,000
Huron 340,000 316,000
Wahpeton 329,000 304,000
Washington 245,000 228,000
</TABLE>
C. WORKING CAPITAL
As of December 31, 1999, the MLP has working capital of approximately
$495,000 excluding amounts due to the Managing General Partner and the Pension
Groups of $796,000 and $189,000, respectively. The MLP's operating budget for
2000 projects a cash deficit of approximately $95,000. Consequently, the MLP
does not have sufficient reserves to satisfy balloon loan obligations with
respect to the Third Party Underlying Obligations. The Partnership Agreement and
the Restructuring Agreement do not permit the Third Party Underlying Obligations
to be refinanced in order to provide working capital to create a working capital
reserve. The Managing General Partner may, in its discretion, create a reserve
in light of anticipated costs or other economic contingencies.
To date, the MLP has replenished its working capital reserves through the
sale of Properties. This has occurred when holders of the Second Mortgage and
Wrap Mortgage have released their liens on Properties which have been sold,
notwithstanding that pursuant to the terms of the Restructuring Agreement the
proceeds were payable to the holders of the Second Mortgage and the Wrap
Mortgage. They have agreed in certain instances to release their liens and
provide proceeds from the sale to the MLP because their mortgages are
cross-collateralized against all of the Properties and because the proceeds from
the sale of such Properties have been utilized for the remaining Properties.
Although the Second Mortgage and Wrap Mortgage lenders are not obligated to
subordinate or release their mortgages, their continued cooperation in this
regard is expected. As of December 31, 1999, the Managing General Partner has
advanced approximately $796,000 to the MLP. The General Partners do not have the
financial wherewithal to continue to advance funds to the MLP and the Managing
General Partner may in fact require the repayment of the advances for its own
operational needs. As a result, it may be necessary for the MLP to sell
Properties.
D. LOAN OBLIGATIONS
As of December 31, 1999 the Third Party Underlying Obligations for the
Fairfield, Huron, Wahpeton and Washington properties have matured and had
balloon payments due. The Third Party Underlying Obligations that have matured
relating to these properties are as follows: Fairfield - $52,000; Huron -
$67,000; Wahpeton - $65,000; and Washington - $49,000. These properties are
encumbered by the same mortgage and the Fairfield, Wahpeton and Washington
properties were leased to the same tenant as of December 31, 1999. This tenant
is seeking to enforce a provision of its lease whereby the MLP, as
18
<PAGE> 21
landlord, would be required to convey all four of the properties at a price
defined in the lease. The MLP disputes this interpretation of the lease and in
July 1999, filed an action for declaratory judgment in the United States
District Court for the Eastern District of Pennsylvania to resolve this matter.
If the MLP were required to convey these four properties, it would result in a
loss on disposition of properties of approximately $85,000.
With respect to the year ending December 31, 2000, Third Party Underlying
Obligations for the Kalamazoo ($525,000) and Wheelersburg ($1,169,000)
properties are scheduled to mature.
Although all the Third Party Underlying Obligations on which balloons have
become due to date have been refinanced there can be no assurance that loan
extensions will be successfully negotiated with the lenders holding the Third
Party Underlying Obligations on these Properties. See "Item 2. Properties."
E. CAPITAL REQUIREMENTS
The average age of the Properties owned by the MLP is in excess of 20
years. Due to the age of the Properties, there is a continuing need for capital
expenditures in order to properly maintain the Properties. At December 31, 1999,
the MLP was obligated for approximately $278,000 of capital commitments which
were primarily for roof repair and replacement. The 2000 operating budget for
the Properties provides for approximately $734,000 in capital repair reserves.
During 1999, the MLP completed remodeling and other renovations to the
Ardmore property in order to refit the premises for a new anchor tenant. The
cost of these improvements was approximately $874,000.
During 1999, the MLP had two outstanding lines of credit with E&H
Properties, Inc., an affiliate of NPA, ("E&H") under which E&H would advance up
to $1.25 million to the MLP for purposes of making Capital and Tenant
Improvements (the "MLP Lines"). The MLP Lines include a $1,000,000 line of
credit (the "Jefferson Line") and a $250,000 line of credit (the "Firstrust
Line"). Pursuant to the MLP Lines, the obligation of E&H to make advances to the
MLP is at all times in the sole and absolute discretion of E&H. At December 31,
1999, there were $770,000 of advances under the MLP Lines.
Amounts advanced pursuant to the Jefferson Line bear interest at the rate
of 1% above "E&H Borrowing Rate" (as defined below, currently 10.25%). Amounts
advanced pursuant to the Jefferson Line are not directly secured by any
collateral. However, the East Haven, Connecticut property has been pledged to
secure a line of credit extended to E&H by Jefferson Bank of Philadelphia,
Pennsylvania ("Jefferson Bank") which will enable E&H to fund the Jefferson Line
in order to finance Capital and Tenant Improvements (the E&H Line"). In
accordance with the terms of the E&H Line, the MLP has granted a security
interest in and assigned a deed-in-lieu of foreclosure with respect to the East
Haven property to Jefferson Bank (the "East Haven Security").
At December 31, 1999, the E&H Line permitted E&H to borrow up to
$2,000,000 which it can loan to the MLP and can use for E&H's general working
capital.
Pursuant to the promissory note executed with respect to the E&H Line (the
"Jefferson Note"), the amounts advanced pursuant to the Jefferson Note bear
interest at a rate equal to .25% per annum in excess of the "Base Rate" of
Jefferson Bank (the "E&H Borrowing Rate"). The current E&H Borrowing Rate is
10.25%.
The Jefferson Note is secured by an assignment of certain Wrap Notes and
Second Mortgages, the East Haven Security and certain Guaranty and Suretyship
Agreements executed by EBL&S, Inc., EBL&S Property Management, Inc., National
Property Analysts Partners and Edward B. Lipkin. Additionally, the Jefferson
Note contains a confession of judgment against the borrower.
The Jefferson Note provides for certain events of default. In addition to
providing for an event of default arising from a failure to pay principal and
interest on the E&H Line when due, the Jefferson Note provides that Jefferson
Bank may declare a default if, in its sole discretion, it determines that it is
insecure with respect to any of the collateral or the ability of E&H or any
other obligor to perform all of its obligations under the Jefferson Note or any
of the other loan documents. The loan and security agreement executed by E&H in
connection with the E&H Line (the "Jefferson Loan and Security Agreement")
provides that upon the occurrence of an event of default, Jefferson Bank will
have the right to sell the East Haven property and apply the proceeds of the
sale to payment of all amounts due pursuant to the Jefferson Note, the Jefferson
Loan and Security Agreement or the other loan documents in such order of
priority as Jefferson Bank may determine in its sole discretion.
19
<PAGE> 22
Amounts advanced pursuant to the Firstrust Line bear interest at the Prime
Rate as published in the Wall Street Journal's "Money Rates" section. Amounts
advanced pursuant to the Firstrust Line are secured by a $250,000 mortgage and
an assignment of rents and leases on the property in Sault Ste. Marie, Michigan.
In 1999, E&H secured a line of credit with Firstrust Bank of Conshohocken,
PA ("Firstrust Bank"), which will enable E&H to fund the Firstrust Line in order
to finance Capital and Tenant Improvements (the "E&H Firstrust Line").
At December 31, 1999, the E&H Firstrust Line permitted E&H to borrow up to
$2,500,000 which it can loan to the MLP and can use for E&H's general working
capital.
Pursuant to the promissory note executed with respect to the E&H Firstrust
Line (the "Firstrust Note"), the amounts advanced pursuant to the Firstrust Note
bear interest at the Prime Rate as published in the Wall Street Journal's "Money
Rates" section (the "E&H Firstrust Borrowing Rate"). The current E&H Firstrust
Borrowing Rate is 8.50%.
The Firstrust Note is secured by an assignment of certain Wrap Notes and
Second Mortgages and certain Guaranty and Suretyship Agreements executed by
EBL&S Property Management, Inc. and Edward B. Lipkin. Additionally, the
Firstrust Note contains a confession of judgment against E&H and the Guaranty
and Suretyship Agreements contain a confession of judgment against EBL&S
Property Management, Inc. and Edward B. Lipkin.
At December 31, 1999, $770,000 has been advanced under the MLP Lines and
borrowed under the E&H Firstrust Line, respectively.
F. TENANT IMPROVEMENTS
The current retail rental market is such that proposed tenants for vacant
space and those tenants whose leases are scheduled for renewal are aware of the
pressure landlords are under to obtain and keep tenants and in certain instances
are able to negotiate lease terms at reduced rental rates. Many of these tenants
insist on substantial tenant improvement contributions from landlords. In the
event that the tenants pay for their own improvements, they may pay a
correspondingly lower rental rate than they would otherwise pay or are allowed
rental abatements during the term of their leases. For the year ending December
31, 1999, approximately $34,000 was provided to tenants in rental abatements.
II. RESULTS OF OPERATIONS
A. PROPERTY DISPOSITIONS DURING FISCAL 1999
During 1999, the Minot, North Dakota property was sold in a transaction
structured to be a tax-free exchange in accordance with Section 1031 of the
Internal Revenue Code. The MLP has identified the property to be acquired in
this transaction and anticipates completing the purchase in the second quarter
of 2000. In addition, a portion of the Cahokia, Illinois property was sold; and
a portion of the Cahokia, Illinois property was transferred to the holder of the
Third Party Underlying Obligation in accordance with the terms of the plan of
reorganization of Cahokia Associates. Proceeds, if any, were used to pay off the
Third Party Underlying Obligations and pay down the Wrap Mortgages. In addition,
any remaining balances due on the Third Party Underlying Obligations and Wrap
Mortgages were either assumed or forgiven by the holder of the respective
mortgages. The disposition of these properties may result in tax liability to
those who had been Limited Partners in the Partnerships which owned the
property. See "Item 5. Market Price for the Registrant's Common Equity and
Related Stockholder Matters - Certain Income Tax Consequences - Recognition of
Gain."
B. FORGIVENESS OF WRAP MORTGAGES DURING FISCAL 1998
During 1998, MLPG agreed to the forgiveness of $98,239,000 of Wrap
Mortgages with related discounts of $59,677,000, of which $13,908,000 of Wrap
Mortgages with related discounts of $4,441,000 were written off with the
dispositions of the East Meadow and Las Vegas properties during the 1st half of
1998. In addition, MLPG agreed to the forgiveness of $1,954,000 which was due to
MLPG for past due payments. The aggregate of $31,049,000 is included in
"Forgiveness of wraparound mortgages payable on disposition of properties."
Through December 31, 1997, MLPG had forgiven the Wrap Mortgages remaining
after the disposition of Properties which were owned by Audited Partnerships. In
1998 MLPG agreed to forgive certain Wrap Mortgages remaining after the
disposition of Properties which were owned by Unaudited
20
<PAGE> 23
Partnerships. For the year ended December 31, 1998, Wrap Mortgages of
approximately $36,523,000 with related discounts of $16,389,000 were forgiven in
connection with various Property dispositions. The aggregate of $20,134,000 is
in "Forgiveness of wraparound mortgages payable on disposition of properties."
The forgiveness of these Wrap Mortgages may result in tax liabilities to those
who had been Limited Partners in the Partnerships which had the Wrap Mortgages
forgiven. See "Item 5. Market Price for the Registrant's Common Equity and
Related Stockholder Matters - Certain Income Tax Consequences - Recognition of
Gain."
As noted above, during 1998, MLPG forgave the remainder of the $98,239,000
of wraparound mortgage obligations with related discounts of $59,677,000 on 14
properties previously owned by the MLP as it was unlikely that these obligations
would ultimately be repaid. After consultation with the MLP's outside tax
counsel and independent public accountants, the MLP structured the transaction
to minimize the tax effect of such a write-off to the limited partners as a
whole. As a result of this debt forgiveness, certain limited partners of the MLP
(those who were originally limited partners in the limited partnerships which
owned these 14 properties) (the "Affected Limited Partners") will recognize
taxable income in 1998, allocated among the Affected Limited Partners in varying
amounts in proportion to their interests in the original partnerships. Affected
Limited Partners may apply any suspended passive losses they may have from prior
years against their allocable share of such income.
Affiliates of the Managing General Partner ("Affiliates") had acquired in
1995 an option to purchase certain of the Wrap Mortgages from MLPG. In
anticipation of this acquisition and in order to prevent potential adverse tax
consequences described below, Affiliates had to divest themselves of their
interests in the MLP. Therefore, on August 1, 1998, Affiliates assigned their
entire economic interest as limited partners to the MLP in exchange for the
MLP's interest in Mountain View Mall Associates ("Mountain View"). Affiliates
have agreed to hold one of Mountain View's two properties (the "Ardmore
Property") in trust for the MLP, with all benefits of ownership of the Ardmore
Property accruing to the MLP. Affiliates will also remit a portion of sales
proceeds in excess of related debt, if any, of Mountain View's other property
(the "Trenton Property") to the MLP. The debt on the Trenton Property greatly
exceeds the anticipated sales price for this property. Because Affiliates
assigned their interests to the MLP before MLPG effectively forgave the Wrap
Mortgages as described above, the Affected Limited Partners will have an
additional tax liability which is not expected to be significant. Such liability
may be offset by any suspended passive losses available to such partner.
During 1998, Affiliates exercised their option to purchase certain Wrap
Mortgages from MLPG. These obligations remain outstanding, with no economic
change to the MLP. If the Affiliates had remained as either general or limited
partners of the MLP, the partners might have been required to recognize
substantial current income (without corresponding cash distributions) and
further, the MLP's ability to deduct future losses, if any, could have been
called into question. This could have effectively eliminated the tax basis of
all partners in the MLP. To prevent this result, Affiliates assigned their
interests in the MLP as described above.
The net effect of this series of transactions for the MLP was to reduce
the MLP's Wrap Mortgages by $120,854,000 with related discounts of $71,625,000,
to reduce the number of outstanding Units of the MLP by the 2,248 Units formerly
owned by Affiliates (2.25% of the outstanding Units ) and, as to the Affected
Limited Partners, to recognize certain amounts of ordinary income for tax
purposes.
C. FULL FISCAL YEARS
Over the five year period ended December 31, 1999, the MLP disposed of 14
Properties. The number of Properties owned and disposed of by year are as
follows:
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Beginning of year 49 56 57 60 62
Properties disposed 1 7 1 3 2
-- -- -- -- --
End of year 48 49 56 57 60
== == == == ==
</TABLE>
The disposition of Properties resulted in "Net (loss) gain on disposition
of properties" and "Forgiveness of wraparound mortgages payable on disposition
of properties" as reflected in the financial statements.
21
<PAGE> 24
The following table reflects the operating results for the MLP for the
years ended December 31, 1999, 1998, 1997, 1996 and 1995, excluding the
operating results for 14 Properties that were disposed during the five year
period. The table is presented in order to facilitate an understanding of the
operating results and trends of the MLP.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME:
Rental income $ 18,277 $ 18,054 $ 17,805 $ 17,782 $ 17,312
Other charges
to tenant 5,427 5,461 5,610 5,291 8,521
Interest income 210 200 128 112 292
Other income 150 62 97 -- --
-------- -------- -------- -------- --------
TOTAL INCOME 24,064 23,777 23,640 23,185 26,125
-------- -------- -------- -------- --------
OPERATING EXPENSES:
Interest expense 11,638 11,361 14,389 14,344 14,299
Other operating
expenses 9,270 9,667 9,615 9,370 9,258
Depreciation and
amortization 6,987 7,141 7,046 6,853 6,756
-------- -------- -------- -------- --------
TOTAL OPERATING
EXPENSES 27,895 28,169 31,050 30,567 30,313
-------- -------- -------- -------- --------
OPERATING LOSS $ (3,831) $ (4,392) $ (7,410) $ (7,382) $ (4,188)
======== ======== ======== ======== ========
</TABLE>
The fluctuations in "Rental Income" between years has been modest and did
not exceed 2.7% for any of the years presented. This is consistent with the
Property portfolio which has a significant portion of space rented to Anchor
Tenants under long term leases. In 1998 and 1997, there were $257,000 and
$244,000 increases in percentage rental income, respectively.
In 1995, the MLP received approximately $2,400,000 in proceeds from tenant
lease terminations. In 1996, real estate tax recoveries decreased by
approximately $700,000 and there were no substantial proceeds from tenant lease
terminations.
Prior to 1997, certain advances were made by the MLP to MLPG. Interest
income was earned on these advances and on available funds which were invested.
The changes in interest income from 1995 through 1996 were due to a decrease
during this period in advances to MLPG. The changes in interest income after
1996 were due to an increase in Reserves for Capital and Tenant Improvements.
The Properties are financed by long term fixed rate debt and consequently
there was virtually no fluctuation in interest expense from 1995 through 1997.
During 1998, $84,331,000 of Wrap Mortgages were forgiven on properties
previously owned by Unaudited Partnerships resulting in a substantial decrease
in interest expense between 1997 and 1998.
The increases in depreciation and amortization between 1995 and 1999 are
due to capital improvements. The net decrease between 1998 and 1999 was due to
adjustments to the estimated useful lives of certain tenant improvements where
the tenant had vacated prior to December 31, 1998.
III. YEAR 2000
The MLP has not encountered difficulties to date with respect to the year
2000 millennium change, either internally or with third parties. The MLP will
continue to monitor exposure to any year 2000 related problems.
IV. INDEBTEDNESS SECURED BY THE PROPERTIES
The Properties are subject to certain indebtedness which was incurred in
connection with the acquisition of the Properties by the Partnerships. As of
December 31, 1999, the aggregate indebtedness of the MLP pursuant to the Wrap
Mortgages was approximately $301 million, of which approximately $92 million
constituted indebtedness under the Third Party Underlying Obligations and $83
million constituted indebtedness under the Second Mortgages. See "Item 5. IV.
Certain Income Tax Considerations - A. Recognition of Gain." As of December 31,
1999, the aggregate historical cost of the Properties securing the indebtedness
of the MLP mortgages was approximately $231 million.
The original acquisition of the Properties by the Partnerships was
typically structured as set forth below.
Typically, an affiliate of NPA acquired a Property from an unaffiliated
seller. The NPA affiliate thereafter sold the Property to a Pension Group. The
Partnership acquired the Property from the Pension Group. In both the original
acquisition and the purchase by the Pension Group, the purchasers
22
<PAGE> 25
(i.e., the NPA affiliate and the Pension Group) took the Properties subject to
existing mortgages in favor of the sellers or unaffiliated third parties.
Consequently, as a general matter, at the time it was acquired by the
Partnership, each Property was subject to a Third Party Underlying Obligation
and a Second Mortgage.
The Partnerships typically paid the purchase price for the Properties in
part by delivering to the Pension Group a Wrap Mortgage. The Wrap Mortgage
represented a lien on the Property subordinate to the Third Party Underlying
Obligation and the Second Mortgage. Neither the Third Party Underlying
Obligation nor the Second Mortgage represented direct financial obligations of
the Partnership. Rather, the Wrap Mortgage required the Pension Group to use the
payments made thereunder to make the required payments under the Third Party
Underlying Obligation and the Second Mortgage. The Third Party Underlying
Obligation and the Second Mortgage continued, however, as liens against the
Property. The Wrap Mortgage obligated the Partnership to comply with all the
terms and conditions of the Third Party Underlying Obligation and the Second
Mortgage.
The Properties whose ownership was consolidated in the MLP remain subject
to the Third Party Underlying Obligations, Second Mortgages and Wrap Mortgages
incurred in connection with the acquisition of the Properties. However, the Wrap
Mortgages and Second Mortgages have been restructured.
A. THIRD PARTY UNDERLYING OBLIGATIONS
Information relating to the Third Party Underlying Obligations is included
in Schedule 3 which appears under "Item 2. Properties" above.
B. THE SECOND MORTGAGES AND NOTES
Under the terms of the Restructuring Agreement, no payments are
currently due on the Second Mortgages. The approximate outstanding principal
balance of the Second Mortgages as of December 31, 1999 was approximately $83
million. The Restructuring Agreement provides that this indebtedness will be
paid from proceeds realized from the sale of property subject to the sharing
arrangement established in the Restructuring Agreement.
C. THE RESTRUCTURED WRAP MORTGAGES
The Wrap Mortgages represent an obligation of the MLP and a lien against
the Properties in favor of the Pension Groups. The lien is subordinate to the
Third Party Underlying Obligations and the Second Mortgages.
The Restructuring Agreement amended and restructured each Wrap Note to
provide that each Wrap Note would consist of the obligation to pay two principal
balances, an interest-bearing principal balance equal to the original principal
indebtedness when the Wrap Note was first executed and delivered by the
Partnership less amounts of principal, if any, paid prior to January 1, 1990,
and an non-interest bearing principal balance equal to the amount of interest
accrued and unpaid under the Wrap Note prior to January 1, 1990. The
Restructuring Agreement adjusted the interest rate on the Wrap Notes in such a
way that the interest bearing principal balance earns interest at a rate elected
by the Managing General Partner to assure that there will be adequate interest
paid over the life of the Wrap Note to comply with applicable Internal Revenue
Code requirements in order to prevent the imputation of interest. The interest
rates on the Restructured Wrap Mortgages (the "Restructured Wrap Mortgages")
range from 0% of the principal balance of some Wrap Mortgages to 10%. The Wrap
Notes mature on December 31, 2013.
Each amended Wrap Note requires a minimum annual payment from the MLP in
an amount equal to the 1990 Debt Service payable on the Third Party Underlying
Obligations secured by the same Properties as the Wrap Mortgages which secured
such Wrap Note prior to the Restructuring. These minimum payments are applied
first to past due interest and principal payments under the Wrap Notes, if any,
then to current interest and principal payments due on the Wrap Notes, then
against the interest-bearing principal balances of the Wrap Notes, allocated
among the Wrap Notes as the Pension Groups elect, and finally to the
non-interest-bearing principal balances, allocated among the Wrap Notes as the
Pension Groups elect. The Restructuring Agreement requires the MLP to make
additional payments on the Wrap Notes on April 10th of each year equal to sixty
percent (60%) of the amounts by which Cash Flow from Operations for the previous
year exceeded the sum of the minimum annual payment in such year plus the
current payments due in such year on any indebtedness incurred after January 1,
1990 for Capital Improvements to any of the Properties. The holder of the Wrap
Notes applies the minimum annual payments to pay the current payments due on the
Third Party Underlying Obligations.
The Restructuring Agreement provides that all the Wrap Notes which were
originally secured by Wrap Mortgages on the Properties which the MLP acquired
from partnerships audited by the Internal Revenue Service will be secured by all
of those Wrap Mortgages and will not be secured by Wrap Mortgages on the
23
<PAGE> 26
Properties which the MLP acquired from the Unaudited Partnerships. All of the
Wrap Notes which were originally secured by Wrap Mortgages on the Properties
which the MLP acquired from Unaudited Partnerships are secured by all of those
Wrap Mortgages and are not secured by Wrap Mortgages on the Properties which the
MLP acquired from partnerships audited by the Internal Revenue Service. The
holder of the Wrap Mortgages agreed in the Restructuring Agreement to release
from the lien of the Wrap Mortgages any Property sold by the MLP, upon payment
to the holder of the Wrap Mortgages, as a pre-payment of the Wrap Notes, an
amount equal to all of the Proceeds of Sales of the Properties not permitted by
the Restructuring Agreement to be retained by the MLP.
The Restructuring Agreement permits the MLP to have the opportunity to
retain, in certain circumstances, a portion of the Excess Proceeds. In
accordance with the Restructuring Agreement the Excess Proceeds derived from the
Proceeds of Sales of the Properties are applied as noted below.
The Excess Proceeds are applied as follows: (a) 100% of the Excess
Proceeds are applied in payment of the Wrap Mortgages until the Threshold Amount
has been paid; (b) the next $70 million of Excess Proceeds are allocated 60% to
the payment of the Wrap Mortgage and 40% are retained by the MLP; (c) 100% of
the next Excess Proceeds up to an amount equal to the Investor Note Recovery or
$25 million, whichever is less, are retained by the MLP and distributed by the
MLP to the Investor Note Payors; (d) the next Excess Proceeds are allocated by
60% to the payment of the Wrap Mortgages and 40% are retained by the MLP up to
an amount equal to the outstanding balances for the Wrap Mortgages on January 1,
1990 less the sum of: (i) the aggregate amount of the sums previously paid as
Minimum Payoff Amounts; (ii) the Investor Note Recovery, and (iii) $70 million;
(e) 100% of the next Excess Proceeds are applied in payment of the Wrap
Mortgages in the amount equal to (i) the amount necessary to pay in full the
Wrap Mortgages on Properties acquired from partnerships audited by the Internal
Revenue Service, in the case of Excess Proceeds generated by the sale of such a
Property, and (ii) the amount necessary to pay in full the Wrap Mortgages on
Properties acquired from Unaudited Partnerships, in the case of Excess Proceeds
generated by the sale of such a Property; and (f) 100% of any additional Excess
Proceeds are retained by the MLP.
The Restructuring Agreement provides for indebtedness which may be
incurred to finance Capital Improvements to the Properties after January 1,
1990, and requires that in connection with any sale of Property by the MLP, the
loans for Capital Improvements to such Property must either be paid in full or
assumed by the purchaser of the Property before the Wrap Mortgage on such
Property will be released.
The Restructuring Agreement permits the holders of the Wrap Mortgages to
refinance or negotiate modifications to the Third Party Underlying Obligations,
so long as the aggregate amount of all Third Party Underlying Obligations is not
increased. The fees and expenses associated with any such refinancing or
modification are required to be borne by the holders of the Wrap Mortgages.
The Restructuring Agreement spreads the lien securing each of the Second
Mortgages to all of the Properties owned by the MLP and all of the Second
Mortgages have been "wrapped" or included within all of the Wrap Mortgages.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The combined financial statements, including the notes thereto and the
report of the independent certified public accountants, are included in Part IV,
Item 14 of this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
24
<PAGE> 27
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
EBL&S, Inc., a Delaware corporation incorporated in December, 1989, and an
affiliate of NPA, is the Managing General Partner of the MLP. Feldman
International, Inc., a Delaware corporation incorporated in September 1998 is
the Equity General Partner of the MLP. The Managing General Partner is owned
100% by E&H Properties, Inc., a Pennsylvania corporation incorporated in July,
1979, which is owned 100% by Edward B. Lipkin. The Equity General Partner is
owned 100% by Robert McKinney.
The directors and executive officers of the General Partners are as
follows:
Edward B. Lipkin, age 54, serves as Director of the Managing General
Partner. Mr. Lipkin has also been President of NPA since it was organized in
1976. Mr. Lipkin received a Bachelor of Science degree in Finance from Temple
University. Mr. Lipkin was a Trustee of the International Council of Shopping
Centers, a leading industry organization, from 1986 to 1992.
Robert McKinney, age 44, serves as Director of the Equity General Partner.
Mr. McKinney received a Masters of Science and Masters of Business
Administration from Villanova University and Temple University, respectively.
ITEM 11. EXECUTIVE COMPENSATION
Neither the General Partners nor the officers of the General Partners
receive compensation from the MLP. Certain administrative services related to
tax and accounting service and to investor note collections were performed by
the Managing General Partner on behalf of the MLP as provided in the Partnership
Agreement. The amount payable to the Managing General Partner for such services
aggregated $70,000, $58,000 and $58,000 for the years ended December 31, 1999,
1998 and 1997, respectively. See "Item 13. Certain Relationships and Related
Transactions - I. Compensation and Fees and II. Property Management by
Affiliate."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
<CAPTION>
NAME & ADDRESS OF AMOUNT AND NATURE OF
----------------- ------------------------
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP (2) % OF CLASS
- -------------- ----------------- ------------------------ ----------
<S> <C> <C> <C>
Units of Limited Robert McKinney 1,000 Units 1.0%
Partnership Interest 230 S. Broad Street
Philadelphia, PA 19102
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
I. COMPENSATION AND FEES
The amounts and kinds of compensation and fees to be paid to the General
Partners and its affiliates during the operation of the MLP are summarized
below.
<TABLE>
<CAPTION>
PERSON RECEIVING ESTIMATED AMOUNT
COMPENSATION TYPE OF COMPENSATION OF COMPENSATION
- ------------ -------------------- ---------------
<S> <C> <C>
ORGANIZATIONAL PHASE
--------------------
Equity General Partner 1% general partners' interest in the MLP.
OPERATIONAL PHASE
-----------------
Equity General Partner General Partners' share of On an annual basis, 1% of Cash Flow from
Cash Flow from Operations Operations. Actual amounts will depend
upon future operations and are
not now determinable.
</TABLE>
25
<PAGE> 28
<TABLE>
<S> <C> <C>
EBL&S Property Management, Inc. Property Management Fees Annual fee of 5% of gross operating revenues
derived from the Properties. Actual amounts
will depend upon future operations and are not
now determinable.
EBL&S Property Management, Inc. Leasing Fees For all obtained or renewed leases, an amount
equal to the fees customarily charged in the
geographic area of leased property. Actual
amounts will depend upon future operations and
are not now determinable.
Equity General Partner General Partners' share The Equity General Partner will be allocated
Of Profit and Losses 1% of the profits and losses from MLP
operations.
Managing General Partner Reimbursement of Expenses(1) Actual cost of goods and services utilized
for or by the MLP, including certain
administrative services performed by
the Managing General Partner.
LIQUIDATION PHASE
-----------------
Equity General Partner General Partners' share The Equity General Partner will be
of Proceeds of Sales of allocated 1% of the Proceeds of Sale of
the Properties. the Properties.
E&H Properties, Repayment of Indebtedness Actual amounts will depend on
Inc. secured by Second Mortgages the price of Properties and are
not now determinable.
</TABLE>
II. PROPERTY MANAGEMENT BY AFFILIATE
As of January 1, 1990, the MLP entered into a management agreement with
EBL&S Property Management, Inc., a Delaware corporation ("Property Manager"),
with respect to the management of the Properties ("Management Agreement").
EBL&S Property Management, Inc. is owned 100% by E&H Properties, Inc. which
also is the sole shareholder of the MLP's Managing General Partner, EBL&S,
Inc. The directors of EBL&S Property Management, Inc. are the same as those
of the Managing General Partner.
Pursuant to the Management Agreement, the Property Manager receives a
management fee equal to five (5%) percent of all gross operating revenues
derived from the Properties payable as and when such income is received, plus a
leasing fee for all obtained or renewed leases equal to the fees customarily
charged in the geographic area of the leased property, payable as customary in
such area. An aggregate of approximately $1,162,000 was earned by the Property
Manager for management fees, and an aggregate of approximately $160,000 was
earned by the Property Manager for leasing fees for the fiscal year 1999.
- --------
(1) All expenses of the MLP are billed directly to and paid by the MLP. The
Managing General Partner is reimbursed for the actual cost of goods and
materials used for or by the MLP and obtained from entities which are not
affiliates of the Managing General Partner. In addition, the Managing General
Partner is reimbursed for administrative services performed for the MLP,
provided that such services are necessary for the prudent operation of the MLP
and further provided that such reimbursement is at the lower of (i) the Managing
General Partner's actual cost or (ii) the cost of obtaining comparable
administrative services from independent parties in the same geographic
location. Reimbursement to the Managing General Partner for services for which
it is entitled to compensation by way of a separate fee is not allowed. No
reimbursement is made for rent, depreciation, utilities, or capital equipment in
the building in which the MLP maintains offices and other overhead costs.
26
<PAGE> 29
III. CONFLICTS OF INTEREST
From time to time, there may be conflicts of interest between the Managing
General Partner and its affiliates (including the Property Manager) on the one
hand and the MLP and its Limited Partners on the other hand. The Managing
General Partner will attempt to resolve any conflicts of interest by exercising
the good faith required of fiduciaries, and the Managing General Partner
believes that it will generally be able to resolve conflicts on an equitable
basis. Depending on the relevant facts and circumstances, however, the
resolution of any particular conflict may not be in favor of the MLP. A
resolution which is unfavorable to the MLP will result only if the Managing
General Partner determines in good faith, bearing in mind its fiduciary duties,
that it is the most appropriate to deal with the overall situation. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources."
A. CONFLICT REGARDING SALES AND REFINANCING
The Managing General Partner is an affiliate of NPA. NPA or its affiliates
hold the Second Mortgages aggregating $83 million. This lack of independence
gives rise to certain conflicts of interest with respect to the sale or
refinancing of the Properties.
The Managing General Partner oversees sales, leases, financing, operations
and management of the Properties and decides which Properties are sold and how
to apply the Proceeds of Sales of the Properties. Because NPA or its affiliates
hold the Second Mortgages on the Properties which will be repaid from the
Proceeds of Sales of the Properties and the Managing General Partner is an
affiliate of NPA, the Managing General Partner may not be solely interested in
ensuring that sales of Properties generate sufficient proceeds to enable the
Limited Partners to receive distributions with respect thereto. However,
pursuant to the Restructuring Agreement, a portion of all proceeds derived from
sale of the Properties in excess of the Threshold Amount will be applied in
payment of the Wrap Mortgages. Accordingly, the Managing General Partner (as an
affiliate of NPA) will have a financial incentive to cause the MLP to maximize
Proceeds of Sales of the Properties. Furthermore, the Managing General Partner
is accountable to the MLP and the Limited Partners as a fiduciary and,
consequently, must exercise good faith and integrity in handling the affairs of
the MLP and must take its Limited Partners' interests in account in making
decisions regarding sales and refinancing.
B. OTHER ACTIVITIES OF THE AFFILIATES OF THE GENERAL PARTNERS
There is no limitation on the right of the affiliates of the General
Partners to engage in any business even if the business is competitive with the
business of the MLP. For instance, if an affiliate of the General Partners owns
or manages a property which competes for tenants with a Property owned by the
MLP, the economic interest of the equity owners of the General Partners in that
affiliate may create a conflict between the General Partners or the Property
Manager on the one hand and the MLP on the other with respect to allocating
prospective tenants between competitive properties. The Managing General Partner
and its affiliates presently own properties that are competitive with the
Properties and affiliates of the Managing General Partner may act as manager of
such properties.
C. COMPETITION BY THE MLP WITH AFFILIATES OF THE MANAGING GENERAL PARTNER
FOR SERVICES OF OFFICERS AND EMPLOYEES
The MLP depends on the Managing General Partner to operate the MLP. The
Managing General Partner believes it will have sufficient staff personnel and
resources to perform all of its duties with respect to managing the MLP.
However, because the staff personnel and resources are shared with affiliates,
the Managing General Partner and certain of its affiliates have conflicts of
interest in the allocation of management and staff time, services and functions
among the MLP and other entities in existence or which may be organized.
IV. SUMMARY OF RELATIONSHIPS
E&H Properties, Inc. owns 100% of the equity interest in EBL&S, Inc. (the
Managing General Partner) and EBL&S Property Management, Inc. (the Property
Manager). E&H Properties, Inc. is owned 100% by Edward B. Lipkin. Feldman
International, Inc. is owned 100% by Robert McKinney. The General Partners and
the Property Manager both have ongoing relationships with the MLP. E&H
Properties, Inc. and the affiliates which it controls are the holders of the
Second Mortgages.
27
<PAGE> 30
V. RELATED PARTY TRANSACTIONS
During 1996, the El Paso, Texas property was sold to a limited partnership
owned by directors and executives of the Managing General Partner. The sales
price of the property was determined to be at fair market value by an
independent appraiser. In connection with the transaction, a promissory note was
issued to the MLP in the approximate amount of $436,000. The note is interest
only, bears interest at 10% and matures on November 1, 2008.
During 1998, the Third Party Underlying Obligation on the North Augusta,
South Carolina property was acquired by E & H Properties for its balance as of
the date of acquisition. The mortgage was extended and modified to fully
amortize on October 1, 1999.
NPA and its principals owned 4,362 of the 100,000 units of the MLP as of
December 31, 1997. During 1998, NPA and its principals redeemed their interest
in the MLP in exchange for the transfer of the Trenton property and related
wraparound mortgage obligations. As a result, NPA and its principals did not own
any of the 97,752 units as of December 31, 1999 and 1998. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations - II. Results of Operations - B.
Forgiveness of Wrap Mortgages During Fiscal 1998."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
I. DOCUMENTS FILED AS PART OF THIS REPORT
A. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<S> <C>
Independent Auditors' Report.............................. F-1
Combined Financial Statements:
Combined Balance Sheets at December 31, 1999 and 1998... F-2
Combined Statements of Operations and Changes
in Partners' Deficit for the years ended
December 31, 1999, 1998 and 1997........................ F-3
Combined Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997........................ F-4
Notes to Combined Financial Statements.................... F-5
Attachments
1 Properties Effectively Owned by the MLP at
December 31, 1999.................................... F-15
2 Schedules II and III to the Combined Financial
Statements........................................... F-16
</TABLE>
B. EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
*2.1 Consolidation Agreement by and
among the National Property
Analysts Master Limited
Partnership (the "MLP"); EBL&S,
Inc. ("EBL&S") and Buster,
Inc.("Buster").
*2.2 Settlement Agreement by and
among plaintiffs as a class,
National Property Analysts, Inc.
("NPA") and certain additional
defendants in James O'Brien, et
al. v. National Property
Analysts, Inc., et al. (the
"Action").
*2.3 Judgment and Order Approving the
Transaction, the Formation of
the Master Limited Partnership,
and the Allocation of Interests
in the Master Limited
</TABLE>
28
<PAGE> 31
<TABLE>
<S> <C>
Partnership entered by the
Court.
*3.1 Initial Limited Partnership
Agreement of the MLP.
*3.2 Amended and Restated Limited
Partnership Agreement of the
MLP.
*3.3 Certificate of Limited
Partnership of the MLP.
*10.1 Restructuring and Mortgage
Modification Agreement by and
among Main Line Pension Group,
L.P. ("MLPG"), the MLP and
National Property Analysts, Inc.
*10.2 Leasing and Management Agreement
by and between EBL&S Property
Management, Inc. and the MLP.
*10.3 Information Statement Relating
to the formation of the MLP.
*10.4 Proof of Claim and Release and
Vote on Consolidation.
**10.5 Loan and Security Agreement
between E&H Properties, Inc. and
Jefferson Bank.
**10.6 Line of Credit Promissory
Note
</TABLE>
II. REPORTS ON FORM 8-K
Not Applicable
* Incorporated by reference from Registrant's Report on Form 10 filed July
14, 1994 (0-24816)
** Incorporated by reference from Registrant's Report on Form 10-K filed
April 1, 1996 (0-24816)
29
<PAGE> 32
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.
NATIONAL PROPERTY ANALYSTS MASTER
LIMITED PARTNERSHIP
(Registrant)
By: EBL&S, Inc., its managing general partner
By: /s/ Edward B. Lipkin
--------------------------------
Edward B. Lipkin
Director
Date: March 27, 2000
--------------------------------
By: Feldman International, Inc., its equity general partner
By: /s/ Robert McKinney
--------------------------------
Robert McKinney
Director
Date: March 27, 2000
--------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
- --------- -------- ----
<S> <C> <C>
/s/Edward B. Lipkin Director of EBL&S, Inc.
- ------------------- Principal Executive Officer,
Edward B. Lipkin Principal Accounting Officer and
Principal Financial Officer March 27, 2000
/s/Robert McKinney Director of Feldman International, Inc. March 27, 2000
- -------------------
Robert McKinney
</TABLE>
30
<PAGE> 33
INDEPENDENT AUDITORS' REPORT
General Partners
National Property Analysts
Master Limited Partnership:
We have audited the combined financial statements of National Property Analysts
Master Limited Partnership (NPAMLP) (a limited partnership) as listed in the
accompanying index. In connection with our audits of the combined financial
statements, we have also audited the financial statement schedules as listed in
the accompanying index. These combined financial statements and financial
statement schedules are the responsibility of NPAMLP's management. Our
responsibility is to express an opinion on these combined financial statements
and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined 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 combined financial statements referred to above present
fairly, in all material respects, the financial position of NPAMLP as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 1999, in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedules, when considered in relation to the
basic combined financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
/s/ KPMG LLP
March 10, 2000
F-1
<PAGE> 34
NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP)
Combined Balance Sheets
December 31, 1999 and 1998
(in thousands)
<TABLE>
<CAPTION>
ASSETS 1999 1998
--------- --------
<S> <C> <C>
Rental property, at cost:
Land $ 15,293 16,292
Buildings 215,676 224,029
--------- --------
230,969 240,321
Less: accumulated depreciation 114,302 113,228
--------- --------
Rental property, net 116,667 127,093
Cash and cash equivalents 2,527 2,190
Restricted cash 2,316 3,459
Tenant accounts receivable, net of allowance of $30 for
both 1999 and 1998 312 179
Unbilled rent receivable 531 850
Tenant leasing costs 50 76
Accounts receivable and other assets 1,684 1,057
--------- --------
Total assets $ 124,087 134,904
========= ========
LIABILITIES AND PARTNERS' DEFICIT
Wraparound mortgages payable $ 300,782 318,555
Less: unamortized discount based on imputed interest rate
of 12% 156,559 169,290
--------- --------
Wraparound mortgages payable less
unamortized discount 144,223 149,265
Due to Pension Groups 189 --
Other borrowings 770 445
Deferred revenue 556 331
Accounts payable and other liabilities 1,989 1,780
Finance lease obligation 2,650 2,650
Deposit on sale of property 2,051 2,051
--------- --------
Total liabilities 152,428 156,522
Partners' deficit (28,341) (21,618)
--------- --------
Total liabilities and partners' deficit $ 124,087 134,904
========= ========
</TABLE>
See accompanying notes to combined financial statements.
F-2
<PAGE> 35
NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP)
Combined Statements of Operations and Changes in Partners' Deficit
Years ended December 31, 1999, 1998 and 1997
(in thousands, except per-unit data)
<TABLE>
<CAPTION>
1999 1998 1997
-------- ------- --------
<S> <C> <C> <C>
Income:
Rental income $ 19,533 21,782 22,876
Other charges to tenants 5,563 6,682 6,884
Interest income 228 200 136
Other income 150 62 97
-------- ------- --------
Total income 25,474 28,726 29,993
-------- ------- --------
Operating expenses:
Interest expense 16,596 18,035 23,038
Real estate taxes 4,501 4,934 6,468
Management fees 1,162 1,216 1,292
Common area maintenance expenses 1,939 1,922 2,389
Ground rent 479 528 627
Repairs and maintenance 291 407 583
General and administrative 753 879 438
Depreciation and amortization 7,301 8,141 8,865
-------- ------- --------
Total operating expenses 33,022 36,062 43,700
-------- ------- --------
Operating loss (7,548) (7,336) (13,707)
Other expense:
Net loss on disposition of properties (3,415) (11,894) (866)
Write-down of rental property -- -- (1,000)
-------- ------- --------
Loss before extraordinary gain (10,963) (19,230) (15,573)
Extraordinary gain:
Forgiveness of wraparound mortgages payable on
disposition of properties 4,240 51,183 373
-------- ------- --------
Net (loss) income (6,723) 31,953 (15,200)
Partners' deficit:
Beginning of year (21,618) (53,571) (38,371)
-------- ------- --------
End of year $(28,341) (21,618) (53,571)
======== ======= ========
Net (loss) income per unit $ (68.78) 322.55 (152.00)
======== ======= ========
Weighted average units outstanding 97,752 99,063 100,000
======== ======= ========
</TABLE>
See accompanying notes to combined financial statements.
F-3
<PAGE> 36
NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP)
Combined Statements of Cash Flows
Years ended December 31, 1999, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income $(6,723) 31,953 (15,200)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation 7,148 7,937 8,604
Amortization of discount 7,167 7,135 11,071
Net (gain) loss on disposition of properties including
forgiveness of wraparound mortgages payable (825) (36,946) 493
Write-down of rental property -- -- 1,000
(Increase) decrease in tenant accounts receivable, net (133) (126) 800
Decrease in unbilled rent receivable 319 32 558
Decrease in tenant leasing costs 26 41 206
(Increase) decrease in accounts receivable and
other assets (627) (390) 243
Increase (decrease) in accounts payable and
other liabilities 209 (581) (636)
Increase (decrease) in deferred revenue 225 (65) 148
------- ------- -------
Net cash provided by operating activities 6,786 8,990 7,287
------- ------- -------
Cash flows from financing activities:
Payments on wraparound mortgages (7,969) (7,712) (9,617)
Repayment of advances to the Pension Groups -- -- --
Increase (decrease) in due to Pension Groups 189 (1,954) 784
Proceeds (payments) from other borrowings 325 (148) 358
Proceeds from additional debt -- 2,363 653
------- ------- -------
Net cash used in financing activities (7,455) (7,451) (7,822)
------- ------- -------
Cash flows from investing activities:
Disposition of properties 2,114 3,948 1,736
Improvements to rental property (2,251) (1,929) (1,618)
Decrease in deposit on sale of property -- (389) --
------- ------- -------
Net cash (used in) provided by investing activities (137) 1,630 118
------- ------- -------
(Decrease) increase in cash and cash equivalents (806) 3,169 (417)
Cash and cash equivalents:
Beginning of year 5,649 2,480 2,897
------- ------- -------
End of year $ 4,843 5,649 2,480
======= ======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $ 9,429 10,900 11,967
======= ======= =======
Supplemental disclosure of noncash activities:
Reduction in wraparound mortgages from forgiveness
of debt, net of related discount $ 4,240 51,183 373
======= ======= =======
</TABLE>
See accompanying notes to combined financial statements.
F-4
<PAGE> 37
NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP)
Notes to Combined Financial Statements
December 31, 1999, 1998 and 1997
(dollars in thousands)
(1) FORMATION AND DESCRIPTION OF BUSINESS
National Property Analysts Master Limited Partnership (NPAMLP), a limited
partnership, was formed effective January 1, 1990. NPAMLP is owned 99% by
the limited partners and 1% collectively by EBL&S, Inc., the managing
general partner, and Feldman International, Inc. (FII), the equity general
partner (note 8). EBL&S, Inc. assigned its economic interest as general
partner to FII on September 30, 1998.
The properties included in NPAMLP consist primarily of shopping centers and
free-standing, single-tenant retail stores with national retailers as prime
tenants. The ownership and operations of these properties have been
combined in NPAMLP pursuant to a consolidation (the Consolidation) of
properties owned by certain limited partnerships (the Electing
Partnerships) previously sponsored by National Property Analysts, Inc. and
its affiliates (NPA). NPAMLP intends to hold the properties until such time
as it is deemed prudent to dispose of them. The precise timing of
disposition of the properties is at the discretion of the managing general
partner. However, in accordance with the partnership agreement, the
partnership will terminate on December 31, 2015. It is anticipated that as
a result of the sale of the properties, the limited partners will have to
report substantial taxable income without the corresponding receipt of any
cash proceeds.
The properties were originally purchased by the Electing Partnerships from
unaffiliated limited partnerships owned by various pension and profit
sharing trusts, whose interests were subsequently acquired by Main Line
Pension Group (MLPG). Properties were purchased by the Electing
Partnerships subject to existing senior mortgages in favor of the sellers
or unaffiliated third parties. In connection with the acquisition of the
properties, wraparound mortgages were delivered by the Electing
Partnerships to MLPG which were subordinate to the third-party underlying
mortgage obligations and other second mortgages. Neither these third-party
underlying obligations nor the second mortgages represented direct
financial obligations of the Electing Partnerships. The Electing
Partnerships were required to make payments on the wraparound mortgages to
MLPG, which was required to make payments on the underlying obligations.
In accordance with the Consolidation, the Electing Partnerships transferred
their interests to NPAMLP. The Electing Partnerships include both
partnerships that contributed their interests to NPAMLP and certain
partnerships whose partnership interests were not contributed as of the
effective date of NPAMLP's formation on January 1, 1990, but were allocated
their interests in NPAMLP as if they were contributed on January 1, 1990.
The combined financial statements include the accounts of all Electing
Partnerships.
In connection with the Consolidation, NPAMLP, MLPG and certain affiliates
entered into a restructuring agreement to modify the terms of repayment of
the wraparound notes. The restructuring agreement provided that all
wraparound notes which were originally secured by wraparound mortgages on
properties owned by Electing Partnerships that were audited by the Internal
Revenue Service (the Audited Partnerships) are cross-collateralized by all
other wraparound mortgages on other Audited Partnerships. In addition, all
wraparound notes which were originally secured by wraparound mortgages on
properties owned by Electing Partnerships that were not audited by the
Internal Revenue Service (the Unaudited Partnerships) are
cross-collateralized by all other wraparound mortgages on other Unaudited
Partnerships.
F-5
<PAGE> 38
NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP)
Notes to Combined Financial Statements
December 31, 1999, 1998 and 1997
(dollars in thousands)
Effective October 1, 1998, National Property Analysts Employee Partnership
(NPAEP) and Penn Valley Pension Group (PVPG) acquired the interest of MLPG
in certain wraparound mortgages. MLPG, NPAEP and PVPG are collectively
referred to as the Pension Groups (note 6).
The wraparound mortgages provide for a sharing of cash from the proceeds of
sales of properties. The wraparound mortgages generally provide that the
limited partners of NPAMLP receive 40% of the net proceeds, if any, from
the sale of properties after repayment of the third-party underlying
mortgage obligations once the net proceeds, as defined in the restructuring
agreement, from the sale of properties exceed a threshold amount of $45,000
(the threshold).
Through December 31, 1999, NPAMLP sold properties that generated
approximately $36,422 in net proceeds that have been applied as a reduction
of the threshold amount. NPAMLP has not distributed any sales proceeds to
its partners since its organization.
Additionally, the limited partners of NPAMLP receive 40% of the cash flow,
if any, from operations in excess of debt service requirements and any
capital improvements or reserves considered necessary. The remaining cash
flow, if any, is applied to the wraparound mortgages in payment of accrued
interest and then principal. It is not anticipated that NPAMLP will be in a
position to distribute cash flow to its partners in the foreseeable future.
Under the terms of the NPAMLP partnership agreement, the limited partners
are entitled to a 99% share of any income or loss and the equity general
partner is entitled to a 1% share.
NPAMLP has working capital as of December 31, 1999, of approximately $495,
excluding amounts due to the managing general partner and the Pension
Groups of $796 and $189, respectively. NPAMLP may not have sufficient
working capital reserves to satisfy mortgage obligations. NPAMLP has $2,527
of unrestricted cash and $480 available under line of credit agreements at
December 31, 1999, to meet its short-term obligations. Through December 31,
1999, NPAMLP has replenished its working capital reserves through the sale
of properties on which the holders of the second mortgage and the
wraparound mortgage have released their liens. In addition, as of December
31, 1999, the managing general partner has advanced approximately $796 to
NPAMLP. The managing general partner does not have the financial
wherewithal to continue to advance funds to NPAMLP and may in fact require
the repayment of the advances for its own operational needs. As a result,
it may be necessary for NPAMLP to sell properties. In the event that NPAMLP
is not able to obtain refinancing commitments and loan extensions from the
existing senior mortgage lenders or refinancing from alternative lenders,
the properties could be lost to foreclosure.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) RENTAL PROPERTY
Rental properties are stated at original cost to the Electing
Partnerships. Depreciation on buildings and building improvements is
calculated on the straight-line method over their estimated useful
lives of 30 years and 15 to 39 years, respectively.
F-6
<PAGE> 39
NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP)
Notes to Combined Financial Statements
December 31, 1999, 1998 and 1997
(dollars in thousands)
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of. SFAS No. 121 requires that long-lived assets and certain
identifiable assets be reviewed by management for impairment whenever
events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held
and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment to be recognized
is measured by the amount by which the carrying amount of the assets
exceed the fair value of the assets. Assets to be disposed are reported
at the lower of the carrying amount or the fair value less costs to
sell.
NPAMLP adopted SFAS No. 121 on January 1, 1996. In 1997, the estimated
undiscounted cash flows from the Las Vegas, Nevada and East Greenbush,
New York properties indicated that a write-down to fair market value of
$1,000 was required, which is included in the combined statements of
operations as write-down of rental property. The estimated fair values
of these properties were determined by management based on projected
cash flows and market trends.
(b) RESTRICTED CASH
Restricted cash consists principally of amounts held in escrow for
capital improvements, real estate taxes and insurance expenses and
amounts due from various bank trust departments in connection with
certain property rents that are assigned to these banks in order to
satisfy the debt service on the underlying mortgage obligations. The
banks' trust departments periodically remit excess funds to NPAMLP as
required under the respective trust agreements. Restricted cash also
includes amounts held in reserve for tenant security deposits received.
(c) RENTAL INCOME
Rental income is recognized on a straight-line basis over the terms of
the respective leases. Unbilled rent receivable represents the amount
by which the straight-line rentals exceed the current rents collectible
under the payment terms of the lease agreements. Tenant pass-through
charges including common area maintenance, real estate taxes and
property insurance are recognized in income when earned and are
recorded as other charges to tenants.
(d) DISCOUNT ON WRAPAROUND MORTGAGES
The discount on wraparound mortgages represents the difference between
the present value of mortgage payments at the stated interest rate and
the imputed rate. The discount is amortized using the interest method
over the terms of the mortgages and is recorded as interest expense.
(e) INCOME TAXES
No provision has been made in the combined financial statements for
income taxes as any such liability is the liability of the individual
partners.
F-7
<PAGE> 40
NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP)
Notes to Combined Financial Statements
December 31, 1999, 1998 and 1997
(dollars in thousands)
(f) CASH AND CASH EQUIVALENTS
All highly liquid interest-bearing deposits with original maturities of
three months or less are considered to be cash equivalents.
(g) FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107, Disclosures About Fair Value of Financial Instruments,
requires disclosure of the fair value of certain financial instruments.
Cash, tenant accounts receivable, accounts payable, and other
liabilities as reflected in the combined financial statements
approximate fair value because of the short-term maturity of these
instruments.
In accordance with SFAS No. 107, NPAMLP has determined the estimated
fair value of its wraparound mortgages based on discounted future cash
flows at a current market rate. Management estimates that the carrying
value approximates the estimated fair value of the wraparound mortgages
at December 31, 1999 and 1998.
(h) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Significant estimates have
been made by management with respect to the recoverability of the
carrying amounts of rental property. Actual results could differ from
these estimates.
(3) OTHER BORROWINGS
During 1996, NPAMLP secured a $1,000 revolving line of credit with a bank
secured by certain properties. The maximum amount outstanding under the
line of credit was $593 during the years ended December 31 1998 and 1997.
During 1998, this line of credit was paid in full and expired under its
terms.
During 1995, NPAMLP negotiated with E&H Properties, Inc. (E&H), a related
party (note 8), for E&H to advance up to $1,000 to NPAMLP for the purpose
of making capital and tenant improvements to the properties. Pursuant to
the agreement, the obligation of E&H to make advances to NPAMLP is at all
times the sole and absolute discretion of E&H. The line bears interest
based on a variable rate (11.25% at December 31, 1999) and has no
expiration date. The amounts advanced to NPAMLP are not directly secured by
any collateral; however, the East Haven, Connecticut property (with a net
book value of rental property of $4,421 and a wraparound mortgage payable
of $6,519 at December 31, 1999) has been pledged to secure a line of credit
extended to E&H by a bank, which enables E&H to make advances to NPAMLP. As
of December 31, 1999, $770 was owed by NPAMLP and E&H under this line of
credit, respectively. The maximum amount outstanding under this line of
credit during the year ended December 31, 1999, was $770 for NPAMLP and
E&H, respectively. As of December 31, 1998, $445 was owed by NPAMLP and E&H
under this line of credit, respectively. The maximum amount outstanding
under this line of credit during the year ended December 31, 1998, was $445
for NPAMLP and E&H, respectively. During 1997, there were no advances to
NPAMLP.
F-8
<PAGE> 41
NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP)
Notes to Combined Financial Statements
December 31, 1999, 1998 and 1997
(dollars in thousands)
During 1999, NPAMLP negotiated with E&H for E&H to advance up to an
additional $250 to NPAMLP for the purpose of making capital and tenant
improvements to the properties. Pursuant to the agreement, the obligation
of E&H to make advances to NPAMLP is at all times the sole and absolute
discretion of E&H. This additional line bears interest based on the prime
rate (8.50% at December 31, 1999), and is scheduled to expire May 2001. The
amounts advanced to NPAMLP are secured by a $250 second mortgage on the
Sault Ste. Marie, Michigan property. During 1999, there were no advances to
NPAMLP and no borrowings from E&H under this additional line of credit.
(4) TENANT LEASES
At December 31, 1999, NPAMLP effectively owns and operates 48 properties
(49 at December 31, 1998), as listed in Attachment 1, that are comprised
principally of shopping centers and free standing, single-tenant retail
stores with approximately 180 tenants under various lease agreements which
are treated as operating leases.
In addition to minimum rental payments, the leases generally provide for
additional rents based on operating results of the tenants, reimbursement
for certain common area maintenance charges, real estate taxes and property
insurance, and renewal options. The leases expire under their original
terms at various dates over the next 17 years.
Future minimum lease rentals to be received under noncancelable leases are
approximately:
<TABLE>
<S> <C>
2000 $ 16,243
2001 15,246
2002 14,075
2003 12,707
2004 10,669
Thereafter 32,017
</TABLE>
Rental income includes approximately $1,356, $1,113 and $856 related to
percentage rents for the years ended December 31, 1999, 1998 and 1997,
respectively.
(5) GROUND LEASES
NPAMLP is obligated under 13 noncancelable ground leases that expire
between 2000 and 2078 (see Attachment 1).
During the year ended December 31, 1991, NPAMLP sold the land underlying
five rental properties and simultaneously entered into ground leases to
leaseback the land from the buyer. The ground leases have maturities
ranging from 2004 to 2012, excluding renewal options.
During the term of the 1991 ground leases, including renewal options,
NPAMLP is responsible for maintaining the buildings and building
improvements, as well as making the respective mortgage payments. Under the
terms of sale, at the expiration of the respective 1991 ground leases,
including renewal options, title to the buildings will be conveyed to the
buyer with no additional consideration
F-9
<PAGE> 42
NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP)
Notes to Combined Financial Statements
December 31, 1999, 1998 and 1997
(dollars in thousands)
and any amounts still outstanding under the respective wraparound mortgages
will remain the liability of NPAMLP.
Aggregate proceeds from the five land sales were $2,650 and are recorded as
a finance lease obligation. The amounts paid in accordance with the 1991
ground leases are recorded as interest expense. Any gain arising from this
transaction will be recognized at the date upon which title to the
buildings is conveyed to the buyer.
Future minimum lease payments under all noncancelable ground leases as of
December 31, 1999, are approximately:
<TABLE>
<S> <C>
2000 $ 677
2001 672
2002 672
2003 529
2004 431
Thereafter 2,276
</TABLE>
Total rental expense for ground leases for the years ended December 31,
1999, 1998 and 1997, was approximately $479, $528, and $627, respectively.
In addition, $262, $263 and $255 was recorded as interest expense for the
years ended December 31, 1999, 1998 and 1997, respectively.
(6) WRAPAROUND MORTGAGES
The properties combined in NPAMLP are subject to nonrecourse wraparound
mortgages. The wraparound mortgages are cross-collateralized among the
properties owned by NPAMLP as described in note 1. The wraparound mortgages
are secured by liens on the properties and are subordinate to the
third-party underlying mortgage obligations and the purchase money
mortgages (note 8), collectively the senior mortgage obligations. The
wraparound mortgages are payable to the Pension Groups, and the Pension
Groups are liable to the holders of the senior mortgage obligations.
As stated in note 1, NPAEP and PVPG acquired the interest of MLPG in
certain wraparound mortgages. Each wraparound mortgage is secured by liens
on specific properties and is subordinate to the senior mortgage
obligations as stated above.
During 1998, MLPG agreed to the forgiveness of $98,239 of wraparound
mortgage obligations with related discounts of $59,677 which remained after
property dispositions in prior years, of which $13,908 of wraparound
mortgage obligations with related discounts of $4,441 were written off with
the dispositions of the East Meadow and Las Vegas properties during the
first half of 1998. In addition, MLPG agreed to the forgiveness of $1,954
that was due to MLPG for past due payments. The aggregate of $31,049 is
included in Extraordinary Gain from Forgiveness of wraparound mortgages
payable on disposition of properties.
Through December 31, 1997, MLPG had forgiven the wraparound mortgages
remaining after the disposition of properties that were owned by Audited
Partnerships. In 1998, MLPG agreed to forgive certain wraparound mortgages
remaining after the disposition of properties that were owned by Unaudited
Partnerships. For the years ended December 31, 1999, 1998 and 1997,
wraparound
F-10
<PAGE> 43
NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP)
Notes to Combined Financial Statements
December 31, 1999, 1998 and 1997
(dollars in thousands)
mortgage obligations of approximately $9,804, $36,523 and $5,180 with
related discounts of $5,564, $16,389 and $4,807, respectively, were
forgiven in connection with various property dispositions. The aggregate of
$4,240, $20,134 and $373 is included in Extraordinary Gain from Forgiveness
of wraparound mortgages payable on disposition of properties for the years
ended December 31, 1999, 1998 and 1997, respectively.
The wraparound mortgages have maturity dates varying from August 2009 to
December 2013 and stated interest rates varying from 0% to 10%.
Certain wraparound mortgages are fully amortized over the life of the
mortgage loan while other wraparound mortgages require balloon payments to
satisfy the wraparound mortgage obligations. Also, the Pension Groups have
balloon payments due on the third-party underlying mortgage obligations,
which aggregate approximately $1,927 during the year ended December 31,
2000. Discussions and negotiations with the lenders for these properties
are in process; however, there can be no assurance that loan extensions
will be successfully negotiated with these lenders.
Wraparound mortgage principal payment requirements for the next five years
are approximately:
<TABLE>
<S> <C>
2000 $ 6,969
2001 7,038
2002 7,466
2003 7,181
2004 7,444
</TABLE>
(7) PROPERTY SUBJECT TO SALES CONTRACTS
During the years ended December 31, 1990 and 1995, NPAMLP sold options for
the purchase of two and three rental properties, respectively. The 1990
options provide that title to the land and buildings will be conveyed to
the holder of the options without additional consideration on November 14,
2003, and December 11, 2006. The 1995 options provided that title to the
land and buildings would be conveyed to the holder of the options without
additional consideration on July 13, 1998, October 31, 1998, and June 30,
2003. Aggregate proceeds received from the sale of the options were $2,440
and were recorded as a deposit on sale of property. Estimated losses
arising from these transactions have already been recognized by NPAMLP. Any
gain arising from these transactions is recognized at the date upon which
title to the land and buildings is conveyed to the buyer. During 1998, the
Las Vegas, Nevada and La Mesa, California properties were conveyed to the
holder of the option without additional consideration. As a result, $389
was recognized as a net gain on disposition of properties and the deposit
on sale of property was reduced to $2,051 as of December 31, 1998.
(8) RELATED-PARTY TRANSACTIONS
NPAMLP is owned 99% by the limited partners and 1% collectively by EBL&S,
Inc., the managing general partner and FII, the equity general partner.
EBL&S, Inc. assigned its economic interest as general partner to FII, and
FII was admitted as the equity general partner on September 30, 1998.
EBL&S, Inc. is owned by E&H Properties, Inc.
F-11
<PAGE> 44
NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP)
Notes to Combined Financial Statements
December 31, 1999, 1998 and 1997
(dollars in thousands)
NPAMLP entered into a leasing and property management agreement with EBL&S
Property Management, Inc. (EBL&S) in 1990. EBL&S is owned by E&H. Under the
agreement, EBL&S is to receive a property management fee equal to 5% of the
gross annual rentals collected, including tenant reimbursements for common
area maintenance charges, real estate taxes and property insurance. EBL&S
is also entitled to receive leasing commissions for obtaining or renewing
leases.
In addition, certain administrative services were performed by EBL&S on
behalf of NPAMLP as provided for in NPAMLP's Partnership Agreement. Amounts
earned by EBL&S for the years ended December 31 were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ----- -----
<S> <C> <C> <C>
Property management fees $1,162 1,196 1,292
Leasing commissions 160 63 108
Administrative services 70 58 58
------ ----- -----
$1,392 1,317 1,458
====== ===== =====
</TABLE>
Included in accounts payable and other liabilities at December 31, 1999 and
1998, was approximately $796 and $573, respectively, that was owed to EBL&S
for property management fees, leasing commissions, administrative services
and cash advances for debt service.
During 1996, the El Paso, Texas property was sold to a limited partnership
owned by directors and executives of EBL&S, Inc. The sales price of the
property was determined to be at fair market value by an independent
appraiser. In connection with the transaction a promissory note was issued
to NPAMLP in the approximate amount of $436. The note is interest only,
bears interest at 10% and matures on November 1, 2008.
During 1998, the third-party underlying mortgage obligation on the North
Augusta, South Carolina property was acquired by E&H for its remaining
principal balance as of the date of acquisition. The mortgage was extended
and fully amortized on October 1, 1999.
NPA and its principals owned 4,362 of the 100,000 units of NPAMLP as of
December 31, 1997. During 1998, NPA and its principals redeemed their
interests in NPAMLP in exchange for the transfer of the Trenton, New Jersey
property and related wraparound mortgage obligations. As a result, NPA and
its principals did not own any of the 97,752 units of NPAMLP at December
31, 1999 and 1998.
NPA holds purchase money mortgages on certain properties of NPAMLP. The
purchase money mortgages aggregated approximately $83,156 at December 31,
1999 and 1998.
(9) COMMITMENTS AND CONTINGENCIES
Upon NPAMLP's formation, the titles of the properties of the Electing
Partnerships were to be transferred to NPAMLP. State and local laws vary
with respect to transfer taxes and are susceptible to varying
interpretations. NPAMLP's interpretation of the laws relating to these
transfer taxes could result in significant adjustments if successfully
challenged by the respective taxing authority; however, a reasonable
estimation of the potential liability, if any, cannot be made at this time.
F-12
<PAGE> 45
NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP)
Notes to Combined Financial Statements
December 31, 1999, 1998 and 1997
(dollars in thousands)
NPAMLP is involved in various claims and legal actions arising in the
ordinary course of property operations. In the opinion of the managing
general partner, the ultimate disposition of these matters will not have a
material adverse effect on NPAMLP's financial position, results of
operations or liquidity.
Certain scheduled payments on third-party underlying mortgage obligations
discussed in note 1 have not been made on the Borger, Texas; Crescent City,
California; Fairfield, Iowa; Federal Way, Washington; Huron, South Dakota;
Wahpeton, North Dakota; and Washington, Iowa properties at December 31,
1999.
In October 1998, the third-party underlying mortgage obligations on the
Borger and Federal Way properties matured and had balloon payments due. In
May 1999, the loan on the Crescent City property matured and had a balloon
payment due. As of December 31, 1999, the mortgagees declared the loans to
be in default. In February 2000, NPAMLP negotiated and received alternative
financing for these properties.
On June 30, 1999, the mortgage on the Fairfield, Huron, Wahpeton and
Washington properties matured and had a balloon payment due. These
properties are encumbered by the same mortgage and the Fairfield, Wahpeton
and Washington properties were leased to the same tenant as of December 31,
1999. The tenant at these properties is seeking to enforce a provision of
its lease whereby NPAMLP, as landlord, would be required to convey the four
properties at a price defined in the lease. NPAMLP disputes this
interpretation of the lease and in July 1999, filed an action for
declaratory judgement in the United States District Court for the Eastern
District of Pennsylvania to resolve this matter. If NPAMLP were required to
convey these four properties, it would result in a loss on disposition of
properties of approximately $85.
(10) MAJOR TENANTS
During the years ended December 31, 1999, 1998 and 1997, one tenant
accounted for approximately 55%, 55% and 50% of the rental income of
NPAMLP, respectively. Four of the stores occupied by this tenant had been
vacated as of December 31, 1999; however, the tenant has continued to make
rental payments under the terms of its leases at these properties while it
attempts to market the space to other users. The tenant remains obligated
under the terms of its leases at these four properties for terms ranging
from two to eighteen years.
(11) EXCHANGE OF PROPERTIES
During the year ended December 31, 1999, the Minot, North Dakota property
was sold in a transaction structured to be a tax-free exchange in
accordance with Section 1031 of the Internal Revenue Code. This transaction
is scheduled to be completed in the second quarter of 2000. As a result of
the sale, a gain of $171 was recognized during 1999.
F-13
<PAGE> 46
(12) PARTNERS' DEFICIT
Following is a summary of the combined changes in partners' deficit for the
three years ended December 31, 1999 (in thousands except unit data):
<TABLE>
<CAPTION>
UNITS PARTNERS' DEFICIT
---------------------------------------- -----------------------------------------
GENERAL LIMITED GENERAL LIMITED
PARTNERS PARTNERS TOTAL PARTNERS PARTNERS TOTAL
-------- -------- ----- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
December 31, 1996 1,000 99,000 100,000 $(384) (37,987) (38,371)
Net loss -- -- -- (152) (15,048) (15,200)
------ ------- ------- ----- ------- -------
December 31, 1997 1,000 99,000 100,000 (536) (53,035) (53,571)
Net income -- -- -- 320 31,633 31,953
Redemption of units -- (2,248) (2,248) -- -- --
------ ------- ------- ----- ------- -------
December 31, 1998 1,000 96,752 97,752 (216) (21,402) (21,618)
Net loss -- -- -- (67) (6,656) (6,723)
------ ------- ------- ----- ------- -------
December 31, 1999 1,000 96,752 97,752 $(283) (28,058) (28,341)
====== ======= ======= ===== ======= =======
</TABLE>
F-14
<PAGE> 47
ATTACHMENT 1
NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP)
Properties Effectively Owned by NPAMLP at December 31, 1999(1)
PROPERTY LOCATION
- --------------------------------------------------------------------------------
Ardmore, OK Huntsville, AL* O'Fallon, MO
Borger, TX Huron, SD Philadelphia, PA*+
Bowling Green, OH Hutchinson, MN San Mateo, CA*
Cahokia, IL Independence, MO Sault Ste. Marie, MI
Chesapeake, VA*+ International Falls, MN Seven Hills, OH*+
Clackamas, OR** Kalamazoo, MI*+ Sparks, NV**
Cottage Grove, MN Lake Mary, FL Steger, IL
Crescent City, CA Lockport, IL Taylorville, IL
Dunmore, PA* Marquette, MI* Urbana, IL
East Haven, CT Maryville, MO* Wahpeton, ND
Escanaba, MI Menominee, MI* Washington, IA
Fairborn, OH*+ New Hope, MN Waverly, OH
Fairfield, IA Newberry, SC Wheelersburg, OH
Federal Way, WA North Augusta, SC* Yazoo City, MS
Fond du Lac, WI North Sarasota, FL
Fort Wayne, IN** Oak Lawn, IL*
Huntington, WV Ocala, FL
* Properties with ground leases (note 5).
** Property subject to sales contracts (note 7).
+ Land sales (note 5).
(1) Effectively owned refers to the fact that legal title to the properties is
held by certain partnerships as nominee titleholder and agent for NPAMLP.
NPAMLP has all beneficial interest in and equitable title to the properties
and has the right to cause a transfer of legal title at its request.
F-15
<PAGE> 48
SCHEDULE II
NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP)
Combined Valuation and Qualifying Accounts
December 31, 1999, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
BALANCE, ADDITIONS BALANCE,
BEGINNING CHARGED TO END OF
OF YEAR OPERATIONS DEDUCTIONS YEAR
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended December 31, 1997 $ 20 10 -- 30
Year ended December 31, 1998 30 -- -- 30
Year ended December 31, 1999 30 -- -- 30
</TABLE>
F-16
<PAGE> 49
SCHEDULE III
NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP)
Combined Real Estate and Accumulated Depreciation Schedule
December 31, 1999, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
COST CAPITALIZED
(WRITTEN OFF) SUBSEQUENT
INITIAL COST TO ACQUISITION
------------------------ -------------------------
BUILDINGS AND BUILDINGS AND
PROPERTY LOCATION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS
- ----------------- ------------ -------- ------------- -------- --------------
<S> <C> <C> <C> <C> <C>
Ardmore, OK $ 7,280 750 14,989 -- (37)
Borger, TX 694 106 1,143 -- --
Bowling Green, OH 4,946 496 5,270 -- 35
Cahokia, IL -- 600 5,800 (578) (5,790)
Chesapeake, VA 3,671 416 4,798 -- --
Clackamas, OR 1,137 124 3,091 -- --
Cottage Grove, MN 6,718 740 5,550 (84) 4,537
Crescent City, CA 1,536 129 2,220 -- --
Dunmore, PA 732 -- 1,350 -- --
East Haven, CT 3,535 447 4,883 -- 2,361
Escanaba, MI 1,038 159 1,616 -- --
Fairborn, OH 3,399 377 4,961 -- 10
Fairfield, IA 244 45 461 -- --
Federal Way, WA 2,579 86 1,894 -- --
Fond du Lac, WI 5,167 760 7,721 (24) 179
Fort Wayne, IN 4,015 575 6,616 -- --
Huntington, WV 2,518 336 3,649 -- 467
Huntsville, AL 1,291 -- 1,904 -- 144
Huron, SD 316 58 598 -- --
Hutchinson, MN 1,939 179 3,304 -- --
Independence, MO 2,877 394 3,550 -- 446
International Falls, MN 1,742 179 3,071 -- --
Kalamazoo, MI 2,617 250 4,850 -- 252
Lake Mary, FL 5,121 1,310 7,422 -- --
Lockport, IL 2,195 286 2,572 -- 464
Marquette, MI 7,978 -- 5,700 -- 8,565
Maryville, MO 220 -- 1,248 -- 78
Menominee, MI 1,883 -- 2,722 -- 100
New Hope, MN 3,219 357 3,774 -- 390
Newberry, SC 1,723 201 2,192 -- --
North Augusta, SC 1,995 100 2,900 -- --
North Sarasota, FL 4,802 459 5,686 -- 256
O'Fallon, MO 3,185 343 3,626 -- 56
Oak Lawn, IL 6,099 -- 9,029 -- 178
Ocala, FL 2,498 417 3,301 -- --
Philadelphia, PA 3,628 529 5,859 -- 202
</TABLE>
<TABLE>
<CAPTION>
BUILDINGS AND ACCUMULATED DATE OF
PROPERTY LOCATION LAND IMPROVEMENTS TOTAL DEPRECIATION ACQUISITION LIFE METHOD
- ----------------- -------- ------------- -------- -------------- ----------- ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ardmore, OK 750 14,952 15,702 8,041 09/83 Varies Varies
Borger, TX 106 1,143 1,249 619 10/83 30 years Straight line
Bowling Green, OH 496 5,305 5,801 3,328 02/81 Varies Varies
Cahokia, IL 22 10 32 2 10/82 Varies Varies
Chesapeake, VA 416 4,798 5,214 2,772 09/82 30 years Straight line
Clackamas, OR 124 3,091 3,215 1,683 09/83 30 years Straight line
Cottage Grove, MN 656 10,087 10,743 3,782 11/81 Varies Varies
Crescent City, CA 129 2,220 2,349 1,221 07/83 30 years Straight line
Dunmore, PA -- 1,350 1,350 1,106 06/75 30 years Straight line
East Haven, CT 447 7,244 7,691 3,270 08/80 Varies Varies
Escanaba, MI 159 1,616 1,775 929 10/82 30 years Straight line
Fairborn, OH 377 4,971 5,348 2,896 07/82 Varies Varies
Fairfield, IA 45 461 506 243 03/84 30 years Straight line
Federal Way, WA 86 1,894 1,980 1,184 04/81 30 years Straight line
Fond du Lac, WI 736 7,900 8,636 4,445 10/82 Varies Varies
Fort Wayne, IN 575 6,616 7,191 3,529 01/84 30 years Straight line
Huntington, WV 336 4,116 4,452 1,940 10/84 Varies Varies
Huntsville, AL -- 2,048 2,048 1,017 03/84 Varies Varies
Huron, SD 58 598 656 316 03/84 30 years Straight line
Hutchinson, MN 179 3,304 3,483 1,826 06/83 30 years Straight line
Independence, MO 394 3,996 4,390 2,302 05/81 Varies Varies
International Falls, MN 179 3,071 3,250 1,689 07/83 30 years Straight line
Kalamazoo, MI 250 5,102 5,352 3,204 09/80 Varies Varies
Lake Mary, FL 1,310 7,422 8,732 962 12/94 Varies Varies
Lockport, IL 286 3,036 3,322 1,587 07/82 Varies Varies
Marquette, MI -- 14,265 14,265 5,777 05/83 Varies Varies
Maryville, MO -- 1,326 1,326 685 11/83 Varies Varies
Menominee, MI -- 2,822 2,822 1,657 10/81 Varies Varies
New Hope, MN 357 4,164 4,521 2,396 03/81 Varies Varies
Newberry, SC 201 2,192 2,393 1,114 10/84 30 years Straight line
North Augusta, SC 100 2,900 3,000 1,917 03/80 30 years Straight line
North Sarasota, FL 459 5,942 6,401 3,679 11/80 Varies Varies
O'Fallon, MO 343 3,682 4,025 2,279 03/81 Varies Varies
Oak Lawn, IL -- 9,207 9,207 5,574 10/81 Varies Varies
Ocala, FL 417 3,301 3,718 1,862 02/83 30 years Straight line
Philadelphia, PA 529 6,061 6,590 3,863 08/80 Varies Varies
</TABLE>
F-17 (Continued)
<PAGE> 50
SCHEDULE III
NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
(a limited partnership)
Combined Real Estate and Accumulated Depreciation Schedule
December 31, 1999, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
COST CAPITALIZED
(WRITTEN OFF) SUBSEQUENT
INITIAL COST TO ACQUISITION
----------------------- -----------------------
BUILDINGS AND BUILDINGS AND BUILDINGS AND
PROPERTY LOCATION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS
- ----------------- ------------ ---- ------------ ---- ------------ ---- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
San Mateo, CA $ 2,746 -- 6,672 -- -- -- 6,672
Sault Ste. Marie, MI 1,916 375 2,816 -- -- 375 2,816
Seven Hills, OH 2,056 371 3,771 -- -- 371 3,771
Sparks, NV 11,248 1,648 20,409 -- -- 1,648 20,409
Steger, IL 2,298 332 2,489 -- 28 332 2,517
Taylorville, IL 2,505 492 3,696 -- 118 492 3,814
Urbana, IL 3,639 633 4,753 -- 91 633 4,844
Wahpeton, ND 304 56 577 -- -- 56 577
Washington, IA 228 41 431 -- -- 41 431
Waverly, OH 2,519 471 2,920 -- 169 471 3,089
Wheelersburg, OH 1,279 194 2,081 -- 213 194 2,294
Yazoo City, MS 2,549 158 1,820 -- 409 158 2,229
-------- ------ ------- ---- ------ ------ -------
Total $137,824 15,979 201,755 (686) 13,921 15,293 215,676
======== ====== ======= ==== ====== ====== =======
Cross-collateralized wraparound
mortgages on properties
previously disposed $ 6,399
--------
$144,223
========
</TABLE>
<TABLE>
<CAPTION>
ACCUMULATED DATE OF
PROPERTY LOCATION TOTAL DEPRECIATION ACQUISITION LIFE METHOD
- ----------------- ----- ------------ ----------- ---- ------
<S> <C> <C> <C> <C> <C>
San Mateo, CA 6,672 4,040 11/81 30 years Straight line
Sault Ste. Marie, MI 3,191 1,612 11/82 30 years Straight line
Seven Hills, OH 4,142 2,168 10/82 30 years Straight line
Sparks, NV 22,057 10,998 11/83 30 years Straight line
Steger, IL 2,849 1,512 11/81 Varies Varies
Taylorville, IL 4,306 2,158 11/82 Varies Varies
Urbana, IL 5,477 2,727 11/82 Varies Varies
Wahpeton, ND 633 305 03/84 30 years Straight line
Washington, IA 472 228 03/84 30 years Straight line
Waverly, OH 3,560 1,696 10/82 Varies Varies
Wheelersburg, OH 2,488 1,189 10/83 Varies Varies
Yazoo City, MS 2,387 973 09/84 Varies Varies
------- -------
Total 230,969 114,302
======= =======
</TABLE>
Properties consist primarily of shopping centers and free standing, single
tenant retail stores.
Depreciation of NPAMLP's investment in buildings and improvements reflected
in the statements of operations is calculated over the estimated useful lives of
the assets as follows:
Base building....... 30 years Building components..... 15-39 years
The aggregate cost for federal income tax purposes was approximately $14,347 at
December 31, 1999.
The changes in total real estate assets and accumulated depreciation for the
years ended December 31, are as follows:
<TABLE>
<CAPTION>
TOTAL REAL ESTATE ASSETS
----------------------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Beginning Balance $ 240,321 273,734 277,585
Improvements 2,251 1,929 1,618
Acquisitions -- -- 41
Disposals/write-downs (11,603) (35,342) (5,510)
--------- --------- ---------
$ 230,969 240,321 273,734
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
ACCUMULATED DEPRECIATION
---------------------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Beginning Balance $ 113,228 122,448 115,711
Depreciation - Original 6,526 7,150 7,950
Depreciation - Improvements 622 787 654
Disposals (6,074) (17,157) (1,867)
--------- --------- ---------
$ 114,302 113,228 122,448
========= ========= =========
</TABLE>
F-18
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 4,843
<SECURITIES> 0
<RECEIVABLES> 342
<ALLOWANCES> 30
<INVENTORY> 0
<CURRENT-ASSETS> 5,155
<PP&E> 230,969
<DEPRECIATION> 114,302
<TOTAL-ASSETS> 124,087
<CURRENT-LIABILITIES> 3,504
<BONDS> 144,223
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 124,087
<SALES> 0
<TOTAL-REVENUES> 25,474
<CGS> 0
<TOTAL-COSTS> 9,125
<OTHER-EXPENSES> 10,716
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,596
<INCOME-PRETAX> (10,963)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,963)
<DISCONTINUED> 0
<EXTRAORDINARY> 4,240
<CHANGES> 0
<NET-INCOME> (6,723)
<EPS-BASIC> (68.78)
<EPS-DILUTED> (68.78)
</TABLE>
