-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IeO7Fdf/voOL8os4qBvgdxZmfE63MWcM9fAdQ/l8vC3PSv4dBlgHAIJUwWLltHgZ UMi2VG5b/xowjZmVt6Ax5w== 0000769129-96-000003.txt : 19960517 0000769129-96-000003.hdr.sgml : 19960517 ACCESSION NUMBER: 0000769129-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MRI BUSINESS PROPERTIES FUND LTD II CENTRAL INDEX KEY: 0000745289 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 942935565 STATE OF INCORPORATION: CA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14177 FILM NUMBER: 96567869 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ PO BOX 1089 STREET 2: C/O INSIGNIA FINANCIAL GROUP INC CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 4049169090 MAIL ADDRESS: STREET 1: 100 JERICHO QUADRANGLE STREET 2: STE 214 CITY: JERICHO STATE: NY ZIP: 11753 10-Q 1 FORM 10-Q--QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 (As last amended in Rel. No. 312905, eff. 4/26/93.) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 For the quarterly period ended March 31, 1996 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period.........to......... (Amended by Exchange Act Rel. No. 312905, eff. 4/26/93.) Commission file number 0-14177 MRI BUSINESS PROPERTIES FUND, LTD. II (Exact name of registrant as specified in its charter) California 94-2935565 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) Issuer's telephone number (864) 239-1000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports ), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) MRI BUSINESS PROPERTIES FUND, LTD. II CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION (in thousands, except unit data) March 31, 1996 (Unaudited) Assets Cash and cash equivalents $ 1,330 Accounts receivable 560 Total assets 1,890 Liabilities Accrued expenses 35 Estimated costs during the period of liquidation 18 53 Net assets in liquidation $ 1,837 See Notes to Consolidated Financial Statements a) MRI BUSINESS PROPERTIES FUND, LTD. II CONSOLIDATED BALANCE SHEET September 30, 1995 ASSETS Cash and cash equivalents $ 4,813 Accounts receivable and other assets 2,712 Due from affiliate 170 Real Estate: Real estate 92,497 Accumulated depreciation (37,814) Allowance for impairment of value (10,948) Real estate, net 43,735 Total assets $ 51,430 LIABILITIES AND PARTNERS' EQUITY Accounts payable and other liabilities $ 2,407 Due to an affiliate of the joint venture partner 55 Due to unconsolidated joint venture 618 Notes payable 36,610 Minority interest in joint venture 2,937 Commitments and Contingencies Partners' Equity: General partners' 2 Limited partners' (91,083 assignee units outstanding at September 30, 1995) 8,801 Total partners' equity 8,803 Total liabilities and partners' equity $ 51,430 See Notes to Consolidated Financial Statements b) MRI BUSINESS PROPERTIES FUND, LTD. II CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Six Months Ended March 31, March 31, 1996 1995 1996 1995 Revenues: Room revenue $ (157) $ 8,245 $ 2,226 $16,906 Food and beverage revenue -- 4,476 1,761 9,383 Other operating revenues -- 683 312 1,473 Interest 111 46 136 223 Gain on sale of properties -- -- 14,445 -- Gain on sale of unconsolidated joint venture property -- -- 2,694 -- Equity in unconsolidated joint venture's operations -- -- 370 -- Total revenues (46) 13,450 21,944 27,985 Expenses: Room expenses -- 1,979 579 4,023 Food and beverage expenses -- 3,398 1,256 7,178 Other operating expenses -- 5,157 2,208 10,624 Interest -- 1,446 361 3,465 Depreciation and amortization -- 1,595 334 2,797 Equity in unconsolidated joint venture's operations -- 23 -- 107 General and administrative 142 117 254 239 Total expenses 142 13,715 4,992 28,433 Income (loss) before minority interest in joint venture's operations and adjustment to liquidation basis (188) (265) 16,952 (448) Minority interest in joint venture's operations -- 20 (41) (81) Adjustment to liquidation basis (18) -- (18) -- Net income (loss) $ (206) $ (245) $16,893 $ (529) Net income (loss) allocated to general partners $ (4) $ (5) $ 479 $ (11) Net income (loss) allocated to limited partners (202) (240) 16,414 (518) $ (206) $ (245) $16,893 $ (529) Net income (loss) per limited partnership unit $ (2.22) $ (2.64) $180.21 $ (5.68) Distribution per limited partnership unit $225.94 $ -- $256.70 $ -- See Notes to Consolidated Financial Statements
c) MRI BUSINESS PROPERTIES FUND, LTD.II CONSOLIDATED STATEMENT OF PARTNERS' EQUITY (Unaudited) (in thousands, except unit data)
Limited General Limited Partnership Partners' Partners' Total Units Equity Equity Equity Partners' equity at September 30, 1995 91,083 $ 2 $ 8,801 $ 8,803 Net income for the six months ended March 31, 1996 -- 479 16,414 16,893 Distributions paid -- (477) (23,382) (23,859) Partners' equity at March 31, 1996 91,083 $ 4 $ 1,833 $ 1,837 See Notes to Consolidated Financial Statements
d) MRI BUSINESS PROPERTIES FUND, LTD.II CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended March 31, 1996 1995 Cash flows from operating activities: Net income (loss) $ 16,893 $ (529) Adjustments to liquidation basis 18 -- Adjustments to reconcile net income (loss) to cash provided by operating activities: Depreciation and amortization 384 3,014 Minority interest in joint venture's operations 41 81 Equity in unconsolidated joint venture's operations (370) 107 Gain on sale of properties (14,445) -- Gain on sale of unconsolidated joint venture property (2,694) -- Change in accounts: Accounts receivable and other assets 1,664 2 Due from affiliate 55 -- Accounts payable, other liabilities and due to an affiliate of the joint venture partner (2,526) (568) Net cash (used in) provided by operating activities (980) 2,107 Cash flows from investing activities: Property improvements and replacements (772) (6,126) Net proceeds from sale of properties 55,588 -- Unconsolidated joint venture distributions 2,445 -- Restricted cash decrease -- 1,229 Cash provided by (used in) investing activities 57,261 (4,897) Cash flows from financing activities: Mortgage principal repayments (41) (399) Satisfaction of mortgages payable (35,864) (19,874) Proceeds from mortgage financing -- 19,400 Financing costs paid -- (211) Distributions paid (23,859) -- Cash used in financing activities (59,764) (1,084) Net decrease in cash and cash equivalents (3,483) (3,874) Cash and cash equivalents at beginning of period 4,813 9,346 Cash and cash equivalents at end of period $ 1,330 $ 5,472 Supplemental information: Interest paid $ 490 $ 3,094 Other assets assumed by purchaser $ 566 $ -- Capitalized leases assumed by purchaser $ 655 $ -- See Notes to Consolidated Financial Statements
e) MRI BUSINESS PROPERTIES FUND, LTD. II NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note A - Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Managing General Partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six and three month periods ended March 31, 1996, are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 1996. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the fiscal year ended September 30, 1995. The balance sheet at September 30, 1995 was derived from audited financial statements at such date. Certain reclassifications have been made to the 1995 information to conform to the 1996 presentation. During the first quarter of fiscal 1996, the Partnership sold its remaining properties. As a result, the Partnership changed its basis of accounting as of March 31, 1996, to a liquidation basis. Consequently, assets have been valued at estimated net realizable value and liabilities are presented at their estimated settlement amounts, including estimated costs associated with carrying out the liquidation. The valuation of assets and liabilities necessarily requires many estimates and assumptions and there are substantial uncertainties in carrying out the liquidation. The actual realization of assets and settlement of liabilities could be higher or lower than amounts indicated and is based on the estimates as of the date of the financial statements. Note B - Transactions with Affiliated Parties MRI Business Properties Fund, Ltd. II (the "Partnership") has no employees and is dependent on its general partners and affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following transactions with affiliates of Insignia Financial Group, Inc.("Insignia"), National Property Investors, Inc.("NPI"), and affiliates of NPI were charged to expense in 1996 and 1995:
For the Six Months Ended March 31, 1996 1995 Reimbursement for services of affiliates (included in general and administrative expenses) $ 39,000 $ 54,000
Note B - Transactions with Affiliated Parties (continued) An affiliate of the Managing General Partner was paid a fee of $49,000 relating to a successful real estate tax appeal on the Partnership's Somerset Marriott Hotel during the six months ended March 31, 1996. The managing general partner of the Partnership is Montgomery Realty Company-84 ("Montgomery"), a general partnership, and the associate general partner is MRI Associates, Ltd. II ("MRI"), a limited partnership. Fox Realty Investors ("FRI") is the managing general partner of Montgomery and a general partner of MRI. On December 6, 1993, NPI Equity Investments II, Inc. ("Managing General Partner" or "NPI Equity") became the managing general partner of FRI. As a result, the Managing General Partner became responsible for the operation and management of the business and affairs of the Partnership and the other investment partnerships sponsored by FRI and its affiliates. The individuals who had served previously as partners of FRI contributed their general partnership interests in FRI to a newly formed limited partnership, Portfolio Realty Associates, L.P. ("PRA"), in exchange for limited partnership interests in PRA. In the foregoing capacity, such partners continue to hold, indirectly, certain economic interests in the Partnership and such other partnerships, but have ceased to be responsible for the operation and management of the Partnership and such other partnerships. The Managing General Partner is a wholly-owned subsidiary of NPI. On August 17, 1995, the stockholders of NPI entered into an agreement to sell to IFGP Corporation, a Delaware corporation, an affiliate of Insignia, all of the issued and outstanding common stock of NPI for an aggregate purchase price of $1,000,000. The closing of the transactions contemplated by the above mentioned agreement (the "Closing") occurred on January 19, 1996. Upon the closing, the officers and directors of NPI and NPI Equity resigned and IFGP Corporation caused new officers and directors of each of those entities to be elected. Note C - Investment in Unconsolidated Joint Venture The following are the condensed balance sheets as of March 31, 1996, and September 30, 1995, and condensed statements of operations for the six months ended March 31, 1996 and 1995, of the unconsolidated joint venture: MRI BUSINESS PROPERTIES COMBINED FUND NO. 1 CONDENSED BALANCE SHEETS
March 31, September 30, 1996 1995 (Unaudited) (Note) Assets Cash and cash equivalents $ 245 $ 887 Restricted cash -- 958 Accounts receivable and other assets -- 1,321 Real Estate: Real estate -- 63,148 Accumulated depreciation -- (17,952) Allowance for impairment of value -- (11,962) Real estate, net -- 33,234 Total assets $ 245 $ 36,400 Liabilities and Partners' Deficiency Accounts payable and other liabilities $ -- $ 1,805 Due to affiliates 245 3,069 Note payable -- 34,000 Total liabilities 245 38,874 Minority interest in joint venture -- (1,238) Partners' Deficiency: MRI BPF, Ltd. II -- (618) MRI BPF, Ltd. III -- (618) Total partners' deficiency -- (1,236) Total liabilities and partners' deficiency $ 245 $ 36,400
Note: The balance sheet at September 30, 1995 was derived from audited financial statements at such date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Note C - Investment in Unconsolidated Joint Venture (continued) MRI BUSINESS PROPERTIES COMBINED FUND NO. 1 CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Six Months Ended March 31, March 31, 1996 1995 Revenues $ 4,015 $ 10,122 Gain on sale of hotel 9,755 -- Total revenues 13,770 10,122 Expenses 2,536 10,551 Income (loss) before minority interest in joint venture operations 11,234 (429) Minority interest in joint venture operations (5,107) 215 Net income (loss) $ 6,127 $ (214) Allocation of net income (loss): MRI BPF, Ltd. II $ 3,064 $ (107) MRI BPF, Ltd. III 3,063 (107) Net income (loss) $ 6,127 $ (214) For the Three Months Ended March 31, March 31, 1996 1995 Revenues $ 1 $ 5,251 Expenses 1 5,346 Loss before minority interest in joint venture's operations -- (95) Minority interest in joint venture's operations -- 48 Net loss $ -- $ (47) Allocation of net loss: MRI BPF, Ltd. II $ -- $ (23) MRI BPF, Ltd. III -- (24) Net loss $ -- $ (47)
Note D - Sale of Investment Properties On October 5, 1995, the Partnership's Somerset Marriott Hotel was sold to an unaffiliated third party for $24,950,000. After satisfaction of notes payable of approximately $21,830,000 (including accrued interest), a prepayment premium of $500,000 and closing costs, the partnership received approximately $2,200,000. The sale resulted in a gain of $1,351,000. The Partnership had previously recorded a $10,948,000 provision for impairment of value in 1992 and 1993. On December 1, 1995, the joint venture (in which the Partnership had a controlling interest) sold the Radisson South Hotel to an unaffiliated third party for $31,840,000, which terminated the joint venture. After satisfaction of mortgage notes of approximately $14,452,000 (including accrued interest) and closing costs, the joint venture received approximately $17,000,000. In accordance with the joint venture agreement, the Partnership is entitled to all the net proceeds of the sale. In addition, the Partnership received approximately $990,000 of cash from operations, as well as, approximately $1,300,000 in outstanding receivables of which approximately $340,000 was outstanding at March 31, 1996. The sale resulted in a gain of approximately $13,094,000, which included $2,978,000 of gain from termination of the joint venture. On December 1, 1995, the Combined Fund sold the Holiday Inn Crowne Plaza property to an unaffiliated third party for $44,000,000. After satisfaction of the mortgage note of $34,000,000, closing costs and other expenses the joint venture received approximately $8,900,000. In accordance with the July 7, 1995 agreement, the Combined Fund received $5,000,000. The Partnership's share of net proceeds, after expenses, was $2,445,000. The Partnership has recognized a gain on sale of $2,694,000. The Combined Fund had previously recorded an approximate $11,900,000 provision for impairment of value in 1991 and 1992. A former joint venture partner may be required to contribute certain funds to the Partnership in accordance with the joint venture agreement. The amount of contribution, if any, is not determinable at this time. Note E - Distributions The Partnership distributed $2,802,000 to limited partners ($30.76 per limited partnership assignee unit) and $57,000 to the general partners on October 25, 1995. On January 23, 1996, the Partnership distributed $20,580,000 to limited partners ($225.94 per limited partnership assignee unit) and $420,000 to the general partners. The distributions were from sales proceeds and working capital reserves. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Operating results for the six months ended March 31, 1996, as compared to the six months ended March 31, 1995, improved by $17,400,000, prior to minority interest in joint venture's operations, due to the sale of the partnership's Somerset Marriott Hotel, Radisson South Hotel and unconsolidated joint venture property (the Holiday Inn Crowne Plaza) as discussed in further detail below. As described in Item 1, "Notes to Financial Statements, Note D", the Partnership sold its remaining properties during the first quarter of fiscal year 1996. The aggregate sales prices for its properties was $100,790,000. After satisfaction of existing mortgages, closing costs and amounts distributed to the Partnership's joint venture partners, net proceeds received by the Partnership were approximately $22,000,000. In addition, the Partnership received approximately $990,000 of cash from operations in December 1995 and $946,000 in outstanding receivables in January 1996, relating to the Radisson South Hotel. The Partnership recorded a gain of $1,351,000 on the sale of the Somerset Marriott Hotel, a gain of $13,094,000 on the sale of the Radisson South Hotel and a gain of $2,694,000 on the sale of its unconsolidated joint venture property, the Holiday Inn Crowne Plaza. The Partnership distributed $2,802,000 to limited partners ($30.76 per limited partnership assignee unit) and $57,000 to the general partners on October 25, 1995. The Partnership distributed $20,580,000 to limited partners ($225.94 per limited partnership assignee unit) and $420,000 to the general partners on January 23, 1996. The distributions were from sales proceeds and working capital reserves. Since these were the Partnership's last remaining properties, the Partnership expects to be terminated in 1996 after collection of receivables, payment of outstanding liabilities and a final distribution to the partners. Cash and cash equivalents decreased by $3,483,000 at March 31, 1996, as compared to September 30, 1995. The Partnership's $57,261,000 of net cash provided by investing activities was offset by $980,000 of net cash used in operating activities and $59,764,000 of net cash used in financing activities. Investing activities consisted of $55,588,000 of proceeds from sales of the Partnership's Somerset Marriott and Radisson South hotel properties and $2,445,000 of net proceeds from the sale of the Partnership's unconsolidated joint venture property, the Holiday Inn - Crowne Plaza and $772,000 of property improvements. Financing activities consisted of $35,864,000 paid in satisfaction of the mortgages encumbering the Partnership's Somerset Marriott and Radisson South hotels, $23,859,000 of distributions to partners and $41,000 in notes payable principal payments. All other increases (decreases) in certain assets and liabilities are the result of the timing of receipt and payment of various operating activities. The Partnership, due to its fiscal year end of September 30, may be obligated under Section 444 of the Internal Revenue Code to deposit funds with the IRS effectively advancing the estimated tax liability of its partners. This deposit is due May 15 and the current years required deposit is in excess of the Partnership's available funds. The general partner is currently exploring its alternatives in this matter. No liability for this deposit has been recorded in the accompanying financial statements. The Partnership's original investment objective of capital growth will not be attained. Accordingly, a significant portion of invested capital will not be returned to limited partners. Upon termination of the Partnership, the general partners will be required to contribute approximately $1,727,000 to the Partnership in accordance with the partnership agreement. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: A Form 8-K dated January 19, 1996, was filed reporting the change in control of the Partnership. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MRI BUSINESS PROPERTIES FUND, LTD. II By: MONTGOMERY REALTY COMPANY 84, A California General Partnership, its managing general partner By: FOX REALTY INVESTORS, A California General Partnership, its managing general partner By: NPI EQUITY INVESTMENTS II, INC., A Florida Corporation, its managing partner /s/ William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director /s/ Ronald Uretta Ronald Uretta Treasurer (Principal Financial Officer and Principal Accounting Officer) Date: May 15, 1996 EX-27 2
5 This schedule contains summary financial information extracted from MRI Business Properties Fund, Ltd. II 1996 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000745289 MRI BUSINESS PROPERTIES FUND, LTD II 1,000 3-MOS SEP-30-1996 MAR-31-1996 1,330 0 560 0 0 0 0 0 1,890 0 0 0 0 0 1,837 1,890 0 21,944 0 0 4,992 0 361 16,893 0 16,893 0 0 0 16,893 .18 0 The Registrant has an unclassified balance sheet.
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