-----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, TN91PonQDBgIuvHV+11ftuwcCRdMMqmLUUhc2NxGYe0eN6FX9mZaY1jkwr1UROBU 1FtEhXKq0aQGbjfXyOmyyA== 0000812187-96-000004.txt : 19960812 0000812187-96-000004.hdr.sgml : 19960812 ACCESSION NUMBER: 0000812187-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960809 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: 96606333 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 June 30, 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 small business issuer 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 (Unaudited) (in thousands) June 30, 1996 Assets Cash and cash equivalents $ 1,742 Other assets 1,384 Accounts receivable 260 Total assets 3,386 Liabilities Accrued expenses 1,538 Estimated costs during the period of liquidation 13 1,551 Net assets in liquidation $ 1,835 See Notes to Consolidated Financial Statements a) MRI BUSINESS PROPERTIES FUND, LTD. II CONSOLIDATED BALANCE SHEET (in thousands, except unit data) 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 STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION (Unaudited) (in thousands) June 30, 1996 Net assets in liquidation at March 31, 1996 $ 1,837 Changes in net assets in liquidation attributed to: Increase in cash 412 Decrease in accounts receivable (300) Increase in other assets 1,384 Increase in accrued expenses (1,503) Decrease in estimated costs during the period of liquidation 5 Net assets in liquidation at June 30, 1996 $ 1,835 See Accompanying Note to Financial Statements b) MRI BUSINESS PROPERTIES FUND, LTD. II CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended Nine Months Ended June 30, June 30, 1995 1995 Revenues: Room revenue $ 10,092 $ 26,998 Food and beverage revenue 4,852 14,235 Other operating revenues 834 2,307 Interest 125 348 Gain on sale of properties 18,497 18,497 Equity in unconsolidated joint venture's operations 14 -- Total revenues 34,414 62,385 Expenses: Room expenses 2,058 6,081 Food and beverage expenses 3,597 10,775 Other operating expenses 5,843 16,467 Interest 1,396 4,861 Depreciation and amortization 1,363 4,160 Equity in unconsolidated joint venture's operations -- 93 General and administrative 117 356 Total expenses 14,374 42,793 Income before minority interest in joint venture's operations and adjustment to liquidation basis 20,040 19,592 Minority interest in joint venture's operations (56) (137) Net income $ 19,984 $ 19,455 Net income allocated to general partners $ 3,547 $ 3,536 Net income allocated to limited partners 16,437 15,919 $ 19,984 $ 19,455 Net income per limited partnership unit $ 180.46 $ 174.77 See Notes to Consolidated Financial Statements c) MRI BUSINESS PROPERTIES FUND, LTD. II CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended June 30, 1995 Cash flows from operating activities: Net income $ 19,455 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 4,464 Minority interest in joint venture's operations 137 Equity in unconsolidated joint venture's operations 93 Gain on sale of properties (18,497) Change in accounts: Accounts receivable and other assets (1,014) Accounts payable, other liabilities and due to an affiliate of the joint venture partner (434) Net cash provided by operating activities 4,204 Cash flows from investing activities: Property improvements and replacements (7,034) Net proceeds from sale of properties 30,000 Unconsolidated joint venture distributions (170) Restricted cash decrease 1,465 Cash provided by investing activities 24,261 Cash flows from financing activities: Mortgage principal payments (601) Satisfaction of mortgages payable (19,874) Proceeds from mortgage financing 19,400 Financing costs paid (211) Cash used in financing activities (1,286) Net increase in cash and cash equivalents 27,179 Cash and cash equivalents at beginning of period 9,346 Cash and cash equivalents at end of period $ 36,525 Supplemental information: Interest paid $ 4,399 See Notes to Consolidated Financial Statements
d) 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 under the liquidation basis of accounting 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 NPI Equity Investments II, Inc. ("NPI Equity" or the "Managing General Partner"), all adjustments considered necessary for a fair presentation on the liquidation basis have been included. 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. 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. The statement of consolidated net assets in liquidation as of June 30, 1996, includes approximately $13,000 of costs, net of income, that the Managing General Partner estimates will be incurred during the period of liquidation, based on the assumption that the liquidation process will be completed by September 30, 1996. These costs include anticipated legal fees, administrative expenses, and mailing costs. Because the success in realization of assets and the settlement of liabilities is based on the Managing General Partner's best estimates, the liquidation period may be shorter than projected or it may be extended beyond the projected period. 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 Nine Months Ended June 30, 1996 1995 Reimbursement for services of affiliates (included in general and administrative expenses) $46,000 $ 78,000
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 nine months ended June 30, 1996. The 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 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 and an affiliate of Insignia, a Delawere corporation, 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 June 30, 1996, and September 30, 1995, and condensed statements of operations for each of the nine months ended June 30, 1996 and 1995, of the unconsolidated joint venture: MRI BUSINESS PROPERTIES COMBINED FUND NO. 1 CONDENSED BALANCE SHEETS (in thousands) June 30, September 30, 1996 1995 (Unaudited) Assets Cash and cash equivalents $ 231 $ 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 $ 231 $ 36,400 Liabilities and Partners' Deficiency Accounts payable and other liabilities $ -- $ 1,805 Due to affiliates 231 3,069 Note payable -- 34,000 Total liabilities 231 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 $ 231 $ 36,400 Note: The balance sheet at September 30, 1995, was derived from audited financial statements at such date. MRI BUSINESS PROPERTIES COMBINED FUND NO. 1 CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands) For the Nine Months Ended June 30, June 30, 1996 1995 Revenues $ 4,017 $ 15,730 Gain on sale of hotel 9,755 -- Total revenues 13,772 15,730 Expenses 2,553 16,102 Income (loss) before minority interest in venture operations 11,219 (372) Minority interest in joint venture operations (5,107) 186 Net income (loss) $ 6,112 $ (186) Allocation of net income (loss): MRI BPF, Ltd. II $ 3,056 $ (93) MRI BPF, Ltd. III 3,056 (93) Net income (loss) $ 6,112 $ (186) For the Three Months Ended June 30, June 30, 1996 1995 Revenues $ 2 $ 5,608 Expenses 17 5,551 (Loss) income before minority interest in joint venture's operations (15) 57 Minority interest in joint venture operations -- (29) Net (loss) income $ (15) $ 28 Allocation of net (loss) income: MRI BPF, Ltd. II $ (8) $ 14 MRI BPF, Ltd. III (7) 14 Net (loss) income $ (15) $ 28 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 was entitled to all of 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 $48,000 was outstanding at June 30, 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 the 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 the 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 OR PLAN OF OPERATION As of March 31, 1996, the Partnership adopted the liquidation basis of accounting. 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 price 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 collected $1,245,000 in outstanding receivables in January and May 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 the 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 the 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. For the three months ended June 30, 1996, the Partnership recorded a net decrease in net assets in liquidation of approximately $2,000. The Partnership recorded an increase in other assets related to the requirement under Section 444 of the Internal Revenue Code to deposit funds with the Internal Revenue Service due to its fiscal year end of September 30. This deposit of $1,350,000 with the Internal Revenue Service will be refunded upon termination of the Partnership. The Partnership also recognized an increase in accrued expenses during the three months ended June 30, 1996, related to state withholding taxes due to Minnesota of approximately $1,505,000. 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 the limited partners. Upon termination of the Partnership, the general partners may 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: None filed during the quarter ended June 30, 1996. 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: August 8, 1996 EX-27 2
5 This schedule contains summary financial information extracted from MRI Business Properties Fund, Ltd. II 1996 Third Quarter 10-Q and is qualified in its entirety by reference to such 10-Q filing. 0000745289 MRI BUSINESS PROPERTIES FUND, LTD. II 1,000 9-MOS SEP-30-1996 JUN-30-1996 1,742 0 260 0 0 0 0 0 3,386 0 0 0 0 0 1,835 3,386 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 The Registrant has a statement of net assets in liquidtion.
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