-----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, A4qcZWfnpA8hhp4zuu1oFi1KytBB+aK0zyJioCTdDi60qDWPUFQCbeFTULhJ8f61 hlqyQ3vJwjgheO5hTRyiOQ== 0000757642-97-000003.txt : 19970423 0000757642-97-000003.hdr.sgml : 19970423 ACCESSION NUMBER: 0000757642-97-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970422 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIF CENTRAL INDEX KEY: 0000757642 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 942969720 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15756 FILM NUMBER: 97584923 BUSINESS ADDRESS: STREET 1: 155 BOVET RD STREET 2: STE 100 CITY: SAN METEO STATE: CA ZIP: 94402 BUSINESS PHONE: 4155135200 MAIL ADDRESS: STREET 1: PO BOX 130 CITY: CARBONDALE STATE: CO ZIP: 81623 FORMER COMPANY: FORMER CONFORMED NAME: LANDSING INCOME FUND DATE OF NAME CHANGE: 19900827 FORMER COMPANY: FORMER CONFORMED NAME: LANDSING REALTY PARTNERS III DATE OF NAME CHANGE: 19850617 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended December 31, 1996 [ ] Transition Report Pursuant to Section 13 or 15(a) of the Securities Exchange Act of 1934 Commission File Number 0-15756 LIF (Exact name of registrants as specified in its charter) California 94-2969720 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) P. O. Box 130, Carbondale, Colorado 81623 (Address of principal executive offices) (970) 963-8007 (Partnership's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Units of Limited Partnership Interest (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (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 incorporated by reference in Part III of this Form 10- K or any amendment to this Form 10-K [ ] State the aggregate market value of the voting stock held by non-affiliates of the registrant. Inapplicable. DOCUMENTS INCORPORATED BY REFERENCE: None LIF FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996 TABLE OF CONTENTS Item No. Name of Item Part I Item 1. Business Item 2. Properties Item 3. Legal Proceedings Item 4. Submission of Matters to a Vote of Security Holders Part II Item 5. Market for Partnership's Common Equity and Related Shareholders Matters Item 6. Selected Financial Data Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 8. Financial Statements and Supplementary Data Item 9. Change in and Disagreements with Accountants on Accounting and Financial Disclosure Part III Item 10. Directors and Executive Officers of the Registrant Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management Item 13. Certain Relationships and Related Transactions Part IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K Signatures Index to Consolidated Financial Statements and Supplemental Consolidated Financial Statement Schedules PART I ITEM 1. BUSINESS LIF (the "Partnership") is a limited partnership which was organized under the California Revised Limited Partnership Act on June 29, 1984. The Partnership was organized to acquire real properties, including commercial, residential and agricultural properties, located primarily within the western portion of the United States, and to make short-term loans and capital contributions to other limited partnerships formed to acquire or develop and operate one or more income-producing real properties. The Partnership was formed with the following principal investment objectives: (i) to provide the maximum possible cash distributions from operations, a substantial portion of which may not be taxable to the holders of units of limited partnership interest in the Partnership (the "Holders"); (ii) to provide for capital growth through appreciation in values; and (iii) to protect the Partnership's capital. The General Partner of LIF is Partners '85 (the "General Partner") a partnership whose General Partner is Landsing Equities Corporation. The Partnership's business consists of a single segment -- acquisition and operation of one or more income-producing real properties and making short-term loans and capital contributions to operating entities formed to acquire or develop real properties. For a schedule of the Partnership's income and losses and assets, see Item 6, Selected Financial Data. The Partnership will not be engaged in the production of goods or the rendering of services. For a more specific discussion of the Partnership's operations and financial condition, see Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. The Partnership currently has an investment in Landsing Private Fund-21 ("P-21") which owns one multi-family rental property, Alpine Center Partners ("ACP") which owns one commercial rental property under construction; and Cattle Creek Development Partners ("CCDP") which owns two retail rental properties. For financial reporting purposes the Partnership's investments are presented on a consolidated basis. Results of the Partnership's operations depend primarily upon the successful operation of it's investment. The yields (return on capital) available on equity ownership of investments in income-producing and other types of real estate investments depend to a large extent upon the ability to lease or rent the property, the geographic location of the property, competition and other factors, none of which can be predicted with any certainty. The Partnership has not engaged in research activities relating to the development or improvement of products or services. The Partnership has not made, nor does it anticipate making, during the succeeding fiscal year, any capital expenditures for environmental control facilities, nor does it expect any material effects upon capital expenditures, earnings or competitive position resulting from compliance with present federal, state or local environmental control provisions. The Partnership has no employees. All of the Partnership's operations are located in the United States. ITEM 2. PROPERTIES A description of the income-producing properties which the Partnership owned at December 31, 1996 is as follows:
Financial Occupancy Average Net For the Physical Effective Rentable Year Ended Occupancy Rental Name & Location Type Sq. Ft. 12/31/96 At 12/31/96 Rate Whistler Point Apt Residential 140,230 92% 89% $ 9 Boise, Idaho Valley View Business Center Glenwood Springs, CO Retail 20,750 80% 90% $ 6 701 Cooper Glenwood Springs, CO Commercial 2,937 100% 100% $10 Alpine Center Carbondale, CO Commercial 21,783
[FN] Expressed as a percentage, it compares the actual dollar amount of rent received with the dollar amount of rent which would be received if the property were fully leased. Physical occupancy denotes the percentage of net rentable square footage leased as of a certain date. Represents the average effective rental rates, per square foot, for the year ended December 31, 1996. Alpine Center was under construction as of December 31, 1996 and thus not available for occupancy. Initial occupancy of Phase I which contains 12,349 square feet occurred in February 1997. Each of the Partnership's properties is subject to substantial encumbrances. Reference is made to Schedule XI to the Financial Statements filed as part of this annual report for information regarding such encumbrances. ITEM 3. LEGAL PROCEEDINGS The Partnership, through CCDP, has had suit filed against it by two tenants alleging loss of business during the re-development of CCDP's property. No action has been taken by the Plaintiffs and CCDP is seeking to have the matter dismissed. CCDP's defense is being paid by its insurance carrier. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter has been submitted to a vote of the limited partners (the "Limited Partners") through the solicitation of proxies or otherwise, during the fourth quarter of 1996. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDERS MATTERS There is no established public trading market for the Units of Limited Partnership interest of the Partnership and there are substantial restrictions on the transferability of such Units imposed by federal and state securities laws and by the Limited Partnership Agreement. The approximate number of record holders of Units of the Partnership as of January 1, 1997, is 951. The Limited Partners of the Partnership are entitled to certain distributions under the Amended and Restated Certificate and Agreement of Limited Partnership of the Partnership. A cash distribution of $15 per unit was paid on September 30, 1996 to Limited Partners of record as of September 15, 1996. ITEM 6. SELECTED FINANCIAL DATA (In thousands, except per Unit amount)
. . . . . . .DECEMBER 31 . . . . . . . 1996 1995 1994 1993 1992 Total Revenues $ 1,517 $1,542 $1,361 $1,216 $1,157 Net Income (Loss) 136 (52) 27 58 (47) Net Income (Loss) Per Unit (11) (4) 2 5 (4) Total Assets 9,864 9,076 8,153 7,318 7,385 Long-term Obligations - Net 7,960 6,897 5,591 4,406 4,489 Cash Distributions-Limited Partners 193 385 385 0 0 Paid Per Unit 15 30 30 0 0 Based on a weighted average of 12,820 limited partnership units outstanding in 1996, 1995, 1994, 1993, and 1992.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION The Partnership was organized to acquire real properties, including commercial, residential and agricultural properties, located primarily within the western portion of the United States, and to make short-term loans and capital contributions to other limited partnerships formed to acquire or develop and operate one or more income-producing real properties. The Partnership currently has an investment in Landsing Private Fund-21 ("P-21") which owns one multi-family rental property, Alpine Center Partners ("ACP") which owns one commercial building under construction, and Cattle Creek Development Partners ("CCP") which owns two retail rental properties. For financial reporting purposes the Partnership's investments are presented on a consolidated basis. LIQUIDITY AND CAPITAL RESOURCES As of December 31, 1996, the Partnership's consolidated cash balance totaled $388,000. Cash not required for current operations is placed in federally insured financial instruments, certificates of deposit, and money market funds which can be liquidated as needed. It is the Partnership's intention to maintain adequate cash reserves for its operations. During 1996, the Partnership experienced a net decrease in cash and cash equivalents of $168,000. During this same period, the Partnership experienced a net decrease in short-term investments of $99,000. As of December 31, 1996, cash plus short-term investment totaled $388,000 versus a balance of $655,000 at December 31, 1995 for a net decrease of $267,000. The Partnership made one Short-Term Loan during 1996. The Partnership had two Short-Term Loans repaid in full and a third partially repaid in 1996. The Short-Term Loan made to Prince Creek Partners, a Colorado limited partnership ("PCP"), was repaid in June 1996. The three rental residential property acquired by PCP were sold in 1996. The Partnership recognized a gain of $33,000 as a result of these sales. The Short-Term Loan made to Thompson Creek Partners, a Colorado limited partnership ("TCP"), was repaid in June 1996. The rental residential property acquired by TCP was sold in 1996. The Partnership recognized a gain of $6,000 as a result of this sale. The Short-Term Loan made to Cattle Creek Development Partners, a Colorado limited partnership ("CCDP"), was partially repaid in December 1996. The remaining loan balance, including accrued and unpaid interest, as of December 31, 1996 was $550,000. The loan is currently past due and is thus in default. It is expected that the two commercial properties securing this loan will either be sold in 1997 or the remainder of the Short- Term Loan will be repaid. As of December 31, 1996, one of the properties owned by CCDP was 100% occupied, while the other property owned by CCDP was 90% occupied. Currently as a Co-General Partner of CCDP, the Partnership is allocated 99% of all the profits, losses and cash distributions of CCDP as long as the Short-Term Loan remains outstanding. On June 3, 1996, the Partnership made a Short-Term Loan in the principal amount of $585,000 to Alpine Center Partners, a Colorado limited partnership ("ACP"). ACP was organized to acquire one commercial property located in Carbondale, Colorado. The property is currently undergoing renovation and expansion. The Partnership also made a capital contribution to ACP in the amount of $10,000 and became a Co-General Partner of ACP. As a Co-General Partner of ACP, the Partnership will be allocated 95% of all profits, losses and cash distributions of ACP as long as the Short-Term Loan remains outstanding. Upon repayment of the loan, the Partnership will receive 1% of profits and losses and 1% of cash distributions. A Short-Term Loan currently bears interest at the rate of 6.87% per annum and is due and payable on March 3, 1997, with the option of exercising five (5) three month extensions. Each three month extension requires a payment of an exercise fee in the amount of $3,410, and an adjustment to the interest rate (Index Rate plus 2%). As of December 31, 1996, the property owned by ACP was under construction and not available for occupancy. Occupancy of Phase I was achieved in February 1997. For financial reporting purposes, results of operations for CCDP, TCP and ACP have been shown on a consolidated basis. RESULTS OF OPERATIONS The Partnership's revenues for the year ended December 31, 1996 have declined compared to 1995. Rental revenues were $1,483,000 in 1996, a decrease of $59,000 or approximately 4% from 1995. Rental revenues were $1,542,000 in 1995, an increase of $210,000 or approximately 16% from 1994. The decline in rental revenues in 1996 versus 1995 were the result of the sale of four properties in 1996, which properties were operational for the entire year in 1995. The improvement in revenues in 1995 as compared to 1994 was the result of the acquisition of four residential properties, which were only partially included in 1994's operation and improved operations at Whistler Point Apartments. Operating expenses were $595,000 in 1996, a decrease of $48,000 or 7% from 1995. Operating expenses were $643,000 in 1995, an increase of $104,000 or 19% from 1994. The decrease in operating expenses in 1996 was the result of property sales during the year. Specifically, maintenance and repairs decreased 14%, and general and administrative costs decreased 12%. Other operating costs remained steady with 1995 levels. The increase of operating expenses in 1995 versus 1994 was the result of having more properties operating for the entire year in 1995 as compared to 1994. Net operating income of the properties (rental revenue less operating expenses) was $888,000 in 1996, a decrease of $11,000 or 2% from 1995. Management believes net operating income is the best indication of the properties performance. The decrease of 4% was due to the sale of four residential properties in 1996 that were in operation for the entire year 1995. Interest income decreased slightly in 1996. The decline was due to the decrease in the Partnership's short term investments and cash equivalents, and reduced interest rates. Interest expense increased 16% in 1996 from 1995 levels due to average larger outstanding loan balances in 1996 and acquisition of Alpine Center. Interest expense increased in 1995 from 1994, due to the acquisition of new properties in 1994. Entity level general and administrative expenses, exclusive of that at the property level, remained consistent in 1996 compared to 1995, after a 33% decrease in 1995 versus 1994. The net loss for the Partnership was $136,000 in 1996, an increase of $59,000 from a net loss of $84,000 in 1995. The net loss of the Partnership of $52,000 in 1995 was a decrease of $79,000 from the net income of $27,000 in 1994. These decreases are a result of acquiring new properties in 1994 and 1996, and the related increased depreciation and interest expense amounts. PROPERTY OPERATIONS Residential Property - Four residential properties were sold in 1996 at a profit of $39,000 to the Partnership. The remaining residential property's, Whistler Point Apartments in Boise, Idaho, operations remained stable. In 1996, the Partnership continued to make capital improvements to the property to allow it to compete effectively with new competition. The Partnership is continuing this program in 1997. The Partnership anticipates that when this improvement program is completed, the property will be placed on the market for sale in 1998. Commercial Property - The 701 Cooper Building remained 100% occupied during 1996. The Valley View Business Center improved its occupancy from 80% to 90% by year-end. As of March 31, 1997, the property is 99% occupied and leased. The Fund acquired the Alpine Center complex in 1996. The property is currently undergoing a renovation and expansion. Occupancy of Phase I occurred in February 1997. As of March 31, 1997, Phase I was 63% leased. OCCUPANCY Occupancy at all of the Partnership's properties remain high in 1996. As of December 31, 1996, occupancy at Whistler Point Apartments was 92%. This occupancy, despite new competition, is expected to remain stable through 1997. Occupancy at properties owned by CCDP was 90% as of December 31, 1996. It is expected that all Partnership properties will maintain stable occupancy during 1997. DISTRIBUTIONS A cash distribution of $15.00/unit was paid on September 30, 1996. INFLATION The effect of inflation on the Partnership's operations have been no greater than the effect on the economy as a whole. Because of competitive conditions, market rate rents may increase or decrease disproportionately with inflation while property operating costs continue to follow inflationary trends. Inflationary conditions are not expected to have a major impact on the Partnership during 1997. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this Item is contained at page F-1 following in this report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The General Partner of the Partnership is Partners '85, which has sole responsibility for all aspects of the Partnership's operations. Partners '85 is a limited partnership, whose General Partner is Landsing Equities Corporation, a California corporation. Landsing Equities Corporation was incorporated in California in 1983. It is a wholly-owned subsidiary of The Landsing Corporation which has acted as a sponsor of real estate investment programs, providing property acquisition and management services. Gary K. Barr is the Director and President of Landsing Equities Corporation. His principal occupation during the last five years or more, and certain other affiliations are set forth below: Gary K. Barr. Mr. Barr serves as Chairman and Chief Executive Officer of Pacific Coast Capital and has served as President and Director of Landsing Pacific Fund from its inception in November, 1988 to July, 1992. Mr. Barr received a Bachelor of Science degree in Mechanical Engineering from Oklahoma State University in 1967 and a Master of Business Administration degree from the Stanford University Graduate School of Business in 1972. Mr. Barr serves on the Board of Governors of the National Association of Real Estate Investment Trusts and on its Editorial Board. Mr. Barr has served as President of the California Chapter of the Real Estate Securities and Syndication Institute of the National Association of Realtors ("RESSI"), which has awarded him the designation of Specialist in Real Estate Securities. Since 1983, he has served on the Board of Directors of Silicon Valley Bancshares. In 1989 he authored the book J.K. Lasser's "Real Estate Investment Guide" published by Prentice Hall. ITEM 11. EXECUTIVE COMPENSATION The Director and President of Landsing Equities Corporation does not receive compensation from the Partnership. However, the General Partner, Partners '85, has contracted with Pacific Coast Capital, an affiliate, for the provision of certain asset management and administrative services. During 1996, Pacific Coast Capital received management fees of $103,000, which were determined based on expenses incurred in order to operate the Partnership. In addition, Pacific Coast Capital was paid $25,000 for property management services. These property management fees were based on 2% of the monthly property revenues received from Whistler Point Apartments. See Item 13, Certain Relationships and Related Transactions for further information. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT No persons or groups are known by the Partnership to hold more than 5% of the Units of limited partnership of the Partnership. The General Partner is not a direct or beneficial owner of Units of limited partnership. The General Partner knows of no arrangement, including any pledge by any person of securities of the Partnership, the operation of which may at a subsequent date result in a change in control of the Partnership. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Partnership has agreements with The Landsing Corporation and one of its affiliates, Pacific Coast Capital, pursuant to which the Partnership has paid various fees and compensation to these companies. The Partnership has entered into a property management agreement with Pacific Coast Capital for the management of the Partnership's property. During 1996, the Partnership paid Pacific Coast Capital $25,000 for property management and leasing services. The Partnership has retained Pacific Coast Capital to serve as advisor and to manage the day-to-day operations of the Partnership. Pacific Coast Capital is to perform these services based on reimbursement of costs incurred but in no case are these to exceed those which the Partnership would have to pay independent parties for comparable services. During 1996, the Partnership paid Pacific Coast Capital expense reimbursements of $103,000. For information concerning the agreements between the Partnership and the affiliates of The Landsing Corporation, see Note 2 of Notes to Financial Statements filed as part of this Annual Report. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) 1. Financial Statements See the Index on page F-1. 2. Financial Statement Schedules See the Index on page F-1. 3. Exhibits See the Exhibit Index which immediately precedes the Exhibits filed with this Report. (b) No reports were filed by the Partnership on Form 8-K during the fourth quarter ended December 31, 1996. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Partnership has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. LIF By: Partners '85 By: Landsing Equities Corporation, General Partner March 31, 1997 By: /s/ Gary K. Barr GARY K. BARR, President and Director 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 Partnership and in the capacities and on the dates indicated. March 31, 1997 /s/ Gary K. Barr GARY K. BARR, President and Director Landsing Equities Corporation (Principal Executive Officer) Supplemental Information to be Furnished With Reports Filed Pursuant to Section 15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to Section 12 of the Act. No Annual Report or Proxy material has been sent to Partnership's security holders. An Annual Report will be furnished to such security holders subsequent to the filing of Partnership's Annual Report on Form 10-K, and, when so sent, Partnership shall furnish copies of such material to the Commission. LIF INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT SCHEDULES INCLUDED IN THE FORM 10-K Report of Independent Accountants Financial Statements: Consolidated Balance Sheets, December 31, 1996 and 1995 Consolidated Statements of Operations for the Years Ended December 31, 1996, 1995 and 1994 Consolidated Statements of Changes in Partners' Equity for the Years Ended December 31, 1996, 1995 and 1994 Consolidated Statements of Cash Flows for the Years Ended December 31, 1996, 1995 and 1994 Notes to Consolidated Financial Statements Supplemental Consolidated Financial Statement Schedules: Schedule X - Supplementary Consolidated Income Statement Information for the Years Ended December 31, 1996, 1995 and 1994 Schedule XI - Real Estate and Accumulated Depreciation for the Year Ended December 31, 1996 REPORT OF INDEPENDENT ACCOUNTANTS To the Partners of LIF: We have audited the accompanying consolidated financial statements and consolidated financial statement schedules of LIF and subsidiaries listed in the index on page F-1 of this Form 10-K as of December 31, 1996 and 1995, and the related consolidated statements of operations, partners' equity and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards required that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of LIF and subsidiaries as of December 31, 1996 and 1995, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. In addition, in our opinion, the consolidated financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein. DALBY, WENDLAND & CO., P.C. Glenwood Springs, Colorado March 13, 1997 LIF CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1996 AND 1995 (In thousands)
1996 1995 ASSETS INVESTMENT IN REAL ESTATE: Rental property $11,871 $10,267 Accumulated depreciation (2,282) (2,010) Rental property - net 9,316 8,257 CASH AND CASH EQUIVALENTS (including interest bearing deposits of $282 in 1996 and $548 in 1995) 388 556 OTHER ASSETS: Short-term investments 0 99 Accounts receivable 9 15 Deferred loan costs, net of accumulated amortization of $174 in 1996 and $135 in 1995 122 132 Prepaid expenses 29 17 Total other assets 154 263 TOTAL $ 9,864 $ 9,076 LIABILITIES AND PARTNERS' EQUITY LIABILITIES: Notes payable $ 7,960 $ 6,897 Accounts payable 29 80 Other liabilities 194 170 Total liabilities 8,183 7,147 Minority Interest 75 PARTNERS' EQUITY 1,606 1,929 TOTAL $ 9,864 $ 9,076 The accompanying notes are an integral part of the consolidated financial statements.
LIF CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (In thousands except per unit amounts)
1996 1995 1994 REVENUES: Rental $1,483 $1,542 $1,332 Interest 34 25 29 Total revenues 1,517 1,567 1,361 EXPENSES: Interest 533 482 341 Operating 595 643 539 Depreciation and amortization 343 307 246 General and administrative 218 187 208 Total expenses 1,689 1,619 1,334 NET INCOME (LOSS) FROM OPERATIONS $ (172) $ (52) $ 27 GAIN FROM SALE OF REAL ESTATE 36 0 0 NET INCOME (LOSS) $ (136) $ (52) $ 27 NET INCOME (LOSS) PER PARTNERSHIP UNIT General Partners $ 0 $ 0 $ 0 Limited Partners (11) (4) 2 The accompanying notes are an integral part of the consolidated financial statements.
LIF CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (In thousands, except partnership units)
LIMITED PARTNERS NUMBER OF GENERAL TOTAL PARTNERSHIP PARTNER PARTNERS' UNITS AMOUNT AMOUNT EQUITY BALANCE, JANUARY 1, 1994 12,820 $2,882 $ (82) $2,800 Net income - 1994 27 0 27 Distribution - 1994 (385) (41) (426) Contributions - 1994 0 1 1 BALANCE, DECEMBER 31, 1994 12,820 2,524 (122) 2,402 Net loss - 1995 (52) 0 (52) Distribution - 1995 (385) (41) (426) Contributions - 1995 0 5 5 BALANCE, DECEMBER 31, 1995 12,820 2,087 (158) 1,929 Net loss - 1996 (136) 0 (136) Distribution - 1996 (192) (22) (214) Contributions - 1996 0 27 20 BALANCE, DECEMBER 31, 1996 12,820 $1,759 $(153) $1,606 The accompanying notes are an integral part of the consolidated financial statements.
LIF CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (In thousands)
1996 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (136) $ (52) $ 27 (Gain) loss on sale of property (36) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 297 267 246 Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 6 (15) 7 Decrease (increase) in prepaid expenses and deposits (12) (2) (15) Increase (decrease) in accounts payable (51) 64 1 (Decrease) increase in other liabilities 24 (50) 10 Net cash provided by operating activities 138 212 276 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (932) (868) (1,915) Sale of investment property 208 0 0 Proceeds from short-term investments 99 99 688 Net cash used in investing activities (625) (769) (1,227) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from financing 563 5,707 1,312 (Distributions) contributions net (187) (421) (426) Payments on notes payable (164) (4,401) (127) Proceeds from sale of minority interest 107 0 0 Net cash provided by financing activities 319 885 759 Increase (decrease) in cash and cash equivalents (168) 328 (192) Cash and cash equivalents at beginning of year 556 228 420 Cash and cash equivalents at end of year $ 388 $ 556 $ 228 The accompanying notes are an integral part of the consolidated financial statements.
LIF NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands except per unit amounts) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization - LIF (the "Partnership") is a limited partnership organized under the laws of the state of California for the purpose of investing in income properties and making short-term loan and capital contributions to operating entities formed to acquire or develop and operate one or more income producing real properties. The General Partner is Partners '85 (the "General Partner"), a California limited partnership, whose General Partner is Landsing Equities Corporation. LIF was formed in June 1984, and shall continue until December 31, 2034, unless sooner terminated. Investment In Real Estate Partnership - At December 31, 1996 and 1995, the Partnership was invested in Landsing Private Fund ("P-21"), a wholly-owned real estate partnership, and CCDP, a Colorado limited partnership formed in 1994. The Partnership has a 99% profits and loss interest and cash distribution interest in CCDP. On the occurrence of certain events, the Partnership's cash distribution interest is reduced to 1%. Additionally, the profits and loss interest is reduced to 1%. The other partners in CCDP are affiliates of the General Partner. In 1995 and for a portion of 1996, the Partnership was also invested in Prince Creek Partners ("PCP") and Thompson Creek Partners ("TCP"). In 1996, the properties owned by these partnerships were sold and the partnerships terminated. During 1996, the Partnership invested into a new entity - Alpine Center Partners ("ACP"). The Partnership acquired rental real estate in Colorado in 1996. The Partnership has a 95% profits and loss interest and cash distribution interest in ACP. Upon the occurrence of certain events, the Partnership's cash distribution interest is reduced to 1%. Additionally, the profits and loss interest is reduced to 1%. The other partners in ACP are affiliates of the General Partner. For financial reporting purposes, the Partnership consolidates the operations of P-21, PCP, CCDP, TCP and ACP with that of the Partnership. All significant intercompany transactions and balances have been eliminated. Minority interest was insignificant at December 31, 1996 and 1995. Rental Property - Rental property is stated at cost. Depreciation is computed by the straight-line method over estimated useful lives ranging from five to forty years. Major additions and betterments are capitalized at cost, while maintenance and repairs which do not improve or extend the life of the respective assets are expensed currently. When assets are retired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts, and any gain or loss on disposal is included in the results of operations. Deferred Loan Costs - Loan fees are deferred and amortized over the life of the related note payable. Cash and Cash Equivalents - The Partnership considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. Short-Term Investments - The Partnership invests in short-term federally insured certificates of deposits which mature on a date in excess of three months from the date of purchase. The cost of these investments approximates market value. Income Taxes - No provision for federal or state income taxes has been made in the consolidated financial statements because these taxes are the obligation of the partners. Net Income (Loss) Per Partnership Unit is based on weighted average units outstanding of 12,820 in 1996, 1995 and 1994, after giving effect to net income (loss) allocated to the General Partner of $0 in 1996, $0 in 1995, and $0 in 1994. Cash distributions of $15 per unit were paid to holders of record as of September 30, 1996. Cash distributions of $30 per unit were paid to holders in 1995 and 1994. Concentrations of Credit Risk - The Partnership's financial instruments that are exposed to concentrations of credit risk consist primarily of its cash and cash equivalents. The Partnership's cash and cash equivalents are in high-quality institutions with high credit ratings. This investment policy limits the Partnership's exposure to concentrations of credit risk. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Reclassifications - Certain amounts in the 1994 and 1995 financial Statements have been reclassified to conform to the 1996 presentation. 2. RELATED PARTY TRANSACTIONS The Partnership has entered into agreements with Pacific Coast Capital. Advisory services for investment management, general and administrative and property management are provided by Pacific Coast Capital. The General Partner is an affiliate of Pacific Coast Capital. The related party transactions delineated in the Partnership Agreement with affiliates of the General Partner are as follows: 1996 1995 1994 General and Administrative Support Fees $ 103 $ 103 $ 105 Property Management $ 25 $ 28 $ 26 In addition, as described in Note 1, the Partnership has invested in new partnerships during 1994 and 1996. The other partners in those partnerships are affiliates of the General Partner. 3. RENTAL PROPERTY Rental property consists of the following: 1996 1995 Land $ 1,922 $ 1,751 Building and improvements 9,676 8,516 Total $11,598 $10,267 The residential leases are generally for a term of one year or less or are on a month-to-month basis. Retail leases range from one to five years in length. 4. NOTES PAYABLE
1996 1995 First note payable bears interest at 8%, matures September 1, 2000, and is collateralized by Whistler Point Apartments. The note requires monthly payments of principal and interest of $42 per month. In addition the note is guaranteed by the Landsing Corporation. $5,373 $5,447 First note payable collateralized by the Valley View Business Park, with an interest rate of 9.00%, and monthly payments of $11, matures on December 10, 1998. 1,068 649 Second note payable collateralized by the Valley View Business Park, with an interest rate of 8.5% and monthly payments of $2, matures on August 28, 2004. 199 202 First note payable collateralized by 701 Cooper commercial building, with an interest rate of 9.99% and monthly payments of $3, matures on October 7, 2001. 324 193 First note payable collateralized by residence at 481 Mesa Verde, with an interest rate of 6.375% and monthly payments of $1, matures on July 1, 2024. 0 109 First note payable collateralized by residence at 3901 Mountain Drive, with an interest rate of 8.25% and monthly payments of $1, matures on July 1, 2024. 0 86 First note payable collateralized by residence at 0051 Badger Court, with an interest rate of 8.79% and monthly payments of $1, matures on September 1, 2024. 0 93 First note payable collateralized by residence at 239 Crystal Road, with an interest rate of 9.0% and monthly payments of $1, matures on October 1, 2024. 0 118 First note payable collateralized by Alpine Center, with an interest rate of 8.75% and monthly payments of $9, matures on June 3, 1997. 996 0 TOTAL $7,960 $6,897
The Partnership paid interest of $533 in 1996, $482 in 1995, and $340 in 1994. Principal payments required in future years are as follows: 1997 $ 1,118 1998 1,169 1999 363 2000 5,168 2001 142 Total $ 7,960 5. RENTAL PROPERTIES UNDER OPERATING LEASES Minimum future rents from rental properties under operating leases having initial or remaining noncancelable lease terms in excess of one year at December 31, 1996, are as follows: 1997 $ 185 1998 162 1999 76 2000 32 2001 24 Total $ 479 6. RECONCILIATION TO INCOME TAX BASIS OF ACCOUNTING The difference at December 31, 1996, 1995 and 1994, between the basis of accounting used in the accompanying consolidated financial statements and the income tax basis used to file the Partnership's federal income tax return are as follows:
1996 1995 1994 Net income (loss) $ (136) $ (52) $ 27 Remove book (income) loss from partnership investments 96 (43) (78) Difference in book vs. tax loss from partnerships (175) (86) (45) Net income (loss) - tax basis (215) (181) (96) Partners' equity 1,732 1,929 2,402 Remove equity in partnership investments (509) (453) (403) Syndication costs 1,906 1,906 1,906 Investment in partnerships (978) (803) (717) Partners' equity - tax basis 2,151 2,579 3,188
SCHEDULE X LIF SUPPLEMENTARY CONSOLIDATED INCOME STATEMENT INFORMATION FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (In thousands)
Column A Column B ITEM CHARGED TO COSTS & EXPENSES 1996 1995 1994 1. Maintenance and repairs $ 151 $ 176 $ 139 2a. Depreciation 304 267 224 2b. Amortization of deferred expenses 39 40 22 3. Property taxes 146 146 129 4. Utilities 72 69 5. General & Administrative 147 168 6. Property Management 57 58 As to items omitted, amounts did not exceed one percent of total revenue.
SCHEDULE XI LIF (A California limited partnership) REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1996 (In thousands)
COST CAPITALIZED INITIAL COST SUBSE- CONSOLI- CONSOLI- BLDG. & QUENT TO DATED DATED ACCUMULATED ENCUM- IMPROVE- ACQUI- ADJUST- CARRYING DEPRECI- BRANCES LAND MENTS TOTAL SITION MENT COST ATION Whistler Point Apts. $5,373 $1,351 $5,947 $7,298 $ 762 $ (122) $ 7,938 $2,190 Boise, ID Date Acquired: 12/23/85 Valley View Business Park 1,267 187 751 938 819 (15) 1,742 76 Glenwood Springs, CO Date Acquired: 08/28/94 701 Cooper-Commercial 324 65 261 326 1 (6) 321 16 Glenwood Springs, CO Date Acquired: 06/20/94 Alpine Center 996 410 326 736 861 0 1,597 0 Carbondale, CO Date Acquired: 06/03/96 TOTAL $7,960 $2,013 $7,285 $9,298 $2,443 $ (143) $11,598 $2,282
SCHEDULE XI LIF REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1996 (In thousands) NOTES: (1) The Partnership's policy is to invest in income producing real properties and make short-term loans and capital contributions to operating entities formed to acquire or develop and operate one or more income producing real properties. Costs incurred before completion of the development are included in building basis. Costs incurred after completion of the development projects and costs incurred subsequent to the purchase of completed projects are included as improvements. (2) Depreciation is computed by the straight-line method on lives of five to forty years. E X H I B I T I N D E X Exhibit Number in Accordance with 601 of Regulation S-K Exhibit Description 3.1 Amended and Restated Certificate and Agreement of Limited Partnership of LIF, a California limited partnership, filed as Exhibit 3 to Partnership's Registration Statement No. 2-94509 on Form S-11, as amended, is incorporated herein by reference. 3.2 Assignment Agreement, filed as Exhibit 10.1 to Partnership's Registration Statement No. 2-94509 on Form S-11, as amended, is incorporated herein by reference. 10.1 Agreement of Limited Partnership for Cattle Creek Development Partners, Ltd. (Incorporated by reference to Form 8-K dated August 31, 1994) 10.2 Promissory Note to LIF. (Incorporated by reference to Form 8-K dated August 31, 1994) 10.3 Bill of Sale, along with the Closing and Settlement Agreement for the acquisition of Valley View Business Park. (Incorporation by reference to Form 8-K dated August 31, 1994) 10.4 Promissory Note to Alpine Bank, along with related Deed of Trust. (Incorporated by reference to Form 8-K dated August 31, 1994) 10.5 Promissory Note to Norman Overacker and Elaine Overacker, along with related Deed of Trust. (Incorporated by reference to Form 8-K dated August 31, 1994) 10.6 Closing and Settlement Agreement for acquisition of 701 Cooper Avenue Building. (Incorporated by reference to Form 8-K dated August 31, 1994) 10.7 Promissory Note to Alpine Bank, along with related Deed of Trust. (Incorporated by reference to Form 8-K dated August 31, 1994) EX-27 2 ART. 5 FDS 1996 10-K
5 1000 12-MOS DEC-31-1996 DEC-31-1996 388 0 9 0 0 122 11,598 2,282 9,864 223 0 0 0 0 1,681 9,864 0 1,517 0 0 1,156 0 533 0 0 0 0 0 0 (136) 0 0
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