-----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, P+yWcFOgaqdU5e6RBAGdm/fOFyOKoywo4P49V5f8vlKCdVY5NLi+QJZJl6TDyYjI Tgr3a+9v0+bgiTak0wruWQ== 0000950134-99-000408.txt : 19990126 0000950134-99-000408.hdr.sgml : 19990126 ACCESSION NUMBER: 0000950134-99-000408 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19990125 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL REALTY L P CENTRAL INDEX KEY: 0000819671 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE OPERATORS (NO DEVELOPERS) & LESSORS [6510] IRS NUMBER: 752163175 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 001-09648 FILM NUMBER: 99511910 BUSINESS ADDRESS: STREET 1: 10670 N CENTRAL EXPRWY STREET 2: SUITE 300 CITY: DALLAS STATE: TX ZIP: 75231 BUSINESS PHONE: 2146924700 MAIL ADDRESS: STREET 1: 10670 N CENTRAL EXPRWY STREET 2: SUITE 300 CITY: DALLAS STATE: TX ZIP: 75231 10-Q/A 1 AMENDMENT TO FORM 10-Q FOR QUARTER END 6/30/98 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED JUNE 30, 1998 Commission File Number 1-9648 ------ NATIONAL REALTY, L.P. ------------------------------------------------------ (Exact Name of Registrant as Specified in Its Charter) Delaware 75-2163175 ------------------------------- ---------------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 10670 North Central Expressway, Suite 300, Dallas, Texas 75231 ----------------------------------------------------------------------- (Address of Principal Executive Office) (Zip Code) (214) 692-4700 ------------------------------- (Registrant's Telephone Number, Including Area Code) 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 [ ]. Units of Limited Partner Interest 6,321,622 - --------------------------------- ------------------------------- (Class) (Outstanding at July 31, 1998) 2 This Form 10-Q/A amends the Registrant's quarterly report on Form 10-Q for the quarter ended June 30, 1998 as follows: ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - page 19, 22. Liquidity and Capital Resources (Continued) The Partnership's principal sources of cash flow have been and will continue to be from property operations and externally generated funds. Externally generated funds include borrowings, proceeds from the sale of Partnership properties and other assets and proceeds from the issuance of debt secured by Partnership properties or mortgage notes receivable. The Partnership expects that its cash on hand, cash flow from property operations together with externally generated funds will be sufficient to meet the Partnership's various cash needs in 1998, including, but not limited to the payment of distributions, debt service obligations coming due and property maintenance and improvements, as more fully discussed in the paragraphs below. The Partnership's net cash flow from property operations (rents collected less payments for property operating expenses) decreased from $12.5 million and $23.9 million for the three and six months ended June 30, 1997 to $10.4 million and $21.2 million for the three and six months ended June 30, 1998. This decrease is primarily due to the sale of one apartment complex and three commercial properties in 1997 and the sale of three apartment complexes and one commercial property in the first half on 1998. Interest collected increased from $1.4 million for the six months ended June 30, 1997 to $1.6 million for the six months ended June 30, 1998. An increase of $903,000 was due to loans funded in late 1997 or in 1998. This increase was partially offset by decreases of $410,000 due to loans paid off in 1997, $249,000 due to a loan on which the Partnership stopped accepting the reduced payment and is considering foreclosure and $94,000 due to decreased short term investments in 1998. Interest paid increased from $14.4 million for the six months ended June 30, 1997 to $14.6 million for the six months ended June 30, 1998. An increase of $952,000 is due to borrowings in 1997 and 1998, secured by notes receivable and four previously unencumbered shopping centers. An increase of $205,000 is due to a loan on which payments were not being made in 1997, pending modification which occurred in 1998. These increases were partially offset by decreases of $110,000 due to loans secured by notes receivable being paid off and $350,000 due to properties sold in 1997 and 1998. General and administrative expenses paid decreased from $4.4 million for the six months ended June 30, 1997 to $3.5 million for the six months ended June 30, 1998. This decrease was primarily due to accruals at June 30, 1998, for payroll, legal and other expenses, paid in the third quarter of 1998. In November 1992, in conjunction with the transfer of the net assets of 52 apartment complexes and a wraparound note receivable to GCLP, such assets were refinanced under a $223 million blanket mortgage loan. The blanket mortgage loan required that cash flow from the GCLP properties be used to fund various escrow and reserve accounts and limited the payment of distributions to the Partnership. During the three and six months ended June 30, 1998, the Partnership received distributions from GCLP totaling $10.0 million and $11.5 million, compared to distributions totaling $1.2 million and $2.0 million (excluding proceeds from the released credit enhancement escrow, as described below) received during the three and six months ended June 30, 1997. In January 1997, GCLP replaced the credit enhancement escrow with a $18.5 million letter of credit. The letter of credit provided by a financial institution in the amount of $18.5 million was for a term of not less than two years and was to be used to pay operating shortfalls of GCLP's properties. The Partnership received net cash of $11.3 million from the released credit enhancement escrow, after the payment of various costs associated with the letter of credit. During the first and second quarters of 1998, the Partnership funded a $350,000 loan to Ellis Development Company, Inc. The loan is secured by 4.5 acres of land located in Abilene, Texas. In 1997, the Partnership funded a total of $1.3 million of a $1.5 million loan commitment to Bordeaux Investments Two, L.L.C. ("Bordeaux"). The loan is secured by (i) a 100% limited partnership interest in Bordeaux, which owns a shopping center in Oklahoma City, Oklahoma; (ii) 100% of the stock of Bordeaux Investments One, Inc., which owns approximately 6.5 acres of undeveloped land in Oklahoma City, Oklahoma; and (iii) the personal guarantees of the Bordeaux partners. Through July 1998, an additional $53,000 was funded and the loan was modified, increasing the principal balance to $1.4 million. The Partnership has committed to fund an additional $24,000, at which time the loan will be modified to increase the principal balance. The Partnership received the required December 31, 1997 deferred interest payment in January 1998. 19 3 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Liquidity and Capital Resources (Continued) Also in July 1998, the Partnership completed the sale of the Royal Oaks Apartments, a 300 unit apartment complex in Stone Mountain, Georgia, for $6.8 million in cash. The property is classified as held for sale in the accompanying June 30, 1998 Consolidated Balance Sheet. The Partnership received net cash of $6.6 million from the sale. In the first six months of 1998, the Partnership declared and paid quarterly distributions aggregating $.25 per unit, or a total of $1.6 million. As discussed in NOTE 7. "LEGAL PROCEEDINGS," the Moorman litigation settlement agreement (the "Moorman Settlement Agreement") sets forth certain aggressive, annually increasing targets relating to the price of the Partnership's units of limited partner interest which were not met, resulting in, among other things, the required withdrawal of the General Partner upon election of a successor and the resulting required purchase of the Redeemable General Partner Interest, as defined below. The withdrawal of the General Partner requires the Partnership to acquire the General Partner's interest in the Partnership (the "Redeemable General Partner Interest") at its then fair value, and to pay certain fees and other compensation, as provided in the Partnership Agreement and the Moorman Settlement Agreement. The Moorman Settlement Agreement provides that any payment for such Redeemable General Partner Interest, fees and other compensation during the pendency of the Moorman Settlement Agreement may, at the option of the Oversight Committee (also established under the Moorman Settlement Agreement), be made over three years pursuant to a secured promissory note bearing interest at a financial institution's prime rate. The Managing General Partner has calculated the fair value of the Redeemable General Partner Interest at December 31, 1997 to be $49.6 million, and believes that there has been no material change in such value since that date. The Partnership would be entitled to offset against such payment the then outstanding principal balance of the note receivable ($4.2 million at June 30, 1998) plus all accrued and unpaid interest ($7.8 million at June 30, 1998) on the note receivable from the General Partner representing its capital contribution to the Partnership. When Syntek Asset Management, L.P. ("SAMLP") withdraws as General Partner of the Partnership, the fair value of the Redeemable General Partner Interest would depend on the value of the Partnership's assets at the time of calculation and there 22 4 NATIONAL REALTY, L.P. Signature Page 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 REALTY, L.P. By its General Partner: SYNTEK ASSET MANAGEMENT, L.P. By its General Partners: SYNTEK ASSET MANAGEMENT, INC. Date: January 25, 1999 By: /s/ Randall M. Paulson ------------------------- --------------------------------- Randall M. Paulson President Date: January 25, 1999 By: /s/ Thomas A. Holland ------------------------- --------------------------------- Thomas A. Holland Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) Date: January 25, 1999 By: /s/ Gene E. Phillips ------------------------- --------------------------------- Gene E. Phillips General Partner Syntek Asset Management, L.P. 28 -----END PRIVACY-ENHANCED MESSAGE-----