-----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, RjrZ4wQYj9FCw6dXTwBMO4ZXPGKywv0E3rKqdpMi32+eJeLRdbD/HS30b67n1Dr8 mQwclwMDXJOoFpWmizqEXg== 0000950134-97-005877.txt : 19970812 0000950134-97-005877.hdr.sgml : 19970812 ACCESSION NUMBER: 0000950134-97-005877 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970811 SROS: AMEX 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 SEC ACT: 1934 Act SEC FILE NUMBER: 001-09648 FILM NUMBER: 97655391 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 1 FORM 10-Q FOR QUARTER ENDED JUNE 30, 1997 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED JUNE 30, 1997 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 6,328,969 - --------------------------------- ------------------------------ (Class) (Outstanding at August 1, 1997) 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The accompanying Consolidated Financial Statements have not been examined by independent certified public accountants, but in the opinion of the management of National Realty, L.P., all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of consolidated results of operations, consolidated financial position and consolidated cash flows at the dates and for the periods indicated, have been included. NATIONAL REALTY, L.P. CONSOLIDATED BALANCE SHEETS
June 30, December 31, 1997 1996 ------------ -------------- (dollars in thousands) Assets Real estate held for investment Land ......................................... $ 49,758 $ 51,342 Buildings and improvements ................... 391,767 396,626 -------- -------- 441,525 447,968 Less - accumulated depreciation .............. (224,158) (223,204) -------- -------- 217,367 224,764 Notes and interest receivable, net of deferred gains of $15,787 in 1997 and 1996 ............ 23,077 15,189 Less - allowance for estimated losses ........ (1,910) (1,910) -------- -------- 21,167 13,279 Cash and cash equivalents ...................... 16,253 5,872 Accounts receivable ............................ 2,261 2,040 Prepaid expenses ............................... 996 1,663 Escrow deposits and other assets (including $480 in 1997 from affiliates) ..................... 5,473 18,496 Marketable equity securities of affiliate, at market ....................................... 2,447 1,272 Deferred financing costs ....................... 12,982 13,947 -------- -------- $278,946 $281,333 ======== ========
The accompanying notes are an integral part of these Consolidated Financial Statements. 2 3 NATIONAL REALTY, L.P. CONSOLIDATED BALANCE SHEETS - Continued
June 30, December 31, 1997 1996 ------------ ----------- (dollars in thousands) Liabilities and Partners' Equity (Deficit) Liabilities Notes and interest payable ................................. $323,058 $325,921 Pension notes and related interest payable ................. 14,253 13,478 Accrued property taxes ..................................... 5,987 6,928 Accounts payable and other liabilities (including $85 in 1996 to affiliates) ................... 4,582 3,040 Tenant security deposits ................................... 3,153 7,057 -------- -------- 351,033 356,424 Commitments and contingencies Redeemable General Partner Interest .......................... 37,855 37,855 Partners' equity (deficit) General Partner ............................................ 2,710 2,649 Limited Partners (6,328,974 units in 1997 and 6,328,303 units in 1996) ................................ (72,799) (74,568) Unrealized gain on marketable equity securities of affiliate ............................................ 2,177 1,003 -------- -------- (67,912) (70,916) Less - Redeemable General Partner Interest ................. (42,030) (42,030) -------- -------- (109,942) (112,946) -------- -------- $278,946 $281,333 ======== ========
The accompanying notes are an integral part of these Consolidated Financial Statements. 3 4 NATIONAL REALTY, L.P. CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months For the Six Months Ended June 30, Ended June 30, ----------------------------------- ----------------------------------- 1997 1996 1997 1996 --------------- -------------- --------------- -------------- (dollars in thousands, except per unit) Revenues Rents.......................... $ 27,889 $ 27,171 $ 55,609 $ 54,185 Interest....................... 925 764 1,764 1,510 --------------- -------------- --------------- -------------- 28,814 27,935 57,373 55,695 Expenses Interest....................... 8,512 8,433 17,033 16,860 Depreciation................... 2,678 2,530 5,142 5,040 Property taxes & insurance..... 3,100 3,082 6,118 6,175 Utilities...................... 2,849 2,833 6,005 5,803 Property-level payroll costs... 1,488 1,448 3,160 3,118 Repairs and maintenance........ 6,705 6,578 12,377 12,070 Other operating expenses....... 1,013 972 2,166 2,070 Property management fees....... 1,191 1,172 2,384 2,327 General and administrative..... 1,544 1,265 3,501 3,078 --------------- -------------- --------------- -------------- 29,080 28,313 57,886 56,541 --------------- -------------- --------------- -------------- (Loss) from operations........... (266) (378) (513) (846) Gain on sale of real estate...... 3,587 - 3,587 - --------------- -------------- --------------- -------------- Net income (loss)................ $ 3,321 $ (378) $ 3,074 $ (846) =============== ============== =============== ============== Earnings per unit Net income (loss).............. $ .51 $ (.06) $ .48 $ (.14) =============== ============== =============== ============== Weighted average units of limited partner interest used in computing earnings per unit....................... 6,329,076 6,417,832 6,328,639 6,417,832 =============== ============== =============== ==============
The accompanying notes are an integral part of these Consolidated Financial Statements. 4 5 NATIONAL REALTY, L.P. CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT) FOR THE SIX MONTHS ENDED JUNE 30, 1997
Unrealized Gain On Redeemable Marketable General Partner's General Limited Equity Partner Equity Partner Partners Securities Interest (Deficit) --------- ---------- --------- ---------- ---------- (dollars in thousands, except per unit) Balance, January 1, 1997 .......... $ 2,649 $ (74,568) $ 1,003 $ (42,030) $ (112,946) Units issued on exercise of warrants ........................ -- 20 -- -- 20 Distributions ($.20 per unit) ..... -- (1,264) -- -- (1,264) Unrealized gain on marketable equity securities of affiliate... -- -- 1,174 -- 1,174 Net income ........................ 61 3,013 -- -- 3,074 --------- ---------- --------- ---------- ---------- Balance, June 30, 1997 ............ $ 2,710 $ (72,799) $ 2,177 $ (42,030) $ (109,942) ======== ========= ======== ========= ==========
The accompanying notes are an integral part of these Consolidated Financial Statements. 5 6 NATIONAL REALTY, L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, ------------------------------------- 1997 1996 (dollars in thousands) ---------------- ---------------- Cash Flows From Operating Activities Rents collected ................................... $ 55,703 $ 54,401 Interest collected ................................ 1,438 1,432 Interest paid ..................................... (14,433) (15,869) Payments for property operations .................. (31,835) (33,369) General and administrative expenses paid .......... (4,397) (2,999) ---------------- ---------------- Net cash provided by operating activities ...... 6,476 3,598 Cash Flows From Investing Activities Proceeds from sale of real estate ................. 4,409 -- Real estate improvements .......................... (1,313) (1,888) Collections on notes receivable ................... 1,362 -- Funding of notes receivable ....................... (9,106) (1,485) ---------------- ---------------- Net cash (used in) investing activities ........ (4,648) (3,373) Cash Flows From Financing Activities Proceeds from notes payable ....................... 8,333 2,400 Payoffs on notes payable .......................... (7,051) (2,331) Payments from (to) affiliates, net ................ -- (4,277) Payments on notes payable ......................... (2,781) (2,405) Receipt from escrow ............................... 12,423 -- Deferred financing costs .......................... (1,127) (70) Exercise of warrants .............................. 20 -- Distributions to unitholders ...................... (1,264) (9,355) ---------------- ---------------- Net cash provided by (used in) financing activities ................................... 8,553 (16,038) ---------------- ---------------- Net increase (decrease) in cash and cash equivalents .................................. 10,381 (15,813) Cash and cash equivalents at beginning of period .... 5,872 20,699 ---------------- ---------------- Cash and cash equivalents at end of period .......... $ 16,253 $ 4,886 ================ ================
The accompanying notes are an integral part of these Consolidated Financial Statements. 6 7 NATIONAL REALTY, L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, --------------------------- 1997 1996 ----------- ----------- (dollars in thousands) Reconciliation of net income (loss) to net cash provided by operating activities Net income (loss) ............................... $ 3,074 $ (846) Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation .................................. 5,142 5,040 Gain on sale of real estate ................... (3,587) -- Decrease in other assets ...................... 1,274 807 (Increase) in interest receivable ............. (144) (25) Increase in interest payable .................. 1,061 163 (Decrease) in other liabilities ............... (344) (1,541) ----------- ----------- Net cash provided by operating activities... $ 6,476 $ 3,598 =========== =========== Schedule of noncash activities Unrealized gain on marketable equity securities of affiliate ............................... $ 1,174 $ 220
The accompanying notes are an integral part of these Consolidated Financial Statements. 7 8 NATIONAL REALTY, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. BASIS OF PRESENTATION The accompanying Consolidated Financial Statements of National Realty, L.P. and consolidated entities (the "Partnership") have been prepared in conformity 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. Operating results for the six month period ended June 30, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. For further information, refer to the Consolidated Financial Statements and Notes thereto included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1996 (the "1996 Form 10- K"). NOTE 2. EARNINGS PER UNIT Net income (loss) per unit of limited partner interest (per "unit") is computed based upon the weighted average number of units outstanding during each period. The limited partners of National Realty, L.P. ("National Realty") have a 99% interest and the general partner, Syntek Asset Management, L.P. (the "General Partner" or "SAMLP"), has an aggregate 1% interest in the net income, net loss and distributions of National Realty. National Realty is allocated 99% of the net income or net loss of National Operating, L.P. ("NOLP" or the "Operating Partnership"), and the General Partner is allocated an aggregate 1% of the net income or net loss of the Operating Partnership. The 1% General Partner interest in each of National Realty and the Operating Partnership is equal to a 1.99% interest on a combined basis. Accordingly, net income (loss) per unit is derived by dividing 98.01% of the net income (loss) in each period by the respective weighted average units of limited partner interest. NOTE 3. NOTES RECEIVABLE In January 1997, the Partnership funded a $1.2 million loan 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. The loan bears interest at 14.0% per annum, requires monthly payments of interest only at 12.0% per annum, with the deferred interest payable annually in December 1997 and 1998, and matures in January 1999. The Partnership has the option to reduce the principal balance of the loan by $50,000 in exchange for 75% ownership of Bordeaux. In July 1997, an additional $53,000 was funded and the loan was modified, increasing the principal balance to $1.3 million. The Partnership has committed to fund an additional $212,000, at which time the loan will be modified to increase the principal balance. 8 9 NATIONAL REALTY, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued NOTE 3. NOTES RECEIVABLE (Continued) In February 1997, the Partnership funded a third loan to JNC Enterprises, Inc. ("JNC") in the amount of $2.5 million. The loan is secured by a 70.87% limited partner interest in a limited partnership which owns 250 acres of undeveloped land in Fort Worth, Texas. The note bears interest at 12% per annum, requires quarterly payments of interest only and matures in October 1997. In March 1997, the Partnership funded an additional $1.5 million and modified the loan by increasing the principal balance to $4.0 million. In June 1997, the Partnership funded a fourth loan to JNC in the amount of $2.5 million. In July 1997, an additional $1.0 million was funded and the loan was modified, increasing the principal balance to $3.5 million. The loan is secured by 81.99 acres of undeveloped land in Frisco, Texas. The note bears interest at 16.0% per annum, requires monthly payments of interest only and matures in June 1998. Also in June 1997, the Partnership received $1.5 million from JNC, of which $1.0 million was applied to payoff the first note at maturity in June 1997, $416,000 was applied as a principal reduction payment on the third note and the remaining $84,000 was applied to accrued interest. In July 1997, the Partnership received $2.0 million from JNC, which was applied, as a principal reduction payment, to the third note. In January 1997, the note receivable secured by the Nellis Bonanza Shopping Center in Las Vegas, Nevada matured. The borrower did not make the required principal payment. Therefore, the note was classified as non-performing at December 31, 1996. The Partnership has instituted foreclosure proceedings and anticipates that it will not incur a loss on foreclosure as the estimated value of the collateral property exceeds the carrying value of the note. In April 1997, the Partnership funded a $1.5 million loan to Highway 544 Partners, L.P. ("Highway Partners"). The loan is secured by a first lien on approximately 49 acres of undeveloped land in Plano, Texas, a pledge of 100% of the partnership interest and the personal guarantee of the owner of Highway Partner's general partner. The note receivable bears interest at 18% per annum, requires quarterly interest only payments at 12% per annum, with the deferred interest payable annually in April 1998 and 1999, and matures in April 1999. NOTE 4. REAL ESTATE In April 1997, the Partnership sold Tollhill East, a 81,115 square foot office building in Dallas, Texas. The building was sold for $7.0 million in cash, the Partnership receiving net cash of $4.6 million after the payoff of $2.4 million in existing mortgage debt and the payment of various closing costs associated with the sale. The Partnership paid Carmel Realty, Inc. ("Carmel Realty"), an affiliate of the Partnership's General Partner, a real estate sales commission of $209,000 based on the $7.0 million sales price of the property. The Partnership recognized a gain of $3.6 million on the sale. 9 10 NATIONAL REALTY, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued NOTE 4. REAL ESTATE (Continued) In June 1997, the Partnership sold the Fondren Building, a 47,808 square foot office building in Houston, Texas, for $661,000 in cash. The Partnership received net cash of $610,000 after the payment of various closing costs associated with the sale of the property. The Partnership recognized no gain or loss on the sale. NOTE 5. NOTES PAYABLE In April 1997, the Partnership modified and extended the mortgage secured by the Cross County Mall in Mattoon, Illinois. In conjunction with the modification, the Partnership made a principal reduction payment of $137,500. The modified and extended mortgage bears interest at a variable rate, currently 10.4% per annum, requires monthly payments of principal and interest and matures in April 2002. In June 1997, the Partnership refinanced the mortgage debt secured by the Pheasant Ridge Apartments in Bellevue, Nebraska in the amount of $5.7 million. The Partnership received net cash of $804,000 after the payoff of $4.6 million in existing mortgage debt, the funding of escrows, and the payment of various closing costs associated with the refinancing. The new mortgage bears interest at 7.89% per annum, requires monthly payments of principal and interest of $41,742 and matures in July 2007. The Partnership paid Basic Capital Management, Inc. ("BCM"), an affiliate of the Partnership's General Partner, a mortgage brokerage and equity refinancing fee of $57,000 based on the new $5.7 million mortgage. Also in June 1997, the Partnership refinanced the mortgage debt secured by the Regency Apartments in Lincoln, Nebraska in the amount of $3.4 million. The Partnership received net cash of $374,000 after the payoff of $2.5 million in existing mortgage debt, the funding of escrows and the payment of various closing costs associated with the refinancing. The new mortgage bears interest at 7.89% per annum, requires monthly payments of principal and interest of $24,577 and matures in July 1997. The Partnership paid BCM a mortgage brokerage and equity refinancing fee of $33,848 based on the new $3.4 million mortgage. NOTE 6. WARRANTS Pursuant to the Moorman Settlement Agreement (as defined in NOTE 8. "LEGAL PROCEEDINGS"), on February 14, 1992, the Partnership issued warrants to purchase an aggregate of 2,019,579 of its units of limited partner interest subject to adjustment. Each warrant initially entitled the holder thereof to purchase three quarters of one unit at the exercise price of $11.00 per warrant. The initial exercise price was equal to $14.67 per unit and increased to $16.00 per unit on February 14, 1993. The warrants were exercisable for five years from the date of issuance and expired on February 14, 1997. Prior to their expiration a total of 1,631 warrants were exercised for the purchase of 1,226 units. See NOTE 8. "LEGAL PROCEEDINGS." 10 11 NATIONAL REALTY, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued NOTE 7. INCOME TAXES No federal or state income taxes have been provided for in the accompanying Consolidated Statements of Operations as the partners include their share of Partnership income or loss in their respective tax returns. For income or loss allocation purposes, limited partners are allocated their proportionate share of income or loss commencing with the calendar month subsequent to their entry into the Partnership. NOTE 8. LEGAL PROCEEDINGS Moorman Settlement. The Partnership is party to a settlement agreement, dated as of May 9, 1990, between plaintiffs Joseph B. Moorman, et al. and defendants Robert A. McNeil, National Realty, the Operating Partnership, SAMLP, Gene E. Phillips and William S. Friedman, and Shearson Lehman Hutton Inc., successor- in-interest to defendant E.F. Hutton & Company Inc., relating to the action entitled Moorman, et al. v. Southmark Corporation, et al. Such action was filed on September 2, 1987, in the Superior Court of the State of California, County of San Mateo. On May 9, 1990, the Partnership agreed to settle such action pursuant to the terms of a written agreement (the "Moorman Settlement Agreement"). On June 29, 1990, after a hearing as to its fairness, reasonableness and adequacy, the Moorman Settlement Agreement was granted final court approval. The Moorman Settlement Agreement is complex and the following summary is qualified in its entirety by reference to the text thereof, which was previously included as an exhibit to the Partnership's Form 10-Q for the quarter ended March 31, 1990, as filed with the Securities and Exchange Commission. The Moorman Settlement Agreement provides for a plan (the "Moorman Settlement Plan") consisting of, among other things, the following: (i) the appointment and operation of a committee (the "Oversight Committee"), to oversee the implementation of the Moorman Settlement Plan, (ii) the appointment and operation of an audit committee having a majority of members unaffiliated with Messrs. Phillips and Friedman or SAMLP, (iii) the establishment of specified annually increasing targets described below (each a "Target") for each of the next five years through May 1995, relating to the price of the units of limited partner interest as decreased for certain distributions to unitholders, (iv) an agreement by SAMLP not to seek reimbursement of greater than $500,000 per year for Messrs. Phillips' and Friedman's salaries for serving as general partners of SAMLP, (Mr. Friedman resigned as general partner of SAMLP effective March 4, 1994) and a deferral of such payments until such time as a Target may be met, and, if SAMLP resigns as General Partner, a waiver of any compensation so deferred, (v) a deferral until such time as a Target may be met of certain future annual General Partner compensation payable, pursuant to the Partnership's governing documents, to SAMLP or its affiliates, and, if SAMLP resigns as General Partner, a waiver of any compensation so deferred, (vi) the required distribution to unitholders of all the Partnership's operating cash flow in excess of certain renovation costs, unless the Oversight Committee approves alternative uses for such 11 12 NATIONAL REALTY, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued NOTE 8. LEGAL PROCEEDINGS (Continued) operating cash flow, (vii) the issuance of Warrants to purchase an aggregate of up to 2,019,579 units (the "Warrants") to Class Members, (viii) the contribution by certain co-defendants of cash and notes payable to the Partnership aggregating $5.5 million (including $2.5 million to be contributed by SAMLP and its general partners over a four-year period), (ix) the amendment of the Partnership Agreement to reduce the vote required to remove the General Partner from a two-thirds vote to a majority vote of the units, (x) the Partnership's redemption of its unit purchase rights and an agreement not to adopt a similar rights plan without Oversight Committee approval and (xi) the Partnership's payment of certain settlement costs, including plaintiffs' attorneys' fees in the amount of $3.4 million. The Moorman Settlement Plan remains in effect until SAMLP has resigned as General Partner and a successor general partner is elected and takes office, and the Warrants remained exercisable for five years from the date of issuance and expired on February 14, 1997. Prior to their expiration a total of 1,631 Warrants were exercised for the purchase of 1,226 units. SAMLP, on behalf of itself and its general partners, has made the payments of $2.5 million (including accrued interest), to the Partnership, as required by the Moorman Settlement Agreement. If Targets are not met for any two successive years of the Moorman Settlement Plan or for the final year of the Moorman Settlement Plan, SAMLP will be required to withdraw as General Partner effective at the time a successor general partner is elected. Upon, among other things, the withdrawal of SAMLP as General Partner and the due election and taking office of a successor, the Moorman Settlement Plan would terminate. The Targets for the first and second anniversary dates were not met. Since the Targets were not met for two successive years, the Moorman Settlement Agreement requires that SAMLP resign as General Partner, effective upon the election and qualification of its successor. On July 8, 1992, SAMLP notified the Oversight Committee of the failure to meet the Target for two successive years. Upon, among other things, the withdrawal of SAMLP as General Partner and the due election and taking office of a successor, the Moorman Settlement Plan will terminate. Withdrawal of SAMLP as General Partner pursuant to the Moorman Settlement Agreement requires unitholders to elect a successor general partner by majority vote. Upon the withdrawal or removal of the General Partner without the selection of a successor, the Partnership would be dissolved. The Moorman Settlement Agreement provides that between the date of the certification causing the General Partner's resignation and the date a successor general partner takes office, the resigning General Partner shall limit its activities, as General Partner, to the conduct of the business of the Partnership in the ordinary course, shall not, without 12 13 NATIONAL REALTY, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued NOTE 8. LEGAL PROCEEDINGS (Continued) consent of the Oversight Committee, purchase or sell any real estate or other assets of the Partnership not in progress on said date, shall cooperate in the election of a successor general partner and shall cooperate with its successor to facilitate a change in the office of General Partner of the Partnership. The resigning General Partner will continue to receive fees, expenses and distributions, if any, while the solicitation is prepared. The withdrawal of the General Partner would require 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. Under the Moorman Settlement Agreement, payment for such Redeemable General Partner Interest, fees and other compensation may, at the Oversight Committee's option, be paid over a three year period pursuant to a secured promissory note bearing interest at the prime rate and containing commercially reasonable terms and collateral. Under the Moorman Settlement Plan, the purchase price for Redeemable General Partner Interest would be calculated, as of the time SAMLP withdraws as General Partner under the Partnership's governing documents. The Managing General Partner has calculated the Redeemable General Partner Interest at December 31, 1996 to be $42.0 million, and believes there has been no material change in such value since such date. The Partnership would be entitled to offset against any such payment the then outstanding principal balance ($4.2 million at June 30, 1997) plus all accrued but unpaid interest ($6.7 million at June 30, 1997) on the note receivable from SAMLP for its capital contribution to the Partnership. In the accompanying Consolidated Financial Statements, the Redeemable General Partner Interest is shown as a reduction of Partners' Equity. The note receivable from the General Partner has been offset against the Redeemable General Partner Interest. The Oversight Committee previously has informed the Partnership that it calculated the amount of such Redeemable General Partner Interest to be less than the amount calculated by the Managing General Partner. When SAMLP withdraws as General Partner of the Partnership, the value of the Redeemable General Partner Interest would depend on the fair value of the Partnership's assets at the time of calculation and there can be no assurance that the Redeemable General Partner Interest, fees and other compensation payable on any such withdrawal will not be substantially higher or lower than any current estimate or calculation. On January 27, 1995, National Realty, SAMLP, the Oversight Committee and William H. Elliott executed an Implementation Agreement which provides for the nomination of an entity controlled by Mr. Elliott as successor general partner and for the resolution of all related matters under the Moorman Settlement. On February 20, 1996, the parties to the Implementation Agreement executed an Amended and Restated Implementation Agreement. 13 14 NATIONAL REALTY, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued NOTE 8. LEGAL PROCEEDINGS (Continued) On September 23, 1996, the Supervising Judge entered an order granting tentative approval of the Amended and Restated Implementation Agreement and the form of notice to be sent to the original class members. On April 7, 1997, the Supervising Judge entered an order amending the September 23, 1996 order, approving the formal notice and setting a hearing on the Implementation Agreement for June 27, 1997. A notice was sent to all class members and unitholders in April 1997 and the hearing was held on June 27, 1997. As of August 1, 1997, the Supervising Judge had not entered the order granting final approval of the Implementation Agreement. Upon final approval by the Supervising Judge, the proposal to elect the successor general partner will be submitted to the unitholders of National Realty for a vote. In addition, the unitholders will vote upon amendments to the National Realty Partnership Agreement which relate to the proposed compensation of the successor general partner and other related matters. Provided that the successor general partner is elected pursuant to the terms of the Amended and Restated Implementation Agreement, SAMLP shall receive $12,471,500 from the Partnership. This amount represents a compromise settlement of the net amounts owed by the Partnership to SAMLP upon SAMLP's withdrawal as General Partner and any amounts which SAMLP and its affiliates may owe to the Partnership. This amount shall be paid to SAMLP pursuant to a promissory note in accordance with the terms set forth in the Amended and Restated Implementation Agreement. Upon approval by the unitholders, SAMLP shall resign as General Partner and the successor general partner shall take office. If the required approvals are obtained, National Realty anticipates that the successor general partner may be elected and take office during the fourth quarter of 1997. The Amended and Restated Implementation Agreement provides that SAMLP, and its affiliates owning units in National Realty, shall not vote to remove the successor general partner, except for removal with cause, for a period of 36 months from the date the successor general partner takes office. Upon the election and taking office of the successor general partner, the Moorman Settlement Plan and the Oversight Committee shall terminate. If the successor general partner nominee is not elected, the existing Moorman Settlement Agreement shall remain in full force and effect and all of the provisions of the Amended and Restated Implementation Agreement shall be voided. Other. The Partnership is involved in various lawsuits arising in the ordinary course of business. Management of the Partnership is of the opinion that the outcome of these lawsuits would have no material impact on the Partnership's financial condition. 14 15 NATIONAL REALTY, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued NOTE 9. SUBSEQUENT EVENTS In July 1997, the Partnership funded a $700,000 loan to an individual. The loan is secured by a first lien on an oil, gas and mineral lease in Anderson County, Texas and by a second lien on a ranch in Henderson County, Texas. The loan bears interest at 12.0% per annum, requires monthly payments of interest only and matures in March 1998. Also in July 1997, the Partnership funded a $1.4 million loan to Avex Fund III, Inc. The loan is secured by a first lien on 14.5 acres of undeveloped land in Las Colinas, Texas. The loan bears interest at 12.0% per annum, requires monthly payments of interest only and matures in July 1999. In August 1997, the Partnership funded an $800,000 loan to Frisco Eldorado Partners, L.L.C. The loan is secured by a first lien on 45 acres of undeveloped land in Frisco, Texas. The loan bears interest at 15.0% per annum, requires monthly payments of interest only and matures in August 1998. $250,000 of the loan balance is guaranteed by the Frisco Economic Development Corporation. ------------------------ ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction National Realty, L.P. ("National Realty") is a Delaware limited partnership formed on January 29, 1987, the business of which consists primarily of owning and operating through National Operating, L.P., also a Delaware limited partnership (the "Operating Partnership"), a portfolio of real estate. Most of the Operating Partnership's properties were acquired in transactions consummated on September 18, 1987, pursuant to which National Realty acquired all of the assets, and assumed all of the liabilities, of 35 public and private limited partnerships. National Realty and the Operating Partnership operate as an economic unit and, unless the context otherwise requires, all references herein to the "Partnership" shall constitute references to National Realty and the Operating Partnership as a unit. In November 1992, the Operating Partnership, in conjunction with a refinancing of 52 of its apartment properties and a wraparound note receivable, transferred such assets to Garden Capital, L.P. ("GCLP"), a Delaware limited partnership in which the Operating Partnership holds a 99.3% limited partner interest. Liquidity and Capital Resources Cash and cash equivalents aggregated $16.3 million at June 30, 1997 compared to $5.9 million at December 31, 1996. The principal reasons for this increase in cash are discussed in the paragraphs below. 15 16 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Liquidity and Capital Resources (Continued) The Managing General Partner of the Partnership's General Partner has discretion in determining methods of obtaining funds for the Partnership's operations. The Partnership's governing documents place no limitation on the amount of leverage that the Partnership may incur either in the aggregate or with respect to any particular property or other investment. At June 30, 1997, the aggregate loan-to-value ratio of the Partnership's real estate portfolio was 44.2%, computed on the basis of the ratio of total property-related debt to aggregate appraised values as of June 30, 1997, as compared with a loan-to- value ratio of 44.6% at December 31, 1996. 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 1997, including, but not limited to the payment of distributions, debt service obligations coming due, including the "Pension Notes," and property maintenance and improvements, as more fully discussed in the paragraphs below. 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 requires that cash flow from the GCLP properties be used to fund various escrow and reserve accounts and limits the payment of distributions to the Partnership. During the three and six months ended June 30, 1997, the Partnership received distributions from GCLP totaling $1.2 million and $2.0 million (excluding proceeds from the released credit enhancement escrow, as described below), compared to distributions totaling $250,000 and $800,000 received during the three and six months ended June 30, 1996. 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 is for a term of not less than two years. The letter of credit may be drawn upon to pay operating shortfalls of GCLP's properties. The available amount under the letter of credit will be reduced by the amount of each draw on the letter of credit. 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. In January 1997, the Partnership funded a $1.2 million loan 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 16 17 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Liquidity and Capital Resources (Continued) the Bordeaux partners. In July 1997, an additional $53,000 was funded and the loan was modified, increasing the principal balance to $1.3 million. The Partnership has committed to fund an additional $212,000, at which time the loan will be modified to increase the principal balance. In February 1997, the Partnership funded a third loan to JNC Enterprises, Ltd. ("JNC") in the amount of $2.5 million. This loan is secured by a 70.87% limited partner interest in a limited partnership which owns 250 acres of undeveloped land in Fort Worth, Texas. In March 1997, the Partnership funded an additional $1.5 million increasing the loan's principal balance to $4.0 million. In June 1997, the Partnership funded a fourth loan to JNC in the amount of $2.5 million. The loan is secured by 81.99 acres of undeveloped land in Frisco, Texas. In July 1997, an additional $1.0 million was funded and the loan was modified increasing the principal balance to $3.5 million. In June 1997, the Partnership received $1.5 million from JNC, of which $1.0 million was applied to payoff the first note at maturity in June 1997, $416,000 was applied as a principal reduction payment on the third loan, and the remaining $84,000 was applied to accrued interest. In July 1997, the Partnership received $2.0 million from JNC, which was applied to the third note as a principal reduction payment. In April 1997, the Partnership funded a $1.5 million loan to Highway 544 Partners, L.P. ("Highway Partners"). The loan is secured by a first lien on approximately 49 acres of undeveloped land in Plano, Texas, 100% of the partnership interests in Highway Partners and the personal guarantee of the owner of the general partner of Highway Partners. In April 1997, the Partnership modified and extended the mortgage secured by the Cross County Mall in Mattoon, Illinois. In conjunction with the modification, the Partnership made a principal reduction payment of $137,500. Also in April 1997, the Partnership sold Tollhill East, an office building in Dallas, Texas, for $7.0 million in cash. The Partnership received net cash of $4.6 million after the payoff of $2.4 million in existing mortgage debt and the payment of various closing costs associated with the sale. Also in June 1997, the Partnership sold the Fondren Building, an office building in Houston, Texas. The office building was sold for $661,000 in cash, the Partnership receiving net cash of $610,000 after the payment of various closing cost associated with the sale of the property. Also in June 1997, the Partnership refinanced the mortgage debt secured by the Pheasant Ridge Apartments in Bellevue, Nebraska in the amount of $5.7 million. The Partnership received net cash of $804,000 after the 17 18 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Liquidity and Capital Resources (Continued) payoff of $4.6 million in existing mortgage debt, the funding of escrows, and the payment of various closing costs associated with the financing. Also in June 1997, the Partnership refinanced the mortgage debt secured by the Regency Apartments in Lincoln, Nebraska in the amount of $3.4 million. The Partnership received net cash of $374,000 after the payoff of $2.5 million in existing mortgage debt, the funding of escrows and the payment of various closing costs associated with the financing. In July 1997, the Partnership funded a $700,000 loan to an individual. The loan is secured by a first lien on an oil, gas and mineral lease in Anderson County, Texas and by a second lien on a ranch in Henderson County, Texas. Also in July 1997, the Partnership funded a $1.4 million loan to Avex Fund III, Inc. The loan is secured by a first lien on 14.5 acres of undeveloped land in Las Colinas, Texas. In August 1997, the Partnership funded an $800,000 loan to Frisco Eldorado Partners, L.L.C. The loan is secured by a first lien on 45 acres of undeveloped land in Frisco, Texas. In the first six months of 1997, the Partnership declared and paid quarterly distributions aggregating $.20 per unit, or a total of $1.3 million. The Partnership's net cash flow from property operations (rents collected less payments for property operating expenses) increased from $10.3 million and $21.0 million for the three and six months ended June 30, 1996 to $12.5 million and $23.9 million for the three and six months ended June 30, 1997. This increase is primarily due to increased rental rates at the Partnership's apartment and commercial properties. As discussed in NOTE 8. "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 18 19 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Liquidity and Capital Resources (Continued) 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, 1996 to be $42.0 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, 1997) plus all accrued and unpaid interest ($6.7 million at June 30, 1997) 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 can be no assurance that the Redeemable General Partner Interest, fees and other compensation payable on any such withdrawal will not be substantially higher or lower than any current estimate or calculation. In the accompanying Consolidated Balance Sheets, the Redeemable General Partner Interest is shown as a reduction in Partners' Equity and the note receivable from the General Partner has been offset against the Redeemable General Partner Interest. On January 27, 1995, National Realty, SAMLP, the Oversight Committee and William H. Elliott executed an Implementation Agreement which provides for the nomination of a successor general partner and for the resolution of all related matters under the Moorman Settlement. On February 20, 1996, the parties to the Implementation Agreement executed an Amended and Restated Implementation Agreement. On September 23, 1996, the Supervising Judge entered an order granting tentative approval of the Amended and Restated Implementation Agreement and the form of notice to be sent to the original class members. On April 7, 1997, the Supervising Judge entered an order amending the September 23, 1996 order, approving the formal notice and setting a hearing on the Implementation Agreement for June 27, 1997. A notice was sent to all class members and unitholders in April 1997 and the hearing was held on June 27, 1997. As of August 1, 1997, the Supervising Judge had not entered the order granting final approval of the Implementation Agreement. Upon final approval by the Supervising Judge, the proposal to elect the successor general partner will be submitted to the unitholders of National Realty for a vote. In addition, the unitholders will vote upon amendments to the National Realty Partnership Agreement which relate to the proposed compensation of the successor general partner and other related matters. Provided that the successor general partner is elected pursuant to the terms of the Amended and Restated Implementation Agreement, SAMLP shall receive $12,471,500 from the Partnership. This amount represents a compromise settlement of the net amounts owed by the Partnership to SAMLP upon SAMLP's withdrawal as General Partner and any amounts which 19 20 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Liquidity and Capital Resources (Continued) SAMLP and its affiliates may owe to the Partnership. This amount shall be paid to SAMLP pursuant to a promissory note in accordance with the terms set forth in the Amended and Restated Implementation Agreement. Upon approval by the unitholders, SAMLP shall resign as General Partner and the successor general partner shall take office. If the required approvals are obtained, National Realty anticipates that the successor general partner may be elected and take office during the fourth quarter of 1997. The Amended and Restated Implementation Agreement provides that SAMLP, and its affiliates owning units in National Realty, shall not vote to remove the successor general partner, except for removal with cause, for a period of 36 months from the date the successor general partner takes office. Upon the election and taking office of the successor general partner, the Moorman Settlement Plan and the Oversight Committee shall terminate. If the successor general partner is not elected, the existing Moorman Settlement Agreement shall remain in full force and effect and all of the provisions of the Amended and Restated Implementation Agreement shall be voided. The outcome of this matter cannot presently be determined and the consolidated financial statements do not include any adjustments that might result from the outcome of this matter. Results of Operations The Partnership reported net income of $3.3 million and $3.1 million including a gain on sale of real estate of $3.6 million for the three and six months ended June 30, 1997 as compared to a net loss of $378,000 and $846,000 for the three and six months ended June 30, 1996. The primary factors contributing to the Partnership's improvement in operating results are discussed in the following paragraphs. Rents increased to $27.9 million and $55.6 million for the three and six months ended June 30, 1997 from $27.2 million and $54.2 million for the three and six months ended June 30, 1996. This increase is primarily due to increased rental rates at the Partnership's apartments and commercial properties. Rents are expected to continue to increase during the remainder of 1997. Interest income increased to $925,000 and $1.8 million for the three and six months ended June 30, 1997 from $764,000 and $1.5 million for the three and six months ended June 30, 1996. This increase is attributable to loans funded in 1996 and 1997. Interest income for the remaining six months of 1997 is expected to be comparable to that of the first six months. 20 21 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Results of Operations (Continued) Interest expense, depreciation, property taxes and insurance, utilities, property level payroll, repairs and maintenance, other property operation expenses, property management fees and general and administrative expenses for 1997 all approximated those for 1996. For the three and six months ended June 30, 1997, the Partnership recognized a gain on the sale of real estate of $3.6 million. See NOTE 4. "REAL ESTATE." No such gains were recognized in 1996. Tax Matters National Realty is a publicly traded limited partnership and, for federal income tax purposes, all income or loss generated by the Partnership is included in the income tax returns of the individual partners. In December 1987, Congress passed legislation requiring certain publicly traded partnerships to be taxed as corporations. National Realty qualifies for "grandfather" treatment and will be treated as a partnership until at least 1997, unless the Partnership adds a substantial new line of business, which would require approval of the Oversight Committee, and will continue to be so treated thereafter if 90% or more of its gross income consists of qualifying income from real estate activities. As presently operated, the Partnership meets these requirements. Under Internal Revenue Service guidelines generally applicable to publicly traded partnerships and thus to the Partnership, a limited partner's use of his or her share of partnership losses is subject to special limitations. Inflation The effects of inflation on the Partnership's operations are not quantifiable. Revenues from property operations generally fluctuate proportionately with inflationary increases and decreases in housing costs. Fluctuations in the rate of inflation also affect the sales values of the Partnership's properties and, correspondingly, the ultimate gains to be realized by the Partnership from property sales. To the extent that inflation affects interest rates, the Partnership's earnings from short-term investments and the cost of new borrowings as well as the cost of its variable rate borrowings will be affected. Environmental Matters Under various federal, state and local environmental laws, ordinances and regulations, the Partnership may be potentially liable for removal or remediation costs, as well as certain other potential costs relating to hazardous or toxic substances (including governmental fines and injuries to persons and property) where property-level managers have arranged for the removal, disposal or treatment of hazardous or toxic substances. In addition, certain environmental laws impose liability for release of asbestos-containing materials into the air, and third parties may seek recovery from the Partnership for personal injury associated with such materials. 21 22 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Environmental Matters (Continued) The General Partner is not aware of any environmental liability relating to the above matters that would have a material adverse effect on the Partnership's business, assets or results of operations. --------------------------------- PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS See NOTE 8. "LEGAL PROCEEDINGS - Moorman Settlement," of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS in PART I for information relating to legal proceedings. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: Exhibit Number Description - ------- ------------------------------------------------------------- 11.0 Computation of Earnings Per Unit 27.0 Financial Data Schedule (b) Reports on Form 8-K: None.
22 23 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: August 11, 1997 By: /s/ Randall M. Paulson ------------------------- ----------------------------------- Randall M. Paulson Director and President Date: August 11, 1997 By: /s/ Thomas A. Holland -------------------------- ----------------------------------- Thomas A. Holland Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) Date: August 11, 1997 By: /s/ Gene E. Phillips -------------------------- ----------------------------------- Gene E. Phillips General Partner Syntek Asset Management, L.P. 23 24 NATIONAL REALTY, L.P. EXHIBITS TO QUARTERLY REPORT ON FORM 10-Q For the Quarter ended June 30, 1997
Exhibit Page Number Description Number - ------- --------------------------------------------------- ------ 11.0 Computation of Earnings Per Unit 25 27.0 Financial Data Schedule 26
24 EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 Exhibit 11.0 NATIONAL REALTY, L.P. A DELAWARE LIMITED PARTNERSHIP Computation of Earnings Per Unit
For the Three Months For the Six Months Ended June 30, Ended June 30, ------------------------ ----------------------- 1997 1996 1997 1996 ----------- ---------- ---------- ---------- (dollars in thousands, except per unit) Net income (loss).................... $ 3,321 $ (378) $ 3,074 $ (846) Less - General Partners' 1.99% Interest............ 66 (8) 61 (17) ----------- ----------- ----------- ----------- Net income (loss) allocable to Limited Partner............ $ 3,255 $ (370) $ 3,013 (846) ----------- ----------- ----------- ----------- Earnings Per Unit Net income (loss)............. $ .51 $ (.06) $ .48 $ (.14) ----------- ----------- ----------- ----------- Weighted average units of limited partner interest used in computing earnings per unit...................... 6,329,076 6,417,832 6,328,639 6,417,832 =========== =========== =========== ===========
25 EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 16,253 2,447 23,077 1,910 0 0 441,525 224,158 278,946 0 337,311 0 0 0 (109,942) 278,946 0 55,609 0 32,210 5,142 0 17,033 3,074 0 3,074 0 0 0 3,074 .48 .48
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