-----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, LjjPG8vUzi3Jl0ppZR+l1Zhqb5Ife9ZY/pDoRuGiRFlZ/87FEf72I/3KIx+0pYoK LhKAFg6SzBs7hyX+Eh5Sjg== 0000950152-98-005740.txt : 19980701 0000950152-98-005740.hdr.sgml : 19980701 ACCESSION NUMBER: 0000950152-98-005740 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980227 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980630 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: REALTY REFUND TRUST CENTRAL INDEX KEY: 0000082473 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 346647590 STATE OF INCORPORATION: OH FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-07062 FILM NUMBER: 98657913 BUSINESS ADDRESS: STREET 1: 925 EUCLID AVENUE STREET 2: SUITE 1750 CITY: CLEVELAND STATE: OH ZIP: 44115 BUSINESS PHONE: 2166220046 MAIL ADDRESS: STREET 1: 925 EUCLID AVENUE STREET 2: SUITE 1750 CITY: CLEVELAND STATE: OH ZIP: 44115 8-K/A 1 REALTY REFUND TRUST 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K/A Amended Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported) February 27, 1998 ------------------ Realty ReFund Trust ------------------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Ohio ------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 001-07062 34-6647590 - ----------------------------- ------------------------------------ (Commission File Number) (I.R.S. Employer Identification No.) 925 Euclid Avenue, Suite 1750, Cleveland, Ohio 44115 - -------------------------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) (216) 622-0046 -------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) ------------------------------------------------------------------ (Former Name or Former Address, if Changed Since Last Report) 2 Item 2. Acquisition or Disposition of Assets. On February 27, 1998, RRF Limited Partnership ("RRFLP"), a Delaware limited partnership controlled by its 13% sole general partner, Realty ReFund Trust ("RRF"), acquired all of the membership interests in Tucson St. Mary's Suite Hospitality LLC, an Arizona limited liability company ("Tucson St. Mary's LLC"), which owns the InnSuites Hotel Tucson St. Mary's, a 297-suite hotel located in Tucson, Arizona. The acquisition occurred pursuant to the terms of the Contribution Agreement, dated as of February 1, 1998, among James F. Wirth, Chairman, President, Chief Executive Officer and Trustee of RRF, Gail J. Wirth, his wife, and RRFLP. Pursuant to the terms of the Contribution Agreement, Mr. and Mrs. Wirth contributed their respective 50% membership interests in Tucson St. Mary's LLC to the capital of RRFLP. The total consideration under the Contribution Agreement was Ten Million Eight Hundred Twenty Thousand Dollars ($10,820,000), paid by RRFLP as follows: RRFLP assumed a Six Million Dollar ($6,000,000) mortgage on the Tucson St. Mary's LLC property payable to JDI Tucson, L.L.C.; RRFLP delivered a One Million Dollar ($1,000,000) promissory note to Hospitality Corporation International, an Arizona corporation owned by Mr. and Mrs. Wirth; and the balance of the consideration consisted of 407,703 Class B Limited Partnership Units in RRFLP delivered to Mr. and Mrs. Wirth, 26,589 Class A Limited Partnership Units in RRFLP delivered to Mr. Marc Berg, a Trustee of RRF, and 8,863 Class A Limited Partnership Units in RRFLP delivered to Mr. Kenneth Sliwa as advisory fees, and 443,155 Class B Limited Partnership Units in RRFLP issued to Mr. and Mrs. Wirth to be held in escrow by RRFLP and released to Mr. and Mrs. Wirth pursuant to formulas measuring the achievement of projected operational results by Tucson St. Mary's LLC. The total consideration received pursuant to the Contribution Agreement was determined based upon an appraisal conducted by an independent third party. RRF intends to utilize the assets acquired by it pursuant to the Contribution Agreement in accordance with their use prior to the acquisition. Item 7. Financial Statements and Exhibits (a) Financial Statements of Business Acquired. The following are filed as exhibits to this Form 8-K/A Amended Report: Report of Independent Public Accountant. Balance Sheet as of December 31, 1997. Statements of Operations and Members' Deficit for the year ended December 31, 1997. Statement of Cash Flows for the year ended December 31, 1997. Notes to the Financial Statements. (b) Pro Forma Financial Information. The following are filed as exhibits to this Form 8-K/A Amended Report: Pro Forma Consolidated Balance Sheet as of January 31, 1998 and 1997. Notes to the Pro Forma Consolidated Balance Sheet as of January 31, 1998. Pro Forma Consolidated Statement of Operations for the year ended January 31, 1998. Notes to the Pro Forma Consolidated Statement of Operations for the year ended January 31, 1998. (c) Exhibits. Contribution Agreement, dated as of February 1, 1998, by and among RRF Limited Partnership, James F. Wirth and Gail J. Wirth. Financial Statements of Business Acquired and Pro Forma Financial Statements of Realty Refund Trust. 3 Exhibit No. Document Description - ------- -------------------- 2.1 Contribution Agreement, dated as of February 1, 1998, by and among RRF Limited Partnership, James F. Wirth and Gail J. Wirth. 7.1 Financial Statements of Business Acquired. 7.2 Pro Forma Financial Statements of Realty Refund Trust. 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Realty ReFund Trust (Registrant) Dated: May 15, 1998 By: /s/ Gregory D. Bruhn ---------------------------------- Name: Gregory D. Bruhn ---------------------------------- Title: Executive Vice President, Chief Financial Officer, Treasurer and Secretary ---------------------------------- 5 INDEX TO EXHIBITS Exhibit No. Document Description - ------- -------------------- 2.1 Contribution Agreement, dated as of February 1, 1998, by and among RRF Limited Partnership, James F. Wirth and Gail J. Wirth. 7.1 Financial Statements of Business Acquired. 7.2 Pro Forma Financial Statements of Realty Refund Trust. EX-2.1 2 EXHIBIT 2.1 1 EXHIBIT 2.1 CONTRIBUTION AGREEMENT ---------------------- CONTRIBUTION AGREEMENT, dated as of February 1, 1998, among JAMES F. WIRTH and GAIL J. WIRTH (collectively, the "Wirths") and RRF LIMITED PARTNERSHIP, a Delaware limited partnership (the "Operating Partnership"). W I T N E S S E T H - - - - - - - - - - WHEREAS, the Wirths each own fifty percent (50%) membership interests (collectively, the "Interests") in Tucson St. Mary's Suite Hospitality LLC, an Arizona limited liability company (the "Company") that owns the real property identified on the Property Schedule attached hereto as SCHEDULE I (the "Hotel"); and WHEREAS, on the terms and subject to the conditions set forth herein, the Wirths desire to contribute the Interests as a contribution to the capital of the Operating Partnership, and the Operating Partnership desires to accept such contributions in exchange for admitting the Wirths as a limited partner in the Operating Partnership in accordance with the terms and subject to the conditions set forth in the First Amended and Restated Limited Partnership Agreement of the Operating Partnership (as the same may be amended, modified or supplemented from time to time in accordance with its terms, the "OP Agreement"). NOW, THEREFORE, in consideration of the premises, mutual agreements, provisions and covenants contained herein, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby expressly acknowledged, the Wirths and the Operating Partnership do hereby covenant and agree as follows: ARTICLE I CERTAIN DEFINITIONS ------------------- Section 1.1. CERTAIN DEFINITIONS. Capitalized terms used but not otherwise defined herein shall have the meanings specified in the OP Agreement. ARTICLE II CONTRIBUTION AND ADMISSION; APPORTIONMENTS ------------------------------------------ Section 2.1. CONTRIBUTION AND ASSIGNMENT. Subject to the satisfaction of the conditions specified in Sections 5.2 and 5.4, the Wirths shall contribute the Interests ("Contributed Interests") to the Operating Partnership by assigning all of the Wirths' right, title - 1 - 2 and interest in and to (i) the Company, together with any and all rights, privileges, benefits, obligations and liabilities appertaining thereto, including but not limited to all of the Wirths' right, title and interest as a member of the Company in and to, subject to Section 2.3 hereof, the profits, surplus, losses, capital, cash flow, rentals, contract rights, cash, accounts, receivables, escrows, claims, chooses in action and other assets of such Company, and (ii) all partner loans made by the Wirths to such Operating Partnership except for the HCI Note (as hereinafter defined). The assignment and transfer of Contributed Interests shall be accomplished by the execution and delivery of an Assignment of Membership Interest, substantially in the form attached hereto as EXHIBIT A, with respect to the Contributed Interests (the "Assignment"). Section 2.2. ADMISSION AS A LIMITED PARTNER; LIMITED PARTNERSHIP INTEREST. Subject to the satisfaction of the conditions specified in Sections 5.2 and 5.3 and in consideration of the contribution of the Contributed Interests to the Operating Partnership pursuant to the terms of the OP Agreement, the Operating Partnership shall admit the Wirths as a limited partner in the Operating Partnership in accordance with the terms and subject to the conditions set forth in the OP Agreement. The Percentage Interest of the aggregate Partnership Interest in the Operating Partnership to be received by the Wirths in the Operating Partnership in respect of the Contributed Interests shall be calculated and determined as specified on SCHEDULE II attached hereto. ARTICLE III REPRESENTATIONS AND WARRANTIES ------------------------------ Section 3.1. REPRESENTATIONS AND WARRANTIES OF THE WIRTHS. The Wirths hereby represent and warrant, jointly and severally, to the Operating Partnership that: (a) the Company is a limited liability company validly existing and in good standing under the laws of the State of Arizona; (b) they have all necessary right, power and authority to enter into this Agreement and to perform their obligations hereunder; (c) they have duly executed and delivered this Agreement and this Agreement constitutes a legal, valid and binding obligation of the Wirths, enforceable against the Wirths in accordance with the terms hereof, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium and other laws affecting - 2 - 3 enforceability of creditors' rights generally and general principles of equity; (d) the Wirths will acquire the limited partnership interests in the Operating Partnership on the Closing Date for investment and not with a view to the distribution (within the meaning of section 2(11) of the Securities Act of 1933, as amended (the "Securities Act")) thereof; (e) as of the date hereof, the Wirths are the sole owners of the Interests in the Company and have good title to such Interests, free and clear of all liens and encumbrances; (f) except as may be set forth in this Agreement, there are no rights, subscriptions, options, warrants, conversion rights or agreements of any kind outstanding (including rights of first offer and rights of first refusal) to purchase or to otherwise acquire the Interests; (g) the execution, delivery and performance of this Agreement by the Wirths will not, with or without the giving of notice, lapse of time or both, (i) violate, conflict with or constitute a default under any term or condition of any term or provision of any judgment, decree, order, statute, injunction, rule or regulation of a governmental unit applicable to the Wirths, or of any material contract, agreement or instrument to which the Wirths are a party or by which any of their properties or assets may be bound (the violation of which would have a material adverse effect upon the Wirths or the Operating Partnership) or (ii) result in the creation of any lien upon the Interests other than in favor of the Operating Partnership. Section 3.2. REPRESENTATIONS AND WARRANTIES OF THE OPERATING PARTNERSHIP. The Operating Partnership hereby represents and warrants to the Wirths that: (a) it is duly organized as a limited partnership and validly existing under the laws of the State of Delaware and is, or at the Closing will be, duly qualified in each state in which it conducts business; (b) it has all necessary legal and contractual right, power and authority to enter into this Agreement and to perform its obligations hereunder, including the execution, delivery and performance of all other Documents; (c) it has duly authorized, executed and delivered this Agreement and will have at the Closing duly authorized, executed and delivered the other Documents and this Agreement constitutes, and at the Closing, each of the - 3 - 4 other Documents will constitute, a legal, valid and binding obligation of the Operating Partnership, enforceable against the Operating Partnership in accordance with the terms hereof and thereof, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium and other laws affecting enforceability of creditors' rights generally and general principles of equity; (d) none of the execution, delivery or performance of this Agreement or the other Documents by the Operating Partnership will, with or without the giving of notice, lapse of time or both, violate, conflict with or constitute a default under any term or condition of (A) the OP Agreement or (B) any term or provision of any judgment, decree, order, statute, injunction, rule or regulation of a governmental unit applicable to the Operating Partnership or any material contract, agreement or instrument to which the Operating Partnership is a party or by which its properties or assets may be bound (the violation of which, in the case of either (A) or (B), would have a material adverse effect upon the Operating Partnership); (e) upon execution of the OP Agreement by the Wirths, the Wirths will be duly admitted as a limited partner of the Operating Partnership; and (f) the Operating Partnership will acquire the Contributed Interests in the Company for investment and not with a view to the distribution (within the meaning of section 2(11) of the Securities Act) thereof. ARTICLE IV COVENANTS --------- Section 4.1. RESTRICTIONS ON TRANSFER. The Wirths shall not pledge, encumber, hypothecate, transfer, assign or convey any Interest in any way prior to the Closing Date (or the termination of this Agreement pursuant to Section 5.1 in the absence of a Closing). Section 4.2. TRANSFER TAXES. The Operating Partnership and, upon the specific request of the Operating Partnership, the Wirths shall take any and all actions necessary in order to comply with the provisions of any transfer tax laws and regulations applicable to this Agreement or the conveyance of any Contributed Interest, including, without limitation, the payment of any transfer tax which may be determined to be due in respect of such Contributed Interest under any such law or regulation and the preparation, execution and filing of any and all affidavits and questionnaires required by any such law or regulation. The Wirths shall cooperate with the Operating Partnership in the preparation of any such affidavits or questionnaires and shall make available to the Operating - 4 - 5 Partnership any books and records of the Wirths used in the preparation of any such affidavits or questionnaires. The Wirths shall pay any such tax which may be determined to be due under any such law or regulation and, in the event any such tax is paid by the Wirths, the Wirths shall be reimbursed at the Closing by the Operating Partnership. Section 4.3. FURTHER ASSURANCES. The Wirths and the Operating Partnership agree, at any time and from time to time after the Closing, to execute, acknowledge where appropriate and deliver such further instruments and documents and to take such other action as any other party to this Agreement may reasonably request in order to carry out the intents and purposes of this Agreement. Section 4.4. CLOSING COSTS; FEES AND EXPENSES. Except as expressly provided herein, each party hereto shall bear all costs and expenses incurred by such party in connection with the negotiation, preparation and/or review of this Agreement and the OP Agreement and any other agreement or instrument contemplated hereby and thereby, including the fees and expenses of their respective auditors and attorneys. The Operating Partnership shall bear all closing costs, including all filing and recordation fees, title insurance premiums and charges, costs of legal opinions (other than those of the Wirths' counsel), transfer taxes, all Hart-Scott costs whether incurred by the Wirths or the Operating Partnership, costs incurred in connection with obtaining the consent of any third parties, document production, duplication costs and other similar costs and expenses incurred by them in connection with the Closing and shall pay and reimburse the Wirths for all reasonable closing costs, including all filing and recordation fees, document production, duplication costs and other similar costs directly incurred by them (other than attorneys' fees, except for attorneys' fees in the event that it is determined that the Wirths shall be required to make a filing under Hart-Scott with respect to the transactions contemplated by this Agreement) in connection with the Closing. ARTICLE V CLOSING ------- Section 5.1. CLOSING. The closing of the transactions contemplated hereby (the "Closing") shall occur as of 12:01 a.m. (MST) on February 1, 1998, or such later date as the Operating Partnership shall specify (the "Closing Date"), at the offices of Thompson Hine & Flory LLP, 3900 Key Center, 127 Public Square, Cleveland, Ohio 44114, or at such other location as the Operating Partnership shall specify. The Operating Partnership agrees that any such notice of a change in the Closing Date or in the proposed location of the Closing shall be - 5 - 6 effective only if given in writing and delivered to Wirths not less that the second business day prior to (a) the date on which the Closing was to have occurred, in the case of a change in the proposed Closing Date, and (b) the Closing Date, in the case of a change in the proposed location of the Closing. Section 5.2. CONDITIONS TO ALL OBLIGATIONS. The obligations of the Wirths and the Operating Partnership to consummate the transactions contemplated hereby are subject to fulfillment or waiver (by means of a written instrument signed by each of the Operating Partnership and the Wirths) of all of the following conditions on or prior to the Closing Date: (a) all consents and waivers of third parties requisite to the consummation of the Closing and the effectiveness of the OP Agreement (including waivers of requirements, puts, options, rights of first refusal and other similar rights, if any), shall have been obtained by the Operating Partnership. Section 5.3. CONDITIONS TO OBLIGATIONS OF THE OPERATING PARTNERSHIP. The obligations of the Operating Partnership to consummate the transactions contemplated hereby is subject to fulfillment or waiver (by means of a written instrument signed by the Operating Partnership) of all of the following conditions on or prior to the Closing Date: (a) the Wirths shall have executed and delivered to the Operating Partnership one fully completed Assignment with respect to all of the Contributed Interests; (b) the REIT shall have received an original OP Agreement executed and delivered by each other party thereto; (c) The Operating Partnership shall have received a certificate, dated the Closing Date, to the effect that all of the representations and warranties of the Wirths set forth in Section 3.1 are true and correct as of the Closing Date as if made again on and (except to the extent any such representation and warranty expressly specifies otherwise) as of such date. Section 5.4. CONDITIONS TO OBLIGATIONS OF THE WIRTHS. The obligations of Wirths to consummate the transactions contemplated hereby are subject to fulfillment or waiver (by means of a written instrument signed by the Wirths) of all of the following conditions on or prior to the Closing Date: - 6 - 7 (a) the Wirths shall have received an original, fully completed Assignment with respect to each of the Contributed Interests executed by each party thereto other than the Wirths; (b) the Wirths shall have received an original OP Agreement executed and delivered by each party thereto other than the Wirths; (c) the Wirths shall have received a certificate, dated the Closing Date, of an authorized officer of the REIT to the effect that (i) all of the conditions set forth in Sections 5.2 and 5.3 have been satisfied or waived as provided therein, and (ii) all of the representations and warranties of the Operating Partnership set forth in Section 3.2 are true and correct as of the Closing Date as if made again on and (except to the extent any such representation and warranty expressly specifies otherwise) as of such date. Upon delivery thereof, such certificate shall constitute the representation and warranty with respect to the matters stated therein of the Operating Partnership to the Wirths for the purposes of this Agreement; ARTICLE VI MISCELLANEOUS ------------- Section 6.1. TIME OF THE ESSENCE. Time of performance is of the essence of this Agreement. Section 6.2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on the parties hereto and their respective heirs, executors, administrators, successors and assigns. The Operating Partnership may not assign this Agreement without the prior written consent of the Wirths. Section 6.3. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Arizona. Section 6.4. NOTICES. All notices, demands or requests made pursuant to, under or by virtue of this Agreement must be in writing and mailed to the party to which the notice, demand or request is being made by certified or registered mail, return receipt requested, postage prepaid, as follows: - 7 - 8 To the Wirths: James F. Wirth and Gail J. Wirth c/o InnSuites Hotels LLC 1615 East Northern Avenue Suite 105 Phoenix, Arizona 85020-3998 To the Operating Partnership: c/o Realty ReFund Trust 1750 Huntington Building 925 Euclid Avenue Cleveland, Ohio 44114 Attn: Executive Vice President With a copy to: James B. Aronoff, Esq. Thompson Hine & Flory LLP 3900 Key Center 127 Public Square Cleveland, Ohio 44114 Any notice given in accordance with the provisions of this Section 6.4 shall be deemed given when actually delivered or when proper delivery is refused by the addressee. Section 6.5. EXCULPATION. No partner (other than any party hereto and the REIT in its capacity as general partner of the Operating Partnership), shareholder, officer, director, agent or employee of a party hereto, shall have any individual or personal liability hereunder. Section 6.6. ENTIRE AGREEMENT; MODIFICATION OR AMENDMENT. This Agreement together with the exhibits hereto and all agreements referred to herein and therein, contains the entire understanding of the parties with respect to its subject matter, and the parties hereto may amend this Agreement only by a writing signed by each party against whom such amendment may be enforced. Section 6.7. CAPTIONS. The Article and Section captions herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Section 6.8. COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same Agreement, and shall become effective when one or more counterparts have been signed by - 8 - 9 each of the parties hereto and delivered to each of the other parties. Section 6.9. SURVIVAL. This Agreement will survive the Closing. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered on the day and year first above written. /S/ JAMES F. WIRTH ------------------- James F. Wirth /S/ GAIL J. WIRTH ------------------ Gail J. Wirth RRF LIMITED PARTNERSHIP By: Realty ReFund Trust, its general partner By: /S/ GREGORY D. BRUHN ------------------------ Gregory D. Bruhn, Executive Vice President - 9 - 10 SCHEDULE I ---------- Legal Description of the Hotel 11 Schedule I Those parts of Blocks 3, 4, 7 and 8 of Goldschmidt's Addition, to the City of Tucson, Pima County, Arizona, according to the Plat of record in the Office of the Pima County Recorder in Book 1 of Maps, Page 3 and of Lots 16 and 17 of Section 11, Township 14 South, Range 13 East, Gillla and Salt River Base and Meridian, Pima County, Arizona, described as follows: Beginning at the Southeast corner of Lot 10, Block 7 of said Goldschmidt's Addition; Thence South 73 degrees 36 minutes 40 seconds West (South 73 degrees 36 minutes 38 seconds West, measured), along the North right of way of Franklin Street, a distance of 743.97 feet (744.29 feet measured) to the East right of way of the Tucson Controlled Access Highway, Arizona State Highway Project F. I. 141, according to the map filed in the Pima County Recorder's Office on March 3, 1949 in instrument No. 6675; Thence Northerly along said East right of way on a Spiral Curve, a distance of 442.05 feet (441.74 feet measured); Thence along a curve to the right having a central angle of 47 degrees 30 minutes 00 seconds a radius of 641.20 feet, a distance of 531.58 feet; Thence Northeasterly along a spiral curve, a distance of 158.87 feet (158.55 feet measured) to the West right of way of the alley running North and South through said Blocks 3, 4 and 7 of Goldschmidt's Addition; Thence South 14 degrees 32 minutes 18 seconds East (South 14 degrees 33 minutes 24 seconds East, measured), along the West line of said alley, a distance of 695.11 feet (695.23 feet measured) to the Point of Beginning; and Those parts of Blocks 3 and 4 of Goldschmidt's Addition to the City of Tucson, Pima County, Arizona, according to the plat of record in the office of the Pima County Recorder in Book 1 of Maps, Page 3, described as follows: Beginning at a point on the East line of said Block 4, said point being 42.00 feet Southerly from the Northeast corner of Lot 1, Block 4; Thence South 75 degrees 17 minutes 00 seconds West (South 75 degrees 34 minutes 37 seconds West, measured), a distance of 170.09 feet (170.13 feet measured) to the West line of Block 4; Thence North 14 degrees 32 minutes 18 seconds West (North 14 degrees 30 minutes 16 seconds West, measured), along the West line of said Block 4, a distance of 37.00 feet to the Northwest corner of Lot 1, Block 4; 12 Thence continue North 14 degrees 32 minutes 18 seconds West (North 14 degrees 30 minutes 77 seconds West measured), along the West line of Block 3, a distance of 93.84 feet (93.77 feet measured) to the South right of way of the Tucson Controlled Access Highway, Arizona State Highway Project F.I. 141, according to the map filed in the Pima County Recorder's Office on March 3, 1949 as instrument No. 6675; Thence Easterly along said South right of way on a spiral curve, a distance of 124.62 feet (124.57 feet measured); Thence North 77 degrees 23 minutes 51 seconds East (North 77 degrees 45 minutes 26 seconds East measured), a distance of 45.51 feet (45.54 feet measured) to the East line of Block 3; Thence South 14 degrees 32 minutes 26 seconds East (South 14 degrees 32 minutes 59 seconds East, measured), along the East line of said Blocks 3 and 4, a distance of 126.25 feet (126.75 feet measured) to the Point of Beginning. 13 SCHEDULE II ----------- Calculation of Units 1. The consideration payable by the Operating Partnership for the Hotel shall be Ten Million Eight Hundred Twenty Thousand Dollars ($10,820,000). 2. The Consideration shall be payable as follows: a. The Operating Partnership shall assume a $6,000,000 mortgage loan payable to JDI Tucson, L.L.C. b. The Operating Partnership shall deliver to Hospitality Corporation International, or an affiliate corporation wholly-owned by James F. Wirth, a promissory note (the "HCI Note") in the principal amount of $1,000,000. The principal balance of the Note shall be due and payable on February 1, 1999. Interest only shall be paid monthly at seven percent (7%). c. The balance of Consideration shall consist of Class B Partnership Units in the Operating Partnership. The number of Class B Partnership Units to be delivered at closing shall be equal to 50% of the above-calculated balance of the Consideration, less 3% of such balance to be delivered to Marc Berg and 1% of such balance of the consideration to be delivered to Kenneth Sliwa pursuant to paragraph 2(d) below, divided by 4.31. The balance of the Class B Partnership Units shall be issued and held in escrow by the Operating Partnership, provided, that such Units shall not be entitled to distributions from the Operating Partnership so long as they are held in escrow. The terms of this escrow shall provide that on the 90th day following the close of the first and second fiscal years (1998 & 1999) following the Closing: (i) the number of Units held in escrow shall be reduced by any amount, if any, by which the Hotel's Net Operating Income is less than the amount projected for that year times the discount factor used in the in the Appraisal of the Hotel prepared by Charles V. Singleton, dated January 19, 1998 (the "Appraisal") divided by 4.31 or (ii) in each case, one- third (1/3) of the Units held in escrow shall be released by the Operating Partnership in the event that for such fiscal year, the Hotel's Net Operating Income meets or exceeds the amount projected for such year in the Appraisal and provided further that if the Hotel shall produce sufficient Net Operating 14 Income for such fiscal year to exceed the amount of Net Operating Income projected by the Appraisal for the following fiscal year then an additional one-third (1/3) of the Units held in escrow shall be released at such time. Ninety (90) days after the close of the third fiscal year, the number of Units held in escrow shall be reduced by the sum of: (i) any amount, if any, by which the Hotel's Net Operating Income is less than the amount projected for that year, times the discount factor used in the Appraisal for that year divided by 4.31, and (ii) any amount, if any, by which a recalculation of the Appraisal using the first three years' actual Net Operating Income would be less than the total consideration furnished for the Hotel ($10,820,000), divided by 4.31. d. James F. and Gail Wirth shall direct that three percent (3%) and one percent (1%), respectively, of the balance of the consideration shall be paid by the issuance to Marc Berg and Kenneth Sliwa of Class A Partnership Units, as an advisory fee. The number of Class A Partnership Units to be delivered shall be equal to the 4% balance divided by 4.31. 15 EXHIBIT A --------- Form of Assignment and Assumption of Membership Interest 16 ASSIGNMENT AND ASSUMPTION OF MEMBERSHIP INTEREST ------------------------------------------------ Tucson Saint Mary's Suite Hospitality L.L.C. THIS ASSIGNMENT AND ASSUMPTION OF MEMBERSHIP INTEREST ("Assignment") is made as of the 1st day of February, 1998 by and between ______________ (the "Assignor") and RRF LIMITED PARTNERSHIP, a Delaware limited partnership ("Assignee"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, Assignor holds a fifty percent (50%) membership interest in Tucson Saint Mary's Suite Hospitality L.L.C., an Arizona limited liability company (the "Company"), which is governed by the certain Operating Agreement of Tucson Saint Mary's Suite Hospitality L.L.C. dated as of April 29, 1997 (the "Operating Agreement"); WHEREAS, the Company and Assignee have entered into that certain option agreement dated as of January 30, 1998 (the "Option Agreement") pursuant to which the Company has agreed to sell to Assignee the InnSuites Hotel located in Tucson, Arizona owned by the Company (the "Hotel") in consideration of the delivery to Assignee of, among other things, limited partnership units in Assignee; and WHEREAS, the Option Agreement provides for the sale of the Hotel through the transfer of the membership interests in the Company to Assignee; NOW, THEREFORE, Assignor and Assignee hereby agree as follows: 1. ASSIGNMENT. The Assignor hereby sells, conveys and assigns to Assignee, without recourse, all of Assignor's right, title and interest in the Company and the Operating Agreement. 2. ASSUMPTION. Assignee, by its execution hereof, agrees to accept the foregoing assignment and to assume, subject to the terms of the Operating Agreement, all of Assignor's rights, title and obligations of Assignor under the Operating Agreement. 3. INDEMNIFICATION. Assignee indemnifies and agrees to defend and hold Assignor harmless from and against any and all costs, expenses (including, without limitation, reasonable attorneys' fees and expenses) damages, claims or liabilities that Assignor may suffer or incur and that arise out of this Company from and after the date of this Assignment. 4. GOVERNING LAW. This Assignment shall be governed by and construed in accordance with Arizona law. 17 5. SUCCESSORS AND ASSIGNS. This Assignment shall be binding upon and inure to the benefit of, the parties hereto and their respective successors and assigns. 6. COUNTERPARTS. This Assignment may be executed in multiple counterparts each of which shall be deemed an original and all of which shall constitute a single instrument. IN WITNESS WHEREOF, the parties hereto have executed this Assignment and Assumption of Membership Interest as of the date first above written. ASSIGNOR: ------------------------------- ------------------ ASSIGNEE: RRF LIMITED PARTNERSHIP, a Delaware limited partnership By: REALTY REFUND TRUST, an unincorporated Ohio business trust, its general partner By: ________________________ Title: __________________ EX-7.1 3 EXHIBIT 7.1 1 Exhibit 7.1 MICHAEL MAASTRICHT, C.P.A. Certified Public Accountant 10640 North 28th Drive, Suite C-209 (602) 375-2926 - ofc Phoenix, Arizona 85029 (602) 375-2761 - fax Independent Auditor's Report ---------------------------- The Members Tucson Saint Mary's Suite Hospitality, LLC: We have audited the accompanying balance sheet of Tucson Saint Mary's Suite Hospitality, LLC (An Arizona Limited Liability Company) as of December 31, 1997, and the related statements of operations and members' deficit and cash flows for the year ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tucson Saint Mary's Suite Hospitality, LLC as of December 31, 1997, and the results of its operations and cash flows for the year ended in conformity with generally accepted accounting principles. February 27, 1998 Michael Maastricht, C.P.A. Phoenix, Arizona Member American Institute of Certified Public Accountants Arizona Society of Certified Public Accountants 2 TUCSON SAINT MARY'S SUITE HOSPITALITY, LLC Balance Sheet December 31, 1997
ASSETS ------ Cash $ 16,617 Accounts receivable 51,999 Inventory 95,643 Land 900,000 Buildings and equipment pledged, at cost, net of accumulated depreciation 5,415,062 Deferred loan fees, net of accumulated amortization 85,000 Cash held in escrow 90,452 Other assets 11,277 ----------- $ 6,666,050 =========== LIABILITIES AND MEMBERS' DEFICIT -------------------------------- Accounts payable $ 391,484 Accrued expenses 298,403 Deed of trust 6,000,000 Line of credit 50,000 Advances from affiliates 1,140,428 ----------- 7,880,315 ----------- Members' deficit: Members' capital 25,000 Distributions to prior owners (788,256) Accumulated losses (451,009) ----------- (1,214,265) ----------- $ 6,666,050 ===========
See accompanying notes to financial statements 3 TUCSON SAINT MARY'S SUITE HOSPITALITY, LLC Statements of Operations and Members' Deficit For the year ended December 31, 1997
Revenues: Room rentals $2,562,155 Restaurant and banquet 813,651 Telephone 100,698 Other 65,144 ---------- 3,541,648 ---------- Department costs: Wages and salaries: Salaries 206,457 Front desk 139,182 Housekeeping 224,374 Laundry and houseman 85,297 Maintenance and other 146,069 Taxes and benefits 129,684 ---------- 931,063 ---------- Rooms department: Guest supplies 60,305 Complimentary items 92,692 Telephone 65,824 Cleaning supplies 36,776 Office and desk supplies 11,707 Linen 18,952 Travel agent commissions 25,217 Reservations 4,147 Other rooms department 18,357 ---------- 334,157 ---------- Other operating expenses: Administrative and general: Professional services 83,054 Licenses, dues and subscriptions 12,274 Bank charges and credit card discount 51,045 Management fees 58,372 Trademark license fees 100,414 Other administrative 21,767 ---------- 326,926 ---------- Advertising and sales promotion: Travel and promotion 18,434 Advertising trust fees 14,189 Publications and newspapers 48,458 Billboards 18,949 Guest mail and postage 6,685 Supplies and sales printing 13,608 ---------- 120,323 ----------
(continued) 4 TUCSON SAINT MARY'S SUITE HOSPITALITY, LLC Statements of Operations and Members' Deficit For the year ended December 31, 1997
Repairs and maintenance: Landscaping and pool $ 55,229 Mechanical and electrical 42,611 Supplies 31,544 Refurbishing 181,658 ----------- 311,042 ----------- Restaurant and banquet: Food and beverage 224,016 Wages 292,261 Benefits and taxes 51,500 Supplies 28,893 Other 14,404 ----------- 611,074 ----------- Utilities: Electric 242,926 Gas 35,433 Water and sewer 71,940 ----------- 350,299 ----------- Other fixed charges: Property insurance 35,165 Property taxes 168,872 Depreciation 247,548 Interest 556,188 ----------- 1,007,773 ----------- Total expenses $ 3,992,657 ----------- Net loss (451,009) Members' capital contributions 25,000 Distributions to prior owners (788,256) Members' deficit, beginning of year -- ----------- Members' deficit, end of year $(1,214,265) ===========
See accompanying notes to financial statements. 5 TUCSON SAINT MARY'S SUITE HOSPITALITY, LLC Statements of Operations and Members' Deficit For the year ended December 31, 1997
Cash flows from operating activities: Net income $ (451,009) Adjustments to reconcile net income to cash provided by operating activities: Depreciation 247,548 Amortization 35,000 (Increase) decrease in: Accounts receivable (51,999) Inventories (95,643) Cash held in escrow (90,452) Other assets (11,277) Increase (decrease) in: Accounts payable 391,484 Accrued expenses 298,403 ------------ Net cash provided by operating activities 272,055 ------------ Cash flows from investing activities: Acquisition of land, buildings and equipment (6,562,610) ------------ Net cash used by investing activities (6,562,610) ------------ Cash flows from financing activities: Deferred loan fees (120,000) Increase in line of credit 50,000 Increase in advances from affiliates 1,140,428 Addition of deed of trust: payable 6,000,000 Members' capital contributions 25,000 Distributions to prior owners (788,256) ------------ Net cash provided by financing activities 6,307,172 ------------ Net increase in cash 16,617 Cash, beginning of period -- ------------ Cash, end of period $ 16,617 ============
See accompanying notes to financial statements. 6 Notes to Financial Statements Year ended December 31, 1997 1. Operations and Summary of Significant Policies. Tucson Saint Mary's Suite Hospitality, LLC ("The Company") (An Arizona Limited Liability Company) was organized in May 1997 to purchase and operate a hotel property in Tucson, Arizona. The financial statements are presented for the purpose of presenting the property's operations for a full year and include operations of the prior owners for the period January 1 to May 20, 1997. The property is operated under the InnSuites trademark ("InnSuites") of Hospitality Corporation International ("Hospitality"). An affiliate, InnSuites Hotels, LLC provides management services to the Company. The property is located in a developed area that includes other hotel properties some of which may have greater financial resources than the Company. Significant accounting policies of the Company follow: Property and Equipment. Buildings and equipment are stated at cost. Depreciation is provided principally using the straight-line method for financial reporting and income tax purposes over the estimated useful lives of the assets which range from 7 years for equipment to 40 years for the buildings. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense including regular guest room refurbishing. Loan fees are amortized over the term of the note. Property accounts consist of the following:
Buildings $ 3,780,087 Equipment and furnishings 1,882,523 ------------ 5,662,610 Accumulated depreciation 247,548 ------------ $ 5,415,062 ===========
Management of the Company reviews the hotel property for impairment when events or changes in circumstances indicate the carrying amounts of the hotel properties may not be recoverable. When such conditions exist, management estimates the future cash flows from operations and disposition of the hotel property. If the estimated undiscounted future cash flows from operations and disposition of the hotel property are less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the related hotel property's estimated fair market value would be recorded and an impairment loss would be recognized. No such impairment losses have been recognized. Cash and Cash Equivalents. All highly liquid investments with an original maturity date of three months or less when purchased are considered to be cash equivalents. Cash Held in Escrow. Cash held in escrow consists of amounts for real estate taxes remitted to the lender which holds the deed of trust on the hotel property and amounts deposited for the replacement of hotel real and personal property pursuant to the terms of the loan agreement. 7 Notes to Financial Statements Year ended December 31, 1997 Deferred Loan Fees. Deferred loan fees are amortized over the terms of the related loan agreement. Amortization expense of $35,000 for the period ended December 31, 1997 is included in interest expense in the accompanying statements of operations. Accumulated amortization of deferred expenses was $35,000 at December 31, 1997. Revenue Recognition. Revenue is recognized as earned. Ongoing credit evaluations are performed and credit losses are charged off when deemed to be uncollectible. Such losses have been minimal and within management's expectations. Inventories. Inventories, which consist primarily of linen, operating supplies, and food and beverage, are stated at the lower of cost or market. Cost is determined by the first in, first out method. Income Taxes. All income and expense is passed through the Company for tax purposes and reported on the income tax returns of the individual members. Accordingly, the financial statements include no provision or liabilities for income taxes. Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. 8 Notes to Financial Statements Year ended December 31, 1997 2. Related Party Transactions The Company, Hospitality and its affiliates are related through common ownership and management. The Company accrued fees to Hospitality or its affiliates during 1997 for services rendered as follows (fees in excess of these amounts were paid by the property to the prior management company and trademark owner): Management fees (2.5% of total revenues) $ 35,472 Trademark license fees (2.5% of total revenues) 35,472 InnSuites Trust - advertising (1% of total revenues) 14,189 Advances from affiliates are as follows: Hospitality Corporation International $ 825,000 Rare Earth Development Company 52,500 Managing member 262,928 ---------- $1,140,428 ==========
Advances from affiliates are working capital advances generally advanced during slower periods and repaid by the property during the busy season and advances connected with guest room refurbishing and improvements. There are no terms or covenants connected with the advances. 3. Deed of Trust The deed of trust payable matures in May of 1999. Monthly payments of interest only of $70,000 are at a rate of 14%. The note is secured by all property and equipment of the Company and collateral assignment of all operating agreements. Interest paid in 1997 was $521,188. Annual principal payment requirements of the mortgage are as follows:
1998 $ -- 1999 6,000,000 ------------ $ 6,000,000 ============
EX-7.2 4 EXHIBIT 7.2 1 Exhibit 7.2 PRO FORMA FINANCIAL INFORMATION The Pro Forma Consolidated Balance Sheet of Realty Refund Trust (the Trust) (i) is presented as if the acquisition of the membership interests in Tucson St. Mary's Suite Hospitality LLC (St. Mary's) as discussed in Item 2 of this Form 8-K had occurred on January 31, 1998; and (ii) adjusts the historical balance sheet of the Trust as of January 31, 1998 for the effects of the acquisition. The Pro Forma Consolidated Statement of Operations for the Trust for the year ended January 31, 1998 (i) is presented as if the acquisition of St. Mary's had occurred on February 1, 1997; (ii) the formation transactions, (previously reported on Form 8-K dated February 17, 1998) had occurred on February 1, 1997; and (iii) adjusts the historical operating results of the Trust for the year ended January 31, 1998 for the effects of the acquisition and formation transactions. The pro forma information is not necessarily indicative of what the actual financial position and results of operations of the Trust would have been, assuming these transactions had been consummated as of January 31, 1998 or as the beginning of the period presented, nor does it purport to represent the future financial position or results of operations of the Trust. 2 REALTY ReFUND TRUST PRO FORMA CONSOLIDATED BALANCE SHEET JANUARY 31, 1998 (Unaudited, dollar amounts in thousands)
Trust St. Mary's Pro Forma Pro ASSETS Historical Historical Adjustment Forma ------ ---------- ---------- ---------- ----- (A) (A) (B) INVESTMENTS IN HOTEL PROPERTIES, net $41,241 $6,315 $47,556 CASH AND CASH EQUIVALENT 2,379 106 (16) (C) 2,469 ------- ------ ------- ------- ACCOUNT RECEIVABLES - 52 (52) (C) - INVENTORY - 97 (97) (C) - OTHER ASSETS - 96 (96) (C) - ------- ------ ------- ------- TOTAL ASSETS $43,620 $6,666 $ (261) $50,025 ======= ====== ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ MORTGAGE NOTES PAYABLE $17,710 $6,000 $23,710 NOTES PAYABLE TO BANKS 155 50 205 OTHER NOTES PAYABLE 2,865 - 2,865 ADVANCES PAYABLE TO RELATED PARTIES 1,700 1,140 2,840 DUE TO LESSEE 944 - 130 (C) 1,074 ACCOUNTS PAYABLE AND ACCRUED EXPENSES 572 690 (391) (C) 871 MINORITY INTEREST IN LIMITED PARTNERSHIP 14,075 - (1,214) (D) 12,861 EQUITY: Shares of beneficial interest without par value; unlimited authorization; 1,667,817 and 1,020,586 shares issued and outstanding in 1998 5,599 (1,214) 1,214 (D) 5,599 ------- ------ ------- ------- TOTAL EQUITY 5,599 (1,214) 1,214 5,599 ------- ------ ------- ------- TOTAL LIABILITIES AND EQUITY $43,620 $6,666 $ (261) $50,025 ======= ====== ======= ======= The accompanying notes to pro forma consolidated balance sheet are an integral part of this balance sheet.
3 REALTY REFUND TRUST NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET AS OF JANUARY 31, 1998 (Unaudited, dollar amounts in thousands) (A) Derived from the historical balance sheet of the Trust as of January 31, 1998 and the historical balance sheet of St. Mary's as of December 31, 1997. (B) Reflects the acquisition of St. Mary's membership interest by RRF Limited Partnership (RRFLP). Giving effect to the acquisition, the Trust is a 12.4% sole general partner in RRFLP. As James F. Wirth, Chairman, President and Chief Executive Officer of the Trust and holder of Class B limited partnership units representing 53% of RRFLP, together with his spouse, owned 100% of St. Mary, no adjustments to the historical carrying amounts of St. Mary's assets and liabilities have been made. (C) Represents the elimination of working capital assets and liabilities assumed by the lessee. (D) Reflects the elimination of the historical equity of St. Mary's and the adjustment to minority interest resulting from the acquisition. 4 REALTY ReFUND TRUST PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEARS ENDED JANUARY 31, 1998 (Unaudited, dollar amounts in thousands)
St. Mary's Trust Formation Pro Forma Historical Transactions Adjustments Pro Forma ---------- ------------ ----------- --------- (A) (B) (B) PERCENTAGE LEASE REVENUE $ -- $ 7,902 $ 995 $ 8,897 OTHER RENTAL REVENUE 1,367 (1,367) -- -- INTEREST INCOME 55 -- -- 55 ---------- ----------- ------- ---------- 1,422 6,535 995 8,952 ---------- ----------- ------- ---------- LOSS ON SALE OF REAL ESTATE 36 (36) -- -- INTEREST EXPENSE ON MORTGAGE AND OTHER NOTES PAYABLE 118 1,492 630 2,240 ADVISORY FEE TO RELATED PARTY ADVISOR -- 576 112 688 OPERATING EXPENSES OF REAL ESTATE HELD FOR SALE 1,379 (1,379) -- -- DEPRECIATION AND AMORTIZATION 21 1,689 360 2,070 GENERAL AND ADMINISTRATIVE 441 137 70 648 REAL ESTATE AND PERSONAL PROPERTY TAXES AND CASUALTY INSURANCE AND GROUND RENT -- 820 230 1,050 MINORITY INTEREST -- 2,396 (356) 2,040 ---------- ----------- ------- ---------- TOTAL EXPENSES AND MINORITY INTEREST 1,995 5,695 1,046 8,736 NET INCOME (LOSS) ATTRIBUTABLE TO SHARES OF BENEFICIAL INTEREST $ (573) $ 840 $ (51) $ 216 ---------- ----------- ------- ---------- NET INCOME (LOSS) PER SHARE $ (0.34) $ 0.13 ========== ========== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 1,667,817 1,667,817 The accompanying notes to pro forma consolidated statement of operations are an integral part of this statement.
5 REALTY REFUND TRUST NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED JANUARY 31, 1998 (Unaudited, amounts in thousands) (A) Derived from the historical statement of operations for the Trust for the year ended January 31, 1998. (B) Represents pro forma adjustments to reflect the (i) formation transactions and (ii) the acquisition of St. Mary's as of February 1, 1997. The pro forma adjustments include the following: 1. Pro forma percentage rent as calculated pursuant to the terms of the percentage leases between RRFLP and the hotels acquired in the formation transactions and St. Mary's. 2. Pro forma adjustments to other rental revenue, loss on sale of real estate and operating expenses of real estate held for sale assume the sale of the related real estate occurred as of February 1, 1997. The real estate was sold on September 4, 1997 for $6,000. 3. Pro forma interest expense on existing mortgage indebtedness assumed by RRFLP. The interest rates on the mortgage debt range from 8.0% to 9.75%. Historical interest expense on $2,300 is eliminated as that loan from related party was retired with proceeds from the sale of the real estate. 4. Pro forma advisory fee to related party advisor (equal to 1% of the Trust's invested assets) reflects assets under management having a total appraised value of $68,485. 5. Pro forma depreciation and amortization represents (i) the elimination of historical amortization of the Trust related to the real estate held for sale, and (ii) depreciation of the properties owned and acquired by RRFFLP. Depreciation is computed using the straight-line method and is based upon the estimated useful lives of 40 years for building and improvements and 7 years furniture and equipment. These estimated useful lives are based on management's knowledge of the properties and the hotel industry in general. The Trust's pro forma investment in hotel properties, at cost, consist of the following:
St. Mary's Formation Pro Forma Transactions Adjustments ------------ ----------- Land $ 3,440 $ 900 Building and improvements 31,395 3,615 Furniture, fixtures and equipment 6,406 1,800 ------- ------ $41,241 $6,315 ======= ======
6. Pro forma general and administrative expense reflects expenses related to salaries and wages, professional fees, directors expenses and other operating expenses of the properties assumed by RRFLP and the Trust. 6 7. Pro forma real estate and personal property taxes, property and casualty insurance and ground rent expense paid by RRFLP based on historical amounts. 8. Pro forma minority interest represents 87.6% of net income of RRFLP attributable to minority interest holders who hold 7,191,847 limited partnership units (including non-exchanging minority partners representing the equivalent of 299,622 limited partnership units). The Trust holds 1,020,586 units of general partner interest or 12.4% of the total.
St. Mary's Formation Pro Forma Transactions Adjustments ------------ ----------- Pro Forma income before minority interest: Trust $ 55 $ -- Scottsdale (128) -- RRFLP 2,736 (407) ------- ----- 2,663 (407) Minority interest in Pro Forma of RRFLP at 87.6% 2,396 (356) ------- ----- $ 267 $ (51) ======= =====
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