EX-99 2 0002.txt CORRESPONDENCE TO THE PARTNERS DiVall Insured Income Properties 2, L.P. QUARTERLY NEWS ================================================================================ A publication of The Provo Group, Inc. FOURTH QUARTER 2000 Year-end Information During the year 2000, DiVall 2 distributed $56.92 per unit, including approximately $9.84 representing a return of capital. Overall, this is a 9.2% return for the year (excluding the return of capital). The annual rate of return is calculated on the current net asset value of $500 per unit. We are in receipt of nearly all of the properties sales figures for the year 2000 and are pleased to note in most cases they have increased from prior years. The ten Wendy's restaurants continue to do very well. Nine of the ten stores showed in increase an sales, and four stores boasted over a 10% increase! Popeye's, Hooters and KFC also showed significant increases in their sales. Offsetting these were a decrease in sales by all of the Hardee's locations, the Village Inn and the Applebee's. Last quarter management was successful in negotiating Lease extensions for all ten Wendy's stores. Originally, the Wendy's leases had expiration dates in the year 2009. The new expiration date for each store is November 2016, this date is coterminous with the franchise agreements with Wendy's. With the additional seven years of rent from this, a very successful chain of restaurants, we feel we have not only secured the value of this portfolio, but enhanced it. We also required significant expenditures for store upgrades in connection with the extended terms. It should also be noted that the stores are now owned and managed by a new franchisee, Wencoast Restaurants, Inc. The year 2001 will begin with getting new property appraisals done. We anticipate these will be completed no later than January 30, 2001. We will report to you the new appraised values next quarter. Additionally, the December 31, 2000 net unit value will become available in February. ________________________________________________________________________________ Distribution Highlights . The Fourth Quarter distribution represents a 9.76% (approx.) annualized return from operations based on $23,550,000 (estimated net asset value as of December 31, 1999). . $575,000 total amount distributed for the Fourth Quarter 2000 which was consistent with projections. . $12.42 per unit (approx.) for the Fourth Quarter 2000. . $1,055.00 to $857.00 range of distributions per unit from the first unit ----- sold to the last unit sold before the offering closed (February 1990), ---- respectively. (NOTE: Distributions are from both cash flow from operations ---- and "net" cash activity from financing and investing activities.) Page 2 DiVall 2 4 Q 00 Statements of Income and Cash Flow Highlights . 24% increase in "total" operating revenues from projections for the 4/th/ Quarter. . Rental income shows an increase due to the way percentage rents are accrued. Therefore, more income was recognized this quarter. . There was a 2% decrease in expenses for the 4/th/ Quarter. . The decrease in expenses is due to lower than expected investor communication costs. ___________________________________ Property Highlights . Mulberry Street Grill (Formerly Mr. Munchies, Phoenix, AZ) was delinquent at December 31, 2000, in the amount of $6,159.73. This is the amount of December rent and CAM charges. (During the months of February - June 2000 this tenant carried a delinquent balance of over $14,000). Management has already contacted this tenant regarding the December payment. If payment is not made in full, the tenant will be defaulted. . Village Inn (Grand Forks, ND) was delinquent at December 31, 2000, in the amount of $8,240. This is a portion of November rent, all of December rent and late fees. Management has sent this tenant a default notice. This is a potential problem property as sales continue to decline. _______________________________________________________________ Questions & Answers . When can I expect my next distribution mailing? Your distribution correspondence for the First Quarter of 2001 is scheduled to be mailed on May 15, 2001. . When can I expect my 2000 Schedule K-1? The Schedule K-1's will be mailed no later than February 28, 2001. . What is the new net unit value as of December 31, 2001. That information is not yet available. We have scheduled to mail out the Net Unit Value letters on or before February 28, 2001. . If I have questions or comments, how can I reach your office? Please feel free to contact us at our toll-free number (800) 547-7686 or (816) 421-7444 or you may contact us by mail at: The Provo Group, Inc. 101 W. 11/th/ Street, Suite 1110, Kansas City, MO 64105. Finally, we can also be reached via e-mail at mmcmillin@theprovogroup.com.
------------------------------------------------------------------------------------------------------------------------------------ DIVALL INSURED INCOME PROPERTIES 2 L.P. STATEMENTS OF INCOME AND CASH FLOW CHANGES FOR THE THREE MONTH PERIOD ENDED DECEMBER 31, 2000 ----------------------------------------------------------------------------------------------------------------------------------- PROJECTED ACTUAL VARIANCE ----------------------------------------------------------- 4TH 4th QUARTER QUARTER BETTER OPERATING REVENUES 12/31/00 12/31/00 (WORSE) ----------- ---------- ----------- Rental income $ 695,537 $ 865,752 $ 170,215 Interest income 13,600 15,254 1,654 Other income 0 272 272 ----------- ----------- ----------- TOTAL OPERATING REVENUES $ 709,137 $ 881,278 $ 172,141 ----------- ----------- ----------- OPERATING EXPENSES Insurance $ 4,317 $ 4,681 ($364) Management fees 46,777 46,965 (188) Overhead allowance 3,783 3,789 (6) Advisory Board 2,600 2,188 412 Administrative 10,702 1,735 8,967 Professional services 6,550 9,200 (2,650) Auditing 17,000 15,500 1,500 Legal 4,500 12,704 (8,204) Ground lease termination fee 0 0 0 Loss on disposition of assets 0 10,569 (10,569) Defaulted tenants 900 390 510 ----------- ----------- ---------- TOTAL OPERATING EXPENSES $ 97,129 $ 107,721 ($10,592) ----------- ----------- ---------- GROUND RENT $ 31,650 $ 17,911 $ 13,739 ----------- ----------- ---------- INVESTIGATION AND RESTORATION EXPENSES $ 0 $ 0 $ 0 ----------- ----------- ---------- NON-OPERATING EXPENSES Depreciation $ 88,098 $ 86,100 $ 1,998 Amortization 2,364 2,866 (502) ----------- ----------- ---------- TOTAL NON-OPERATING EXPENSES $ 90,462 $ 88,966 $ 1,496 ----------- ----------- ---------- TOTAL EXPENSES $ 219,241 $ 214,598 $ 4,643 ----------- ----------- ---------- NET INCOME (LOSS) $ 489,896 $ 666,680 $ 176,784 OPERATING CASH RECONCILIATION: VARIANCE ---------- Depreciation and amortization 90,462 88,966 (1,496) Recovery of amounts previously written off 0 0 0 Loss on disposition of assets 0 10,569 10,569 (Increase) Decrease in current assets (126,532) (325,604) (199,072) (Increase) Decrease in current liabilities 5,065 (8,176) (13,241) (Increase) Decrease in cash reserved for payables (7,025) 8,000 15,025 Advance from current cash flows for furture distributions 122,000 122,000 0 ----------- ---------- ---------- Net Cash Provided From Operating Activities $ 573,866 $ 562,435 ($11,431) ----------- ---------- ---------- CASH FLOWS FROM (USED IN) INVESTING AND FINANCING ACTIVITIES Investment in Deferred Leasing Commissions 0 (190,156) (190,156) Proceeds from sale of property and equipment 0 0 0 ----------- ---------- ---------- Net Cash Provided From Investing And Financing Activities $ 0 ($190,156) ($190,156) ----------- ---------- ---------- Total Cash Flow For Quarter $ 573,866 $ 372,279 ($201,587) Cash Balance Begining of Period 1,093,038 1,009,783 (83,255) Less 3rd quarter distributions paid 11/00 (575,000) (500,000) 75,000 Change in cash reserved for payables or future distributions (114,975) (130,000) (15,025) ----------- ---------- ---------- Cash Balance End of Period $ 976,929 $ 752,062 ($224,867) Cash reserved for 4th quarter L.P. distributions (575,000) (575,000) 0 Cash reserved for payment of payables (104,764) (128,000) (23,236) ----------- ---------- ---------- Unrestricted Cash Balance End of Period $ 297,165 $ 49,062 ($248,103) =========== ========== ========== ------------------------------------------------------------------------------------------------------------------------------------ PROJECTED ACTUAL VARIANCE ----------------------------------------------------------- * Quarterly Distribution $ 575,000 $ 575,000 $ 0 Mailing Date 2/15/01 (enclosed) ------------------------------------------------------------------------------------------------------------------------------------
* Refer to distribution letter for detail of quarterly distribution. PROJECTIONS FOR DISCUSSIONS PURPOSES DIVALL INSURED INCOME PROPERTIES 2 LP 2000 PROPERTY SUMMARY AND RELATED ESTIMATED RECEIPTS PORTFOLIO (Note 1)
---------------------------- ------------------------------------- --------------------------- REAL ESTATE EQUIPMENT TOTALS ---------------------------- ------------------------------------- --------------------------- ANNUAL LEASE ANNUAL -------------------------------- BASE % EXPIRATION LEASE % * ANNUAL CONCEPT LOCATION COST RENT YIELD DATE COST RECEIPTS RETURN COST RECEIPTS RETURN -------------------------------- ---------------------------- ------------------------------------- --------------------------- APPLEBEE'S COLUMBUS, OH 1,059,465 135,780 12.82% 84,500 0 0.00% 1,143,965 135,780 11.87% BLOCKBUSTER OGDEN, UT 646,425 100,554 15.56% 646,425 100,554 15.56% DENNY'S PHOENIX, AZ 972,726 65,000 6.68% 183,239 0 0.00% 1,155,965 65,000 5.62% DENNY'S PHOENIX, AZ 865,900 115,200 13.30% 221,237 0 0.00% 1,087,137 115,200 10.60% FIESTA TIME TWIN FALLS, ID 699,032 83,200 11.90% 190,000 0 0.00% 889,032 83,200 9.36% MR. MUNCHIES (3) PHOENIX, AZ 500,000 50,800 10.16% 14,259 0 0.00% 514,259 50,800 9.88% HARDEE'S (5) S MILWAUKEE, WI 808,032 64,000 7.92% 808,032 64,000 7.92% HARDEE'S (5) HARTFORD, WI 686,563 64,000 9.32% 686,563 64,000 9.32% HARDEE'S (5) MILWAUKEE, WI 1,010,045 76,000 7.52% (4) 260,000 0 0.00% 1,421,983 76,000 5.34% 151,938 0 0.00% HARDEE'S (5) FOND DU LAC,WI 849,767 88,000 10.36% (4) 290,469 0 0.00% 1,140,236 88,000 7.72% HARDEE'S (5) MILWAUKEE,WI 0 0 0.00% 780,000 0 0.00% 780,000 0 0.00% HOOTER'S R.HILLS, TX 1,246,719 95,000 7.62% 1,246,719 95,000 7.62% HOSTETTLER'S DES MONIES, IA 845,000 55,584 6.58% 52,813 0 0.00% 897,813 55,584 6.19% KFC SANTA FE, NM 451,230 60,000 13.30% 451,230 60,000 13.30% MIAMI SUBS PALM BEACH, FL 743,625 39,000 5.24% 743,625 39,000 5.24% -------------------------------- ---------------------------- ------------------------------------- ---------------------------
Note 1: This property summary includes only current property and equipment held by the Partnership. Equipment lease receipts shown include a return of capital. 2: Rent is based on 12.5% of monthly sales. Rent projected for 2000 is based on 1999 sales levels. 3: The Partnership entered into a long-term ground lease in which the Partnership is responsible for payment of rent. 4: The lease was terminated and the equipment sold to Hardee's Food Systems in conjunction with their assumption of the Terratron leases in November 1996. 5: These leases were assumed by Hardee's Food Systems as a reduced rental rate from that stated in the original leases. Page 1 of 2
PROJECTIONS FOR DISCUSSION PURPOSES DIVALL INSURED INCOME PROPERTIES 2 LP 1999 PROPERTY SUMMARY AND RELATED ESTIMATED RECEIPTS PORTFOLIO (Note 1) ----------------------------- ------------------------------------- ----------------------------- REAL ESTATE EQUIPMENT TOTALS ----------------------------- ------------------------------------- ----------------------------- ANNUAL LEASE ANNUAL -------------------------------- BASE % EXPIRATION LEASE % TOTAL CONCEPT LOCATION COST RENT YIELD DATE COST RECEIPTS RETURN COST RECEIPTS RETURN -------------------------------- ----------------------------- ------------------------------------- ----------------------------- POPEYE'S PARK FOREST, IL 580,938 77,280 13.30% 580,938 77,280 13.30% SUNRISE PS PHOENIX, AZ 1,084,503 127,920 11.80% 79,219 0 0.00% 1,182,735 127,920 10.82% 19,013 0 0.00% VILLAGE INN GRAND FORKS, ND 739,375 84,000 11.36% 739,375 84,000 11.36% WENDY'S AIKEN, SC 633,750 90,480 14.28% 633,750 90,480 14.28% WENDY'S CHARLESTON, SC 580,938 76,920 13.24% 580,938 76,920 13.24% WENDY'S N. AUGUSTA, SC 660,156 87,780 13.30% 660,156 87,780 13.30% WENDY'S AUGUSTA, GA 728,813 96,780 13.28% 728,813 96,780 13.28% WENDY'S CHARLESTON, SC 596,781 76,920 12.89% 596,781 76,920 12.89% WENDY'S AIKEN, SC 776,344 96,780 12.47% 776,344 96,780 12.47% WENDY'S AUGUSTA, GA 649,594 86,160 13.26% 649,594 86,160 13.26% WENDY'S CHARLESTON, SC 528,125 70,200 13.29% 528,125 70,200 13.29% WENDY'S MT. PLEASANT, SC 580,938 77,280 13.30% 580,938 77,280 13.30% WENDY'S MARTINEZ, GA 633,750 84,120 13.27% 633,750 84,120 13.27% -------------------------------- ----------------------------- ------------------------------------ ----------------------------- -------------------------------- ----------------------------- -------------------------- ----------------------------- PORTFOLIO TOTALS (27 Properties) 20,158,534 2,224,738 11.04% 2,326,687 0 0.00% 22,485,221 2,224,739 9.89% -------------------------------- ----------------------------- -------------------------- -----------------------------
Note 1: This property summary includes only current property and equipment held by the Partnership. Equipment lease receipts shown include a return of capital. Page 2 of 2