EX-99.0 4 dex990.htm CORRESPONDENCE TO THE LIMITED PARTNERS Correspondence to the Limited Partners

Exhibit 99.0

 

DiVall Insured Income Properties 2, L.P.

 

QUARTERLY NEWS

 

A publication of The Provo Group, Inc.   First QUARTER 2005

 

2005 Biennial Consent for Sale . . .

 

As you may recall we represented in 1998 that we would poll the limited partners on a biennial basis by circulating a consent for sale beginning in May 2001. The last consent was mailed in May 2003. Only 14% of investors voted for a sale of the portfolio at that time. This was lower than the May 2001 consent which received a 26% vote to sell the portfolio.

 

Enclosed you will find the third biennial (May 2005) consent for sale documents. Please read the documents carefully and return the consent card no later than June 30, 2005.

 

The General Partner and the Advisory Board have held lengthy discussions regarding the potential sale of all the Partnership’s assets and the liquidation of the Partnership. We realize that there now is a strong real estate market fueled by low interest rates and aggressive investors. However, we believe that the Partnership can continue to provide a return to the limited partners which would be difficult to replace with alternative investments. The Partnership has achieved a high level of stability in recent years because the portfolio of properties has been strengthened by the sale of a number of poorer performing units and the extensions of the leases on the ten Wendy’s locations to 2016. We believe that the Partnership can continue to provide a steady cash flow to the partners, and additional value can be achieved by continuing the strategy of selectively selling the units which are not leased to prime quality tenants. Accordingly, the General Partner and the Advisory Board recommend a vote AGAINST a sale.

 

The current market conditions (as we understand them) are detailed in the consent.

 

If you do not return your consent it is deemed a vote against a sale at this time. Unless more than 50% of the limited partners vote for a sale, we will circulate the next biennial consent vote in May 2007.

 

DISTRIBUTION HIGHLIGHTS

 

•      $435,000 total amount distributed for the First Quarter 2005, as budgeted.

   

•      $1,286 to $1,137 range of distributions per unit from the first unit sold to the last unit sold before the offering closed (2/90) respectively. (Distributions are from both cash flow from operations and “net” cash activity from financing and investing activities).

 

•      $9.40 per unit (approx.) for the First Quarter 2005. The approximate annualized “operating return” is 8.5% based on the most recent net asset value as of December 31, 2004.

   

PAGE 2   DIVALL 2   1 Q 05

 

QUESTIONS & ANSWERS

 

•   When can I expect my next distribution mailing?

Your distribution correspondence for the Second Quarter of 2005 is scheduled to be mailed on August 15, 2005.

 

•   What was the December 31, 2004 net asset value?

Approximately $440 per unit.

 

•   When will the results of the consent to sell be given to investors?

The consent results will be reported in the August 15, 2005 newsletter.

 

•   I’ve moved how do I update my account registration?

Please mail or fax to us a signed letter stating your new address and telephone number. Updates cannot be accepted over the telephone or via voicemail messages.

 

•   If I have questions or comments, how can I reach your office?

You can reach us at our address listed below:

 

MAIL:    DiVall Investor Relations
     c/o The Provo Group, Inc.
     1100 Main Street, Suite 1830
     Kansas City, MO 64105
PHONE:    800-547-7686 OR (816) 421-7444 EXTENSION 224
FAX:    (816) 221-2130
E-MAIL:    mevans@theprovogroup.com

DIVALL INSURED INCOME PROPERTIES 2 LP

2005 PROPERTY SUMMARY

AND RELATED RECEIPTS

FOR CURRENT OPERATING PROPERTIES

AS OF MARCH 31, 2005

 

PROJECTIONS FOR

DISCUSSION PURPOSES

 

PORTFOLIO                                                             (Note 1)

 

CONCEPT

   

LOCATION

    REAL ESTATE
     EQUIPMENT
     TOTALS
  
      COST
    ANNUAL
BASE
RENT
    %
YIELD
     LEASE
EXPIRATION
DATE
    COST
    PRINCIPAL
RETURNED
AS OF 1/1/94
    ANNUAL
LEASE
RECEIPTS
    %
RETURN
     COST
    ANNUAL
RECEIPTS
    RETURN
  

APPLEBEE’S

    COLUMBUS, OH    1,059,465    135,780    12.82 %        84,500    29,849    0    0.00 %   1,143,965    135,780    11.87 %

BLOCKBUSTER

    OGDEN, UT    646,425    110,750    17.13 %                             646,425    110,750    17.13 %

DENNY’S

    PHOENIX, AZ    972,726    65,000    6.68 %        183,239    0    0    0.00 %   1,155,965    65,000    5.62 %

CHINESE SUPER BUFFET

    PHOENIX, AZ    865,900    66,000    7.62 %        221,237    0    0    0.00 %   1,087,137    66,000    6.07 %

HOOTER’S

    R. HILLS, TX    1,246,719    95,000    7.62 %                             1,246,719    95,000    7.62 %

DAYTONA’S All SPORTS CAFÉ

    DES MOINES, IA    845,000    60,000    7.10 %        52,813    0    0    0.00 %   897,813    60,000    6.68 %

KFC

    SANTA FE, NM    451,230    60,000    13.30 %                             451,230    60,000    13.30 %
Note:

 

  1: This property summary includes only property and equipment held by the Partnership during 2005.

 

Page 1 of 2

DIVALL INSURED INCOME PROPERTIES 2 LP

2005 PROPERTY SUMMARY

AND RELATED RECEIPTS

FOR CURRENT OPERATING PROPERTIES

AS OF MARCH 31, 2005

 

PROJECTIONS FOR

DISCUSSION PURPOSES

 

PORTFOLIO                                                             (Note 1)

 

CONCEPT

   

LOCATION

   

REAL ESTATE

     EQUIPMENT
     TOTALS
  
      COST
    ANNUAL
BASE
RENT
    %
YIELD
     LEASE
EXPIRATION
DATE
    COST
    PRINCIPAL
RETURNED
AS OF 1/1/94
    ANNUAL
LEASE
RECEIPTS
    %
RETURN
     COST
    TOTAL
RECEIPTS
    RETURN
  

POPEYE’S

    PARK FOREST, IL    580,938    77,280    13.30 %                             580,938    77,280    13.30 %

SUNRISE PRESCHOOL

    PHOENIX, AZ    1,084,503    123,318    11.37 %        79,219    33,047    0    0.00 %   1,182,735    123,318    10.43 %
                               19,013    6,710    0    0.00 %                

PANDA BUFFET

   

GRAND FORKS, ND

    739,375    34,000    4.60 %                             739,375    34,000    4.60 %

WENDY’S

    AIKEN, SC    633,750    90,480    14.28 %                             633,750    90,480    14.28 %

WENDY’S

   

CHARLESTION, SC

    580,938    77,280    13.30 %                             580,938    77,280    13.30 %

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

         14,861,470    1,670,908    11.24 %        640,021    69,606    0    0.00 %   15,501,491    1,670,908    10.78 %

Note:

 

  1: This property summary includes only property and equipment held by the Partnership during 2005.

 

Page 2 of 2

DIVALL INSURED INCOME PROPERTIES 2 L.P.

STATEMENTS OF INCOME AND CASH FLOW CHANGES

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2005

 

    

PROJECTED
1ST

QUARTER
03/31/2005

     ACTUAL
1ST
QUARTER
03/31/2005
     VARIANCE
BETTER
(WORSE)
  

OPERATING REVENUES

                         

Rental income

    $ 417,055     $ 417,415     $ 360  

Interest income

      2,550       3,328       778  

Real estate tax recoveries

      18,685       14,374       (4,311 )

Other income

      0       1,922       1,922  
    
 
 

TOTAL OPERATING REVENUES

    $ 438,290     $ 437,039     $ (1,251 )
    
 
 

OPERATING EXPENSES

                         

Insurance

    $ 9,729     $ 9,728     $ 1  

Management fees

      51,986       52,192       (206 )

Overhead allowance

      4,227       4,222       5  

Advisory Board

      3,500       3,500       0  

Administrative

      7,020       20,997       (13,977 )

Professional services

      13,190       14,676       (1,486 )

Auditing

      16,200       14,629       1,571  

Legal

      9,000       5,663       3,337  

Property Expenses

      3,750       170       3,580  
    
 
 

TOTAL OPERATING EXPENSES

    $ 118,602     $ 125,776     $ (7,174 )
    
 
 

INVESTIGATION AND RESTORATION EXPENSES

    $ 0     $ 134     $ (134 )
    
 
 

NON-OPERATING EXPENSES

                         

Depreciation

      65,358       65,357       1  

Amortization

      3,198       3,198       (0 )
    
 
 

TOTAL NON-OPERATING EXPENSES

    $ 68,556     $ 68,555     $ 1  
    
 
 

TOTAL EXPENSES

    $ 187,158     $ 194,466     $ (7,308 )
    
 
 

NET INCOME

    $ 251,132     $ 242,573     $ (8,559 )
                 VARIANCE
  

OPERATING CASH RECONCILIATION:

                         

Depreciation and amortization

      68,556       68,555       (1 )

Recovery of amounts previously written off

      0       (3,357 )     (3,357 )

(Increase) Decrease in current assets

      256,919       524,181       267,262  

Increase (Decrease) in current liabilities

      (48,471 )     56,179       104,650  

(Increase) Decrease in cash reserved for payables

      47,466       (57,150 )     (104,616 )

Current cash flows advanced from (reserved for) future distributions

      (130,700 )     (355,487 )     (224,787 )
    
 
 

Net Cash Provided From Operating Activities

    $ 444,902     $ 475,494     $ 30,592  
    
 
 

CASH FLOWS (USED IN) FROM INVESTING AND FINANCING ACTIVITIES

                         

Indemnification Trust (Interest earnings reinvested)

      (1,500 )     (2,143 )     (643 )

Recovery of amounts previously written off

      0       3,357       3,357  
    
 
 

Net Cash (Used In) From Investing And Financing Activities

    $ (1,500 )   $ 1,214     $ 2,714  
    
 
 

Total Cash Flow For Quarter

    $ 443,402     $ 476,709     $ 33,307  

Cash Balance Beginning of Period

      708,873       684,586       (24,287 )

Less 4th quarter distributions paid 2/05

      (430,000 )     (425,000 )     5,000  

Change in cash reserved for payables or future distributions

      83,234       412,637       329,403  
    
 
 

Cash Balance End of Period

    $ 805,508     $ 1,148,932     $ 343,424  

Cash reserved for 1st quarter 2005 L.P. distributions

      (430,000 )     (435,000 )     (5,000 )

Cash reserved for payment of accrued expenses

      (99,907 )     (200,965 )     (101,058 )

Cash advanced from (reserved for) future distributions

      (195,513 )     (425,300 )     (229,787 )
    
 
 

Unrestricted Cash Balance End of Period

    $ 80,088     $ 87,667     $ 7,579  
    
 
 
     PROJECTED
     ACTUAL
     VARIANCE
  
*    Quarterly Distribution    $ 430,000     $ 435,000     $ 5,000  

        Mailing Date

      05/13/2005       (enclosed )     —    
* Refer to distribution letter for detail of quarterly distribution.