Note 4 - Investment in Limited Liability Company

6 Months Ended

Jun. 30, 2011

Equity Method Investments Disclosure [Text Block]

NOTE 4 – INVESTMENT IN LIMITED LIABILITY COMPANY

During 2008, the Partnership entered into an Operating Agreement of 1850 De La Cruz LLC, a California limited liability company (“1850”), with Nanook Ventures LLC (“Nanook”), an unrelated party.  The purpose of the joint venture is to acquire, own and operate certain industrial land and buildings located in Santa Clara, California that were owned by the Partnership. The property was subject to a Purchase and Sale Agreement dated July 24, 2007 (the “Sale Agreement”), as amended, between the Partnership, as seller, and Nanook, as buyer.  During the course of due diligence under the Sale Agreement, it was discovered that the property is contaminated and that remediation and monitoring may be required.  The parties agreed to enter into the Operating Agreement to restructure the arrangement as a joint venture.  At the time of closing in July 2008, the two properties were separately contributed to two new limited liability companies, Nanook Ventures One LLC and Nanook Ventures Two LLC that are wholly owned by 1850. The Partnership and Nanook are the Members of 1850 and NV Manager, LLC is the Manager. (See Note 12 for further discussion of the Partnership’s environmental remediation obligation with respect to the properties owned by 1850.)

The Partnership received capital distributions from 1850 of approximately $65,000 during the three months ended June 30, 2011 and 2010, respectively, and $65,000 during the six months ended June 30, 2011 and 2010, respectively. The net income to the Partnership from its investment in 1850 De La Cruz was approximately $37,000 and $40,000 during the three months ended June 30, 2011 and 2010, respectively, and $77,000 and $73,000 during the six months ended June 30, 2011 and 2010, respectively.