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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10K
(Mark one)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
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OR
----- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period
from __________________ to __________________
Commission file number 0-15097.
WESTIN HOTELS LIMITED PARTNERSHIP
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(Exact name of Registrant as specified in its charters)
Delaware 91-1328985
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 Sixth Avenue, Seattle, Washington 98121
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (206) 443-5000
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Units of limited partnership interests
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(Title of Class)
There is no public market for Units of limited partnership interests in the
Westin Hotels Limited Partnership.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
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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
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Indicate the number of shares (Units) outstanding of each of the issuer's
classes of common stock (Units), as of the latest practicable date (applicable
only to corporate issuers).
135,600 limited partnership Units issued and outstanding
DOCUMENTS INCORPORATED BY REFERENCE
None.
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PART I
ITEM 1. BUSINESS.
GENERAL DEVELOPMENT OF BUSINESS
Westin Hotels Limited Partnership (the "Partnership") and its subsidiary
limited partnerships, The Westin St. Francis Limited Partnership (the "St.
Francis Partnership") and the Westin Chicago Limited Partnership (the "Chicago
Partnership"), each a Delaware limited partnership (collectively the
"Partnerships"), were formed on April 25, 1986, for the purpose of acquiring
two hotels, The Westin St. Francis in San Francisco, California and The Westin
Hotel, Chicago in downtown Chicago, Illinois (individually a "Hotel",
collectively the "Hotels"). In January 1997 The Westin Hotel, Chicago was
renamed The Westin Michigan Avenue, Chicago to distinguish it from The Westin
River North, Chicago also located in downtown Chicago. (See the discussion
under Item 2 - "Properties"). The Westin St. Francis and The Westin Michigan
Avenue, Chicago had been owned by subsidiaries of Westin Hotel Company
("Westin") and have been managed by Westin as part of Westin's international
hotel system since 1945 and 1964, respectively. Westin Realty Corp. ("Westin
Realty") is the sole general partner of the Partnership, St. Francis Hotel
Corporation ("St. Francis Corp.") is the sole general partner of the St.
Francis Partnership, and 909 North Michigan Avenue Corporation ("909 Corp.") is
the sole general partner of the Chicago Partnership. Each general partner
(individually a "General Partner," collectively the "General Partners") is a
subsidiary of Westin. The St. Francis Partnership and Chicago Partnership are
collectively referred to as the "Hotel Partnerships."
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Partnerships, which commenced operations on August 28, 1986, are
engaged solely in the business of owning and operating the Hotels. Therefore,
the Partnerships are engaged in only one industry segment.
DESCRIPTION OF BUSINESS
The Hotels are managed by Westin and are operated as part of Westin's
international hotel system. The hotel business in general is highly
competitive. To the extent hotel capacity expands or demand for hotel
accommodations decreases in San Francisco and Chicago, where the Partnerships
operate the Hotels, competition will increase. The demand for particular
accommodations and related services are subject to various factors including,
but not limited to, seasonal variance, changes in economic conditions, and
changes in travel patterns and preferences (which may be affected by airline
schedules, weather conditions or availability). Specific information regarding
competitive conditions at each of the Hotels is set forth in Item 2 below.
Westin is owned by a limited liability company formed specifically for the
purpose of acquiring Westin. The limited liability company is made up of
Starwood Capital Group, L.P., a private firm that invests on behalf of its
principals; affiliates of Goldman, Sachs & Co., an international investment
banking firm; and Nomura Asset Capital Corporation. Nomura Asset Capital
Corporation provided the financing.
Neither the Partnership nor the Hotel Partnerships have any employees.
Administrative and Hotel personnel are employees of either Westin or the
Hotels' respective General Partners. The Partnerships reimburse Westin and the
General Partners for the costs of such employees. However, neither the
Partnership nor the Hotel Partnerships are directly responsible for the payment
of executive compensation to the officers of the General Partners.
ITEM 2. PROPERTIES.
The Partnerships' properties consist of The Westin St. Francis in San
Francisco, California, and The Westin Michigan Avenue, Chicago (formerly The
Westin Hotel, Chicago) in Chicago, Illinois. Each is a first-class hotel
bearing the Westin name and located in a premier central urban location,
providing guests with convenient access to business districts, shopping areas
and convention facilities. From time to time Westin
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will own and/or manage more than one hotel in a major market area. While
multiple operations within a single market area may compete to some extent,
certain benefits may also inure from the ability to coordinate marketing
strategies and from other synergisms created by associations with the Westin
hotel system.
THE WESTIN ST. FRANCIS
Description. The Westin St. Francis has 1,192 guest rooms, including 83
suites, with 613 rooms in the main building and 579 rooms in the 32-story
tower, and 28 meeting and banquet rooms. Three separate restaurants are located
within the Hotel: The Compass Rose, Dewey's, and the newly renovated St.
Francis Cafe, formerly the Dutch Kitchen. In addition, there are three lounges,
including Club Oz on the 32nd floor. Also on the 32nd floor is Victor's Palace,
formerly Victor's Restaurant, which opened this summer as a premier banquet
facility. The Hotel offers concierge services and has a business center and
complimentary health and fitness center. Jewelry and gift boutiques, clothing
shops, specialty stores, an art gallery, a florist and a hair salon are all
available within the Hotel.
Location. The Westin St. Francis is located on historic Union Square in
downtown San Francisco, approximately 12 miles north of the San Francisco
International Airport and within easy walking distance of the George R. Moscone
Convention Center, Chinatown and the central business and financial district of
San Francisco. The world-famous San Francisco cable cars stop directly in front
of the Hotel.
Capital Improvements. During 1996 the Hotel continued the aggressive
renovation program it embarked on in 1995. The Hotel spent $13.1 million on
capital improvements. Of this amount, $3.6 million was spent on the main
building facade restoration, $2.6 million on renovations to food and beverage
outlets, $2.7 million on rooms renovations, and the remaining $4.2 million in
other areas including fire/life safety upgrades and ADA (Americans with
Disabilities Act) compliance.
Entering the final phase of facility restoration, the Hotel has budgeted
$7.1 million for capital improvements in 1997, of which $0.4 million is to be
spent on suites, $0.8 million on food and beverage banquet rooms, $3.6 million
in other areas including EDP equipment, ADA compliance and fire/life safety
upgrades, and $2.3 million on the facade project. For further discussion
regarding the funding of these capital expenditures, see Item 7 - "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources."
Competitive Conditions. The competition in San Francisco's hospitality
industry remained strong during 1996. No new hotels have been added to this
competitive segment since 1991, although a new 425-room hotel is planned and
due to open in late 1998 or early 1999. Most all of the competition is in the
process of or has plans to improve their facilities. The newly expanded Moscone
Convention Center is booked to near capacity through 2005, signaling strong
group demand. Whereas business travel continues to decline, tourism is on the
rise. The impact of this will result in dramatic changes in sales and marketing
strategies to take advantage of upswings and changes in the marketplace. Westin
manages a hotel at the San Francisco International Airport, but it is not in
direct competition with The Westin St. Francis.
THE WESTIN MICHIGAN AVENUE, CHICAGO
Description. The Westin Michigan Avenue, Chicago has 740 guest rooms,
including 38 suites, and 21 meeting rooms. The Hotel operates the Chelsea
Restaurant and Bar as an all-purpose food and beverage facility. The Hotel has
a fitness center and a business center and provides retail space for several
specialty stores and a gift shop.
Location. The Westin Michigan Avenue, Chicago is located on a prime site
in downtown Chicago at the north end of the famous "Magnificent Mile." The
Hancock Center is situated directly south of The Westin Michigan Avenue,
Chicago, as is the Water Tower Place, offering a variety of shopping and
entertainment possibilities. The Hotel is 18 miles from O'Hare International
Airport and 12 miles from the Midway Airport.
Capital Improvements. In 1996 the Hotel focused on renovations to the
public areas. The Hotel spent $2.9 million for capital expenditures. Of this
amount, $0.8 million was spent on the exterior facade and structure, $0.8
million on food and beverage areas, $0.2 million on rooms, and the remaining
$1.1 million on various other projects including ADA guest elevators and
elevator modernization.
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The Hotel has budgeted $6.7 million for capital improvements during 1997.
Extensive renovation to the tower rooms at a cost of $3.4 million is planned.
In addition, $0.4 million will be spent on the sidewalks and planters, $1.1
million for EDP equipment and updating of engineering systems, and $1.8 million
for food and beverage outlets. For discussion regarding the funding of these
capital expenditures see Item 7 - "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources."
Competitive Conditions. Chicago's hospitality industry continued to
experience strong competition during 1996. One competitor has completed and
another is in the process of extensive renovations. Another competitor on North
Michigan Avenue was recently closed for demolition. Plans are to reopen a new
hotel in late 1999 or early 2000 in a mixed use facility including
condominiums, retail, and office space. For 1997 the Hotel believes that it can
maintain its share of the market by emphasizing its premier "Magnificent Mile"
location. Westin manages a hotel located at the O'Hare International Airport
near Chicago and in January 1997 commenced management of The Westin River
North, Chicago in the financial district of downtown Chicago. While Westin and
the General Partner believe that neither is in direct competition with The
Westin Michigan Avenue, Chicago, their close proximity allows for efficiencies
in both staffing and productivity.
MORTGAGE LOANS
On August 21, 1986, Mortgage Loans in the amount of $83,325,000 with
respect to The Westin St. Francis and $32,825,000 with respect to The Westin
Michigan Avenue, Chicago (collectively the "Mortgage Loans") were refinanced by
Teacher Retirement System of Texas ("Lender"). The Hotels were acquired subject
to the Mortgage Loans. The Mortgage Loans require that the Hotel Partnerships
not further encumber the Hotels without prior consent of the Lender. On June 2,
1994, the General Partner, on behalf of Westin Hotels Limited Partnership,
successfully completed a restructuring of the Mortgage Loans and entered into a
Restructuring Agreement with the Lender
INSURANCE
Each Hotel is covered by comprehensive general liability insurance, fire
and extended property insurance (including earthquake coverage), business
interruption, workers' compensation, employer's liability insurance, and such
other insurance as is customarily obtained for similar properties.
The Hotels currently participate in a Westin insurance program whereby
general liability and workers' compensation insurance coverage premiums are
paid through Westin to Aetna Casualty and Surety Company and Westel Insurance
Company, the latter being a wholly owned subsidiary of Westin.
ITEM 3. LEGAL PROCEEDINGS.
On January 15, 1997, Equity Resources Group, Inc., a limited partner of
the Partnership ("Claimant"), filed a demand for arbitration with the American
Arbitration Association in Seattle, Washington, claiming that the Partnership
and its General Partner, Westin Realty Corp., unlawfully refused to provide
Claimant with a list of, and other information concerning, the limited partners
in order to enable Claimant to make offers to acquire units, thereby damaging
Claimant in an unspecified amount. The Partnership and Westin Realty Corp. deny
the claim and intend to contest it.
Because of the nature of the hotel business, the Hotel Partnerships, along
with Westin as the Hotels' manager, are subject to various claims and legal
actions incidental to the ordinary course of their operations, including such
matters as contract and lease disputes and complaints alleging personal injury,
property damage and employment discrimination. The General Partner believes
that the outcome of any such pending claims or proceedings, individually or in
the aggregate, will not have a material adverse effect upon the business,
financial condition, or results of operations of the Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED UNITHOLDER MATTERS.
As of March 25, 1997, there were 8,625 holders of record of the 135,600
Units.
There is no public market for the Units, and it is not anticipated that a
public market for the Units will develop. The transfer of Units, or any
interest therein, is subject to a variety of restrictions. Limited Partners may
not transfer their interests in the Partnership if, in the opinion of the
Partnership's counsel, such transfers might violate the registration
requirements of the Securities Act of 1933, as amended, or the laws of any
other jurisdiction or agency applicable to the transfers, cause the Partnership
to be regarded as an association taxable as a corporation, result in the
dissolution or termination of the Partnership or result in a Hotel
Partnership's not being able to obtain or continue in effect any license
permitting the service or sale of alcoholic beverages in its Hotel. The
assignee must also meet certain other requirements set forth in the Amended and
Restated Agreement of Limited Partnership of Westin Hotels Limited Partnership
before it may be recognized as a substituted Limited Partner, including the
payment of all reasonable expenses connected with the transfer of any interest.
The limited partners or their representatives must furnish, as to voluntary
transfers, sufficient information to counsel to permit the foregoing
determination to be made.
The General Partner is aware of certain transfers of Units between
unrelated parties, some of which do occur through certain secondary markets
that specialize in trading limited partnership interests ("Limited Partnership
Exchanges"). Initally, because these transactions were limited and sporadic in
number and volume, it had been the General Partner's policy not to disclose the
prices at which Units were transferred. Around July 1996, in response to
direct requests for Unit sales price and value estimates, the General Partner
began advising individuals that Unit exchange sales were occurring on Limited
Partnership Exchanges and providing those individuals with the names of Limited
Partnership Exchanges and other sources to contact for exchange trading price
information.
In 1996 and more recently, in 1997, the General Partner became aware of
offers to purchase Units, which were mailed to limited partners, that have
ranged from $185 to $400 per Unit. The General Partner responded, without
recommending either an acceptance or rejection of any offer, by providing the
limited partners with certain information concerning reported Unit sales. (See
the Partnership's current Reports on Form 8-K dated September 26, 1996 and
March 12, 1997). The following information reflects the Partnership's records
of the average and range of Unit sale prices for each quarter of 1996 and the
first quarter of 1997 (through March 21, 1997).
Average per Unit Range of per Unit Sale
Sales Price Sales Price
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1996: First Quarter $201.63 $120.00 to $215.34
Second Quarter $242.32 $150.12 to $269.00
Third Quarter $315.81 $204.50 to $347.00
Fourth Quarter $363.84 $340.00 to $387.60
1997: First Quarter
(through March 21, 1997) $472.00 $320.00 to $600.00
In October 1996 the General Partner determined it to be in the best
interest of the Partnership to implement a Unit transfer policy that relies on
the protections of the 5% safe harbor, promulgated by the Internal Revenue
Service, to prevent the Partnership from being deemed a "publicly traded
partnership" pursuant to Section 7704 of the Internal Revenue Code. The 5% safe
harbor applies if the sum of the percentage interests in partnership capital or
profits represented by Units traded during any calendar year does not exceed 5%
of the total Partnership interests. Upon reaching 1996 Unit sales aggregating
6,848, the General Partner suspended its approval of any Unit sales transfer
requests in order to comply with the 5% safe harbor. The Partnership has
already received transfer requests for 5,023 Units sales for the first quarter
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of 1997. When the Partnership reaches 1997 Unit sales aggregating 6,848, the
General Partner will suspend its approval of any Unit sales transfer requests
for the remainder of 1997.
Cash distributions, if any, are distributed to the partners on a quarterly
basis not later than 75 days after the end of the Partnership's fiscal quarter.
Limited partners have received no cash distributions during the past six years.
Based on the expectation that the Hotels' strong operating results will
continue and having achieved the performance levels in 1996 required by the
Restructing Agreement, the General Partner plans to reinstate cash
distributions to the limited partners in 1997. These and any other future
distributions of net cash flow will be determined in accordance with Section
7.02 of the Partnership agreement.
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth selected financial information for the
Partnership.
Years Ended December 31,
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1996 1995 1994 1993 1992
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(In Thousands of Dollars Except per Unit Amounts)
Operating Revenues:
Rooms $ 72,589 $ 60,907 $ 60,181 $ 58,300 $ 58,164
Food and beverage 27,477 27,124 30,611 27,954 28,763
Other 10,884 9,213 8,596 7,972 7,772
-------- -------- -------- -------- --------
Total Operating Revenues 110,950 97,244 99,388 94,226 94,699
-------- -------- -------- -------- --------
Operating Expenses:
Rooms 19,631 17,931 18,511 17,693 17,618
Food and beverage 21,963 22,842 25,637 24,410 25,554
Administrative, general and
marketing 17,263 16,120 16,083 15,305 16,189
Management fees 5,672 2,188 5,309 4,992 5,032
Other 26,522 24,169 21,392 27,467 29,333
-------- -------- -------- -------- --------
Total Operating Expenses 91,051 83,250 86,932 89,867 93,726
-------- -------- -------- -------- --------
Operating Profit $ 19,899 $ 13,994 $ 12,456 $ 4,359 $ 973
-------- -------- -------- -------- --------
Net Income (Loss) $ 6,978 $ 1,713 $ 1,444 $ (8,675) $(12,258)
-------- -------- -------- -------- --------
Net Income (Loss) per Unit $ 51.46 $ 12.63 $ 10.65 $ (63.97) $ (90.40)
Total Assets $263,148 $246,698 $234,293 $214,217 $223,332
Long-term Obligations $157,880 $153,760 $141,659 $125,855 $127,182
Deferred Incentive
Management Fees $ 19,425 $ 16,249 $ 16,249 $ 13,089 $ 11,395
Distributions Paid per Unit $ - $ - $ - $ - $ -
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL
The Hotels' primary market focus is on business travelers, conventions and
other groups and, in the case of The Westin St. Francis, tourism. The Hotels'
business activities generally follow national economic trends. The level of
tourist business is influenced by the general global economic environment and
political climate and, to a lesser extent, by the strength of the US dollar in
relation to foreign currencies. Current
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trends in the hotel industry indicate that the outlook for the lodging industry
remains positive due to the increase in demand, limited growth of full-service
hotels and an improved economic environment. Both The Westin St. Francis and
The Westin Michigan Avenue, Chicago continue to experience seasonal trends,
with the lowest occupancy levels occurring during the first quarter, followed
by increased occupancies throughout the remainder of the year. See Note (9) of
the Notes to Consolidated Financial Statements, included under Item 8 -
"Financial Statements and Supplementary Data" below, for additional quarterly
information.
RESULTS OF OPERATIONS
This section analyzes significant fluctuations in items affecting the
consolidated statements of operations for the years ended December 31, 1996,
1995 and 1994. The table below presents key statistics used in the analysis:
Years Ended December 31,
Combined 1996 1995 1994
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Average room rate (ARR) $138.96 $124.99 $118.36
Occupancy rate 73.9% 69.0% 71.8%
REVPAR $102.66 $86.26 $ 84.99
Profit margin as a percentage of revenues:
Rooms 73.0% 70.6% 69.2%
Food and beverage 20.1% 15.8% 16.2%
1996 Compared with 1995. For the year ended December 31, 1996, the
Partnership had net income of $7.0 million, an increase of $5.3 million over
1995. This improvement is primarily the result of a 14.1% increase in operating
revenues offset by a 9.4% increase in operating expenses over the year ended
December 31, 1995.
Combined rooms revenues for the year 1996 increased to $72.6 million
compared to $60.9 million for 1995, a 19.2% improvement. Each Hotel increased
both their occupancy rates and their average room rates over the prior year.
REVPAR, revenue per available room, on a combined basis, increased 19.0% to
$102.66 for 1996 from $86.26 for 1995. The Westin St. Francis reported an
increase in occupancy of 5.2 percentage points to 76.4% and The Westin Michigan
Avenue, Chicago reported a 4.4 percentage point increase to 69.7%. The Westin
Michigan Avenue, Chicago achieved a percentage increase in average room rate of
12.8%; The Westin St. Francis, 10.3%. The average room rate at The Westin St.
Francis in 1996 was $144.42 compared to $130.88 in 1995. At The Westin St.
Francis, the occupancy percentage and average room rate was up for both the
group and individual segments. These improvements can be directly attributed to
an improved product and to strong occupancies and room rate increases buoyed by
the robust demand in the San Francisco market. The Westin Michigan Avenue,
Chicago increased its average room rate to $129.31 in 1996 from $114.62 in
1995. At this Hotel, both the occupancy rate and the average room rate improved
for the group segment. However, their occupancy rate for the individual segment
was down but was offset by an increase in the group rate resulting in an
overall increase. The Westin Michigan Avenue, Chicago also benefited from the
improved room product.
In 1996 both Hotels controlled increases in room costs. Specifically, at
The Westin St. Francis, the cost per occupied room increased only $1.01 to
$42.18 in 1996 or 2.5% over 1995. The Westin Michigan Avenue, Chicago reported
a slight increase of 1.3% in cost per occupied room over 1995 to $29.09. As a
result, the combined rooms profit margin increased to 73.0% for 1996 compared
to 70.6% for 1995.
Combined food and beverage profits for the year 1996 increased 28.8% over
1995 to $5.5 million. The most significant difference in food and beverage
profit over 1995 was reported by The Westin Michigan Avenue, Chicago. The
Westin Michigan Avenue, Chicago, on total food and beverage revenues of $8.5
million, achieved an 11.8% improvement over 1995, or $0.9 million. By keeping
cost increases to less than 1.0%, this resulted in a net contribution to
profits of $2.2 million. This result was due to increases in prices, higher
business levels and the negative impact in 1995 of the renovations to banquet
space. Food and
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beverage profits at The Westin St. Francis increased $0.4 million. This was the
result of a $0.5 million decline in food and beverage revenues offset by a $0.9
million decrease in food and beverage costs. Both differences in revenues and
costs at The Westin St. Francis were due primarily to the temporary closures in
1996 of food and beverage outlets for renovating or reconfiguring the banquet
rooms. The 1996 combined food and beverage profit margin increased 4.3
percentage points over 1995.
Other operating departments were responsible for $1.7 million of the
increase in operating revenues with only a small (5.4%) increase in costs. In
1996 management implemented a policy to charge for cancellations, early
departure, late arrivals and no shows. This resulted in additional revenues of
$0.7 million over 1995. The rest of the increase is primarily the result of the
increased occupancies and an increase in rates in other departments, such as
telephone and garage, at both Hotels.
Management fees increased $3.5 million primarily because incentive
management fees were earned in 1996. These fees, which are calculated based on
a percentage of net cash flow, were not earned in 1995. The $1.2 million
increase in depreciation is due to the addition of depreciable assets in 1996.
1995 Compared with 1994. During 1995 the Partnership realized net income
totaling $1,713,000, up $269,000 from 1994 levels of $1,444,000. Significantly
lower management fees, down $3,121,000 from 1994 levels, were the greatest
single contributor to the earnings improvement. Operating profits improved by
$1,538,000 as the improved profitability in the areas of rooms and other
operating departments was partially offset by declines in food and beverage
operations resulting from slower banquet business at both Hotels.
Combined rooms revenues showed a 1.2% improvement of $726,000, to
$60,907,000 over 1994 levels. The Westin Michigan Avenue, Chicago achieved
significantly higher rooms revenues, up 7.8% over 1994 to $20,237,000 as the
average room rate increased 11.7%, reflecting the Hotel's renovated rooms
product and higher demand in the Chicago market. The Westin Michigan Avenue,
Chicago's improvement was partially offset, however, by the 1.8% decline in
rooms revenue at The Westin St. Francis, as the Hotel experienced a 3
percentage point drop in the occupancy rate, as rooms were renovated and group
business declined since the Hotel was unable to book this segment during the
renovation period.
Combined food and beverage revenues declined by 11.4% to $27,124,000,
reflecting slower banquet activity at each Hotel. The Hotels' food and beverage
declines reflected the previously mentioned slower group business resulting
from the renovations. In addition, The Westin St. Francis' results were
further impacted by an unusually slow social calendar in San Francisco.
The combined rooms profits improved by 3.1% to $42,976,000 due to the
significant improvement at The Westin Michigan Avenue, Chicago. The Hotel
achieved a $1,532,000 increase in rooms profit as The Westin Michigan Avenue,
Chicago's profitability benefited from the 11.7% increase in the average room
rate. The Westin St. Francis experienced a slight decline in the rooms profit
(0.8%) as the cost savings measures implemented at the Hotel were insufficient
to offset the decline in rooms revenues previously discussed.
Despite the improved profitability in food and beverage operations at The
Westin Michigan Avenue, Chicago, the Hotels' combined food and beverage profits
of $4,282,000 declined by $692,000, as The Westin St. Francis was able only to
partially offset lost banquet revenues by cost efficiencies.
Combined profits from other operating departments improved $587,000 to
$6,431,000 as revenues increased $617,000 and costs were virtually kept at 1994
levels. Management fees declined $3,121,000 from 1994 levels to $2,188,000 as
no incentive management fee accrued as provided for in the management contract.
Taxes and insurance increased $2,223,000 over 1994 levels due to the impact of
the one-time property tax rebate which occurred in 1994. Interest expense
related to the subordinated loan from the General Partner increased to
$2,456,000, $1,814,000 greater than 1994 levels, as the loan was fully funded
to $25,000,000 during 1995 and interest accrued for 12 months as compared to 6
months in 1994.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1996, the Partnership had cash and cash equivalents of
$14.8 million, a $4.4 million increase from December 31, 1995. During 1996
total net cash provided by operating activities equaled $22.7 million.
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In 1996 the FF&E Reserve Accounts were funded by Available Net Cash Flow
as stipulated in the Restructuring Agreement and amounted to $17.9 million for
1996. This amount, plus interest, less $16.0 million expended for capital
expenditures, is included in Restricted Cash on the Consolidated Balance Sheet.
On February 28, 1997, $6.2 million was deposited into the FF&E Reserve Accounts
for the fourth quarter of 1996. Starting January 1, 1997, pursuant to the
Restructuring Agreement, the Partnership is required to make deposits to the
FF&E Reserve Accounts of 5.0% of gross revenue for each quarter (instead of
Available Net Cash Flow) through maturity of the Mortgage Loan in the year
2001. In 1996, $0.5 million was deposited into a Tax Escrow Account for payment
of real and personal property taxes as required by the Restructuring Agreement
and is included in Cash and Cash Equivalents under Current Assets on the
Consolidated Balance Sheet. Deposits by both Hotels for payment of real and
personal property taxes into Tax Escrow Accounts will be required for 1997 and
thereafter.
A total of $16.0 million was spent for capital improvements in 1996 for
both Hotels. The Westin St. Francis spent $13.1 million in 1996 for capital
improvements, of which $3.6 million was spent on the main building facade
restoration, $2.6 million on renovations to food and beverage outlets, $2.7
million on rooms renovations, and the remaining $4.2 million in other areas
including fire/life safety upgrades and ADA compliance. Renovations to the
tower guest rooms were completed in May 1996. On July 1, the Dutch Kitchen
reopened as the St. Francis Grill and Victor's was reopened as a premier
banquet facility, Victor's Palace, and hosted its first wedding on August 31.
The Westin Michigan Avenue, Chicago spent $2.9 million for capital improvements
in 1996. Of this amount, $0.8 million was spent on the exterior facade and
structure, $0.2 million on rooms, the lobby and facade, $0.8 million on food
and beverage areas, and the remaining $1.1 million on various other projects
including ADA guest elevators and elevator modernization. As stipulated by the
Restructuring Agreement, variances from the original estimated amounts reflect
timing adjustments and were either approved by the Lender or were within the
limits required by the Restructuring Agreement.
Expenditures in 1997 will total approximately $13.8 million. The Westin
St. Francis, entering the final phase of facility restoration, will spend
approximately $7.1 million on capital improvements in 1997, of which $0.4
million is to be spent on renovating suites, $0.8 million on food and beverage
banquet rooms, $3.6 million in other areas including EDP equipment, ADA
compliance, and fire/life safety upgrades, and $2.3 million on the facade
project. The facade restoration at The Westin St. Francis will continue in
1997, with a current projected 1998 completion date. The Westin Michigan
Avenue, Chicago expects to spend $6.7 million for capital improvements during
1997. In 1997 this Hotel is scheduled to undergo extensive renovations to the
tower rooms at a cost of $3.4 million, which will enhance the Hotel's ability
to compete in the highly competitive Chicago market. In addition, $0.4 million
will be spent on sidewalks and planters, $1.1 million for EDP equipment and
updating of engineering systems, and $1.8 million for food and beverage
outlets. All capital projects have been approved by the Lender.
The Mortgage Loans, as restructured, provided for the suspension of
principal payments through December 1, 1998. Under the terms of the Mortgage
Loan, the Partnership made scheduled interest payments of $9.2 million in 1996.
No distributions were made to the limited partners in 1996 because the Hotels
did not achieve sufficient cash flow as required.
At this time, the General Partner anticipates that the cash flow from
operations and the contributions to the FF&E Reserve Accounts will provide
adequate funding for these capital expenditures and the 1997 interest payments.
In addition, barring any unforeseen adverse occurrence, the General Partner
anticipates that the Partnership will be in a position to resume distributions
to the limited partners sometime in 1997 and thereafter from available net cash
flow. The amount of each distribution will be determined by the General Partner
at the end of each calendar quarter according to the terms of the Partnership
agreement and will be distributed to the limited partners within 75 days from
the end of the quarter.
When the Partnership was formed in 1986, it was anticipated that a sale or
refinancing of the Hotels would be explored after eight years of Partnership
operations. Beginning with 1994, the Partnership agreement directed the General
Partner to actively review opportunities to sell or refinance the Hotel
properties on behalf of the Partnership. During 1994 the General Partner
emphasized restructuring the debt to stabilize both Hotels and to allow them to
remain competitive in their respective markets. In 1996 the
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General Partner's focus has been on the completion of renovations at both
Hotels and continued improvement in the Hotels' operation in order to bolster
the value of the Hotels. The General Partner will review the opportunities to
sell or refinance the Hotel properties when it reasonably believes that such
action is in the best interest of the Partnership. As the real estate market
for upscale hotel properties continues to improve, the General Partner will
monitor the market conditions for appropriate opportunities to sell or
refinance the properties. By the end of 2001, the General Partner must use its
best efforts to sell or refinance the Hotel properties.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following documents are filed as part of this report:
Independent Auditors' Reports . . . . . . . . . . . . . . . . . 11 - 12
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . 13 - 14
Consolidated Statements of Operations . . . . . . . . . . . . . 15
Consolidated Statements of Partners' Equity . . . . . . . . . . 16
Consolidated Statements of Cash Flows . . . . . . . . . . . . . 17
Notes to Consolidated Financial Statements . . . . . . . . . . . 18 - 22
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
-10-
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INDEPENDENT AUDITORS' REPORT
To the Partners of
Westin Hotels Limited Partnership:
We have audited the accompanying consolidated balance sheets of Westin
Hotels Limited Partnership and subsidiaries (a Delaware limited partnership) as
of December 31, 1996 and 1995, and the related consolidated statements of
operations, partners' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits 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 audits provide 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 Westin Hotels Limited
Partnership and subsidiaries as of December 31, 1996 and 1995, and the results
of their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Seattle, Washington,
February 14, 1997
-11-
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INDEPENDENT AUDITORS' REPORT
The Partners
Westin Hotels Limited Partnership:
We have audited the accompanying consolidated statements of operations,
partners' equity and cash flows of Westin Hotels Limited Partnership and
Subsidiaries (the Partnership) for the year ended December 31, 1994. These
consolidated financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on the consolidated
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 consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and cash
flows of Westin Hotels Limited Partnership and Subsidiaries for the year ended
December 31, 1994, in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Seattle, Washington,
February 28, 1995
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WESTIN HOTELS LIMITED PARTNERSHIP
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(In Thousands of Dollars)
ASSETS
1996 1995
---- ----
CURRENT ASSETS:
Cash and cash equivalents, including restricted cash
of $540 in 1996 $ 14,752 $ 10,345
Guest and trade accounts receivable, less allowance for
doubtful accounts of $232 in 1996 and $213 in 1995 6,511 4,745
Other receivables 450 109
Inventories 516 516
Prepaid expenses and other current assets 1,281 1,677
-------- --------
TOTAL CURRENT ASSETS 23,510 17,392
PROPERTY AND EQUIPMENT, at cost:
Buildings and improvements 173,392 161,731
Furniture, fixtures and equipment 91,214 80,844
Expendable supplies 2,031 2,031
-------- --------
266,637 244,606
Less accumulated depreciation and amortization 97,355 89,412
-------- --------
169,282 155,194
Construction in progress 1,376 7,562
Land 62,599 62,599
-------- --------
PROPERTY AND EQUIPMENT, net 233,257 225,355
RESTRICTED CASH 6,018 3,555
OTHER ASSETS 363 396
-------- --------
TOTAL ASSETS $263,148 $246,698
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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WESTIN HOTELS LIMITED PARTNERSHIP
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(In Thousands of Dollars)
LIABILITIES AND PARTNERS' EQUITY
1996 1995
---- ----
CURRENT LIABILITIES:
Accounts payable:
Trade and other $ 1,937 $ 2,491
Westin and affiliates 1,171 613
-------- --------
Total accounts payable 3,108 3,104
Accrued expenses 9,274 7,859
Current maturities of long-term obligations 159 172
Other current liabilities 1,353 715
-------- --------
TOTAL CURRENT LIABILITIES 13,894 11,850
LONG-TERM OBLIGATIONS 127,085 125,662
LONG-TERM OBLIGATION TO GENERAL PARTNER 30,795 28,098
DEFERRED INCENTIVE MANAGEMENT FEES
PAYABLE TO WESTIN 19,425 16,249
-------- --------
TOTAL LIABILITIES 191,199 181,859
COMMITMENTS AND CONTINGENCIES
MINORITY INTERESTS 3,568 3,436
PARTNERS' EQUITY (DEFICIT):
General Partner (2,026) (1,795)
Limited Partners (135,600 Units issued and outstanding) 70,407 63,198
-------- --------
TOTAL PARTNERS' EQUITY 68,381 61,403
-------- --------
TOTAL LIABILITIES AND PARTNERS' EQUITY $263,148 $246,698
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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WESTIN HOTELS LIMITED PARTNERSHIP
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(In Thousands of Dollars Except per Unit Data)
1996 1995 1994
---- ---- ----
OPERATING REVENUES:
Rooms $ 72,589 $ 60,907 $ 60,181
Food and beverage 27,477 27,124 30,611
Other operating departments 10,884 9,213 8,596
-------- -------- --------
TOTAL OPERATING REVENUES 110,950 97,244 99,388
-------- -------- --------
OPERATING EXPENSES:
Rooms 19,631 17,931 18,511
Food and beverage 21,963 22,842 25,637
Other operating departments 2,933 2,782 2,752
Administrative and general 9,838 9,301 9,141
Management fees 5,672 2,188 5,309
Advertising and business promotion 7,425 6,819 6,942
Property maintenance and energy 8,273 7,994 8,332
Local taxes and insurance 6,468 5,768 3,545
Rent 778 789 475
Depreciation and amortization 8,070 6,836 6,288
-------- -------- --------
TOTAL OPERATING EXPENSES 91,051 83,250 86,932
-------- -------- --------
OPERATING PROFIT 19,899 13,994 12,456
-------- -------- --------
OTHER INCOME (EXPENSE):
Interest income 787 919 638
Interest expense (10,812) (10,665) (10,568)
Interest expense on long-term obligation
to General Partner (2,697) (2,456) (642)
Other, net (67) (2) (385)
-------- -------- --------
NET OTHER EXPENSE (12,789) (12,204) (10,957)
-------- -------- --------
INCOME BEFORE MINORITY INTERESTS 7,110 1,790 1,499
MINORITY INTERESTS (132) (77) (55)
-------- -------- --------
NET INCOME $ 6,978 $ 1,713 $ 1,444
======== ======== ========
NET INCOME PER UNIT $ 51.46 $ 12.63 $ 10.65
======== ======== ========
(135,600 Units issued and outstanding)
The accompanying notes are an integral part of these consolidated financial
statements.
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WESTIN HOTELS LIMITED PARTNERSHIP
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(In Thousands of Dollars)
General Limited
Partner Partners
-------- --------
BALANCE AT DECEMBER 31, 1993 $ (1,418) $ 59,664
Net income (loss) (172) 1,616
-------- --------
BALANCE AT DECEMBER 31, 1994 (1,590) 61,280
Net income (loss) (205) 1,918
-------- --------
BALANCE AT DECEMBER 31, 1995 (1,795) 63,198
Net income (loss) (231) 7,209
-------- --------
BALANCE AT DECEMBER 31, 1996 $ (2,026) $ 70,407
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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WESTIN HOTELS LIMITED PARTNERSHIP
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(In Thousands of Dollars)
1996 1995 1994
---- ---- ----
OPERATING ACTIVITIES:
Net income $ 6,978 $ 1,713 $ 1,444
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 8,070 6,836 6,288
Interest on long-term obligations not
currently payable 4,277 4,498 2,305
Interest earned on restricted cash (220) (512) (198)
(Increase) decrease in receivables (2,107) 745 (1,752)
Decrease in inventories - 123 7
Decrease (increase) in prepaid expenses and
other current assets 396 (124) (510)
Increase (decrease) in accounts payable 4 (543) 688
Increase (decrease) in accrued expenses and
other current liabilities 2,053 (954) 240
Incentive management fees not currently payable 3,176 - 3,160
Minority interests 132 77 55
Other 13 23 5
-------- -------- --------
Net cash provided by operating activities 22,772 11,882 11,732
-------- -------- --------
INVESTING ACTIVITIES:
Proceeds from sales of equipment 13 83 15
Acquisition of property and equipment (15,985) (27,393) (6,677)
Increase in restricted cash (17,927) (16,234) (20,299)
Decrease in restricted cash to fund acquisition of
property and equipment 15,671 27,520 6,132
Decrease (increase) in other assets 33 (366) 1
-------- -------- --------
Net cash used in investing activities (18,195) (16,390) (20,828)
-------- -------- --------
FINANCING ACTIVITIES:
Increase in long-term obligation to General Partner - 7,500 17,500
Repayment of long-term obligations (170) (249) (5,308)
-------- -------- --------
Net cash (used in) provided by financing
activities (170) 7,251 12,192
-------- -------- --------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 4,407 2,743 3,096
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 10,345 7,602 4,506
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 14,752 $ 10,345 $ 7,602
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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WESTIN HOTELS LIMITED PARTNERSHIP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
The accompanying consolidated financial statements include the
accounts of Westin Hotels Limited Partnership, a Delaware limited partnership
(the "Partnership"), and its subsidiary limited partnerships, The Westin St.
Francis Limited Partnership and The Westin Chicago Limited Partnership (the
"Hotel Partnerships"). The Westin St. Francis Limited Partnership owns and
operates The Westin St. Francis in downtown San Francisco, California, and The
Westin Chicago Limited Partnership owns and operates The Westin Michigan
Avenue, Chicago (formerly The Westin Hotel, Chicago) in downtown Chicago,
Illinois (individually a "Hotel", collectively the "Hotels"). All significant
intercompany transactions and accounts have been eliminated. Certain of the
prior years' amounts have been reclassified to conform with the 1996
presentation.
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 consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period.
(B) CASH EQUIVALENTS AND RESTRICTED CASH
For purposes of the Consolidated Statements of Cash Flows, cash
equivalents consist of highly liquid debt instruments bearing floating interest
rates and other short-term investments purchased with original maturities of
three months or less. Restricted cash consists of amounts deposited in
interest-bearing money market accounts. The Partnership's carrying amount
approximates the fair value of cash equivalents and restricted cash.
(C) INVENTORIES
Inventories, principally food and beverage and supplies, are valued at
the lower of cost (first-in, first-out) or replacement market.
(D) PROPERTY AND EQUIPMENT
Depreciation of property and equipment is provided principally on the
straight-line method over the assets' estimated useful lives as follows:
Buildings 40 years
Building improvements Remaining life of building
Furniture, fixtures and equipment 7 to 12 years
Expendable supplies 5 years
An annual group method of depreciation is used, under which individual
assets are not specifically identified for purposes of determining retirements,
and fully depreciated asset groups are written off when evidence indicates they
are no longer in use. Proceeds from miscellaneous sales of property and
equipment are credited to accumulated depreciation.
Expendable supplies (linens, china, silverware and glassware) have
been depreciated to 50% of the cost of initial stock. Replacements are expensed
when purchased.
Amortization of capitalized lease property and equipment is provided
on the straight-line method over the shorter of the assets' estimated useful
lives or the lease terms.
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Maintenance and repairs, including the cost of minor replacements, are
charged to property maintenance expense accounts. Costs of additions and
betterment of property are capitalized in property and equipment accounts.
(E) ADVERTISING COSTS
The Partnership expenses the production costs of advertising the first
time the advertising takes place.
(F) INCOME TAXES
The Partnership does not record any provision for Federal and state
income taxes in its consolidated financial statements. All items of income,
gain, loss, deduction or credit for Federal and state income tax purposes are
allocated to the partners of the Partnership for inclusion in their individual
income tax returns. The reported amounts of the Partnership's net assets and
liabilities exceeded the related tax bases by approximately $50,141,000 and
$43,036,000 at December 31, 1996 and 1995, respectively.
(2) ORGANIZATION
The Partnership was formed on April 25, 1986, to invest in hotel
properties by acquiring limited partnership interests in the Hotel
Partnerships. The Partnership will continue until December 31, 2036, unless
terminated sooner under the provisions of the Partnership agreement.
Westin Realty Corp. ("Westin Realty"), a wholly owned subsidiary of
Westin Hotel Company ("Westin"), is the sole General Partner of the
Partnership. On August 28, 1986, Westin Realty acquired all of the limited
partnership interests in the Hotel Partnerships (which represented 91.62% of
the fair value of the Hotel Partnerships' net assets) and contributed these
interests, valued at $135,600,000, to the Partnership in exchange for all of
the limited partnership interests in the Partnership. Westin Realty then sold
these limited partnership interests in a public offering. The remaining 8.38%
interest in the Hotel Partnerships was retained by the predecessor owners,
subsidiaries of Westin.
On May 12, 1995, Aoki Corporation sold all of the stock of Westin,
which it held indirectly through its wholly owned subsidiary, Caesar Park
Hotels & Resorts, Inc. (formerly Caesar Park Hotel Investment, Inc.). Westin
was sold to a limited liability corporation formed specifically for the purpose
of this acquisition by Starwood Capital Group, L.P.; affiliates of Goldman,
Sachs & Co.; and Nomura Asset Corporation. The sale of Westin did not change
the structure of the General Partner's and limited partners' interests in the
Partnership. Two affiliates of Westin Realty own a total of 279 limited
partnership Units, representing less than a 1% ownership interest.
In January 1997 The Westin Hotel, Chicago was renamed The Westin
Michigan Avenue, Chicago to distinguish it from The Westin River North,
Chicago, also located in downtown Chicago.
The Hotel Partnerships' profits and losses are generally allocated 99%
to the Hotel Partnership and 1% to minority interests. Partnership profits and
losses are further allocated 99% to the limited partners and 1% to the General
Partner, with the exception of depreciation expense, which is allocated 92.55%
to the limited partners and 7.45% to the General Partner. Because of the
allocation of depreciation expense, the General Partner's share of profits and
losses since inception is a net loss, resulting in a deficit balance in the
General Partner equity account. The Partnership agreement specifies that if a
deficit balance exists after liquidation of the Hotel Partnerships' assets, the
General Partner would be obligated to contribute cash to the Partnership equal
to the lesser of (i) the deficit balance in such capital account, or (ii) 1.01%
of the capital contributions of the limited partners reduced by all capital
contributions of the General Partner to, but not including, such specified
time.
Except for the following restrictions outlined in the restructuring of
the Mortgage Loans in June 1994 ("Restructuring Agreement"), net cash flow of
the Partnership as defined in the Partnership agreement is distributed first to
the limited partners until certain preferential distributions are achieved and
then allocated to both the general and limited partners depending on factors
related to the source of the net cash flow and cash distributions as specified
in the Partnership agreement. The Restructuring Agreement permitted cash
distributions to the limited partners in 1996 subject to the Hotels achieving
certain performance levels in the
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two years prior to 1996. However, the Hotels did not achieve these performance
levels. Distributions are permitted in 1997 subject to the Hotels achieving
certain performance levels in the three years prior to 1997. The Hotels have
achieved these performance levels.
(3) RESTRICTED CASH
In 1996, $17,927,000 of Available Net Cash Flow from operations (as
defined in the Restructuring Agreement) was deposited in the Furniture, Fixture
and Equipment ("FF&E") Reserve Accounts. During 1995 the remaining $7,500,000
of the $25,000,000 subordinated loan from Westin Realty was funded to the
Partnership. In 1995 these proceeds, along with $8,734,000 of Available Net
Cash Flow from operations was deposited to the FF&E Reserve Accounts. In 1994,
$17,500,000 of the subordinated loan and $2,799,000 of Available Net Cash Flow
was deposited to the FF&E Reserve Accounts. On February 28, 1997, $6.2 million
was deposited into the FF&E Reserve Accounts for the fourth quarter of 1996.
In 1996, $540,000 was deposited to a Tax Escrow Account as required by
the Restructuring Agreement. This account is used to pay real and personal
property taxes as they become due. The FF&E Reserve Account is classified as
Restricted Cash on the Consolidated Balance Sheets and the Tax Escrow Account
is included in Cash and Cash Equivalents under Current Assets of the
Consolidated Balance Sheets.
(4) ACCRUED EXPENSES
Accrued expenses include the following at December 31:
1996 1995
---- ----
(In Thousands of Dollars)
Salaries and wages $ 3,670 $ 2,990
Estimated property and other taxes 4,072 3,806
Accrued interest 901 886
Other 631 177
-------- --------
Total $ 9,274 $ 7,859
======== ========
(5) LONG-TERM OBLIGATIONS
Long-term obligations include the following at December 31:
1996 1995
---- ----
(In Thousands of Dollars)
Mortgage loans, plus accrued interest of $4,538,000
in 1996 and $2,958,000 in 1995, bearing effective
interest at 8.55% $127,020 $125,440
Capital lease obligations 224 394
-------- --------
127,244 125,834
Less current maturities 159 172
-------- --------
Total $127,085 $125,662
======== ========
Subordinated note, payable to the General Partner,
bearing interest at prime plus 1% (9.25% at
December 31, 1996 and 9.5% at December 31, 1995) $ 30,795 $ 28,098
======== ========
On June 2, 1994, an agreement to restructure the Hotel Partnerships'
existing Mortgage Loans was completed. The parties to this Restructuring
Agreement were the Teacher Retirement Systems of Texas, Westin Realty, Westin
as manager for the Hotels and the Hotel Partnerships.
The terms of the Restructuring Agreement provided for reductions in
the interest rates on the outstanding balances of the Mortgage Loans for the
following time periods: (i) 7.0% per annum for the period from December 1, 1993
through November 30, 1995; (ii) 7.5% per annum for the period from December 1,
1995 through November 30, 1997; and (iii) 10.0% per annum for the period from
December 1, 1997 through
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21
November 30, 1998, and then 10.25% per annum thereafter. This results in
effective interest rates of approximately 8.55% from December 1, 1993 through
maturity in the year 2001. The Restructuring Agreement also required a
$5,000,000 payment in 1994. The Mortgage Loans, as restructured, provide for
the suspension of additional principal payments through December 1, 1998.
In addition, the Restructuring Agreement provided for a subordinated
loan of $25,000,000 to the Partnership by Westin Realty. This loan accrues
interest at an annual rate of prime plus 1%. Principal and interest are payable
only upon the earlier to occur of the expiration of 15 years or a refinancing
or sale of either Hotel.
Aggregate quarterly payments on the Mortgage Loans are as follows:
$2,297,000 for 1997, $3,062,000 for 1998 and $3,410,000 for the remaining years
through September 2001, at which time the remaining outstanding principal
balance is due. From December 1, 1993 through December 31, 1997, interest
payments are less than the interest accrued on the Mortgage Loans. Accordingly,
the excess of interest accrued over interest paid is added to the outstanding
principal balance. Mortgage Loans are secured by first mortgage liens on
substantially all Hotel Partnership assets.
Scheduled principal payments on long-term obligations are $159,000 in
1997, $1,344,000 in 1998, $2,831,000 in 1999, $3,080,000 in 2000, $119,830,000
in 2001 and $30,795,000 thereafter.
Interest paid by the Partnership totaled $9,216,000 in 1996,
$8,615,000 in 1995 and $8,859,000 in 1994.
No new capital lease agreements were entered into in 1996. The
Partnership entered into capital lease agreements with related obligations of
$363,000 in 1995.
The carrying values of the Partnership's Mortgage Loans and
subordinated note approximate fair values.
(6) OPERATING LEASES
Minimum annual rental expense for operating leases in effect at
December 31, 1996, are as follows (in thousands of dollars):
1997 $ 728
1998 272
1999 128
2000 125
2001 125
Thereafter 553
-------
$ 1,931
=======
(7) COMMITMENTS AND CONTINGENCIES
On January 15, 1997, Equity Resources Group, Inc., a limited partner
of the Partnership ("Claimant"), filed a demand for arbitration with the
American Arbitration Association in Seattle, Washington, claiming that the
Partnership and its General Partner, Westin Realty Corp., unlawfully refused to
provide Claimant with a list of, and other information concerning, the limited
partners in order to enable Claimant to make offers to acquire units, thereby
damaging Claimant in an unspecified amount. The Partnership and Westin Realty
Corp. deny the claim and intend to contest it.
Because of the nature of the hotel business, the Hotel Partnerships,
along with Westin as the Hotels' manager, are subject to various claims and
legal actions incidental to the ordinary course of their operations, including
such matters as contract and lease disputes and complaints alleging personal
injury, property damage and employment discrimination. The General Partner
believes that the outcome of any such pending claims or proceedings,
individually or in the aggregate, will not have a material adverse effect upon
the business, financial condition, or results of operations of the Partnership.
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22
(8) RELATED PARTY TRANSACTIONS
Westin Realty is responsible for the management and administration of
the Partnership. In accordance with the Partnership agreement, the Partnership
reimburses Westin Realty for expenses in connection with such services, which
totaled $583,000 in 1996, $482,000 in 1995 and $624,000 in 1994.
Westin, as manager of the Hotels, receives a base management fee equal
to 2.25% of Hotel gross operating revenues. In conjunction with the
Restructuring Agreement, Westin agreed to reduce its base management fee from
3.5% to 2.25% of the Hotels' gross revenues through December 31, 1998. Base
management fees totaled $2,496,000 in 1996, $2,188,000 in 1995 and $2,149,000
in 1994. Westin also earns an incentive management fee of 20% of annual net
operating cash flow. Incentive management fees totaled $3,176,000 in 1996 and
$3,160,000 in 1994. No incentive management fee was earned in 1995. Any
incentive management fee not currently payable bears no interest and is
deferred and subsequently payable from the proceeds of a sale or refinancing of
the Hotels or net cash flow after 1996. Therefore, determining the fair value
of the liability is not practicable due to uncertainty as to when the liability
will be paid. In any event, the fair value of the liability does not exceed the
carrying amount.
Westin and an affiliate also receive marketing fees, representing the
Partnership's share of the aggregate costs and expenses incurred by Westin in
providing advertising, public relations, sales and reservation services to all
Westin hotels. The marketing fee totaled $2,108,000 in 1996, $1,848,000 in 1995
and $1,888,000 in 1994. The Partnership also reimburses Westin for the services
of certain full-time Hotel employees. All costs incurred for services provided
to the Hotel Partnerships by Hotel employees have been recognized as an expense
of the Partnership.
As disclosed in Note (5), at December 31, 1996, the subordinated loan
from Westin Realty to the Partnership totals $30,795,000, which includes
$5,795,000 of accrued interest. At December 31, 1995, the balance was
$28,098,000 and included $3,098,000 of accrued interest.
(9) SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data is as follows:
First Second Third Fourth Total
----- ------ ----- ------ -----
(In Thousands of Dollars Except per Unit Amounts)
1996 Quarters:
Operating revenue $ 21,754 $ 28,377 $ 28,799 $ 32,020 $110,950
Operating profit $ 1,116 $ 6,366 $ 6,013 $ 6,404 $ 19,899
Net income (loss) $ (2,050) $ 3,022 $ 2,781 $ 3,225 $ 6,978
Net income (loss) per Unit $ (15.12) $ 22.29 $ 20.51 $ 23.78 $ 51.46
1995 Quarters:
Operating revenue $ 19,931 $ 25,522 $ 25,310 $ 26,481 $ 97,244
Operating profit (loss) $ (208) $ 3,627 $ 4,815 $ 5,760 $ 13,994
Net income (loss) $ (3,056) $ 525 $ 1,671 $ 2,573 $ 1,713
Net income (loss) per Unit $ (22.54) $ 3.87 $ 12.32 $ 18.98 $ 12.63
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Partnerships have no directors or officers. Business policy-making
functions of the Partnerships are carried out through the directors and
officers of the General Partners.
Westin Realty's directors and officers and their current positions
are:
Frederick Kleisner Chairman, Chief Executive Officer and President
Richard Mahoney Director, Vice President, Chief Financial Officer and Treasurer
Merrick Kleeman Director
Stuart Rothenberg Director
John Ceriale Vice President
Douglas C. Sutten Vice President
Kevin Hylton Vice President and Assistant Treasurer
Catherine L. Walker Vice President and Secretary
Ruth E. Valine Assistant Secretary
Merrick Kleeman and Stuart Rothenberg became Directors in June 1995.
Frederick Kleisner became a Director and Officer in September 1995. Richard
Mahoney became a Director and Officer in October 1995. John Ceriale became an
Officer in October 1995. Other Officers assumed their current offices at the
following times: Mr. Sutten, May 1986; Mr. Hylton, February 1988; Ms. Walker,
December 1990, and Ms. Valine, May 1989.
Frederick Kleisner, 52, joined Westin in August 1995 and currently
serves as President and Chief Operating Officer. Prior to joining Westin, Mr.
Kleisner served as Group President, Operations, for Interstate Hotels
Corporation, North America's largest franchisee of hotels, from 1990 to 1995.
Richard Mahoney, 44, joined Westin in September 1995 and currently
serves as Executive Vice President and Chief Financial Officer. Prior to
joining Westin, Mr. Mahoney was Senior Vice President and Chief Financial
Officer of Premier Cruise Lines from 1993 to 1995. From 1989 to 1993, he served
as Senior Vice President and Controller of The Continental Companies.
Merrick Kleeman, 33, was named Director of Westin Realty Corp. in June
1995 and serves as a director of Westin Hotel Company. He currently serves as
an executive officer of Starwood Capital Group, L.P., its successors and
affiliated entities. Mr. Kleeman joined Starwood in August 1992.
Stuart Rothenberg, 33, was named Director of Westin Realty Corp. in
June 1995 and serves as a director of Westin Hotel Company. Mr. Rothenberg
joined Goldman Sachs as an associate in the Real Estate Department in 1987. He
currently serves as Vice President of Real Estate Acquisitions for Goldman's
Whitehall Real Estate Funds.
John Ceriale, 45, joined Westin in September 1995 and currently serves
as Senior Vice President. Mr. Ceriale was formerly the Vice President of
Operations of Fairmont Hotels from 1991 to 1995 and General Manager of the
company's flagship property, the Fairmont Hotel in San Francisco.
Douglas C. Sutten, 43, was named Vice President of Westin in 1989.
From 1985, when he joined Westin, until 1989, Mr. Sutten was Westin's Director
of Taxation.
Kevin Hylton, 40, has been Vice President and Corporate Controller of
Westin since 1988. From 1984, when he joined Westin, until 1988, Mr. Hylton was
Financial Reporting Controller of Westin.
Catherine Walker, 43, was named Senior Vice President, General
Counsel, and Assistant Secretary of Westin in December 1990 and elected
Secretary in May 1991. Ms. Walker joined Westin's legal department in 1985.
Ruth E. Valine, 46, was named Legal Administrator of Westin in
February 1989. Upon joining Westin in 1979 until February 1989, she held the
title of Legal Assistant.
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24
The following persons are directors and/or officers of both Hotel
General Partners, as indicated:
Frederick Kleisner President, Director
Richard Mahoney Vice President, Treasurer and Director
Merrick Kleeman Director
Stuart Rothenberg Director
John Ceriale Vice President
Douglas C. Sutten Vice President
Kevin Hylton Vice President and Assistant Treasurer
Catherine L. Walker Vice President and Secretary
Ruth E. Valine Assistant Secretary
ITEM 11. EXECUTIVE COMPENSATION.
As noted in Item 10 above, the Partnerships have no directors,
officers or other employees. However, under the respective Agreements of
Limited Partnership for the Partnerships, Westin Realty, as General Partner of
the Partnership, is responsible for the administration and management of the
Partnership, and St. Francis Corp. and 909 Corp., as General Partners of the
Hotel Partnerships, are responsible for the administration and management of
the Hotel Partnerships. The General Partners, however, receive no fees for
providing these services to the Partnership. Moreover, neither the Partnership
nor the Hotel Partnerships are directly responsible for the payment of any
executive compensation to the officers of the General Partners.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
As of December 31, 1996, no person owned of record, or to the
Partnership's knowledge owned beneficially, more than 5% of the total number of
Units.
The officers and directors of the General Partners, as a group,
beneficially own no Units. Two affiliates of Westin Realty own a total of 279
limited partnership Units, representing less than a 1% ownership interest.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
All of the directors and principal officers of Westin Realty, except
Ms. Valine, are directors and/or principal officers of Westin. The Partnership
has engaged various subsidiaries of Westin to provide services to the Hotels.
See Note (8) of the Notes to Consolidated Financial Statements included under
Item 8 - "Financial Statements and Supplementary Data."
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25
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(A) 1. FINANCIAL STATEMENTS.
The following documents are filed as part of this report:
Independent Auditors' Reports . . . . . . . . . . . . . . . . . 11 - 12
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . 13 - 14
Consolidated Statements of Operations . . . . . . . . . . . . . 15
Consolidated Statements of Partners' Equity . . . . . . . . . . 16
Consolidated Statements of Cash Flows . . . . . . . . . . . . . 17
Notes to Consolidated Financial Statements . . . . . . . . . . . 18 - 22
(A) 2. FINANCIAL STATEMENT SCHEDULES.
Financial statement schedules are omitted for the reason that they are not
required, or because the required information is shown in the consolidated
financial statements or notes thereto.
(A) 3. EXHIBITS.
4. Instruments defining the rights of security holders.
4.1 Amended and Restated Agreement of Limited Partnership of Westin Hotels Limited
Partnership. (1)
4.2 Amended and Restated Agreement of Limited Partnership of The Westin St. Francis Limited
Partnership. (1)
4.3 First Amendment to Amended and Restated Agreement of Limited Partnership of The
Westin St. Francis Limited Partnership. (3)
4.4 Amended and Restated Agreement of Limited Partnership of The Westin Chicago Limited
Partnership. (1)
4.5 First Amendment to Amended and Restated Agreement of Limited Partnership of The
Westin Chicago Limited Partnership. (3)
10. Material contracts
10.1 Restructuring Agreement dated as of June 2, 1994. (3)
10.2 Amended and Restated Management Agreements between The Westin St. Francis Limited
Partnership and Westin Hotel Company, and between The Westin Chicago Limited
Partnership and Westin Hotel Company, for property management services. (2)
10.3 First Amendments to Amended and Restated Management Agreements of The Westin St.
Francis Limited Partnership and of The Westin Chicago Limited Partnership. (3)
10.4 Contribution Agreement between St. Francis Hotel Corporation and The Westin St. Francis
Limited Partnership, and between 909 North Michigan Avenue Corporation and The Westin
Chicago Limited Partnership, for contribution of Hotel assets and the transfer of limited
partnership interests. (2)
10.5 Promissory Note of St. Francis Hotel Corporation dated August 21, 1986 to Teacher
Retirement System of Texas. (1)
10.6 First Amendment to Promissory Note of St. Francis Hotel Corporation dated as of June 2,
1994. (3)
10.7 Deed of Trust, Financing Statement, Security Agreement and Fixture filing dated August 21,
1986 respecting The Westin St. Francis. (1)
-25-
26
10.8 First Amendment to Deed of Trust, Financing Statement, Security Agreement and Fixture
Filing dated as of June 2, 1994. (3)
10.9 Promissory Note of 909 North Michigan Avenue Corporation dated August 21, 1986 to
Teacher Retirement System of Texas. (1)
10.10 First Amendment to Promissory Note of 909 North Michigan Avenue Corporation dated as of
June 2, 1994. (3)
10.11 Mortgage and Security Agreement dated August 21, 1986 for The Westin Hotel,
Chicago. (1)
10.12 First Amendment to Mortgage and Security Agreement dated as of June 2, 1994. (3)
10.13 St. Francis FF&E Escrow Agreement dated as of June 2, 1994. (3)
10.14 Chicago FF&E Escrow Agreement dated as of June 2, 1994. (3)
10.15 Promissory Note dated June 2, 1994 in favor of Westin Realty Corp. by Westin Hotels
Limited Partnership. (3)
10.16 Loan Agreement dated as of June 2, 1994 between Westin Hotels Limited Partnership and
Westin Realty Corp. (3)
27.1 Financial Data Schedule
____________________
(1) Incorporated by reference to Exhibits 4.1, 4.2, 4.3, 10.3, 10.4, 10.5
and 10.6, respectively, to the Partnership's 1986 Annual Report on
Form 10-K.
(2) Incorporated by reference to Exhibits 10.1 and 10.2, respectively, of
the Partnership's Registration Statement on Form S-11 (No. 33-3918).
(3) Incorporated by reference to Exhibits 4.3, 4.5, 10.1, 10.3, 10.6,
10.8, 10.10, 10.12, 10.13, 10.14, 10.15, and 10.16, respectively, to
the Partnership's Form 10-Q for the period ending June 30, 1994.
(B) REPORTS ON FORM 8-K.
On October 17, 1996, the Partnership filed a report on Form 8-K dated
September 26, 1996, announcing two special mailings to limited partners: one in
response to two separate offers to the limited partners to purchase Units and
the other addressing certain tax issues and the potential effect on Unit
transfers.
-26-
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SIGNATURES
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 on March 25, 1997.
WESTIN HOTELS LIMITED PARTNERSHIP
(a Delaware limited partnership)
By: WESTIN REALTY CORP.,
Its sole General Partner
By: /s/ Richard Mahoney
-----------------------------------
Richard Mahoney, Director,
Vice President, Chief Financial
Officer and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
Signatures Title Date
---------- ----- ----
/s/ Frederick Kleisner Chairman, Chief Executive March 25, 1997
- ------------------------------------------- Officer and President
Frederick Kleisner
/s/ Richard Mahoney Director, Vice President, March 25, 1997
- ------------------------------------------- Chief Financial Officer and
Richard Mahoney Treasurer (Chief Accounting
Officer)
/s/ Merrick Kleeman Director March 25, 1997
- -------------------------------------------
Merrick Kleeman
/s/ Stuart Rothenberg Director March 25, 1997
- -------------------------------------------
Stuart Rothenberg
-27-
28
SIGNATURES
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 on March 25, 1997.
THE WESTIN ST. FRANCIS LIMITED PARTNERSHIP
(a Delaware limited partnership)
By: ST. FRANCIS HOTEL CORPORATION,
Its sole General Partner
By: /s/ Richard Mahoney
-----------------------------------
Richard Mahoney, Director,
Vice President and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signatures Date Title
---------- ---- -----
/s/ Frederick Kleisner President and Director March 25, 1997
- -------------------------------------------
Frederick Kleisner
/s/ Richard Mahoney Director, Vice President March 25, 1997
- ------------------------------------------- and Treasurer
Richard Mahoney
/s/ Merrick Kleeman Director March 25, 1997
- -------------------------------------------
Merrick Kleeman
/s/ Stuart Rothenberg Director March 25, 1997
- -------------------------------------------
Stuart Rothenberg
-28-
29
SIGNATURES
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 on March 25, 1997.
THE WESTIN CHICAGO LIMITED PARTNERSHIP
(a Delaware limited partnership)
By: 909 NORTH MICHIGAN AVENUE CORPORATION,
Its sole General Partner
By: /s/ Richard Mahoney
-----------------------------------
Richard Mahoney, Director,
Vice President and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
Signatures Title Date
---------- ----- ----
/s/ Frederick Kleisner President and Director March 25, 1997
- -------------------------------------------
Frederick Kleisner
/s/ Richard Mahoney Director, Vice President March 25, 1997
- ------------------------------------------- and Treasurer
Richard Mahoney
/s/ Merrick Kleeman Director March 25, 1997
- -------------------------------------------
Merrick Kleeman
/s/ Stuart Rothenberg Director March 25, 1997
- -------------------------------------------
Stuart Rothenberg
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30
EXHIBIT INDEX
(A) 3. EXHIBITS.
4. Instruments defining the rights of security holders.
4.1 Amended and Restated Agreement of Limited Partnership of Westin Hotels Limited
Partnership. (1)
4.2 Amended and Restated Agreement of Limited Partnership of The Westin St. Francis Limited
Partnership. (1)
4.3 First Amendment to Amended and Restated Agreement of Limited Partnership of The
Westin St. Francis Limited Partnership. (3)
4.4 Amended and Restated Agreement of Limited Partnership of The Westin Chicago Limited
Partnership. (1)
4.5 First Amendment to Amended and Restated Agreement of Limited Partnership of The
Westin Chicago Limited Partnership. (3)
10. Material contracts
10.1 Restructuring Agreement dated as of June 2, 1994. (3)
10.2 Amended and Restated Management Agreements between The Westin St. Francis Limited
Partnership and Westin Hotel Company, and between The Westin Chicago Limited
Partnership and Westin Hotel Company, for property management services. (2)
10.3 First Amendments to Amended and Restated Management Agreements of The Westin St.
Francis Limited Partnership and of The Westin Chicago Limited Partnership. (3)
10.4 Contribution Agreement between St. Francis Hotel Corporation and The Westin St. Francis
Limited Partnership, and between 909 North Michigan Avenue Corporation and The Westin
Chicago Limited Partnership, for contribution of Hotel assets and the transfer of limited
partnership interests. (2)
10.5 Promissory Note of St. Francis Hotel Corporation dated August 21, 1986 to Teacher
Retirement System of Texas. (1)
10.6 First Amendment to Promissory Note of St. Francis Hotel Corporation dated as of June 2,
1994. (3)
10.7 Deed of Trust, Financing Statement, Security Agreement and Fixture filing dated August 21,
1986 respecting The Westin St. Francis. (1)
31
10.8 First Amendment to Deed of Trust, Financing Statement, Security Agreement and Fixture
Filing dated as of June 2, 1994. (3)
10.9 Promissory Note of 909 North Michigan Avenue Corporation dated August 21, 1986 to
Teacher Retirement System of Texas. (1)
10.10 First Amendment to Promissory Note of 909 North Michigan Avenue Corporation dated as of
June 2, 1994. (3)
10.11 Mortgage and Security Agreement dated August 21, 1986 for The Westin Hotel,
Chicago. (1)
10.12 First Amendment to Mortgage and Security Agreement dated as of June 2, 1994. (3)
10.13 St. Francis FF&E Escrow Agreement dated as of June 2, 1994. (3)
10.14 Chicago FF&E Escrow Agreement dated as of June 2, 1994. (3)
10.15 Promissory Note dated June 2, 1994 in favor of Westin Realty Corp. by Westin Hotels
Limited Partnership. (3)
10.16 Loan Agreement dated as of June 2, 1994 between Westin Hotels Limited Partnership and
Westin Realty Corp. (3)
27.1 Financial Data Schedule
- -------------------------
(1) Incorporated by reference to Exhibits 4.1, 4.2, 4.3, 10.3, 10.4, 10.5
and 10.6, respectively, to the Partnership's 1986 Annual Report on Form
10-K.
(2) Incorporated by reference to Exhibits 10.1 and 10.2, respectively, of
the Partnership's Registration Statement on Form S-11 (No. 33-3918).
(3) Incorporated by reference to Exhibits 4.3, 4.5, 10.1, 10.3, 10.6, 10.8,
10.10, 10.12, 10.13, 10.14, 10.15, and 10.16, respectively, to the
Partnership's Form 10-Q for the period ending June 30, 1994.