Back to GetFilings.com
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1996
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 0-13518
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-2
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 75-1933081
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Seaport Plaza, New York, N.Y. 10292-0116
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 214-1016
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 Interest
- --------------------------------------------------------------------------------
(Title of class)
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 CK No _
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. [CK]
DOCUMENTS INCORPORATED BY REFERENCE
Registrant's Annual Report to Limited Partners for the year ended December
31, 1996 is incorporated by reference into Parts I, II and IV of this Annual
Report on Form 10-K.
Amended and Restated Certificate and Agreement of Limited Partnership,
included as part of the Registration Statement on Form S-11 (File No. 2-88785)
filed with the Securities and Exchange Commission pursuant to Rule 424(b) of the
Securities Act of 1933, as amended, is incorporated by reference into Part IV of
this Annual Report on Form 10-K.
Index to exhibits can be found on pages 9 and 10.
CAUTIONARY STATEMENT FOR PURPOSES OF
THE ``SAFE HARBOR'' PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
When used in this Annual Report on Form 10-K, the words ``Believe''
``Anticipates,'' ``Expects'' and similar expressions are intended to identify
forward-looking statements. Statements looking forward in time are included in
this Annual Report on Form 10-K pursuant to the ``Safe Harbor'' provision of the
Private Securities Litigation Reform Act of 1995. Such statements are subject to
certain risks and uncertainties which could cause actual results to differ
materially, including, but not limited to, those set forth in ``Management's
Discussion and Analysis of Financial Condition and Results of Operations.''
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Registrant undertakes no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances occurring after the date hereof or to reflect the occurrence of
unanticipated events.
2
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-2
(a limited partnership)
TABLE OF CONTENTS
PART I PAGE
Item 1 Business.......................................................................... 4
Item 2 Properties........................................................................ 5
Item 3 Legal Proceedings................................................................. 5
Item 4 Submission of Matters to a Vote of Limited Partners............................... 5
PART II
Item 5 Market for the Registrant's Units and Related Limited Partner Matters............. 5
Item 6 Selected Financial Data........................................................... 6
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations...................................................................... 6
Item 8 Financial Statements and Supplementary Data....................................... 6
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure...................................................................... 6
PART III
Item 10 Directors and Executive Officers of the Registrant................................ 6
Item 11 Executive Compensation............................................................ 8
Item 12 Security Ownership of Certain Beneficial Owners and Management.................... 8
Item 13 Certain Relationships and Related Transactions.................................... 8
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
Financial Statements and Financial Statement Schedules............................ 9
Exhibits.......................................................................... 9
Reports on Form 8-K............................................................... 10
SIGNATURES................................................................................... 15
3
PART I
Item 1. Business
General
Prudential-Bache/Watson & Taylor, Ltd.-2 (the ``Registrant''), a Texas
limited partnership, was formed on November 14, 1983 and will terminate in
accordance with a vote of the limited partners as described below. The
Registrant was formed for the purpose of acquiring, developing, owning and
operating mini-storage and office/warehouse facilities with proceeds raised from
the initial sale of units of limited partnership interests (``Units''). The
Registrant's fiscal year for book and tax purposes ends on December 31.
On December 15, 1995, the Management Committee of the Registrant determined
to seek bids for all of the properties held by the Registrant. On June 13, 1996,
the Registrant entered into a contract with Public Storage, Inc., the property
manager of the Registrant's properties, for the sale of all the Registrant's
properties. This sale was subject to the approval by the limited partners
holding a majority of the limited partnership units and certain other conditions
and potential price adjustments.
In accordance with a consent statement dated September 17, 1996 (the
``Consent Statement''), the limited partners approved, on October 18, 1996, the
sale to Public Storage, Inc. of all eight miniwarehouse facilities owned by the
Registrant and the liquidation and dissolution of the Registrant. Seven of the
eight properties which were under contract were sold to Public Storage, Inc. and
its affiliates on December 16, 1996. The Registrant received, in cash, gross
sales proceeds of $16,000,000 reduced by certain selling expenses and
pro-rations of approximately $433,000. The gross sales price was in excess of
the appraised value of the properties.
The Registrant continues to own the Hampton Park property located in Capitol
Heights, Maryland. This property has evidenced certain concentrations of
hazardous materials which were discovered in an environmental review of the
property. The results of the environmental assessment have been reported to the
appropriate State environmental regulatory departments. It is uncertain at this
time what the State environmental regulatory departments will ultimately require
to resolve the environmental issue at the property, although currently the State
is requiring that the situation be monitored on a quarterly basis. Due to the
uncertainty of the environmental status of the property, Public Storage, Inc.
has decided not to proceed with the purchase of this property. Accordingly, it
is currently uncertain when the final sale of this property will occur.
A distribution of $300 per limited partnership unit was made on December 19,
1996 representing the net sales proceeds reduced by a contingency reserve and
funds required to meet current and future operating costs until the liquidation
of the Registrant. The Registrant intends to liquidate in 1997, subject to the
prior sale of the Hampton Park property, and will distribute any remaining funds
at such time. There are no assurances that a buyer can be found for the Hampton
Park property until the environmental issue is resolved.
For more information regarding the Consent Statement, see Item 4 Submission
of Matters to a Vote of Limited Partners.
General Partners
The general partners of the Registrant are Prudential-Bache Properties, Inc.
(``PBP''), George S. Watson and A. Starke Taylor, III (collectively, the
``General Partners''). PBP is the Managing General Partner and is responsible
for the day-to-day operations of the Registrant and its investments. See Note E
of the financial statements in the Registrant's Annual Report which is filed as
an exhibit hereto.
Employees
The Registrant has no employees. Management and administrative services for
the Registrant are performed by the General Partners and their affiliates
pursuant to the Partnership Agreement. See Note E of the financial statements in
the Registrant's Annual Report which is filed as an exhibit hereto.
4
Item 2. Properties
As of December 31, 1996, the Registrant has sold seven of its eight
properties and currently owns the following property:
Average Monthly
Occupancy Rates Rental Rates
for the year ended Per Unit
December 31, Land Rentable as of December 31,
Property Location 1996(1) (in acres) Units 1996
- -------------------------------------- ------------------- ---------- -------- --------------------
Hampton Park (Capitol Heights,
Maryland)
Mini-warehouse 94.5% 5.87 130 $ 29 - $ 280
Commercial 68 $ 250 - $1,450
--------
198
--------
--------
(1) Average occupancy rates are calculated by averaging the monthly occupancies
determined by dividing occupied square footage by available square footage
as of each month-end.
The Managing General Partner believes the Registrant's remaining property is
adequately insured.
For the years ended December 31, 1996, 1995 and 1994, respectively, the
following properties' rental revenues exceeded 15% of the Registrant's total
revenue:
1996 1995 1994
---- ---- ----
Arapaho 19 % 19% 19%
Arlington 16 17 18
Hampton Park 17 * *
* Property's rental revenue was 15% or less of the Registrant's total revenue
for the year.
No single tenant accounted for 10% or more of the total revenue for any of
the three years in the period ended December 31, 1996.
Item 3. Legal Proceedings
This information is incorporated by reference to Note G of the financial
statements in the Registrant's Annual Report which is filed as an exhibit
hereto.
Item 4. Submission of Matters to a Vote of Limited Partners
Pursuant to the Consent Statement dated September 17, 1996, the limited
partners of the Registrant approved, on October 18, 1996, the sale to Public
Storage, Inc. of all the Registrant's properties and the liquidation and
dissolution of the Registrant. The vote was 31,079 Units or 60.6% in favor, 334
Units or .7% against and 596 Units or 1.2% abstaining. Reference is made to the
Consent Statement dated September 17, 1996 which is incorporated by reference in
Item 14.
PART II
Item 5. Market for the Registrant's Units and Related Limited Partner Matters
As of March 3, 1997, there were 3,502 holders of record owning 51,818 Units,
inclusive of 258, 130 and 130 equivalent limited partnership units held by PBP
and Messrs. Watson and Taylor, respectively. A significant secondary market for
the Units has not developed, and it is not expected that one will develop in the
future. There are also certain restrictions set forth in Section 17.3 of the
Partnership Agreement limiting the ability of a limited partner to transfer
Units. Consequently, holders of Units may not be able to liquidate their
investments in the event of an emergency or for any other reason.
5
The following per Unit cash distributions were paid to limited partners on or
about 45 days after the end of the specified quarter and were made from current
and previously undistributed cash generated by the operations of the
Registrant's properties:
Quarter Ended 1996 1995
------------------------------------ ----- -----
March 31 $3.71 $3.71
June 30 3.71 3.71
September 30 -- 3.71
December 31 -- 3.71
In addition, a distribution of $300 per limited partnership unit was made on
December 19, 1996 representing the net proceeds from the sale of seven of the
Registrant's properties, reduced by a contingency reserve and funds required to
meet current and future operating costs until the liquidation of the Registrant.
The Registrant intends to liquidate in 1997, subject to the prior sale of the
Hampton Park property, and will distribute any remaining funds at such time.
The amount of limited partner distributions that represented a return of
capital on a generally accepted accounting principles (GAAP) basis was
approximately $282,000 for the year ended December 31, 1995. Also, the
distributions paid to limited partners for the year ended December 31, 1996
primarily represented a return of capital on a GAAP basis. Return of capital on
a GAAP basis is calculated as limited partner distributions less net income
allocated to limited partners.
Item 6. Selected Financial Data
The following table presents selected financial data of the Registrant. This
data should be read in conjunction with the financial statements of the
Registrant and the notes thereto on pages 2 through 10 of the Registrant's
Annual Report which is filed as an exhibit hereto.
Nine Months
Ended Year ended December 31,
September 30, -----------------------------------------------------
1996 1995 1994 1993 1992
------------- ----------- ----------- ----------- -----------
Total revenues $ 2,209,270 $ 2,841,354 $ 2,615,970 $ 2,461,721 $ 2,400,913
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Net income $ 619,119 $ 489,304 $ 402,785 $ 347,081 $ 355,077
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Limited partner net income per
Unit $ 11.89 $ 9.40 $ 7.73 $ 6.66 $ 6.82
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Total assets $14,325,486 $14,086,449 $14,263,400 $15,072,631 $15,732,923
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Total distributions $ 580,329 $ 773,886 $ 1,044,203 $ 886,930 $ 1,077,008
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Limited partner distributions per
Unit $ 11.13 $ 14.86 $ 20.05 $ 17.03 $ 20.68
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This information is incorporated by reference to page 11 of the Registrant's
Annual Report which is filed as an exhibit hereto.
Item 8. Financial Statements and Supplementary Data
The financial statements are incorporated by reference to pages 2 through 10
of the Registrant's Annual Report which is filed as an exhibit hereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
There are no directors or executive officers of the Registrant. The
Registrant is managed by the Managing General Partner.
6
Section 16(a) Beneficial Ownership Reporting Compliance
The Registrant, the Registrant's General Partners, PBP's directors and
executive officers and any persons holding more than ten percent of the
Registrant's Units are required to report their initial ownership of such Units
and any subsequent changes in that ownership to the Securities and Exchange
Commission on Forms 3, 4 and 5. Such General Partners, executive officers,
directors and other persons who own greater than ten percent of the Registrant's
Units are required by Securities and Exchange Commission regulations to furnish
the Registrant with copies of all Forms 3, 4 or 5 they file. All of these filing
requirements were satisfied on a timely basis. In making these disclosures, the
Registrant has relied solely on written representations of the General Partners,
PBP's directors and executive officers and other persons who own greater than
ten percent of the Registrant's Units or copies of the reports they have filed
with the Securities and Exchange Commission during and with respect to its most
recent fiscal year.
Prudential-Bache Properties, Inc., Managing General Partner
The directors and executive officers of PBP and their positions with regard
to managing the Registrant are as follows:
Name Position
Thomas F. Lynch, III President, Chief Executive Officer, Chairman of the
Board of Directors and Director
Barbara J. Brooks Vice President--Finance and Chief Financial Officer
Eugene D. Burak Vice President and Chief Accounting Officer
Brian J. Martin Vice President
Frank W. Giordano Director
Nathalie P. Maio Director
THOMAS F. LYNCH, III, age 38, is the President, Chief Executive Officer,
Chairman of the Board of Directors and a Director of PBP. He is a Senior Vice
President of Prudential Securities Incorporated (``PSI''), an affiliate of PBP.
Mr. Lynch also serves in various capacities for other affiliated companies. Mr.
Lynch joined PSI in November 1989.
BARBARA J. BROOKS, age 48, is the Vice President--Finance and Chief Financial
Officer of PBP. She is a Senior Vice President of PSI. Ms. Brooks also serves in
various capacities for other affiliated companies. She has held several
positions within PSI since 1983. Ms. Brooks is a certified public accountant.
EUGENE D. BURAK, age 51, is a Vice President of PBP. He is a First Vice
President of PSI. Prior to joining PSI in September 1995, he was a management
consultant for three years and was with Equitable Capital Management Corporation
from March 1990 to May 1992. Mr. Burak is a certified public accountant.
BRIAN J. MARTIN, age 46, is a Vice President of PBP. He is a Senior Vice
President of PSI, which he joined in 1980. Mr. Martin is a Manager in the
Specialty Finance Asset Management Group and also serves in various capacities
for certain other affiliated companies. Mr. Martin is a member of the
Pennsylvania Bar.
FRANK W. GIORDANO, age 54, is a Director of PBP. He is a Senior Vice
President of PSI and an Executive Vice President and General Counsel of
Prudential Mutual Fund Management LLC, an affiliate of PSI. Mr. Giordano also
serves in various capacities for other affiliated companies. He has been with
PSI since July 1967.
NATHALIE P. MAIO, age 46, is a Director of PBP. She is a Senior Vice
President and Deputy General Counsel of PSI and supervises non-litigation legal
work for PSI. She joined PSI's Law Department in 1983; presently, she also
serves in various capacities for other affiliated companies.
There are no family relationships among any of the foregoing directors or
executive officers. All of the foregoing directors and executive officers have
indefinite terms.
7
Individual General Partners
George S. Watson, age 56, is a financial specialist and a certified public
accountant. He is also a member of the board of directors of Lyco Energy
Corporation as well as the Advisory Council of the University of Texas Business
School and a member of its Chancellor's Council. Mr. Watson attended the
University of Texas in Austin, graduating summa cum laude in 1963 with a B.B.A.
in accounting and finance. He received his M.B.A. in accounting and finance from
the University of Texas in 1965, graduating first in his class and summa cum
laude. He has received various awards and scholarships and is a member of many
fraternal organizations including Phi Kappa Phi, the honorary scholastic
fraternity.
A. Starke Taylor, III, age 53, holds a bachelor of business administration
degree from Southern Methodist University which was awarded in 1966. He is past
president of the North Dallas Chamber of Commerce. Active in the community, Mr.
Taylor is the chairman of the board of Priority One, an international missionary
organization, the founding chairman of the board of the Park Central Athletic
Association, a member of the Dallas regional board of the Salvation Army, and a
board member of the Dallas Theological Seminary. Mr. Taylor was recognized in
1983 by D Magazine as one of Dallas's 10 most outstanding young business
leaders.
The two individual General Partners are not related.
Item 11. Executive Compensation
The Registrant does not pay or accrue any fees, salaries or any other form of
compensation to either individual General Partner or to directors and officers
of the Managing General Partner for their services. Certain officers and
directors of the Managing General Partner receive compensation from affiliates
of the Managing General Partner, not from the Registrant, for services performed
for various affiliated entities, which may include services performed for the
Registrant; however, the Managing General Partner believes that any compensation
attributable to services performed for the Registrant is immaterial. See also
Item 13 Certain Relationships and Related Transactions for information regarding
reimbursement to the General Partners for services provided to the Registrant.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 3, 1997, no individual General Partner or director or officer of
the Managing General Partner owns directly or beneficially any interest in the
voting securities of the Managing General Partner.
As of March 3, 1997, no individual General Partner or director or officer of
the Managing General Partner owns directly or beneficially any of the Units
issued by the Registrant. However, the General Partners have contributed to the
Registrant and, based on such contribution, they received ``equivalent units''
entitling them to participate in the distributions to the limited partners and
in the Registrant's profits and losses in the same proportion that the General
Partners' capital contribution bears to the total capital contributions of the
limited partners. The Managing General Partner has retained its right to receive
funds from the Registrant, such as General Partner distributions and
reimbursement of expenses, but has waived its right to share in any limited
partner cash distributions and allocations of Registrant's profits and losses
based upon such equivalent units.
As of March 3, 1997, no limited partner beneficially owns more than five
percent (5%) of the outstanding Units issued by the Registrant.
Item 13. Certain Relationships and Related Transactions
The Registrant has and will continue to have certain relationships with the
General Partners and their affiliates. However, there have been no direct
financial transactions between the Registrant and the individual General
Partners or the directors or officers of the Managing General Partner during
1996.
Reference is made to Notes A and E of the financial statements in the
Registrant's Annual Report which is filed as an exhibit hereto, which identify
the related parties and discuss the services provided by these parties and the
amounts paid or payable for their services.
8
PART IV
Page
Number in
Annual Report
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements and Report of Independent Audi-
tors--Incorporated by reference to the Registrant's Annual Report
which is filed as an exhibit hereto
Report of Independent Auditors 2
Financial Statements:
Statement of Net Assets--December 31, 1996 3
Statement of Financial Condition--December 31, 1995 3
Statement of Changes in Net Assets--Three months ended December
31, 1996 4
Statements of Operations--Nine months ended September 30, 1996
and two years ended December 31, 1995 4
Statements of Changes in Partners' Capital--Nine months ended
September 30, 1996 and two years ended December 31, 1995 5
Statements of Cash Flows--Nine months ended September 30, 1996
and two years ended December 31, 1995 6
Notes to Financial Statements 7
2. Financial Statement Schedules and Consent of Independent Auditors
Consent of Independent Auditors
Schedules:
II--Valuation and Qualifying Accounts and Reserves--Three years
ended December 31, 1996
III--Real Estate and Accumulated Depreciation at December 31,
1996
Notes to Schedule III--Real Estate and Accumulated Depreciation
All other schedules have been omitted because they are not
applicable or the required information is included in the
financial statements and the notes thereto.
3. Exhibits
Description:
2.01 Consent Statement dated September 17, 1996 (1)
3.01 Amended and Restated Certificate and Agreement of Limited
Partnership (2)
3.02 Amendment Number 8 to Amended and Restated Certificate and
Agreement of Limited Partnership (3)
4.01 Revised Form of Certificate of Limited Partnership Interest
(4)
10.01 Management Agreement (2)
10.02 Property Management Agreement dated as of November 1, 1988
by and between the Registrant and Public Storage Commercial
Properties Group, Inc. (4)
10.03 Property Management Agreement dated as of November 1, 1988
by and between the Registrant and Public Storage
Management, Inc. (4)
10.04 Agreement Relating to General Partner Interests (2)
9
13.01 Registrant's Annual Report to Limited Partners for the year
ended December 31, 1996 (with the exception of the information
and data incorporated by reference in Items 3, 7 and 8 of
this Annual Report on Form 10-K, no other information or
data appearing in the Registrant's Annual Report is to be
deemed filed as part of this report)
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
Registrant's Current Report on Form 8-K dated December 16, 1996,
as filed with the Securities and Exchange Commission on January
23, 1997, relating to Item 2 regarding the sale of the
Registrant's properties to Public Storage, Inc.
- ------------------
(1) Filed on the Registrant's Proxy Statement on Schedule 14A and incorporated
herein by reference.
(2) Filed as an exhibit to Registration Statement on Form S-11 (No. 2-88785)
and incorporated herein by reference.
(3) Filed as an exhibit to Registrant's Form 10-Q for the quarter ended March
31, 1990 and incorporated herein by reference.
(4) Filed as an exhibit to Registrant's Form 10-K for the year ended December
31, 1988 and incorporated herein by reference.
10
CONSENT OF INDEPENDENT AUDITORS
To the Partners
Prudential-Bache/Watson & Taylor, Ltd.-2
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Prudential-Bache/Watson & Taylor, Ltd.-2 of our report dated February 7,
1997, except for Note G, as to which the date is March 5, 1997, included in the
1996 Annual Report to Limited Partners of Prudential-Bache/Watson & Taylor,
Ltd.-2.
Our audits also included the financial statement schedules of
Prudential-Bache/Watson & Taylor, Ltd.-2 listed in Item 14(a). These schedules
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion based on our audits. In our opinion, the financial statement
schedules referred to above, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
/s/ Ernst & Young LLP
New York, New York
February 7, 1997, except for Note G,
as to which the date is March 5, 1997
11
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-2
(a limited partnership)
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
December 31, 1996
- --------------------------------------------------------------------------------
Allowance for Loss on Impairment of Assets
Deductions - Amounts
Year Ended Balance at Additions - Amounts Written-off During Balance at
December 31, Beginning of Year Reserved During Year Year End of Year
- ------------ ----------------- -------------------- -------------------- -----------
1994 $ 1,418,000 -- -- $ 1,418,000
1995 $ 1,418,000 -- -- $ 1,418,000
1996 $ 1,418,000 -- -- $ 1,418,000(1)
- -------------------------------------------------------------------------------------------------------
(1) Shown as a direct deduction of carrying value of remaining property.
12
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-2
(a limited partnership)
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1996
Amount at which carried at
close of year
-----------------------------------------------
Initial cost to Permanent
Registrant Costs writedown of
(Note B) capitalized impaired assets
----------------------------- subsequent and accumulated
Description Buildings and to Buildings and depreciation
(Note A) Land Improvements acquisition Land Improvements (Notes C & D)
- ----------------------------- ---------- -------------- ------------ -------- -------------- ---------------
Hampton Park
(Capitol Heights, Maryland) 925,595 -- 3,274,366 926,441 3,273,520 2,681,440
---------- -------------- ------------ -------- -------------- ---------------
$ 925,595 $ -- $ 3,274,366 $926,441 $3,273,520 $ 2,681,440
---------- -------------- ------------ -------- -------------- ---------------
---------- -------------- ------------ -------- -------------- ---------------
- -----------------------------------------------------------------------------------------------------------------------------------
Description Total Date(s) of Date
(Note A) (Note C) construction acquired
- ----------------------------- ---------- ------------- --------
Hampton Park
(Capitol Heights, Maryland) 1,518,521 1985/86 1984
----------
$1,518,521
----------
----------
- ---------------------------------------------------------------------------------
See notes on the following page
13
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-2
(a limited partnership)
NOTES TO SCHEDULE III
December 31, 1996
NOTE A--There are no mortgages, deeds of trust or similar encumbrances against
the remaining property.
NOTE B--Initial cost represents the initial purchase price of the property
including acquisition fees.
NOTE C--RECONCILIATION SUMMARY OF TRANSACTIONS--REAL ESTATE
Year ended December 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
Balance at beginning of year............................ $22,792,224 $22,623,910 $22,494,603
Allocation of accumulated depreciation against the
carrying amount of the properties based upon the
reclassification of the properties as held for sale... (8,274,973) -- --
Allocation of allowance for loss on impairment of assets
against the carrying amount of the properties based
upon the reclassification of the properties as held
for sale.............................................. (1,418,000) -- --
Additions during the year--property improvements 51,988 168,314 129,307
Deductions during the year--costs of properties
sold(1)............................................... (11,632,718) -- --
----------- ----------- -----------
Balance at close of year................................ $ 1,518,521 $22,792,224 $22,623,910
----------- ----------- -----------
----------- ----------- -----------
(1) In December 1996, the Registrant sold all of its properties except for Hampton Park.
The aggregate cost of land, buildings and improvements, and furniture and
fixtures for Federal income tax purposes as of December 31, 1996 was $2,508,000.
NOTE D--RECONCILIATION SUMMARY OF TRANSACTIONS--ACCUMULATED DEPRECIATION
Year ended December 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
Balance at beginning of year............................ $ 8,274,973 $ 7,511,313 $ 6,778,084
Depreciation during the year charged to expense(1)...... -- 763,660 733,229
Allocation of accumulated depreciation against the
carrying amount of the properties based upon the
reclassification of the properties as held for sale... (8,274,973) -- --
----------- ----------- -----------
Balance at close of year................................ $ -- $ 8,274,973 $ 7,511,313
----------- ----------- -----------
----------- ----------- -----------
(1) The Partnership ceased depreciating the properties for financial
reporting purposes when the properties were reclassified as held for sale as of
December 31, 1995.
14
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.
Prudential-Bache/Watson & Taylor, Ltd.-2
By: Prudential-Bache Properties, Inc.,
A Delaware corporation,
Managing General Partner
By: /s/ Eugene D. Burak Date: March 27, 1997
----------------------------------------
Eugene D. Burak
Vice President and
Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities (with respect to the General Partner) and on
the dates indicated.
By: Prudential-Bache Properties, Inc.,
A Delaware corporation,
Managing General Partner
By: /s/ Thomas F. Lynch, III Date: March 27, 1997
-----------------------------------------
Thomas F. Lynch, III
President, Chief Executive Officer,
Chairman of the Board of Directors and
Director
By: /s/ Barbara J. Brooks Date: March 27, 1997
-----------------------------------------
Barbara J. Brooks
Vice President-Finance and
Chief Financial Officer
By: /s/ Eugene D. Burak Date: March 27, 1997
-----------------------------------------
Eugene D. Burak
Vice President
By: /s/ Frank W. Giordano Date: March 27, 1997
-----------------------------------------
Frank W. Giordano
Director
By: /s/ Nathalie P. Maio Date: March 27, 1997
-----------------------------------------
Nathalie P. Maio
Director
15