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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT UNDER SECTIONS 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended: Commission File Number:
DECEMBER 31, 2000 33-2320
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EXCEL PROPERTIES, LTD.
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(Exact name of registrant as specified in its charter)
CALIFORNIA 87-0426335
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
17140 BERNARDO CENTER DRIVE, SUITE 300 SAN DIEGO, CALIFORNIA 92128
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(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (858) 675-9400
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Securities registered pursuant to Section 12(b) of the Act: NONE
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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.
(1) Yes X No
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(1) Yes X No
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Excel Properties, Ltd., a California limited partnership (the "Partnership"),
was organized to purchase commercial real estate properties for cash and to hold
these assets for investment. The general partners of the Partnership are New
Plan Excel Realty Trust, Inc., a Maryland corporation ("New Plan"), and Gary B.
Sabin. The Partnership was formed on September 19, 1985 and will continue in
existence until December 31, 2015, unless dissolved earlier under certain
circumstances. In 1999, Excel Legacy Corporation (the "Company") began managing
the assets of the Partnership when certain officers of New Plan resigned. The
Company has indemnified New Plan of any general partner liability in exchange
for an assignment of their partnership interest.
Properties that have been acquired by the Partnership are subject to long-term
triple-net leases. Such leases require the lessee to pay the prescribed minimum
rental plus all costs and expenses associated with the operations and
maintenance of the property. These expenses include real property taxes,
property insurance, repairs and maintenance and similar expenses. Certain leases
also provide some form of inflation hedge which calls for the minimum rent to be
increased, based upon adjustments in the consumer price index, fixed rent
escalation, or by receipt of a percentage of the gross sales of the tenant.
The principal investment objectives of the Partnership were originally to
provide to its limited partners: (1) preservation, protection and eventual
return of the investment, (2) distributions of cash from operations, some of
which may be a return of capital for tax purposes rather than taxable income,
and (3) realization of long-term appreciation in value of properties. The
Partnership is currently attempting to sell all of the properties held by the
Partnership. The selling of the properties could take several years as the
Partnership attempts to maximize the sales price of each property. There can be
no assurance that the general partners will be successful in selling all of the
properties or what price they can obtain. Additionally, the plans of the
Partnership may change in the future.
ITEM 2. PROPERTIES
The Partnership presently owns eight properties as follows:
KINDER-CARE LEARNING CENTERS
The Partnership owns three properties on lease to Kinder-Care, Inc., the
nation's largest provider of day-care centers.
KINDER-CARE LEARNING CENTER - WEST CARROLLTON, OHIO
Date of purchase: May 28, 1987
Purchase price: $190,337
Property description: This property is located approximately eight miles
southwest of Dayton, Ohio in the suburb of West Carrollton. The building
contains 4,650 square feet and is situated on .55 acres of land. The current
lease expires August 31, 2005. The annual rent over the remainder of the
lease is $40,920.
KINDER-CARE LEARNING CENTER - DAYTON, OHIO
Date of purchase: May 28, 1987
Purchase price: $190,337
Property description: This property is located approximately thirty miles
northeast of Dayton, Ohio in the Mud River Township. The building is situated
on .645 acres and contains 4,650 square feet. The current lease expires
August 31, 2005. The annual rent over the remainder of the lease is $40,920.
KINDER-CARE LEARNING CENTER - INDIANAPOLIS, INDIANA
Date of purchase: May 2, 1989
Purchase price: $201,080
Property description: This property is located at 1034 N. Whitcomb Ave. in
Indianapolis, Indiana. The building contains 4,487 square feet and is
situated on .598 acres. The current lease expires August 31, 2005 with gross
rents of $39,486 per year.
PARAGON RESTAURANT GROUP, INC.
The Partnership owns two properties operated as Mountain Jack's Restaurants, on
lease to Paragon Steakhouse Restaurants, Inc. The company is headquartered in
San Diego, California. Their trade names include Mountain Jack's and Hungry
Hunter.
MOUNTAIN JACK'S RESTAURANT - MIDDLEBURG HEIGHTS, OHIO
Date of purchase: July 21, 1987
Purchase price: $1,046,222
Property description: The property, situated on 1.72 acres and containing
6,331 square feet, is an upscale steak and seafood restaurant located in
Middleburg Heights, Ohio, a suburb of Cleveland. It has seating for
approximately 163 persons and parking for approximately 115 cars. The annual
lease payment is the greater of $104,500 or 5% of the gross sales. The lease
expires on July 20, 2005.
MOUNTAIN JACK'S RESTAURANT - LAFAYETTE, INDIANA
Date of purchase: September 29, 1987
Purchase price: $1,080,096
Property description: This property is located at 2411 State Road 26 East,
Lafayette, Indiana. Lafayette is located between Chicago, Illinois to the
north and Indianapolis, Indiana to the south. It is the home of Purdue
University. The property is situated on 1.72 acres, contains 8,274 gross
square feet and has seating for approximately 294 persons. The site is
ideally located along a main commercial artery and is surrounded by seven
hotels. The annual lease payment is the greater of $107,800 or 5% of the
gross sales. The lease expires on September 28, 2005.
AUTOWORKS - BELLEVUE, NEBRASKA
Date of purchase: July 5, 1988
Purchase price: $688,580
Property description: The property is located at a major shopping center at
915 Fort Crook Road, Bellevue, Nebraska, a suburb of Omaha, Nebraska.
Bellevue is the home of the Strategic Air Command (SAC) which contributes
largely to the area economy. The improvements consist of a free standing
concrete block and glass building containing 4,870 square feet. The base
minimum annual rent is $80,500 per year with scheduled rental increases
occurring every third year of the lease based on increases in the Consumer
Price Index not to exceed a 10% increase. The lease expires on July 5, 2008.
PONDEROSA RESTAURANT - ANN ARBOR, MICHIGAN
Date of purchase: January 20, 1989
Purchase price: $759,618
Property description: The property, containing 5,034 square feet, is situated
on approximately one acre located at 3354 East Washtenaw Street, Ann Arbor,
Michigan. The lease calls for a minimum rent of $77,187 plus 6.5% of the
annual gross sales in excess of the average annual sales for the years 1989
and 1990. The lease expires September 21, 2003.
SOUTHEASTERN EARLY EDUCATION - COLUMBUS, OHIO
Date of purchase: May 28, 1987
Purchase price: $190,337
Property description: This property is located in Columbus, Ohio. The
building is situated on .538 acres and contains 4,650 square feet.
The property is on lease until March 31, 2010. The annual rent over the
remainder of the lease is as follows:
January 1 to December 31, 2001 $ 42,139
January 1 to December 31, 2002 $ 39,569
January 1 to December 31, 2003 $ 38,850
January 1 to December 31, 2004 $ 40,475
January 1 to December 31, 2005 $ 40,800
January 1 to December 31, 2006 $ 42,490
January 1 to December 31, 2007 $ 42,828
January 1 to December 31, 2008 $ 44,615
January 1 to December 31, 2009 $ 44,973
January 1 to March 31, 2010 $ 11,243
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. MARKET FOR REGISTRANT'S LIMITED PARTNERSHIP UNITS AND RELATED
SECURITY HOLDER MATTERS
A) A public market for the Partnership's units does not exist.
B) As of December 31, 2000, there were 1,589 investors holding 135,199
units.
C) The Partnership made its first cash flow distribution from operations
in May 1987. Since that date, cash distributions have been made at
the end of each calendar quarter through December 31, 2000. The
Partnership expects to continue to make cash distributions on a
quarterly basis in the future to the extent the Partnership continues
to generate net operating income, or realize proceeds through
property sales.
PART II
ITEM 6. SELECTED FINANCIAL DATA
The following information has been selected from the financial statements of the
Partnership:
INCOME STATEMENT DATA
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
Total rental revenue $532,483 $598,103 $670,691 $827,221 $1,048,015
Interest and other income 102,066 120,217 119,518 156,668 202,786
Operating expenses:
Property expenses (21,612) 37,234 32,240 70,308 214,221
General and administrative 88,935 46,763 49,893 94,589 59,106
Depreciation 89,582 98,669 126,485 143,021 176,133
Net income before real estate sales 477,644 535,654 581,591 675,971 801,341
Gain on sale
of real estate - 389,300 99,986 84,373 880,643
Net income $477,644 $924,954 $681,577 $760,344 $1,681,984
Per Unit Data:
Net income 3.49 6.77 4.71 5.45 12.07
Distributions 4.47 16.83 15.05 21.96 25.10
BALANCE SHEET DATA
Net real estate 3,182,259 3,271,841 4,452,546 5,777,802 6,213,838
Cash 265,054 289,446 412,033 444,616 1,393,367
Accounts receivable, net 11,184 2,222 8,998 19,897 79,217
Total assets 4,595,140 4,717,775 6,041,019 7,415,403 9,665,303
Total liabilities 49,926 46,172 19,369 37,333 45,898
Partners' equity 4,545,214 4,671,603 6,021,650 7,378,070 9,619,405
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Certain statements in this Form 10-K may be deemed to be "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities and Exchange Act of 1934, as amended.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results of the Partnership to be
materially different from historical results or from any results expressed or
implied by such forward-looking statements.
The following discussion should be read in conjunction with the financial
statements and the notes thereto. Historical results and percentage
relationships set forth in the Statements of Income contained in the Financial
Statements, including trends which might appear, should not be taken as
indicative of future operations.
COMPARISON OF YEAR ENDED DECEMBER 31, 2000 TO YEAR ENDED DECEMBER 31, 1999.
The net income of the Partnership decreased by $447,310 in 2000 when compared to
1999. The differences in income and expenses are explained below.
Rental revenue decreased by $65,620 or 11% to $532,483 in 2000 from $598,103 in
1999. The decrease in rental revenue was primarily attributed to the property
sales in 1999. During 1999, the Partnership sold four properties. In February
1999, the Partnership sold a vacant building in Kenner, Louisiana that was
formerly on lease to Toddle House Restaurant. The net sale price for the
building was $222,849 and a $34,534 gain was recognized on the sale. In March
1999, the Partnership sold a building in Plant City, Florida that was on lease
to Payless Shoe Store. The net sale price for the building was $645,975 and a
$71,313 gain was recognized on the sale. In September 1999, the Partnership sold
two buildings that were on lease to Kindercare. The net sale price for the
Kindercare located in Gahanna, Ohio was $325,019 and the net sale price for the
Kindercare located in Grove City, Ohio was $271,291. The partnership recognized
a gain of $170,848 and $112,605, respectively, on these sales. These properties
accounted for $71,228 in rental revenue in 1999. There were no property sales in
2000.
Interest income decreased $18,151 or 15% over 1999. This decrease was largely
due to cash balances from proceeds relating to the 1999 property sales before
the funds were distributed to the partners.
Operating expenses decreased by $25,761 or 14% in 2000 from 1999. Depreciation
expense decreased by $9,087 or 9% due to property sales in 1999. Accounting and
legal expenses increased by $42,062 due to legal matters related to the transfer
and ownership of certain partnership units. Bad debt expense decreased by
$57,967 as compared to 1999. The decrease in bad debt expense relates to
reserves for a tenant which was delinquent on their rents, but paid current in
May 2000. Other expenses and other income varied very little between the two
accounting periods.
COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 1998.
The net income of the Partnership increased by $243,377 in 1999 when compared to
1998. The differences in income and expenses are explained below.
Rental revenue decreased by $72,588 or 11% to $598,103 in 1999 from $670,691 in
1998. The decrease in rental revenue was primarily attributed to the sale in
March 1999 of a building that was leased to Payless Shoes and a sale of a
building in May 1998 that was leased to Timberlodge Steakhouse. These properties
accounted for $100,986 in rental revenue in 1998 as compared to $17,696 in 1999.
During 1999, the Partnership sold four properties. In February 1999, the
Partnership sold a vacant building in Kenner, Louisiana that was formerly on
lease to Toddle House Restaurant. The net sale price for the building was
$222,849 and a $34,534 gain was recognized on the sale. In March 1999, the
Partnership sold a building in Plant City, Florida that was on lease to Payless
Shoe Store. The net sale price for the building was $645,975 and a $71,313 gain
was recognized on the sale. In September 1999, the Partnership sold two
buildings that were on lease to Kindercare. The net sale price for the
Kindercare located in Gahanna, Ohio was $325,019 and the net sale price for the
Kindercare located in Grove City, Ohio was $271,291. The partnership recognized
a gain of $170,848 and $112,605, respectively, on these sales.
During 1998, the Partnership sold two properties. In May 1998, the Partnership
sold a building leased to Timber Lodge Restaurant in Burnsville, Minnesota. The
net sales price was $689,760 and a $100,094 gain was recognized on the sale. In
September 1998, the Partnership sold a building leased to Ponderosa Restaurant
in Alton, Illinois. The net sales price was $608,997 and a $108 loss was
recognized on the sale.
Operating expenses decreased by $25,952 or 12% in 1999 from 1998. Depreciation
expense decreased by $27,816 or 22% due to property sales in 1998 and 1999.
Property tax expense decreased by $21,753 or 99%. The decrease in property tax
expense is attributable to the Company paying for the property taxes that would
have been paid by the Ponderosa Restaurant and Toddle House in 1998. In 1999,
the Company paid property taxes that would have been paid by Kindercare in
Columbus, Ohio. Subsequently, the Company charged Kindercare for the amount of
the property taxes paid on their behalf. Bad debt expense increased by $27,478
as compared to 1998. The increase is primarily due to Kindercare in Columbus,
Ohio. Other expenses and other income varied very little between the two
accounting periods.
The Partnership has continued to distribute cash flows to the limited partners
since 1989. Management anticipates that distributions from cash flows will
continue in 2000. The distributions may be supplemented by proceeds from
property sales,
if any. If additional properties are sold and proceeds are distributed to the
partners instead of reinvested, future distributions are expected to decrease.
Inflation is not expected to negatively impact the operations of the Partnership
due to the structure of its investment portfolio. The leases all provide a
minimum rental which the lessee is obligated to pay. Since the triple-net leases
require the lessees to pay for all property operating expenses, the net effect
is that the revenue received will not be eroded away as operating expenses
increase due to inflation.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership has $265,054 in cash at December 31, 2000, with no outstanding
debt on any of the properties that it owns. In January 2001, the Partnership
distributed accumulated cash to the partners in the amount of $138,000. The
Partnership has income of approximately $45,873 per month from rental revenue.
Also, the management does not expect the Partnership to incur any significant
operational expenses as the Partnership properties are subject to triple-net
leases.
The Partnership's primary source of cash is from rental of the real estate
properties currently owned. The Partnership is attempting to dispose of its
assets which would provide cash for distribution. Management believes that
rental revenue should cover the recurring operating expenses of the Partnership
and allow for cash distributions to be made to the partners unless buildings
become vacant or tenants become delinquent in their rents. The Partnership has
the policy of paying quarterly distributions to the limited partners of the
actual cash earned by the Partnership in the preceding quarter. Therefore, if
expenses were to increase or revenue were to decrease, the Partnership would
decrease the quarterly distributions to the limited partners. It is anticipated
that the liquidity of the Partnership will decrease as properties are sold.
CERTAIN CAUTIONARY STATEMENTS
Certain statements in this Form 10-K are not historical fact and constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results of the Partnership to be materially different from historical results or
from any results expressed or implied by such forward-looking statements. Such
risk, uncertainties and other factors include, but are not limited to, the
following risks:
ECONOMIC PERFORMANCE AND VALUE OF PROPERTIES DEPENDENT ON MANY FACTORS. Real
property investments are subject to varying degrees of risk. The economic
performance and values of real estate can be affected by many factors, including
changes in the national, regional and local economic climates, local conditions
such as an oversupply of space or reductions in demand for real estate in the
area, the attractiveness of the properties to tenants, competition from other
available space, the ability of the owner to provide adequate maintenance and
insurance and increased operating costs.
DEPENDENCE ON RENTAL REVENUE FROM REAL PROPERTY. Since substantially all of the
Partnership's income is derived from rental revenue from real property, the
Partnership's income and funds for distribution would be adversely affected if a
significant number of the Partnership's tenants were unable to meet their
obligations to the Partnership, if the Partnership were unable to lease a
significant amount of space in its buildings on economically favorable lease
terms, or as the properties are sold. There can be no assurance that any tenant
whose lease expires in the future will renew such lease or that the Partnership
will be able to re-lease space on economically advantageous terms.
ILLIQUIDITY OF REAL ESTATE INVESTMENTS. Equity real estate investments are
relatively illiquid and therefore tend to limit the ability of the Partnership
to vary its portfolio promptly in response to changes in economic or other
conditions.
RISK OF BANKRUPTCY OF TENANTS. The bankruptcy or insolvency of a tenant would
have an adverse impact on the property affected and on the income produced by
such property. Under bankruptcy law, a tenant has the option of assuming
(continuing) or rejecting (terminating) any unexpired lease. If the tenant
assumes its lease with the Partnership, the tenant must cure all defaults under
the lease and provide the Partnership with adequate assurance of its future
performance under the lease. If the tenant rejects the lease, the Partnership's
claim for breach of the lease would (absent collateral securing the claim) be
treated as a general unsecured claim. The amount of the claim would be capped at
the amount owed for unpaid pre-petition lease payments unrelated to the
rejection, plus the greater of one years' lease payments or 15% of the remaining
lease payments payable under the lease (but not to exceed the amount of three
years' lease payments). At December 31, 2000, the Company had no tenants under
bankruptcy.
ENVIRONMENTAL RISKS. Under various federal, state and local laws, ordinances and
regulations, the Partnership may be considered an owner or operator of real
property or may have arranged for the disposal or treatment of hazardous or
toxic
substances and, therefore, may become liable for the costs of removal or
remediation of certain hazardous substances released on or in its property or
disposed of by it, as well as certain other potential costs which could relate
to hazardous or toxic substances (including governmental fines and injuries to
persons and property). Such liability may be imposed whether or not the
Partnership knew of, or was responsible for, the presence of such hazardous
toxic substances.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Partnership is filing as part of this report, its financial statements which
contain the following:
Page
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1) Report of Independent Accountants F-2
2) Balance Sheets
December 31, 2000 and 1999 F-3
3) Statements of Income
Years Ended December 31, 2000, 1999 and 1998 F-4
4) Statements of Changes in Partners' Equity
Years Ended December 31, 2000, 1999 and 1998 F-5
5) Statements of Cash Flows
Years Ended December 31, 2000, 1999 and 1998 F-6
6) Notes to Financial Statements F-7
7) Financial Statement Schedules:
II - Valuation and Qualifying Accounts
Years Ended December 31, 2000, 1999 and 1998 F-11
III - Real Estate and Accumulated Depreciation
December 31, 2000 F-12
PART III
ITEM 10. GENERAL PARTNERS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The general partners of the Partnership are New Plan Excel Realty Trust, Inc., a
Maryland corporation ("New Plan"), and Gary B. Sabin. In 1999, Excel Legacy
Corporation ("the Company") began managing the assets of the Partnership when
certain officers of New Plan resigned. Neither Gary B. Sabin nor the executive
officers of the company receive compensation from the Partnership. The Company
has indemnified New Plan of any general partner liability in exchange for an
assignment of their partnership interest. The General Partner and the officers
and employees of the Company spend such time in the administration of
Partnership affairs to the extent deemed necessary.
The names, ages and positions of responsibility held by the executive officers
of the Company who spend time in the Partnership affairs are as follows:
Name Age Position
---------------- ---- -------------------------------
Gary B. Sabin 46 President and Chairman of the Board
Richard B. Muir 45 Executive Vice President and Director
Mark T. Burton 40 Senior Vice President
James Y. Nakagawa 35 Chief Financial Officer
S. Eric Otteson 45 Senior Vice President
John Visconsi 56 Senior Vice President
FAMILY RELATIONSHIPS
Not Applicable.
BUSINESS EXPERIENCE
The following is a brief background of the directors and executive officers of
the Company.
GARY B. SABIN has served as Chief Executive Officer, President and Chairman of
the Board of Directors since January 1989. He is a graduate of Brigham Young
University and Stanford University's Graduate School of Business where he
received a master's degree as a Sloan Fellow. Mr. Sabin has extensive experience
in the financial services industry with emphasis in the areas of commercial real
estate and marketable securities.
RICHARD B. MUIR has served as Executive Vice President, Secretary and Director
of New Plan and/or the Company since January 1989. Mr. Muir has worked
extensively in the field of commercial real estate, developing expertise in real
estate acquisition, property management, leasing and project financing.
MARK T. BURTON has served as Vice President of New Plan and /or the Company
since January 1989 and as a Senior Vice President since January 1996. Mr.
Burton's duties for the Company primarily consist of the evaluation and
selection of property acquisitions and dispositions. Mr. Burton has served in
various capacities with other affiliated companies since 1984.
JAMES Y. NAKAGAWA has served as Chief Financial Officer of the company since
October 1998. From March 1998 to October 1998, Mr. Nakagawa served as Controller
of the Company. Mr. Nakagawa served as Controller of New Plan from September
1994 to April 1999. Prior to joining New Plan, Mr. Nakagawa as a manager at
Coopers & Lybrand LLP. He is a certified public accountant.
S. ERIC OTTESON has served as Senior Vice President , General Counsel and
Assistant Secretary since the Company's formation. Mr. Otteson served as Senior
Vice President - Legal Affairs and Secretary of New Plan Excel from September
1998 to April 1999. Mr. Otteson also served as Senior Vice President, General
Counsel and Assistant Secretary if Excel Realty Trust from September 1996 to
September 1998. From 1987 to 1995, he was a senior partner in a San Diego law
firm.
JOHN A. VISCONSI has served as Legacy's Senior Vice President -Leasing/Asset
Management since May 1999. Mr. Visconsi served as Vice President - Leasing with
Excel Realty Trust and then New Plan Excel from January 1995 to April 1999. He
also served as Senior Vice President of Price Enterprises from January 1994 to
March 1995. From 1981 to 1994, Mr. Visconsi was Director of Leasing and Land
Development of Ernest W. Hahn, Inc.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no executive officers and has not paid nor proposes to pay
any compensation or retirement benefits to the directors or executive officers
of New Plan or the Company. See ITEM 13 for compensation to the general partner.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No person is known by the Partnership to be the beneficial owner of more than 5%
of the limited partner units. The following information sets forth the number of
units owned directly or indirectly by affiliates.
PERCENT OF
NUMBER UNITS AT
TITLE OF CLASS BENEFICIAL OWNER OF UNITS 12/31/00
-------------- ---------------- -------- --------
Units of Limited
Partnership Interest Gary B. Sabin None None
Units of Limited Excel Legacy Corporation
Partnership Interest 853 0.630%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The table below reflects compensation paid to the Company, or their affiliates
during the year ended December 31, 2000:
DESCRIPTION AMOUNT
----------- ------
Management fees $ 5,356
Administrative fees 10,800
Accounting 6,480
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) Documents filed as part of this report:
(1) (2) Financial statements under Item 8 in Part II hereof.
(3) Exhibits: None
(B) Reports on Form 8-K
No reports on Form 8-K have been filed during the past year.
SIGNATURES
Pursuant to the requirement 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.
Date: March 27, 2001 Excel Properties, Ltd.
(Registrant)
By: /s/ Gary B. Sabin
---------------------------------
Gary B. Sabin
General Partner
By: /s/ James Y. Nakagawa
---------------------------
James Y. Nakagawa
Principal Accounting Officer
INDEX TO FINANCIAL STATEMENTS
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PAGE
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1. FINANCIAL STATEMENTS:
Report of Independent Accountants - Squire & Co......................................F-2
Balance Sheets
December 31, 2000 and 1999........................................................F-3
Statements of Income
Years Ended December 31, 2000, 1999 and 1998......................................F-4
Statements of Changes in Partners' Equity
Years Ended December 31, 2000, 1999 and 1998......................................F-5
Statements of Cash Flows
Years Ended December 31, 2000, 1999 and 1998......................................F-6
Notes to Financial Statements........................................................F-7
2. FINANCIAL STATEMENT SCHEDULES:
Schedule II - Valuation and Qualifying Accounts
Years Ended December 31, 2000, 1999 and 1998.....................................F-11
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2000................................................................F-12
F-1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners
Excel Properties, Ltd.
We have audited the accompanying balance sheets of Excel Properties, Ltd., as of
December 31, 2000 and 1999, and the related statements of income, changes in
partners' equity, and cash flows for each of the three years in the period ended
December 31, 2000. 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 audits 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 Excel Properties, Ltd., as of
December 31, 2000 and 1999, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2000, in conformity
with generally accepted accounting principles.
Our audits were made for the purposes of forming an opinion in the basic
financial statements taken as a whole. Financial statement Schedules II and III
are presented for the purpose of additional analysis and are not a required part
of the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
SQUIRE & CO.
February 7, 2001
Poway, California
F-2
EXCEL PROPERTIES, LTD.
BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
----------
2000 1999
----------- -----------
ASSETS
Real estate:
Land $ 1,524,764 $ 1,524,764
Buildings 2,821,843 2,821,843
Less: accumulated depreciation (1,164,348) (1,074,766)
----------- -----------
Net real estate 3,182,259 3,271,841
Cash 265,054 289,446
Accounts receivable, less allowance for bad debts of
$0 and $30,999 in 2000 and 1999, respectively 11,184 2,222
Notes receivable 1,121,859 1,148,629
Interest receivable 12,291 5,637
Other assets 2,493 -
----------- -----------
Total assets $ 4,595,140 $ 4,717,775
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts payable:
Affiliates $ 6,562 $ 20,708
Other 27,850 1,520
Property taxes payable - 5,174
Deferred rental income 15,514 18,770
----------- -----------
Total liabilities 49,926 46,172
----------- -----------
Partners' Equity:
General partner's equity 28,582 28,950
Limited partners' equity, 235,308 units authorized,
135,199 units issued and outstanding 4,516,632 4,642,653
----------- -----------
Total partners' equity 4,545,214 4,671,603
----------- -----------
Total liabilities and partners' equity $ 4,595,140 $ 4,717,775
=========== ===========
The accompanying notes are an integral part
of the financial statements
F-3
EXCEL PROPERTIES, LTD.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
----------
2000 1999 1998
---------- ---------- ----------
Revenue:
Base rent $ 532,483 $ 598,103 $ 670,691
Interest and other income 102,066 120,217 119,518
---------- ---------- ----------
Total revenue 634,549 718,320 790,209
---------- ---------- ----------
Operating Expenses:
Bad debts (26,968) 30,999 3,521
Depreciation 89,582 98,669 126,485
Accounting and legal 67,758 25,696 25,220
Property taxes - 216 21,969
Administrative 10,800 10,800 10,800
Management fees 5,356 6,019 6,750
Office expenses 10,377 10,267 13,873
---------- ---------- ----------
Total operating expenses 156,905 182,666 208,618
---------- ---------- ----------
Net income before real estate sales 477,644 535,654 581,591
Gain - sale of real estate - 389,300 99,986
---------- ---------- ----------
Net income $ 477,644 $ 924,954 $ 681,577
========== ========== ==========
Net income allocated to:
General partner $ 5,672 $ 10,236 $ 45,438
Limited partners 471,972 914,718 636,139
---------- ---------- ----------
Total $ 477,644 $ 924,954 $ 681,577
========== ========== ==========
Net income per weighted average
limited partnership unit $ 3.49 $ 6.77 $ 4.71
========== ========== ==========
The accompanying notes are an integral part
of the financial statements
F-4
EXCEL PROPERTIES, LTD.
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
----------
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
--------- ---------- ----------
Balance at January 1, 1998 $ 16,376 $7,361,694 $7,378,070
Liquidation of Limited Partnership units - 1998 - (3,000) (3,000)
Net income - 1998 45,438 636,139 681,577
Partner distributions - 1998 (20,350) (2,014,647) (2,034,997)
--------- ---------- ----------
Balance at December 31, 1998 41,464 5,980,186 6,021,650
Net income - 1999 10,236 914,718 924,954
Partner distributions - 1999 (22,750) (2,252,251) (2,275,001)
--------- ---------- ----------
Balance at December 31, 1999 28,950 4,642,653 4,671,603
Net Income - 2000 5,672 471,972 477,644
Partner distributions - 2000 (6,040) (597,993) (604,033)
--------- ---------- ----------
Balance at December 31, 2000 $ 28,582 $4,516,632 $4,545,214
========= ========== ==========
The accompanying notes are an integral part
of the financial statements
F-5
EXCEL PROPERTIES, LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
----------
2000 1999 1998
--------- ----------- ---------
Cash flows from operating activities:
Net income $ 477,644 $ 924,954 $ 681,577
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation 89,582 98,669 126,485
Allowance for doubtful accounts (26,968) 30,999 (191,765)
Gain on sale of real estate - (389,300) (99,986)
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 18,006 (24,223) 202,664
Interest receivable (6,654) 96 81
Other assets (2,493) 2,605 (2,605)
Increase (decrease) in liabilities:
Accounts payable 12,184 19,137 256
Property taxes payable (5,174) 5,174 (19,089)
Tenant security deposits - - (5,000)
Deferred rental income (3,256) 2,492 5,870
--------- ----------- ---------
Net cash provided by operating activities 552,871 670,603 698,488
--------- ----------- ---------
Cash flows from investing activities:
Proceeds from real estate sales - 1,471,336 1,298,757
Collection of notes receivable 26,770 10,475 8,169
--------- ----------- ---------
Net cash provided by investing activities 26,770 1,481,811 1,306,926
--------- ----------- ---------
Cash flows from financing activities:
Redemption of partnership units - (3,000)
Cash distributions (604,033) (2,275,001) (2,034,997)
--------- ----------- ---------
Net cash used by financing activities (604,033) (2,275,001) (2,037,997)
--------- ----------- ---------
Net decrease in cash (24,392) (122,587) (32,583)
Cash at beginning of year 289,446 412,033 444,616
--------- ----------- ---------
Cash at end of year $ 265,054 $ 289,446 $ 412,033
========= =========== =========
The accompanying notes are an integral part
of the financial statements
F-6
EXCEL PROPERTIES, LTD.
NOTES TO FINANCIAL STATEMENTS
----------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
Excel Properties, Ltd. (the "Partnership") was formed in the State of
California on September 19, 1985, for the purpose of, but not limited to,
acquiring real property and syndicating such property.
REAL ESTATE
Land and buildings are recorded at cost. Buildings are depreciated using
the straight-line method over the tax life of 31.5 years. The tax life
does not differ materially from the economic useful life. Expenditures for
maintenance and repairs are charged to expense as incurred. Significant
renovations are capitalized. The cost and related accumulated depreciation
of real estate are removed from the accounts upon disposition. Gains and
losses arising from the dispositions are reported as income or expense.
The Partnership assesses whether there has been an impairment in the value
of its real estate by considering factors such as expected future
operating income, trends, and prospects, as well as the effects of the
demand, competition and other economic factors. Such factors include a
lessee's ability to pay rent under the terms of the lease. If a property
is leased at a significantly lower rent, the Partnership may recognize a
permanent impairment loss if the income stream is not sufficient to
recover its investment.
CASH DEPOSITS
At December 31, 2000, the carrying amount of the Partnership's cash
deposits total $265,054. The bank balances are $322,801 of which $200,000
which is covered by federal depository insurance.
STATEMENT OF CASH FLOWS - SUPPLEMENTAL DISCLOSURE
There was no interest or taxes paid for the years ended December 31, 2000,
1999 or 1998. The Partnership had no noncash investing or financing
transactions in 2000, 1999 or 1998.
INCOME TAXES
The Partnership is not liable for payment of any income taxes because as a
partnership, it is not subject to income taxes. The tax effects of its
activities accrue directly to the partners.
ACCOUNTS RECEIVABLE
All net accounts receivable are deemed to be collectible within the next
12 months.
Continued F-7
EXCEL PROPERTIES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
----------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
FINANCIAL STATEMENT ESTIMATES
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
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
RECLASSIFICATIONS
Certain reclassifications have been made to the financial statements for
the years ended December 31, 1999 and 1998 in order to conform with the
current period presentation.
2. FINANCIAL STATEMENT AND TAX RETURN DIFFERENCES
The Partnership had the following differences between the financial
statements and the Partnership tax return.
2000 1999 1998
----------- ----------- -----------
Net income:
Financial statements $ 477,644 $ 924,954 $ 681,577
Tax returns 454,216 956,554 487,913
----------- ----------- -----------
Difference $ 23,428 $ (31,600) $ 193,664
=========== =========== ===========
Difference is due to:
Allowance for bad debts $ 30,999 $ (30,999) $ 193,664
Deferred gain - sale of building (7,571) (601) --
----------- ----------- -----------
$ 23,428 (31,600) $ 193,664
=========== =========== ===========
Partners' equity:
Financial statements $ 4,545,214 $ 4,671,603 $ 6,021,650
Tax returns 5,760,809 5,910,596 7,229,073
----------- ----------- -----------
Difference $(1,215,595) $(1,238,993) $(1,207,423)
=========== =========== ===========
Difference is due to:
Syndication costs $(1,496,818) $(1,496,818) $(1,496,818)
Allowance for bad debts -- (30,999) --
Deferred gain - like-kind exchange -- -- --
Deferred gain on sale of building 281,223 288,793 289,395
Distributions payable -- 31 --
----------- ----------- -----------
$(1,215,595) $(1,238,993) $(1,207,423)
=========== =========== ===========
Continued F-8
EXCEL PROPERTIES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
----------
3. FEES PAID TO GENERAL PARTNER:
The Partnership has paid the General Partner or its affiliates the
following fees:
2000 1999 1998
------- ------- -------
Management fees $ 5,356 $ 6,019 $ 6,750
Administrative fees 10,800 10,800 10,800
Accounting 6,480 6,480 6,480
4. NOTES RECEIVABLE:
The Company had the following notes receivable at December 31, 2000 and
1999:
2000 1999
---------- ----------
Note from the sale of land, interest at 10%. Secured by
land sold. Currently due $ 165,750 $ 165,750
Note from sale of building, receipts of $1,390 per month
at 9% interest. Secured by building sold. Currently due 119,752 125,378
Note from sale of building, receipts of $5,366 per month
at 8.5% interest. Secured by building sold. Due
November 2003 736,107 755,923
Note from sale of building, receipts of $1,004 per month
at 8% interest. Secured by building sold. Repaid in
February 2001 100,250 101,578
---------- ----------
Total notes receivable $1,121,859 $1,148,629
========== ==========
5. MINIMUM FUTURE RENTALS:
The Company leases single-tenant buildings to tenants under noncancelable
operating leases requiring the greater of fixed or percentage rents. The
leases are primarily triple-net, requiring the tenant to pay all expenses
of operating the property such as insurance, property taxes, repairs and
utilities. Minimum future rental revenue for the next five years for the
commercial real estate currently owned and subject to noncancelable
operating leases is as follows:
YEAR ENDING DECEMBER 31,
------------------------
2001 $ 550,480
2002 547,911
2003 524,904
2004 467,770
2005 353,472
Thereafter 421,580
Continued F-9
EXCEL PROPERTIES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
----------
6. REAL ESTATE:
There were no property sales during 2000.
During 1999 the Partnership sold four properties. In February 1999, the
Partnership sold a vacant building in Kenner, Louisiana that was formerly
on lease to Toddle House Restaurant. The net sale price for the building
was $222,849 and a $34,534 gain was recognized on the sale. In March 1999,
the Partnership sold a building in Plant City, Florida that was on lease
to Payless Shoe Store. The net sale price for the building was $645,975
and a $71,313 gain was recognized on the sale. In September 1999, the
Partnership sold two buildings that were on lease to Kindercare. The net
sale price for the Kindercare located in Gahanna, Ohio was $325,019 and
the net sale price for the Kindercare located in Grove City, Ohio was
$271,291. The partnership recognized a gain of $170,848 and $112,605,
respectively, on the sales.
During 1998, the Partnership sold two properties. In May 1998, the
Partnership sold a building leased to Timberlodge Restaurant in
Burnsville, Minnesota. The net sales price was $689,760 and a $100,094
gain was recognized on the sale. In September 1998, the Partnership sold a
building leased to Ponderosa Restaurant in Alton, Illinois. The net sales
price was $608,997 and a $108 loss was recognized on these sales.
F-10
EXCEL PROPERTIES, LTD.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
Additions Deductions
-------------- --------------------------
Balance at Balance at
Beginning Charged to End
Description of Year Expense Description Amount of Year
- ------------------------------- ------------- -------------- -------------------------- ------------- ----------------
Year ended December 31, 2000:
Recovery of Previously
Allowance for bad debts $ 30,999 (26,968) Written-off bad debts $ 4,031 $ 0
============= ============== ============= ================
Year ended December 31, 1999:
Allowance for bad debts $ 0 30,999 Write-off of Reserves $ $ 30,999
============= ============== ============= ================
Year ended December 31, 1998:
Allowance for bad debts $ 191,764 $ 3,521 Write-off of Reserves $ 195,285 $ 0
============= ============== ============= ================
F-11
EXCEL PROPERTIES, LTD.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
Cost
Capitalized
Subsequent
to
Initial Cost Acquisition
------------------------------------------ --------------------
Buildings
and
Description Encumbrances Land Improvements Improvements
- -------------------------------- -------------------- ------------------ ------------------- --------------------
Kinder Care:
West Carrollton, Ohio - 57,101 133,236 -
Dayton, Ohio - 57,101 133,236 -
Indianapolis, Indiana - 60,324 140,755 -
Paragon Restaurant:
Middleburg Heights, Ohio - 313,867 732,355 -
Lafayette, Indiana - 324,029 756,068 -
Autoworks:
Omaha, Nebraska - 275,432 413,148 -
Ponderosa:
Ann Arbor, Michigan - 379,809 379,809 -
Southeastern Early Education:
Columbus, Ohio $ - $ 57,101 $ 133,236 $ -
-------------------- ------------------ ------------------- --------------------
$ - $ 1,524,764 $ 2,821,843 $ 0
==================== ================== =================== ====================
Gross Amount at Which
Carried at Close of Period Life on Which
-------------------------------- Depreciation
Accumu- in Latest
Buildings lated Income
and Total Depreci- Date Statements
Land Improvements (a)(b) ation (c) Acquired is Computed
---------- ------------------ ------------- ------------ ----------- -------------
Kinder Care:
West Carrollton, Ohio 57,101 133,236 190,337 57,630 1987 31.5 years
Dayton, Ohio 57,101 133,236 190,337 57,630 1987 31.5 years
Indianapolis, Indiana 60,324 140,755 201,079 51,945 1987 31.5 years
Paragon Restaurant:
Middleburg Heights, Ohio 313,867 732,355 1,046,222 312,897 1987 31.5 years
Lafayette, Indiana 324,029 756,068 1,080,097 319,028 1987 31.5 years
Autoworks:
Omaha, Nebraska 275,432 413,148 688,580 163,401 1988 31.5 years
Ponderosa:
Ann Arbor, Michigan 379,809 379,809 759,618 144,187 1989 31.5 years
Southeastern Early Education:
Columbus, Ohio $ 57,101 $ 133,236 $ 190,337 $ 57,630 1987 31.5 years
------------- ------------------ ------------- ------------
$ 1,524,764 $ 2,821,843 $ 4,346,607 $ 1,164,348
============= ================== ============= ============
(a) Also represents cost for federal income tax purposes.
(b) Reconciliation of total real estate carrying value for the three years
ended December 31, 2000 is as follows:
2000 1999 1998
----------- ----------- -----------
Balance at beginning of year $ 4,346,607 $ 5,652,631 $ 7,145,664
Acquistions -- -- --
Cost of property sold 0 (1,306,024) (1,493,033)
----------- ----------- -----------
Balance at end of year $ 4,346,607 $ 4,346,607 $ 5,652,631
=========== =========== ===========
(c) Reconciliation of accumulated depreciation for the three years ended
December 31, 2000 is as follows:
2000 1999 1998
----------- ----------- -----------
Balance at beginning of year $ 1,074,766 $ 1,200,084 $ 1,367,861
Expense 89,582 98,669 126,485
Deletions 0 (223,987) (294,262)
----------- ----------- -----------
Balance at end of year $ 1,164,348 $ 1,074,766 $ 1,200,084
=========== =========== ===========
F-12