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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, 1996 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)
16955 VIA DEL CAMPO, SUITE 110 SAN DIEGO, CALIFORNIA 92127
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(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (619) 485-9400
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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
Excel Realty Trust, Inc., a Maryland corporation, and Gary B. Sabin, an
individual. The Partnership was formed on September 19, 1985 and will continue
in existence until December 31, 2015, unless dissolved earlier under certain
circumstances.
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. The net
effect is that, under normal circumstances, no expenses will offset the rental
revenue from the property. Most of the 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 a
percentage of the gross sales of the tenant.
Properties have been acquired free and clear of liens and encumbrances. The
Partnership may seek to finance one or more of the properties and distribute
the financing proceeds to the partners, but only if the financing proceeds
equal or exceed 100% of the Partnership's capital invested in the property or
properties (including a prorata amount of the Partnership's public offering
unit selling commissions and organization expenses). To date, no properties
owned by the Partnership have been the subject of any mortgage financing,
therefore, at the present time, all properties remain free and clear from any
mortgage loan, lien or encumbrance.
The principal investment objectives of the Partnership are 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, (3)
distributions of cash from financing the properties and (4) realization of
long-term appreciation in value of properties.
The general partners have selected properties they believe meet certain minimum
investment standards and that are most likely to accomplish the investment
objectives of the Partnership. Properties were acquired through arms-length
negotiations with third parties.
ITEM 2. PROPERTIES
The Partnership presently owns sixteen properties as follows:
KINDER-CARE LEARNING CENTERS
The Partnership owns seven properties on lease to Kinder-Care, Inc., the
nation's largest provider of day-care centers.
KINDER-CARE LEARNING CENTER - GAHANNA, OHIO
Date of purchase: May 28, 1987
Purchase price: $216,823
Property description: This property is located approximately fifteen miles
northeast of Columbus, Ohio in the suburb of Gahanna. The building is
located on .551 acres and contains 4,528 square feet.
The current lease expires June 30, 1998 with gross rents of $21,000 per year.
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KINDER-CARE LEARNING CENTER - GROVE CITY, OHIO
Date of purchase: May 28, 1987
Purchase price: $222,340
Property description: This property is located in Grove City, Ohio, seven
miles south of Columbus, Ohio. The building is located on .8939 acres and
contains 4,528 square feet.
The current lease expires November 30, 1998 with gross rents of $21,000 per
year.
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 December 31, 2001. The annual rent over the
remainder of the lease is as follows:
January 1, 1997 to December 31, 1998 $ 33,202
January 1, 1999 to December 31, 2001 $ 35,526
KINDER-CARE LEARNING CENTER - 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 has been sublet by Kinder-Care to Children Today, another child-care
provider.
The property is on lease until December 31, 2001. The annual rent over the
remainder of the lease is as follows:
January 1, 1997 to December 31, 1998 $ 33,202
January 1, 1999 to December 31, 2001 $ 35,526
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 December 31, 2001. The annual base rent over the
remaining term of the lease is as follows:
January 1, 1997 to December 31, 1998 $ 33,202
January 1, 1999 to December 31, 2001 $ 35,526
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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 December 31, 2000 with gross rents of $49,694 per
year.
KINDER-CARE LEARNING CENTER - INDIANAPOLIS, INDIANA
Date of purchase: May 2, 1989
Purchase price: $201,079
Property description: This property is located at 29 N. Coronado in
Indianapolis, Indiana. The building contains 4,487 square feet and is
situated on 1.106 acres. The gross rents are $21,600 per year and the lease
expires December 31, 2000.
PARAGON RESTAURANT GROUP, INC.
The Partnership owns two properties operated as Mountain Jack's Restaurants, on
lease to Paragon Steakhouse Restaurants, Inc. The company, headquartered in
San Diego, California, is one of the nation's premier specialty restaurant
chain operators. Their trade names include Mountain Jacks'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 strategically 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.
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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 $80,484 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 property is surrounded by numerous commercial
enterprises including the Arbor Land enclosed shopping mall. 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.
PONDEROSA RESTAURANT - ALTON, ILLINOIS
Date of purchase: January 31, 1989
Purchase price: $770,993
Description of property: The building, containing 5,587 square feet, is
situated on approximately one acre at 3354 Homer-Adams Parkway along Highway
111, which is the major east/west road system through the city. Alton,
Illinois is situated across the Mississippi River from St. Louis, Missouri.
The tenant has vacated the premises and the Partnership is attempting to
re-lease and/or sell this property. Rent is $93,813 per year. Although the
Partnership is attempting to collect amounts owed, the rents are being
reserved for in bad debts. The Partnership received $153,386 in insurance
proceeds related to fire damage that occurred in 1996. These proceeds have
been offset against the price of the property.
PAYLESS SHOE STORE - PLANT CITY, FLORIDA
Date of purchase: December 1, 1989
Purchase price: $648,122
Property description: The property is located at 1801 Jim Redman Parkway,
Plant City, Florida. Plant City is located approximately 18 miles northeast
of the central business district of Tampa, Florida. The property is situated
on .89 acres and contains 2,989 square feet.
The lease is guaranteed by the May Department Store Co. which has a net worth
in excess of $3 billion. The property is on lease until November 30, 1999
with four additional 5-year options. The minimum rent is $70,785 per year.
The rent would be $82,682, $94,578, $106,495 and $118,372 for each option
period should the options be exercised by the tenant.
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TIMBER LODGE STEAKHOUSE - BURNSVILLE, MINNESOTA
Date of purchase: February 12, 1990
Purchase price: $722,040
Property description: This family restaurant is located at 13050 Aldrich
Avenue South. Burnsville is a suburb approximately 11 miles south of
Minneapolis. The property contains 6,614 square feet and is situated on 1.43
acres. The current rent is $69,031 per year and the lease expires on July
14, 2001.
TODDLE HOUSE RESTAURANT - KENNER, LOUISIANA
Date of purchase: November 26, 1991
Purchase price: $218,738
Property description: Toddle House Restaurants is a national restaurant
chain. It features 24-hour service with a cook-to-order menu. Toddle House
Restaurants, Inc. is a wholly-owned subsidiary of Diversified Hospitality
Group, Inc. (DHG) which also operates the Steak 'N' Eggs Kitchen restaurants.
The property is located at 2,841 Loyola, Kenner, Louisiana and contains 2,175
square feet. The land on which the restaurant is located is 16,800 square
feet.
The current annual rent is $38,020 and the lease expires on November 25,
2011. Toddle House is currently in Chapter 11 Bankruptcy and did not pay any
rent in 1996. The Partnership is attempting to re-lease or sell this
property.
LAND - LAS VEGAS, NEVADA
Date of purchase: March 9, 1995
Purchase price: $128,800
Property description: A 39% undivided interest in a parcel of land located
on Sahara Avenue in Las Vegas, Nevada. The land is not currently generating
any rental income. The parcel is currently being held for sale.
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 and is not
likely to develop.
B) As of December 31, 1996, there were 1,648 investors holding 135,299
units.
C) The Partnership made its first cash flow distribution from operations
in May 1987. Since that date, consistent cash distributions have
been made at the end of each calendar quarter through December 31,
1996. The Partnership expects to continue to make cash distributions
on a quarterly basis in the future.
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PART II
ITEM 6. SELECTED FINANCIAL DATA
The following information has been selected from the financial statements of
the Partnership:
INCOME STATEMENT DATA
1996 1995 1994 1993 1992
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Total rental revenue $1,048,015 $ 1,185,371 $ 1,145,656 $ 1,226,545 $ 1,225,912
Interest and other income 202,786 129,399 112,772 41,354 25,550
Operating expenses:
Property expenses 214,221 63,761 (2,438) 56,091 57,054
General and administrative 59,106 36,972 43,955 50,845 51,119
Depreciation 176,133 193,696 212,716 227,306 230,087
Net income before real estate sales 801,341 1,020,341 1,004,195 937,162 913,476
Gain (loss) on sale
of real estate 880,643 450,293 - 273,251 (17,325)
Net income 1,681,984 1,470,634 1,004,195 1,210,413 896,151
Per Unit Data:
Net income 12.07 10.77 7.33 8.82 6.52
Distributions 25.10 8.50 8.90 8.37 8.16
BALANCE SHEET DATA
Net real estate 6,213,838 8,414,719 9,451,413 9,664,128 10,649,877
Cash 1,393,367 1,817,201 641,053 626,726 483,003
Accounts receivable, net 79,217 165,083 19,135 44,029 15,369
Total assets 9,665,303 11,417,867 11,138,851 11,367,996 11,303,070
Total liabilities 45,898 50,213 79,274 61,722 57,588
Partners' equity 9,619,405 11,367,654 11,059,577 11,306,274 11,245,482
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
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, 1996 to year ended December 31, 1995.
The net income of the Partnership increased by $211,350 in 1996 when compared
to 1995. The differences in income and expenses are explained below.
Rental revenue decreased by $137,356, or 11.6% to $1,048,015 in 1996 from
$1,185,371 in 1995. During 1996, the Company sold four operating properties
which accounted for the decrease. These properties accounted for $190,551 of
rental revenue in 1996 compared to $258,273 in 1995, a decrease of $67,722.
Also, a building and a land parcel that were sold in 1995, had contributed
$129,669 to 1995 rental revenues. The lost rental revenue from properties sold
was offset partially by additional rental revenue from rent increases from
existing tenants.
Interest income increased by $73,387 in 1996 from 1995. This increase was due
to the additional amounts of cash on hand which the Partnership invested in
interest bearing accounts.
Operating expenses increased by $155,031 in 1996 from 1995. The net increase
was primarily attributed to the $132,991 increase in bad debt expense, the
$21,455 increase in accounting and legal expense, the $17,962 increase in
property taxes, and the decrease of $17,563 in depreciation. The bad debt
expense for 1996 was $183,608 of which $100,067 was attributable to a building
leased to Ponderosa Restaurant but vacant and $81,488 to the nonpayment of rent
by Toddle House Restaurants. Bad debt expense was $50,617 in 1995. Legal
expense increased primarily due to collection efforts on amounts owed to the
Partnership from Ponderosa. Property tax expense of $17,962 incurred in 1996
related to the building leased to Ponderosa. The decrease in depreciation in
1996 was primarily related to the four properties sold during the year.
During 1996, the Partnership sold four properties and a parcel of land. In
April 1996, the Partnership sold a Kentucky Fried Chicken building and a
Wendy's building located in Blaine, Minnesota for $901,187. The Partnership
recognized a net gain of $206,761 on these sales. In October 1996, the
partnership sold a building that was leased to Checker Autoworks in Denver,
Colorado for $811,494 of which the Partnership recognized a $208,072 gain.
Also in October 1996, the Partnership sold a land parcel for $75,357 and
recognized a $9,004 gain. The land parcel was located in Las Vegas, Nevada.
Finally, in December 1996, the Partnership sold a building leased to Denny's
Restaurant and located in Denver, Colorado for $963,968 and recognized a
$456,806 gain.
Based on current leases in place, management believes that the operating
revenues and related expenses of the Partnership in 1996 should be somewhat
indicative of the operations of the Partnership in 1997 (less $190,551 of
revenue and $26,557 of expenses related to the properties sold in 1996).
Various factors may, however, influence 1997 operations. These may include
such events as additional property sales, tenants who default on leases or new
tenants obtained by the Partnership to lease vacant properties.
The Partnership has continued to make distributions to the limited partners at
an annual rate of over 8% since 1989. In 1996, distributions at a rate of
approximately 25% were made primarily from cash received through property
sales, in addition to cash generated from operations. Management anticipates
that distributions will approximate 8% in 1997 which may be supplemented by
excess proceeds distributed from property sales, if any. If additional
properties are sold and proceeds are distributed to the partners instead of
reinvested, recurring distributions are expected to decrease in the future.
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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. Additionally,
most leases contain some form of inflation hedge which provides for the rent to
be increased. The rent increases may be in the form of scheduled fixed minimum
rent increases, Consumer Price Index (CPI) adjustments or by participating in a
percentage of the gross sales volume of the tenant. 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.
Comparison of year ended December 31, 1995 to year ended December 31, 1994.
The net income of the Partnership increased by $466,439 in 1995 when compared
to 1994. The differences in income and expenses are explained below.
Rental revenue increased by $48,348 in 1995 from 1994. In February 1995, the
Partnership sold the Childrens World building that generated $109,000 of gross
rental income in 1994 but only $14,223 in 1995. In 1995, the Partnership also
purchased a parcel of land in March and sold the same parcel in November.
While the land was owned in 1995, the Partnership collected $115,446 in base
rent. The additional rental revenue came from rent increases from existing
tenants. Interest income increased by $16,627 in 1995 from 1994. This
increase was due to the additional amounts of cash on hand which the
Partnership invested in interest bearing accounts.
Operating expenses increased by $40,196 from 1994 to 1995. The net increase
was primarily attributed to the $67,257 increase in bad debt expense, the
decrease of $19,020 in depreciation expense and the decrease of $6,386 in
accounting and legal expense. The bad debt expense increased $50,031 due to
the nonpayment of rent by Toddle House Restaurants in 1995 and by $16,640 from
the negative bad debt expense in 1994. Depreciation expense decreased
primarily from a building that was sold during the year. Legal expense
decreased due to expenditures made in 1994 that were not made in 1995 related
to collection of Toddle House rent amounts.
In February 1995, the Partnership sold a building in Phoenix, Arizona that was
on lease to Childrens World. The sales price was $1,135,000 less $28,729 in
selling expenses. The Partnership recognized a $99,141 gain on the sale. In
November 1995, the Partnership sold for $1,566,264, part of the ground that had
been purchased in February 1995. Prior to the Partnership's acquisition, there
were no operations relating to this ground. The Partnership recognized a
$351,152 gain on the sale. In 1994, there were no sales of real estate.
LIQUIDITY
The Partnership has $1,393,367 in cash at December 31, 1996, with no
outstanding debt on any of the properties that it owns. As such, management
does not anticipate any liquidity difficulties at this time. The Partnership
made a quarterly cash distribution of $1,000,000 in January 1997, which
included cash that had accumulated during the fourth quarter of 1996 from
operating income and proceeds from a property sale in October 1996. After the
distributions, the Partnership still had approximately $393,367 in cash
reserves to pay any unexpected liabilities. Additionally, there was $963,968
in an escrow account which the Partnership received in February 1997. The
Partnership has no debt and currently has income of approximately $79,000 per
month from rental income which management anticipates would cover expenses
which might need to be paid. However, the Partnership does not expect to use
significant funds for operational expenses as the properties are leased on a
triple-net lease basis.
The Partnership's primary source of cash in 1997 is expected to continue to come
from the rental of the real estate properties currently owned. Management
expects that rental income will be sufficient to cover the operating expenses of
the Partnership and allow for cash distributions to be made to the limited
partners. 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 income were to
decrease the Partnership would decrease the quarterly distributions to the
limited partners. Management does not expect the quarterly distributions to
increase or decrease dramatically in the future unless operating properties are
sold and proceeds are distributed to partners instead of reinvested.
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The Partnership has purchased its properties for all cash. The Partnership may
finance one or more of its existing properties if, among other conditions: (1)
the property is held for at least two years (all properties have been owned by
the Partnership for more than two years), (2) the financing proceeds equal or
exceed the Partnership's investment in the property and (3) the Partnership
distributes the financing proceeds to the partners. To date, the Partnership
has not leveraged any of its properties.
The cash of the Partnership decreased by $423,834 in 1996 when compared to the
previous year. This decrease was due primarily to the $3,430,233 that was
distributed to partners. In 1996, $1,941,423 was collected from real estate
sales proceeds. Also, net cash provided by operating activities amounted to
$1,058,327.
In 1996, bad debt expense primarily related to two tenants, Toddle House
Restaurants and Ponderosa, that did not pay rent. The Partnership is
currently in the process of attempting to re-lease or sell the properties
related to these tenants.
The cash and liquidity position of the Partnership has continued to increase
over the past three years. Management believes that the Partnership is in a
very stable liquidity position since it owns all of its real estate free of
debt. Management expects that the liquidity of the Partnership will change in
the future as excess cash is distributed to the unit holders (partners).
CAPITAL RESOURCES
The Partnership is in the business of purchasing and holding improved
commercial properties for long-term investment income. The Partnership
currently owns and manages sixteen properties. Fifteen of the properties are
single tenant buildings and one property is vacant land.
Each of the Partnership's present properties, with the exception of the land,
is leased to an operator/lessee on an absolute net basis, whereby the lessee
pays all maintenance, repairs, property taxes and insurance. Two properties
however, are leased to tenants not paying rent. These leases provide a minimum
rental plus a percentage of the lessee's gross revenues from the property
operation and/or a cost of living increase and/or a fixed rental increase. The
total cost of the properties to the Partnership is $7,475,542. The Partnership
also had cash of $1,393,367 at December 31, 1996.
RECENT ACCOUNTING PRONOUNCEMENTS
In 1996, the Partnership adopted the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards No. 121 ("FAS 121")
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of," which became effective for fiscal years beginning after
December 15, 1995. FAS 121 establishes standards for determining when
impairment losses on long-lived assets have occurred and how impairment losses
should be measure. The financial statement impact of adopting FAS 121 was not
material.
CERTAIN CAUTIONARY STATEMENTS
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.
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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, 1996 and 1995 F-3
3) Statements of Income
Years Ended December 31, 1996, 1995 and 1994 F-4
4) Statements of Changes in Partners' Equity
Years Ended December 31, 1996, 1995 and 1994 F-5
5) Statements of Cash Flows
Years Ended December 31, 1996, 1995 and 1994 F-6
6) Notes to Financial Statements F-7
7) Financial Statement Schedules:
II - Valuation and Qualifying Accounts
Years Ended December 31, 1996, 1995 and 1994 F-11
III - Real Estate and Accumulated Depreciation
December 31, 1996 F-12
PART III
ITEM 10. GENERAL PARTNERS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The general partners of the Partnership are Excel Realty Trust, Inc., a
Maryland corporation, and Gary B. Sabin. Neither Gary B. Sabin nor the
executive officers of Excel Realty Trust, Inc. receive compensation from the
Partnership. The General Partner and the officers and employees of Excel
Realty Trust, Inc. 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
and directors of Excel Realty Trust, Inc. are as follows:
Name Age Position
----------------- --- -------------------------------
Gary B. Sabin 42 President and Chairman of the Board
Richard B. Muir 41 Executive Vice President and Director
David A. Lund 45 Chief Financial Officer
Ronald H. Sabin 46 Senior Vice President
Graham R. Bullick 46 Senior Vice President
Mark T. Burton 36 Senior Vice President
S. Eric Ottesen 41 General Counsel and Senior Vice President
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FAMILY RELATIONSHIPS
Gary B. Sabin and Ronald H. Sabin are brothers.
BUSINESS EXPERIENCE
The following is a brief background of the directors and executive officers of
Excel Realty Trust, Inc (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 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.
DAVID A. LUND, CPA has served as Chief Financial Officer of the Company since
June 1994. He previously served from 1989 to 1994 in various capacities with
the Company, including Vice President and Vice President of Finance. From 1983
to 1989 he worked for various affiliated companies. Prior to 1983, Mr. Lund
was a partner in a CPA firm.
RONALD H. SABIN has served as Senior Vice President of the Company in charge of
property management since January 1989. Mr. Sabin has also served in various
similar capacities with other affiliated companies since 1979.
GRAHAM R. BULLICK, Ph.D. has served as Senior Vice President of the Company
since January 1991. Prior to joining the company, Mr. Bullick served for four
years as an account manager of a company specializing in organizational
development and service/quality systems.
MARK T. BURTON has served as Vice President of 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.
S. ERIC OTTESEN has served as General Counsel of the Company since January
1995. Prior to 1995, Mr. Ottesen worked as a partner in a law firm.
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 Excel Realty Trust, Inc. See ITEM 13 for compensation to the general
partner.
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13
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 each general partner.
PERCENT OF
NUMBER UNITS AT
TITLE OF CLASS BENEFICIAL OWNER OF UNITS 12/31/96
-------------------- ---------------- -------- ----------
Units of Limited
Partnership Interest Gary B. Sabin None None
Units of Limited Excel Realty
Partnership Interest Trust, Inc. 853 0.624%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The table below reflects compensation paid to the general partner or their
affiliates during the year ended December 31, 1996:
DESCRIPTION AMOUNT
------------------- --------
Management fees $ 9,414
Administrative fees 10,800
Accounting 16,080
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.
13
14
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 7, 1997 Excel Properties, Ltd.
(Registrant)
Excel Realty Trust, Inc.
(General Partner)
By: /s/ Gary B. Sabin
------------------------------
Gary B. Sabin
President
By: /s/ David A. Lund
------------------------------
David A. Lund
Principal Financial Officer
14
15
INDEX TO FINANCIAL STATEMENTS
__________
PAGE
----
1. FINANCIAL STATEMENTS:
Report of Independent Accountants - Squire & Co. . . . . . . . . . . . . . . . . . . . . . . . F-2
Balance Sheets
December 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Statements of Income
Years Ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . F-4
Statements of Changes in Partners' Equity
Years Ended December 31, 1996, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . . . F-5
Statements of Cash Flows
Years Ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . F-6
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
2. FINANCIAL STATEMENT SCHEDULES:
Schedule II - Valuation and Qualifying Accounts
Years Ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . F-11
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-12
F-1
16
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, 1996 and 1995, 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, 1996. 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, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on 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 6, 1997
Poway, California
F-2
17
EXCEL PROPERTIES, LTD.
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
--------------------
1996 1995
----------- -----------
ASSETS
Real estate:
Land $ 2,917,587 $ 3,822,602
Buildings 4,557,955 6,015,835
Less: accumulated depreciation (1,261,704) (1,423,718)
----------- -----------
Net real estate 6,213,838 8,414,719
Cash 1,393,367 1,817,201
Escrow deposits 963,968 -
Accounts receivable, less allowance for bad debts of
$236,017 and $51,595 in 1996 and 1995, respectively 79,217 165,083
Notes receivable 1,009,023 1,015,672
Interest receivable 5,890 5,192
----------- -----------
Total assets $ 9,665,303 $11,417,867
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts payable:
Affiliates $ 864 $ 867
Other 935 3,169
Property taxes payable - 939
Tenant security deposits 5,000 5,000
Deferred rental income 39,099 40,238
----------- -----------
Total liabilities 45,898 50,213
----------- -----------
Partners' Equity:
General partner's equity 23,573 8,691
Limited partners' equity, 235,308 units authorized,
135,299 units issued and outstanding 9,595,832 11,358,963
----------- -----------
Total partners' equity 9,619,405 11,367,654
----------- -----------
Total liabilities and partners' equity $ 9,665,303 $11,417,867
=========== ===========
The accompanying notes are an integral part
of the financial statements
F-3
18
EXCEL PROPERTIES, LTD.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
--------------------
1996 1995 1994
---------- ---------- ----------
Revenue:
Base rent $1,011,114 $1,146,919 $1,098,571
Percentage rents 36,901 38,452 47,085
Interest and other income 202,786 129,399 112,772
---------- ---------- ----------
Total revenue 1,250,801 1,314,770 1,258,428
---------- ---------- ----------
Operating Expenses:
Bad debts 183,608 50,617 (16,640)
Depreciation 176,133 193,696 212,716
Accounting and legal 40,424 18,969 25,355
Property taxes 17,962 - 114
Administrative 10,800 10,800 10,800
Management fees 9,414 10,186 11,959
Office expenses 7,882 7,203 7,800
Miscellaneous 3,237 2,536 2,129
---------- ---------- ----------
Total operating expenses 449,460 294,429 254,233
---------- ---------- ----------
Net Income before real estate sales 801,341 1,020,341 1,004,195
Gain - sale of real estate 880,643 450,293 -
---------- ---------- ----------
Net income $1,681,984 $1,470,634 $1,004,195
========== ========== ==========
Net income allocated to:
General partner $ 49,182 $ 15,303 $ 12,169
Limited partners 1,632,802 1,455,331 992,026
---------- ---------- ----------
Total $1,681,984 $1,470,634 $1,004,195
========== ========== ==========
Net income per weighted average
limited partnership unit $12.07 $10.77 $7.33
====== ====== =====
The accompanying notes are an integral part
of the financial statements
F-4
19
EXCEL PROPERTIES, LTD.
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
--------------------
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
-------- ----------- -----------
Balance at January 1, 1994 $ 5,027 $11,301,247 $11,306,274
Liquidation of Limited Partnership
units - 1994 - (39,000) (39,000)
Syndication fees - 1994 - 7,800 7,800
Net income - 1994 12,169 992,026 1,004,195
Partner distributions - 1994 (12,196) (1,207,496) (1,219,692)
-------- ----------- -----------
Balance at December 31, 1994 5,000 11,054,577 11,059,577
Liquidation of Limited Partnership
units - 1995 - (2,000) (2,000)
Syndication fees - 1995 - 600 600
Net income - 1995 15,303 1,455,331 1,470,634
Partner distributions - 1995 (11,612) (1,149,545) (1,161,157)
-------- ----------- -----------
Balance at December 31, 1995 8,691 11,358,963 11,367,654
Net income - 1996 49,182 1,632,802 1,681,984
Partner distributions - 1996 (34,300) (3,395,933) (3,430,233)
-------- ----------- -----------
Balance at December 31, 1996 $ 23,573 $ 9,595,832 $ 9,619,405
======== =========== ===========
The accompanying notes are an integral part
of the financial statements
F-5
20
EXCEL PROPERTIES, LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
--------------------
1996 1995 1994
----------- ----------- -----------
Cash flows from operating activities:
Net income $ 1,681,984 $ 1,470,634 $ 1,004,195
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation 176,133 193,696 212,716
Allowance for doubtful accounts 184,422 50,617 (98,192)
Gain on sale of real estate (880,643) (450,293) -
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (95,237) (196,565) 123,086
Interest receivable (698) 46 41
Increase (decrease) in liabilities:
Accounts payable (2,237) 568 (4,308)
Property taxes payable (4,258) (7,837) 7,074
Deferred rental income (1,139) (21,792) 14,786
----------- ----------- -----------
Net cash provided by operating activities 1,058,327 1,039,074 1,259,398
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from real estate sales 1,941,423 2,703,525 -
Purchase of real estate - (1,410,234) -
Collection of notes receivable 6,649 6,340 5,821
----------- ----------- -----------
Net cash provided by investing activities 1,948,072 1,299,631 5,821
----------- ----------- -----------
Cash flows from financing activities:
Redemption of partnership units - (2,000) (39,000)
Syndication costs reimbursed - 600 7,800
Cash distributions (3,430,233) (1,161,157) (1,219,692)
----------- ----------- -----------
Net cash used by financing activities (3,430,233) (1,162,557) (1,250,892)
---------- ----------- -----------
Net increase (decrease) in cash (423,834) 1,176,148 14,327
Cash at beginning of year 1,817,201 641,053 626,726
----------- ----------- -----------
Cash at end of year $ 1,393,367 $ 1,817,201 $ 641,053
=========== =========== ===========
The accompanying notes are an integral part
of the financial statements
F-6
21
EXCEL PROPERTIES, LTD.
NOTES TO FINANCIAL STATEMENTS
--------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
Excel Properties, Ltd. 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.
CASH DEPOSITS
At December 31, 1996, the carrying amount of the Partnership's cash
deposits total $1,396,366. The bank balances are $1,419,003 of which
$200,000 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, 1996,
1995 or 1994. In 1996, proceeds from the sale of a restaurant in Colorado
were deposited in an escrow account and are excluded from the statement of
cash flows. The Partnership had no noncash investing or financing
transactions in 1995 or 1994.
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.
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.
Continued F-7
22
EXCEL PROPERTIES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
--------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
RECLASSIFICATIONS
Certain reclassifications have been made to the financial statements for
the years ended December 31, 1995 and 1994 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.
1996 1995 1994
----------- ----------- -----------
Net income:
Financial statements $ 1,681,984 $ 1,470,634 $ 1,004,195
Tax returns 1,870,650 1,508,743 906,004
----------- ----------- -----------
Difference $ (188,666) $ (38,109) $ 98,191
=========== =========== ===========
Difference is due to:
Allowance for bad debts $ (184,422) $ (50,617) $ 98,191
Deferred gain - like kind exchange (4,244) 12,508 -
----------- ----------- -----------
$ (188,666) $ (38,109) $ 98,191
=========== =========== ===========
Partners' equity:
Financial statements $ 9,619,405 $11,367,654 $11,059,577
Tax returns 11,056,481 12,616,064 12,270,479
----------- ----------- -----------
Difference $(1,437,076) $(1,248,410) $(1,210,902)
=========== =========== ===========
Difference is due to:
Syndication costs $(1,498,718) $(1,498,718) $(1,499,319)
Allowance for bad debts (236,017) (51,595) (978)
Deferred gain - like-kind exchange 8,264 12,508 -
Deferred gain on sale of building 289,395 289,395 289,395
----------- ----------- -----------
$(1,437,076) $(1,248,410) $(1,210,902)
=========== =========== ===========
3. FEES PAID TO GENERAL PARTNER:
The Partnership has paid the General Partner or its affiliates the
following fees:
1996 1995 1994
------- ------- -------
Management fees $ 9,414 $10,186 $11,959
Administrative fees 10,800 10,800 10,800
Accounting 16,080 6,480 6,480
Continued F-8
23
EXCEL PROPERTIES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
__________
4. NOTES RECEIVABLE:
The Company had the following notes receivable at December 31, 1996 and
1995:
1996 1995
---------- ----------
Note from sale of building, receipts of $1,390 per month
at 9% interest. Secured by building sold. Due July 1997. $ 139,424 $ 143,455
Note from sale of building, interest only receipts of
$5,366 per month at 8.5% interest. Secured by building
sold. Due November 2003. 757,500 757,500
Note from sale of building, receipts of $1,004 per month
at 8% interest. Secured by building sold. Due December
2001. 111,999 114,717
---------- ----------
Total notes receivable $1,008,923 $1,015,672
========== ==========
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 either: (1) triple-net, requiring the tenant to pay all
expenses of operating the property such as insurance, property taxes,
repairs and utilities, or (2) requiring the tenant to reimburse the
Company for substantially all of the tenant's share of real estate taxes
and other common area maintenance expenses. 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,
-----------------------
1997 $ 856,133
1998 847,414
1999 822,445
2000 761,452
2001 638,708
Thereafter 1,975,704
Continued F-9
24
EXCEL PROPERTIES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
--------------------
6. REAL ESTATE:
During 1996, the Partnership sold four properties and a parcel of land.
In April 1996, the Partnership sold a Kentucky Fried Chicken building and
a Wendy's building located in Blaine Minnesota for $901,187. The
Partnership recognized a net gain of $206,761 on these sales. In October
1996, the partnership sold a building that was leased to Checker Autoworks
in Denver, Colorado for $811,494 of which the Partnership recognized a
$208,072 gain. Also in October 1996, the Partnership sold a land parcel
for $75,357 and recognized a $9,004 gain. The land parcel was located in
Las Vegas, Nevada as mentioned below in the 1995 sales transactions.
Finally, in December 1996, the Partnership sold a building leased to
Denny's Restaurant and located in Denver, Colorado for $963,968 and
recognized a $456,806 gain.
The following unaudited Pro Forma Condensed Statement of Income has been
presented as if the 1996 sales had occurred on January 1, 1996. The
unaudited Pro Forma Condensed Statement of Income should be read in
conjunction with the audited financial statements. In management's
opinion, all adjustments necessary to reflect these transactions have been
made. The unaudited Pro Forma Condensed Statement of Income is not
necessarily indicative of what actual results of operations of the
partnership would have been had this transaction actually occurred as of
January 1, 1996 nor do they purport to represent the results of operations
of the Partnership for future periods.
FOR THE YEAR ENDED DECEMBER 31, 1996
----------------------------------------------------
PRO FORMA COMPANY
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ----------- -----------
Revenue $ 1,251,000 $ (191,000) $ 1,060,000
Operating Expenses 449,000 (27,000) 422,000
Gain on Sale of Real Estate 880,000 - 880,000
----------- ---------- -----------
Net Income $ 1,682,000 $ (164,000) $ 1,518,000
=========== ========== ===========
In March 1995, the Partnership purchased a 39% undivided interest in a
parcel of ground in Las Vegas, Nevada for $1,410,233. The ground was
leased with the Partnership's share of rent equaling $169,228 per year.
The ground was subdivided into three building lots and the lessee
constructed a building on one of the three lots. The building was sold in
November 1995 and one of the land parcels in 1995. The sales price was
$1,566,234 and the Partnership recognized a $351,152 gain on the sale. In
February 1995, the Partnership also sold a building in Phoenix, Arizona
that was on lease to Childrens World. The sales price was $1,135,000 less
$28,729 in selling expenses. The Partnership recognized a gain of $99,141.
F-10
25
EXCEL PROPERTIES, LTD.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Additions Deductions
------------ -----------------------------
Balance at Balance at
Beginning Charged to End
Description of Year Expense Description Amount of Year
- ---------------------------- ---------- ------------ ---------------- -------- -----------
Year ended December 31, 1996:
Allowance for bad debts $ 51,595 $ 183,608 Reconciling Item $ (814) $ 236,017
---------- ------------ -------- -----------
Year ended December 31, 1995:
Allowance for bad debts $ 978 $ 50,617 $ - $ 51,595
---------- ------------ -------- -----------
Year ended December 31, 1994:
Allowance for bad debts $ 99,170 $ (16,640) Write-off account $ 81,552 $ 978
---------- ------------ -------- -----------
F-11
26
EXCEL PROPERTIES, LTD.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
Cost
Capitalized
Subsequent
to
Initial Cost Acquisition
--------------------------- -----------
Buildings
and
Description Encumbrance Land Improvements Improvements
- -------------------- ----------- ----------- ------------ ------------
Kinder Care:
Columbus, Ohio $ - $ 57,101 $ 133,236 $ -
Gahanna, Ohio - 65,047 151,776 -
West Carrollton, Ohio - 57,101 133,236 -
Grove City, Ohio - 66,702 155,638 -
Dayton, Ohio - 57,101 133,236 -
Indianapolis, Indiana - 60,324 140,756
Indianapolis, Indiana - 60,324 140,755 -
Paragon Restaurant:
Middleburg Heights, Ohio - 313,867 732,355 -
Lafayette, Indiana - 324,028 756,068 -
Autoworks:
Omaha, Nebraska - 275,432 413,148 -
Ponderosa:
Ann Arbor, Michigan - 379,809 379,809 -
Alton, Illinois - 369,740 554,639 (153,386)
Volume Shoe-Plant City, FL - 398,104 250,018 -
Benjamins-Burnsville, MN - 216,612 505,428 -
Toddle House-Kenner, LA - 87,495 131,243 -
Land-Las Vegas, NV - 128,800 - -
---------- ----------- ----------- ------------
$ - $ 2,917,587 $ 4,711,341 $ (153,386)
========== =========== =========== ============
(a) Also represents cost for federal income tax purposes.
(b) Reconciliation of total real estate carrying value for the three years
ended December 31, 1996 is as follows:
Gross Amount at Which Life on Which
Carried at Close of Period Depreciation
----------------------------------------- Accumu- in Latest
Buildings lated Income
and Total Depreci- Date Statements
Land Improvements (a)(b) ation(c) Acquired is Computed
------------ ----------- ----------- ----------- -------- -----------
Kinder Care:
Columbus, Ohio $ 57,101 $ 133,236 $ 190,337 $ 40,711 1987 31.5 years
Gahanna, Ohio 65,047 151,776 216,823 46,376 1987 31.5 years
West Carrollton, Ohio 57,101 133,236 190,337 40,711 1987 31.5 years
Grove City, Ohio 66,702 155,638 222,340 47,556 1987 31.5 years
Dayton, Ohio 57,101 133,236 190,337 40,711 1987 31.5 years
Indianapolis, Indiana 60,324 140,756 201,080 34,071 1989 31.5 years
Indianapolis, Indiana 60,324 140,755 201,079 34,071 1987 31.5 years
Paragon Restaurant:
Middleburg Heights, Ohio 313,867 732,355 1,046,222 219,900 1987 31.5 years
Lafayette, Indiana 324,028 756,068 1,080,096 223,019 1987 31.5 years
Autoworks:
Omaha, Nebraska 275,432 413,148 688,580 110,938 1988 31.5 years
Ponderosa:
Ann Arbor, Michigan 379,809 379,809 759,618 95,957 1989 31.5 years
Alton, Illinois 369,740 401,253 770,993 140,127 1989 31.5 years
Volume Shoe-Plant City, FL 398,104 250,018 648,122 55,891 1989 31.5 years
Benjamins-Burnsville, MN 216,612 505,428 722,040 110,312 1990 31.5 years
Toddle House-Kenner, LA 87,495 131,243 218,738 21,353 1991 31.5 years
Land-Las Vegas, NV 128,800 - 128,800 - 1995
----------- ----------- ----------- -----------
$ 2,917,587 $ 4,557,955 $ 7,475,542 $ 1,261,704
=========== =========== =========== ===========
(a) Also represents cost for federal income tax purposes.
(b) Reconciliation of total real estate carrying value for the three years
ended December 31, 1996 is as follows:
1996 1995 1994
------------- -------------- ---------------
Balance at beginning of year $ 9,838,437 $ 10,815,480 $ 10,815,480
Acquistions - 1,410,234 -
Cost of property sold (2,362,895) (2,387,277) -
------------- -------------- ---------------
Balance at end of year $ 7,475,542 $ 9,838,437 $ 10,815,480
------------- -------------- ---------------
(c) Reconciliation of accumulated depreciation for the three years ended
December 31, 1996 is as follows:
1996 1995 1994
------------ -------------- ---------------
Balance at beginning of year $ 1,423,718 $ 1,364,067 $ 1,151,352
Expense 176,133 193,696 212,715
Deletions (338,147) (134,045) -
------------- -------------- ---------------
Balance at end of year $ 1,261,704 $ 1,423,718 $ 1,364,067
------------- -------------- ---------------
F-12