Item 1. Business
Nashville Land Fund, Ltd. ("Registrant"), is a Tennessee limited partnership organized on March 26, 1986, pursuant to the provisions of the Tennessee Uniform Limited Partnership Act, Chapter 2, Title 61, Tennessee Code Annotated, as amended. The General Partner of Registrant is 222 Partners, Inc.
Registrant's primary business is to own and hold for investment undeveloped real properties located in Goodlettsville, Sumner County and Nashville, Davidson County, Tennessee (the "Property"). Registrant's investment objectives are preservation of investment capital and appreciation of the value of the Property due to development of the immediately surrounding areas and the growth of the communities generally.
Financial Information About Industry Segments
The Registrant's activity, investment in land, is within one industry segment and geographical area. Therefore, financial data relating to the industry segment and geographical area is included in Item 6 - Selected Financial Data.
Narrative Description of Business
The Registrant is holding for investment approximately 58 sellable acres of land in various stages of development in Goodlettsville, Sumner County and Nashville, Davidson County, Tennessee. These properties will be referred to respectively as North Creek Business Park Property and Larchwood Property in the remainder of this report.
The North Creek Business Park Property is approximately 44 acres of land. It is subdivided into 20 tracts, which are cleared, graded and improved with roads and utilities. The North Creek Business Park Property is located in the incorporated City of Goodlettsville, approximately 12 miles north of downtown Nashville, and is zoned Commercial PUD. It is intended for office users.
An affiliate of the General Partner, North Creek Associates, Ltd., owns land in the immediate vicinity of North Creek Business Park. North Creek Associates, Ltd.'s land is intended primarily for retail and apartment use. The retail site, called North Creek Commons, does not directly compete with the Registrant due to their different uses.
The Larchwood Property is approximately 14 acres located in Nashville, Davidson County. It is subdivided into 4 tracts, which are cleared and graded. One of the four tracts is zoned for residential use, and all remaining acreage is zoned Commercial PUD.
Competition: The competition surrounding the Registrant's Property has had very little change in the recent years. The competitive sites have also seen little activity in the past year and are asking similar prices to the Registrant.
The Registrant has no employees. Partnership management services are being provided under a contractual agreement with Landmark Realty Services Corporation, an affiliate of the General Partner.
Item 2.
Item 2. Properties
As of December 31, 1996, Registrant owned approximately 58 sellable acres of land in Goodlettsville, Sumner County, and Nashville, Davidson County, Tennessee. These properties consist of 44 acres in the North Creek Business Park and 14 acres of the Larchwood Property. For further information, see Item 1 above.
Item 3.
Item 3. Legal Proceedings
Registrant is not a party to, nor is any of Registrant's property the subject of, any material legal proceedings.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
The security holders of Registrant did not vote on any matter during the fiscal year covered by this report.
PART II
Item 5.
Item 5. Market for Registrant's Units of Limited Partnership Interest and Related Security Holder Matters
There is no established market for the Units, and it is not anticipated that any will exist in the future. The Registrant commenced an offering to the public on June 26, 1986 of 7,500 Units of limited partnership interests at $1,000 per Unit. The offering of $7,500,000 was fully subscribed and closed on July 31, 1986. As of February 28, 1997, there were 459 holders of record of the 7,500 Units of limited partnership interests.
There are no material restrictions upon Registrant's present or future ability to make distributions in accordance with the provisions of Registrant's Limited Partnership Agreement.
Item 6.
Item 6. Selected Financial Data
For the Year Ended December 31,
1996 1995 1994 1993 1992
Total Revenue $48,475 441,335 124,358 183,105 132,101 Net (loss) Earnings (935,415) 242,773 11,389 74,306 28,549 Net (loss) Earnings per limited partner unit (124.72) 32.37 1.52 9.91 3.81 Total Assets 4,220,840 5,159,939 6,430,985 6,390,008 6,469,190 Cash Distributions per limited partner unit - 200 - 20 -
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Sales
In August, 1996, the Registrant sold .64 acres of the Larchwood Property for approximately $108,000. Proceeds were retained to meet the operating expenses of the Registrant. In 1995, the Registrant sold approximately one acre for approximately $184,000. There were no sales during 1994.
Also during 1995, the Registrant received $1,490,292 as payment of interest and principal on the Note receivable. These proceeds together with the sale proceeds were used to make a $1.5 million distribution to the partners.
Analysis of Operations
Several of the accounts of the Registrant fluctuated due to the receipt of the Stewart's Ferry Note receivable in September 1995. The majority of the Registrant's interest income was from this note receivable. The minimal interest income in 1996 is due to the lack of income from this note due to its retirement in 1995. The fluctuation in interest from 1995 to 1994 is due to a nine month period of interest accrual versus a twelve month period in 1994.
The income from profit participation relates to the note receivable from Stewart's Ferry Joint Venture that was received as part of the sale proceeds from the 1987 land sale to Stewart's Ferry. The Partnership received an equity participation agreement during negotiations with the borrower. The agreement generally provided for the proceeds from the sale of the secured land to be allocated as follows: 1) a full repayment of principal and all accrued interest, 2) the borrower receiving $871,986, and 3) any remaining proceeds from the sale of the land securing the note were to be divided equally between the borrower and the Partnership. In September 1995, the land was sold. The note receivable was collected in full and a profit participation of $245,659 was recognized by the Partnership. This income was a singular event and will not recur.
The 1995 commission expense relates to the 1987 land sale to Stewart's Ferry Joint Venture which incurred a commission of $208,152. $124,152 was paid in 1987. The remaining $84,000 plus interest was to be paid upon collection of the note receivable. In error, the unpaid part of the commission was not accrued in 1987. This error was not noticed until payment of the commission in 1995. Management decided not to treat the late commission as a prior period adjustment because it was less than 4% of the original sale proceeds and less than 2% of Partners' equity. The commission expense was recognized in 1995 when paid. Generally, all commissions on land sales are paid at the date of the sale and are reflected as selling expenses.
Asset writedown expense in 1996 relates to the Registrant's reevaluation of the carrying value of land and improvements held for investment under Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." This Statement, which was initially adopted January 1, 1996, requires that long-lived assets and certain identifiable intangibles be reviewed for impairment on a property by property basis whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. The fair value of the assets can be determined externally using appraisals or internally using discounted future net cash flows. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets.
In the fourth quarter of 1996, as a result of this review, the Partnership revised its assumptions used in developing its estimated fair value and determined that certain properties were impaired.
As required by SFAS No. 121, the carrying value of the Larchwood Property was written down $877,154 to a value of $1,198,440. This value is based on management's best estimate of future cash flows based on the Partnership's experience in disposing of these properties. The resulting non-cash charge is reflected in the accompanying 1996 statement of operations.
Management believes that the estimates used in evaluating the adoption of SFAS No.121 were reasonable. However, actual results could differ from these estimates.
This evaluation will be repeated annually, or more often if the general partner feels that is necessary and the reserve for the decline in value of land and improvements will be adjusted.
Architect and Engineering fees in general are incurred as the Partnership prepares for land sales. Some sales require more engineering than other sales. The 1994 fees can be attributed to the sale that closed in January 1995. The 1995 and 1996 fees generally relate to the 1996 sale. The fees are expended as incurred because there can be no assurances that the related sales will close as expected.
Financial Condition and Liquidity
At February 28, 1997, $108,949 was held in cash and cash equivalents to cover partnership administrative expenses. The General Partner believes that the 1997 cash expenses will remain comparable to those incurred in the recent past. Therefore, the present cash balances should provide sufficient liquidity for 1997. Sales of the land held for investment are the Registrant's primary sources of additional capital resources and liquidity.
Item 8.
Item 8. Financial Statements and Supplementary Data
The Financial Statements required by Item 8 are filed at the end of this Report.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
Registrant does not have any directors or officers. 222 Partners, Inc. is the General Partner of the Registrant and as such has general responsibility and ultimate authority in matters affecting Registrant's business.
222 Partners Inc.
222 Partners, Inc. was formed in September, 1986 and serves as co-general partner for several other real estate investment limited partnerships. The executive officers and directors of 222 Partners, Inc. are W. Gerald Ezell, Steven D. Ezell, and Michael A. Hartley.
Officers and Directors of 222 Partners, Inc. are as follows:
W. Gerald Ezell, age 66, serves on the Board of Directors of 222 Partners, Inc. Until November, 1985, Mr. Ezell had been for over 20 years an agency manager for Fidelity Mutual Life Insurance Company and a registered securities principal of Capital Analysts Incorporated, a wholly owned subsidiary of Fidelity Mutual Life Insurance Company.
Steven D. Ezell, age 44, is the President and sole shareholder of 222 Partners, Inc. He has been an officer of 222 Partners, Inc. from September 17, 1986 through the current period. Mr. Ezell is President and 50% owner of Landmark Realty Services Corporation. For the prior four years, Mr. Ezell was involved in property acquisitions for Dean Witter Realty Inc. in New York City, most recently as Senior Vice President. Steven D. Ezell is the son of W. Gerald Ezell.
Michael A. Hartley, age 37, is Secretary/Treasurer and a Vice President of 222 Partners, Inc. He has been an officer of 222 Partners, Inc. from September 17, 1986 through the current period. He is Vice President and 50% owner of Landmark Realty Services Corporation. Prior to joining Landmark in 1986, Mr. Hartley was Vice President of Dean Witter Realty Inc., a New York-based real estate investment firm.
Item 11.
Item 11. Executive Compensation
During 1996, Registrant was not required to and did not pay remuneration to any executives, partners of the General Partner or any affiliates, except as set forth in Item 13 of this report, "Certain Relationships and Related Transactions."
The General Partner does participate in the profits, losses and distributions of the Registrant as set forth in the Partnership Agreement.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of February 28, 1997 no person or "group" (as that term is used in Section 13(d) (3) of the Securities Exchange Act of 1934) was known by the Registrant to beneficially own more than five percent of the Units of Registrant.
As of the above date, the Registrant knew of no officers or directors of 222 Partners, Inc. that beneficially owned any of the units of the Registrant.
There are no arrangements known by the Registrant, the operation of which may, at a subsequent date, result in a change in control of the Registrant.
Item 13.
Item 13. Certain Relationships and Related Transactions
No affiliated entities have, for the year ending December 31, 1996, earned or received compensation or payments for services from the Registrant in excess of $60,000. For a listing of miscellaneous transactions with affiliates which were less than $60,000 refer to Note 3 of the Financial Statements included herein.
PART IV
Item 14.
Item 14. Exhibits Financial Statement Schedules and Reports on Form 8-K (a) (1) Financial Statements
Independent Auditors' Report Financial Statements Balance Sheets Statements of Operations Statements of Partners' Equity Statements of Cash Flows Notes to Financial Statements
(2) Financial Statement Schedules
Independent Auditors' Report S-1
Schedule III - Real Estate and Accumulated Depreciation S-2
(3) Exhibits
3 Amended and Restated Certificate and Agreement of limited Partnership, incorporated by reference to Exhibit A to the Prospectus of Registrant dated June 26, 1986 filed pursuant to Rule 424 (b) of the Securities and Exchange Commission.
22 Subsidiaries - Registrant has no subsidiaries.
27 Financial Data Schedule
(b) No reports on Form 8-K have been filed during the last quarter of 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NASHVILLE LAND FUND, LTD.
By: 222 Partners, Inc. General Partner
DATE: March 27, 1997 By:/s/ Steven D. Ezell President and Director
DATE: March 27, 1997 By:/s/ Michael A. Hartley Secretary Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
NASHVILLE LAND FUND, LTD.
By: 222 Partners, Inc. General Partner
DATE: March 27, 1997 By:/s/ Steven D. Ezell President and Director
DATE: March 27, 1997 By:/s/ Michael A. Hartley Secretary/Treasurer
Supplement Information to be Furnished with Reports filed Pursuant to Section 15(d) of the Act by Registrant Which Have Not Registered Securities Pursuant to Section 12 of the Act:
No annual report or proxy material has been sent to security holders.
Independent Auditors' Report
The Partners Nashville Land Fund, Ltd.:
We have audited the accompanying balance sheets of Nashville Land Fund, Ltd. (a limited partnership) as of December 31, 1996 and 1995, and the related statements of operations, partners' equity, and cash flows for each of the years in the three-year 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nashville Land Fund, Ltd. at December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1996, in conformity with generally accepted accounting principles.
As discussed in Note 1, the Partnership adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to be Disposed of" on January 1, 1996.
KPMG Peat Marwick LLP
Nashville, Tennessee January 20, 1997
NASHVILLE LAND FUND, LTD. (A Limited Partnership)
Balance Sheets
December 31, 1996 and 1995
Assets 1996 1995
Cash and cash equivalents $ 153,733 163,842 Land and improvements held for investment, less valuation allowance of $877,154 in 1996 (note 2) 4,066,832 4,995,822 Other assets 275 275 __________ _________ Total assets $ 4,220,840 5,159,939
Liabilities and Partners' Equity
Liabilities: Accounts payable $ 74 984 Accrued property taxes 32,462 35,236 ______ ______ Total liabilities 32,536 36,220
Partners' equity:
Limited partners, 7,500 units outstanding 4,188,218 5,123,614 Special limited partner 4 5 General partner 82 87
Total partners' equity 4,188,304 5,123,719
Commitments (note 3)
Total liabilities and partners' equity $ 4,220,840 5,159,939
See accompanying notes to financial statements.
NASHVILLE LAND FUND, LTD. (A Limited Partnership)
Statements of Operations
For the Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994 Revenue: Sale of land and improvements $ 107,812 184,109 - Cost of land and improvements sold (48,686) (85,036) - Selling expenses (note 3) (17,284) (16,414) -
Gain on sale of land 41,842 82,659 -
Interest 6,133 112,587 123,158 Income from profit participation on note receivable - 245,659 - Miscellaneous 500 430 1,200
Total revenues 48,475 441,335 124,358
Expenses:
Writedown of land held for investment (note 2) 877,154 - - Commissions - 100,000 - State income tax 8,829 - - Partnership and property management fees 14,000 14,000 14,000 Association fees 24,691 27,567 26,370 Legal and accounting fees (note 3)17,499 16,006 14,959 Architect and engineering fees 7,307 4,443 15,627 General and administration 2,293 2,562 2,998 Property taxes 32,117 33,984 39,015
Total expenses 983,890 198,562 112,969
Net (loss) earnings $ (935,415) $ 242,773 11,389
Net (loss) earnings allocated to:
General partner (18) - - Special limited partner (1) - - Limited partners $ (935,396) 242,773 11,389
Net (loss) earnings per limited partnership unit: $ (124.72) 32.37 1.52
Weighted average units outstanding 7,500 7,500 7,500
See accompanying notes to financial statements.
NASHVILLE LAND FUND, LTD. (A Limited Partnership)
Statements of Partners' Equity
Years ended December 31, 1996 1995 and 1994
Special Limited limited General partners partner partner Total units amount Balance at December 31, 1993 7,500 $ 6,369,452 - 105 6,369,557
Net earnings - 11,389 - - 11,389
Partners transfer - - 5 (5) - ______ _________ ______ ______ _____ Balance at December 31, 1994 7,500 6,380,841 5 100 6,380,946
Distributions (note 5)- (1,500,000) - - (1,500,000)
Net earnings - 242,773 - - 242,773 ______ _________ ______ _____ ______ Balance at December 31, 1995 7,500 5,123,614 5 100 5,123,719
Net loss - (935,396) (1) (18) (935,415) ______ _________ ______ _____ ______ Balance at December 31, 1996 7,500 $ 4,188,218 4 82 4,188,304
See accompanying notes to financial statements.
NASHVILLE LAND FUND, LTD. (A Limited Partnership)
Statements of Cash Flows Years ended December 31, 1996, 1995, and 1994
1996 1995 1994 Cash flows from operating activities: Net (loss) earnings $ (935,415) 242,773 11,389 Adjustments to reconcile net (loss) earnings to net cash (used in) provided by operating activities: Cost of land and improvements sold 48,686 85,036 - Cost of land improvements - - (11,500) Writedown of land and improvements held for investment 877,154 - - Decrease (increase) in accrued interest receivable - 267,193 (117,791) (Decrease) increase in accrued property taxes (2,774) (1,015) 23,848 (Decrease) increase in accounts payable (910) (12,804) 5,740 Return of development fees 3,150 - - Net cash (used) provided by operating activities (10,109) 581,183 (88,314)
Cash flows from investing activities - payment received on note receivable - 978,014 - Cash flows from financing activities - cash distributions - (1,500,000) -
Net (decrease) increase in cash and cash equivalents (10,109) 59,197 (88,314) Cash and cash equivalents at beginning of year 163,842 104,645 192,959 Cash and cash equivalents at end of year 153,733 163,842 104,645
Supplemental disclosures of cash flow information: Cash paid for state income taxes $ 8,829 - -
See accompanying notes to financial statements.
NASHVILLE LAND FUND, LTD. (A Limited Partnership)
Notes to Financial Statements
December 31, 1996 and 1995
(1) Summary of Significant Accounting Policies
(a) Organization
Nashville Land Fund, Ltd. (the Partnership) is a Tennessee Limited Partnership organized in March, 1986 to acquire, own, and hold for investment certain parcels of undeveloped real property located in Metropolitan Nashville, Davidson County, and Sumner County, Tennessee. 222 Partners, Inc. is the general partner of the Partnership. The Partnership prepares financial statements and income tax returns on the accrual basis of accounting.
(b) Estimates
Management of the partnership has made certain estimates and assumptions to prepare these financial statements in accordance with generally accepted accounting principles. These estimates include the determination of the estimated fair value of the land held for investment in accordance with the provisions of SFAS No. 121. Actual results could differ from those estimates.
(c) Cash and Cash Equivalents
The Partnership considers all short-term investments with original maturities of three months or less at the date of purchase to be cash equivalents.
Cash belonging to the Partnership is combined in an account with funds from other partnerships related to the general partner.
(d) Land and Improvements Held for Investment
Land and improvements held for investment are recorded at cost and include two tracts of undeveloped land representing approximately 103 and 104 acres in 1996 and 1995, respectively. Approximately 58 acres of the land are available for sale with the remainder being flood plain, roads, and landscaping. Land costs include amounts incurred to acquire and develop the land, including interest and property taxes, during the development period.
NASHVILLE LAND FUND, LTD. (A Limited Partnership)
Notes to Financial Statements
December 31, 1996 and 1995
(1) Summary of Significant Accounting Policies (continued)
Costs to hold land, including interest and property taxes, are charged to expense once development is substantially complete. Land improvement costs incurred include development costs expended subsequent to the acquisition of a tract.
The Partnership adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets to Be Disposed Of" on January 1, 1996. This Statement requires that long- lived assets to be disposed of be reported at the lower of the carrying amount or fair value less estimated costs to sell. The fair value of the assets can be determined externally, using appraisals, or internally using discounted future net cash flows. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value less estimated costs to sell of the assets. If impaired, management establishes an allowance for impairment with a corresponding charge to earnings. Losses upon the sale of the assets are recognized against the allowance to the extent available. The initial adoption of SFAS No. 121 did not have a material impact on the Partnership's financial position, results of operations, or liquidity. During 1996, as a result of revisions in management's assumptions used in determining the properties' estimated fair values, a valuation allowance of $877,154 was charged to operations and recorded as a reduction in the carrying value of the land and improvements held for investment. See note 2.
(e) Income Recognition
Income from sales of land and improvements held for investment is generally recorded on the accrual basis when the buyer's financial commitment is sufficient to provide economic substance to the transaction, and when other criteria of SFAS No. 66 " Accounting for Sales of Real Estate" are satisfied. For sales of real estate where both cost recovery is reasonably certain and the collectibility of the contract price is reasonably assured, but the
NASHVILLE LAND FUND, LTD. (A Limited Partnership)
Notes to Financial Statements
December 31, 1996 and 1995
(1) Summary of Significant Accounting Policies (continued)
transaction does not meet the remaining requirements to be recorded on the accrual basis, profit is deferred and recognized under the installment method, which recognizes profit as collections of principal are received. If developments subsequent to the adoption of the installment method occur which cause the transaction to meet the requirements of the full accrual method, the remaining deferred profit is recognized at that time. Any losses on sales of real estate are recognized at the time of the sale.
Interest on notes receivable is recognized in income as it accrues during the period it is outstanding. However, if an uncertainty exists about the collectibility of a note, the Partnership may establish a reserve for uncollected interest earned and recognize income only when cash is received. The Partnership may also establish a reserve for doubtful accounts on notes receivable based on management's evaluation of the recoverability of the note.
(f) Income Taxes
No provision has been made in the financial statements for Federal income taxes, since such taxes are the responsibilities of the partners. The partnership is subject to a 6% state tax on certain interest income. Additionally, the partners receive, from the partnership, IRS Form K-1's which provides them with their share of taxable income (or losses), deductions, and other tax information. The only difference between the tax basis and reported amounts of the Partnership's assets and liabilities relates to the valuation of land held for investment.
NASHVILLE LAND FUND, LTD. (A Limited Partnership)
Notes to Financial Statements
December 31, 1996 and 1995
(1) Summary of Significant Accounting Policies (continued)
(g) Partnership Allocations
Net profits, losses and distributions of cash flow of the Partnership are allocated to the partners in accordance with the Partnership agreement as follows:
Partnership net profits are allocated first to any partner with a negative balance in their capital account, determined at the end of the taxable year as if the Partnership had distributed cash flow, in proportion to the negative capital balance account of all partners until no partner's capital account is negative. Net profit allocations are then made to the limited partners up to the difference between their capital account balances and the sum of their adjusted capital contributions (capital balance, net of cumulative cash distributions in excess of preferred returns - 10% annual cumulative return on capital contributed) and unpaid preferred returns. Any remaining net profit are allocated to the limited partners until the taxable year in which cumulative distributions to the limited partners equal their adjusted capital contribution plus an unpaid preferred return. Net profits are then allocated to the general partner until the ratio of the general partner's capital account balance to the capital account balances in excess of adjusted capital contributions and unpaid preferred return of all limited partners is 28 to 72. Thereafter, profits are generally allocated 28% to the general partner and 72% to the limited partners. Net losses are allocated to the partners in proportion to their positive capital accounts.
NASHVILLE LAND FUND, LTD. (A Limited Partnership)
Notes to Financial Statements
December 31, 1996 and 1995
(1) Summary of Significant Accounting Policies (continued)
Partnership distributions are allocated to the limited partners in an amount equal to their preferred return (10% annual cumulative return on capital contributed) to the extent unpaid to date. Any remaining distributions are allocated 99% to the limited partners and 1% to the general partner until the limited partners have received an amount equal to their adjusted capital contributions, and thereafter, 72% to the limited partners and 28% to the general partner.
(h) Reclassifications
Certain prior year amounts have been reclassified to conform with the current year presentation.
(2) Land and Improvements Held for Investment
The components of land and improvements held for investment at December 31, are as follows: 1996 1995
Land $2,771,203 2,800,349 Improvements 2,172,783 2,195,473 Valuation Allowance (877,154) -
$4,066,832 4,995,822
The aggregate cost for federal income tax purposes was $5,067,590 and $5,120,859 at December 31, 1996 and 1995, respectively.
At January 1, 1996, based upon an internal discounted cash flow analysis, the carrying values of the land and improvements was not less than its estimated fair value. During the year ended December 31, 1996, management revised its estimated sellout period and discount rate resulting in a decline in the estimated fair value below the carrying value.
NASHVILLE LAND FUND, LTD. (A Limited Partnership)
Notes to Financial Statements
December 31, 1996 and 1995
(2) Land and Improvements Held for Investment (continued)
Accordingly, the carrying amounts of the assets were written down, through the establishment of a valuation allowance, to their estimated fair values less costs to sell, as estimated based on the Partnership's experience in disposing of these properties. The resulting non-cash charge, as identified on the accompanying financial statements, reduced the 1996 net income by $877,154.
Management believes that the estimates used in evaluating the adoption of SFAS No.121 were reasonable. However, actual expenses and cash flows could differ from these estimates.
(3) Related Party Transactions
The general partner and its affiliates have been actively involved in managing the Partnership. Affiliates of the general partner receive fees for performing certain services. Expenses incurred for these services for the years ended December 31, 1996, 1995, and 1994 are as follows:
1996 1995 1994 Partnership and property management fees $14,000 14,000 14,000 Accounting fees 2,300 2,000 2,000 Real estate sales commissions - 5,523 -
(4) Association Fees
During 1989, an owners' association was formed to manage a portion of the land and improvements held for investment. The Partnership incurred association fees totaling $24,691 in 1996, $27,567 in 1995, and $26,370 in 1994, which relate to the Partnership's pro rata share of the owners' association expenses, consisting primarily of electricity costs, irrigation, and landscape maintenance.
(5) Distributions
For the years ended December 31, 1995, the Partnership made distributions to the limited partners of $1,500,000 ($200 per unit). There were no distributions made in 1996 and 1994.
NASHVILLE LAND FUND, LTD. (A Limited Partnership)
Notes to Financial Statements
(6) Fair Value of Financial Instruments
At December 31, 1996 and 1995, the Partnership had financial instruments including cash and cash equivalents, accounts payable, and accrued property taxes. The carrying amounts of cash and cash equivalents, accounts payable and accrued property taxes approximate their fair value because of the short maturity of those financial instruments.
Independent Auditors' Report
The Partners Nashville Land Fund, Ltd.:
Under date of January 20, 1997, we reported on the balance sheets of Nashville Land Fund, Ltd. as of December 31, 1996 and 1995, and the related statements of operations, partners' equity, and cash flows for each of the years in the three-year period ended December 31, 1996. These financial statements and our report thereon are included elsewhere herein. In connection with our audits of the aforementioned financial statements, we have also audited the related financial statement schedule as listed in the accompanying index. This financial statement schedule is the responsibility of the Partnership's management. Our responsibility is to express an opinion on this financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP
Nashville, Tennessee January 20, 1997 S-1
S-2 Schedule III
NASHVILLE LAND FUND, LTD. (A Limited Partnership)
Real Estate and Accumulated Depreciation
December 31, 1996
1996 1995 1994
(1) Balance at beginning$4,995,822 5,080,858 5,069,358 of Period Additions during period: Improvements - - 11,500 ________ ________ _________ - - 11,500 Deductions during period: Cost of real estate sold 48,686 85,036 - Asset Writedown 877,154 - - Other- reimbursement of development fees from municipality 3,150 - - ________ ________ ________ 928,990 85,036 - Balance at end of period $4,066,832 4,995,822 5,080,858
(2) Aggregate cost for Federal income tax purposes $5,067,590 $5,120,859 5,208,244
See accompanying independent auditors' report.
S-3
Exhibits Filed Pursuant to Item 14 (a) (3):
NASHVILLE LAND FUND, LTD. (A Tennessee Limited Partnership)
Exhibit Index
Exhibit 3 Amended and Restated Certificate and Agreement of limited Partnership, incorporated by reference to Exhibit A to the Prospectus of Registrant dated June 26, 1986 filed pursuant to Rule 424 (b) of the Securities and Exchange Commission.
22 Subsidiaries - Registrant has no subsidiaries.
27 Financial Data Schedule