Item 1. Business
General
Prudential Acquisition Fund I, L.P. (the 'Registrant'), a Delaware limited partnership, was formed on February 16, 1983 and will terminate in accordance with a vote of the limited partners as described below. The Registrant was formed to acquire and manage income-producing commercial real estate with proceeds raised from the initial sale of 70,124 limited partnership units ('Units'). The Registrant's fiscal year for book and tax purposes ends on December 31.
The Registrant had invested in and operated a real estate investment portfolio which consisted of five properties: two office buildings, a warehouse and two shopping centers. The shopping centers were acquired through a joint venture agreement with Prudential Realty Acquisition Fund II, L.P., an affiliated limited partnership ('Joint Venture'). All of the Registrant's properties have been sold as of December 31, 1996, as described below.
In January 1996, the General Partners mailed to all limited partners a Consent Solicitation Statement (the 'Statement') asking for their written consent to approve (i) a plan of sale of the remaining assets of the Registrant and (ii) the complete liquidation and dissolution of the Partnership, as more fully described in the Statement. On March 11, 1996, the limited partners holding a majority of the Units approved the plan of sale and complete liquidation and dissolution of the Registrant. Pursuant to the approval of the plan of liquidation, the general partners sold all the properties of the Partnership in the year ended December 31, 1996, as discussed below.
The two shopping centers owned by the Joint Venture were sold on March 26, 1996 for a gross sales price of $15,500,000 less costs to sell and pro-rations. On December 18, 1996, an agreement was signed by and between the Registrant and Prudential Realty Acquisition Fund II, L.P., an affiliated limited partnership, outlining the terms of the dissolution of the Joint Venture. As of December 31, 1996, all remaining assets of the Joint Venture were distributed in liquidation in accordance with this agreement.
The Norwalk Industrial warehouse facility was sold on August 6, 1996 for a gross sales price of $6,600,000 less costs to sell and pro-rations, the One Executive Center office building was sold on October 17, 1996 for a gross sales price of $7,300,000 less costs to sell and pro-rations and the Norwest Center office building was sold on October 18, 1996 for a gross sales price of $6,900,000 less costs to sell and pro-rations. See Notes C and E to the financial statements of the Registrant's Annual Report to Limited Partners for the year ended December 31, 1996 ('Registrant's Annual Report') for further information.
General partners
The general partners of the Registrant are Prudential-Bache Properties, Inc. ('PBP') and Prudential Realty Partnerships, Inc. ('PRP') (collectively, the 'General Partners').
Employees
The Registrant has no employees. Management and administrative services for the Registrant are performed by the General Partners and their affiliates pursuant to the Partnership Agreement. See Note F to the financial statements in the Registrant's Annual Report for further information.
Item 2.
Item 2. Properties
All of the Registrant's properties were sold as of December 31, 1996. See Notes C and E to the financial statements of the Registrant's Annual Report for further information.
Item 3.
Item 3. Legal Proceedings
This information is incorporated by reference to Note G of the financial statements in the Registrant's Annual Report which is filed as an exhibit hereto.
Item 4.
Item 4. Submission of Matters to a Vote of Limited Partners
None.
PART II
Item 5.
Item 5. Market for the Registrant's Units and Related Limited Partner Matters
As of March 3, 1997, there were 7,676 holders of record owning 70,124 Units. A significant secondary market for the Units has not developed, and it is not expected that one will develop in the future. There are also certain restrictions set forth in the Partnership Agreement limiting the ability of a Limited Partner to transfer Units. Consequently, holders of Units may not be able to liquidate their investments in the event of an emergency or for any other reason.
The following per Unit cash distributions were paid to Limited Partners during the quarter indicated:
As a result of the approval by the limited partners holding a majority of the Units of the plan of sale and liquidation of the Registrant, all properties of the Registrant were sold during the year ended December 31, 1996. The increase in distributions during the year ended December 31, 1996 was primarily the result of the distribution of net proceeds from the sales of the properties. See Item 1 Business for further information. The Registrant intends to make a final liquidating distribution in 1997. The distributions paid to limited partners during 1996 and 1995 primarily represent a return of capital on a generally accepted accounting principles (GAAP) basis. (The return of capital on a GAAP basis is calculated as limited partner distributions less net income allocated to limited partners.)
Item 6.
Item 6. Selected Financial Data
The following table presents selected financial data of the Registrant. This data should be read in conjunction with the financial statements of the Registrant and the notes thereto contained on pages 2 through 9 in the Registrant's Annual Report which is filed as an exhibit hereto.
- --------------- (a) Includes $1,269,000, $7,587,000 and $1,674,000 provisions for loss on impairment of assets in 1995, 1993 and 1992, respectively.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
This information is incorporated by reference to pages 10 through 11 of the Registrant's Annual Report which is filed as an exhibit hereto.
Item 8.
Item 8. Financial Statements and Supplementary Data
The financial statements are incorporated by reference to pages 2 through 9 of the Registrant's Annual Report which is filed as an exhibit hereto.
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
There are no directors or executive officers of the Registrant. The Registrant is managed by the General Partners.
The Registrant, the Registrant's General Partners and their directors and executive officers, and any persons holding more than ten percent of the Registrant's Units are required to report their initial ownership of such Units and any subsequent changes in that ownership to the Securities and Exchange Commission on Forms 3, 4 and 5. Such executive officers, directors and persons who own greater than ten percent of the Registrant's Units are required by Securities and Exchange Commission regulations to furnish the Registrant with copies of all Forms 3, 4 or 5 they file. All of these filing requirements were satisfied on a timely basis. In making these disclosures, the Registrant has relied solely on written representations of the General Partners' directors and executive officers and persons who own greater than ten percent of the Registrant's Units, if any, or copies of the reports they have filed with the Securities and Exchange Commission during and with respect to its most recent fiscal year.
Prudential-Bache Properties, Inc.
The directors and executive officers of PBP and their positions with regard to managing the Registrant are as follows:
THOMAS F. LYNCH, III, age 38, is the President, Chief Executive Officer, Chairman of the Board of Directors and a Director of PBP. He is a Senior Vice President of Prudential Securities Incorporated ('PSI'), an affiliate of PBP. Mr. Lynch also serves in various capacities for other affiliated companies. Mr. Lynch joined PSI in November 1989.
BARBARA J. BROOKS, age 48, is the Vice President-Finance and Chief Financial Officer of PBP. She is a Senior Vice President of PSI. Ms. Brooks also serves in various capacities for other affiliated companies. She has held several positions within PSI since 1983. Ms. Brooks is a certified public accountant.
EUGENE D. BURAK, age 51, is a Vice President of PBP. He is a First Vice President of PSI. Prior to joining PSI in September 1995, he was a management consultant for three years and was with Equitable Capital Management Corporation from March 1990 to May 1992. Mr. Burak is a certified public accountant.
CHESTER A. PISKOROWSKI, age 53, is a Senior Vice President of PBP. He is a Senior Vice President of PSI and is the Senior Manager of the Specialty Finance Asset Management area. Mr. Piskorowski has held several positions within PSI since April 1972. Mr. Piskorowski is a member of the New York and Federal Bars.
FRANK W. GIORDANO, age 54, is a Director of PBP. He is a Senior Vice President of PSI and an Executive Vice President and General Counsel of Prudential Mutual Fund Management LLC, an affiliate of PSI. Mr. Giordano also serves in various capacities for other affiliated companies. He has been with PSI since July 1967.
NATHALIE P. MAIO, age 46, is a Director of PBP. She is a Senior Vice President and Deputy General Counsel of PSI and supervises non-litigation legal work for PSI. She joined PSI's Law Department in 1983; presently, she also serves in various capacities for other affiliated companies.
There are no family relationships among any of the foregoing directors or executive officers. All of the foregoing directors and executive officers have indefinite terms.
Prudential Realty Partnerships, Inc.
The directors and executive officers of Prudential Realty Partnerships, Inc. and their positions are as follows:
JOEL W. STOESSER, age 56, is a Managing Director of Prudential Real Estate Investors. He is head of Investment Advisory services, which includes responsibility for portfolio management and asset management of separate accounts and certain co-investment programs and commingled funds. Prior to his current assignment, Mr. Stoesser served as a Senior Vice President of the Prudential Realty Group. Prior to joining Prudential in 1988, he also served as a Senior Vice President in Real Estate Investment Management at CIGNA Corporation and held assignments with Connecticut General Life Insurance Company as head of real estate operations and as Director of strategic planning for all investment operations.
DAVID BRADFORD, age 43, is a Managing Director of Prudential Real Estate Investors. He is the portfolio manager of PRISA, a large commingled fund. Prior to joining Prudential in 1995, Mr. Bradford was a Senior Vice President in Portfolio Management at Equitable Real Estate. His 13-year tenure at Equitable included positions in pension investment marketing across all asset classes, real estate product management and portfolio operations and investment. Most recently (1991-1995), Mr. Bradford was Assistant Portfolio Manager for Equitable's Prime Property Fund.
KEVIN R. SMITH, age 39, is a Vice President of Prudential Real Estate Investors. He is a portfolio manager for three separate accounts and two commingled funds. Mr. Smith has been employed by Prudential since 1981 and has experience in asset management, development, property acquisitions and sales, and mortgage loans as a result of field office assignments in Cleveland, Houston, and Northern New Jersey.
JOSE GENER, age 46, is a Vice President, Operations and Systems, with Prudential Asset Management Group. In his present assignment, he is responsible for reporting for the institutional real estate management
arm of PAMG. Mr. Gener has been with Prudential since 1977, serving in a series of comptrollership assignments. Since 1986 he has worked primarily with the investment management units of Prudential.
C. EDWARD CHAPLIN, age 40, is Vice President and Treasurer of Prudential Insurance Company of America. He is responsible for all borrowings, cash management and securities custody activities of Prudential. Mr. Chaplin joined Prudential in the Realty Group in August 1983. In May 1992, he transferred to the Treasurer's Department as Vice President and Assistant Treasurer, with responsibility for Banking and Cash Management. In October 1993, he was promoted to Managing Director and Assistant Treasurer, with responsibility for managing Prudential's debt issuance, its relationships with the major credit rating agencies and financial counterparty credit analysis. In November 1995, Mr. Chaplin was appointed to Vice President and Treasurer.
ROGER S. PRATT, age 44, is Managing Director of Prudential Real Estate Investors. He is the portfolio manager of PRISA II, a large commingled fund. Mr. Pratt joined the Prudential Realty Group in June 1982 as an asset manager in the Atlanta regional office and subsequently has served in a variety of positions for Prudential. Prior to assuming his current position in February 1992, Mr. Pratt was Vice President in charge of the New Jersey regional office.
JOSEPH D. MARGOLIS, age 36, is Assistant General Counsel responsible for the provision and coordination of legal services to Prudential Real Estate Investors as well as other Prudential Asset Management Group entities. His assignments with Prudential have included counsel to Prudential Mortgage Capital Company, Inc. and Associate Regional Counsel in the Boston Realty Group office. Prior to joining Prudential, Mr. Margolis was employed by Nutter, McClennen & Fish in Boston, Massachusetts.
There are no family relationships among any of the foregoing directors or executive officers. All of the foregoing executive officers and directors have indefinite terms.
Item 11.
Item 11. Executive Compensation
The Registrant does not pay or accrue any fees, salaries or any other form of compensation to directors and officers of the General Partners for their services. Certain executive officers and directors of the General Partners receive compensation from affiliates of the General Partners, not from the Registrant, for services performed for various affiliated entities, which may include services performed for the Registrant; however, the General Partners believe that any compensation attributable to services performed for the Registrant is immaterial. See Item 13 Certain Relationships and Related Transactions for information regarding compensation to the General Partners.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 3, 1997, no director or executive officer of either of the General Partners owns directly or beneficially any interest in the voting securities of the General Partners.
As of March 3, 1997, no director or executive officer of either of the General Partners owns directly or beneficially any of the Units issued by the Registrant.
As of March 3, 1997, no limited partner beneficially owns more than five percent (5%) of the outstanding Units issued by the Registrant.
Item 13.
Item 13. Certain Relationships and Related Transactions
The Registrant has and will continue to have certain relationships with the General Partners and their affiliates. However, there have been no direct financial transactions between the Registrant and the directors or executive officers of the General Partners.
Reference is made to Notes A and F to the financial statements of the Registrant's Annual Report which is filed as an exhibit hereto, which identify the related parties and discuss the services provided by these parties and the amounts paid or payable for their services.
PART IV
- --------------- Incorporated by reference to Prospectus (1) dated July 1, 1983 as filed with the Commission pursuant to Rule 424(b) under the Securities Act of 1933 Incorporated by reference to Exhibits 3 (2) and 4 of Registrant's Annual Report on Form 10-K for the year ended December 31, (3) Incorporated by reference to Exhibit 10(c) of Registrant's Current Report on Form 8-K dated May 23, 1985 (4) Incorporated by reference to Exhibit 10(d) of Amendment on Form 8 to Registrant's Current Report on Form 8-K dated May 23, (5) Incorporated by reference to Exhibit 10(a) of Registrant's Current Report on Form 8-K dated January 14, 1986 (6) Incorporated by reference to Exhibit 10(a) of Registrant's Current Report on Form 8-K dated May 15, 1986 Incorporated by reference to Exhibits (7) 10(g) and 10(h) of Registrant's Current Report on Form 8-K dated March 26, 1996 Incorporated by reference to Exhibits (8) 10(i) and 10(j) of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996 Incorporated by reference to Exhibits (9) 10(k), 10(l), 10(m) and 10(n) of Registrant's Current Report on Form 8-K dated October 17, 1996 Incorporated by reference to Proxy (10) Statement on Schedule 14A as filed with the Commission on January 26, 1996
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INDEPENDENT AUDITORS' REPORT
To the Partners of Prudential Acquisition Fund I, L.P. New York, New York
We have audited the statement of net assets in process of liquidation of Prudential Acquisition Fund I, L.P. (a Delaware Limited Partnership) as of December 31, 1996, the statement of financial condition of Prudential Acquisition Fund I, L.P. as of December 31, 1995, and the related statements of operations, changes in partners' capital and cash flows for each of the three years in the period ended December 31, 1996, and have issued our report thereon dated March 24, 1997; such financial statements and report thereon are included in your 1996 Annual Report to Limited Partners and are incorporated herein by reference. Our audits also included the financial statement schedule of Prudential Acquisition Fund I, L.P., listed in Item 14.