Item 1. Description of Business
Organization
The registrant, Intervest Mortgage Associates L.P. (the "Partnership") is a Delaware limited partnership organized in June 1990. The Partnership's principal executive offices are located at 10 Rockefeller Plaza, Suite 1015, New York, New York 10020-1903, and its telephone number is 212-757-7300.
The General Partner is Intervest Funds Management Corporation (the "General Partner"), a Delaware corporation which was incorporated in June 1990. All of the stock of the General Partner is owned by Lowell S. Dansker and Lawrence G. Bergman, who are also Special Limited Partners of the Partnership. The General Partner manages and controls the affairs of the Partnership and has agreed to pay all Partnership expenses.
During 1991, a public offering of $10,000,000 of units of limited partnership interest was completed. The Partnership's objectives are to invest in mortgages, which will preserve and protect the Partnership's capital and provide for monthly distribution to unitholders at a floating annual interest rate on their adjusted contributions equal to two percentage points over the prime rate of Chase Manhattan Bank of New York, with a minimum rate of 9 1/2% and a maximum rate of 15%.
The Partnership invests in mortgages secured by income-producing properties, primarily residential apartment buildings. Mortgages generally will have maturities ranging from one to seven years. Mortgage investments may include first mortgages, junior mortgages and wraparound mortgages.
Present Business
Proceeds from the sale of the $10,000,000 of units were principally used to acquire mortgages, which at December 31, 1996, had a carrying value of $6,575,000. The balance is mostly invested in cash equivalents.
For financial statement reporting purposes, all mortgages sold to the Partnership by affiliates have been recorded at the historical cost of the affiliate, adjusted for a discount to reflect an appropriate market interest rate at the date of acquisition.
Each of the Partnership's seven mortgages is a first mortgage lien on multifamily residential apartment buildings. Five of the residential apartment buildings are located in New York City, one is located in New Rochelle, New York, a suburb of New York City, and one is located in East Orange, New Jersey.
Future Business Operations
The Partnership plans to engage in the real estate business, including the acquisition and origination of additional mortgages in the future. Such additional mortgages may be purchased from affiliates of the Partnership or from unaffiliated parties. It is anticipated that such mortgages will be acquired or originated by reinvesting a substantial part of the proceeds resulting from the sale, repayment or prepayment of the present mortgage portfolio.
The Partnership's mortgage loans will include: (i) wraparound mortgage loans; (ii) junior mortgage loans; (iii) interim mortgage loans; and (iv) first mortgage loans.
The Partnership's mortgage loans will generally be secured by income-producing properties. In determining whether to make mortgage loans, the Partnership will analyze relevant real property and financial factors which may in certain cases include such factors as the condition and use of the subject property, its income-producing capacity and the quality, experience and creditworthiness of the owner of the property. The Partnership's mortgage loans will generally not be personal obligations of the borrower and will not be insured or guaranteed by governmental agencies or otherwise.
The Partnership may make both long- and short-term mortgage loans. The Partnership anticipates its mortgage loans will typically mature within approximately five years. However, the Partnership may also invest in mortgage loans with shorter maturities and then reinvest the proceeds from such mortgage loans in additional mortgage loans. The Partnership anticipates that generally its mortgage loans will provide for balloon payments due at the time of their maturity.
Mortgage Investment Policy
To the extent that proceeds from existing mortgages are available, the Partnership anticipates that it will acquire or originate senior and junior mortgages, primarily on multifamily residential properties located in the New York metropolitan area. Such mortgages generally will not be insured by the Federal Housing Administration or guaranteed by the Veterans Administration or otherwise guaranteed or insured in any way. The Partnership requires that all mortgaged properties be covered by property insurance in amounts deemed adequate in the opinion of management.
In addition, prior to funding any mortgage, the Partnership will obtain a real property appraisal prepared by an independent MAI appraiser and a mortgagee's or owner's title insurance policy or commitment as to the priority of the mortgage or the condition of title. The General Partner will generally rely on its own independent analysis and not exclusively on appraisals in determining whether or not to make a particular mortgage loan. The principal amount of each mortgage made by the Partnership will not exceed, when added to the amount of any other mortgages on the underlying property, 85% of the appraised value of the underlying property.
An independent advisor has been retained to issue letters of opinion that each proposed mortgage to an affiliated borrower is fair and at least as favorable to the Partnership as a loan to an unaffiliated borrower in similar circumstances.
Temporary Investment by Affiliates on Behalf of the Partnership
An affiliate of the Partnership may make a mortgage loan or purchase a mortgage in its own name and temporarily hold such investment for the purpose of facilitating the making of an investment of the Partnership, provided that any such investment is acquired by the Partnership at a cost no greater than the cost of such investment to the affiliate plus carrying costs and provided there is no other benefit to the affiliate arising out of such transaction.
Certain Characteristics of the Partnership's Mortgage Investments
Mortgages typically provide for periodic payments of interest and, in some cases, principal during the term of the mortgage, with the remaining principal balance and any accrued interest due at the maturity date. The mortgages owned by the Partnership provide for monthly payments of interest and balloon payments at maturity, which means that a substantial part or all of the original principal of the mortgage is due in one lump sum payment at maturity. The property on which the mortgage is a lien provides the security for the mortgage. If the net revenue from the property is not sufficient to make all debt service payments due on mortgages on the property, or if at maturity or the due date of any balloon payment the owner of the property fails to raise the funds to make the payment (by refinancing, sale or otherwise), the Partnership could sustain a loss on its investment in the mortgage. To the extent that the aggregate net revenues from the Partnership's mortgage investments are insufficient to pay the monthly distributions to the unitholders, the General Partner has agreed to pay the Partnership any shortfall.
With respect to any wraparound mortgages which may be originated by the Partnership in the future, such wraparound mortgages are generally negotiated and structured on an individual, case by case basis, and may be structured to include any or all of the following provisions:
(i) The Partnership may lend money to a real property owner who would be obligated to repay the senior underlying mortgage debt as well as the new wraparound indebtedness owed to the Partnership.
(ii) The Partnership may legally assume the obligation to make the payments due on the senior underlying mortgage debt.
(iii) The real property owner-debtor may agree to make payments to the Partnership in satisfaction of both the senior underlying mortgage debt and the new wraparound indebtedness owed to the Partnership.
(iv) The Partnership may receive a mortgage on the real property to secure repayment of the total amount of indebtedness (wraparound indebtedness and the senior underlying mortgage indebtedness).
The mortgages owned by the Partnership are first mortgages. In all cases, in the opinion of management, the current value of the underlying property collateralizing the mortgage loan is in excess of the stated amount of the mortgage loan. Therefore, in the opinion of management of the Partnership, each property on which a mortgage owned by the Partnership is a lien constitutes adequate collateral for the related mortgage loan. Accordingly, in the event the owner of a property fails to make required debt service payments, management believes that, based upon current value, upon a foreclosure of the mortgage and sale of the property, the Partnership would recover its entire investment. However, there can be no assurance that the current value of the underlying property will be maintained.
Loan Loss Experience
For financial reporting purposes, the Partnership considers a loan as delinquent or non-performing when it is contractually past due 90 days or more as to principal or interest payments. To date, the Partnership has not experienced any defaults or delinquencies in its mortgage portfolio. The Partnership evaluates its portfolio of mortgage loans on an individual basis, comparing the amount at which the investment is carried to its estimated net realizable value. Since the Partnership has not experienced any defaults or delinquencies, no allowance for loan losses is presently maintained.
Tax Accounting Treatment of Payments Received on Mortgages
The Partnership derives substantially all of its cash flow from debt service payments which it receives on mortgages owned by it. The tax accounting treatment of such debt service payments, as income or return of capital, depends on the particular mortgage. In the case of mortgages which pay interest only, the entire debt service payment prior to maturity received by the Partnership is treated as income and the repayment of principal is generally considered a return of capital. In the case of mortgages which include amortization of principal in the debt service payment received by the Partnership, the amount representing amortization of principal is generally treated as a return of capital for tax accounting purposes.
Financial Accounting Treatment of Payments Received on Mortgages
For financial reporting purposes, the Partnership's basis in certain mortgages is less than the face amount outstanding. This difference is attributable to discounts recorded by the Partnership to reflect a market rate of interest at the date the loans were acquired. These discounts will be amortized over the lives of the mortgages.
Effect of Government Regulation
Investment in mortgages on real properties presently may be impacted by government regulation in several ways. Residential properties may be subject to rent control and rent stabilization laws. As a consequence, the owner of the property may be restricted in its ability to raise the rents on apartments. If real estate taxes, fuel costs and maintenance of and repairs to the property were to increase substantially, and such increases are not offset by increases in rental income, the ability of the owner of the property to make the payments due on the mortgage as and when they are due might be adversely affected.
Laws and regulations relating to asbestos have been adopted in many jurisdictions, including New York City, which require that whenever any work is undertaken in a property in an area in which asbestos is present, the asbestos must be removed or encapsulated in accordance with such applicable local and federal laws and regulations. The cost of asbestos removal or encapsulation may be substantial, and if there were not sufficient cash flow from the property, after debt service on mortgages, to fund the required work, and the owner of the property fails to fund such work from other sources, the value of the property could be adversely affected, with consequent impairment of the security for the mortgage.
Laws regulating the storage, disposal and clean up of hazardous or toxic substances at real property have been adopted at the federal, state and local levels. Such laws may impose a lien on the real property superior to any mortgages on the property. In the event such a lien were imposed on any property which serves as security for a mortgage owned by the Partnership, the security for such mortgage could be impaired.
Item 2.
Item 2. Properties
None.
Item 3.
Item 3. Legal Proceedings
The Partnership is not engaged in any litigation, nor does it presently know of any threatened or pending litigation in which it is contemplated that the Partnership will be made a party.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5.
Item 5. Market for the Registrant's Units of Limited Partnership Interest ("Units")
There is no established trading market for the Units.
Item 6.
Item 6. Selected Financial Data
Balance Sheet Data
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Liquidity and Capital Resources:
The Partnership is engaged in the real estate business, including the originating and purchase of real estate mortgage loans, consisting of first mortgages, junior mortgages, wraparound mortgages and interim mortgage loans. The Partnership's current investment policy emphasizes the investment in mortgage loans on income producing properties. The majority of the Partnership's loans are expected to mature within approximately five years.
The Partnership's liquidity is managed to ensure that sufficient funds are available to preserve and protect the Partnership's capital and to provide for monthly distributions to unitholders at a floating annual rate based on their adjusted capital contributions equal to two percentage points over the prime rate of Chase Manhattan Bank, New York with a minimum rate of 9 1/2% and a maximum of 15%.
Results of Operations:
Year ended December 31, 1996 and 1995
For the year ended December 31, 1996 interest income was $1,218,000 as compared to $1,209,000 for the same period a year ago. The increase of $9,000 resulted mainly from an increase in mortgages receivable in the fourth quarter 1996, an offset in part by a decrease in interest rate subsequent to July 1995.
Year ended December 31, 1995 and 1994
For the year ended December 31, 1995 interest income was $1,209,000 as compared to $1,190,000 for the same period a year ago. The increase of $19,000 resulted mainly from an increase in interest rates in 1995.
Since the Partnership is engaged in the real estate business, its results of operations are affected by general economic trends in real estate markets, as well as by trends in the general economy and the movement of interest rates. Since the properties underlying the Partnership's mortgages are concentrated in the New York City area, the economic condition in that area can also have an impact on the Partnership's operations.
The rental housing market in New York City remains stable and the Partnership expects that such properties will continue to appreciate in value with little or no reduction in occupancy rates. The Partnership's mortgage portfolio is composed predominantly of mortgages on multi-family residential properties, most of which are subject to applicable rent control and rent stabilization statutes and regulations. In both cases, any increases in rent are subject to specific limitations. As such, properties of the nature of those constituting the most significant portion of the Partnership's mortgage portfolio are not affected by the general movement of real estate values in the same manner as other income-producing properties.
Impact of Inflation:
Inflation has not had an effect on the Partnership's objectives of making monthly distributions to unitholders from interest received from its mortgage portfolio. Since certain mortgages bear interest at a fixed rate, rising interest rates as a result of inflation may require the Partnership to rely on the guarantee of the General Partner to pay to the Partnership a sufficient amount to make the monthly distributions to the unitholders.
Business:
The Partnership is engaged in the real estate business and has historically invested primarily in real estate mortgage loans secured by income producing real property. It is anticipated that a substantial portion of the loans to be made by the Partnership will be loans with terms of approximately five years. Such transactions typically require an understanding of the underlying real estate transaction and rapid processing and funding as a principal basis for competing in the making of these loans. The Partnership does not finance new construction.
At December 31, 1996, five of the seven Partnership loans were secured by properties located in the greater New York metropolitan area.
Competition:
The Company competes for acceptable investments with real estate investment trusts, commercial banks, insurance companies, savings and loan associations, pension funds and mortgage banking firms, many of which have greater resources with which to compete for desirable mortgage loans.
Item 8.
Item 8. Financial Statements and Supplementary Data
Other financial statement schedules and inapplicable periods with respect to schedules listed above are omitted because the conditions requiring their filing do not exist or the information required thereby is included in the financial statements filed, including the notes thereto.
` REPORT OF INDEPENDENT AUDITORS
To the Partners Intervest Mortgage Associates L.P. New York, New York
We have audited the accompanying balance sheets of Intervest Mortgage Associates L.P. (a Delaware limited partnership) as at December 31, 1996 and December 31, 1995, and the related statements of operations, partners' capital and cash flows for each of the years in the three-year period ended December 31, 1996 and Schedule IV. These financial statements and related schedule are the responsibility of the Company'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 and related schedule 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 enumerated above present fairly, in all material respects, the financial position of Intervest Mortgage Associates L.P. at December 31, 1996 and December 31, 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. Further, it is our opinion that the schedule referred to above presents fairly, in all material respects, the information set forth therein in compliance with the applicable accounting regulation of the Securities and Exchange Commission.
New York, New York January 22, 1997
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INTERVEST MORTGAGE ASSOCIATES L.P.
BALANCE SHEETS
The accompanying notes to financial statements are an integral part hereof.
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INTERVEST MORTGAGE ASSOCIATES L.P.
STATEMENTS OF OPERATIONS
Year Ended December 31, ------------------------ 1996 1995 1994 ---- ---- ----
Revenue:
Interest income, includes $241,000, $294,000 and $371,000, from affiliates (Note G) . . . . . . . . . $1,218,000 $1,209,000 $1,190,000 ---------- ---------- ----------
Gain on early repayment of discounted mortgages (Note C) . . . . . . . . . 47,000 9,000
Other income . . . . . . . . 2,000 17,000 ---------- ---------- ----------
1,267,000 1,235,000 1,190,000
Expenses:
General and administrative . 3,000 6,000 5,000 ---------- ---------- ----------
NET INCOME . . . . . . . . . . . $1,264,000 $1,229,000 $1,185,000 ========== ========== ==========
The accompanying notes to financial statements are an integral part hereof.
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The accompanying notes to financial statements are an integral part hereof.
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INTERVEST MORTGAGE ASSOCIATES L.P.
STATEMENTS OF CASH FLOWS
The accompanying notes to financial statements are an integral part hereof.
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INTERVEST MORTGAGE ASSOCIATES L.P.
NOTES TO FINANCIAL STATEMENTS
(NOTE A) - Organization and Business:
Intervest Mortgage Associates L.P., a Delaware limited partnership (the "Partnership"), was formed for the primary purpose of investing in mortgages on improved income-producing real properties. The Partnership will continue until December 31, 1999, unless terminated sooner in accordance with the provisions of the partnership agreement.
The special limited partners, Lowell S. Dansker and Lawrence G. Bergman each own 50% of the common stock of Intervest Funds Management Corporation, the general partner.
(NOTE B) - Significant Accounting Policies:
Cash equivalents:
The Partnership considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.
(NOTE C) - Mortgages Receivable:
Mortgages receivable consist of first mortgages on residential properties.
Interest rates on mortgages range from 9 1/2% to 15%. Certain mortgages have been discounted utilizing rates ranging from 11% to 16 1/2%.
During 1996 and 1995, mortgages were paid in full prior to their maturity date. This resulted in the recognition of a gain, which represents the balance of the unamortized discount applicable to these mortgages.
(continued)
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INTERVEST MORTGAGE ASSOCIATES L.P.
NOTES TO FINANCIAL STATEMENTS
(NOTE C) - Mortgages Receivable: (continued)
Annual maturities of mortgages receivable during the next five years are summarized as follows:
Year Ending December 31,
1997 . . . . . . . . . . . . . $1,526,000 1998 . . . . . . . . . . . . . 652,000 1999 . . . . . . . . . . . . . 2,985,000 2000 . . . . . . . . . . . . . 84,000 2001 . . . . . . . . . . . . . 84,000 Thereafter . . . . . . . . . . 1,337,000 ---------- 6,668,000 Less unearned discount . . . . 93,000 ------
T o t a l. . . . . . $6,575,000 ==========
The Partnership evaluates its portfolio of mortgage loans on an individual basis, comparing the amount at which the investment is carried to its estimated net realizable value. At December 31, 1996 and at December 31, 1995, no allowance was required.
(NOTE D) - Duties and Obligations of the General Partner:
As more fully described in the partnership agreement, the General Partner has agreed, among other things, to:
(1) Manage and control the business of the Partnership;
(2) Pay all organization costs and operating expenses of the Partnership and the expenses in connection with the public offering. Operating expenses for 1996, 1995 and 1994 have been reflected in the financial statements of the Partnership;
(3) Pay to the Partnership any shortfall with respect to cash distributions due to unitholders;
(4) Repurchase each year, on a noncumulative basis, a maximum of 10% of units outstanding as of January 1 of each year if requested by the unitholders; and
(continued)
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INTERVEST MORTGAGE ASSOCIATES L.P.
NOTES TO FINANCIAL STATEMENTS
(NOTE D) - Duties and Obligations of the General Partner: (continued)
(5) Maintain a net worth of at least 10% of the adjusted contribution of the unitholders, but in no event less than $500,000. At December 31, 1996 and December 31, 1995, the audited financial statements of the general partner showed a net worth of $1,134,000 and $1,085,000, respectively, including notes receivable from stockholders of $1,000,000.
(NOTE E) - Allocation of Income, Losses and Distributions:
As more fully described in the partnership agreement, income, losses and distributions are to be allocated as follows:
(1) Net income and operating cash distributions, first to unitholders in an amount equal to their investment return (equal to 2% above prime rate of Chase Manhattan Bank, subject to a minimum rate of 9 1/2% and a maximum rate of 15% per annum) and then to the general partner (99%) and special limited partners (1%).
(2) Net loss, other than from a disposition, as defined, 99% to the general partner and 1% to the special limited partners.
(3) Net loss from a disposition, to unitholders to the extent of their positive capital account balances and then to the general partner and special limited partners.
(4) Disposition proceeds will generally be distributed to unitholders until each has received an amount equal to his original invested capital and then to the general partner and special limited partners.
(NOTE F) - Distribution Accrual Plan:
Under the partnership agreement, unitholders can elect to have the Partnership retain distributions they are entitled to receive. Such retained amounts will earn interest at Chase Manhattan Bank's prime rate, compounded monthly, with a floor of 9 1/2% and a ceiling of 15%.
(NOTE G) - Related Parties:
[1] During 1995 and 1994, the Partnership received payments of mortgages in the amounts of $2,000,000 and $850,000, respectively, due from affiliates.
(continued)
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INTERVEST MORTGAGE ASSOCIATES L.P.
NOTES TO FINANCIAL STATEMENTS
(NOTE G) - Related Parties: (continued)
[2] Under the terms of the partnership agreement, the Partnership will invest in mortgages on improved income-producing real properties owned by either unaffiliated or affiliated borrowers. If the property owner is an affiliated entity, certain conditions must be met before the investment can be made by the Partnership.
(NOTE H) - Income Taxes:
The Partnership will not be required to provide for, or pay, any federal income taxes. Income tax liabilities and/or benefits that arise from its operations will be passed directly to the individual partners. The Partnership may be subject to state and local taxes in jurisdictions in which it operates.
(NOTE I) - Unit Repurchase Rights:
Beginning January 1, 1999, or at an earlier date, in the event the Partnership is to be terminated, the General Partner will have the right to purchase all Units from the unitholders.
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SCHEDULE IV--MORTGAGES LOANS ON REAL ESTATE--continued
The following summary reconciles mortgages receivable at their carrying values:
REPORT OF INDEPENDENT AUDITORS
Board of Directors Intervest Funds Management Corporation New York, New York
We have audited the accompanying balance sheets of Intervest Funds Management Corporation as at December 31, 1996 and December 31, 1995, and the related statements of operations 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 Company'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 enumerated above present fairly, in all material respects, the financial position of Intervest Funds Management Corporation at December 31, 1996 and December 31, 1995, and the results of its operations and its cash flows for the years in the three-year period ended December 31, 1996 in conformity with generally accepted accounting principles.
New York, New York January 22, 1997
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The accompanying notes to financial statements are an integral part hereof.
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INTERVEST FUNDS MANAGEMENT CORPORATION
STATEMENTS OF OPERATIONS
Year Ended December 31, ------------------------ 1996 1995 1994 ------ ------ -----
Revenue:
Interest income . . . . . . . . . $ 1,000 $ 1,000 $ 1,000 --------- --------- ---------
Expenses:
General and administrative . . . . 3,000 3,000 2,000
Payment to partnership (Note C) . 14,000 --------- --------- ---------
T o t a l . . . . . . . . . 3,000 17,000 2,000 --------- --------- ---------
Operating (loss) . . . . . . . . . . (2,000) (16,000) (1,000)
Equity in income of partnership . . . 56,000 112,000
State and City (taxes) benefit (Note B[2]) . . . . . . . . . . . (5,000) 1,000 (8,000) --------- --------- ---------
NET INCOME (LOSS) . . . . . . . . . . 49,000 (15,000) 103,000
Deficit at beginning of period . . . (823,000) (808,000) (911,000) --------- --------- ---------
DEFICIT AT END OF PERIOD . . . . . . $(774,000) $(823,000) $(808,000) ========= ========= =========
The accompanying notes to financial statements are an integral part hereof.
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The accompanying notes to financial statements are an integral part hereof.
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INTERVEST FUNDS MANAGEMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
(NOTE A) - Organization:
Intervest Funds Management Corporation (the "Company"), a Delaware corporation, was formed by Lowell S. Dansker and Lawrence G. Bergman, who each own 50% of the Company's issued and outstanding common shares. The Company is the general partner and its stockholders are special limited partners in a limited partnership, Intervest Mortgage Associates L.P. (the "Partnership").
(NOTE B) - Significant Accounting Policies:
[1] Cash equivalents:
The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.
[2] Income taxes:
The Company has elected to be treated as an S corporation for federal income tax purposes and for state and local jurisdictions which permit such election. As a result, income is generally taxed directly to the stockholders for such purposes.
(NOTE C) - The Partnership:
The Partnership invests in mortgages on improved income-producing real properties owned by either unaffiliated or affiliated borrowers. The Partnership has sold 1,000 units of limited partnership interest at $10,000 per unit. Each unitholder is generally entitled to a return on his investment equal to 2% above the prime rate of Chase Manhattan Bank subject to a minimum rate of 9 1/2% and a maximum rate of 15% per annum.
The Company, as general partner, has agreed, among other things to:
[1] Manage and control the business of the Partnership;
[2] Pay all operating costs of the Partnership;
[3] Pay to the Partnership any shortfall with respect to cash distributions due to the unitholders described above;
[4] Repurchase each year on a noncumulative basis, a maximum of 10% of units outstanding as of January 1 of each year if requested by the unitholders, and
(continued)
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INTERVEST FUNDS MANAGEMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
(NOTE C) - The Partnership: (continued)
[5] Maintain a net worth of at least 10% of the adjusted contribution of the unitholders, but in no event less than $500,000. Notes receivable were contributed to capital by the stockholders to maintain a net worth of at least 10% of the adjusted contribution of the unitholders. The notes will become interest-bearing at a defined rate only for the period from the date payment is demanded by the Company until such payment is made.
In addition, the Company has paid all organization costs and expenses of the Partnership in connection with the sale of the units of limited partnership interest.
As more fully described in the partnership agreement, income, losses and distributions are to be allocated as follows:
(1) Net income and operating cash distributions, first to unitholders in an amount equal to their investment return and then to the general partner (99%) and special limited partners (1%).
(2) Net loss, other than from a disposition, as defined, 99% to the general partner and 1% to the special limited partners.
(3) Net loss from a disposition, to unitholders to the extent of their positive capital account balances and then to the general partner and special limited partners.
(4) Disposition proceeds will generally be distributed to unitholders until each has received an amount equal to his original invested capital and then to the general partner and special limited partners.
(NOTE D) - Unit Repurchase Rights:
Beginning January 1, 1999 or at an earlier date, in the event the Partnership is to be terminated, the Company will have the right to purchase all units from the unitholders.
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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
The General Partner of the Partnership, Intervest Funds Management Corporation, is wholly owned by Lowell S. Dansker and Lawrence G. Bergman. The Partnership will be managed by the General Partner, which was incorporated in Delaware on June 13, 1990. It has an office located at 10 Rockefeller Plaza, New York, New York 10020-1903 (telephone: 212-757-7300).
The current directors and executive officers of the General Partner are as follows:
Lowell S. Dansker, age 46, serves as a Director, and as Co-Chairman, President and Treasurer of the General Partner. Mr. Dansker received a Bachelor of Science in Business Administration from Babson College, a law degree from the University of Akron School of Law, and is admitted to practice as an attorney in New York, Ohio, Florida and the District of Columbia.
Lawrence G. Bergman, age 52, serves as a Director, and as Co-Chairman, Vice President and Secretary of the General Partner. Mr. Bergman received a Bachelor of Science degree and a Master of Engineering (Electrical) degree from Cornell University, and a Master of Science in Engineering and a Ph.D degree from The Johns Hopkins University.
For more than the past fifteen years, Mr. Dansker and Mr. Bergman have been actively involved in the ownership and operation of real estate and mortgages primarily through 100% family owned partnerships, corporations and family trusts.
Mr. Bergman, his wife, Mr. Dansker and Mr. Dansker's father are the sole owners, partners and trustees, respectively, of such family corporations, partnerships and trusts. Mr. Dansker and Mrs. Bergman are brother and sister.
Item 11.
Item 11. Executive Compensation
Pursuant to the terms of the partnership agreement, $112,400 was credited to the capital account of the General Partner during 1994. No other compensation of any kind was paid to or accrued by the Partnership for any executive officer or director of the General Partner.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information concerning the ownership of common stock of the General Partner.
Amount of Percent Name and Address of Beneficial Owner Beneficial Ownership of Class - ------------------------------------ ---------------------------------
Lowell S. Dansker........................ 10 shares 50.0% 360 West 55th Street, New York, New York 10019
Lawrence G. Bergman................... 10 shares 50.0% 201 East 62nd Street New York, New York 10021
Item 13.
Item 13. Certain Relationships and Related Transactions
During 1994 and 1995, the partnership received payments of mortgages in the amounts of $850,000 and $2,000,000, respectively, due from affiliates.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1) Financial Statements:
See Item 8 "Financial Statements and Supplementary Data"
(a) (2) Financial Statement Schedules:
See Item 8 "Financial Statements and Supplementary Data"
(a) (3) Exhibits:
4 Certificate of Limited Partnership and Certificate of Amendment to Certificate of Limited Partnership. (1)
10.1 Form of Escrow Agreement. (1)
10.2 Form of Independent Advisor Agreement. (1)
25 Power of Attorney. (1)
(b) Reports on Form 8-K
None
(1) Incorporated by reference to Registrant's Registration Statement as amended on Form S-11 (File No. 33- 36336), declared effective on November 20, 1990.
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.
INTERVEST MORTGAGE ASSOCIATES L.P.
By: INTERVEST FUNDS MANAGEMENT CORPORATION General Partner
Dated: March 25, 1997 By: /S/ Lawrence G. Bergman ----------------------- Lawrence G. Bergman Executive Vice President
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.
Signatures President, Co-Chairman, Treasurer and Director of Intervest Funds /S/ Lowell S. Dansker Management Corporation Lowell S. Dansker (Principal Executive Officer) Dated: March 25, 1997
Executive Vice President, Co-Chairman, Secretary /S/ Lawrence G. Bergman and Director of Intervest Lawrence G. Bergman Funds Management Corporation Dated: March 25, 1997 (Principal Operating Officer)
Supplemental Information to be Furnished with Reports Filled Pursuant to Section 15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to Section 12 of the Act:
The annual report to Unitholders has not as yet been distributed.
When the annual report has been distributed to the Unitholders, four copies will be sent to the Commission.