Item 1. BUSINESS
General
Boettcher Pension Investors Ltd. (the "Partnership") was organized in May 1984 as a limited partnership under the Colorado Uniform Limited Partnership Act. The Partnership's primary business has been to invest in improved and unimproved real property on an unleveraged basis and to purchase or originate participating mortgage loans and land lease investments. At October 31, 1996, the Partnership owned and operated one shopping center located in Utah, Parkway Village Shopping Center (the "Remaining Property"), which has been recorded by the Partnership as property held for sale as discussed in Note 6 to the Financial Statements contained in Item 8 of this report. The Remaining Property is more fully described in Item 2
Item 2. PROPERTIES
At October 31, 1996, the Partnership owned and operated one shopping center, which is being held for sale, as more fully described below:
Name and Location General Character of Property - ------------------------------- -------------------------------------
Parkway Village Shopping Center 4-building shopping center containing 2255 N. University Parkway approximately 102,000 square feet of Provo, Utah net rentable area on approximately 10.05 acres of land.
As stated above, at October 31, 1996 the Partnership has recorded its investment in the Remaining Property as properties held for sale. For additional information, refer to Note 6 to the Financial Statements as contained in Item 8 of this report.
For information regarding the indebtedness to which Parkway Village is subject, see Note 3 to the Financial Statements as contained in Item 8 of this report.
On May 8, 1996, the Partnership sold the land, related improvements and personal property of the retail shopping center known as Lindsay-Main Plaza ("Lindsay"), as described in more detail in Management's Discussion and Analysis of Financial Condition and Results of Operations as contained in Item 7 of this report and Note 2 to the Financial Statements as contained in Item 8 of this report.
On October 4, 1995 the Partnership sold the land, related improvements and personal property of the retail shopping center known as Clackamas Corner ("Clackamas"), as described in more detail in Management's Discussion and Analysis of Financial Condition and Results of Operations as
contained in Item 7 of this report and Note 2 to the Financial Statements as contained in Item 8 of this report.
In the opinion of the Managing General Partner, the Remaining Property is adequately covered by insurance.
Average occupancies and average effective rental rates generated by the Partnership's real estate investments in the last five fiscal years were as follows:
(a) Average effective rental rates are stated in terms of an average annual rate per square foot. Effective rates take into account the effect of leasing concessions and bad debts. These rates are "triple net". In addition to this base rent, the majority of tenants pay their pro rata share of taxes, insurance and common area maintenance expenses at the property.
(b) Average occupancies and average effective rental rates are reported only for the Partnership's period of ownership, which began on May 5, 1993.
(c) These computations give effect to the sale of Lindsay-Main Plaza on May 8, 1996 and the sale of Clackamas Corner Shopping Center on October 4, 1995.
Parkway Village Shopping Center has one tenant occupying 10% or more of the total rentable square footage. Albertson's Food Market is a party to a 25 year lease expiring February 28, 2008 at the property and is a provider of full service grocery products. The rent per annum is approximately $265,600. Albertson's has the option of renewing the lease for nine consecutive 5-year lease terms.
The following table sets forth, by property, a schedule of lease expirations for the next ten years, including:
(a) the number of tenants whose leases will expire, (b) the total area in square feet covered by such leases, (c) the annual rental represented by such leases, and (d) the percentage of gross annual rental represented by such leases.
As of October 31, 1996:
Parkway Village Shopping Center - ------------------------------- Lease Expiration Dates
Item 3.
Item 3. LEGAL PROCEEDINGS -----------------
There are no material pending legal proceedings to which the Partnership is a party or of which the Remaining Property is subject.
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF HOLDERS OF LIMITED PARTNERSHIP INTERESTS
There have been no matters submitted to a vote of holders of Limited Partnership Interests (the "Units") during the fiscal year which is covered by this report.
PART II
Item 5.
Item 5. MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP INTERESTS AND RELATED LIMITED PARTNER MATTERS
At October 31, 1996, 10,717 Units were outstanding and held by approximately 1,000 limited partners.
The Units have limited transferability. There is no public market for the Units and it is not expected that any will develop. There are significant restrictions relating to the transferability of Units, including the requirement that the Managing General Partner consent to any transfer and to any transferee becoming a substituted limited partner, which consent may be granted or withheld at the sole discretion of the Managing General Partner. In addition, restrictions on transfers may be imposed by federal and state securities laws.
The Partnership Agreement provides that after January 1, 1987, under certain circumstances, the General Partners may repurchase the Units held by limited partners desiring to sell their Units. At October 31, 1996, the General Partners had not established the Repurchase Fund as provided for in the Partnership Agreement as they had not received any distribution of cash flow from Partnership operations since the inception of the Partnership. Net earnings for the fiscal year ended October 31, 1996 were less than the 9% Current Distribution Preference of the limited partners as provided in the Partnership Agreement and, accordingly, were allocated solely to the limited partners.
Until fiscal 1996, the Partnership made consecutive quarterly cash distributions to limited partners from cash flow generated by Partnership operations. In fiscal 1996, the Partnership distributed a total of $760,907 ($71 per $1,000 Unit) to limited partners as generated by the sale of Lindsay Main Plaza. At the discretion of the Managing General Partner, no other distributions were made from cash flow generated by Partnership operations in fiscal 1996 in order to build additional cash reserves related to the environmental contamination at Parkway Village as discussed more fully in Note 7 to the Financial Statements contained in Item 8 of this report. The following table sets forth a summary of distributions made to limited partners for the three years ended October 31, 1996 on an aggregate and per unit basis:
In the future, the Partnership intends to apply cash flow generated from Partnership operations to maintain sufficient cash reserves, as determined by the Managing General Partner, pay amounts payable to the Managing General Partner, and, thereafter, to distribute to limited partners operating cash flow determined by the Managing General Partner to be in excess of amounts required to fund anticipated liabilities of the Partnership. For additional information on the Partnership's liquidity refer to the Liquidity and Capital Resources section of Management's
Discussion and Analysis of Financial Condition and Results of Operations as contained in Item 7 of this report.
The Managing General Partner is attempting to sell the Remaining Property and liquidate the Partnership in fiscal 1997. However, there can be no assurances that the Partnership will sell the Remaining Property in 1997. The ability of the Partnership to sell Parkway Village may be adversely effected by the existence and remediation of the dry cleaning solution contamination at the property as described more fully in Note 7 to the Financial Statements contained in Item 8 of this report. The Managing General Partner believes that the sale, if consummated, will provide net proceeds to the Partnership after the payment of sales costs, closing costs and the mortgage payable related to Parkway Village; however, the sale transaction may include both cash at closing and deferred payments to the Partnership. The Partnership intends to apply net sale proceeds to maintain sufficient cash reserves, as determined by the Managing General Partner. Thereafter, the Partnership intends to pay amounts payable to the Managing General Partner and then to make distributions to limited partners. The Partnership has entered into a listing agreement with an unrelated real estate brokerage firm to act as the exclusive selling agent for the Remaining Property. The Partnership has recorded its remaining investment as property held for sale at October 31, 1996 as described more fully in Note 2 to the Financial Statements contained in Item 8 of this report.
Item 6.
Item 6. SELECTED FINANCIAL DATA
BOETTCHER PENSION INVESTORS LTD. Selected Financial Data(a) As of or for the years ended October 31,
(a) The selected financial data should be read in conjunction with the Financial Statements and related Notes as contained in Item 8 of this report. (b) Per Unit data is based upon 10,717 weighted average Units outstanding during each fiscal year.
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations October 31, 1996 marked the close of the Partnership's thirteenth year of operations. The Partnership continues to own and operate one shopping center, located in Utah (Parkway Village), which is being held for sale as of October 31, 1996.
1996 as Compared to 1995:
For the fiscal year ended October 31,1996, the Partnership generated total revenue of $1,192,846, and incurred total expenses of $1,177,982, resulting in earnings from operations of $14,864. The Partnership's fiscal 1996 operating earnings decreased $254,423 (94%) when compared with fiscal 1995. A loss on the sale of its real estate investment in Lindsay-Main Plaza ("Lindsay") in the amount $20,402, was recorded in the third quarter of fiscal 1996 as more fully discussed in Note 2 to the Financial Statements contained in Item 8
Item 8 of this report. A summary of the Partnership's results of operations and year-to-year comparisons before gain on sale of Clackamas is presented below:
Total revenue decreased $61,762 (4%) in fiscal 1995 as compared to fiscal 1994, as a consequence of the sale of Clackamas, which resulted in one less month of rental and other income in fiscal 1995, and a decrease in tenant reimbursements and other income due to vacancies at Parkway Village. The Partnership's properties generated rental income of $1,238,182 in fiscal 1995, a decrease of $31,706 (2%) when compared to fiscal 1994. Parkway Village achieved a weighted average occupancy of 98% and a weighted average effective rental rate of $9.13, representing a decrease of 2% and an increase of $0.18, respectively, when compared with fiscal 1994. Lindsay-Main generated average occupancy of 45% in fiscal 1995, an increase of 7% over fiscal 1994, while the property's annual average effective rental rate decreased $0.44 to $5.08 per square foot when compared to fiscal 1994. Clackamas Corner generated average annual occupancy of 96% (based on eleven months of operations prior to its being sold) a decrease of 4% when compared to fiscal 1994. The annual average effective rental rate at Clackamas Corner decreased $0.07 to $10.54 for fiscal 1995 when compared to fiscal 1994. For additional occupancy and rental rate information related to the Properties, refer to the table provided in Item 2 as contained in this report. Tenant reimbursement and other income generated by the Partnership in fiscal 1995 totaled $261,054, representing a decrease of $29,407 (10%) when compared to fiscal 1994, primarily due to over-estimates of common area charges reflected in fiscal 1994 billings, resulting in lower 1995 billings; and increased vacancies in fiscal 1995 at Parkway Village.
Total expenses incurred by the Partnership in fiscal 1995 totaled $1,249,965, a decrease of $23,788 (2%) when compared to fiscal 1994. All major expense categories, except utilities and depreciation and amortization, recognized minor decreases due to the sale of Clackamas Corner. Utilities expense increased $4,225 (10%) due to increased vacancies at Parkway Village and a water leak at Parkway Village in a vacant unit that resulted in higher water bills for part of fiscal 1995. General and administrative expense decreased $13,454 (17%) in fiscal 1995 when compared to fiscal 1994 due to legal fees incurred in fiscal 1994 related to the Partnership's acquisition of Parkway Village through a bankruptcy reorganization in fiscal 1993.
Liquidity and Capital Resources
Combined cash and cash equivalent balances, which represent Partnership cash reserves, were $667,934 at October 31, 1996, representing an increase of $152,183 when compared with fiscal 1995 year-end balances. This increase is primarily the result of the Managing General Partner's decision to suspend the quarterly distributions of Partnership cash flows to limited partners due to the continued analyses of potential environmental remediation costs at Parkway Village. Net cash provided by operating activities in fiscal 1996 amounted to $191,506. The most significant changes in operating assets and liabilities are decreases in all assets and liabilities due to the sale of Lindsay-Main Plaza, more fully discussed in Note 2 to the Financial Statements contained in Item 8 of this report. The payable to the Managing General Partner decreased $12,555 to $28,218 due to the payment by the Partnership of advances made by the Managing General Partner for Partnership expenses in fiscal 1996.
Net cash provided by investing activities in fiscal 1996 amounted to $805,938. The sale of Lindsay-Main Plaza generated net proceeds, after proration of operating income and expenses related to the property, of $886,190. Deferred leasing costs of $80,252 were incurred in fiscal 1996 to cover lease commission costs associated with the renewal of existing tenants at Parkway Village and Lindsay-Main Plaza (prior to its sale).
Net cash used by financing activities amounted $845,261 in fiscal 1996, the combined result of distributions to limited partners in the amount of $760,907 and a reduction in mortgage principal of $84,354 related to the mortgage secured by Parkway Village.
To the knowledge of the Managing General Partner, the Remaining Property is in good physical condition. In fiscal 1997, there are no material tenant finish costs and lease commissions budgeted. Tenant finish costs and lease commissions will however be incurred in anticipation of leasing vacant space and renewing existing tenant leases at Parkway Village. If such costs are required, it is currently anticipated that the funds required for such expenditures would be made available either from cash flow generated from the operations of the Remaining Property or from Partnership cash reserves.
The Partnership is required under its Partnership Agreement to maintain cash reserves of not less than 2% of aggregate capital contributions from limited partners for normal repairs, replacements, working capital and other contingencies. As of October 31, 1996, the Partnership had $667,934 in cash reserves, while the minimum required amount was $214,340. The Partnership intends to apply cash flow generated from Partnership operations in fiscal 1997, if any, to maintain sufficient cash reserves, as determined by the Managing General Partner. Thereafter, the Partnership intends to pay amounts payable to the Managing General Partner and then distribute to limited partners operating cash flow determined by the Managing General Partner to be in excess of amounts required to fund anticipated liabilities of the Partnership.
As of October 31, 1996, the Partnership has recorded its remaining real estate investment as property held for sale. The Managing General Partner is attempting to sell the Remaining Property and liquidate the Partnership in fiscal 1997. However, there can be no assurances that the Partnership will sell the Remaining Property in 1997. The ability of the Partnership to sell
Parkway Village may be adversely effected by the existence and remediation of the dry cleaning solution contamination at the property as discussed more fully in Note 7 to the Financial Statements as contained in Item 8 of this report. The Partnership has entered into a separate listing agreement with an unrelated real estate firm to act as the exclusive selling agent for the sale of Parkway Village. The Managing General Partner believes that the sale of the Remaining Property, if consummated, will generate net proceeds to the Partnership after the payment of sales costs, closing costs and the mortgage payable at Parkway Village; however, the sale transaction may include cash at closing and deferred payments to the Partnership. The Partnership intends to apply net sales proceeds to maintain sufficient cash reserves, as determined by the Managing General Partner, pay amounts payable to the Managing General Partner and then to make distributions to limited partners.
On May 8, 1996, the Partnership sold the land, related improvements and personal property of the retail center known as Lindsay-Main Plaza ("Lindsay") located at 116 North Lindsay, in Mesa, Arizona. The purchaser, GOV, Inc., is not affiliated with the Partnership, its Managing General Partner or any affiliate, director, officer or associate of the foregoing, and the sales price was determined by arm's length negotiations. Lindsay consists of a 1-building shopping center containing approximately 37,000 square feet of net rentable area on approximately 4.213 acres of land and one vacant undeveloped parcel of land consisting of approximately .934 acres. At the time of sale, Lindsay was approximately 38% leased and occupied.
The net proceeds to the Partnership, before proration of operating income and expenses related to the property, were as follows:
The Partnership recorded a net loss on sale of real estate investment of $20,402 related to this transaction, resulting from the excess of the Partnership's net carrying value of Lindsay over the net sales proceeds.
On October 4, 1995, the Partnership sold the land, related improvements and personal property of the retail center known as Clackamas Corner. The purchaser, Stephen M. Berrey, is not affiliated
with the Partnership, its Managing General Partner or any affiliate, director, officer or associate of the foregoing, and the sales price was determined by arm's length negotiations. Clackamas Corner consists of a one-building shopping center containing approximately 26,500 square feet of net rentable area on approximately 2.19 acres of land. At the time of sale, Clackamas Corner was approximately 100% leased and occupied.
The net proceeds to the Partnership before proration of operating income and expenses related to the property were as follows:
The Partnership recorded a net gain on sale of real estate investment of $684,856 related to this transaction, resulting from the excess of the net sales proceeds over the Partnership's net carrying value of Clackamas Corner.
INDEPENDENT AUDITORS' REPORT
THE PARTNERS BOETTCHER PENSION INVESTORS, LTD.:
We have audited the accompanying balance sheets of Boettcher Pension Investors, Ltd. (a limited partnership) as of October 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for each of the years in the three-year period ended October 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 Boettcher Pension Investors, Ltd. as of October 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 October 31, 1996, in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Denver, Colorado January 10, 1997
BOETTCHER PENSION INVESTORS LTD. (A Limited Partnership)
Balance Sheets October 31, 1996 and 1995
See accompanying notes to financial statements.
BOETTCHER PENSION INVESTORS LTD. (A Limited Partnership)
Statements of Operations Years ended October 31, 1996, 1995, and 1994
See accompanying notes to financial statements.
BOETTCHER PENSION INVESTORS LTD. (A Limited Partnership)
Statements of Partners' Capital Years ended October 31, 1996, 1995, and 1994
See accompanying notes to financial statements.
BOETTCHER PENSION INVESTORS LTD. (A Limited Partnership)
Statements of Cash Flows Years ended October 31, 1996, 1995, and 1994
BOETTCHER PENSION INVESTORS LTD. (A Limited Partnership)
Notes to Financial Statements October 31, 1996, 1995, and 1994
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(1) Significant Accounting Principles
Organization and Allocation of Income and Losses Boettcher Pension Investors Ltd. (the "Partnership") is a limited partnership formed on May 8, 1984 for the purpose of investing in improved and unimproved real property on an unleveraged basis and to purchase or originate participating mortgage loans and land lease investments. Limited partnership interests ("Units") were sold through a public offering and as of October 31, 1996, 1995 and 1994, 10,717 Units at $1,000 per Unit were outstanding.
The Managing General Partner of the Partnership is Boettcher Affiliated Investors, L.P. ("BAILP"), and the associate general partner is Boettcher 1984 Associates, Ltd.
The Partnership Agreement provides for the net operating income, as defined, of the Partnership to be allocated to the partners in accordance with their relative participation in distribution of operating cash flow. Operating cash flow is allocated as follows: (i) to the limited partners to the extent necessary to equal 9% simple interest on the adjusted capital contributions of the limited partners; (ii) to the General Partners until they have received an amount equal to 10% of the aggregate amount to be distributed for the period under (i) and (ii); and (iii) any remaining balance, 10% to the General Partners and 90% to the limited partners. Net operating cash flow for the years ended October 31, 1996, 1995 and 1994 is less than the 9% preferred return and, accordingly, net earnings from operations for fiscal 1996, 1995 and 1994 has been allocated solely to the limited partners.
The Partnership Agreement provides for net capital income from the sale or other disposition of Partnership properties to be allocated on a cumulative basis as follows: (i) first, to the extent of gross income applicable to prior depreciation deductions, 1% to the General Partners and 99% to the limited partners; (ii) second, to each of the partners in accordance with their relative participations in distributions of net proceeds and repayment proceeds. Net capital loss is allocated 1% to the General Partners and 99% to the limited partners.
Environmental Remediation Liabilities Liabilities for loss contingencies, including environmental remediation costs, arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. The costs of site clean-up are recorded in the amount of the cash payments made or for future estimated costs for that site when fixed or reliably determinable based upon information derived from the remediation plan for that site. Recoveries from third parties which are probable of realization are separately recorded, and are not offset against the related environmental liability.
BOETTCHER PENSION INVESTORS LTD. (A Limited Partnership)
Notes to Financial Statements October 31, 1996, 1995, and 1994 - --------------------------------------------------------------------------------
In October 1996, the American Institute of Certified Public Accountants issued Statement of Position ("SOP") 96-1, Environmental Remediation Liabilities. SOP 96-1 will be adopted by the Partnership during fiscal 1997 and will require, among other things, environmental remediation liabilities to be accrued when the criteria of SFAS No. 5, Accounting for Contingencies, have been met. The SOP also provides guidance with respect to the measurement of the remediation liabilities. Such accounting is consistent with the Partnership's current method of accounting for environmental remediation costs and therefore, adoption of this new Statement will not have a material impact on the Partnership's financial position, results of operations, or liquidity.
Deferred Leasing Costs Costs associated with the leasing of the Partnership's retail shopping center are deferred and amortized over the life of the related leases. These costs are comprised of lease commissions and construction costs related to the buildout of tenant space.
Financial Instruments The fair value of the Partnership's financial instruments approximate their carrying values due to the short maturities of those instruments or due to the interest rates of those instruments approximating interest rates for similar issues.
Use of Estimates Management of the Partnership has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates.
Business and Credit Concentrations The Partnership's remaining real estate investment, Parkway Village Shopping Center, is located in Provo, Utah. Three national tenants account for fifty percent of the rental income.
The Partnership estimates an allowance for doubtful accounts based on the credit worthiness of its customers as well as general economic conditions. Consequently, an adverse change in those factors could effect the Partnership's estimate of its bad debts. At October 31, 1996, the Partnership had $77,727 of tenant receivables from current and former tenants of the Parkway Village Shopping Center for which an allowance for doubtful accounts have been established.
BOETTCHER PENSION INVESTORS LTD. (A Limited Partnership)
Notes to Financial Statements October 31, 1996, 1995, and 1994
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Income Taxes No provisions has been made for Federal income taxes, as the taxable income (loss) is reported by the partners rather than the Partnership. The Partnership reports certain transactions differently for tax and financial statement purposes, primarily depreciation.
A reconciliation of net earnings as shown in the accompanying financial statements and the Partnership's income (loss) for tax purposes is shown in the table below. The October 31, 1996 net earnings as shown in the financial statements is actual. However, the Partnership's tax return for the year ended December 31, 1996 has not yet been prepared; therefore, the reconciling items for 1996 are estimates by management.
BOETTCHER PENSION INVESTORS LTD. (A Limited Partnership)
Notes to Financial Statements October 31, 1996, 1995, and 1994
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Real Estate Investments Properties held for sale are recorded at the lower of cost or fair value based on independent appraised values less estimated selling costs.
Buildings and improvements are depreciated using the straight-line method over an estimated useful life of 30 years. Equipment and furnishings are depreciated using the straight-line method over an estimated useful life of 10 years. Renewals and betterments are capitalized and repairs and maintenance are charged to operations as incurred.
Cash and Cash Equivalents For purposes of the statements of cash flows, cash and cash equivalents include highly liquid debt instruments purchased with an original maturity of three months or less. Cash and cash equivalents as of October 31 are comprised of the following:
Reclassifications ------------------------------
Certain prior year amounts have been reclassified to conform with fiscal 1996 financial statement presentation.
(2) Real Estate Investments ------------------------------ As of October 31, 1996 and 1995, the fair value of the Properties held for sale exceeds cost based upon independent appraised values less estimated selling costs. The cost of the Partnership's real estate investments and related accumulated depreciation are as follows:
October 31, 1996
BOETTCHER PENSION INVESTORS LTD. (A Limited Partnership)
Notes to Financial Statements October 31, 1996, 1995, and 1994 - --------------------------------------------------------------------------------
October 31, 1995
Sales of Real Estate Investments:
Lindsay-Main Plaza - ------------------ On May 8, 1996, the Partnership sold the land, related improvements and personal property of the retail center known as Lindsay-Main Plaza ("Lindsay") located at 116 North Lindsay, in Mesa, Arizona. The purchaser, GOV, Inc., is not affiliated with the Partnership, its Managing General Partner or any affiliate, director, officer or associate of the foregoing, and the sales price was determined by arm's length negotiations. Lindsay consists of a 1-building shopping center containing approximately 37,000 square feet of net rentable area on approximately 4.213 acres of land and one vacant undeveloped parcel of land consisting of approximately .934 acres. At the time of sale, Lindsay was approximately 38% leased and occupied.
The net proceeds to the Partnership, before proration of operating income and expenses related to the property, were as follows:
BOETTCHER PENSION INVESTORS LTD. (A Limited Partnership)
Notes to Financial Statements October 31, 1996, 1995, and 1994 - --------------------------------------------------------------------------------
The Partnership recorded a net loss on sale of real estate investment of $20,402 related to this transaction, resulting from the excess of the Partnership's net carrying value of Lindsay over the net sales proceeds.
Clackamas Corner ---------------- On October 4, 1995, the Partnership sold the land, related improvements and personal property of the retail center known as Clackamas Corner located at the northeast corner of the Clackamas Town Center in unincorporated Clackamas County, Oregon. The purchaser, Stephen M. Berrey, is not affiliated with the Partnership, its Managing General Partner or any affiliate, director, officer or associate of the foregoing, and the sales price was determined by arm's length negotiations. Clackamas Corner consists of a one-building shopping center containing approximately 26,500 square feet of net rentable area on approximately 2.19 acres of land. At the time of sale, Clackamas Corner was approximately 100% leased and occupied.
The net proceeds to the Partnership before proration of operating income and expenses related to the property were as follows:
The Partnership recorded a net gain on sale of real estate investment of $684,856 related to this transaction, resulting from the excess of the net sales proceeds over the Partnership's net carrying value of Clackamas Corner.
BOETTCHER PENSION INVESTORS LTD. (A Limited Partnership)
Notes to Financial Statements October 31, 1996, 1995, and 1994 - --------------------------------------------------------------------------------
(3) Mortgage Payable The mortgage payable is secured by a first deed of trust on Parkway Village and is nonrecourse to the Partnership. The carrying value of Parkway Village, the property collateralizing this debt of the Partnership was $5,977,943 at October 31, 1996. The payment terms of the mortgage note are as follows:
Interest Rate: 9.5% Monthly Payment: $52,422 Due Date: May 5, 2003
Aggregate maturities of principal payments for the five fiscal years ending October 31, 2001 and thereafter related to the Parkway Village mortgage are as follows:
1997 $85,253 1998 93,715 1999 103,015 2000 113,239 2001 123,657 Thereafter 5,237,027 --------- $5,755,906 ==========
The fair value of the mortgage attributable to the Partnership is estimated to be approximated by its carrying value.
(4) Transactions with Related Parties BAILP is the Managing Agent of the Partnership and is paid property management, loan servicing, and acquisition fees for its services to the Partnership. The property management fee is equal to 5% of gross receipts from the Properties, less management fees paid to others. The property management fee earned by BAILP amounted to $8,889, $13,328 and $15,182 for the years ended October 31, 1996, 1995 and 1994, respectively.
The Partnership also reimburses BAILP for its allocable share of salaries of nonmanagement and nonsupervisory personnel providing accounting, investor reporting and communications, and legal services to the Partnership and allowable expenses related to the maintenance and repair of data processing equipment used for or by the Partnership. The amount due to BAILP for such reimbursements amounted to $14,312, $16,512 and $16,542 for the years ended October 31, 1996, 1995, and 1994, respectively.
BOETTCHER PENSION INVESTORS LTD. (A Limited Partnership)
Notes to Financial Statements October 31, 1996, 1995, and 1994
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(5) Future Rental Income Aggregate base rental income relating to long-term noncancellable leases for the Partnership's properties for the five fiscal years ending October 31, 2001 and thereafter is as follows:
(6) Property Held for Sale
The Partnership has recorded its remaining real estate investment as property held for sale. The Managing General Partner is attempting to sell the Remaining Property and liquidate the Partnership in 1997. However, there can be no assurances that the Partnership will sell the Remaining Property in 1997. The ability of the Partnership to sell Parkway Village may be adversely effected by the existence and remediation of the dry cleaning solution contamination at the property, more fully discussed in Note 7. The Partnership has entered into a separate listing agreement with an unrelated real estate firm to act as the exclusive selling agent for the sale of Parkway Village. The Managing General Partner believes that the sale, if consummated, will generate net proceeds to the Partnership after the payment of sales costs, closing costs and the mortgage payable at Parkway Village; however, the sale transaction may include cash at closing and deferred payments to the Partnership. The Partnership intends to apply net sales proceeds to maintain sufficient cash reserves, as determined by the Managing General Partner, pay amounts payable to the Managing General Partner, and, thereafter, to make distributions to limited partners.
(7) Environmental Remediation Costs
In fiscal 1995, a non sudden release of a dry cleaning solution, tetrachloroethylene (PERC), was reported by the dry cleaning tenant (the Tenant) at Parkway Village to the State of Utah Department of Environmental Quality (DEQ). The Tenant, utilizing the services of an environmental consulting firm, investigated the extent of the PERC release and its effect on soil and groundwater in the vicinity. The DEQ is monitoring the Tenant's progress. Although the Tenant is responsible for the costs of any required remediation, should the Tenant be unable to complete the required work due to limitations of its financial resources, it is likely that the Partnership, as owner of Parkway Village, would be
BOETTCHER PENSION INVESTORS LTD. (A Limited Partnership)
Notes to Financial Statements October 31, 1996, 1995, and 1994
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required to complete the needed remediation. The Partnership has been advised that groundwater contamination has occurred and the Partnership on behalf of and in cooperation with the tenant, is in the process of determining the method, cost and timing of required soil and groundwater remediation measures. The Partnership has spent approximately $46,000 to date on the above mentioned testing as well as legal representation in connection with the PERC release. Management is unable at this time to estimate the full extent of additional expenses that may be incurred. Due to groundwater contamination, the Partnership may incur significant additional remediation costs. The estimate of costs and their timing of payment could change as a result of (1) changes to a remediation plan required by the State Environmental Agency, (2) changes in technology available to treat the site, (3) unforeseen circumstances existing at the site and (4) differences between actual inflation rates and rates assumed in preparing the estimate. The ultimate resolution of this matter and its impact on the Partnership's financial statements is uncertain.
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in accountants or disagreements with accountants on any matter of accounting principles or practices on financial statement disclosure or auditing scope or procedure.
PART III
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership does not have directors or executive officers. The general partner of the Partnership's Managing General Partner and Associate General Partner is Boettcher Properties Ltd. (BPL). BPL Holdings, Inc. (BPL Holdings), a Delaware corporation is the general partner of BPL. During fiscal 1995, the ultimate parent company of BPL Holdings (Kemper Securities Holdings, Inc.) experienced a change in ownership, whereby it became a wholly-owned subsidiary of EVEREN Capital Corporation and changed its name to EVEREN Securities Holdings, Inc. (ESHI). EVEREN Securities, Inc. is a wholly-owned subsidiary of ESHI. These changes have had no impact on the day-to-day operations of BPL Holdings. The following is a list of the directors and officers of BPL Holdings.
Present Position and Principal Occupation and Affiliation --------------------------------------------------------- Name and Age During the Last Five Years or More: - ----------------- -----------------------------------
Janet L. Reali Director and President (Principal Executive Officer of the --------------------------------------------------------- Age: 45 Partnership) ------------ Ms. Reali was elected Executive Vice President and Secretary of EVEREN Capital Corporation in May 1995. Since December 1993 she has been Executive Vice President, Corporate Counsel and Corporate Secretary of EVERE Securities, Inc. She became a Director and the President of BPL Holdings, Inc. in May 1995. She was Senior Vice President and Associate General Counsel of EVEREN Securities, Inc. from July 1991 to December 1993. Before joining EVEREN Securities, Inc. she was a partner in the Chicago law firm of Keck, Mahin & Cate.
Stanley R. Fallis Director of BPL Holdings, Inc. ------------------------------------------------------------- Age: 55 Mr. Fallis graduated from the University of Idaho with a BS degree in accounting. Mr. Fallis also obtained an MBA degree from the University of Utah. Mr. Fallis is a Certified Public Accountant and practiced public accounting for six years. Mr. Fallis was associated with Boettcher and Company and its successor, EVEREN Securities, Inc. for 18 years. He served as Chief Financial Officer of EVEREN Securities Inc. From August 1990 to January 1994. He then served as Senior Vice President of Kemper Corporation from March 1994 to March 1995. He is currently Senior Executive Vice President and Director of Administration of EVEREN Securities, Inc.
Daniel D. Williams Director and Vice President of BPL Holdings, Inc. -------------------------------------------------- Age: 45 Mr. Williams became a Director and Vice President of BPL Holdings, Inc. May 1995. Mr. Williams was elected Senior Executive Vice President, Treasurer and Chief Financial Officer of EVEREN Capital Corporation in May 1995. Since April 1995 he has been Senior Executive Vice President and Chief Financial Officer of EVEREN Securities, Inc. From January 1994 to April 1995, Mr. Williams was Executive Vice President and Director of Finance and Administration, and from January 1991 to January 1994 he was Senior Vice President and Director of Accounting of, EVEREN Securities, Inc. Prior thereto, he was Executive Vice President, Treasurer and Chief Financial Officer of Boettcher and Company.
Kelly J. Stradinger Vice President and Secretary of BPL Holdings, Inc. ---------------------------------------------------- Age: 37 Mr. Stradinger joined BPL in 1983 as Assistant Controller for the syndicated public real estate partnerships. Mr. Stradinger is currently in charge of asset management for all syndicated partnerships where BPL or an affiliate is the general partner. He is also a Vice President of EVEREN Securities, Inc. and Director of Leasing for the facilities management department. Mr. Stradinger graduated from Western Michigan University with a Bachelor of Business Administration in Accounting and successfully completed the Certified Public Accountant exam.
Thomas M. Mansheim Director and Treasurer of BPL Holdings, Inc. (Principal ------------------------------------------------------- Age: 39 Financial and Accounting Officer of the Partnership) ------------------------------------------------------- Mr. Mansheim joined BPL in 1984 and is currently a Senior Vice President with EVEREN Securities, Inc. He became a Director of BPL Holdings in July 1995 and has been the Treasurer of BPL Holdings, Inc. since December 1987. Mr. Mansheim is a Certified Public Accountant and from 1980 to 1984 was employed with KPMG Peat Marwick. Mr. Mansheim graduated from the University of Colorado with a Bachelor of Science degree in business administration.
There is no family relationship among the officers or directors of BPL Holdings or any of its affiliates.
Item 11.
Item 11. EXECUTIVE COMPENSATION
The Partnership, as an entity, does not have any directors or executive officers. The information required by Item 402 of Regulation SK relating to amounts owed by the Partnership to the Managing General Partner and its affiliates for services rendered during the fiscal year ended October 31, 1996 is presented below. Reference is also made to Note 4 to Financial Statements as contained in Item 8 of this report for a description of related parties.
No form of non-cash remuneration was paid by the Partnership. See Item 13 below with respect to a description of certain transactions of the Managing General Partner and its affiliates with the Partnership.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To the knowledge of the Partnership, no person or group owns of record or beneficially more than 5% of the outstanding Units.
The Partnership has no directors or executive officers. To the knowledge of the Partnership, no directors or officers of the Managing General Partner or its affiliates currently own any Units.
There exists no arrangement, known to the Partnership, the operation of which may at a subsequent date result in a change in control of the Partnership.
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership has no directors or executive officers. The information required by Item 404 of Regulation S-K is set forth in Item 11, Executive Compensation, as contained in this report.
The Partnership has a Management Agreement with the Managing General Partner pursuant to which the Managing General Partner is responsible for finding and negotiating the acquisition of suitable investments for the Partnership, originating or purchasing mortgage loans and negotiating lease terms for land lease transactions. The Managing General Partner is also responsible for performing the day-to-day investment and administrative operations of the Partnership and supervising the management and operation of the Partnership's Properties. For such services, the Managing General Partner is entitled to receive annual fees comprised of a Property Management Fee and a Loan Servicing Fee as more fully discussed in Note 4 to the Financial Statements as contained in Item 8 of this report. The Managing General Partner earns such fees for services provided to the Partnership pursuant to the Management Agreement and not by reason of its Partnership interest. The Managing General Partner earned a Property Management Fee of $8,889 for the fiscal year ended October 31, 1996.
Pursuant to the Partnership Agreement, the Managing General Partner may be reimbursed by the Partnership for certain of its costs including reimbursements for its allocable share of salaries of nonmanagement and nonsupervisory personnel providing accounting, investor reporting and communications and legal services to the Partnership, and the maintenance and repair of data processing equipment used for or by the Partnership. Pursuant to such provisions for services provided during the fiscal year ended October 31, 1996, the Managing General Partner is entitled to receive reimbursements aggregating $14,312.
The Partnership Agreement provides for the net operating income of the Partnership to be allocated to the partners in accordance with their relative participation in distribution of operating cash flow. Operating cash flow is allocated as follows: (i) to the limited partners to the extent necessary to equal 9% simple interest on the adjusted capital contributions of the limited partners; (ii) to the General Partners until they have received an amount equal to 10% of the aggregate amount to be distributed for the period under (i) and (ii); and (iii) any remaining balance, 10% to the General Partners and 90% to the limited partners. Net operating cash flow for the years ended October 31, 1996, 1995 and 1994 is less than the 9% preferred return and, accordingly, net operating income for fiscal 1996, 1995 and 1994 has been allocated solely to the limited partners.
The Partnership Agreement provides for net capital income from the sale or other disposition of Partnership properties to be allocated on a cumulative basis as follows: (i) first, to the extent of gross income applicable to prior depreciation deductions, 1% to the General Partners and 99% to the limited partners; (ii) second, to each of the partners in accordance with their relative participations in distributions of net proceeds and repayment proceeds. Net capital loss is allocated 1% to the General Partners and 99% to the limited partners.
PART IV
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
Independent Auditors' Report
Balance Sheets - October 31, 1996 and 1995
Statements of Operations - Years ended October 31, 1996, 1995, and 1994
Statements of Partners' Capital - Years ended October 31, 1996, 1995, and 1994
Statements of Cash Flows - Years ended October 31, 1996, 1995 and 1994
Notes to Financial Statements
(2) Financial Statement Schedule
Independent Auditors' Report
Schedule III - Real Estate and Accumulated Depreciation - October 31, 1996
Schedules, other than the one listed, are omitted for the reason that they are inapplicable or equivalent information has been included elsewhere herein.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the period.
(c) Exhibits
NUMBER EXHIBIT
3 Limited Partnership Agreement of Registrant (1)
10.1 Inverness Income Joint Venture Agreement dated July 24, 1984 (2)
10.2 Purchase and Sale Agreement with Exhibits thereto between The Cumberland Companies, Inc., as Seller, and Inverness Income Joint Venture as Purchaser, dated as of July 24, 1984(2)
10.3 Land Lease Agreement with exhibits thereto, between The Cumberland Companies Inc., Lessor, and Cumberland Office Plaza Joint Venture, Lessee, dated July 31, 1984 (2)
10.4 Assignment and Assumption Agreement between Boettcher Affiliated Investors L.P., Assignor, and Boettcher Pension Investors Ltd., Assignee, dated October 5, 1984 (2)
10.5 Advisor's Consulting Agreement dated September 19, 1984 (2)
10.6 Advisor's Letter of Opinion dated September 19, 1984 (2)
10.7 Management Agreement (3)
10.8 Deed of Trust Note between Johansen Thackeray MacKenzie Properties, Ltd. and Boettcher Pension Investors Ltd. dated September 30, 1985 (4)
10.9 Deed of Trust, Security Agreement, Assignment of Rents and Leases, and Financing Statement between Johansen Thackeray MacKenzie Properties, Ltd. and Boettcher Pension Investors Ltd. dated September 30, 1985 (4)
10.10 Loan Agreement between Boettcher Pension Investors Ltd. and Johansen Thackeray MacKenzie Properties, Ltd. dated September 30, 1985 (4)
10.11 Collateral Assignment and Security Agreement between Boettcher Pension Investors Ltd. and Johansen Thackeray MacKenzie Properties, Ltd. dated September 30, 1985 (4)
(c) Exhibits, continued
10.12 Guaranty dated September 30, 1985 executed by individual general partners of Borrower (Armand D. Johansen, Donald W. MacKenzie and John Thackeray) (4)
10.13 Deed of Trust Note between Lindsay-Main Plaza and Boettcher Pension Investors Ltd. dated March 13, 1986 (5)
10.14 Deed of Trust, Security Agreement and Assignment of Rents and Leases, between Lindsay-Main Plaza and Boettcher Pension Investors Ltd. dated March 13, 1986 (5)
10.15 Loan Agreement between Boettcher Pension Investors Ltd. and Lindsay-Main Plaza dated March 13, 1986 (5)
10.16 Guarantee dated March 13, 1986 as executed by the individual general partners of borrower. (Steven Shea, James Shea, Dennis Foley and Darryl Foley) (5)
10.17 Purchase agreement dated May 8, 1986 between Boettcher Pension Investors Ltd. and Westwood Corporation (6)
10.18 Notice of Commencement of Case Under Chapter 11 of the Bankruptcy Code, Meeting of Creditors, and Fixing of Dates dated March 20, 1992 (7)
10.19 Creditors Amended Plan of Reorganization and Amended Disclosure Statement dated February 1993 (7)
10.20 Purchase and Sale Agreement for Clackamas Corner(11)
28.7 Creditor's Amended Plan of Reorganization dated January 27, 1993 (8)
28.8 Order On Motion for Valuation of Secured Claim Held by California Federal Bank and Objections to Claim No. 5 of California Federal Bank dated April 13, 1993 (8)
28.9 Preliminary Order on Hearing on Confirmation of Creditor's Amended Plan of Reorganization dated April 13, 1993 (8)
28.10 Order Confirming Creditor's Amended Plan of Reorganization dated April 14, 1993 (8)
(c) Exhibits, continued
28.11 Notice of Appeal to District Court dated April 23, 1993 (8)
28.12 Order on Boettcher Pension Investors Ltd.'s Motion to Dismiss dated September 8, 1993(9)
28.13 Motion for Entry of Final Decree dated September 26, 1994(10)
28.13 Clarified Decision on Appeal dated July 15, 1994. (12)
28.14 Supplemental Order Reconfirming the Order Confirming Creditor's Amended Plan of Reorganization. (12)
(1) Incorporated by reference to Exhibit No. 3 to Amendment No. 1 to Form S-11 Registration Statement filed June 13, 1984 - File No. 2-91040.
(2) Incorporated by reference to Exhibits No. 10.1 through 10.6, respectively, to Post-Effective Amendment No. 1 to Form S-11 Registration Statement filed October 23, 1984 - File No. 2-91040.
(3) Incorporated by reference to Exhibit 10 to Amendment No. 1 to Form S-11 Registration Statement filed June 13, 1984 - File No. 2-91040.
(4) Incorporated by reference to Registrant's Report on Form 8-K dated September 30, 1985 (filed February 18, 1986).
(5) Incorporated by reference to Registrant's Report on Form 8-K dated March 19, 1986.
(6) Incorporated by reference to Registrant's Report on Form 8-K dated May 21, 1986.
(7) Incorporated by reference to Registrant's Report on Form 10-K dated October 31, 1992.
(8) Incorporated by reference to Registrant's Report on Form 10-Q dated April 30, 1993.
(9) Incorporated by reference to Registrant's Report on Form 10-Q dated July 31, 1993.
(10) Incorporated by reference to Registrant's Report on Form 10-K dated October 31, 1994.
(c) Exhibits, continued
(11) Incorporated by reference to Registrant's Report on Form 8-K dated October 4, 1995.
(12) Incorporated by reference to Registrant's Report on Form 10-Q dated September 13, 1994.
INDEPENDENT AUDITORS' REPORT
THE PARTNERS BOETTCHER PENSION INVESTORS, LTD:
Under the date of January 10, 1997, we reported on the balance sheets of Boettcher Pension Investors, Ltd. (a limited partnership) as of October 31, 1996 and 1995, and the related statements of operations, partners' capital, and cash flows for each of the years in the three-year period ended October 31, 1996, as contained in the Partnership's annual report on Form 10-K for the year 1996. In connection with our audits of the aforementioned financial statements, we also audited the related financial statement Schedule III - Real Estate and Accumulated Depreciation. 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 audit.
In our opinion, the related 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
Denver, Colorado January 10, 1997
BOETTCHER PENSION INVESTORS, LTD. (A LIMITED PARTNERSHIP) SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OCTOBER 31, 1996
BOETTCHER PENSION INVESTORS, LTD. (A LIMITED PARTNERSHIP) SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OCTOBER 31, 1996
NOTES: (a) PROPERTIES WERE PURCHASED OR ACQUIRED THROUGH FORECLOSURE DURING THE PERIODS INDICATED ABOVE FOR CASH AND/OR MORTGAGE NOTE PAYABLE.
(b) LINDSAY MAIN PLAZA WAS SOLD ON MAY 8, 1996:
(c) RECONCILIATION OF THE TOTAL AMOUNT AT WHICH REAL ESTATE WAS CARRIED
(d) REPRESENTS ADJUSTMENT TO THE ORIGINAL PURCHASE PRICE BY THE SELLER OF CLACKAMAS CORNER. REPRESENTS IMPAIRMENT OF VALUE RELATED TO LINDSAY-MAIN PLAZA AND ADJACENT LAND IN MESA, ARIZONA.
(e) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES AT OCTOBER 31, 1996 FOR PARKWAY IS: $6,558,179.
(f) FOR FEDERAL INCOME TAX PURPOSES, BUILDINGS ARE DEPRECIATED USING THE MODIFIED ACRS METHOD OVER AN ESTIMATED USEFUL LIFE OF 31.5 YEARS AT A RATE OF 3.175% OR THE STRAIGHT-LINE METHOD OVER AN ESTIMATED USEFUL LIFE OF 39 YEARS AT A RATE OF 1/39.
(g) NO INTERCOMPANY PROFITS ARE INCLUDED IN THE TOTAL OF COLUMN E.
(h) REAL ESTATE TAXES FOR FISCAL 1996 FOR PARKWAY VILLAGE WERE $71,360.
SEE ACCOMPANYING INDEPENDENT AUDITORS' REPORT.
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.
BOETTCHER PENSION INVESTORS LTD. (Registrant)
By: Boettcher Affiliated Investors L.P. Managing General Partner
By: Boettcher Properties, Ltd. Managing General Partner
By: BPL Holdings, Inc. Managing General Partner
By: /s/Thomas M. Mansheim ----------------------------- Thomas M. Mansheim, Treasurer
Dated: January 27, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons (constituting a majority of the Directors of the corporate General Partner of the Registrant's Managing General Partner) on the 27th day of January, 1997 in the capacities indicated below.
Name Capacities ---- ----------
JANET L. REALI Director and President of BPL Holdings, Inc.; Principal Executive Officer
By: /s/Janet L. Reali Dated: January 27, 1997 ----------------- Janet L. Reali
DANIEL D. WILLIAMS Director and Vice President of BPL Holdings, Inc.
By: /s/Daniel D. Williams Dated: January 27, 1997 --------------------- Daniel D. Williams
THOMAS M. MANSHEIM Director and Treasurer of BPL Holdings, Inc.; Principal Financial and Accounting Officer of the Partnership
By: /s/Thomas M. Mansheim Dated: January 27, 1997 --------------------- Thomas M. Mansheim
No annual report or proxy materials have been sent to the limited partners of the Partnership. An annual report will be sent to the limited partners subsequent to this filing, and the Partnership will furnish copies of such to the Commission when it is sent to the limited partners.