ITEM 1. BUSINESS
The Registrant, Dean Witter Realty Yield Plus II, L.P. (the "Partnership"), is a limited partnership formed in February 1988 under the laws of the State of Delaware for the purpose of investing in income- producing commercial and industrial properties.
The Managing General Partner of the Partnership is Dean Witter Realty Yield Plus II Inc. (the "Managing General Partner"), a Delaware corporation which is wholly-owned by Dean Witter Realty Inc. ("Realty"). The Associate General Partner is Dean Witter Realty Yield Plus Associates II, L.P., a Delaware limited partnership, the general partner of which is the Managing General Partner. The Managing General Partner manages and controls all aspects of the business of the Partnership. The terms of transactions between the Partnership and its affiliates are set forth below in the financial statements in Item 8 and in Item 13.
The Partnership issued 173,164 units of limited partnership interest (the "Units") for $86,582,000. The offering has been terminated and no additional Units will be sold.
The proceeds from the offering were used to make investments in three participating mortgage loans and land leases secured by interests in three office buildings, one industrial property, and an office and parking garage complex. The Partnership subsequently acquired the real estate securing all but one of the foregoing loans through foreclosure or transfers of ownership in lieu of foreclosure. The Partnership's properties and investment in participating mortgage loan are described in Item 2
ITEM 2. PROPERTIES
The Partnership's principal offices are located at Two World Trade Center, New York, New York 10048. The Partnership has no other offices.
As of December 31, 1996, the Partnership owned directly or through a partnership interest the following three interests in real estate and a real estate loan. Generally, the leases pertaining to the properties provide for pass-throughs to the tenants of their pro- rata share of certain operating expenses. In the opinion of the Managing General Partner, all of the properties are adequately covered by insurance.
1. Dean Witter Realty Yield Plus, L.P. ("Yield Plus"), an affiliate of the Partnership, owns the remaining 50.81% general partnership interest. The total initial investment in the property was approximately $71 million.
2. Yield Plus provided the remaining 58% of the loan.
Average occupancy and effective annual rent per square foot at the properties in which the Partnership has an ownership interest were as follows:
1 Represents annualized base rent amount at the time of lease expiration.
Three tenants occupy the Century Alameda property. Goldenberg Plywood, a manufacturer and distributor of home improvement products, occupies approximately 309,000 square feet (65% of the property) under a lease which expires in 2005, subject to extension at the tenant's option for 5 years at the then-current market rent. Rent per annum is approximately $854,000. Tools Exchange, a tools distributor, occupies approximately 103,000 square feet (22% of the property) under a lease which expires in 1997, subject to extension at the tenant's option for one 5-year term at 95% of the then- current market rent. Rent per annum is approximately $272,000. California Feather & Down, a home furnishings distributor, occupies approximately 61,000 square feet (13% of the property) under a lease which expires in 2007. Rent per annum is approximately $196,000.
Most of the tenants at the 2600 Michelson property are providers of financial services. The only tenant occupying more than 10% of the space is Newport Management Corporation, a subsidiary of AVCO Financial Services Corporation, which has guaranteed the lease. Newport occupies approximately 86,000 square feet (22% of the property) under a lease which expires in 2002, subject to extension at the tenant's option for two 3-year terms at 95% of the then- current market rent. The tenant has a one-time option to cancel the lease in 1999 upon payment of a termination fee.
Leases at both of the properties generally provide for fixed minimum rents with rental escalation and/or expense reimbursement clauses.
The Federal tax basis of the Century Alameda property is approximately $13.5 million. The building is depreciated on the straight-line method over a period of 31.5 years. Real estate taxes in 1996 totalled approximately $87,000 and were assessed at a rate of $1.02 per $1,000 of assessed valuation.
The Federal tax basis of the 2600 Michelson Drive property is approximately $48.9 million. The building is depreciated on the straight-line method over a period of 31.5 years. Real estate taxes in 1996 totalled approximately $622,000 and were assessed at a rate of $1.47 per $1,000 of assessed valuation.
Each property was built with on-site parking facilities.
An affiliate of Realty is the property manager for 2600 Michelson Drive and the Century Alameda Distribution Center.
Further information relating to the Partnership's properties is included in Item 7 and Notes 4 and 5 to the financial statements in Item 8 below.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
On December 27, 1995, a purported class action lawsuit (the "Grigsby Action") naming various public real estate partnerships sponsored by Realty (including the Partnership and its Managing General Partner and Associate General Partner), Realty, Dean Witter Reynolds Inc. ("DWR") and others as defendants was filed in Superior Court in California. The complaint alleged fraud, negligent misrepresentation, intentional and negligent breach of fiduciary duty, unjust enrichment and related claims and sought compensatory and punitive damages in unspecified amounts and injunctive and other equitable relief. The defendants removed the case to the United States District Court for the Southern District of California. Pursuant to an order of the U.S. District Court for the southern District of California entered May 24, 1996, the Grigsby Action was transferred to the U.S. District Court for the Southern District of New York.
On February 14, 1996, a purported class action lawsuit (the "Schectman Action") naming various public real estate partnerships sponsored by Realty (including the Partnership and its Managing General Partner), Realty, Dean Witter, Discover & Co. ("DWD") and DWR as defendants was filed in the Chancery Court of Delaware for New Castle County (the "Delaware Chancery Court"). On February 23, 1996, a purported class action lawsuit (the "Dosky Action") naming various public real estate partnerships sponsored by Realty (including the Partnership and its Managing General Partner), Realty, DWD, DWR and others as defendants was filed in the Delaware Chancery Court. On February 29, 1996, a purported class action lawsuit (the "Segal Action') naming various public real estate partnerships sponsored by Realty (including the Partnership and its Managing General Partner), Realty, DWR, DWD and others as defendants was filed in the Delaware Chancery Court. On March 13, 1996, a purported class action lawsuit (the "Young Action") naming the partnership, other unidentified limited partnerships, DWD, DWR and others as defendants was filed in the Circuit Court for Baltimore City in Baltimore, Maryland. The defendants removed the Young Action to the United States District Court for the District of Maryland.
Thereafter, the Schectman Action, the Dosky Action and the Segal Action were consolidated in a single action (the "Consolidated Action") in the Delaware Chancery Court. The Young Action was dismissed without prejudice. The plaintiffs in the Young Action and the Grigsby Action joined the Consolidated Action. The Grigsby Action remains stayed indefinitely subject to being reopened for good cause.
On October 7, 1996, the plaintiffs in the Consolidated Action filed a First Consolidated and Amended Class Action Complaint naming various public real estate partnerships sponsored by Realty (including the Partnership and its Managing General Partner), Realty, DWD, DWR and others as defendants. This complaint alleges breach of fiduciary duty and seeks an accounting of profits, compensatory damages in an unspecified amount, possible liquidation of the Partnership under a receiver's supervision and other equitable relief. The defendants filed a motion to dismiss this complaint on December 10, 1996.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the fiscal year to a vote of Unit holders.
PART II.
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
An established public trading market for the Units does not exist, and it is not anticipated that such a market will develop in the future. Accordingly, information as to the market value of a Unit at any given date is not available. However, the Partnership does allow limited partners (the "Limited Partners") to transfer their Units if a suitable buyer can be located.
As of March 17, 1997, there were 8,071 holders of limited partnership interests.
The Partnership is a limited partnership and, accordingly, does not pay dividends. It does, however, make quarterly distributions of cash to its partners. Pursuant to the Partnership Agreement, distributable cash, as defined, is paid 90% to the Limited Partners and 10% to the general partners (the "General Partners"). The Managing General Partner was obligated to (a) defer receipt of its share of distributable net cash flow, and (b) contribute additional capital to the Partnership, sufficient to fund any shortfalls between cash flow and a 7.5% annual distribution rate to Limited Partners during the offering period (which ended March 1990), and the twelve quarters thereafter. During the offering period, the Managing General Partner deferred receipt of distributions totalling $3,713,000, but was not required to make any additional capital contributions. Thereafter, the Managing General Partner contributed a total of $4,807,069 with respect to the twelve quarters ended March 31, 1993.
During the year ended December 31, 1996, the Partnership paid quarterly cash distributions aggregating $12.50 per Unit to Limited Partners. The total distribution was $2,405,056, with $2,164,550 distributed to the Limited Partners and $240,506 distributed to the General Partners. During the year ended December 31, 1995, the Partnership paid quarterly cash distributions aggregating $16.25 per Unit to Limited Partners. The total distribution amounted to $3,126,572, with $2,813,915 distributed to the Limited Partners and $312.657 distributed to the General Partners.
On January 29, 1997, the Partnership paid the fourth quarter distribution of $3.125 per Unit to the Limited Partners. The cash distribution aggregated $601,236 with $541,112 distributed to the Limited Partners and $60,124 distributed to the General Partners.
The Partnership anticipates making regular distributions to its partners in the future.
Sale or financing proceeds will be distributed, to the extent available: first, 97% to the Limited Partners and 3% to the General Partners until each Limited Partner has received a return of their invested capital plus an amount sufficient to provide a 10% cumulative annual return thereon; second, 100% to the General Partners until they have received an amount equal to (i) any portion of their share of net cash flow previously deferred and not distributed, and (ii) any additional capital contributions made by the Managing General Partner to fund distributions to the Limited Partners in respect of the 7.5% minimum annual return described above; and third, 85% to the Limited Partners and 15% to the General Partners. To date, the Partnership has not distributed any sale or financing proceeds.
Taxable income (subject to certain adjustments) will be allocated to the partners in proportion to the distribution of distributable cash or sale or financing proceeds, as the case may be (or 90% to the Limited Partners and 10% to the General Partners if there is no distributable cash or sale or financing proceeds). Tax losses, if any, will be allocated 90% to the Limited Partners and 10% to the General Partners.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
1. Revenues and loss include a $1.5 million and $9.8 million loss on impairment in 1996 and 1993, respectively, on the One Congress Street participating mortgage loan. 1996 revenues and loss also include reserves of $.5 million on accrued but unpaid interest. (See item 7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources The Partnership raised $86,582,000 through a public offering which terminated in 1990. The Partnership has no plans to raise additional capital.
The Partnership committed the gross proceeds raised in the offering to three investments. No additional investments are planned.
In many regions of the country, continued restraint of new office construction and steady leasing have reduced supply in office markets and, in certain areas, property values and rental rates are rising. Generally, suburban office markets are faring better than downtown markets in major cities. Generally, new construction remains low by historic standards, and is primarily on a build-to- suit basis. Currently, the office vacancy level in Boston (the location of One Congress Street) is approximately 9%. The relative absence of office construction and growth in demand from high technology and professional service firms has recently resulted in an absorption of office space and an increase in rental rates in the class A office market in market Orange County, CA (the location of 2600 Michelson Drive). The overall economic recovery and a lack of warehouse construction over the past several years is benefiting industrial properties such as the Century Alameda Distribution Center. Demand has remained strong for modern high quality space and well-located industrial properties.
The Partnership's liquidity depends upon the cash flow from operations of its real estate investments, interest on the participating mortgage loan and expenditures for tenant improvements and leasing commissions in connection with the leasing of space. In 1996, both the Century Alameda property and the Michelson joint venture generated positive cash flow from operations, and it is anticipated that they will continue to do so in 1997. As described below and in Note 4 to the consolidated financial statements, the borrower on the One Congress Street property is in Chapter 11 bankruptcy proceedings and did not pay approximately $470,000 of its minimum debt service in the fourth quarter of 1996.
As of December 31, 1996, the Partnership has commitments to fund approximately $171,000 to DW Michelson Associates, primarily for lease-related capital expenditures.
During the first quarter of 1996, the California Feather & Down lease at the Century Alameda property (for approximately 13% of the property's space) was extended through 2007. Because market rates have declined since the tenant signed its original lease, rental revenue and cash flow have decreased under the new lease, which was effective January 1, 1996.
During the year ended December 31, 1996, Partnership cash flows from operations and distributions from DW Michelson Associates exceeded distributions to investors, capital expenditures and contributions to DW Michelson Associates. The Partnership's participating mortgage loan is secured by the One Congress Street property. The General Services Administration ("GSA"), the sole tenant of the office space at the property, vacated approximately 30% of the space at the property in August 1996, and the lease on its remaining space expires in August 1997. On October 15, 1996, the owner/borrower filed a voluntary petition under Chapter 11 of the U.S. bankruptcy code. During the fourth quarter of 1996, the owner/borrower failed to pay interest on the loan of approximately $470,000. See Note 4 to the consolidated financial statements.
The cash flow generated from the lease of the garage at the One Congress Street property is projected to be sufficient to pay the debt service due under the first mortgage loan on the property. However, current market rental rates in Boston are significantly less than in the early 1990's when the GSA lease was entered into. Therefore, the Partnership believes that the rent to be received by the owner/borrower after re-leasing the office space at the property and, as a result, the Partnership's cash flow from the property, will significantly decrease. In addition, there may be a significant amount of time before a new tenant is found for this space, and substantial funds may be required to re-lease the space.
The Partnership believes that during the period of the bankruptcy it will be unable to collect its interest on the loan in full and that the bankruptcy may adversely impact future leasing at the property. Accordingly, the Partnership has determined that its loan is impaired and has recorded an additional valuation allowance of $1,477,000 to reduce the carrying value of the loan to its estimated fair value.
The extent to which Partnership cash flow from the One Congress Street property will be reduced in 1997 can not be determined at this time. It is possible that the cash from One Congress Street along with Partnership cash flow from operations and distributions from the joint venture will be insufficient to fund Partnership cash needs. If this were to occur, the Partnership might need to fund a portion of distributions to investors, capital expenditures and contributions to its joint ventures from cash reserves, or to reduce cash distributions.
On January 29, 1997, the Partnership paid a cash distribution of $3.125 per Unit to the Limited Partners. The cash distribution aggregated $601,236, with $541,112 distributed to the Limited Partners and $60,124 distributed to the General Partners.
Except as discussed above and in the financial statements, the Managing General Partner is not aware of any trends or events, commitments or uncertainties that may have a material impact on liquidity.
Operations Fluctuations in the Partnership's operating results for the year ended December 31, 1996 compared to 1995, and for 1995 compared to 1994 were primarily attributable to the following:
Interest on the participating mortgage loan decreased in 1996 compared to 1995 due to reserves of accrued but uncollected interest as described above in "Liquidity and Capital Resources".
Rental income increased in 1995 compared to 1994 because Goldenberg Plywood leased approximately an additional 28% of the property's space, which had been vacant from April 1994 until July 1995. Lease terms on all the space leased by Goldenberg were changed requiring a one-time adjustment to the straight-line rent accrual which also increased rental revenue in 1995. Rental income decreased in 1996 compared to 1995 primarily because of the absence of the above- described adjustment, partially offset because Goldenberg occupied 65% of the property during all of 1996.
Equity in earnings of unconsolidated partnership decreased in 1996 compared to 1995 primarily because the real estate tax refund received in 1995 was greater than that received in 1996. Equity in earnings increased in 1995 compared to 1994 because 22% of the property's vacant space was leased to Newport Management Corp., and because of lower 1995 property operating expenses (resulting from a significant refund of prior year real estate taxes). The increase was partially offset by higher depreciation and amortization on expenditures for tenant improvements and leasing commissions.
No individually significant factor accounted for the increase in property operating expenses from 1995 to 1996. Property operating expenses decreased in 1995 compared to 1994 primarily due to the absence in 1995 of provisions made in 1994 for uncollectible rents from a large tenant that was evicted from the Century Alameda property in April 1994.
The loss on impairment of the participating mortgage loan consists of the provision for loss on the One Congress Street loan in 1996.
A summary of the office and industrial building markets where the Partnership's properties, and the property underlying the Partnerships' investment in a participating mortgage loan are located, and the performance of each property, is as follows:
There has been no significant new construction in the industrial building market in Lynwood, California, the location of the Century Alameda Distribution Center. Space in this market is being absorbed at a slow and steady pace, and the current vacancy rate is 9.5%. During 1996, average occupancy at the property was 100%, and at December 31, 1996 and 1995, the property was 100% leased to 3 tenants. The leases of Goldenberg Plywood (for approximately 65% of the property's space), Tools Exchange (for approximately 22% of the property's space) and California Feather and Down (for approximately 13% of the space) expire in 2005, 1997 and 2007, respectively.
During 1996, the market vacancy rate for Class A office space in Irvine, California, the location of 2600 Michelson Drive, decreased from 18% to 16% because the steady absorption of space and the lack of new construction are leading to a decrease in the amount of available quality office space. Rental rates have also recently begun to increase in this market. During 1996, average occupancy at the property was 92%, and, at December 31, 1996, occupancy was 93% vs. 92% at the prior year-end. The lease of Newport Management Corporation (a subsidiary of AVCO Financial) for approximately 22% of the property's space expires in 2002. There are no other tenants occupying more than 10% of the property's space. Leases covering approximately 33% and 28% of the space expire in 1998 and 1999, respectively.
In 1996, the office vacancy level in the Boston office market, the location of One Congress Street, decreased from 10% to 9%. Although this market continues to tighten, rental rates have not increased significantly. As discussed above, GSA vacated approximately 70,000 square feet of the property's office space in August 1996 and its lease on the remaining space terminates in August 1997. As a result of GSA's partial vacancy occupancy at the office space decreased from 100% to 70% in 1996 vs. average occupancy of 100% in 1995. In both 1996 and 1995, the retail space, which is not a significant portion of the overall space, remained substantially vacant.
Inflation
Inflation has been consistently low during the periods presented in the financial statements and, as a result, has not had a significant effect on the operations of the Partnership or its properties.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
DEAN WITTER REALTY YIELD PLUS II, L.P.
INDEX
(a) Financial statements
Independent Auditors' Report Balance Sheets at December 31, 1996 and 1995 Statements of Operations for the years ended December 31, 1996, 1995 and 1994 Statements of Partners' Capital for the years ended December 31, 1996, 1995 and 1994 Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 Notes to Financial Statements
(b) Financial statement schedule
Real Estate and Accumulated Depreciation III
All schedules other than those indicated above have been omitted because either the required information is not applicable or the information is shown in the financial statements or notes thereto.
Independent Auditors' Report
The Partners Dean Witter Realty Yield Plus II, L.P.
We have audited the accompanying balance sheets of Dean Witter Realty Yield Plus II, L.P. (the "Partnership") as of December 31, 1995 and 1994, and the related statements of operations, partners' capital and cash flows for each of the three years in the period ended December 31, 1996. Our audits also included financial statement schedule III. These financial statements and the financial statement schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and the financial statement schedule 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 Dean Witter Realty Yield Plus II, L.P. as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. Also, in our opinion, financial statement schedule III, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
Deloitte & Touche LLP /s/Deloitte & Touche LLP
New York, New York March 27, 1997
The accounting policies of DW Michelson are consistent with those of the Partnership.
6. Building
Century Alameda Distribution Center, Lynwood, CA
The building was acquired by deed-in-lieu of foreclosure in 1992. The land underlying the building is leased from an unaffiliated party. The current ground rent is approximately $547,000 a year, subject to graduated increases until expiration of the lease in 2043.
7. Leases
Minimum future rental income under noncancellable operating leases as of December 31, 1996 is as follows:
The Partnership has determined that all leases relating to its properties are operating leases. Lease terms range from three to ten years, and generally provide for fixed minimum rents with rental escalation and/or expense reimbursement clauses. 8. Related Party Transactions
An affiliate of Realty provides property management services for 2600 Michelson Drive and the Century Alameda Distribution Center. For the years ended December 31, 1996, 1995 and 1994, the affiliate received property management fees of $129,896, $106,543 and $101,626, respectively. These amounts are included in property operating expenses.
Realty performs administrative functions and processes certain investor tax information for the Partnership. For each of the three years in the period ended December 31, 1996, the Partnership incurred approximately $212,000, for these services. These amounts are included in general and administrative expenses.
As of December 31, 1996, the affiliates were owed a total of approximately $30,000 for these services.
9. Litigation
Various public partnerships sponsored by Dean Witter Realty Inc. (including the Partnership and its Managing General Partner) are defendants in purported class action lawsuits pending in state and federal courts. The complaints allege a number of claims, including breach of fiduciary duty, fraud and misrepresentation, and seek an accounting of profits, compensatory and other damages in an unspecified amount, possible liquidation of the Partnership under a receiver's supervision and other equitable relief. The defendants are vigorously defending these actions. It is impossible to predict the effect, if any, the outcome of these actions might have on the Partnership's financial statements.
10. Subsequent Event
On January 29, 1997, the Partnership paid a cash distribution of $3.125 per Unit to Limited Partners. The cash distribution aggregated $601,236 with $541,112 distributed to the Limited Partners and $60,124 distributed to the General Partners.
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 Partnership is a limited partnership which has no directors or officers.
The directors and executive officers of the Managing General Partner are as follows:
Position with the Name Managing General Partner
William B. Smith Chairman of the Board of Directors E. Davisson Hardman, Jr. President and Director Lawrence Volpe Controller and Director Ronald T. Carman Secretary and Director
All of the directors have been elected to serve until the next annual meeting of the shareholder of the Managing General Partner or until their successors are elected and qualify. Each of the executive officers has been elected to serve until his successor is elected and qualifies.
William B. Smith, age 53, is a Managing Director of Dean Witter Realty Inc. and has been with Dean Witter Realty Inc. since 1982. He is an Executive Vice President of Dean Witter Reynolds Inc.
E. Davisson Hardman, Jr., age 47, is a Managing Director of Dean Witter Realty Inc. and has been with Dean Witter Realty Inc. since 1982.
Lawrence Volpe, age 49, is a Director and the Controller of Dean Witter Realty Inc. He is a Senior Vice President and Controller of Dean Witter Reynolds, Inc., which he joined in 1983.
Ronald T. Carman, age 45, is a Director and the Secretary of Dean Witter Realty Inc. He is a Senior Vice President and Associate General Counsel of Dean Witter, Discover & Co. and Dean Witter Reynolds Inc., which he joined in 1984.
There is no family relationship among any of the foregoing persons.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The General Partners are entitled to receive cash distributions, when and as cash distributions are made to the Limited Partners, and a share of taxable income or tax loss. Descriptions of such distributions and allocations are contained in Item 5 above. The General Partners received cash distributions of $240,506, $312,652 and $384,809 during the years ended December 31, 1996, 1995 and 1994, respectively.
The General Partners and their affiliates were paid certain fees and reimbursed for certain expenses. Information concerning such fees and reimbursements is contained in Note 8 to the Financial Statements in Item 8 above.
The directors and officers of the Partnership's Managing General Partner received no renumeration from the Partnership.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person is known to the Partnership to be the beneficial owner of more than five percent of the Units.
(b) The directors and executive officers of the Managing General Partner own the following Units as of March 17, 1997:
*Own, by virtue of ownership of limited partnership interests in the Associate General Partner, less than 1% of the Units of the Partnership.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As a result of their being partners of a limited partnership which is the limited partner of the Associate General Partner, certain current and former officers and directors of the Managing General Partner also own indirect partnership interests in the Partnership. The Partnership Agreement of the Partnership provides that cash distributions and allocations of income and loss to the general partners shall be distributed or allocated 50% to the Managing General Partner and 50% to the Associate General Partner. The General Partners' share of cash distributions and income or loss is described in Item 5 above.
All of the outstanding shares of common stock of the Managing General Partner are owned by Dean Witter Realty Inc., a Delaware corporation which is a wholly-owned subsidiary of Dean Witter, Discover & Co. The general partner of the Associate General Partner is the Managing General Partner. The limited partner of the Associate General Partner is LSYP 88, L.P., a Delaware limited partnership. Realty and certain current and former officers and directors of the Managing General Partner are partners of LSYP 88, L.P. Additional information with respect to the directors and executive officers and compensation of the Managing General Partner and affiliates is contained in Items 10 and 11 above.
The General Partners and their affiliates were paid certain fees and reimbursed for certain expenses. Information concerning such fees and reimbursements is contained in Note 8 to the Financial Statements in Item 8 above. The Partnership believes that the payment of fees and the reimbursement of expenses to the General Partners and their affiliates are on terms as favorable as would be obtained from unrelated third parties.
The One Congress Street property was developed by a partnership between a Maryland-based developer and an entity comprised of former Realty executives.
PART IV.
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Annual Report:
1. Financial Statements (see Index to Financial Statements filed as part of Item 8 of this Annual Report).
2. Financial Statement Schedules (see Index to Financial Statements filed as part of Item 8 of this Annual Report).
3. Exhibits
(3)(a) Amended and Restated Agreement of Limited Partnership dated as of June 24, 1988 set forth in Exhibit A to the Prospectus included in Registration Statement Number 33- 20475 is incorporated herein by reference.
(3)(b) Certificate of Limited Partnership dated as of June 24, 1988 set forth in Registration Statement Number 33-20475 is incorporated herein by reference.
(4)(a) Amended and Restated Agreement of Limited Partnership dated as of June 24, 1988 set forth in Exhibit A to the Prospectus included in Registration Statement Number 33- 20475 is incorporated herein by reference.
(4)(b) Certificate of Limited Partnership dated as of June 24, 1988 set forth in Registration Statement Number 33-20475 is incorporated herein by reference.
(10)(a) Partnership Agreement for DW Michelson Associates dated March 14, 1988 was filed as Exhibit 10.1 (a) to Amendment No. 1 to Registrant's Registration Statement on Form S-11 and is incorporated herein by reference.
(10)(b) First Mortgage Promissory Note, dated April 26, 1989, between the Government Center Garage Realty Trust Maker) and Dean Witter Realty Yield Plus II, L.P. was filed as Exhibit to Amendment No. 2 to Current Report on Form 8-K on April 26, 1989 and is incorporated herein by reference.
(10)(c) Construction Loan Agreement, dated April 26, 1989, between Government Center Garage Realty Trust, as Borrower and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., as Lender was filed as Exhibit to Amendment No. 2 to Current Report on Form 8-K on April 26, 1989 and is incorporated herein by reference.
(10)(d) Intercreditor Agreement among Dean Witter Realty Yield Plus, L.P., and Realty Management Services Inc. dated as of April 26, 1989 was filed as Exhibit to Amendment No. 2 to Current Report on Form 8-K on April 26, 1989 and is incorporated herein by reference
(10)(e) First Amendment to Construction Loan Agreement dated October 12, 1989 between Government Center Garage Realty Trust, as Borrower and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., as Lender. Filed as Exhibit 10(e) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated by reference herein.
(10)(f) Amended and Restated Construction Loan/Office Loan Promissory Note dated October 12, 1989 between Government Center Garage Realty Trust (Maker) and Dean Witter Realty Yield Plus II, L.P. (Holder). Filed as Exhibit 10(f) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated by reference herein. (10)(g) Second Amendment to Construction Loan Agreement dated June 22, 1990 between Government Center Garage Realty Trust, as Borrower and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., as Lender. Filed as Exhibit 10(g) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated by reference herein.
(10)(h) First Amendment to Amended and Restated Construction Loan/Office Loan Promissory Note dated June 22, 1990 between Government Center Garage Realty Trust (Maker) and Dean Witter Realty Yield Plus II, L.P. (Holder). Filed as Exhibit 10(h) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated by reference herein.
(10)(i) Supplemental Loan Agreement dated September 20, 1993 between Government Center Garage Realty Trust, as Borrower and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., as Lender. Filed as Exhibit 10(i) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated by reference herein.
(10)(j) Second Amendment to Notes dated September 20, 1993 between Government Center Garage Realty Trust (Maker) and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., (Holders). Filed as Exhibit 10(j) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated by reference herein.
(27) Financial Data Schedule
(d) 1. Financial statements of GCGA Limited Partnership, owner of an office building/parking garage located in Boston, Massachusetts. To be filed when received from GCGA Limited Partnership.
2. Financial statements of DW Michelson Associates, owner of the Michelson office buildings located in Irvine, California.
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.
DEAN WITTER REALTY YIELD PLUS II, L.P.
By: Dean Witter Realty Yield Plus II Inc. Managing General Partner
By: /s/E. Davisson Hardman, Jr. Date: March 26, 1997 E. Davisson Hardman, Jr. President
By: /s/Lawrence Volpe Date: March 26, 1997 Lawrence Volpe Controller (Principal Financial and Accounting Officer)
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.
DEAN WITTER REALTY YIELD PLUS II INC. Managing General Partner
/s/William B. Smith Date: March 26, 1997 William B. Smith Chairman of the Board of Directors
/s/E. Davisson Hardman, Jr. Date: March 26, 1997 E. Davisson Hardman, Jr. Director
/s/Lawrence Volpe Date: March 26, 1997 Lawrence Volpe Director
/s/Ronald T. Carman Date: March 26, 1997 Ronald T. Carman Director
Notes:
(A) The property is not encumbered by long term debt. The basis in the property for financial reporting purposes is net of loss on foreclosure of real estate. The loss on foreclosure does not reduce the basis for federal income tax purposes.
(B) Reconciliation of real estate owned
1996 1995 1993
Balance at beginning of period $7,092,624 $7,092,624 $7,092,624
Additions (deletions) during period: Improvements 212,002 - - Balance at end of period $7,304,626 $7,092,624 $7,092,624
(C) Reconciliation of accumulated depreciation:
Balance at beginning of period $ 824,572 $ 647,256 $ 469,940 Depreciation expense 188,200 177,316 177,316 Balance end of period $ 1,012,772 $ 824,572 $ 647,256
/TABLE
DEAN WITTER REALTY YIELD PLUS II, L.P.
Year ended December 31, 1996
Exhibit Index
Exhibit No. Description
(3)(a) Amended and Restated Agreement of Limited Partnership dated as of June 24, 1988 set forth in Exhibit A to the Prospectus included in Registration Statement Number 33-20475 is incorporated herein by reference.
(3)(b) Certificate of Limited Partnership dated as of June 24, 1988 set forth in Registration Statement Number 33-20475 is incorporated herein by reference.
(4)(a) Amended and Restated Agreement of Limited Partnership dated as of June 24, 1988 set forth in Exhibit A to the Prospectus included in Registration Statement Number 33-20475 is incorporated herein by reference.
(4)(b) Certificate of Limited Partnership dated as of June 24, 1988 set forth in Registration Statement Number 33-20475 is incorporated herein by reference.
(10)(a) Partnership Agreement for DW Michelson Associates dated March 14, 1988 was filed as Exhibit 10.1 (a) to Amendment No. 1 to Registrant's Registration Statement on Form S-11 and is incorporated herein by reference.
(10)(b) First Mortgage Promissory Note, dated April 26, 1989, between the Government Center Garage Realty Trust Maker) and Dean Witter Realty Yield Plus II, L.P. was filed as Exhibit to Amendment No. 2 to Current Report on Form 8-K on April 26, 1989 and is incorporated herein by reference.
(10)(c) Construction Loan Agreement, dated April 26, 1989, between Government Center Garage Realty Trust, as Borrower and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., as Lender was filed as Exhibit to Amendment No. 2 to Current Report on Form 8-K on April 26, 1989 and is incorporated herein by reference.
E1
DEAN WITTER REALTY YIELD PLUS II, L.P.
Year ended December 31, 1996
Exhibit Index
(continued)
Exhibit No. Description
(10)(d) Intercreditor Agreement among Dean Witter Realty Yield Plus, L.P., and Realty Management Services Inc. dated as of April 26, 1989 was filed as Exhibit to Amendment No. 2 to Current Report on Form 8-K on April 26, 1989 and is incorporated herein by reference
(10)(e) First Amendment to Construction Loan Agreement dated October 12, 1989 between Government Center Garage Realty Trust, as Borrower and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., as Lender. Filed as Exhibit 10(e) Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated by reference herein.
(10)(f) Amended and Restated Construction Loan/Office Loan Promissory Note dated October 12, 1989 between Government Center Garage Realty Trust (Maker) and Dean Witter Realty Yield Plus II, L.P. (Holder). Filed as Exhibit 10(f) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated by reference herein.
(10)(g) Second Amendment to Construction Loan Agreement dated June 22, 1990 between Government Center Garage Realty Trust, as Borrower and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., as Lender. Filed as Exhibit 10(g) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated by reference herein.
(10)(h) First Amendment to Amended and Restated Construction Loan/Office Loan Promissory Note dated June 22, 1990 between Government Center Garage Realty Trust (Maker) and Dean Witter Realty Yield Plus II, L.P. (Holder). Filed as Exhibit 10(h) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated by reference herein.
E2 DEAN WITTER REALTY YIELD PLUS II, L.P.
Year ended December 31, 1996
Exhibit Index
(continued)
Exhibit No. Description
(10)(i) Supplemental Loan Agreement dated September 20, 1993 between Government Center Garage Realty Trust, as Borrower and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., as Lender. Filed as Exhibit 10(i) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated by reference herein.
(10)(j) Second Amendment to Notes dated September 20, 1993 between Government Center Garage Realty Trust (Maker) and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., (Holders). Filed as Exhibit 10(j) Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated by reference herein.
(27) Financial Data Schedule
(99) Financial Statements of DW Michelson Associates, owner of the Michelson office buildings located in Irvine, California.
E3