ITEM 1. BUSINESS
Upon its formation in 1981, The Hallwood Group Incorporated ("Hallwood" or the "Company") (NYSE:HWG) became engaged in the ownership, operation and management of the real estate portfolios of its corporate predecessors and in the merchant banking business, specializing in assisting troubled companies to implement plans of financial restructuring. After 1981, the Company disposed of a substantial portion of its initial real estate portfolio and significantly expanded the range of its merchant banking activities. The Company has acquired substantial investment positions in a number of previously unaffiliated enterprises and has thereby become a diversified holding company engaged in three principal activities: asset management, operating subsidiaries and investments in associated companies. At December 31, 1996, the Company, its operating subsidiaries and associated company were currently engaged in the commercial and industrial real estate, energy, textile products, hotel and restaurant businesses. For financial reporting purposes, Hallwood considers itself to operate in five business segments: real estate, energy, textile products, hotels and restaurants. The Company is no longer engaged in the merchant banking business, other than in connection with the businesses in which its operating subsidiaries are engaged. The Company is no longer engaged in the restaurant business, as the entire investment was sold in March 1997 through a secondary public offering by its associated company, ShowBiz Pizza Time, Inc. ("ShowBiz"). Financial information for each industry segment in which the company operates is set forth in Note 18 to the Company's consolidated financial statements.
In October 1995, the Company changed its year end from July 31 to December 31, effective December 31, 1995.
Asset Management. The Company's asset management division consists of real estate and energy business segments.
Real Estate. Real estate activities are conducted primarily through the Company's wholly owned subsidiaries, Hallwood Realty Corporation ("HRC") and Hallwood Commercial Real Estate, Inc. ("HCRE"), formerly named Hallwood Management Company. HRC is the sole general partner of Hallwood Realty Partners, L.P. ("HRP"), a publicly-traded real estate master limited partnership (AMEX:HRY). HRC owns a 1% general partner interest and Hallwood owns a 24% limited partner interest in HRP. HRC is responsible for asset management, financing, acquiring and disposing of HRP properties as it deems appropriate. In addition, HRC provides general operating and administrative services to HRP. At December 31, 1996, HRP owned twelve commercial properties, of which seven are office building properties and five are industrial park properties. HCRE was formed in June 1991 as Hallwood Management Company and acquired the rights to manage the HRP properties under various property management agreements. HCRE is responsible for on-site property management and receives various fees for managing, leasing and construction supervision at such properties. The latest financial statements of HRP are included elsewhere within this document.
In December 1995, the Company completed the sale of the office-retail property located in the United Kingdom for $7,543,000. A provision for loss of $101,000 was recorded in connection with the sale.
The Company previously had a significant investment in mortgage loan portfolios secured by residential lots and condominiums. The portfolios were liquidated during the year ended July 31, 1995, in connection with various sales and the assignment of a portion of the portfolio to a plaintiff in settlement of a lawsuit.
In the year ended December 31, 1996, real estate accounted for 3% of the Company's total revenues, compared to 3% in the five months ended December 31, 1995, and 4% in the years ended July 31, 1995 and 1994.
See Note 12 to the Company's consolidated financial statements.
Energy. Energy operations became reportable in May 1990, when the Company increased its ownership of Hallwood Energy Corporation ("HEC") from 11% to 53%, through the conversion of its preferred stock
into common stock and the purchase of additional common stock. Since May 1990 HEC has been accounted for as a consolidated subsidiary of the Company. As a result of HEC's subsequent purchases of its own stock for treasury and the Company's acquisition of additional HEC common stock, the Company's effective percentage ownership increased to 82%, and after the Company's November 1996 successful tender offer for the remaining minority shares, HEC was merged into the Company.
Certain energy assets acquired by the Company from the merger were subsequently transferred to two wholly-owned entities, HEPGP Ltd. ("HEPGP") and Hallwood G.P., Inc. ("HGP"), the general partner of HEPGP.
The Company's energy operations are now conducted primarily through HEPGP. HEPGP is engaged in the development, production and sale of oil and gas, and in the acquisition, exploration, development and operation of additional oil and gas properties. HEPGP is the sole general partner of Hallwood Energy Partners, L.P. ("HEP"), a publicly-traded oil and gas master limited partnership (AMEX:HEP), and conducts substantially all if its operations through HEP. HEPGP's general partner interest in HEP entitles it to a share of net revenue derived from HEP's properties ranging from 2% to 25%. In addition, the Company holds approximately 6.5% of HEP's limited partner units.
The Company and its subsidiaries account for their ownership of HEP using the proportionate consolidation method, whereby they record a proportional share of HEP's revenues and expenses, current assets, current liabilities, noncurrent assets, long-term obligations and fixed assets.
In the year ended December 31, 1996, energy accounted for 7% of the Company's total revenues, compared to 8% in the five months ended December 31, 1995, and 5% and 6% in the years ended July 31, 1995 and 1994, respectively.
See Note 13 to the Company's consolidated financial statements.
Operating Subsidiaries. The Company's operating subsidiaries division consists of textile products and hotel business segments.
Textile Products. Textile products operations are conducted through the Company's wholly-owned Brookwood Companies Incorporated ("Brookwood") subsidiary. Brookwood is a complete textile service firm that develops and produces innovative fabrics and related products through specialized finishing, treating and coating processes.
In the year ended December 31, 1996, textile products accounted for 67% of the Company's total revenues, compared to 69% in the five months ended December 31, 1995, and 69% and 67% in years ended July 31, 1995 and 1994, respectively.
See Note 14 to the Company's consolidated financial statements.
Hotels. Hotel operations are conducted through the Company's wholly-owned, Hallwood Hotels, Inc. ("Hallwood Hotels") and Hallwood-Integra Holding Company, Inc. ("Integra Hotels") subsidiaries, and consist of (i) leasehold interests in two hotel properties, the Longboat Key Holiday Inn, Sarasota, Florida and the Airport Embassy Suites, Oklahoma City, Oklahoma, both of which were purchased from the Company's then affiliate, Integra-A Hotel and Restaurant Company, in June 1991 and (ii) fee interests in two Residence Inns located in Tulsa, Oklahoma and Greenville, South Carolina, and a leasehold interest in a Residence Inn located in Huntsville, Alabama. The Company previously owned and operated The Lido Beach Holiday Inn, Sarasota, Florida, which was sold in January 1995, and operated two Residence Inn hotels under management contracts which were sold during the year ended July 31, 1995.
All of the hotels are operated under license agreements with Holiday Inns Franchising, Inc., Embassy Suites, Inc. or Marriott International, Inc. The license agreements permit the licensor to prescribe, at such times as it determines, standards for the operation and maintenance of the various properties and their furnishings, equipment and facilities. Substantial capital expenditures may be required from time to time to comply with license standards.
In the year ended December 31, 1996, hotel revenues accounted for 18% of the Company's total revenues, compared to 20% in the five months ended December 31, 1995, and 22% and 20% in the years ended July 31, 1995 and 1994, respectively.
Associated Companies. Hallwood's investment in an associated company consisted of its 13% common stock investment in ShowBiz (NASDAQ:SHBZ). The Company is no longer engaged in the restaurant business, as its entire investment was sold in March 1997 through a secondary public offering by ShowBiz. The Company sold 262,500 ShowBiz shares during 1996 for $4,139,000 in cash resulting in a $2,431,000 gain. The latest financial statements of ShowBiz are included elsewhere in this document. The Company accounts for its investment in ShowBiz on the equity basis. In the year ended December 31, 1996, the Company's income from ShowBiz accounted for 4% of the Company's total revenues, compared to net losses in the five months ended December 31, 1995 and year ended July 31, 1995, and 1% of total revenues in the year ended July 31, 1994.
The Company formerly owned a 15% interest in Oakhurst Capital, Inc. (20% assuming exercise of warrants). In February 1994, the Company completed a cash sale of its entire investment for $1,250,000, resulting in a gain of $30,000.
See Notes 2 and 21 to the Company's consolidated financial statements.
Competition. The Company's real estate operations are subject to competition from other entities, many of which have more experience and substantially greater financial resources.
The energy industry is highly competitive. Major oil and gas companies, independent drilling and production programs and individual producers and operators are active bidders for oil and gas properties, as well as for the equipment and labor required to operate such properties. The market for oil and gas depends on a number of factors, including the level of domestic production, pace of the general economy, supply of imported oil and gas, actions of foreign oil-producing nations and the extent of governmental regulation and taxation.
Textile products operations encounter competition in all regions in which they are conducted. In the volume areas of the textile business, competition is sometimes based on price, particularly during a soft economy.
Hotel operations are subject to competition from similar types of properties in the vicinities in which they are located. The sale of hotels may be impacted by the inability of prospective purchasers to obtain equity capital or suitable financing.
Environmental Compliance. A number of jurisdictions in which the Company operates have adopted laws and regulations relating to environmental matters. Such laws and regulations may require the Company to secure governmental permits and approvals and undertake measures to comply therewith. Compliance with the requirements imposed may be time-consuming and costly. While environmental considerations, by themselves, have not materially affected the Company's business to date or that of its associated company, it is possible that such considerations may have a material and adverse impact in the future. The Company actively monitors its environmental compliance and is not aware of any material compliance issues.
Number of Employees. The Company had 1,020 and 1,009 employees as of February 28, 1997 and 1996, respectively, comprised as follows:
A substantial amount of the salaries and related costs of HEPGP/HEC, HRC and HCRE employees are reimbursed by the respective energy and real estate partnership affiliates.
ITEM 2.
ITEM 2. PROPERTIES
Real Properties
The general character, location and nature of the significant real properties owned by the Company and its subsidiaries and the encumbrances against such properties are described below and/or in Schedule III hereto.
Cost of real estate owned by property type and geographic distribution (in thousands of dollars):
- ---------------
* Less than 1%.
(1) Cost represents purchased leasehold interest in hotel property and capital improvements.
(2) Property is pledged as collateral under loan or bond indenture agreements.
- ---------------
* Less than 1%.
As of December 31, 1996, no single real estate property constituted 10% or more of the Company's consolidated assets.
The textile products' dyeing and finishing plant was custom-built and is well-suited for that particular business. The development of new products requires the plant to be constantly upgraded, along with various levels of utilization. The plant is a multi-shift facility, which can be fully-utilized for a particular operation at any given time.
Hotel properties are operated under license and, as such, must meet and maintain standards established by licensor. At any time during the term of the license, the licensor may require modernization, renovation and other upgrading of the hotel. Except for a franchisor mandated acceleration of the capital expenditures at one of the hotel properties, the Company is in compliance with all current requirements. The Company expects to be in full compliance by June 30, 1997.
Oil and Gas Properties
The Company's oil and gas properties consist primarily of the Company's and HEPGP's indirect interest in properties owned through their investment in HEP. Quantities and values presented in the financial statements attached hereto related to HEP's properties are shown net to their interest in HEP. The supplemental oil and gas reserve information appended to the consolidated financial statements represents estimated quantities of proved oil and gas reserves. These reserves are located principally in six areas within the United States. The determination of oil and gas reserves is based on estimates which are highly complex and interpretive. The estimates are subject to continuing change as additional information becomes available.
See Note 13 to the Company's consolidated financial statements and Supplemental Oil and Gas Reserve Information.
The following tables summarize certain oil and gas information related to the Company's and HEPGP's direct interests and their share of HEP's oil and gas activities (in thousands):
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Company, certain of its affiliates and others were named as defendants in several lawsuits relating to various transactions in which it or its affiliated entities participated. The majority of these matters have been settled and negotiations with respect to the settlement of certain of the other matters are in process. Nevertheless, the remaining lawsuits seek or may seek substantial damages from the Company and the other defendants, and there can be no assurances as to the ultimate outcome of these actions. The Company intends to defend, or in some cases negotiate to settle, the remaining actions and does not currently anticipate that such actions will have a material adverse effect on its financial condition, results of operations or cash flows beyond the reserves the Company has established for such purposes. See Note 17 to the Company's consolidated financial statements.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the security holders of the Partnership during the fourth quarter of 1996.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S UNITS AND RELATED SECURITY HOLDER MATTERS
The Partnership's Units are listed on the American Stock Exchange under the symbol "HRY". As of March 14, 1997, there were approximately 35,500 unitholders of record of the 1,672,556 Units outstanding. Each quarter HRC reviews HRP's capacity to make cash distributions to its partners.
The following table shows the range of sales prices for the periods indicated, as reported by the American Stock Exchange and adjusted for a 1-for-5 reverse split that was effective at the close of business on March 3, 1995:
Page 6 of 32 ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data regarding the Partnership's results of operations and financial position as of the dates indicated. This information should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Item 7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction with Item 6 - Selected Financial Data and Item 8
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION
Page 11 of 32 INDEPENDENT AUDITORS' REPORT
To the Partners, Hallwood Realty Partners, L.P. Dallas, Texas
We have audited the accompanying consolidated balance sheets of Hallwood Realty Partners, L.P. and subsidiaries as of December 31, 1996 and 1995, and the related consolidated 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 the financial statement schedule listed in the Index at Item 8. These financial statements and financial statement schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based upon 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, such consolidated financial statements present fairly, in all material respects, the financial position of Hallwood Realty Partners, L.P. and subsidiaries as of December 31, 1996 and 1995 and the results of their operations and their 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, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Dallas, Texas February 11, 1997
Page 12 of 32
HALLWOOD REALTY PARTNERS, L.P. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS EXCEPT UNIT AMOUNTS)
See notes to consolidated financial statements.
Page 13 of 32
HALLWOOD REALTY PARTNERS, L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS EXCEPT PER UNIT AMOUNTS)
See notes to consolidated financial statements.
Page 14 of 32
HALLWOOD REALTY PARTNERS, L.P. CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (IN THOUSANDS EXCEPT UNIT AMOUNTS)
See notes to consolidated financial statements.
Page 15 of 32 HALLWOOD REALTY PARTNERS, L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
See notes to consolidated financial statements.
Page 16 of 32 HALLWOOD REALTY PARTNERS, L. P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE YEARS ENDED DECEMBER 31, 1996
1. ORGANIZATION
Hallwood Realty Partners, L.P. ("HRP" or the "Partnership"), a publicly traded Delaware limited partnership, is engaged in diversified real estate activities, including the acquisition, ownership and operation of commercial office, industrial real estate and other real estate related assets. The Partnership's limited partners' interests ("Units") are traded on the American Stock Exchange.
As of December 31, 1996, the Partnership owned twelve real estate assets (the "Properties"), of which seven are office building properties and five are industrial park properties containing approximately 2,610,000 and 2,557,000 net rentable square feet, respectively. The Properties are located in six states. The Partnership seeks to maximize the value of the Properties by making capital and tenant improvements, by executing marketing programs to attract and retain tenants and by reducing operating expenses.
Hallwood Realty Corporation ("HRC" or the "General Partner"), a Delaware corporation and wholly-owned subsidiary of The Hallwood Group Incorporated ("Hallwood") is responsible for asset management of the Partnership and its Properties, including the decision making responsibility for financing, refinancing, acquiring and disposing of properties. In addition, HRC provides general operating and administrative services to the Partnership. Hallwood Commercial Real Estate, Inc. ("HCRE", formerly named Hallwood Management Company), another wholly-owned subsidiary of Hallwood, provides property management services to the Properties.
2. ACCOUNTING POLICIES
CONSOLIDATION
The Partnership fully consolidates into its financial statements majority owned entities and reflects a minority interest for those entities not fully owned. As of December 31, 1996, all entities and Properties of the Partnership were fully owned. All significant intercompany balances and transactions have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS
The Partnership considers highly liquid investments with a remaining maturity of three months or less at the time of purchase to be cash equivalents.
PROPERTY
Property is stated at cost. Renovations and improvements are capitalized; maintenance and repairs are expensed. When an asset is sold or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any gain or any previously unanticipated loss is recognized in the year of sale or disposition. The Partnership's management routinely reviews its investments for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Depreciation of buildings is computed using the straight-line method over estimated useful lives ranging from 10 to 43 years. Equipment and other improvements are depreciated on the straight-line method over estimated useful lives ranging from 3 to 23 years. Tenant improvements are capitalized and amortized over the terms of the respective leases.
The Partnership accrues for losses associated with environmental remediation obligations when such losses are probable and reasonably estimable. Accruals for estimated losses from environmental remediation obligations generally are recognized no later than completion of a remedial feasibility study. Such accurals are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value. Recoveries of environmental remediation costs from other parties are recorded as assets when their receipt is deemed probable. Partnership's management is not aware of any environmental remediation obligations which would materially affect the operations, financial position or cash flows of the Partnership.
Page 17 of 32 HALLWOOD REALTY PARTNERS, L. P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE YEARS ENDED DECEMBER 31, 1996
2. ACCOUNTING POLICIES - CONTINUED
OTHER ASSETS
Lease concessions and commissions are amortized over the terms of the respective leases. Leases in the Properties expire from 1997 to 2013. Loan costs are amortized over the terms of the respective loans. The loans mature between 2000 and 2011. Amortization of lease concessions, included in property operations revenues, was $144,000, $688,000 and $707,000 in 1996, 1995 and 1994, respectively. Amortization of lease commissions, included in property operations expense, was $1,880,000, $1,588,000 and $1,403,000 in 1996, 1995 and 1994, respectively. Amortization of loan costs, included in interest expense, was $453,000, $1,469,000 and $618,000 in 1996, 1995 and 1994, respectively.
The following table sets forth the components of prepaid expenses and other assets, net on the balance sheet as of the dates indicated (in thousands):
INCOME TAXES
Currently, the Partnership is a non-taxable entity. Federal and state income taxes, if any, are the responsibility of the individual partners. Accordingly, the Consolidated Financial Statements do not include a provision for income taxes. However, certain business and franchise taxes are the responsibility of the Partnership and subsidiary entities. These business and franchises taxes, included in general and administrative expenses, were $206,000, $8,000, and $6,000 in 1996, 1995, and 1994, respectively. The Partnership's tax returns are subject to examination by federal and state taxing authorities. If the Partnership's amounts are ultimately changed by the taxing authorities, the tax liability of the partners could be changed accordingly. Additionally, no assurance can be given that the federal or state governments will not pass legislation that will characterize the Partnership as an association taxable as a corporation for federal income tax purposes. Such classification may have an adverse effect on the Partnership.
OTHER
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of certain assets, liabilities, revenues, and expenses as of and for the reporting periods. Actual results may differ from such estimates.
Certain reclassifications have been made in the prior year amounts to conform to the classifications used in the current year. The reclassifications had no effect on previously reported net losses.
3. TRANSACTIONS WITH RELATED PARTIES
HRC receives certain fees in connection with the ongoing management of HRP, including an asset management fee, acquisition fees and incentive disposition fees. Specifically, HRC is entitled to receive (i) an asset management fee equal to 1% of the net aggregate base rents of the Properties, (ii) acquisition fees equal to 1% of the purchase price of newly acquired properties, and (iii) incentive fees for performing disposition services with respect to real estate investments, other than the properties owned at the time of HRP's formation on November 1, 1990, equal to 10% of the amount, by which the sales price of a property disposed of exceeds the purchase price of such property.
Page 18 of 32 HALLWOOD REALTY PARTNERS, L. P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE YEARS ENDED DECEMBER 31, 1996
3. TRANSACTIONS WITH RELATED PARTIES - CONTINUED
HCRE receives compensation in connection with the management of the Properties, which includes a property management fee, lease commissions and construction supervision fees. The management contracts expire June 30, 1999 and provide for (i) basic compensation from a property management fee which is an amount equal to 2.85% of cash receipts collected from the Properties' tenants, (ii) lease commissions equal to the current market rate as applied to the net aggregate rent, not to exceed 6% of the net aggregate rent, and (iii) construction supervision fees for administering all construction projects equal to 5% of the total contract costs of each capital expenditure or tenant improvement project.
HRC and HCRE are compensated for services provided to HRP and its Properties as described above. The following table sets forth such compensation and reimbursement paid by HRP for the periods presented (in thousands):
(a) As of February, 1997, $667,000 of the lease commissions accrued in 1996 had not been paid.
(b) These costs are mostly recorded as General and Administrative Expenses and represent reimbursement to HRC, at cost, for Partnership level salaries, employee and director insurance and certain overhead costs. HRP pays, on a monthly basis, the balance of its account with HRC.
4. MORTGAGES PAYABLE
Substantially all of the buildings in eleven of the Partnership's Properties were encumbered and pledged as collateral by six non-recourse mortgages aggregating $160,732,000 as of December 31, 1996. These mortgages have interest rates varying from 8.5% to 9.25%, with an effective average interest rate of 8.8% and mature between 2000 and 2011. Certain mortgages provide for variable interest rates. Cash interest payments were $14,947,000, $15,396,000, and $15,113,000 in 1996, 1995 and 1994, respectively.
Most of the mortgages require monthly principal payments with balloon payments due at maturity. The following table shows for the periods presented the principal and balloon payments that are required (in thousands), excluding First Maryland Building's mortgage principal forgiveness discussed below:
Page 19 of 32 HALLWOOD REALTY PARTNERS, L. P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE YEARS ENDED DECEMBER 31, 1996
4. MORTGAGES PAYABLE - CONTINUED
NOMURA REFINANCING -
On September 29, 1995, a newly formed limited partnership owned 99.9% by the Partnership entered into an agreement for an $88,400,000 loan with Nomura Asset Capital Corporation. The loan has a 25 year principal amortization period with an interest rate of 8.7% through October 10, 2005 and 13.7% thereafter. The non-recourse loan is secured by cross collateralized, cross defaulted, perfected first mortgage liens on Airport Plaza, Bellevue Corporate Plaza, about 65% of Corporate Square, about 92% of Fairlane Commerce Park, Montrose Office Center, Parklane Towers, and Raintree Industrial Park.
FIRST MARYLAND BUILDING -
Per the loan modification agreement described below, HRP is required to spend $2,700,000 for the costs of improvements and the lease commission for the lease renewal of First Maryland Building's major tenant. The tenant's previous lease was not scheduled to expire until mid-1997, however the tenant had been in negotiations with HRP since early 1996 in an effort to reduce their rental rate of $25 per square foot per annum, which was substantially above the prevailing market rate in downtown Baltimore, Maryland. Concurrently with the loan modification, HRP executed a revised ten-year lease with the tenant which calls for rents ranging from $15 to $17 per square foot per annum and increases their space from 62% to 71% of the property's net rentable space of approximately 343,000 square feet.
On October 3, 1996, but effective May 1, 1996, the lender for First Maryland Building extended the loan to April 30, 2003 with an unchanged interest rate of LIBOR plus 3.25% (8.75% as of February 1997) and forgave $3,237,000 of the principal balance in addition to the $9,250,000 of forgiveness granted in September 1995, resulting in a loan principal balance of $25,552,000. Under this agreement, 49.9% of the property's net cash flow must be used to amortize the principal of the loan.
For financial reporting purposes, the mortgage principal forgiveness is treated as a troubled debt restructuring and accordingly, HRP did not recognize a gain. Instead, the the mortgage principal forgiveness remains on the balance sheet and is being amortized over the life of the loan. Interest expense is computed in such a way that a constant effective interest rate (currently equal to approximately 1.7%) is applied to the carrying amount of the loan.
The contingent nature of the forgiveness that was part of the September 1995 loan modification was removed with the October 1996 loan modification. Accordingly, for federal income tax purposes, the total forgiveness of $12,487,000 will be reported as a gain to the partners of HRP on their 1996 Schedule K-1s. Based on available records, the General Partner believes that most individuals who were partners at the time of HRP's formation in November 1990 and certain other partners possibly have enough prior years' suspended losses to absorb a part, if not all, of this gain. Partners should consult their own tax advisor or preparer to assess the tax consequences of this transaction.
EXECUTIVE PARK -
Executive Park's mortgage notes matured on June 16, 1996. On October 8, 1996, the lender and HRP entered into a renewal and loan modification agreement, which extended the maturity date fifteen years to November 15, 2011 and set the initial interest rate at 8.87%. The notes are self-amortizing and include call options every three years for evaluation of financial performance. The interest rate may be adjusted, within certain parameters, at the call option dates.
Page 20 of 32 HALLWOOD REALTY PARTNERS, L. P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE YEARS ENDED DECEMBER 31, 1996
5. LEASE AGREEMENTS
The lease provisions generally require tenants to pay fixed rental amounts plus their proportionate share of certain building operating costs and real property taxes. In addition, certain leases include provisions for annual rental adjustments. Revenue from expense recoveries, included in property operations, was $3,363,000, $3,902,000 and $2,932,000 in 1996, 1995 and 1994, respectively. At December 31, 1996, the Properties, in the aggregate, were 90% occupied and minimum cash rental payments to be received under non-cancelable leases with tenants were as follows (in thousands):
During 1996 and 1995, two tenants leasing space in the Properties each contributed more than 10% of the total revenues of the Partnership. Ford Motor Company and affiliates ("Ford") leases space in Parklane Towers and Fairlane Commerce Park and contributed approximately 16% and 18% of revenues in 1996 and 1995, respectively. The Centers for Disease Control and Prevention, an agency of the U.S. Department of Health and Human Services, ("CDC") leases space in Corporate Square and Executive Park and contributed approximately 10% of 1996's revenues. First National Bank of Maryland leases space in the First Maryland Building and contributed 12% of 1995's revenues.
As of December 31, 1996, Ford occupied approximately 283,000 square feet of office space under 14 separate leases at Parklane Towers and approximately 246,000 square feet of office, technical laboratory and industrial space under 8 separate leases at Fairlane Commerce Park. These leases expire between 1997 and 2001 and most contain renewal options, providing for one to ten year renewals. As of December 31, 1996, CDC occupied approximately 202,000 square feet of office space at Executive Park under 3 leases which expire between 1999 and 2003. CDC also occupied approximately 158,000 square feet of office space at Corporate Square under a lease which expires in 2013.
The remaining tenants are not concentrated in any one industry, nor is the Partnership otherwise dependent on any one tenant or group of tenants for 10% or more of its revenues.
6. PARTNERS' CAPITAL
REVERSE SPLIT
On February 27, 1995, the General Partner approved a one-for-five reverse split ("Reverse Split") of the outstanding Units of the Partnership ("Old Units"). The result is that each five Old Units as of the close of business on the effective date of March 3, 1995 were converted into one new unit ("New Units"). The New Units began trading on March 6, 1995 at the post-Reverse Split price. All references in the consolidated financial statements to the number of Units, per Unit amounts, and market prices of the Partnership's Units have been restated to reflect the effect of the Reverse Split.
In anticipation of the need for cash to pay for fractional New Units, the General Partner purchased 30,000 New Units from the Partnership on March 6, 1995 for $11.875 per Unit. Unitholders received cash in lieu of fractional New Units as they exchanged their certificates that they held prior to the Reverse Split for new certificates. The cash paid to Unitholders for their fractional New Units was $11.875 (based on five times the average closing price of the Old Units on the American Stock Exchange for the five trading days preceding the Reverse Split's effective date). The fractional New Units were purchased by the Partnership. As a result of these transactions, the number of outstanding units decreased from 8,662,298 Old Units to 1,747,765 New Units. During the first quarter of 1995, the General Partner's capital account was adjusted for the above mentioned transactions in order to maintain its 1% general partner interest, in accordance with HRP's Partnership Agreement.
Page 21 of 32 HALLWOOD REALTY PARTNERS, L. P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE YEARS ENDED DECEMBER 31, 1996
6. PARTNERS' CAPITAL - CONTINUED
UNIT OPTIONS
In a separate action taken by the Board of Directors of the General Partner on February 27, 1995, a Unit Option Plan providing for the grants of options ("Options") to certain executives was approved. The Unit Option Plan calls for up to an aggregate of 86,000 New Units to be available for issuance by the Partnership upon the exercise of such Options. As of December 31, 1996, none of the Options have been exercised. Also approved was a loan program that provides for the Partnership, under certain limited conditions, to loan to the optionees the amounts necessary to exercise the Options. These nonqualified options were granted at an exercise price of $11.875 (equal to five times the closing price on the American Stock Exchange on the date before the grant to give effect of the above mentioned Reverse Split), to vest to 100% by February 27, 1997 and expire after 10 years. The options are considered antidilutive and therefore are not included in the calculation of loss per Unit amounts.
HRP has adopted the disclosure-only provisions of Statement of Financial Accounting Standards ("SFAS") No. 123 - "Accounting for Stock Based Compensation". Accordingly, no compensation cost has been recognized for the Options. Had compensation costs for the Options been determined based on the fair value at the grant date for the awards in 1995 consistent with the provisions of SFAS No. 123, HRP's net loss and net loss per Unit for 1996 and 1995 would have been the pro forma amounts indicated below (in thousands except per Unit amounts):
The fair value of the option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used: expected volatility of 57.8%, risk-free interest rate of 7.1%, expected life of 5 years and no distribution yield.
COMMISSION-FREE OFFER
On June 5, 1995, the Partnership announced a commission-free program for Unitholders to sell their interest in the Partnership for holdings of less than 100 Units as of the record date of May 31, 1995. The offer allowed eligible Unitholders to sell all, but not less than all, of their Units to the Partnership without incurring any brokerage commissions. The offer will benefit the Partnership by reducing the annual Unitholder servicing costs incurred for tax reporting, printing, postage and transfer agent costs.
Units were purchased by the Partnership on the first business day (the "Purchase Date") on which the Partnership determined that the Unit certificate was in proper form and that the Letter of Transmittal form was properly completed. The per Unit price paid by the Partnership was based on the average of the closing market prices of the Units for the five trading days immediately preceding the Purchase Date, as reported by The Wall Street Journal. On July 10, 1995 the offer expired. The Partnership acquired about 294,000 Units from over 16,600 Unitholders. As planned, the Partnership resold the acquired Units to Hallwood for the amount that the Partnership paid for the Units, approximately $4,100,000.
UNIT PURCHASES
HRP purchased, in private transactions, 74,760 Units for $1,776,000 in May 1996 and 449 Units for $12,000 in July 1996. In addition, the General Partner's capital account was adjusted by $18,000 in order to maintain its 1% general partner interest, in accordance with HRP's Partnership Agreement. Accordingly, HRP's outstanding Units have decreased from 1,747,765 Units to 1,672,556 Units.
Page 22 of 32 HALLWOOD REALTY PARTNERS, L. P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE YEARS ENDED DECEMBER 31, 1996
7. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107 - "Disclosures about Fair Value of Financial Instruments", requires disclosure of the estimated fair values of certain financial instruments. The estimated fair value amounts have been determined using available market information based upon negotiations held by HRC with potential lenders or other appropriate valuation methodologies that require considerable judgment in interpreting market data and developing estimates. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
The fair value of financial instruments that are short-term or reprice frequently and have a history of negligible credit losses is considered to approximate their carrying value. These include cash and cash equivalents, short term receivables, accounts payable and other liabilities. Real estate and other assets consist of nonfinancial instruments, which are excluded from the scope of SFAS 107.
Management has reviewed the carrying values of its mortgages payable in connection with interest rates currently available to the Partnership for borrowings with similar characteristics and maturities (approximately 8.8%) and has determined that they would equal approximately $159,096,000 and $166,851,000 (excluding the contingent forgiveness of debt discussed in Note 4) of estimated fair value as of December 31, 1996 and 1995, respectively.
As of December 31, 1996 and 1995, the fair value information presented herein is based on pertinent information available to management. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and, therefore current estimates of fair value may differ significantly from the amounts presented herein.
8. COMMITMENTS AND CONTINGENCIES
LITIGATION
On April 14, 1994, the Partnership reached an agreement to settle all claims arising out of a class action lawsuit originally filed in July 1990. In 1994, the Partnership incurred $8,198,000 of litigation and settlement cost expenses. The Partnership is from time to time involved in various legal proceedings in the ordinary course of its business. Management believes that the resolution of these matters will not have a material effect on the financial position, cash flow or operations of the Partnership.
ASBESTOS
Parklane Towers, as well as certain other properties to a lesser extent, are known to contain asbestos. Removal of the asbestos at Parklane Towers is estimated to cost $1,700,000; however, it is not required to be removed since it is not friable and the Partnership has an Operations and Maintenance Program in place. Federal and state environmental legislation or regulations may have an impact on the future operations of Parklane Towers or certain other properties if such legislation or regulations require the immediate expenditure of funds to comply with applicable restrictions or requirements.
RIGHTS PLAN
The Partnership has a Unit Purchase Rights Agreement ("Rights Plan") that provides for a distribution of one right for each Unit of the Partnership to holders of record at the close of business as of December 10, 1990. The rights will become exercisable only in the event, with certain exceptions, an acquiring party accumulates 15 percent or more of the Partnership's Units, or if a party commences or announces an intent to commence a tender offer or exchange offer to acquire 30 percent or more of such Units. The rights will expire on November 30, 2000. Each right will entitle the holder to buy one additional Unit at a price of $250. In addition, upon the occurrence of certain events, holders of the rights will be entitled to purchase either Partnership Units or shares in an "acquiring entity" at half of market value. The Partnership will generally be entitled to redeem the rights at $.01 per right at any time on or prior to the tenth day following the acquisition of a 15 percent or greater interest in its Units.
Page 23 of 32 HALLWOOD REALTY PARTNERS, L. P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE YEARS ENDED DECEMBER 31, 1996
9. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Set forth below is selected quarterly financial data for the years ended December 31, 1996 and 1995.
Page 24 of 32
HALLWOOD REALTY PARTNERS, L.P. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1996 (IN THOUSANDS)
See notes to Schedule III on following page.
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HALLWOOD REALTY PARTNERS, L.P. NOTES TO SCHEDULE III DECEMBER 31, 1996 (IN THOUSANDS)
(A) PROPERTY LOCATIONS ARE AS FOLLOWS:
Office Building Properties: Airport Plaza - San Diego, California Bellevue Corporate Plaza - Bellevue, Washington Corporate Square - Atlanta, Georgia Executive Park - Atlanta, Georgia First Maryland Building - Baltimore, Maryland Montrose Office Center - Rockville, Maryland Parklane Towers - Dearborn, Michigan
Industrial Park Properties: Bradshaw Business Parks - Sacramento and Rancho Cordova, California Fairlane Commerce Park - Dearborn, Michigan Joy Road Distribution Center - Detroit, Michigan Raintree Industrial Park - Solon, Ohio Seattle Business Parks - Kent and Tukwila, Washington
(B) RECONCILIATION OF CARRYING COSTS (in thousands):
(C) COMPUTATION OF DEPRECIATION:
Depreciation of buildings is computed using the straight-line method over estimated useful lives ranging from 10 to 43 years. Equipment and other improvements are depreciated on the straight-line method over estimated useful lives ranging from 3 to 23 years. Tenant improvements are capitalized and amortized over the term of the respective leases. Accumulated depreciation also includes loss reserves established for anticipated losses on future dispositions.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
None.
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PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership has no officers or directors. HRC, as general partner of the Partnership, performs all functions ordinarily performed by officers and directors. HRC was incorporated in Delaware in January 1990.
BUSINESS EXPERIENCE OF DIRECTORS AND OFFICERS OF HRC -
ANTHONY J. GUMBINER, 52, CHAIRMAN OF THE BOARD AND DIRECTOR OF HRC Mr. Gumbiner has served as Chairman of the Board of Directors of Hallwood since 1981 and as its Chief Executive Officer since April 1984. He has served as Chairman of the Board of Directors from May 1984 to November 1996 and Chief Executive Officer since February 1987 of the general partner of Hallwood Energy Partners, L.P. ("HEP"). He has also served as the managing director of Hallwood Holdings S.A. ("HHSA") since March 1984; as a director of HRC since 1990; as a director of Hallwood Consolidated Resources Corporation ("HCRC") since 1992; and as a director of ShowBiz Pizza Time, Inc. ("ShowBiz") since September 1988. Mr. Gumbiner is also a Solicitor of the Supreme Court of Judicature of England.
BRIAN M. TROUP, 49, DIRECTOR OF HRC Mr. Troup has served as a director of Hallwood since 1981 and as President and Chief Operating Officer of Hallwood since April 1986. Mr. Troup has served as a director of the general partner of HEP since May 1984. He also has served as a director of HCRC since 1992; as a director of HHSA since March 1984; as a director of HRC since 1990; and as a director of ShowBiz since September 1988. He is an associate of the Institute of Bankers in Scotland and a member of the Society of Investment Analysts in the United Kingdom.
WILLIAM L. GUZZETTI, 53, PRESIDENT AND DIRECTOR OF HRC Mr. Guzzetti has been President and a director of HRC since January 1990. He has served as Executive-Vice President of Hallwood since October 1989 and as President and a director of HCRC since 1992. Mr. Guzzetti has been President and a director of the general partner of HEP since February 1985.
JOHN G. TUTHILL, 53, EXECUTIVE VICE PRESIDENT AND SECRETARY Mr. Tuthill has been the Executive Vice President and Secretary of HRC since January 1990. Mr. Tuthill joined Hallwood in October 1989 to head all property management functions, having previously served as President of Southmark Commercial Management since November 1986, where he was responsible for a diversified real estate portfolio of over 18,000,000 square feet.
JEFFREY D. GENT, 49, VICE PRESIDENT - FINANCE Mr. Gent has been the Vice President-Finance of HRC since March 1990, having previously served as Vice President - Finance of Southmark Commercial Management since September 1984, where he was responsible for the financial functions of a diversified real estate portfolio of over 18,000,000 square feet.
ALAN G. CRISP, 55, DIRECTOR OF HRC Mr. Crisp was Chairman and Chief Executive Officer of Atlantic Metropolitan Holdings (U.K.) plc from 1979 until 1988, when he joined Interallianz Bank Zurich AG. From 1988 to 1993, he was General Manager of the London Office of the Bank. He is a Fellow of the Royal Institution of Chartered Surveyors and holds a B.A. (Hons) Degree.
WILLIAM F. FORSYTH, 47, DIRECTOR OF HRC Mr. Forsyth has been Chairman of Kildalton & Co., an investment management consultancy based in Edinburgh, Scotland since 1992. He graduated in law at Edinburgh University in 1971, and is a member of the Society of Investment Analysts in the United Kingdom.
EDWARD T. STORY, 53, DIRECTOR OF HRC Mr. Story has been President and Chief Executive Officer of SOCO International, Inc., an oil and gas company, since September, 1991. Prior to September 1991, he was Founder and Chairman of Thaitex Petroleum Company, Co-founder and Chief Financial Officer of Conquest Exploration Company, the Chief Financial Officer for Superior Oil Company and Exploration and Production Controller with Exxon Corporation.
UDO H. WALTHER, 49, DIRECTOR OF HRC Mr. Walther has been President and Chief Executive Officer of Walther Group, Inc., a full service design and construction consultancy, and President of Precept Builders, Inc. since 1991. Previously, Mr. Walther was a Partner at Trammell Crow Company, Project Manager with HCB Contractors and Marketing Vice President for Researched Investments, Ltd.
Page 27 of 32
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - (CONTINUED)
Section 16(a) of the Securities and Exchange Act of 1934 requires a registrant's officers and directors, if any, and persons who own more than ten percent of a registered class of the Partnership's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the "SEC") and the American Stock Exchange. Officers, directors and greater than ten percent shareholders are required by the SEC regulations to furnish the Partnership with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such forms furnished to the Partnership, or written representations that no Forms 5 were required, the Partnership believes that during the period January 1, 1996 to December 31, 1996, all Section 16(a) filing requirements applicable to its officers and directors were complied with.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS, INSIDER PARTICIPATION AND COMPENSATION OF DIRECTORS
HRC does not have a compensation committee and compensation decisions are made by the Board of Directors of HRC. During 1996, Messrs. Gumbiner, Troup and Guzzetti served on the Board of Directors of HRC and the compensation committee of Hallwood Energy. Mr. Gumbiner is also Chief Executive Officer of Hallwood, HRC and the general partner of HEP. Mr. Troup is also President and Chief Operating Officer of Hallwood. Mr. Guzzetti is also President and Chief Operating Officer of HRC, Chief Operating Officer and President of the general partner of HEP, and Executive Vice President of Hallwood. Messrs. Crisp and Forsyth were each paid $20,000 in each of the three years ended December 31, 1996 for director fees. Messrs. Story and Walther were each paid $20,000 in 1996 and 1995 and $10,000 in 1994 for director fees.
HRC receives certain fees in connection with the ongoing management of HRP, including an asset management fee, acquisition fees and incentive disposition fees. Specifically, HRC is entitled to receive (i) an asset management fee equal to 1% of the net aggregate base rents of the Properties, (ii) acquisition fees equal to 1% of the purchase price of newly acquired properties, and (iii) incentive fees for performing disposition services with respect to real estate investments, other than the properties owned at the time of HRP's formation on November 1, 1990, equal to 10% of the amount, by which the sales price of a property disposed of exceeds the purchase price of such property.
HCRE receives compensation in connection with the management of the Properties, which includes a property management fee, lease commissions and construction supervision fees. The management contracts expire June 30, 1999 and provide for (i) basic compensation from a property management fee which is an amount equal to 2.85% of cash receipts collected from the Properties' tenants, (ii) lease commissions equal to the current market rate as applied to the net aggregate rent, not to exceed 6% of the net aggregate rent, and (iii) construction supervision fees for administering all construction projects equal to 5% of the total contract costs of each capital expenditure or tenant improvement project.
HRC and HCRE are compensated for services provided to HRP and its Properties as described above. The following table sets forth such compensation and reimbursement paid by HRP for the periods presented (in thousands):
(a) As of February, 1997, $667,000 of the lease commissions accrued in 1996 had not been paid.
(b) These costs are mostly recorded as General and Administrative Expenses and represent reimbursement to HRC, at cost, for Partnership level salaries, employee and director insurance and certain overhead costs. HRP pays, on a monthly basis, the balance of its account with HRC.
Page 28 of 32
ITEM 11. EXECUTIVE COMPENSATION - (CONTINUED)
CASH COMPENSATION OF EXECUTIVE OFFICERS
The Partnership has no executive officers, however, employees of HRC (general partner of the Partnership) perform all functions ordinarily performed by executive officers. The following table sets forth annual compensation information for the Chief Executive Officer and the three other executive officers with earnings that exceeded $100,000 for the year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
- -------------
(a) Represents executive officers' gross salary before contributions to the qualified 401(k) Tax Favored Savings Plan.
(b) Represents employer matching contributions to the 401(k) Tax Favored Savings Plan or payments in lieu thereof made under a special bonus arrangement.
(c) Represents the number of options granted for Partnership Units under a February 1995 plan - see Note 6 to the Consolidated Financial Statements. Other than this plan, HRC and HRP do not have any long term compensation awards and payouts, such as a stock option plan or restricted stock awards.
The following table discloses for each of the executive officers of HRC, who have been granted options to purchase securities of HRP the number of such options heldby each of the executive officers and the potential realizable values for their options at December 31, 1996. None of the executive officers exercised any options during the year ended December 31, 1996 and HRP has not granted SARs.
AGGREGATED OPTION/SAR EXERCISES IN 1996 AND OPTION/SAR VALUES AT DECEMBER 31, 1996
Page 29 of 32
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 14, 1997 concerning the number of Units of the Partnership owned beneficially by (l) the persons who, to the knowledge of the management, beneficially owned more than 5% of the Units outstanding on such date, (2) each director and (3) the present directors and executive officers of HRC as a group:
- --------------------
* Represents less than l% of the outstanding Units.
** Represents the following address: c/o Hallwood Realty Corporation, 3710 Rawlins, Suite 1500, Dallas, Texas, 75219.
(a) Unless otherwise indicated, each of the persons named has sole voting and investment power with respect to the Units reported.
(b) Comprised of currently exercisable options to purchase 25,800 Units.
(c) Includes currently exercisable options to purchase 15,000 Units.
(d) Comprised of currently exercisable options to purchase 17,200 Units.
(e) Includes currently exercisable options to purchase 78,000 Units.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For information covered by this item, see Notes 3 and 6 to the Registrant's financial statements included in Item 8 hereof.
Page 30 of 32
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(1) Financial Statements.
See Index contained in Item 8.
(2) Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter of 1996 or in 1997 prior to the filing of this Form 10-K for the year ended December 31, 1996.
(3) Exhibits and Reports on Form 8-K.
The response to this portion of Item 14 is incorporated by reference as detailed in the Exhibit Index.
(4) Financial Statement Schedules.
See Index contained in Item 8.
Page 31 of 32
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.
HALLWOOD REALTY PARTNERS, L.P. BY: HALLWOOD REALTY CORPORATION GENERAL PARTNER
DATE: March 14, 1997 BY: /s/ WILLIAM L. GUZZETTI ------------------------------------- William L. Guzzetti President and Chief Operating Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K for the year ended December 31, 1996, has been signed below by the following persons on behalf of the Registrant in the capacities and on the date indicated.
Page 32 of 32
HALLWOOD REALTY PARTNERS, L.P. EXHIBIT INDEX
HALLWOOD REALTY PARTNERS, L.P. EXHIBIT INDEX - (Continued)
INDEX TO EXHIBITS
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* Constitutes a compensation plan or agreement for executive officers.