Item 1. Business
General
Registrant is a Delaware limited partnership formed on August 14, 1986. RAM Funding, Inc., a Delaware corporation that is a wholly-owned subsidiary of Presidio Capital Corp. ("Presidio"), is Registrant's managing general partner ("Managing General Partner"). RAM Funding Inc., was until November 3, 1994 a wholly-owned subsidiary of Integrated Resources Inc. (Integrated").
Registrant offered 400,000 units of limited partnership interest (the "Units") pursuant to the Prospectus dated April 12, 1988 (the "Prospectus") of Registrant which was filed with the Securities and Exchange Commission as part of Post-Effective Amendment No. 2 to Registrant's Registration Statement on Form S-11, Commission File No. 33-9705, as amended (the "Registration Statement"). The Prospectus was supplemented by supplements dated August 12, 1988, February 8, 1989, March 10, 1989, April 28, 1989 and June 26, 1989. In June 1988, Registrant had its initial admission of limited partners, and its offering terminated on September 20, 1989. As of its final admission on October 1, 1989, Registrant had accepted subscriptions for 187,919 Units (including Units owned by the initial limited partner) resulting in total gross proceeds of $46,979,750 of which $18,405,847 of the offering proceeds was not invested or committed by April 12, 1990 and was returned in accordance with the terms of Registrant's partnership agreement ("Partnership Agreement").
Registrant invested primarily in "zero coupon" first and junior mortgage loans ("Mortgage Loans") on properties owned or acquired principally by privately and publicly syndicated limited partnerships originally sponsored by affiliates of Integrated. The Mortgage Loans had original terms of approximately twelve years with all interest and principal due and payable at the maturity or prepayment of the Mortgage Loan.
On November 3, 1994, as a result of the consummation of the reorganization plan relating to Integrated's bankruptcy, indirect ownership of the Managing General Partner and the Associate General Partner was purchased by Presidio. Presidio was also party to an Administrative Services Agreement with Wexford Management LLC ("Wexford") pursuant to which Wexford was responsible for the day to day management of Presidio and, among other things, had authority to designate officers and/or directors of the General Partners.
In December 1994, Z Square G Partners II, the Associate General Partner of Registrant whose partners were previously associated with Integrated, notified Registrant of its withdrawal as the Associate General Partner. The withdrawal became effective, after 60 days prior written notice to Limited Partners, on February 28, 1995. Upon the effective date of such withdrawal, Presidio AGP Corp. ("Presidio AGP"), which is a wholly-owned subsidiary of Presidio, became the Associate General Partner. (The Managing General Partner and Associate General Partner are hereinafter collectively referred to as the "General Partners").
On August 28, 1997, an affiliate of NorthStar Capital Partners acquired all of the Class B shares of Presidio, the corporate parent of the General Partners. This acquisition, when aggregated with previous acquisitions, caused NorthStar Capital Partners to acquire indirect control of the General Partners.
On November 2, 1997, the Administrative Services Agreement between Presidio and Wexford expired. Effective November 3, 1997, Wexford and Presidio entered into a new Administrative Services Agreement (the "ASA"), which expired on May 3, 1998. Under the terms of the ASA, Wexford provided consulting and administrative services to Presidio and its affiliates, including the General Partners and Registrant. Presidio also entered into a management agreement with NorthStar Presidio Management Company, LLC ("NorthStar Presidio"). Under the terms of the management agreement, NorthStar Presidio provides the day-to-day management of Presidio and its direct and indirect subsidiaries and affiliates.
Effective July 31, 1998, Presidio is indirectly controlled by NorthStar Capital Investment Corp. ("NorthStar"), a Maryland corporation.
For the years ended December 31, 1998, 1997 and 1996, the percentage of Registrant's revenue attributable to interest on short-term investments was 86.0%, 88.0% and 6.6%, respectively. For the year ended December 31, 1996, the Sierra Loan accounted for approximately 91.1%, of Registrant's revenue. The Sierra Loan did not account for any revenue for the years ended December 31, 1998 and 1997.
Investments of Registrant
Registrant originally invested 100% of its net proceeds in four Mortgage Loans in the original amount of $23,323,513, including interest of $23,513. In June 1992, the senior mortgage lender on one of Registrant's investments, the Promenade Loan, foreclosed on the property securing its loan and Registrant lost its entire investment. As of March 30, 1999 Registrant had investments in the remaining two Mortgage Loans in the original amounts of $7,700,000. All interest and principal is due and payable at maturity and there are no current payments due on any of the Mortgage Loans. Following is a description of the status of Registrant's investments:
Sierra Marketplace Loan
A $6,500,000 first Mortgage Loan (the "Sierra Loan") to High Cash Partners, L.P. (the "Sierra Borrower"), a public limited partnership originally sponsored by Integrated, which is secured by a shopping center commonly known as the Sierra Marketplace located in Reno, Nevada (the "Sierra Property"). The Sierra Property consists of approximately 233,000 square feet of net rentable area. The shopping center occupies 18.67 acres, consisting of two main buildings and three anchor tenant buildings with surface parking for 1,184 automobiles.
The Sierra Loan was funded on February 10, 1989 and bears interest at a rate of 11.22% per annum, compounded monthly and is due on February 28, 2001, at which time a balloon payment of $24,966,653, together with additional interest (as described below) if any, will be due and payable. Under the terms of the Sierra Loan, the Sierra Borrower must provide, on request, a current appraisal of the Sierra Property. If the sum of (i) the principal balance of the Sierra Loan plus all other then outstanding indebtedness secured by the Sierra Property plus (ii) all accrued and unpaid interest in excess of 5% per annum of the principal balance of such mortgages, exceed 85% of the current appraised value, the Sierra Borrower shall be immediately obligated to pay such excess. In the event that such excess becomes due, the Sierra Borrower may not have sufficient liquidity to satisfy its obligation to Registrant. The Sierra Borrower could be forced to sell its property or seek other relief, including protection under the bankruptcy laws. Management has prepared a valuation of the Property and based on that valuation, no additional amounts are presently due. However, it appears possible that the Sierra loan could accrue to a value in excess of the property's market at some point in the future.
During the first quarter of 1997, the Sierra Borrower wrote the Sierra Property down on its books to what its management believed to be its estimated fair market value of $15,875,000. The balance of the Sierra Loan at December 31, 1996 was approximately $15,979,000 and it was unlikely that any additional interest accrued on the Sierra Loan would ultimately be recovered from the value of the underlying property. Consequently, as of January 1, 1997, Registrant ceased accruing interest on the Sierra Loan.
Registrant is entitled to additional interest equivalent to 23.9% of the appreciation in the value of the Sierra Property after payment of a specified return to the Sierra Borrower. The maximum annual rate of interest, including the additional interest, cannot exceed 16% compounded annually. It is unlikely that Registrant will realize any additional interest from the appreciation of the property.
The total amount, including fees, allocated to the Sierra Loan from the gross proceeds of Registrant's offering was $7,715,134 including payment to the Managing General Partner of a mortgage placement fee of $385,757.
Harborista Loan
A $10,000,000 second Mortgage Loan (the "Harborista Loan") to Harborista Associates L.P. (the "Harborista Borrower"), a private limited partnership originally sponsored by Integrated, is secured by an office building commonly known as the Harbor Plaza, located in Boston, Massachusetts ("Harbor Plaza"). Harbor Plaza consists of a 13-story office building on .88 acres containing approximately 334,000 square feet of rentable space, located in the Fort Point Channel section of downtown Boston. Harbor Plaza is 100% leased pursuant to a master net lease (the "Master Lease") which, subject to a right of early termination by the Harborista Borrower, expired on November 30, 1998.
The Harborista Loan was funded on February 13, 1989 and bears interest at a rate of 13.307% per annum, compounded monthly and was originally due on December 1, 1998 at which time a balloon payment of $36,568,146 would have been payable.
The total amount, including fees, allocated to the loan from the gross proceeds of Registrant's offering was $11,897,345 including payment to the Managing General Partner of a mortgage placement fee of $594,867.
Harbor Plaza is also encumbered by a first mortgage loan in the amount of $24,475,000 (the "Northwestern Mortgage") held by Northwestern Mutual Life Insurance Co. ("Northwestern"). The Northwestern Mortgage was due to mature on December 1, 1995, but was extended until January 1, 1999. On February 8, 1999, Northwestern filed a motion for foreclosure of the Northwestern Mortgage.
During 1993 management determined that interest on the Harborista Loan should cease to accrue and that an allowance for loan losses was necessary for the entire carrying value of the Harborista Loan which, at that time, was $10,618,380.
On March 30, 1999, Registrant sold its interest in the Harborista Loan to an unaffiliated third party for gross proceeds of approximately $1,000,000, exclusive of legal and other costs related to the transaction of approximately $200,000. As of December 31, 1998, Registrant recorded $800,000 of recovery of loan losses with respect to this sale.
Twin Oak Loan
Registrant holds a $1,200,000 second Mortgage Loan (the "Twin Oak Loan") to Twin Oak Plaza Associates (the "Twin Oak Borrower"), a limited partnership originally sponsored by Integrated, which is secured by the Twin Oak Shopping Center, located in Fort Lauderdale, Florida (the "Twin Oak Property").
The Twin Oak Property is a 113,217 square foot community retail shopping center which includes a 15,000 square foot addition built by the Twin Oak Borrower, which had been fully leased to McCrory until March 1995 at which time McCrory vacated. McCrory filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in February 1992. In July 1993, the Bankruptcy Court approved McCrory's application for a Lease Amendment which allowed for a reduction in its rental rates to current market levels. The tenant had been current with its rent payments since the Bankruptcy Court hearing, however, McCrory had petitioned the Bankruptcy Court to terminate its Lease and vacated the premises on March 31, 1995. During 1996, 1997 and 1998 the McCrory space was leased to Scotty's Hardware, who began paying rent to the Twin Oak Borrower in April 1997.
The Twin Oak Property is also encumbered by a first mortgage in the original amount of $4,250,000, held by Southern Life Assurance Company (the "Southern Life Mortgage"). The Southern Life Mortgage bore interest at a rate of 10% per annum plus contingent interest, and was payable in 119 equal monthly installments of $36,550. The maturity date of the Southern Life Mortgage, originally July 1, 1993, was extended by three years to July 1, 1996. The terms and conditions of the extension were essentially the same as the original loan. During October 1997, the Twin Oak borrower and its first mortgage lender formally agreed to extend the maturity date to July 1, 1998. It was the intention of the general partners of Twin Oak to sell the property prior to the July 1, 1998 extended maturity date.
The property was marketed for sale during the first and second quarters of 1998, and Twin Oak entered into a formal contract of sale ("Contract #1") with an unaffiliated third party in May of 1998. The purchaser failed to perform on Contract #1 in August of 1998. The property was again marketed for sale. During this period, the Southern Life Mortgage matured on July 1, and was not repaid. On October 20, 1998, a formal agreement was executed in which the first mortgage lender again agreed to extend the maturity of the loan to July 1, 1999 in exchange for a modification to the interest rate and payment of an extension fee. On October 15, 1998, a new contract for sale ("Contract #2") was executed with Emmes Ventures ("Emmes"), an affiliate of NorthStar, also an affiliate of the general partners of the Twin Oak Borrower and Registrant.
On March 1, 1999, the Twin Oak Property was sold to Emmes for a gross purchase price of approximately $4,150,000 (subject to customary adjustments at closing). The Twin Oak Borrower used the proceeds from the sale to repay the first mortgage to Southern Life Mortgage and the remainder of the net proceeds are expected to be used to repay a portion of the Twin Oak Loan approximating $237,000.
Employees
Registrant does not have any employees. Certain services are performed by the General Partners and/or their affiliates in connection with the servicing of the Mortgage Loans pursuant to a mortgage servicing agreement. NorthStar Presidio currently performs accounting, secretarial, transfer and administrative services for Registrant and Registrant pays for its pro rata amount of such services. NorthStar Presidio also performs similar services for other affiliates of the General Partners. See Item 10, "Directors and Executive Officers of Registrant," Item 11, "Executive Compensation" and Item 13, "Certain Relationship and Related Transactions."
Item 2.
Item 2. Properties
None.
Item 3.
Item 3. Legal Proceedings
None.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders None.
PART II
Item 5.
Item 5. Market for Registrant's Securities and Related Security Holder Matters
There is no established public trading market for the Units of Registrant.
There are restrictions set forth in the Partnership Agreement which may limit the ability of a limited partner to transfer units. Such restrictions could impair the ability of a limited partner to liquidate its investment in the event of an emergency or for any other reason.
As of March 1, 1999 there were approximately 3,700 holders of Units of Registrant, owning an aggregate of 187,919 Units (including Units held by the initial limited partner).
There are no material legal restrictions set forth in the Partnership Agreement upon Registrant's present or future ability to make distributions. No distributions were made in 1998, 1997 and 1996. No distributions from cash flow are anticipated to be made in as much as all payments due from borrowers under the Mortgage Loans are deferred and payable upon maturity or prepayment of the respective Mortgage Loans. Where deemed appropriate, the Managing General Partner will consider accepting prepayments on a negotiated basis.
Item 6.
Item 6. Selected Financial Data.
(1) Net of provision for loan losses of $1,515,000 or $7.86 per Unit. (2) Net of provision for loan losses of $400,000 or $2.08 per Unit on the Twin Oak loan and recovery of loan losses of $800,000 or $4.15 per Unit on the Harborista loan.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Liquidity and Capital Resources
Registrant has invested the net proceeds of its public offering in "zero coupon" first and junior mortgage loans secured by properties owned principally by privately and publicly syndicated limited partnerships originally sponsored by affiliates of Integrated. The initial admission of limited partners occurred on June 1, 1988 and as of the termination of its offering on September 20, 1989 Registrant had raised gross proceeds of $46,979,750. Since all gross proceeds that were raised had not been invested or committed for investment, Registrant was obligated under the terms of the Prospectus to return such uninvested funds. The Managing General Partner distributed these proceeds in the amount of $19,263,445 (including interest of $857,598) in August 1990. This represented a return of capital of $90.06 per unit and an allocation of interest earned on uninvested gross proceeds, ranging from $6.42 per unit to $17.90 per unit depending on the date of admission. Additionally, Registrant made a second related distribution of $606,978, or $3.23 per unit, on October 30, 1990.
Registrant had originally invested in four Mortgage Loans aggregating approximately $23,300,000 in principal. In June, 1992 Registrant lost its investment in the Promenade Loan which represented original loan proceeds of $5,600,000 leaving an aggregate of original investments of approximately $17,700,000.
During October 1997, the Twin Oak Borrower and the first mortgage lender agreed to extend the maturity date of the Twin Oak Loan until July 1, 1998. It was the intention of the general partners of the Twin Oak Borrower to sell the property prior to the July 1, 1998 extended maturity date. Registrant agreed to consent on the condition that the Twin Oak Borrower either refinance both the first and Registrant's mortgage, or give Registrant a deed-in-lieu of foreclosure to the Twin Oak property. On October 20, 1998, a formal agreement was executed in which the first mortgage lender again agreed to extend the maturity of the loan to July 1, 1999 in exchange for a modification to the interest rate and payment of an extension fee. On October 15, 1998, the Twin Oak Borrower entered into a contract of sale with Emmes Ventures, an affiliate of NorthStar.
On March 1, 1999, the Twin Oak Property was sold to Emmes for a gross purchase price of approximately $4,150,000 (subject to customary adjustments at closing). The Twin Oak Borrower used the proceeds from the sale to repay the first mortgage to Southern Life Mortgage and the remainder of the net proceeds are expected to be used to repay a portion of the Twin Oak Loan approximating $237,000.
On March 30, 1999, Registrant sold its interest in the Harborista Loan to an unaffiliated third party for gross proceeds of approximately $1,000,000, exclusive of legal and other costs related to the transaction of approximately $200,000. As of December 31, 1998, Registrant recorded $800,000 of recovery of loan losses with respect to this sale.
Registrant uses working capital reserves provided from the proceeds of its public offering and subsequent settlement amounts, and interest earned thereon as its primary measure of liquidity. Registrant does not anticipate making any distributions from cash flow during its first 8 to 12 years of operations, or until such time as the Mortgage Loans mature or are prepaid. Working capital reserves are invested in short-term instruments and are expected to be sufficient to pay administrative expenses during the term of Registrant. As of December 31, 1998, Registrant had working capital reserves of approximately $2,908,000.
Except as discussed above, management is not aware of any other known trends, events, commitments, or uncertainties that will have a significant impact on liquidity.
Real Estate Market
The real estate market in Reno, Nevada has begun to recover from the effects of the recession which included a substantial decline in the market value of existing properties. However, due to increased competition from newly constructed retail properties, Registrant's potential for realizing the full value of its investment in Sierra Marketplace is considered unlikely.
Allowance for Loan Losses
An allowance for loan losses is established based upon a periodic review of each of the mortgage loans in Registrant's portfolio. In performing the review, management considers the estimated net realizable value of the property or collateral as well as other factors, such as the current occupancy, the amount and status of senior debt, if any, the prospects for the property and the economic situation in the region where the property is located. Because this determination of net realizable value is based upon projection of future economic events which are inherently subjective, the amounts ultimately realized at disposition may differ materially from the carrying values as of December 31, 1998.
For the quarter ended June 30, 1996, a $1,515,000 allowance for loan losses was recorded on the Twin Oak Loan. As a result of the vacancy of the former McCrory space and uncertainties regarding its lease up, a decline in the standard of living in the surrounding area of the Twin Oak Shopping Center and negotiations with the first mortgage lender regarding an extension of its loan which was due July 1, 1996, cash flow projections were performed which indicated the estimated fair value of the Twin Oak property to be approximately $4,530,000 at June 30, 1996. The contractual balance of the first mortgage at June 30, 1996 was approximately $3,890,000, necessitating a write-down of $1,515,000. A $300,000 allowance for loan losses was recorded on the Twin Oak Loan for the quarter ended September 30, 1998 and an additional $100,000 allowance for loan losses was recorded at December 31, 1998 to reduce the carrying value of the loan to approximately $237,000, which is the estimated amount to be received by the Registrant.
Additionally, during 1993 management of Registrant determined that any recovery from the Harborista Loan would be unlikely and recorded an allowance for loan losses of $10,618,380, of which $800,000 was recovered during 1998.
The allowance is inherently subjective and is based on management's best estimate of current conditions and assumptions about expected future conditions. Registrant may provide additional losses in subsequent years and such provisions could be material.
Year 2000 compliance
The Year 2000 compliance issue concerns the inability of computerized information systems and equipment to accurately calculate, store or use a date after December 31, 1999, as a result of the year being stored as a two digit number. This could result in a system failure or miscalculations causing disruptions of operations. Registrant and NorthStar Presidio recognize the importance of ensuring that its business operations are not disrupted as a result of Year 2000 related computer system and software issues.
NorthStar Presidio is in the process of assessing its internal computer information systems and is taking the steps necessary to remediate these systems so that they will be Year 2000 compliant. In connection therewith, NorthStar Presidio has installed a new fully compliant accounting and reporting system. NorthStar Presidio is also reviewing its other internal systems and programs, along with those of its unaffiliated third party service providers, in order to ensure compliance.
Because this assessment is ongoing, the total cost of bringing all systems and equipment into Year 2000 compliance has not been fully quantified. Based upon available information, NorthStar Presidio does not believe that these costs will have a material adverse effect on Registrant's business, financial condition or results. However, it is possible that there could be adverse consequences to Registrant as a result of Year 2000 issues that are outside Registrant's control. NorthStar Presidio is in the preliminary stages of evaluating these issues and will be developing contingency plans.
Results of Operations
1998 as compared to 1997
Net income increased for the year ended December 31, 1998 compared to 1997. The increase was primarily due to the recognition of recovery of loan losses recorded on the second mortgage relating to the Harborista Loan and a slight decrease in general and administrative expenses offset by the additional provisions for loan losses recorded on the second mortgage relating to the Twin Oak Loan.
Revenue increased slightly in 1998 as compared to the same period in 1997 primarily due to an increase in other income.
Costs and expenses decreased for the year ended December 31, 1998 as compared to the year ended December 31, 1997. The decrease was due to the recovery of loan losses recorded on the Harborista Loan and a slight decrease in general and administrative expenses, offset by the provisions for loan losses recorded in 1998 on the Twin Oak Loan, while no allowance was recorded in 1997. General and administrative expenses decreased primarily due to a decrease in legal and investor relations cost.
1997 as compared to 1996
Net income decreased for the year December 31, 1997 compared to 1996. The decrease was due to a greater decrease in revenues than the decrease in costs and expenses.
Revenues decreased compared to the same period in 1996 primarily due to a decrease in mortgage interest income. Mortgage interest income decreased due to the cessation of the interest accrual on the Sierra Loan. During the first quarter of 1997, High Cash Partners, L.P. the owner of the Sierra property and the borrower under the Sierra loan wrote the property down to what its management believed to be its estimated fair market value of $15,875,000. The balance of the Sierra loan at December 31, 1996 was approximately $15,979,000 and it was unlikely that any additional interest accrued on the Sierra loan would ultimately be recovered from the value of the underlying property. Consequently, as of January 1, 1997, the Partnership ceased accruing interest on the Sierra loan.
Costs and expenses decreased compared to the year ended December 31, 1996. The decrease was due to an allowance for loan losses recorded in 1996 on the Twin Oak loan, while no allowance was recorded in 1997, coupled with a decrease in general and administrative expenses. General and administrative expenses decreased primarily due to a decrease in payroll costs in 1997.
Item 7a.
Item 7a. Quantitative and Qualitative Disclosure About Market Risk
Not applicable
Item 8.
Item 8. Financial Statements and Supplementary Data
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
INDEX
All financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
To the Partners of Resources Accrued Mortgage Investors 2 L.P. Greenwich, Connecticut
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of Resources Accrued Mortgage Investors 2 L.P. (a limited partnership) as of December 31, 1998 and 1997, and the related statements of operations, partners' equity and cash flows for each of the three years in the period ended December 31, 1998. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Resources Accrued Mortgage Investors 2 L.P. as of December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998 in conformity with generally accepted accounting principles.
/s/ Hays & Company - ------------------ Hays & Company February 16, 1999, except for Note 4 which is dated March 30, 1999 New York, New York
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
BALANCE SHEETS
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
STATEMENTS OF OPERATIONS
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
STATEMENT OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
STATEMENTS OF CASH FLOWS
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1 ORGANIZATION
Resources Accrued Mortgage Investors 2 L.P. (formerly Resources Accrued Mortgage Investors L.P. - Series 87 and Resources Accrued Mortgage Investors L.P. - Series 88), a Delaware limited partnership (the "Partnership"), was formed in August 1986 under the Delaware Revised Uniform Limited Partnership Law for the purpose of investing primarily in senior and junior accrued interest mortgage loans on properties owned or acquired principally by publicly or privately syndicated limited partnerships sponsored by affiliates of Integrated Resources, Inc. ("Integrated"), the former parent of the General Partners.
The Partnership originally offered 400,000 units of limited partnership interest (the "Units") pursuant to the Prospectus dated April 12, 1988 (the "Prospectus"). Since all gross proceeds that were raised had not been invested or committed for investment, the Partnership was obligated, under the terms of the Prospectus, to return such uninvested funds. The Partnership distributed these funds in the amount of $19,263,445, including interest of $857,598, in August, 1990. Additionally, the Partnership made a second related distribution of $606,978 on October 30, 1990.
In August 1986, the Partnership admitted Resources Capital Corp. as the Administrative General Partner; RAM Funding, Inc. as the Investment General Partner; and Z Square G Partners II as the Associate General Partner (collectively, the "General Partners"). In September, 1986, the General Partners made capital contributions to the Partnership of $960, $20, and $20, respectively. The General Partners were originally entitled to receive 4.8%, .1% and .1%, respectively, of the Adjusted Cash From Operations, Disposition Proceeds and Allocations of Net Income and Loss, each as defined in the Prospectus. The initial limited partner was admitted in August, 1986, and made a capital contribution of $2,500 for ten Units. In May 1987, RAM Funding, Inc. purchased from Resources Capital Corp. its 4.8% general partner interest in the Partnership for $960. RAM Funding, Inc. then became the Managing General Partner of the Partnership. All of the undertakings and responsibilities originally assumed by Resources Capital Corp. were assumed by RAM Funding, Inc. as the Managing General Partner. Integrated, the parent of the Managing General Partner until November 3, 1994, agreed to such changes.
In December 1987, RAM Funding, Inc. and Z Square G Partners II reduced their general partner interests from 4.9% and .1%, respectively, to 2.45% and .05%, respectively; accordingly, RAM Funding, Inc. and Z Square G Partners II were then entitled to receive 2.45% and .05%, respectively, of Adjusted Cash From Operations, Disposition Proceeds and Allocations of Net Income and Loss. In addition, the Limited Partners' interest in Adjusted Cash from Operations, Disposition Proceeds and Allocations of Net Income and Loss had increased from 95% to 97.5%.
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments in mortgage loans
The Partnership principally invested in "zero coupon" senior and junior mortgage loans on properties owned or acquired by limited partnerships originally sponsored by affiliates of the General Partners. These loans generally contain provisions whereby the Partnership may be entitled to additional interest represented by participation in the appreciation of the underlying property.
The Partnership accounts for its investments in mortgage loans under the following methods:
Investment method
Mortgage loans representing transactions in which the Partnership is considered to have substantially the same risks and potential rewards as the borrower are accounted for as investments in real estate rather than as loans. Although the transactions are structured as loans, due to the terms of the zero coupon mortgage, it is not readily determinable at inception that the borrower will continue to maintain a minimum investment in the property. Under this method of accounting, the Partnership will recognize as revenue the lesser of the amount of interest as contractually provided for in the mortgage loan, or its pro rata share of the actual cash flow from operations of the underlying property inclusive of depreciation and interest expense on any senior indebtedness.
Interest method
Under this method of accounting, the Partnership recognizes revenue as interest income over the term of the mortgage loan so as to produce a constant periodic rate of return. Interest income will not be recognized as revenue during periods where there are concerns about the ultimate realization of the interest or loan principal.
Allowance for loan losses
An allowance for loan losses is established based upon a periodic review of each of the mortgage loans in the Partnership's portfolio. In performing this review, management considers the estimated net realizable value of the mortgage loan or collateral as well as other factors, such as the current occupancy, the amount and status of any senior debt, the prospects for the property and the economic situation in the region where the property is located. Because this determination of net realizable value is based upon projections of future economic events which are inherently subjective, the amounts ultimately realized at disposition may differ materially from the carrying value at each year end.
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The allowance is inherently subjective and is based upon management's best estimate of current conditions and assumptions about expected future conditions. The Partnership may provide for additional losses in subsequent periods and such provisions could be material.
Financial statements
The financial statements include only those assets, liabilities and results of operations which relate to the business of the Partnership.
Cash and cash equivalents
For the purpose of the statements of cash flows, the Partnership considers all short-term investments which have original maturities of three months or less to be cash equivalents.
Substantially all of the Partnership's cash and cash equivalents are held at one financial institution.
Fair value of financial instruments
The fair value of financial instruments is determined by reference to market data and other valuation techniques as appropriate. The Partnership's financial instruments include cash and cash equivalents and investments in mortgage loans. Unless otherwise disclosed, the fair value of financial instruments approximates their recorded values.
Net (loss) income per unit of limited partnership interest
Net (loss) income per unit of limited partnership interest is computed based upon the number of units outstanding (187,919) during the year.
Income taxes
No provisions have been made for federal, state and local income taxes, since they are the personal responsibility of the partners.
The income tax returns of the Partnership are subject to examination by federal, state and local taxing authorities. Such examinations could result in adjustments to Partnership income, which changes could effect the income tax liability of the individual partners.
Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
The Managing General Partner of the Partnership, RAM Funding, Inc., was until November 3, 1994 a wholly-owned subsidiary of Integrated Resources, Inc. ("Integrated"). On November 3, 1994, as a result of the consummation of the reorganization plan relating to Integrated's bankruptcy, indirect ownership of the Managing General Partner was purchased by Presidio Capital Corp. ("Presidio"). As of February 28, 1995, the Associate General Partner of the Partnership is Presidio AGP Corp. ("Presidio AGP"), a wholly-owned subsidiary of Presidio, which replaced Z Square G Partners II, a New York general partnership comprised of a general partnership and individuals who were all former officers, directors and significant shareholders of Integrated. The General Partners and certain affiliates of the General Partners, are general partners in several other limited partnerships which are also affiliated with Presidio, and which are engaged in businesses that are, or may be in the future, in direct competition with the Partnership.
Subject to the rights of the Limited Partners under the Limited Partnership Agreement, Presidio controls the Partnership through its indirect ownership of the General Partners. On August 28, 1997, an affiliate of NorthStar Capital Partners acquired all of the Class B shares of Presidio. This acquisition, when aggregated with previous acquisitions, caused NorthStar Capital Partners to acquire indirect control of the General Partners. Effective July 31, 1998, Presidio is indirectly controlled by NorthStar Capital Investment Corp. ("NorthStar"), a Maryland Corporation.
Presidio was also party to an Administrative Services Agreement with Wexford Management LLC ("Wexford") pursuant to which Wexford was responsible for the day-to-day management of Presidio and, among other things, had authority to designate directors of the General Partners.
On November 2, 1997, the Administrative Services Agreement between Presidio and Wexford expired. Effective November 3, 1997, Wexford and Presidio entered into a new Administrative Services Agreement (the "ASA"), which expired on May 3, 1998. Under the terms of the ASA, Wexford provided consulting and administrative services to Presidio and its affiliates, including the General Partners and the Partnership. Presidio also entered into a management agreement with NorthStar Presidio Management Company LLC ("NorthStar Presidio"). Under the terms of the management agreement, NorthStar Presidio provides the day-to-day management of Presidio and its direct and indirect subsidiaries and affiliates. During the years ended December 31, 1998 and 1997, the Partnership paid NorthStar Presidio and Wexford an aggregate of $1,000 and $24,153, respectively, for management and administrative services rendered.
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
Effective November 3, 1997, the officers and employees of Wexford that had served as officers and/or directors of the General Partners tendered their resignations. On the same date, The Board of Directors of Presidio appointed new individuals to serve as officers and/or directors of the General Partners.
As of December 31, 1998, an affiliate of Presidio has acquired 17,385 units of limited partnership interest of the Partnership. These units represent 9.3% of the issued and outstanding limited partnership units.
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES
The Partnership invested in zero-coupon, nonrecourse senior and junior mortgage loans. Collection of the amounts due on the Partnership's mortgage loans is solely dependent upon the sale or refinancing of the underlying properties at amounts sufficient to satisfy the Partnership's mortgage notes after payment of the senior mortgage notes owned by unaffiliated third parties.
Certain of the Partnership's mortgage notes contain a provision which require the borrowers to provide current appraisals based upon certain conditions or in some cases upon request.
The Partnership has prepared an internal valuation for the property owned by High Cash Partners, L.P. ("High Cash"). This loan contains a provision which requires that if the appraisal indicates the value of all indebtedness senior to and including the Partnership's loan, taking into account principal plus accrued interest in excess of 5% per annum, exceeds 85% of the then current appraisal, the borrower must repay the indebtedness to a point where the 85% loan to value ratio is restored.
Based upon this valuation, management does not believe that the loan to value ratio has been exceeded.
While there are risks inherent in a zero-coupon nonrecourse senior or junior mortgage loan portfolio, the above described provisions were intended to provide some mitigation of these risks. However, in the event a borrower is required to make a payment under such loan provisions, there can be no assurance that the borrower will be able to make such payments.
Harborista Loan
A $10,000,000 second mortgage loan (`the Harborista Loan") to Harborista Associates, L.P. is secured by an office building, commonly known as the Harbor Plaza, located in Boston, Massachusetts (the "Harbor Plaza"). The Harborista Loan was funded on February 13, 1989 and bears interest at the rate of 13.307% per annum, compounded monthly and was originally due to mature on December 1, 1998, at which time a balloon payment of approximately $36,000,000 would have been due and payable. Harbor Plaza is also encumbered by a first mortgage loan in the original amount of $24,475,000 held by Northwestern Mutual Life Insurance Co. ("Northwestern"). The first mortgage was due to mature on December 1, 1995, but was extended until January 1, 1999.
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES (continued)
During 1993 management determined that interest on the Harborista Loan should cease to accrue and that an allowance for loan losses was necessary for the entire carrying value of the Harborista Loan which amounted to $10,618,380.
On February 9, 1999, Northwestern filed a motion for foreclosure on its mortgage.
On March 30, 1999, the Partnership sold its interest in the Harborista Loan to an unaffiliated third party for gross proceeds of approximately $1,000,000, exclusive of legal and other costs related to the transaction of approximately $200,000. As of December 31, 1998, the Partnership recorded $800,000 of recovery of loan losses with respect to this sale.
Twin Oak Loan
The Partnership holds a $1,200,000 second mortgage on the Twin Oak property. The first mortgage on this property, which is held by an unaffiliated third party, was due to mature on July 1, 1993. However, during 1993, the mortgage loan was extended for three years until July 1, 1996. For the period between July 1996 and October 1997, the Twin Oak borrower continued to make reduced mortgage payments to the first mortgage lender in anticipation of a loan extension or modification. During October 1997, the Twin Oak borrower and its first mortgage lender formally agreed to extend the maturity date of the first mortgage until July 1, 1998. In order for the Twin Oak borrower to consummate this loan extension, the consent of the Partnership was required. The Partnership agreed to consent on the condition that the Twin Oak borrower either refinance both the first mortgage and the Partnership's mortgage on or before July 1, 1998 or give the Partnership a deed-in-lieu of foreclosure to the Twin Oak property. It was the intention of the general partners of Twin Oak to sell the property prior to the July 1, 1998 extended maturity date.
The property was marketed for sale and Twin Oak entered into a formal contract of sale ("Contract #1") with an unaffiliated third party in May of 1998. The purchaser failed to perform on Contract #1 in August of 1998. The property was again marketed for sale. However, on July 1, the first mortgage matured and was not repaid. On October 20, 1998, a formal agreement was executed in which the first mortgage lender again agreed to extend the maturity of the loan to July 1, 1999 in exchange for a modification to the interest rate and payment of an extension fee. On October 15, 1998, a new contract for sale ("Contract #2") was executed with Emmes Ventures ("Emmes"), an affiliate of NorthStar, also an affiliate of the general partners of Twin Oak and the Partnership.
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES (continued)
On March 1, 1999, the Twin Oak property was sold to Emmes for a gross purchase price of approximately $4,150,000 (subject to customary adjustments at closing). The Twin Oak borrower used the proceeds from the sale to repay the first mortgage holder and the remainder of the net proceeds are expected to be used to repay a portion of the Twin Oak loan approximating $237,000.
During the year ended 1996, a provision for loan losses of $1,515,000 was recorded on the Twin Oak loan. A $400,000 allowance for loan losses was recorded during 1998 to reduce the carrying value of the loan to the estimated amount anticipated to be received by the Partnership under the terms outlined in Contract #2.
Sierra Loan
A $6,500,000 first mortgage loan to High Cash is secured by a shopping center located in Reno, Nevada. Interest on the loan accrues at the rate of 11.22% per annum with no payments due until maturity on February 28, 2001.
During the first quarter of 1997, High Cash wrote the property down to what its management believed to be its estimated fair market value of $15,875,000. Management of the Partnership performed its own evaluation and determined that this amount was a fair estimate of the property value. The outstanding balance of the loan at December 31, 1996 was approximately $15,979,000 and it was unlikely that any additional interest accrued on the Sierra loan would ultimately be recovered from the value of the underlying property. Consequently, as of January 1, 1997 the Partnership ceased accruing interest on the Sierra loan.
On June 13, 1997, the general partners of High Cash, who were formerly affiliated with the General Partners, sold their general partner interests to Pembroke HCP LLC and Pembroke AGP Corp., unaffiliated third parties.
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES (continued)
Information with respect to the Partnership's mortgage loans is summarized as follows:
Information with respect to the Partnership's mortgage loans is summarized as follows:
Information with respect to the Partnership's mortgage loans is summarized as follows:
(a) This loan is accounted for under the investment method.
(b) These loans are accounted for under the interest method.
(c) The Partnership may be entitled to additional interest in the appreciation of the property which is subordinated to a specified return to the borrower. It is unlikely that the Partnership will realize any additional interest from this loan.
(d) Contractual balance represents the amount that would be required to be paid by the borrower if the loan was liquidated (principal plus accrued interest earned to date).
(e) This mortgage loan was extended until January 1, 1999.
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES (continued)
Unaudited financial information for Harbor Plaza, which is a mortgage loan accounted for under the investment method which exceeds 10% of the Partnership's original capital contributions, is not presently available.
5 ACCOUNTS PAYABLE AND ACCRUED EXPENSES
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
6 RECONCILIATION OF NET (LOSS) INCOME AND NET ASSETS PER FINANCIAL STATEMENTS TO TAX BASIS
The Partnership presently recognizes interest income on all of its investments in mortgage loans using the interest method for tax purposes. For financial statement purposes, mortgage loans accounted for under the investment method recognize income as described in Note 2.
A reconciliation of net (loss) income per financial statements to the tax basis of accounting is as follows:
The differences between the Partnership's net assets per financial statements and tax basis of accounting are as follows:
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 Registrant.
There are no officers or directors of Registrant. The Managing General Partner has overall administrative responsibility for Registrant's operations and for the selection, evaluation, negotiation and disposition of Mortgage Loans. The Associate General Partner will not devote any material amount of its business time and attention to the affairs of Registrant. The Managing General Partner is a wholly-owned subsidiary of Presidio and was incorporated in Delaware in September 1985. The Managing General Partner also serves as the investment general partner of Resources Accrued Mortgage Investor L.P. -- Series 86 ("RAM 86"), an indirect subsidiary of Presidio.
Based on a review of Forms 3 and 4 and amendments thereto furnished to Registrant pursuant to Rule 16a-3(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), during its most recent fiscal year and Forms 5 and amendments thereto furnished to Registrant with respect to its most recent fiscal year and written representations received pursuant to Item 405(b)(2)(i) of Regulation S-K, none of the directors or officers of the General Partners, or beneficial owners of more than 10% of the Units failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the most recent fiscal or prior fiscal years. However, no written representations were received from the partners of the former Associate General Partner.
As of March 1, 1999 the names and ages of, as well as the positions held by, the officers and directors of the Managing and Associate General Partners were as follows:
There are no family relationships between or among any of the directors and/or executive officers of the General Partner.
W. Edward Scheetz co-founded NorthStar Capital Partners LLC with David Hamamoto in July 1997, From 1993 through 1997, Mr. Scheetz was a partner at Apollo Real Estate Advisors L.P. From 1989 to 1993, Mr. Scheetz was a principal with Trammell Crow Ventures.
David Hamamoto co-founded NorthStar Capital Partners LLC with W. Edward Scheetz in July 1997. From 1988 to 1997, Mr Hamamoto was a partner and a co-head of the real estate principal investment area at Goldman, Sachs & Co.
Dallas E. Lucas joined Northstar Capital Partners LLC in August 1998. From 1994 until then he was the Chief Financial Officer of Crescent Real Estate Equities Company. Prior to that he was a financial consulting and audit manager in the real estate services group of Arthur Anderson LLP.
David King joined NorthStar Capital Partners LLC in November 1997. From 1990 to 1997, Mr. King was associated with Olympia & York Companies (USA) where he held the position of Senior Vice President of Finance. Prior to that Mr. King was employed with Bankers Trust in its real estate finance group.
Lawrence R. Schachter joined NorthStar Presidio in January 1998 From 1996 to 1998, Mr. Schachter was Controller at CB Commercial/Hampshire LLC. From 1995 to 1996, Mr. Schachter was Controller at Goodrich Associates. From 1992 to 1995, Mr. Schachter was Controller at Greenthal/Harlan Realty Services Co.
J. Peter Paganelli joined NorthStar Presido in March 1998. From 1997 to 1998, Mr. Paganelli was Director of Asset Management at Argent Ventures LLC, a private real estate company. From 1994 to 1997, Mr. Paganelli was a Vice President at Starwood Capital Group, LLC in its Asset Management Group. From 1986 to 1994, Mr. Paganelli was an Associate Director at Cushman & Wakefield, Inc. in its Financial Services and Asset Services Groups.
Allan B. Rothschild joined NorthStar Presidio in December 1997. From 1995 to 1997, Mr. Rothschild was Senior Vice President and General Counsel of Newkirk Limited Partnership. From 1987 to 1995, Mr. Rothschild was associated with the law firm of Proskauer, Rose LLP in its real estate group.
Marc Gordon joined NorthStar Capital Partners LLC in October 1997. From 1993 to 1997, Mr. Gordon was Vice President in the real estate investment banking group at Merrill Lynch. Prior to that, Mr. Gordon was associated with the law firm of Irell & Manella in its real estate and banking group.
Charles Humber joined NorthStar Capital Partners LLC in September 1997. From 1996 to 1997, Mr Humber was employed with Merrill Lynch in its real estate investment banking group. Prior to that, Mr. Humber was a student at Brown University.
Adam Anhang joined NorthStar Capital Partners LLC in August 1997. From 1996 to 1997, Mr. Anhang was employed by The Athena Group as part of its Russia and former Soviet Union development team. Prior to that, Mr. Anhang was a student at the Wharton School of the University of Pennsylvania.
Gregory Peck joined NorthStar Capital Partners LLC in July 1997. From 1996 to 1997, Mr. Peck was employed by Morgan Stanley as part of Morgan Stanley Realty Real Estate Funds (MSREF) and Morgan Stanley's Real Estate Investment Banking Group. From 1994 to 1996, Mr. Peck worked for Lazard Freres & Co. LLC in the Real Estate Investment Banking Group.
Many of the above officers and directors of the Managing General Partner and Associate General Partner are also officers and/or directors of the general partners of other public partnerships affiliated with Presidio or of various subsidiaries of Presidio.
Item 11.
Item 11. Executive Compensation.
Registrant is not required to and did not pay remuneration to the officers and directors of the Managing General Partner or the general partners of the former Associate General Partner. Certain officers and directors of the Managing General Partner receive compensation from affiliates of the Managing General Partner and/or its affiliates (but not from Registrant) for services performed for various affiliated entities, which may include services performed for Registrant; however, the Managing General Partner believes that any compensation attributable to services performed for Registrant is not material. See Item 13, "Certain Relationships and Related Transactions."
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
As of March 1, 1999, only the following entity was known by Registrant to be the beneficial owner of more than 5% of the Units of Registrant.
As of March 1, 1999, neither the General Partners nor their officers and directors was known by Registrant to beneficially own Units or shares of Presidio, the parent of the General Partners.
To the knowledge of the Registrant, the following sets forth certain information regarding ownership of the Class A shares of Presidio as of March 1, 1999 (except as otherwise noted) by: (i) each person or entity who owns of record or beneficially five percent or more of the Class A shares, (ii) each director and executive officer of Presidio, and (iii) all directors and executive officers of Presidio as a group. To the knowledge of Presidio, each of such shareholders has sole voting and investment power as to the shares shown unless otherwise noted.
All outstanding shares of Presidio are owned by Presidio Capital Investment Company, LLC ("PCIC"), a Delaware limited liability company. The interests in PCIC (and beneficial ownership in Presidio) are held as follows:
The holdings of the directors and executive officers of Presidio are as follows:
(1) NorthStar Presidio Capital Holding Corp. ("NS Presidio") is a Delaware corporation whose address is c/o NorthStar Capital Investment Corp., 527 Madison Avenue, 16th Floor, New York, New York 10022. NS Presidio has three shareholders: (i) NorthStar Partnership, L.P., a Delaware limited partnership whose address is c/o NorthStar Capital Investment Corp., 527 Madison Avenue, 16th Floor, New York, New York 10022, holds 99% of the common Stock (non-voting); (ii) David T. Hamamoto holds 0.5% of the common stock (voting); and (iii) W. Edward Scheetz holds 0.5% of the common stock (voting).
(2) Each of Angelo, Gordon & Co., L.P., as sole manager of AG Presidio Investors, LLC and John M. Angelo and Michael L. Gordon, as general partners of the general partner of Angelo, Gordon & Co., L.P., may be deemed to beneficially own for purposes of Rule 13d-3 of the Exchange Act the securities beneficially owned by AG Presidio Investors, LLC. Each of John M. Angelo and Michael L. Gordon disclaims such beneficial ownership. The business address for such persons is c/o Angelo, Gordon & Co., L.P., 245 Park Avenue, 26th Floor, New York, New York 10167.
(3) M.H. Davidson & Company, as sole manager of DK Presidio Investors, LLC, may be deemed to beneficially own for purposes of Rule 13d-3 of the Exchange Act the securities beneficially owned by DK Presidio Investors, LLC. The business address for such persons is c/o M.H. Davidson & Company, 885 Third Avenue, New York, New York 10022.
(4) Includes shares of PCIC beneficially owned by Stonehill Offshore Partners Limited and Stonehill Institutional Partners, L.P. John A. Motulsky is a managing general partner of Stonehill Partners, L.P., a managing member of the investment advisor to Stonehill Offshore Partners Limited and a general partner of Stonehill Institutional Partners, L.P. John A. Motulsky disclaims beneficial ownership of the shares held by these entities. The business address for such persons is c/o Stonehill Investment Corporation, 110 East 59th Street, New York, New York 10022.
(5) The business address for such person is 527 Madison Avenue, 16th Floor, New York, New York 10022.
Item 13.
Item 13. Certain Relationships and Related Transactions.
The General Partners, during Registrant's year ended December 31, 1998, earned or received compensation or payments for services from or with respect to Registrant (or Integrated or Presidio) as follows:
(1) The General Partners were not entitled to any payment for services from or with respect to Registrant, Integrated or Presidio. However, the General Partners, pursuant to the Partnership Agreement, are entitled to receive 2.5% of Registrant's income, loss, capital and distributions (2.45% to the Managing General Partner and .05% to the Associate General Partner) including without limitation Registrant's cash flow from operations and disposition proceeds. No distributions are expected to be made from operations inasmuch as all interest and principal due on the Mortgage Loans is deferred until maturity, unless there are prepayments of Mortgage Loans. For the year ended December 31, 1998, the General Partners were allocated an aggregate of $161,620 of taxable income ($158,388 to the Managing General Partner and $3,232 to the Associate General Partner).
In addition, certain officers and directors of the General Partners receive compensation from the General Partners and/or their affiliates (but not from Registrant) for services performed for various affiliated entities, which may include services performed for Registrant.
PART IV
Item 14.
Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K
(a)(1) Financial Statements See Item 8, "Financial Statements and Supplementary Data."
(a)(2) Financial Statement Schedules None.
All schedules have been omitted because they are inapplicable, not required, or the information is included in the Financial Statements or Notes thereto.
(a)(3) Exhibits 3. Certificate of Limited Partnership filed August 14, 1986 (incorporated by reference to Exhibit 3B as filed as part of Pre-Effective Amendment No. 1 filed on May 14, 1987 ("Pre-Effective Amendment") to the Registration Statement) and Amendments to Certificate of Limited Partnership filed on March 12, 1987, May 7, 1987 (incorporated by reference as filed as part of Pre-Effective Amendment to the Registration Statement) and February 5, 1988 (incorporated by reference to Post-Effective Amendment No. 2 to the Registration Statement).
4.
(A) Amended and Restated Agreement of Limited Partnership (incorporated by reference to Exhibit 3A as filed as part of Post-Effective Amendment No. 2 filed on March 23, 1988 ("Post-Effective Amendment No. 2") to the Registration Statement).
(B) Amendment No. 1 to Amended and Restated Partnership Agreement dated as of June 1, 1988, incorporated by reference to Exhibit 4(B) of the 1988 10-K.
(C) Amendment No. 2 to Amended and Restated Partnership Agreement (incorporated by reference to Supplement No. 1 dated August 12, 1988 to the Prospectus as filed pursuant to Rules 424(b)(3) and 424(c).
10.
(A) Agreement with Associate General Partner dated as of May 17, 1988 among Integrated, RAM Funding, Inc. and Z Square G Partners II, incorporated by reference to Exhibit 10(B) of the 1988 10-K.
(B) Mortgage Services Agreement dated as of April 12, 1988 between Registrant and RAM Funding, Inc., incorporated by reference to Exhibit 10(C) of the 1988 10-K.
(C) Deed of Trust, Assignment of Rents, Fixture Filing and Security Agreement among High Cash Partners, L.P., Truster; First Commercial Title, Inc., Trustee and Resources Accrued Mortgage Investors 2 L.P., Beneficiary, dated February 10, 1989 (incorporated by reference to Exhibit 10(a) of Registrant's Current Report on Form 8-K dated February 13, 1989 (hereinafter referred to as the February 13, 1989 Form 8-K)).
(D) Registered Note among High Cash Partners L.P. and Resources Accrued Mortgage Investors 2 L.P., dated February 10, 1989 (incorporated by reference to Exhibit 10(b) of the February 13, 1989 Form 8-K).
(E) Assignment of Leases and Rents among High Cash Partners L.P. and Resources Accrued Mortgage Investors 2 L.P., dated February 10, 1989 (incorporated by reference to Exhibit 10(c) of the February 13, 1989 Form 8-K).
(F) Power of Sale Mortgage, Assignment of Rents and Security Agreement (also constituting a financing statement) from Harborista Associates Limited Partnership Mortgagor, to Resources Accrued Mortgage Investors 2 L.P. Mortgagee, dated January 31, 1989 (incorporated by reference to Exhibit 10(d) of the February 13, 1989 Form 8-K).
(G) Note among Harborista Associates Limited Partnership and Resources Accrued Mortgage Investors 2 L.P. dated January 31, 1989 (incorporated by reference to Exhibit 10(e) of the February 13, 1989 Form 8-K).
(H) Assignment of Leases and Rents from Harborista Associates Limited Partnership Assigns to Resources Accrued Mortgage Investors 2 L.P., Assignee, dated January 31, 1989 (incorporated by reference to Exhibit 10(f) of the February 13, 1989 Form 8-K).
(I) Mortgage, Assignment of Rents and Security Agreement dated as of April 1, 1990 between Twin Oak Plaza Associates, L.P. and Resources Accrued Mortgage Investors 2 L.P. (incorporated by reference to Exhibit 10(A) of the April 3, 1990 Form 8-K).
(J) Note as of April 3, 1990 between Twin Oak Plaza Associates, L.P. and Resources Accrued Mortgage Investors 2 L.P. (incorporated by reference to Exhibit 10(B) of the April 3, 1990 Form 8-K).
(K) Loan Commitment dated as of April 11, 1990 between Twin Oak Plaza Associates, L.P. and Resources Accrued Mortgage Investors 2 L.P. (incorporated by reference to Exhibit 10(D) of the April 3, 1990 Form 8-K).
(L) Amendment to Agreement dated as of June 20, 1990 among Registrant, the Managing General Partner and Rosenberg and Rosenberg, Ltd. (incorporated by reference to Exhibit 10(O) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1990.)
(M) Amended and Restated Intercreditor Agreement between The Northwestern Mutual Life Insuance Company and Registrant, dated as of November 1, 1994.
(N) Amendment of Mortgage, Note and Other Loan Documents between Harborista Associates Limited Partnership and Registrant, dated as of November 1, 1994.
(b) Reports on Form 8-K None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 13th day of April 1999.
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
By: RAM FUNDING, INC., Managing General Partner Date ----
By: /s/ Allan B. Rothschild April 13, 1999 -------------------------------- Allan B. Rothschild President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Registrant and in their capacities as directors and/or officers (with respect to the Managing General Partner) and on the dates indicated.
Signature Title Date --------- ----- ----
/s/ Dallas Lucas Director April 13, 1999 - ------------------------- Dallas Lucas
/s/ Lawrence R. Schachter Senior Vice President, April 13, 1999 - ------------------------- (Principal Financial Officer Lawrence R. Schachter and Principal Accounting Officer)
/s/ Allan B. Rothschild Director and President April 13, 1999 - ------------------------- Allan B. Rothschild
/s/ David King Director, Executive Vice President April 13, 1999 - ------------------------- and Assistant Treasurer David King
EXHIBIT INDEX Exhibit
3. Certificate of Limited Partnership filed August 14, 1986 (incorporated by reference to Exhibit 3B as filed as part of Pre-Effective Amendment No. 1 filed on May 14, 1987 ("Pre-Effective Amendment") to the Registration Statement) and Amendments to Certificate of Limited Partnership filed on March 12, 1987, May 7, 1987 (incorporated by reference as filed as part of Pre-Effective Amendment to the Registration Statement) and February 5, 1988 (incorporated by reference to Post-Effective Amendment No. 2 to the Registration Statement).
4.
(A) Amended and Restated Agreement of Limited Partnership (incorporated by reference to Exhibit 3A as filed as part of Post-Effective Amendment No. 2 filed on March 23, 1988 ("Post-Effective Amendment No. 2") to the Registration Statement).
(B) Amendment No. 1 to Amended and Restated Partnership Agreement dated as of June 1, 1988, incorporated by reference to Exhibit 4(B) of the 1988 10-K.
(C) Amendment No. 2 to Amended and Restated Partnership Agreement (incorporated by reference to Supplement No. 1 dated August 12, 1988 to the Prospectus as filed pursuant to Rules 424(b)(3) and 424(c).
10.
(A) Agreement with Associate General Partner dated as of May 17, 1988 among Integrated, RAM Funding, Inc. and Z Square G Partners II, incorporated by reference to Exhibit 10(B) of the 1988 10-K.
(B) Mortgage Services Agreement dated as of April 12, 1988 between Registrant and RAM Funding, Inc., incorporated by reference to Exhibit 10(C) of the 1988 10-K.
(C) Deed of Trust, Assignment of Rents, Fixture Filing and Security Agreement among High Cash Partners, L.P., Truster; First Commercial Title, Inc., Trustee and Resources Accrued Mortgage Investors 2 L.P., Beneficiary, dated February 10, 1989 (incorporated by reference to Exhibit 10(a) of Registrant's Current Report on Form 8-K dated February 13, 1989 (hereinafter referred to as the February 13, 1989 Form 8-K)).
(D) Registered Note among High Cash Partners L.P. and Resources Accrued Mortgage Investors 2 L.P., dated February 10, 1989 (incorporated by reference to Exhibit 10(b) of the February 13, 1989 Form 8-K).
(E) Assignment of Leases and Rents among High Cash Partners L.P. and Resources Accrued Mortgage Investors 2 L.P., dated February 10, 1989 (incorporated by reference to Exhibit 10(c) of the February 13, 1989 Form 8-K).
(F) Power of Sale Mortgage, Assignment of Rents and Security Agreement (also constituting a financing statement) from Harborista Associates Limited Partnership Mortgagor, to Resources Accrued Mortgage Investors 2 L.P. Mortgagee, dated January 31, 1989 (incorporated by reference to Exhibit 10(d) of the February 13, 1989 Form 8-K).
(G) Note among Harborista Associates Limited Partnership and Resources Accrued Mortgage Investors 2 L.P. dated January 31, 1989 (incorporated by reference to Exhibit 10(e) of the February 13, 1989 Form 8-K).
(H) Assignment of Leases and Rents from Harborista Associates Limited Partnership Assigns to Resources Accrued Mortgage Investors 2 L.P., Assignee, dated January 31, 1989 (incorporated by reference to Exhibit 10(f) of the February 13, 1989 Form 8-K).
(I) Mortgage, Assignment of Rents and Security Agreement dated as of April 1, 1990 between Twin Oak Plaza Associates, L.P. and Resources Accrued Mortgage Investors 2 L.P. (incorporated by reference to Exhibit 10(A) of the April 3, 1990 Form 8-K).
(J) Note as of April 3, 1990 between Twin Oak Plaza Associates, L.P. and Resources Accrued Mortgage Investors 2 L.P. (incorporated by reference to Exhibit 10(B) of the April 3, 1990 Form 8-K).
(K) Loan Commitment dated as of April 11, 1990 between Twin Oak Plaza Associates, L.P. and Resources Accrued Mortgage Investors 2 L.P. (incorporated by reference to Exhibit 10(D) of the April 3, 1990 Form 8-K).
(L) Amendment to Agreement dated as of June 20, 1990 among Registrant, the Managing General Partner and Rosenberg and Rosenberg, Ltd. (incorporated by reference to Exhibit 10(O) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1990.)
(M) Amended and Restated Intercreditor Agreement between The Northwestern Mutual Life Insuance Company and Registrant, dated as of November 1, 1994.
(N) Amendment of Mortgage, Note and Other Loan Documents between Harborista Associates Limited Partnership and Registrant, dated as of November 1, 1994.
* Filed herewith