-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Tute+w5NmTvNI1+aPhwkBvsrDmDxh/0u1MPdolWRUNWkhhdkfdYCMxxGZE6XtQoz JBlcW5uNsyo2V5YDYnBWTQ== 0000914317-99-000010.txt : 19990113 0000914317-99-000010.hdr.sgml : 19990113 ACCESSION NUMBER: 0000914317-99-000010 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19990112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROYAL PALM BEACH COLONY LTD PARTNERSHIP CENTRAL INDEX KEY: 0000764606 STANDARD INDUSTRIAL CLASSIFICATION: LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES) [6552] IRS NUMBER: 592501059 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-08893 FILM NUMBER: 99505133 BUSINESS ADDRESS: STREET 1: 2501 S OCEAN DR CITY: HOLLYWOOD STATE: FL ZIP: 33019 BUSINESS PHONE: 3059273080 FORMER COMPANY: FORMER CONFORMED NAME: ROYAL PALM BEACH COLONY LP DATE OF NAME CHANGE: 19850528 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended September 30, 1998 Commission File Number 1-8893 ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter) Delaware 59-2501059 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 2501 S. Ocean Drive Hollywood, Florida 33019 -------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (305) 927-3080 Securities registered pursuant to Section 12(b) of the Act: Limited Partnership Units Name of Each Exchange on which Registered - None Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and YES [ X ] NO [ ] (2) has been subject to such filing requirements for the past 90 days. YES [ X ] NO [ ] Indicate by checkmark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statement incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [XX] The aggregate market value of the limited partnership units held by non-affiliates of Registrant computed by reference to the last reported sale price of the Units over-the-counter on December 30, 1998 was approximately $1,600,000. Item 1. Business (a) General Development Of Business Royal Palm Beach Colony, Limited Partnership (the "Partnership" or the "Registrant") was organized under the Delaware Revised Uniform Limited Partnership Act. The Partnership is a successor to Royal Palm Beach Colony, Inc., (the "Predecessor Company") a Florida corporation organized in 1963. Pursuant to a Plan of Complete Liquidation (the "Plan"), the Predecessor Company transferred all of its assets, subject to all of its liabilities, to the Partnership in exchange for a number of partnership units ("Units") exactly equal to the number of shares of common stock of the Predecessor Company outstanding on July 11, 1985 (the "Effective Date"). On the Effective Date, the Units were distributed to the former holders of common stock of the Predecessor Company on the basis of one (1) Unit for each share of common stock of the Predecessor Company. The Partnership, as a successor to the Predecessor Company, has registered its Units under Section 12 (b) of the Securities Exchange Act of 1934. Under the Amended Agreement of Limited Partnership of the Registrant, the term of the Partnership expires December 31, 2005, unless extended by vote of a majority of the partnership units. Trading in Partnership Units The Units are currently trading over-the-counter under the symbol "RPAMZ." Results of Liquidation Activities The Partnership's principal business has been to operate, manage and dispose of the assets which were transferred to it on the Effective Date by the Predecessor Company. Since the Effective Date of the Predecessor Company's liquidation, the Partnership has engaged in a program of asset disposition resulting in the sale of assets for an aggregate gross consideration of $69,878,241. As of September 30, 1998, the Partnership had distributed an aggregate of $29,156,000, or $6.50 per Unit, to the general and limited partners. See Item 5 - Market for the Registrant's Common Equity and Related Stockholder Matters "Prior Distributions." As of September 30, 1998, the Partnership's remaining assets consisted principally of; (1) 99 residential lots (all of which were under contract for sale) plus commercial property and multifamily-zoned land in the "Crestwood" tract in the Village of Royal Palm Beach (the "Village"), (see Item 2 -- Properties -- "Village of Royal Palm Beach" - this tract is hereinafter referred to as the "Crestwood" tract), (2) unsold land in Palm Beach County, Florida which is included in the balance sheet at its book value of $734,584 (3) a tract of land in the Village reacquired by foreclosure in 1993 and included in the balance sheet at $288,724, (4) contingent receivables relating to a prior sale of utility assets with a maximum future undiscounted value of $5,247,000 (which amount, other than $438,573 earned as of September 30, 1998 but not payable to the Partnership until January, 1999, has not been included in the balance sheet due to its contingent nature -- see Note 8 to the Financial Statements), and (5) cash in the amount of $6,553. Since September 30. 1998, there have been substantial additional real estate sales. See Item 2 - "Residential Lots Within the Crestwood Tract." Factors Affecting Future Operations and Distributions The availability of cash for distribution in the future will depend upon a variety of factors not currently determinable. (1) Current Activities In early 1992, a large portion of the Partnership's remaining land consisted of the undeveloped 165 acre "Crestwood" Tract described above, which had been sold during the process of the Partnership's liquidation but reacquired by the Partnership in 1992 when the purchaser was unable to service the interest and amortization payments to the Partnership on a $5,039,952 purchase money mortgage. Thereafter, management commenced the development of one portion of the Crestwood Tract, consisting originally of 170 lots zoned for single family housing (increased in a revised site-plan to 198 lots), in order to enhance its sale value. See Item 2 --Properties -"Village of Royal Palm Beach." (2) Cash Available for Distribution Management has now substantially completed the development of portions of the Partnership's remaining land in Palm Beach County as a means of achieving a higher return upon sale. Because of a substantial reduction in sales revenues in 1993 and 1994, and the cash requirements for such land development activities in 1995, together with cash expenditures in connection with the proposed transaction with Regency Homes, Inc. and normal operating expenses, no cash has been available for distribution since December 1992. In addition, portions of the sales proceeds from the sale of residential lots must be applied to repayment of bank financing aggregating $1,321,750. Distributions may be made during fiscal 1999, however, if the sales described herein under Item 2 close as scheduled. See Item 2 - "Development and Sale of Residential Lots;" and Item 7 - -- "Management Discussion and Analysis of Financial Condition -- Liquidity and Capital Resources." Future collections of contingent receivables relating to a prior sale of a utility plant would also affect future distributions. See Item 2 - --Properties, for a discussion of other sources of and anticipated timing of the receipt of revenue which will affect future distributions. (b) Financial Information About Industry Segments Not applicable. (c) Narrative Description Of The Business Regulation Development and sales operations of the Partnership or by potential purchasers of real estate from the Partnership have been subject to regulation by a number of local, state and federal agencies concerning the nature and extent of improvements, and compliance with zoning regulations, building codes, health requirements and environmental protection. The Partnership believes that it has been in substantial compliance with all such laws and regulations which affect its properties and that it has developed the properties to the extent required by contract or law. If such laws or regulations are amended, in particular those concerning environmental protection, the cost of compliance could be increased. Reference is made to the discussion concerning the impact of land use regulatory issues affecting salability of certain properties remaining in Palm Beach County in Item 2 -- Properties -- "Acreage in the Vicinity of the Village." Competition The real estate business conducted by the Partnership is highly competitive. The Partnership's sales of its remaining land will compete with surrounding developments, and with owners of tracts of land in the area of all its properties. There are substantial tracts of vacant land and land under development in the general area of most of the Partnership's remaining real estate. These competitive considerations could affect the decisions of potential purchasers of the Partnership's remaining properties. The Partnership has historically marketed its properties through direct mail advertising to major brokers and developers, advertisements in major regional newspapers and direct contacts between officers of the Managing General Partner and real estate developers and brokers. The Partnership is currently marketing its remaining properties through local real estate brokers, including RTL Realty, of which Randy Rieger is a partner. Mr. Rieger served as interim Vice President and Chief Operating Officer of the Partnership's managing general partner between September 1995 and February 1996. Mr. Rieger currently provides services as an independent consultant to the Partnership for management services in addition to ongoing brokerage services. See Item 13 -- "Certain Relationships and Related Transactions." Impact of General Economic Conditions The development and sale of real estate occurs within a historically cyclical market, and is significantly influenced by general economic conditions. Sales of housing units and sales of tracts to builders are particularly affected by the costs and availability of mortgage financing and the rise and fall of interest rates in general. Interest rates moved in a narrow range during 1996 and 1997 and declined during the past six months as the result of federal interest rate cuts. If significant increases occur in the future, the real estate market could suffer as a result. Personnel: As of December 30, 1998, Stein Management Company, Inc. ("Steinco")the Managing General Partner, employed 1 person, who acts as an adminstrator of its books and records. The balance of the Partnership's affairs are carried out by independent brokers, contractors and other consultants under the direction of the Board of Directors of Steinco. See Item 10. Office Facilities: The Partnership's executive headquarters are located at 2501 S. Ocean Drive, Hollywood, Florida 33019. The premises are owned by an affiliate of Hasam Realty Limited Partnership ("Hasam L.P."), a general partner of the Partnership, and are being made available to the Partnership as an accommodation without charge. Item 2. Properties Palm Beach County, Florida The Company originally owned approximately 26,000 acres in Palm Beach County, in southeastern Florida, approximately 4,200 of which were located within the Village. The Village of Royal Palm Beach The Village, an incorporated municipality, is approximately eight miles from the Palm Beach International Airport and eleven miles west of Palm Beach. Two major area highways, Southern Boulevard and Okeechobee Road, lead directly from Palm Beach through West Palm Beach to the Village. The Village has a population of approximately 16,000 and is primarily residential. The Village has been developed in accordance with a master plan and includes schools, shopping facilities, community recreation areas, and its own police and fire departments. The Crestwood Tract Although the Partnership had previously sold nearly all of its land in the Village, it reacquired in 1992, through foreclosure of a defaulted purchase money mortgage, the 165 acre Crestwood Tract of undeveloped land in the Village. When reacquired, the Crestwood Tract was zoned and preliminary approval had been obtained for the development of 172 single-family homesites (the "Single Family Tract") and 625 multi-family units. The Crestwood Tract is bisected by a principal Village road and has access to all utilities, but is otherwise undeveloped with the exception of the existence of portions of a drainage system. Commercial Land within the Crestwood Tract In order to enhance the market value of the Crestwood Tract, the Partnership obtained the rezoning of an approximately 14 acre portion of the Crestwood Tract previously zoned for multi-family housing to permit the Partnership to develop a 14 acre shopping center site. The Partnership received site-plan approval in mid-1996. The Partnership has executed an agreement to sell the entire 14 acre portion to an unaffiliated shopping center developer ("Purchaser") in two phases. The closing on the first phase of the Commercial Site, consisting of a 11.8-acre shopping center site, occurred in February, 1997, resulting in gross proceeds of approximately $1,538,757. The second phase consists of two additional parcels in the 14 acre portion rezoned as described above, which adjoin the shopping center site, but as to which building permits are not expected to be available until January, 2000. As to such parcels, the Partnership has agreed to accord an option to the Purchaser to acquire the parcels, with the price to be paid dependent on the terms upon which the Purchaser leases or sells such parcels to an unaffiliated third party. In such event the Purchaser will pay to the Partnership, (i) in the event of a lease, a sum equal to the five times the average annual rental under the lease, and (ii) in the event of a sale, 50% of the net proceeds of the sale; provided that the Partnership is not required to accept less than $3.50 per square foot. The Partnership and the Purchaser have entered into a contract to sell an additional 1.6 acres adjoining the above-described 14 acre shopping center site for a gross purchase price of approximately $250,000. The purchaser is presently preparing to seek the appropriate approvals from the Village and anticipates approvals by June, 1999. Residential Lots within the Crestwood Tract As a result of management's decision to develop portions of the Crestwood Tract, the Partnership replanned the configuration of the entire tract. The project included a redesign of the Single Family Tract, and the Partnership received final plat approval to increase to 198 the number of residential lots for development for single family use (hereinafter the "Residential Tract"). "Development," as such term is applied to single-family lots, entails the completion of all necessary zoning, land use, environmental and other regulatory procedures, the installation of roads and utility connections to each lot and the provision of drainage facilities. Between 1995 and 1997, the Partnership completed the off-site and on-site improvements required for the development of the 198 lots in the Residential Tract. The total construction cost was financed partially through the issuance of bonds and partially with development financing obtained from Union Bank of Florida. (See Item 13 - "Certain Relationships and related Transactions"). "). A total of $3,201,749 was borrowed from Union Bank of Florida (including $293,152 for working capital purposes), of which $1,321,750 was outstanding as of September 30, 1998. The loan, which bears interest at 1% above the bank's prime lending rate, matures on September 17, 1999. As closings of lot sales are held, the Partnership is obligated to pay down the bank at the rate of $20,000 per lot. The remaining cost of the development was financed utilizing the net proceeds ($1,074,000) of bonds issued by the Indian Trail Water Control District, a governmental authority. The bonds are a direct obligation of the District (and not of the Partnership) and are repayable as to principal and interest from taxes levied on the lots in the Residential Tract. The issuance of the bonds increased the annual real estate tax on the entire subdivision by approximately $117,000 or $600 per lot. As lots are sold, the responsibility for payment of the taxes passed from the Partnership to the lot purchasers. In the aggregate, and through December 30, 1998, the Partnership has sold and conveyed 178 of the 198 lots in the Residential Tract, resulting in gross proceeds to the Partnership of approximately $5,285,000 and net cash proceeds, after mandatory loan reductions and brokerage commissions and other closing costs, of approximately $930,000. (The gross proceeds include $1,298,500 owed to the Partnership by Morrison Homes of Florida, Inc., which debt is secured by a first mortgage on 45 of the lots it purchased, requiring the payment of $687,000 on June 29, 1999 and the balance on September 29, 1999.) Of the foregoing, during the 1998 fiscal year only, the Partnership conveyed a total of 59 lots (including 37 lots sold to Lennar Homes of Florida, Inc. - see below) for aggregate gross proceeds of $1,684,000. After mandatory loan reductions of $20,000 per lot and brokerage commissions and other closing costs, net cash proceeds to the Company were $324,000 The remaining 20 lots in the Residential Tract are the last of a total of 86 lots contracted for sale to Lennar Homes of Florida, Inc. The sale of such 20 lots is scheduled to be completed by June 30, 1999, and will result in gross proceeds of $570,000 and estimated net cash proceeds, after mandatory loan reduction and brokerage commissions and other closing costs, of approximately $130,000. During November 1998 the Partnership completed the sale of a 7.7 acre parcel in the multi-family zoned land in Crestwood to a church for $350,000. In March 1998 the Partnership entered into a sale contract with TCR SFA Apartments, Inc., an affiliate of Trammell Crow Residential (a national residential builder) covering a substantial part of the remainder of the multi-family zoned land (comprising land zoned for approximately 290 residential units). The affiliate has assigned the sale contract to Gables East Construction, Inc. which has acquired Trammell Crow Residential. The completion of the sale, which is subject to the buyer obtaining necessary permits and approvals, is scheduled for March 19, 1999 with the buyer having the option to extend the closing for up to 60 days. The sale price being paid to the Partnership for the land will generate approximately $2,175,000 in gross proceeds, and approximately $1,800,000 in net proceeds after costs of sale and brokerage fees. Other Acreage Within the Village In March, 1993 the Partnership reacquired a separate tract of 4.54 acres in the Village by accepting a deed in lieu of foreclosure on a mortgage with a principal balance of $300,000 (See Item 7 --"Foreclosure Transactions"). This parcel is bordered by a golf course and a principal Village road, is zoned for approximately 80 multi-family residential units and is being offered for sale in its present state without further development. An agreement to sell this acreage for $350,000 was terminated by the purchaser in June 1997 and the property is currently being remarketed. Utility Contingent Receivable In 1983 the Partnership's Predecessor Company sold to the Village of Royal Palm Beach a water and sewage treatment system servicing the Village. Pursuant to the agreement of sale ("Utility Contract"), the Predecessor company received $2,510,000 on closing, and was entitled to future payments to a maximum of $10,900,000 as future connections, measured by consumption increases, were made to the system over a period ending August, 2001. As of September 30, 1998, $5,050,000 had not been received or earned. The Utility Contract also provided for contingent extension periods aggregating not more than three additional years to compensate for possible future governmental building moratoriums or water use restrictions. The Partnership's consultants have advised it that the term has been extended through 2003 as a result of water usage restrictions imposed by the South Florida Water Management District in 1990 and 1991 and moratorium actions taken by the Village of Royal Palm Beach in 1985 and 1986. The Utility Contract also calls for payments to the Partnership equal to 25% of any "Guaranteed Revenues" (payment by developers to secure guaranteed allocations of plant capacity) collected by the Village to a maximum payment of $500,000, of which $303,000 has already been received. To date, the Partnership has received the following Utility Contract payments: Amount Received Based On Fiscal Year Ended -------------------------------------------- September 30 Consumption Guaranteed Amounts - ------------ ----------- ------------------ 1984 $ 919,000 1985 830,000 1986 637,000 1987 859,000 1988 240,000 $ 30,000 1989 761,000 45,000 1990 -0- 35,000 1991 293,000 21,000 1992 357,000 37,000 1993 168,000 47,000 1994 58,000 27,000 1995 413,000 20,000 1996 108,000 19,000 1997 207,000 22,000 Total $5,850,000 $ 303,000 - -------------- * The Partnership is also entitled to receive approximately $438,000 in January, 1999. The Utility Contract with extensions management believes have already accumulated will expire in 2003, subject to extensions of up to one additional year. The ability of the Partnership to realize the maximum price is dependent upon the rate at which the population in the Village grows, and levels of water consumption which in turn depends upon economic, social and climatic factors which cannot be predicted. Historically, water consumption tends to increase based upon increases in population. During most of fiscal 1990, however, due to drought conditions existing in most Southern Florida, the South Florida Water Management District imposed mandatory water usage restrictions. The imposition of these restrictions resulted in a decrease in aggregate water consumption in the area from which the Partnership's receipts are projected while population was increasing. Management believes that there is sufficient capacity presently available in the area served by the utility to enable the Partnership to realize the maximum remaining $5,050,000 in contingent payments under the Utility Contract. Although the amount to be received by the Partnership in respect of 1998 represents a substantial increase from receipts in the two preceding years, it is nevertheless considered unlikely that the rate of new construction or water consumption in such area will be sufficient to enable the Partnership to receive the full amount of such payments prior to the expiration of the contingent payment term. Acreage in the Vicinity of the Village Substantially all of the property previously owned by the Predecessor Company in Palm Beach County outside of the Village limits, originally aggregating approximately 23,800 acres, was sold under the Predecessor Company's retail installment sales program, which terminated prior to the inception of the Partnership. The Partnership currently retains three tracts in the vicinity of the Village. The first tract originally consisted of 208 one-acre lots located approximately eight miles northwest of the Village. These lots have been improved with graded unpaved access roads and drainage facilities. One lot from this tract was sold during 1996 for $12,000, and 36 were sold in 1997 for $190,188, leaving a balance of 171 lots. There were no sales of these lots in 1998. All of such lots are subject to numerous governmental regulations under which new development may not be permitted unless adequate public facilities (such as roads and drainage) must be in place concurrently with the impacts of such development. The Indian Trail Water Control District prepared a drainage plan which would result in an exemption for such lots from further compliance with such concurrency requirements and would allow the issuance of building permits for single-family residences on such lots. Such plan was opposed by other governmental agencies, however, and the Palm Beach County Health Department originally denied an application for septic tank permits, due to inadequate drainage. Following the institution of administrative proceedings to compel the issuance of septic tank permits, the Partnership was successful in obtaining approval for such permits for 3 of the 4 lots for which application was made; the 4th lot was wetland and required additional mitigation. However, the South Florida Water Management District has refused to permit development to proceed, and the Partnership is currently engaged in administrative proceedings to set aside such refusal. Numerous additional permits are required before building can be commenced, and there is no assurance that all of such permits can be obtained. The Partnership believes that should it eventually succeed in obtaining septic permits for at least some of the lots, this would substantially increase the value of such lots and that the aggregate realizable value of all such lots will substantially exceed their book value of $379,560. Should the Partnership be unsuccessful in overturning the administrative denial of septic tank permits, the Partnership may elect to pursue other legal remedies, including a possible claim for "inverse condemnation." There can be no assurance that any such litigation would be successful. The Partnership is presently evaluating possible alternative uses of the second tract, consisting of approximately 470 acres, which contains a significant amount of wetlands. This property is presently zoned for agricultural use. The use of this land is dependent on rezoning and the extension of roads, and development activity on this tract may meet with opposition from governmental agencies concerned with wildlife and wetlands preservation. In 1997 the Partnership received an offer of $1,385,000 for this tract from the Nature Conservancy on behalf of Palm Beach County. Negotiations have been protracted and is no assurance that this transaction will be completed. However, management is of the opinion that the realizable value of this property is in excess of its current book value of $213,421. The timing of future sales of the land discussed above, the manner in which the land may be developed and therefore the ultimate realizable prices for this land are dependent upon a complex and interrelated number of factors arising out of governmental regulations concerning permissible land use. The third tract in the vicinity of the Village the Partnership previously held a disputed claim to approximately 24 acres of undeveloped land. This claim had not originally been accorded value on the Partnership's balance sheet and was considered to have little or no value. During 1994, in connection with the resolution of this claim with adjoining land owners, and in order to give value to such claim, the Partnership relinquished a portion of its claim, acquired five adjoining acres for $141,879, and executed a joint development agreement with one of such adjoining landowners relating to the Partnership's acreage and such landowner's acreage (comprising approximately 22 acres in the aggregate of which the Partnership now owns approximately 12 acres). The Partnership and the joint developer have entered into an agreement to sell the entire combined parcel for a price of $1.90 per square foot, subject to survey, which would result in a gross selling price of approximately $1,986,000 (less selling commissions) of which the Partnership's share would be approximately $993,000. The parcel has been rezoned by Palm Beach County for commercial use, but the sale is subject to approval of the premises as a site for a supermarket by a major supermarket chain, the provision of necessary utilities, and the issuance of all necessary building and other permits. The closing date (subject to all of the foregoing) was originally to be no later than June 30, 1997. The closing date has been extended until April 1999. There is no assurance that such permits and approvals will be obtained, which involve proceedings before several governmental bodies, or could be completed or obtained within the required time frame. Item 3. Pending Legal Proceedings. There are no pending legal proceedings, other than routine and immaterial litigation incidental to its business, to which the Partnership is a party or to which its property is subject. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters The Partnership's units were formerly listed on the American Stock Exchange but were delisted on March 28, 1996. The Units currently trade on the over-the-counter market (Symbol RPAMZ). The following table sets forth, for the fiscal periods of the Partnership indicated, the reported high and low closing prices for the Partnership's Units in over-the-counter trading during the fiscal years ended September 30 of 1997 and 1998. The Partnership's Units were held by approximately 600 record holders of as of December 31, 1998. Based on its tax records, including beneficial owners, the Partnership believes that there were a total of approximately 950 unit holders as of such date. Fiscal Year Ended: September 30, 1998 Quarter High Low - ------- ---- --- First 7/8 11/16 Second 13/16 5/8 Third 57/64 21/32 Fourth 55/64 3/4 Fiscal Year Ended: September 30, 1997 Quarter High Low - ------- ---- --- First 1 3/4 Second 1 1/8 3/4 Third 7/8 25/32 Fourth 7/8 11/16 Prior Distributions The Partnership Agreement requires the Managing General Partner to consider quarterly whether the Partnership has Cash Available for Distribution in respect of the Partnership Units, and to make distributions unless the costs of the distribution would be disproportionately high in relation to the Cash Available for Distribution. "Cash Available for Distribution" in general means the excess cash held by the Partnership over anticipated expenditures and reserves for anticipated or contingent liabilities. The Partnership is not a party to any agreements which would restrict its ability to make future distributions. No distributions were made since December of 1992, in light of management's judgment that Partnership cash should be conserved and applied to the development activities discussed in Item 2, and, during 1994, and 1996, in light of the fact that the Partnership was considering the resumption of active business operations as a means to maximize the values of its remaining real estate. Distributions were not feasible in 1997 or 1998 because of the Partnership's obligations to reduce indebtedness with substantial portions of the proceeds of sales. Distributions may be made during fiscal 1999, however, if the sales described herein close as scheduled. See Item 1 -- "Factors Affecting Future Operations and Distributions." At the inception of the Partnership, its assets were assigned a tax basis in the hands of the Partnership based upon the net fair market value of the assets transferred from the Predecessor Company as determined by reference to the aggregate market value of the Units at the time of original issuance. Each Unit's pro rata share of such net fair market value resulted in a capital account of $6.31 per Unit, which also became the original tax basis of each Unit in the hands of the original Unitholders. As a result of taxable income and loss and distributions since inception, the capital account and tax basis attributable to each Unit which has remained in the hands of an original Unitholder has been reduced to $1.65 as of September 30, 1998. Each person acquiring a Unit after inception has a tax basis in such Unit equal to the net price paid therefor. Such basis is thereafter increased by such Unit's allocable share of the Partnership's income and decreased by the allocable share of taxable loss and by any cash distributions made. A distribution itself is not a taxable event except to the extent that the distribution reduces the Unitholder's basis below zero. Section 17-607(a) of the Delaware Revised Uniform Limited Partnership Act provides generally that a limited partnership shall not make a distribution to a partner if, after giving effect to the distribution, all liabilities of the partnership exceed the fair value of its assets. A limited partner who receives such a distribution is liable to the limited partnership for the amount thereof, but only if such limited partner knew at the time of the distribution that distribution violated said Section 17-607(a). No claim based on any such wrongful distribution may be made more than three years after such distribution. In the normal course of events, however, the Managing General Partner does not anticipate that the liabilities of the Partnership immediately following any future distribution will ever exceed the fair value of its net assets. See also "Factors Affecting Future Operations and Distributions" under Item 1. The Partnership has declared and paid the following liquidating distributions: Payment Date Amount Per Unit - ------------ --------------- April 15, 1986 $ .25 August 15, 1986 .35 December 15, 1986 .40 January 15, 1988 .50 July 15, 1988 .50 January 15, 1989 .50 July 17, 1989 1.00 September 29, 1989 .75 March 30, 1990 .75 July 31, 1990 .50 August 30, 1991 .50 December 15, 1991 .25 December 16, 1992 .25 ----- 6.50 Item 6. Selected Financial Data The following is a summary of selected financial data (in thousands of dollars except as to per unit amounts) as of and for the periods ended on the dates indicated:
Fiscal Years Ended September 30, - ------------------------------------------------------------------------------------- 1998 1997 1996 1995 1994 Selected Income Statement Data Revenues ............. $ 2,170 3,107 $ 397 $ 497 $ 832 Net income (loss) .... (215) 391 (690) (787) (554) Income (loss) per unit .... (.05) .09 (.15) (.18) (.12) Selected Balance Sheet Data Total assets ......... 4,786 5,228 5,486 5,425 4,650 Mortgage Notes Payable 1,322 1,676 2,065 1,511 -0- Partners' equity ..... 2,546 2,761 2,370 3,060 3,847 Cash distributions per unit ............. -0- -0- -0- .25 .25
Since the Partnership's sole business has been the disposition of its assets and the distribution of proceeds to its Unitholders, results in any period are not comparable with any other period and are not indicative of the results which may be anticipated in any future period. See Item 5 -- Prior Distributions (relating to prior returns of capital). Item 7. Management`s Discussion And Analysis Of Financial Condition And Results of Operations During the fiscal year, the Partnership continued to incur substantial expenses in the planning and development of its properties in addition to normal ongoing administrative costs. The Partnership had withheld its properties from sale during the fiscal year ended September 30, 1995, and during most of the quarter ended December 31, 1995, in anticipation of a business combination which was being negotiated throughout most of that year, but which negotiations were terminated in December, 1995. The only revenues for the year ended September 30, 1996, were the proceeds of $182,000 received upon the sale of five residential lots and one undeveloped lot, offset in part by approximately $71,000 of terminated merger expense. In addition, the Partnership received $433,000 in payment of an installment on a contingent note held in respect of a prior sale of the utility system (recognized in the 1995 fiscal year). As a result of the recommencement of active marketing activities, sales increased substantially in the fiscal year ended September 30, 1997. Sales of real estate during such year produced gross proceeds of approximately $2,873,000; and the Partnership also received $127,000 (recognized in the 1996 fiscal year) in payment of an installment on a contingent note held in respect of the prior sale of the utility system. Sales of additional real estate in 1998 produced gross proceeds of approximately $1,706,000, and the Partnership also received $229,000 (recognized in the 1997 fiscal year) in payment of an installment on a contingent note held in respect of the prior sale of the utility system. On February 28, 1997 the Partnership repaid a working capital loan in the amount of $527,000 due to Hasam Realty Limited Partnership, a general partner of the Partnership,. See Item 13 -- "Certain Relationships and Related Transactions." In June 13, 1996 the Partnership obtained an additional working capital loan in the amount of $300,000 from an affiliate of Jack Friedland and $25,000 from Mr. Friedland directly. Mr. Friedland is affiliated with Hasam Realty Limited Partnership, a general partner of the Partnership. The loan was originally for a term ending October 31, 1996, at an interest rate of 2% over the prime rate of Union Bank.. As a result of the deferral of closing on several transactions which had been anticipated to produce substantial cash proceeds, the maturity date of the note was extended and the loan was paid in full in January, 1997. The Partnership's cash balances at any particular point depend primarily on the timing of sales of its real estate, which timing can be affected by numerous factors. See Item 2. Cash declined from $ 48,738 at September 30, 1997 to $6,553 at September 30, 1998 but had increased to approximately $213,000 at December 30, 1998. See Financial Information - Statements of Cash Flows. During the current fiscal year, and based upon management's judgment that ordinary operating expenses will not increase, the Partnership anticipates that cash flow and liquidity requirements will be satisfied by the Union Bank financing described above, land sales, contingent utility receipts described "Utility Contingent Receipts", below and other bank financing. Sales of land are subject to conditions which might not be satisfied, although the Partnership has no present knowledge of circumstances which would render likely the non-satisfaction of such conditions. Affect of Land Sales on Future Cash Flow The Partnership's future revenues will depend solely upon its ability to develop and/or sell its remaining real estate, and upon receipts from a prior sale of a utility plant. At September 30, 1998, the Partnership retained and was holding for sale (1) 99 residential lots and commercial property in the "Crestwood" tract in the Village, (2) multi-family zoned land in the Crestwood tract presently zoned for a total of approximately 394 units, (3) a tract of 4.54 acres in the Village zoned for approximately 100 multi-family residential units (4) 171 lots in the vicinity of the Village zoned for single family homes but presently the subject of litigation as to the availability of building permits , (5) a 470-acre tract in the vicinity of the Village, and (6) 12 acres in the vicinity of the Village being jointly developed with an unrelated party - see "Acreage in the Vicinity of the Village. The development and marketing status of these properties is described in Item 2. Total net cash flow which might become available for distribution is unpredictable due to uncertain conditions in the South Florida real estate market in which the Partnership's remaining real estate is located, and competition from other owners and developers of real estate in the South Florida market. These conditions will continue to affect the realizable value of the Partnership's remaining land, including decisions by parties holding options on the Partnership's land to exercise such options in whole or in part. The rate of construction in the Village of Royal Palm Beach could also significantly affect future payments to the Partnership under the contract described under the caption "Utilities Contingent Receivable" under Item 2 above. As indicated under such caption, although the amount to be received by the Partnership in respect of 1998 represents a substantial increase from receipts in the two preceding years, it is nevertheless considered unlikely that the rate of new construction or water consumption in such area will be sufficient to enable the Partnership to receive the full amount of such payments prior to the expiration of the contingent payment term. Environmental Matters There are no environmental contingencies in respect of the Partnership or its properties. Use of all of the Partnership's properties is subject to compliance with state and county land use regulations relating to environmental matters, which the Partnership takes into account in considering the values of its properties.
Results of Operations Fiscal Years Ended September 30 ------------------------------------------ 1998 1997 1996 ---------- ---------- ---------- Sales of land, net ............. $1,706,000 $2,874,000 $ 182,000 Recognized profit on installment and cost recovery sales ................. -0- -0- 1,000 Interest income ................ 7,000 5,000 5,000 Sale of utility system (a) ..... 439,000 227,000 129,000 Other (b) ...................... 18,000 1,000 80,000 ---------- ---------- ---------- Total revenues ................. 2,170,000 3,107,000 $ 397,000 ========== ========== ==========
(a) As discussed in Note 8 to the financial statements, income recognized on the sale of the utility system varies with water consumption and other factors. (b) Other income in 1996 included $74,000 received as a foreclosure settlement, net of related expenses. Cost of Sales Cost of sales relates to the sales of land as discussed above. This item varies as a result of dissimilar profit margins and income recognition methods on the various sales of land and buildings as discussed above. Selling, Administrative and Other Expenses Selling, general and administrative expenses were 680,239 in 1996. In addition, $70,720 was incurred in costs related to a proposed merger as to which negotiations were terminated.) Costs increased to $768,537 in 1997 primarily as the result of an increase in brokerage commissions on higher real estate sales, and declined to $646,467 in 1998 primarily as the result of a decrease in brokerage commissions on lower real estate sales. Interest expense increased from $33,434 in 1997 to $89,147 in 1998, primarily because the Partnership had completed development activities in the residential lots in 1998 and therefor ceased the capitalization of interest expense. Depreciation and Property Taxes Property tax expense increased from 1996 to 1997 because of higher assessments on the Partnership's properties due in part from higher valuations ascribed to certain of the Partnership's properties. Property tax expense further increased from 1997 to 1998 primarily because development activities were completed and such taxes could no longer be capitalized. Income Taxes The Partnership, pursuant to the transitional grandfather rules of the Internal Revenue Code dealing with publicly traded partnerships, reported its income as a Partnership for taxable years through December 31, 1997. The application of the grandfather rules terminated for taxable years commencing after December 31, 1997. Under the Taxpayer Relief Act of 1997, a publicly traded partnership that is currently governed by this provision may elect to continue its Partnership tax status beyond December 31, 1997 by agreeing to pay an annual 3.5% Federal Tax on its gross income for federal income tax purposes (principally revenues less tax cost of land sold). The Partnership has elected to continue its Partnership status beyond December 31, 1997, and estimates that federal tax due, if any, on gross income for federal tax purposes for the tax year ending December 31, 1998 will not be material. See Note 6 to the Financial Statements included with this report. Item 8. Financial Statements and Supplementary Data Financial Statements and supplementary data are listed under Item 14 herein. Item 9. Disagreements with Accountants on Accounting and Financial Disclosure None PART III Item 10. Directors and Executive Officers of the Registrant The following information is provided with respect to the directors and officers of each general partner of the Registrant.(l) Other Positions Name Age and Present Position With the Registrant - ---- ------------------------- ------------------- Irving Cowan 66; President of Steinco Private Investor David B. Simpson 60; Vice President and Attorney currently Director of Steinco in private pracftice and counsel to the Partnership Jack Friedland 73; Member of Friedco, Private Investor L.C.(1) Leonard Friedland 76; Member of Friedco, Private Investor L.C.(1) Herbert Tobin 58; Director of Steinco Director, Secretary And Treasurer(*)of Steinco Marjorie Cowan 58; Member of Friedco, Private Investor L.C.(l); Harold Friedland 68; Member of Friedco, Private Investor L.C.(1) (1) The general partners of the Partnership are Stein Management Company, Inc. ("Steinco") and Hasam Realty L.P. The general partner of Hasam L.P. is Friedco, L.C., ("Friedco") a Florida limited liability company. Friedco is managed by its four members, Jack, Harold and Leonard Friedland and Marjorie Cowan, who are brothers and sister. Irving Cowan is the husband of Marjorie Cowan. Compliance with Section 16(a) of the Securities Exchange Act of 1934 Section 16(a) of the Securities Exchange Act of 1934 requires the officers and directors of the general partners of the Partnership, and persons who own more than ten percent of the Partnership's Units, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Such officers, directors and greater than ten-percent Unitholders are required by SEC regulations to furnish the Partnership with copies of all Section 16(a) forms they file. No such forms were furnished to the Partnership during fiscal 1997. Based solely on the foregoing the Partnership believes that during fiscal 1997, no purchases or sales of units were made requiring compliance with applicable Section 16(a) filing requirements. Item 11. Executive Compensation During fiscal 1998 no executive officer of the Managing General Partner received compensation exceeding $60,000. All officers and directors of Steinco, as a group (4 persons) earned $52,500 in cash compensation. The Partnership Agreement provides that the Partnership will provide and pay for all payroll and other costs of Steinco (to the extent such costs are not paid directly by the Partnership) in connection with the employment of personnel, and the costs of office space, outside clerical and professional assistance, equipment, and other facilities which are ordinary and necessary to the conduct and management of the Partnership's affairs. Since 1994, however, for administrative convenience, all such reimburseable expenses have been paid directly by the Partnership. Steinco's sole function is to serve as the Managing General Partner and it does not conduct any other operations. Other than the foregoing, the Managing General Partner is not entitled to any compensation in respect of the discharge of its obligations under the Partnership Agreement. Hasam L.P., the other General Partner, is not entitled to compensation of any nature under the Partnership Agreement but is entitled to reimbursement for such expenses as it may reasonably incur in the discharge of its ordinary and necessary obligations as a General Partner. Item 12. Security Ownership of Certain Beneficial Owners and Management The following table sets forth as of December 30, 1998 information concerning (i) all persons who are known to the Registrant to be the beneficial owner of more than 5% of the Units and (ii) the beneficial ownership of Units of directors and officers of each General Partner of the Registrant.
Amount Beneficially Percent of Name and Address Owned (a) Class - ------------------ ------------------- ---------- Harold Friedland 712,417 (1) 15.8% 636 Old York Road #210 Jenkintown, PA 19046 Jack Friedland 1,155,834 (1)(2) 25.8% 111 Regatta Drive Jupiter, FL 33477 Leonard Friedland 1,170,196 (1)(3) 26.1% 6530 Allison Road Miami Beach, FL 33131 Marjorie Cowan 1,057,929 (1)(4) 23.6% 3725 S. Ocean Dr. Hollywood, FL 33019 Samuel Friedland Family Foundation 637,417 14.2% 2501 S. Ocean Dr. Hollywood, FL 33019 Hasam Realty Limited Partnership 75,000 1.7% 2501 S. Ocean Dr. Hollywood, FL 33019 Stein Management Company 20,093 Less than 1% 2501 S. Ocean Drive Hollywood, FL 33019 David B. Simpson 1,460 (5) Less than 1% 2 University Plaza #109 Hackensack, N. J. 07601 All officers and 2,361,822 52.7% directors as a group (See footnotes) (6)
- ------------ (a) Includes all units as to which owner holds sole or shared voting or investment power. (1) Includes 637,417 units owned by the Samuel Friedland Family Foundation and 75,000 units owned by Hasam Realty Limited Partnership, of which this individual may be deemed a controlling person. In the case of Harold Friedland does not include 316,144 Units owned by an adult child and 65,000 Units owned by trusts for other adult children of which Jack Friedland is one of three trustees. In the case of Leonard Friedland, includes Units held for benefit of Mr. Friedland and adult children of Mr. Friedland. (2) Does not include 2,500 units owned Jack Friedland's wife. (3) Does not include 2,500 units owned by Leonard Friedland's ex-wife. (4) Does not include 96,900 units owned by Mrs. Cowan's husband, Irving Cowan. Includes 16,993 units owned by a trust for a minor child of which Mr. and Mrs. Cowan are trustees; Includes 21,708 Units owned jointly with Mr. Cowan (5) Does not include 20,000 Units owned by Stein Management Company, of which Mr. Simpson's wife owns 50% of the common stock. (6) Dr. Ernest Safie, a director of Steinco who owned 150 Units, died in early 1998. Item 13. Certain Relationships and Related Transactions Borrowing from Related Parties In June, 1995, the Company borrowed $500,000 from Hasam Realty, L.P. for general working capital purposes, secured by a first mortgage on the Crestwood commercial property referred to in Item 2. In February, 1996, Hasam agreed to add to principal $27,249 of interest accrued through January 31, 1996 and unpaid. The loan (including said amount added to principal) was originally payable in full on June 29, 1996 but was extended through and paid on February 28, 1997. The loan bore interest at a rate equal to two percent over the Prime Rate, defined as the highest fluctuating rate of interest per annum as published by the Wall Street Journal. Management believes that the terms of this borrowing were fair and reasonable, and at least as favorable as the terms which could have been obtained from an unaffiliated institutional lender. On June 13, 1996, the Partnership borrowed $300,000 from an affiliate of Jack Friedland and $25,000 directly from Mr. Friedland, who is an affiliate of Hasam Realty Limited Partnership, a general partner of the Partnership. These loans, originally due on October 1, 1996, were extended through and paid in January, 1997. Indian Trail Water Control District The Indian Trail Improvement District, a public entity whose seven supervisors included Martin J. Katz (President and Director of Steinco until his death in September, 1995) and to which Jack Friedland was recently elected in 1996, has prepared a drainage and reclamation plan covering a portion of the Company's acreage in the vicinity of the Village of Royal Palm Beach. In November, 1996, the District issued bonds to finance a portion of the development of certain of the Partnership's acreage in the Village. Reference is made to Item 2 - Properties --Palm Beach County -"The Village of Royal Palm Beach" and "Acreage in the Vicinity of the Village." Herbert Tobin, a Director of Steinco, is Chairman of the Board and Director, of Union Bank of Florida, which made a land development loan to the Partnership in 1994. See Item 2. Randy Rieger was elected on an interim basis as a Vice President and Chief Operating Officer of Stein Management Company, Inc., the Partnership's managing general partner, in September 1995, shortly following Mr. Katz's death. Mr. Rieger had been active as a real estate broker, directly and through affiliated companies, in the south Florida real estate market for many years. Prior to his election in 1995, Mr. Rieger had been serving as a consultant to the Partnership under an arrangement pursuant to which he was paid consulting fees, and additional amounts applicable to future brokerage commissions were being paid to RTL Realty Corp. (50% owned by Mr. Rieger) which had been engaged as the Partnership's exclusive broker in respect of a substantial portion of its real estate assets. Under such prior arrangement, RTL Realty Corp. is entitled to substantial brokerage commissions in the event that certain real estate sales currently under contract relating to a shopping center site are consummated. See Item 2 Properties -- "The Village of Royal Palm Beach." Mr. Rieger resigned following the election of new officers on February 14, 1996; however, Mr. Rieger has continued to serve the Partnership as a consultant under a consulting and brokerage agreement with Mr. Rieger and RTL Realty Corp, dated May 23, 1996, which was originally scheduled to expire on December 31, 1996 and has been extended through December 31, 1998 (the "RTL Agreement"). Under the RTL Agreement, RTL receives $6,000 per month in consideration of Mr. Rieger's services to the Partnership, in addition to brokerage on sales of the Partnership's properties at a varying schedule of rates and reimbursement of approved expenses. The Partnership also reimburses RTL for certain expenses, including office expenses, at the rate of $2,500 per month. RTL may earn additional commissions on other transactions on a negotiated basis. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) The following documents are filed as a part of this report: 1. Financial Statements: 2. Independent Auditor's Report Royal Palm Beach Colony, Limited Partnership Financial Statements: Balance sheets as of September 30, 1998 and 1997. Statements of operations for the years ended September 30, 1998, 1997, and 1996. Statements of partners' equity for the years ended September 30, 1998, 1997, and 1996. Statements of cash flows for the years ended September 30, 1998, 1997, and 1996. 3. Financial Statement Schedules: Schedule IX - Valuation and qualifying accounts Schedule X - Supplementary Income Statement Information Schedules other than those listed above have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. (b) Reports on Form 8-K None. (c) Exhibits NOTE: All references in this table of exhibits to "Registration Statement" relate to the Registration Statement of the Registrant on Form S-14 (file Number 2-96374) as originally filed with the Securities and Exchange commission on March 12, 1985, as supplemented by Amendment No. 1 filed May 23, 1985 and as effective on June 10, 1985. 3(a) Certificate and Agreement of Limited Partnership of Royal Palm Beach Colony, L.P. filed as Exhibit 3(d) to the Registration Statement and incorporated herein by reference. 3(b) Restated certificate and Agreement of Limited Partnership of Royal Palm Beach Colony, L.P. included as Appendix B to the Registration Statement and incorporated herein by reference. 3(c) Amended Certificate and Agreement of Limited Partnership of Royal Palm Beach Colony, L.P. (filed May 21, 1985 with the Secretary of State of Delaware) changing name to Royal Palm Beach Colony, Limited Partnership. Filed as Exhibit 3(g) to Amendment Number One to the Registration Statement and incorporated herein by reference. 3(d) Restated Certificate and Agreement of Limited Partnership (revised) included as Appendix B to Amendment No. 1 to the Registration Statement and filed July 11, 1985 with the Secretary of State of Delaware and incorporated herein by reference. 3(e) Restated Certificate of Limited Partnership dated December 16, 1986. Filed as Exhibit 3(e) to Report on Form 10-K for the fiscal year ended September 30, 1986 and incorporated herein by reference. 3(f) Amended and Restated Agreement of Limited Partnership dated December 16, 1986. Filed as Exhibit 3(f) to Report on Form 10-K for the fiscal year ended September 30, 1986 and incorporated herein by reference. 3(g) Amendment No. 1 to Amended and Restated Agreement of Limited Partnership dated December 30, 1986. Filed as Exhibit 3(g) to Report on Form 10-K for the fiscal year ended September 30, 1986 and incorporated herein by reference. 3(h) Second Amended and Restated Certificate of Limited Partnership dated December 30, 1986. Filed as Exhibit 3 (h) to Report on Form 10-K for the fiscal year ended September 30, 1986 and incorporated herein by reference. 4(a) Form of Unit Certificate issued to Limited Partners and Assignees of the Partnership. Filed as Exhibit 4 (a) to the Registration Statement and incorporated herein by reference. 4(b) Loan Agreement between Royal Palm Beach Colony, Limited Partnership and Union Bank of Florida dated October 6, 1994, pertaining to loan in the amount of $975,000. Filed as Exhibit 4(b) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1995 and incorporated herein by reference. 4(c) Correction to description of Exhibit 4(c) filed with Report of Registrant on Form 10-K for fiscal year ended September 30, 1995. Said Exhibit relates to is a promissory note for $27,247.83 of accrued interest on Promissory Note in the amount of $500,000 filed as Exhibit 4(d) to said report on Form 10-K. Filed as Exhibit 4(c) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(d) Correction to description of Exhibit 4(d) filed with Report of Registrant on Form 10-K for fiscal year ended September 30, 1995. Said Exhibit is a Promissory note from Registrant to Hasam Realty Limited Partnership in the amount of $500,000. Filed as Exhibit 4(d) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(e) Agreement between Registrant and Gerald M. Higier dated December 1, 1995 relating to purchase of 10.8 acre commercial tract. Filed as Exhibit 4(e) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1995 and incorporated herein by reference. 4(f) Agreement between Registrant and Gerald M. Higier dated in 1995 relating to purchase of 24 acres. Filed as Exhibit 4(f) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1995 and incorporated herein by reference. 4(g) Agreement executed August 12, 1996 between the Registrant and Lennar Homes, Inc. relating to sale of 86 single family lots in Crestwood Unit 3 - Plat Three. Filed as Exhibit 4(g) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(h) First Mortgage Modification Amendment dated June 26, 1995 to Loan Agreement referred to in Exhibit 4(b). Filed as Exhibit 4(h) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(i) Second Mortgage Modification Amendment dated October 21, 1996 to Loan Agreement referred to in Exhibit 4(b). Filed as Exhibit 4(i) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4 (j) Mortgage dated June 13, 1996 between Crossroads Associates, Ltd. and the Registrant pertaining to secured loan of $300,000 to the Registrant. Filed as Exhibit 4(j) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4 (k) Promissory Note dated June 13, 1996 in the amount of $300,000 from Registrant to Crossroads Associates, Ltd. relating to Mortgage referred to in Exhibit 4(j). Filed as Exhibit 4(k) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(l) Letter Agreement dated May 23, 1996 between Randy Rieger and the Registrant relating to brokerage and consulting services. Filed as Exhibit 4(l) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(m) Agreement for Purchase and Sale between the Registrant and TCR SFA Apartments, Inc. dated March 18, 1998 and First and Second Amendments thereto dated in June and December of 1998, respectively, relating to the sale of approximately 21.8 acres in the Crestwood Tract, filed herewith. SIGNATURES Pursuant to the requirements of Section 13 and 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP By: Stein Management Company, Inc. Managing General Partner By: /s/ David B. Simpson -------------------- David B. Simpson, Vice President Date: December 30, 1998 Royal Palm Beach Colony, Limited Partnership Form 10-K Year Ended September 30, 1998 Continuation of Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Name Title /s/David B. Simpson Director, Vice President,Stein - ------------------- Management Company, Inc. David B. Simpson /s/Herbert Tobin Director, Stein Management - ---------------- Company, Inc. Herbert Tobin /s/Irving Cowan Director, President,Stein Management - --------------- Company, Inc. Irving Cowan Dated: December 30, 1998 ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996 Independent auditors' report Financial statements: Balance sheets Statements of operations Statements of partners' equity Statements of cash flows Notes to financial statements Schedule IX - Valuation and Qualifying Accounts Schedule X - Supplemental Income Statement Information Independent Auditors' Report Partners Royal Palm Beach Colony, Limited Partnership Hollywood, Florida We have audited the accompanying balance sheets of Royal Palm Beach Colony, Limited Partnership as of September 30, 1998, and 1997, and the related statements of operations, partners' equity, and cash flows for each of the three years in the period ended September 30, 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 misstatements. 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 Royal Palm Beach Colony, Limited Partnership as of September 30, 1998 and 1997, and the results of its operations and its cash flows for the years in the period ended September 30, 1998 in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed in item 14(a)3 are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/LEFCOURT, BILLIG, SARBEY, TIKTIN & YESNER, P.A. -------------------------------------------------- LEFCOURT, BILLIG, SARBEY, TIKTIN & YESNER, P.A. Coral Gables, Florida November 11, 1998
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP BALANCE SHEETS SEPTEMBER 30, 1998 AND 1997 ASSETS 1998 1997 ---------- ----------- Cash .............................................. $ 6,553 $ 48,738 Mortgage note and other receivables (Note 2): Mortgage note receivable ...................... 101,250 Other ......................................... 439,825 275,303 Property held for sale (Note 4) ................... 4,279,599 4,739,939 Other assets (Note 3) ............................. 59,627 62,944 ---------- ---------- $4,785,604 $5,228,174 ========== ========== LIABILITIES AND PARTNERS' EQUITY Liabilities: Mortgage notes payable, bank (Note 4) ......... $1,321,750 $1,675,972 Accounts payable and other liabilities (Note 5) 917,795 761,325 Estimated cost of development of land sold .... 30,142 ---------- ---------- 2,239,545 2,467,439 Partners' equity: 4,485,504 units authorized and outstanding .... 2,546,059 2,760,735 ---------- ---------- $4,785,604 $5,228,174 ========== ==========
See notes to financial statements.
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS Years ended September 30, -------------------------------------------- 1998 1997 1996 ----------- ----------- ----------- Revenues (Note 10) .................... $ 2,170,116 $ 3,106,552 $ 396,924 ----------- ----------- ----------- Costs and expenses: Cost of sales ..................... 1,394,684 1,747,627 135,533 Selling, general and administrative expenses (Note 7) .............. 646,467 768,537 680,239 Interest (Note 4) ................. 89,147 33,434 72,696 Terminated merger costs ........... 70,720 Depreciation and property taxes ... 254,494 166,110 127,979 ----------- ----------- ----------- 2,384,792 2,715,708 1,087,167 ----------- ----------- ----------- Net income (loss) ..................... $ (214,676) $ 390,844 $ (690,243) =========== =========== =========== Net income (loss) per unit ............ $ (0.05) $ 0.09 $ (0.15) =========== =========== =========== Weighted average number of units outstanding ....................... 4,485,504 4,485,504 4,485,504 =========== =========== ===========
See notes to financial statements.
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP STATEMENTS OF PARTNERS' EQUITY Partnership General Limited Total Units Partners Partners Equity ----------- ----------- ----------- ----------- Balance, September 30, 1995 4,485,504 $ 132,984 $ 2,927,150 $ 3,060,134 Net loss .................. (14,633) (675,610) (690,243) ----------- ----------- ----------- ----------- Balance, September 30, 1996 4,485,504 118,351 2,251,540 2,369,891 Net income ................ 8,286 382,558 390,844 ----------- ----------- ----------- ----------- Balance, September 30, 1997 4,485,504 126,637 2,634,098 2,760,735 Net loss .................. (4,551) (210,125) (214,676) ----------- ----------- ----------- ----------- Balance, September 30, 1998 4,485,504 $ 122,086 $ 2,423,973 $ 2,546,059 =========== =========== =========== ===========
See notes to financial statements.
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS Years ended September 30, --------------------------------------------- 1998 1997 1996 ----------- ----------- ----------- Cash flows from operating activities: Cash received: Collections on land sales and receivables ... $ 1,852,861 $ 2,730,995 $ 434,830 Interest income ............................. 7,018 1,154 7,622 Sale of utility system ...................... 228,661 127,393 432,800 Other cash received ......................... 18,304 1,000 6,398 ----------- ----------- ----------- 2,106,844 2,860,542 881,650 ----------- ----------- ----------- Cash expended: Selling, general and administrative, property taxes and other expenses ........... 654,811 1,274,637 528,353 Interest paid (net of amounts capitalized) ..... 89,147 33,434 72,696 Improvements to property held for sale ......... 1,050,849 1,156,495 848,616 ----------- ----------- ----------- 1,794,807 2,464,566 1,449,665 ----------- ----------- ----------- Net cash provided by (used in) operating activities 312,037 395,976 (568,015) ----------- ----------- ----------- Cash flows from investing activities: Purchase of property and equipment ............. (1,335) ----------- ----------- ----------- Cash flows from financing activities: Proceeds from mortgage notes payable: Bank ........................................ 945,778 1,043,560 301,899 Other ....................................... 325,000 Payments on mortgage payable: Bank ........................................ (1,300,000) (580,000) (100,000) General partner ............................. (527,249) Other ....................................... (325,000) ----------- ----------- ----------- Net cash provided by (used in) financing activities (354,222) (388,689) 526,899 ----------- ----------- ----------- Net increase (decrease) in cash ................... (42,185) 7,287 (42,451) Cash at beginning of year ......................... 48,738 41,451 83,902 ----------- ----------- ----------- Cash at end of year ............................... $ 6,553 $ 48,738 $ 41,451 =========== =========== ===========
(continued)
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS (CONTINUED) Years ended September 30, --------------------------------------- 1998 1997 1996 --------- --------- --------- Reconciliation of net income (loss) to net cash provided by (used in) operating activities: Net income (loss) ................................. $(214,676) $ 390,844 $(690,243) --------- --------- --------- Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization ............... 1,975 2,754 3,428 Sundry (See below) .......................... 27,249 Change in assets and liabilities Increase in: Mortgage notes and other receivables ........ (63,272) (243,235) Property held for sale ...................... (642,327) Other assets ................................ (4,322) (1,578) Accounts payable and accrued liabilities .... 156,470 197,037 Estimated cost of development of land sold .. 16,000 Decrease in: Mortgage notes and other receivables ........ 538,718 Property held for sale ...................... 460,340 510,049 Other assets ................................ 1,342 Accounts payable and accrued liabilities .... (276,114) Estimated cost of development of land sold .. (30,142) (299) --------- --------- --------- Total adjustments ................................. 526,713 5,132 122,228 --------- --------- --------- Net cash provided by (used in) operating activities $ 312,037 $ 395,976 $(568,015) ========= ========= =========
Supplemental information concerning investing and financing activities: In fiscal 1996 the Partnership issued a note payable to the general partner for unpaid interest in the amount of $27,249. See notes to financial statements. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996 1. Organization and summary of significant accounting policies: The primary business purpose of the Partnership is the operation, management and orderly disposition of its assets and the distributions of the proceeds therefrom to unitholders. The general partners of the Partnership are Hasam Realty Limited Partnership and Stein Management Company, Inc. ("Steinco"). Steinco is the Managing General Partner which employs the management and clerical employees necessary to carry out the operation of the Partnership. Steinco is reimbursed by the Partnership for related expenses. A summary of the Partnership's accounting principles is as follows: Land sales: Generally, land sales are recognized when the purchaser has made an adequate down payment, 20% to 25% of the purchase price, the Partnership has no substantial remaining obligations with respect to the property, and the collectibility of the related receivable is reasonably predictable. Otherwise, either the installment or the cost recovery method is used. Under the installment method, portions of profit are recognized as cash payments are received from the buyer. Under the cost recovery method no profit is recognized until cash payments received from the buyer, including interest and principal, exceed the seller's cost of the property sold. Sale of Utility System: The Partnership recognizes profit on the 1983 sale of a utility system in the years in which increases in consumption generate amounts due to the Partnership. (See Note 8). Cash: The Partnership considers all highly liquid debt investments with maturities of three months or less to be cash equivalents. Mortgage note receivable: Mortgage note receivable represents the amount due from the sale of properties. The Partnership evaluates the carrying amount of delinquent mortgage notes receivable to determine that such amount does not exceed the estimated fair market value of the underlying land. (continued) ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996 1. Organization and summary of significant accounting policies (continued): Property held for sale: Property held for sale is stated at the lower of cost or estimated net realizable value. The cost of property held for sale includes the original purchase price, cost of land development, development period real estate taxes, and interest. Net income (loss) per unit: Net income (loss) per unit is calculated based on the weighted average number of units outstanding during the year. Concentrations of risk: Asset which subject the Partnership to concentrations of risk consist primarily of property held for sale. The Partnership's property held for sale is located in Florida. The Partnership's ability to sell its property is substantially dependent upon the Florida real estate economic sector. Use of 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 and disclosures. Actual results could differ from those estimates. Reclassifications: Certain items in the 1997 and 1996 financial statements have been reclassified to conform to the 1998 presentation. 2. Mortgage note and other receivables: Mortgage note receivable of $101,250 at September 30, 1997 carried interest at 10% per annum, and was paid as of September 30, 1998. September 30, ---------------------- 1998 1997 -------- --------- Utility receivable (Note 8) $438,572 $228,660 Accrued interest receivable 3,900 Closing proceeds receivable 41,200 Other ..................... 1,253 1,543 -------- -------- $439,825 $275,303 ======== ======== ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996 3. Other assets: Other assets consist of the following: September 30, -------------------- 1998 1997 ------- -------- Furniture and equipment, net of accumulated depreciation $ 1,361 $ 3,336 Prepaid expenses ................. 58,266 59,608 ------- ------- $59,627 $62,944 ======= ======= 4. Mortgage notes payable, bank: Mortgage notes payable, bank consist of the following:
September 30, --------------------------- 1998 1997 ---------- ----------- Mortgage notes payable, bank: On July 15, 1998, the Partnership combined certain construction development loans under a $2,925,000 Consolidation Promissory Note, at 1% over the prime rate (for an effective rate of 9.50% at September 30, 1998). Interest is payable monthly and the note matures on September 17, 1999. Property held for sale with a cost of approximately $2,259,000 is collateral for this loan and the loan below. The mortgage requires certain principal payments as land is sold. At September 30, 1998, $16,402 is available to be drawn on this loan. $1,028,598 $1,485,820 On September 2, 1997, the Partnership entered in to a Future Advance for Working Capital Loan in the amount of $300,000 at 1% over the prime rate (for an effective rate of 9.50% at September |30, 1998). Interest is payable monthly and the loan matures on September 17, 1999. The collateral described above also collateralizes this obligation. 293,152 190,152 ---------- ---------- $1,321,750 $1,675,972 ========== ==========
(continued) ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996 4. Mortgage notes payable, bank: (continued) Interest is capitalized for property being developed as follows:
September 30, --------------------------- 1998 1997 ---------- ----------- Capitalized $ 61,212 $ 191,893 Charged to operations 89,147 33,434 ----------- ----------- Total interest incurred $ 150,359 $ 225,327 =========== ===========
5. Accounts payable and other liabilities: Accounts payable and other liabilities consist of the following:
September 30, --------------------------- 1998 1997 ---------- ----------- Accounts payable $ 671,594 $ 477,192 Accrued liabilities: Current property taxes 205,690 244,133 Other 40,511 40,000 ---------- ----------- $ 917,795 $ 761,325 ========== ===========
Property taxes related to 1994, 1995, 1996 and 1997 in the amount of $329,160 are delinquent at September 30, 1998 and are included in accounts payable. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996 6. Income taxes: The Partnership, pursuant to the transitional grandfather rules of the Internal Revenue Code dealing with publicly traded partnerships, reported its income as a partnership for taxable years through December 31, 1997. The application of the grandfather rules terminated for taxable years commencing after December 31, 1997. Under the Taxpayer Relief Act of 1997, a publicly traded partnership that is currently governed by this provision may elect to continue its partnership tax status beyond December 31, 1997 by agreeing to pay an annual 3.5% Federal tax on its gross income for Federal income tax purposes (principally revenues less cost of land sold). The Partnership has elected to continue its Partnership status beyond December 31, 1997, and estimates that Federal tax due, if any, on gross income for Federal tax purposes for the tax year ending December 31, 1998 will not be material. The partners are required to include in their income tax returns their share of the Partnership's income or loss, as adjusted to reflect the effects of certain transactions which are accorded different accounting treatment for federal income tax purposes. Pursuant to the Tax Reform Act of 1986, the Partnership changed its fiscal year end, September 30, to a calendar year end for income tax purposes. The following analysis summarizes the major differences between the financial reporting and income tax basis of the partner's equity account at September 30, 1998.
Partners' equity, financial reporting basis $ 2,546,059 Add item recorded for tax purposes only: Step-up in basis of property $17,000,000 Less: Cost of sales - step-up adjusted for unamortized additional capitalized inventory costs and any adjustments as a result of repossessions. 12,167,524 ----------- 4,832,476 Add items not presently deductible for tax purposes 39,882 4,872,358 ----------- ----------- Partners' equity, income tax basis $ 7,418,417 ===========
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996 7. Lease information: The Partnership occupies its office facility in a building owned by an entity related by common ownership. The Partnership does not pay any rent at this office facility. Other long-term operating leases on real and personal properties are not considered material. 8. Other transactions: A subsidiary of the Company, Royal Palm Beach Utilities Company ("Utilities"), previously sold to the Village of Royal Palm Beach ("Village") all of its assets, consisting of a water treatment and distribution system and a sanitary sewer collection, treatment and disposal system located in the Village. The sale requires payments to be received by Utilities as future connections (as measured by increase in consumption) are added to the system, over a period which is expected to be extended from August, 2001 through 2003. Should consumption not increase sufficiently, the Partnership would not receive the full sale amount. The maximum proceeds to Utilities approximates $13,410,000, of which, under the terms of the sale, approximately $5,050,000 had not yet been received as of September 30, 1998. In addition, the Partnership had the right to receive up to $500,000, of which $303,000 has already been received, as the Village collects guaranteed revenues from developers. Since future increases in consumption and payment of guaranteed revenues cannot be assured and, therefore, the extent of future payments to the Partnership is uncertain, the Partnership accounts for this transaction utilizing the cost recovery method of accounting. The Partnership has previously fully recovered its cost and recognizes profit on the sale as increases in consumption generate amounts due to the Partnership. Revenues related to the sale of utility system of $438,573, $227,053, and $129,000 were recognized for fiscal years 1998, 1997 and 1996 respectively. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996 9. Comparative quarterly financial information (unaudited):
First Second Third Fourth quarter quarter quarter quarter Full year ----------- ----------- ----------- ----------- ----------- 1998: Revenues: ............... $ 489,037 $ 620,488 $ 618,981 $ 441,610 $ 2,170,116 Cost and expenses ....... 555,056 764,610 786,995 278,131 2,384,792 ----------- ----------- ----------- ----------- ----------- Net income (loss) ....... $ (66,019) $ (144,122) $ (168,014) $ 163,479 $ (214,676) =========== =========== =========== =========== =========== Net income (loss) per unit $ (0.01) $ (0.03) $ (0.04) $ 0.03 $ (0.05) =========== =========== =========== =========== =========== 1997: Revenues: ............... $ 320,619 $ 1,659,912 $ 327,224 $ 798,797 $ 3,106,552 Cost and expenses ....... 291,774 1,146,565 459,632 817,737 2,715,708 ----------- ----------- ----------- ----------- ----------- Net income (loss) ....... $ 28,845 $ 513,347 $ (132,408) $ (18,940) $ 390,844 =========== =========== =========== =========== =========== Net income (loss) per unit $ 0.01 $ 0.11 $ (0.03) $ (0.00) $ 0.09 =========== =========== =========== =========== =========== 1996: Revenues: ............... $ 144,044 $ 7,197 $ 12,476 $ 233,207 $ 396,924 Cost and expenses ....... 375,444 283,059 185,668 242,996 1,087,167 ----------- ----------- ----------- ----------- ----------- Net loss ........... $ (231,400) $ (275,862) $ (173,192) $ (9,789) $ (690,243) =========== =========== =========== =========== =========== Net loss per unit ....... $ (0.05) $ (0.06) $ (0.04) $ (0.00) $ (0.15) =========== =========== =========== =========== ===========
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996 10. Revenues: Revenues consist of the following:
Years ended September 30, ---------------------------------------- 1998 1997 1996 ---------- ---------- ---------- Land revenues: Net sales of land ............. $1,706,221 $2,873,445 $ 182,000 Recognized profit on installment and costs recovery sales ............... 690 Interest income ................... 7,018 5,054 4,789 Sale of utility system (Note 8) 438,573 227,053 129,000 Foreclosure settlement, net . 74,047 Other ........................ 18,304 1,000 6,398 ---------- ---------- ---------- $2,170,116 $3,106,552 $ 396,924 ========== ========== ==========
11. Liquidity: During the year ended September 30, 1995, the Partnership incurred substantial expenses in the development of its properties in addition to normal ongoing administrative costs incurred in connection with a terminated merger. In anticipation of adding home building operations through the proposed merger, management made a decision to suspend land sales activity pending the outcome of the merger. This suspension of land sales resulted in insufficient cash resources available for the Partnership to meet its obligations as they become due. Since the termination of the merger in December 1995, the Partnership has resumed land sales efforts and has closed certain sales. However, there is no assurance that such sales and closings will continue to occur, or that their timing will coincide with the Partnership's cash requirements. Management believes that the Partnership will be able to fund ongoing operations from future land sales or from short-term financing, if needed. The success of the sales efforts or obtaining additional borrowing is necessary to enable the Partnership to meet its current obligations. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP SCHEDULE IX - VALUATION AND QUALIFYING ACCOUNTS YEAR ENDED SEPTEMBER 30, 1998
Column C -------------------------------- Column B (1) (2) Column E Balance at Charged to Charged to Balance at Column A beginning costs and other Column D end of Description of period expenses accounts deductions period ----------- --------- -------- -------- ---------- ------ Deferred profit: 1996 $ 49,648 (A) $ (690) $ 0.00 (B) (48,958)
(A) Recognized profit on installment and cost recovery sales. (B) Write-off of deferred profit in connection with settlement of mortgage note receivable. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP SCHEDULE X - SUPPLEMENTAL INCOME STATEMENT INFORMATION YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996 September 30, -------------------------------------- 1998 1997 1996 -------- -------- -------- 1. Maintenance and repairs ........ $ 0 $ 580 $ 0 ======== ======== ======== 2. Taxes, other than payroll and income taxes ............ $254,791 $166,837 $128,589 ======== ======== ======== 3. Advertising .................... $ 0 $ 168 $ 0 ======== ======== ======== EX-4 2 EXHIBIT 4(m) AGREEMENT FOR PURCHASE AND SALE ------------------------------- THIS AGREEMENT is entered into by ROYAL PALM BEACH COLONY LIMITED PARTNERSHIP, a Delaware limited partnership ("Seller"), and TCR SFA APARTMENTS, INC., a Texas corporation ("Buyer"). The "Effective Date" of this Agreement is the date on which the last party has signed this Agreement and delivered a fully executed original to the other party. BACKGROUND: ----------- Seller is currently the owner of that certain property located in the Village of Royal Palm Beach in Palm Beach County, Florida, containing approximately 21.8 acres, together with the abandoned Crestwood Boulevard right-of-way, all of which is more particularly described in Exhibit "A" attached hereto and made a part hereof ("Property"). The parties to this Agreement have agreed to the sale and purchase of the Property on the terms and conditions which are set forth in this document. AGREEMENT: ---------- 1.00 Purchase and Sale. ------------------ Subject to all of the terms and conditions of this Agreement, the Seller will sell to the Buyer and the Buyer will purchase from the Seller the Property, together with all appurtenances, rights, easements, and rights of way incident thereto and together with all state, municipal and county development, utility, impact and other fees paid by Seller relating to the Property ("Governmental Fees") as more particularly described herein. 2.00 Purchase Price. --------------- The purchase price to be paid by the Buyer to the Seller for the Property is $2,040,000 ("Purchase Price"). The Purchase Price shall be payable as hereinafter described. If, in connection with the site plan submission and approval process described in Paragraph 4.01 hereof, the Buyer is unable to obtain an approved site plan for at least 272 rental apartment units, then the Purchase Price shall be reduced by the sum of $7,500 for each unit under 272 units which is not on the approved site plan. However, if the number of approved units is less than 250 units, then the Buyer shall, in its sole discretion, either acquire the property for a purchase price based upon 250 units (i.e. $1,875,000), or terminated this Agreement, whereupon the Escrow Agent shall refund any deposits placed hereunder to the Buyer and the parties shall be relieved of all further obligations and liabilities hereunder. 2.01 Deposit. -------- Within 2 days of the Effective Date, the Buyer shall deposit with Broad and Cassel ("Escrow Agent") the sum of $50,000 ("First Deposit") which shall be invested in an interest bearing account selected by Buyer. Upon receipt of final, unappealable site plan approval from the Village of royal Palm Beach for a minimum of 250 apartment units, Buyer shall deposit an additional $50,000 ("Second Deposit") with Escrow Agreement and Escrow Agent shall hold the second deposit upon the same terms as the First Deposit. The First Deposit, the Second Deposit and the deposit described in Paragraph 6.0 are collectively referred to as the "Deposit". The disposition of the Deposit shall be in accordance with the terms and conditions of this Agreement. Upon closing, interest shall be paid to the Buyer. 2.02 Payment of Purchase Price. -------------------------- At the time of closing, the Buyer will pay to Seller by cashier's check or by wire transfer of funds the Purchase Price as adjusted for prorations and adjustments as set forth in this Agreement. Upon closing, the Escrow Agent will return the Deposit to the Buyer. 3.00 Title and Title Insurance. -------------------------- Within twenty (20) days from the Effective Date the Buyer shall obtain a commitment for an ALTA Form B owner's title insurance policy issued by a title insurance company reasonably acceptable to Buyer. The title insurance commitment shall have a date subsequent to the Effective Date and shall show that title to the Property is good and marketable and insurable subject to no liens, encumbrances, exceptions or qualifications which would preclude the Buyer, in its sole discretion, from constructing and developing a rental apartment community upon the Property. The Buyer shall have fifteen (15) days from receipt of the commitment in which to examine the condition of title. If the Buyer fails to provide the Seller with written notice of specific defects which make title to the Property other than as required by this paragraph within the fifteen (15) day period, then, for all purposes of this Agreement, the Buyer shall be deemed to have accepted title in the condition described in the commitment. Any title exceptions which are not objected to within the fifteen (15) day period shall be deemed to be permitted exceptions. If the Buyer timely notifies the Seller that title does not satisfy the requirements of this paragraph, then the Seller agrees to use reasonable diligence to make title good, marketable and insurable, for which purpose the Seller shall have a reasonable time but in no event more than one hundred twenty (120) days from the receipt of the Buyer's written notice that title is unacceptable. After reasonable diligence on the part of the Seller, if title is not rendered as required by this paragraph, then at the end of the one hundred twenty (120) day period any money deposited by the Buyer at the election of Buyer, shall be returned to Buyer, this Agreement shall be terminated and all parties hereto shall be released from any and all obligations and liabilities hereunder. At any time prior to such termination, the Buyer may elect by written notice to the Seller to waive any defects in title, in which event the closing shall take place pursuant to this Agreement without any abatement in price. The obligation of the Seller to cure title defects shall include an obligation to expend money (but not in excess of $5,000.00) but not to commence and pursue litigation. 4.00 Investigation Period. --------------------- a. Commencing on the Effective Date, the Buyer shall have sixty (60) days ("Investigation Period") in which to determine that the Property can be improved with a rental apartment project pursuant to a plan feasible and satisfactory to the Buyer in its sole discretion (the "Intended Improvements"). The inclusion of the Investigation Period in this Agreement shall not in any manner alter, modify or limit the conditions precedent to closing set forth in Paragraph 5.00 hereof or Seller's Warranties set forth in Paragraph 10.00 hereof. Seller acknowledges that Buyer will be expending funds during the Investigation Period, and that such expenditures constitute full and valuable consideration for this Agreement and the Investigation Period. b. Among other things, during the Investigation Period the Buyer shall review the (i) adequacy of utility service which is or will be made available to a boundary of the Property; (ii) impact fees and other charges which will be incurred in connection with the development of the Property, including sewer and water connection fees; (iii) soil conditions; (iv) market surveys relating to the need for Buyer's intended improvement in the area of the Property; and (v) any such other items as Buyer may deem pertinent. During the Investigation Period, Seller shall provide Buyer and its agents with access to the Property and Buyer shall be permitted to clear the Property as necessary for survey purposes and soil borings. c. The Buyer hereby indemnifies and holds the Seller harmless from any damage, loss, cost or expense including, but not limited to, attorneys' fees and costs incurred by the Seller as a result of the negligence, recklessness or willful misconduct of any of Buyer's agents or employees who enter the Property. Prior to entering onto the Property, Buyer shall provide Seller with evidence of liability insurance coverage reasonably satisfactory to Seller. Buyer shall have no indemnification obligation or other liability for, or in connection with any claims arising from pre-existing conditions on or under the Property, or those arising from the presence, discovery, or disturbance of "Hazardous Substances" as such term is defined in the Comprehensive Environmental Response, Compensation and Liability Act. 42 U.S.C. ss. 96-0 et seq. and the regulations promulgated thereunder (as amended from time to time) and shall include oil and oil waste as those terms are defined in the Clean Water Act, 33 U.S.C. ss1251 et seq. and the regulations promulgated thereunder (as amended from time to time), the Resource, Conservation and Recovery Act, 42 U.S.C.ss6901 et seq. and the Florida Resource Recovery and Management Act, Florida Statutes ss403.70-403.73, each as amended from time to time and shall include any other elements or compounds contained in the list of hazardous substances adopted by the United States Environmental Protection Agency (the "EPA") and the list of toxic pollutants designated by Congress or the EPA as defined by any other Federal, State or local statute, law, ordinance, code, rule, regulation, order or decree relating to standards of conduct concerning any toxic or dangerous waste or substance. d. Within fifteen (15) days after the Effective Date, Seller agrees to provide Buyer with copies of all documents in Seller's possession pertaining to the Property and the proposed development thereof, if any, including , but not limited to, surveys, site plans, proposed governmental regulations, agreements relating to school, water, sewer, road and recreational impact fees, association documents, developers agreements (whether recorded or not), and any other document in Seller's possession or in the possession of any of Seller employees, agents or independent contractors, if any. e. If for any reason the Buyer, in its sole discretion, determines during the Investigation Period that the Intended Improvements cannot be built on the Property, then no later than 6:00 p.m. on the last day of the Investigation Period, the Buyer shall, in writing, notify the Seller that it has elected not to proceed and thereupon the Deposit shall be returned to the Buyer and the parties hereto shall be relieved of all liabilities and obligations under this Agreement. In the event, Buyer fails to notify Seller in writing prior to the expiration of the Investigation Period, Buyer shall be deemed to have elected to proceed. If Buyer elects not to proceed, it will provide Seller with copies of surveys, soil tests and third party market studies, if any, which it has obtained during the Investigation Period. 4.01 Development Approval. --------------------- If Buyer elects to proceed with this transaction pursuant to the terms of Paragraph 4.00 hereof, Buyer will promptly thereafter initiate the planning, design, approval and permitting process for the development of the Property and the construction of the Intended Improvements and will thereafter diligently and continuously pursue obtaining the Development Approvals in a time sequence deemed reasonable by Buyer in its discretion. Such approvals and permits are hereinafter collectively the "Development Approvals", and will include, but not be limited to: a. Site Plan Approval. b. Plat approval and recordation of any amendments necessary to permit the constructions and development of the Intended Improvements on the Property: c. All approvals relative to concurrency issues; and d. All building, engineering and utility permits required for the development and construction of the Intended Improvements; and e. All necessary approvals from the appropriate governmental authorities (including reasonable variances which Buyer deems necessary) in order to permit the commencement of development and construction of the Intended Improvements. Seller agrees to cooperate with Buyer in obtaining the Development Approvals, provided Seller shall not thereby be required to incur any costs. Seller's cooperation shall include, but not be limited to the execution of consents, applications, petitions and agreement as may be required by applicable governmental authorities or entities ("Development Applications") and attendance by Seller at meetings, proceedings or hearings (if required). If Seller fails or refuses to execute and deliver to Buyer any Development Applications within five (5) business days of Buyer's delivery of same to Seller, the time periods for Buyer's performance hereunder and the closing date shall be extended for the number of days Buyer has been delayed in the approval and permitting process attributable to Seller's failure to deliver to Buyer the requested Development Applications, provided, however, if Seller fails or refuses to execute any Development Applications for a period in excess of ten (10) business days after delivery of same by Buyer to Seller, Buyer may elect (i) to extend the time for obtaining Development Approvals and the closing date for the number of days Buyer has been delayed in the approval and permitting process attributable to seller's failure to deliver to Buyer the requested Development Applications, or (ii) Buyer may deem the Seller in default of this Agreement. 5.00 Conditions Precedent to Buyer's Obligation to Close. ---------------------------------------------------- The following are specific conditions which must be satisfied prior to, and must be true at closing BUT, THE FAILURE TO SATISFY ANY OF THESE CONDITIONS SHALL NOT EXTEND THE CLOSING AS DESCRIBED IN SECTION 6.00A. BELOW: a. The Property is zoned to permit the development of Buyers, Intended Improvements. b. The Buyer has obtained the Development Approvals. c. There are no governmental prohibitions (including zoning restrictions or conditions or water, sewer, building or other moratoria in effect) that prevent Buyer from proceeding to construct and occupy Buyer's Intended Improvements. d. There shall be direct, uninterrupted and continuous ingress and egress access for pedestrian and vehicular traffic from the Property to a public road or road right-of-way and all necessary curb cuts and street opening permits shall have been obtained or approved. e. An updated environmental audit of the Property (performed at Buyer's expense) shall indicated no adverse environmental conditions as of the closing. f. Title to the Property shall be good, marketable and insurable and subject only to the Permitted Exceptions. 6.00 Closing. -------- a. The purchase and sale contemplated by this Agreement shall be closed on the earlier of nine (9) months after the Effective Date or the date which is fifteen (15) days after Buyer obtains building permits for the Intended Improvements. The closing will be held at the offices of Seller's attorney in Palm Beach County or at such other place as the parties may mutually agree upon. b. If Buyer has been diligently pursing the receipt of building permits from the Village of Royal Palm Beach but has not obtained them within nine (9) months from the Effective Date, then Buyer shall be entitled to three successive 30-day extensions of the Closing. In order to obtain each 30-day extension, the Buyer shall provide the Seller with five days' prior notice of its election to extend the Closing for 30 days. The written Notice shall be simultaneously accompanied with a $25,000 payment of an additional deposit to the Seller. During any of the 30-day extensions of the Closing, the Buyer will continue its diligent pursuit of building permits. If the Buyer fails to obtain building permits by the end of any of the extension periods, and if the Buyer elects not to close, then any of the $25,000 additional deposits made by the Buyer shall be retained by the Seller and the balance of the Deposit held by the Escrow Agent shall be returned to the Buyer. If the Buyer closes this transaction then all of the $25,000 additional deposits as well as the Deposit, shall be credited toward the payment of the Purchase Price. b. Notwithstanding anything contained herein to the contrary, at any time prior to the scheduled closing, the buyer in its sole discretion may elect to close this transaction. Buyer shall exercise this election by delivering to the Seller written notice of the Buyer's intention to close which notice shall set a closing date not less than ten (10) days nor more than forty-five (45) days from the date of the notice. 6.01 Seller's Deliverance. --------------------- Seller shall deliver to the Buyer at the closing the following documents, dated as of the closing date, the delivery and accuracy of which shall be a condition to the Buyer's obligation to consummate the purchase and sale: a. Warranty Deed. A statutory warranty deed in recordable form, duly executed by the Seller, conveying to the Buyer good, marketable and insurable fee simple title to the Property subject only to those exceptions contained in the title commitment, with the legal description provided in the title commitment. b. Affidavit. A no-lien and exclusive possession affidavit of a form and content customarily used in Palm Beach County, Florida. The no-lien affidavit shall relate to any activity of the Seller at the Property within the period that a mechanic's lien can be filed based on such activity prior to the closing. c. FIRPTA Affidavit. In order to comply with the requirements of the Foreign Investment Real Property Tax Act of 1980 "(FIRPTA"), Seller will deliver to Buyer at closing Seller's affidavit under penalty of perjury stating the Seller is not a "foreign person," as defined in Section 1445 of the Internal Revenue Code of 1986 and the U.S. Treasury Regulations thereunder., setting forth Seller's taxpayer identification number, and that Seller intends to file a United States income tax return with respect to the transfer. Seller represents and warrants to Buyer that it has not made nor does Seller have any knowledge of any transfer of the Property or any part thereof that is subject to any provisions of FIRPTA that has not been fully complied with by either transferror or transferee. As required by law, if Seller fails to comply with the requirement of this paragraph, Buyer shall withhold 10% of the Purchase Price in lieu of payment thereof to Seller and pay it over instead to the Internal Revenue Service in such form and manner as may be required by law. d. Seller's Certificate. A duly executed certification that every warranty of the Seller under this Agreement is true and correct as of the closing as if made by the Seller at such time. e. Evidence of Authority. Duly executed resolutions, authorizing the appropriate officers or partners of Seller to execute and deliver any of the above-listed documents on behalf of the Seller. Additionally, Seller shall deliver to the Buyer current certificates of good standing. f. Other Documents. Such other documents as may reasonable be required by the Buyer iln order to consumate the transaction contemplated by this Agreement. Seller shall also deliver to Buyer and Buyer's attorney copies of all of the foregoing documents at least five (5) days prior to closing for Buyer's review. 6.02 Buyer's Deliveries. ------------------- At the closing, and after the Seller has complied with all of the terms and conditions of this Agreement and simultaneously with Seller's delivery of the documents required in Paragraph 6.01, the Buyer shall: a. Purchase Price. Pay to the Seller by wire transfer of funds the Purchase Price, adjusted for the prorations and other payments for in this Agreement; and b. Corporate Resolution. Deliver to Seller a corporate resolution, duly executed, authorizing Buyer to close the subject transaction. c. Other Documents. Deliver such other documents as may reasonably be required by the Seller in order to consummate the transaction contemplated by this Agreement. 6.03 Closing and Recording Costs. --------------------------------- The Seller shall pay the cost of documentary stamps to be affixed to the deed, surtax on the deed of conveyance, if any, one-half of the cost of the owner's title insurance policy premium, and all recording costs (except the cost of recording curative documents required pursuant to the terms of Paragraph 3.00 hereof, which costs shall be paid by the Seller). Buyer shall pay the cost of the boundary survey and one-half of the cost of the title insurance premium. 7.00 Taxes and Prorations. --------------------- At the closing, the taxes on the Property shall be prorated between the parties on the basis of the taxes paid for the most recent year that has been assessed and billed. If the actual taxes for the year of closing are not determinable at the closing date, then the parties agree to re-prorate taxes promptly upon issuance of the tax bill for the year of closing. Special assessment liens certified as of closing shall be paid by the Seller. Pending liens shall be assumed by the Buyer. 8.00 Possession. ----------- The Buyer shall be granted full possession of the Property as of the closing. 9.00 Survey. ------- Buyer will obtain a current boundary survey of the Property dated subsequent to the Effective Date. The survey shall be certified to the Seller, the Buyer, the lending institution designated by Buyer, if any, the title agent and the title insurance company. The survey shall be prepared by a licensed Florida land surveyor in accordance with the minimum technical standards established by the Florida Board of Land Surveyors and shall be sufficient to cause the deletion from the title commitment matters which would be disclosed by an accurate survey. The survey shall contain a certification of the acreage contained within the Property, the average elevation of the Property and the FEMA flood zone designation, and shall disclose all instruments of record as designated in the Title Evidence. The survey shall show that there are no encroachments on the Property. Any encroachments shown shall be treated as a title defect in accordance with Paragraph 3.00. Buyer shall notify Seller of survey defects prior to the expiration of the title review period. 10.00 Seller's Warranties. -------------------- Seller hereby warrants to Buyer as follows: a. Seller owns the Property subject only to the title exceptions which are reflected in the title commitment described in section 3.00. b. There are no condemnation or eminent domain proceedings pending or to the best of Seller's knowledge contemplated against the Property or any part thereof, and the Seller has received no notice of the desire of any public authority to take or use the Property or any part thereof. c. There are no pending suits or proceedings against or affecting the Seller or any part of the Property which (i) do or could affect title to the Property or any part thereof; or (ii) do or could prohibit or make unlawful the consummation of the transaction contemplated by this Agreement, or render Seller unable to consummate the same. d. To the best of Seller's knowledge no toxic and/or hazardous wastes as defined by Federal or Florida law have been used or stored in, on, under or about the Property. e. Seller has full power and authority to execute and deliver this Agreement and all documents now or hereafter to be delivered by it pursuant to this Agreement and to perform all obligations arising under this Agreement. f. This Agreement and Seller's Documents do not and will not contravene any provision of Seller's Agreement of Limited Partnership or any present judgment, order, decree, writ or injunction, or any provision of any currently applicable law or regulation. g. Seller is a limited partnership duly organized and validly existing under the laws of the State of Delaware. h. The Property is or at the time of closing will be free and clear of all liens except for ad valorem taxes for the year 1998, not yet due and payable, and for all subsequent years; i. Seller has received no notice of and to its knowledge there is no violation of any law, regulation, ordinance, order or judgment affecting the Property. j. Seller has no knowledge of any unrecorded easements, restrictions or encumbrances affecting all or any part of the Property. k. Seller is not aware of any facts which prohibit it from closing this Agreement in accordance with the terms hereof. l. There are no agreements, waivers or other arrangements providing for any extension of time with respect to the assessment of any type of tax or deficiency against Seller in respect of the Property, nor to the best of Seller's knowledge, are there any actions, suits, proceedings, investigations or claims for additional taxes and assessments asserted by any taxing authority. m. There are no mechanics' or materialmen's liens against the Property and if subsequent to closing hereunder, any mechanics' or other liens shall be filed against the Property or against Buyer or its assigns, based upon any act or omission occurring prior to closing on the Property, Seller shall take such action, within ten (10) days after the filing thereof, by bonding, deposit, payment or otherwise, as will remove, transfer or satisfy such lien of record against the Property, at Seller's sole cost and expense. n. There are no parties in possession of any portion of the Property, whether as lessees, tenants-at-sufferance, trespassers or otherwise. At the closing, the Seller shall, in writing, reaffirm to the Buyer the truth and correctness, as of the closing date, of each of the warranties and agrees to indemnify and hold the Buyer harmless from any loss or damage suffered by the Buyer on account of the untruth or incorrectness of any such warranties. 11.00 Covenants of Seller. -------------------- Seller hereby convenants with the Buyer as follows: a. Between the date of this Agreement and the closing, Seller will not, without the Buyer's prior written consent, create by its consent any encumbrances on the Property nor will Seller accept any additional advances under any existing mortgage on the Property. For purposes of this provision the term "encumbrances" shall mean any liens, claims, options, mortgages or other encumbrances, encroachments, rights-of-way, leases, easements, covenants, conditions or restrictions. b. Between the date of this Agreement and the date of closing, Seller will not file any application for any change of the present zoning classification of the Property unless such change is requested by the Buyer and is consistent with the Intended Improvements. 12.00 Moratoria. ---------- If, at the time of closing, there are sewer, water, building or other moratoria in effect which would interfere with the immediate construction and occupancy of the Intended Improvements, then Buyer, at its sole option, may: (i) close the transaction without regard to the moratoria; or (ii) extend the closing for up to ninety (90) days (without placing any additional deposits). If at the end of the 90-day period the moratorium has not been removed, Buyer may elect to terminate the Agreement and obtain a refund of the Deposit, whereupon the parties shall be relieved from all further liabilities and obligations hereunder. If the moratorium is lifted within the 90 day extension period, then the closing shall take place within 15 days after the date that the moratorium is lifted. 13.00 Real Estate Commissions. ------------------------ Seller hereby warrants to the Buyer that Seller has not engaged or dealt with any broker or agent other than RTL Realty, Inc. ("Seller's Broker"), with respect to the purchase and sale of the Property as contemplated by this Agreement. Seller shall indemnify and hold the Buyer harmless against any and all liability, cost, damage and expense (including, but not limited to, attorneys' fees and costs of litigation and appeals) Buyer shall ever suffer or incur because of any claim by any broker or agent, including Seller's Broker, claiming to have dealt with the Seller, whether or not meritorious, for any commission or other compensation with respect to this Agreement or to the purchase and sale of the Property in accordance with this Agreement. Seller's broker shall be paid at closing by Seller, a commission determined pursuant to a separate agreement. Buyer hereby warrants to the Seller that Buyer has not dealt with any broker or agent, other than Seller's Broker with respect to the purchase and sale of the Property as contemplated by this Agreement. Buyer shall indemnify and hold the Seller harmless against any and all liability, loss, cost, damage and expense (including, but not limited to, attorneys' fees and costs of litigation and appeal) Seller shall ever suffer or incur because of any claim by any broker or agent, other than Seller's Broker, claiming to have dealt with the Buyer, whether or not meritorious, for any commission or other compensation with respect to this Agreement or to the purchase and sale of the Property in accordance with this Agreement. 14.00 Condemnation. ------------- In the event of the institution against the record owner of the Property of any proceedings, judicial, administrative or otherwise, relating to the taking, or to a proposed taking of any portion of the Property by eminent domain, condemnation or otherwise (which materially impairs the proposed development of the Intended Improvements on the Property) prior to closing, or in the event of the taking of any portion of the Property by eminent domain, condemnation or otherwise, prior to closing, then the Seller shall notify the Buyer promptly and the Buyer shall have the option, in its sole and absolute discretion of either (i) terminating this Agreement and obtaining a full refund of the Deposit (upon which the Buyer's Deposit shall be returned to Buyer); or (ii) closing in accordance with the terms of this Agreement, but at such closing the Seller shall assign to the Buyer all of its right, title and interest in and to any net awards that have been or may be made with respect to such eminent domain proceeding or condemnation. Such election must be made by the Buyer within thirty (30) days of the notice furnished by Seller. If Buyer fails to make an election in writing, Buyer shall be deemed to have elected alternative (i). 15.00 Default. -------- If this transaction does not close solely due to a refusal or default on the part of the Buyer (including, without limitations Buyer's failure to close when it is obligated to close pursuant to the terms hereof) then any deposit placed under this Agreement shall be delivered by the Escrow Agent (together with interest thereon) to the Seller as liquidated and agreed upon damages; and thereafter, the Buyer shall be relieved from all further obligations under this Agreement and the Seller shall have no further claim against the Buyer for specific performance or for damages by reason of the failure of the Buyer to close this transaction. If this transaction fails to close due to a default on the part of the Seller, then at the option of the Buyer any deposits placed under this Agreement (together with interest thereon) shall be returned by the Escrow Agent to the Buyer, together with all interest earned thereon, provided however, that such return shall not limit Buyer's right to maintain an action for specific performance or for actual out-of-pocket documented damages incurred by Buyer in connection with this Agreement and the rights and obligations of Buyer hereunder, which damages shall be limited to monies paid by Buyer or owed by Buyer to third parties (other than Buyer or its salaried employees in connection with this transaction. 16. Escrow. ------- Any Escrow Agent receiving funds is authorized and agrees by acceptance thereof to promptly deposit and to hold same in escrow and to disburse same subject to clearance thereof in accordance with terms and conditions of this Agreement. Failure of clearance of funds shall not excuse performance by the Buyer. In the event of doubt as to its duties or liabilities under the provisions of this Agreement, the Escrow Agent may, in its sole discretion, continue to hold the monies which are the subject of this escrow until the parties mutually agree to the disbursement thereof, or until a judgment of a court of competent jurisdiction shall determine the rights of the parties thereto, or it may deposit all the monies then held pursuant to this Agreement with the Clerk of the Circuit Court of Palm Beach County, Florida, and upon notifying all parties concerned of such action, all liability on the part of the Escrow Agent shall fully terminate, except to the extent of accounting for any monies theretofore delivered out of escrow. In the event of any suit between Buyer and Seller wherein the Escrow Agent is made a party by virtue of acting as such Escrow Agent hereunder, or in the event of any suit wherein Escrow Agent interpleads the subject matter of this escrow, the Escrow Agent shall be entitled to recover a reasonable attorney's fee and costs incurred, said fees and costs to be charged and assessed as court cost in favor of the prevailing party. All parties further agree that the Escrow Agent shall not be liable to any party or person whomsoever for misdelivery to Buyer or Seller of monies subject to this esrow unless such misdelivery shall be due to willful breach of this Agreement or gross negligence on the part of the Escrow Agent. Seller and Buyer agree that the status of Buyer's counsel as Escrow Agent under this Agreement does not disqualify such law firm from representing the Buyer in connection with this transaction and in any disputes that may arise between Seller and Buyer concerning this transaction, including any dispute or controversy with respect to the Deposit. 17.00 Entire Agreement. ----------------- This Agreement constitutes the entire agreement between the parties with respect to the transaction contemplated herein, and it supersedes all prior understandings or agreements between the parties. 18.00 Binding Effect. --------------- This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, devisees, personal representatives , successors and permitted assigns. 19.00 Survival of Paragraphs. ----------------------- Except for the warranties contained in the deed and other closing documents none of the terms, conditions and warranties contained herein shall survive the closing and delivery of the deed of conveyance contemplated by this Agreement for a period of six (6) months. 20.00 Waiver; Modification. --------------------- The failure by the Buyer or Seller to insist upon or enforce any of their rights shall not constitute a waiver thereof, and nothing shall constitute a waiver of the Buyer's or Seller's right to insist upon strict compliance with the terms of this Agreement. Either party may waive the benefit of any provision or condition for its benefit which is contained in this Agreement. No oral modification of this Agreement shall be binding upon the parties and any modification must be in writing and signed by the parties. 21.00 Governing Law; Venue. --------------------- This Agreement shall be governed by and construed under the laws of the State of Florida. The venue of any litigation arising out of this Agreement shall be Palm Beach County, Florida. 22.00 Headings. --------- The paragraph headings as set forth in this Agreement are for convenience or reference only and shall not be deemed to vary the content of this Agreement or limit the provisions or scope of any paragraph herein. 23.00 Notices. -------- Any notice, request, demand, instruction or other communication to be given to either party, except where required by the terms of this Agreement to be delivered at the closing, shall be in writing and shall be sent via telecopy, or by registered or certified mail, return receipt requested, or by express overnight courier, as follows: If to Buyer: TCR SFA Apartments, Inc. 6400 Congress Avenue, Suite 1000 Boca Raton, Florida 33487 Attn: Mr. Greg Iglehart with copy to: Broad and Cassel 7777 Glades Road, Suite 300 Boca Raton, Florida 33434 Attn: Jeffrey A. Deutch, Esquire If to Seller: Royal Palm Beach Colony LP 2501 S. Ocean Drive Hollywood, FL 33019 with copy to: Martin Shapiro, Esquire 767 Arthur Godfrey Road Miami Beach, FL 33140 and Mr. Randy Rieger 3225 Aviation Ave. Coconut Grove, FL 33133 Notice shall be deemed given if forwarded by telecopy on the date sent provided the sender has received a confirmation of such transmittal and receipt. If forwarded by certified mail through the facilities of the United States Postal Office, notice shall be deemed given on the third day following the date that the notice in question is deposited in the facilities of the U.S. Postal Service. If notice is forwarded by express overnight courier, it shall be deemed given on the day following the date that the notice in question is deposited in the facilities of an express overnight courier. 24.00 Assignment; Gables Residential Trust or one of its affiliates ----------- This Agreement may not be assigned by the Buyer except to an entity controlled by or under common control with the Buyer, or in the event of an assignment, the Buyer shall be released from any and all of its obligations hereunder, provided that the assignee of such rights agrees to be fully bound by the terms and conditions of this Agreement as if such assignee were the original party hereto. 25.00 Attorneys' Fees. ---------------- In the event that it becomes necessary for either party to bring suit to enforce the terms of this Agreement, then the prevailing party shall be entitled to recover all costs, including attorneys' fees, incurred in connection with such litigation (including appellate proceedings) against the nonprevailing party. 26.00 Time of the Essence. -------------------- Time is of the essence with respect to each provision of this Agreement which requires that action be taken by either party within a stated time period, or upon a specified date. Provided however, if the date for performance is on a Saturday, Sunday or federal holiday, the date for performance shall be extended to the next business day. 27.00 Construction. ------------- Each party hereto acknowledges that all parties hereto participated equally in the drafting of this Agreement and that, accordingly, no court construing this Agreement shall construe it more stringently against one party than the other. 28.00 Counterparts. ------------- To facilitate execution, this Agreement may be executed in an many counterparts as may be required; and it shall not be necessary that the signature of , or on behalf of, each party, or that the signatures of all persons required to bind any party, appear on each counterpart; but it shall be sufficient that the signature of, or on behalf of, each party, or that the signature of the persons required to bind the party appear on one or more of such counterparts. All counterparts shall collectively constitute a single agreement. 29.00 Signage. -------- Commencing upon the Effective Date and ending upon the termination of this Agreement, Seller grants to Buyer the right to erect a sign, reasonably acceptable to Seller, upon the Property advertising the proposed development by Buyer and directing inquiries regarding the proposed development to Buyer. If this Agreement is terminated for any reason, Buyer shall promptly remove any sign erected by Buyer. 30.00 Radon Gas. ---------- The following disclosure is required to be furnished to Buyer under Florida law: Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health center. 31.00 Commercial Outparcel. --------------------- Simultaneously with its execution of this Agreement, the Seller will provide the Buyer with a legal description of approximately 1.6 acres more or less which shall be part of Parcel C of the Property and which will be adjacent to the existing adjacent shopping center property. The 1.6 acre parcel shall be excluded from the Property and shall be retained by the Seller, to be included as part of the adjoining shopping center. IN WITNESS WHEREORF, the parties have executed this Agreement as of the day and year last below written. BUYER: TCR SFA APRATMENTS, INC., a Texas corporation By: Name: Title: Date: SELLER: ROYAL PALM BEACH COLONY LIMITED PARTNERSHIP, a Delaware limited partnership By: Stein Management Company Inc., as Managing General Partner By: Name: Title: Date: The undersigned agrees to act as Escrow Agent in accordance with the terms of this Agreement. BROAD AND CASSEL Jeffrey A. Deutch, P.A. Partner By: /s/Jeffrey A. Deutch -------------------- Jeffery A. Deutch FIRST AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE -------------------------------------------------- THIS FIRST AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE is entered into by ROYAL PALM BEACH COLONY LIMITED PARTNERSHIP, a Delaware limited partnership ("Seller"), and GABLES EAST CONSTRUCTION, INC., a Georgia corporation ("Buyer"). BACKGROUND: ----------- Seller executed an Agreement for Purchase and Sale (the "Agreement") with an Effective Date of March 19, 1998 in which TCR SFA Apartments, Inc., a Texas corporation was the buyer. Pursuant to an Assignment dated April 1, 1998. TCR SFA Apartments, Inc. assigned all of its right, title and interest as buyer to the Buyer. Seller and Buyer have agreed to amend the Agreement in accordance with the terms of this First Amendment. AGREEMENT: ---------- 1.00 Purchase Price. --------------- The parties agree that the text of paragraph 2.00 of the Agreement is amended to read as follows: The purchase price to be paid by the Buyer to the Seller for the Property is $2,250,000 ("Purchase Price"). The Purchase Price shall be payable as hereinafter described. If, in connection with the site plan submission and approval process described in Paragraph 4.01 hereof, the Buyer is unable to obtain an approved site plan for at least 300 rental apartment units, then the Purchase Price shall be reduced by the sum of $7,500 for each unit under 300 units which is not on the approved site plan. However, if the number of the approved units is less than 290 units then the Buyer shall, in its sole discretion either acquire the Property for a Purchase Price based upon 290 units (i.e. $2,175,000) or terminate this Agreement, whereupon the Escrow Agent shall refund any deposits placed hereunder to the Buyer and the parties shall be relieved of all further obligations and liabilities hereunder. 2.00 Mitigation Costs. ----------------- a. During the Investigation Period the Buyer has learned that the Property includes wetlands which cannot be developed without the approval of South Florida Water Management District ("SFWMD"); the Village of Royal Palm Beach ("Village"); and/or the Army Corps of Engineers ("ACOE"). In order to obtain such approvals, the Buyer anticipates the imposition of mitigation requirements by SFWMD, Village and ACOE that will result in a substantial financial obligation upon the Buyer. For purposes of this paragraph, the payments required by SFWMD, Village and/or ACOE, together with professional fees incurred by Buyer in pursuing development permits for the wetlands, will be referred to as "Mitigation Cost". The Seller agrees that it will pay the first $270,000 of the Mitigation Cost. b. Promptly following the execution of this First Amendment, the Buyer will retain an engineering firm reasonably acceptable to the Seller for the purpose of: (i) ascertaining the exact area of the jurisdictional wetlands; and (ii) assisting the Buyer in its submissions to governmental agencies for the necessary permits to develop the wetlands. Once the Buyer has ascertained the exact area of jurisdictional wetlands and has applied for development permits, it will afford the Seller an opportunity to negotiate with SFWMD, the Village, and/or ACOE to obtain permission to contribute land which is owned by the Seller in an effort to reduce the Mitigation Cost. c. Seller agrees that within a reasonable time after the Buyer has applied for its permits to develop the wetlands, it will make a final decision whether or not it will contribute land in an effort to reduce the Mitigation Cost. Seller acknowledges that it must make its decision promptly in order to avoid any delay in the issuance to Buyer of permits for the wetlands development. The Seller acknowledges that any delay on its part in making its decision whether or not to contribute land may delay the Buyer's efforts in securing its Development Approvals. Accordingly, any such delay on the part of the Seller shall serve to extend the closing date by the same amount of time as the delay. d. By way of an example, assume that the Mitigation Cost is determined to be $350,000. Assume also that by contributing land the Seller can reduce the Mitigation Cost by $150,000. By doing so, the Seller will be responsible for the payment of $120,000 of Mitigation Cost and the Buyer will be responsible for the balance. If the contribution of land by the Seller results in a reduction of the Mitigation Cost from $350,000 to $300,000, then the Seller will be responsible for $220,000 of Mitigation cost and the Buyer will be responsible for the balance. Upon closing, the Buyer shall be entitled to a credit against the Purchase Price for the amount of the Mitigation Cost which is the responsibility of the Seller. 3.00 Status of Agreement. -------------------- The Investigation Period has terminated. The Buyer has reviewed and approved a title insurance commitment subject, however, to the certain matters which have been raised as title objections in a letter dated May 8, 1998 from Jeffrey A. Deutch, Esquire, to Martin Shapiro, Esquire. 4.00 No Further Modification. ------------------------ Except as modified in this First Amendment, the Agreement remains unchanged and continues in full force and effect. SELLER: ROYAL PALM BEACH COLONY LIMITED PARTNERSHIP, a Delaware limited partnership By: Stein Management Company, Inc. as Managing General Partner By: /s/Randy Rieger --------------- Name: Randy Rieger Title: Authorized Agent Date: June , 1998 BUYER: GABLES EAST CONSTRUCTION, INC., a Georgia corporation By: /s/Greg Iglehart ---------------- Name: Greg Iglehart Title: Vice President Date: June 30, 1998 SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT ----------------------------------------------- THIS SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT ("Amendment") is executed as of the date set forth below by and between ROYAL PALM BEACH COLONY LIMITED PARTNERSHIP, a Delaware limited partnership ("Seller") and GABLES EAST CONSTRUCTION, INC. a Georgia corporation ("Buyer"). WITNESSETH: ----------- WHEREAS, Seller and TCR SFA Apartments, Inc. entered into that certain Agreement for Purchase and Sale with an Effective Date of March 19, 1998 which was amended by the terms of a First Amendment dated June 30, 1998 ("Agreement"); and WHEREAS, the Agreement was assigned to Buyer by that certain Assignment dated April 1, 1998; and WHEREAS, Seller and Buyer desire to amend the Agreement as more particularly set forth herein. NOW THEREFORE, in consideration of the premises, the undertakings and agreements of Seller and Buyer herein contained, and the sum of TEN AND NO/100 DOLLARS ($10.00) and other good and valuable consideration paid and/or given by each of the parties hereto to the other, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer, intending to be legally bound, do hereby agree as follows: 1. The foregoing recitals are true and correct and are incorporated herein by reference. Capitalized terms which are not defined in this First Amendment shall have the same meaning as set forth in the Agreement. 2. No later than December 19, 1998, the Buyer shall deliver Seventy Five Thousand Dollars ($75,000) to the Seller which sum shall be held by the Seller and treated as an addition to the Deposit, the disposition of which shall be governed by the Agreement. Such additional deposit is refundable to the Buyer only if the Seller defaults under the Agreement. Otherwise, it shall be retained by the Seller and credited against the Purchase Price. 3. Paragraph 6.00 of the Agreement is deleted and replaced with the following: a. The Closing shall be held on March 19, 1998 at the offices of Seller's counsel in Palm Beach County or at such other place as the parties may agree upon. b. If the Buyer has been diligently pursuing the receipt of building permits from the Village of Royal Palm Beach but has not obtained them by the date of Closing, then the Buyer shall be entitled to two (2) successive thirty (30) day extensions of the Closing. In order to obtain each thirty (30) day extension, the Buyer shall provide the Seller with five (5) days's prior written notice of its election to extend the Closing for thirty (30) days, which notice shall be accompanied by the payment to Seller of the sum of Twenty Five Thousand Dollars ($25,000) (for each extension). Upon the Closing, one-half (1/2) of the amounts paid to extend the Closing shall be credited against the Purchase Price. The remaining one-half (1/2) shall not be credited against the Purchase Price. The $25,000 payment(s) described herein are refundable to the Buyer only if the Seller defaults under the Agreement. Otherwise, they shall be retained by the Seller and one-half (1/2) of each such payment shall be credited against the Purchase Price. During any of the 30-day extensions of the Closing, the Buyer will continue its diligent pursuit of building permits. 4. Except as modified herein, the Agreement shall remain unchanged and shall continue in full force and effect. In the event of any conflict between the terms of the Agreement and this Addendum, the terms of this Addendum shall control. IN WITNESS WHEREOF, the parties have executed this Amendment as of the day upon which the last party executes this Amendment. Witnesses SELLER: ROYAL PALM BEACH COLONY LIMITED PARTNERSHIP, a Delaware limited partnership /s/Rebecca Santamaria By: Stein Management Company, Inc., as - --------------------- Managing General Partner Print Name: Rebecca Santamaria By: /s/Randy Rieger --------------- Name: Randy Rieger Title: Authorized Agent Date:_______________ BUYER: GABLES EAST CONSTRUCTION, INC., /s/Barbara Britton a Georgia corporation - ------------------ Barbara Britton By: /s/Greg Iglehart /s/Virginia M. Barr ---------------- Print Name: Virginia M. Barr Name: Greg Iglehart Title: Vice President Date: December 15, 1998 EX-27 3
5 YEAR SEP-30-1998 SEP-30-1998 6,553 0 439,825 0 4,279,599 46,596 21,843 20,482 4,785,604 917,795 1,321,750 0 0 0 2,546,059 4,785,604 1,706,221 2,170,116 1,394,684 1,394,684 900,961 0 89,147 (214,676) 0 (214,676) 0 0 0 (214,676) (.05) 0
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