-----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, Ixzj/ydBAWmAsR7hToaPwetPIJNeinuBmg9i+PnVW5UJxV1MdpWYxH1rGgGfGSv5 KE8FiLKwGQMknjaI9Je07A== 0000810116-00-000001.txt : 20000331 0000810116-00-000001.hdr.sgml : 20000331 ACCESSION NUMBER: 0000810116-00-000001 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEAN WITTER REALTY YIELD PLUS L P CENTRAL INDEX KEY: 0000810116 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 133426531 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-18148 FILM NUMBER: 587028 BUSINESS ADDRESS: STREET 1: TWO WORLD TRADE CTR STREET 2: 46TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2123921054 MAIL ADDRESS: STREET 1: TWO WORLD TRADE CENTER STREET 2: 46TH FLORR CITY: NEW YORK STATE: NY ZIP: 10048 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [ X ]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 OR [ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________. Commission File Number 0-18148 DEAN WITTER REALTY YIELD PLUS, L.P. (Exact name of registrant as specified in governing instrument) Delaware 13-3426531 (State of organization) (IRS Employer Identification No.) 2 World Trade Center, New York, NY 10048 (Address of principal executive offices)(Zip Code) Registrant's telephone number, including area code: (212) 392-1054 Securities registered pursuant to Section 12(b) of the Act: Title of each className of each exchange on which registered None None Securities registered pursuant to Section 12(g) of the Act: Units of Limited Partnership Interest (Title of Class) 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 (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] State the aggregate market value of the voting stock held by nonaffiliates of the registrant. Not Applicable DOCUMENTS INCORPORATED BY REFERENCE None PART I. ITEM 1. BUSINESS The Registrant, Dean Witter Realty Yield Plus, L.P. (the "Partnership"), is a limited partnership organized in January 1987 under the Uniform Limited Partnership Act of the State of Delaware for the purpose of investing in income- producing properties. The Managing General Partner of the Partnership is Dean Witter Realty Yield Plus Inc. (the "Managing General Partner"), a Delaware corporation which is wholly-owned by Dean Witter Realty Inc. ("Realty"). The Associate General Partner is Dean Witter Realty Yield Plus Associates, L.P. (the "Associate General Partner"), a Delaware limited partnership, the general partner of which is the Managing General Partner. The Managing General Partner manages and controls all aspects of the business of the Partnership. The terms of transactions between the Partnership and its affiliates are set forth in the consolidated financial statements in Item 8 and in Item 13 below. The Partnership issued 8,909,969 units of limited partnership interest (the "Units") for $178,199,380. The offering has been terminated and no additional Units will be sold. The proceeds from the offering were used to make investments in six participating mortgage loans and land leases secured by interests in real property. Additionally, proceeds were used to make an investment in a short-term loan secured by eleven partnership interests. The Partnership subsequently acquired equity interests in the real estate securing all of the loans through foreclosure or through transfers of ownership in lieu of foreclosure. All property interests but three were sold to unaffiliated purchasers or lost through foreclosure prior to December 31, 1998. The Partnership's remaining property interests are described in Item 2 below. The Military Crossing land was sold, for $350,000, in February 2000 and the Partnership's remaining property interests currently are being marketed for sale, with the objective of completing sales of such interests during 2000. There can be no assurance that these interests will be sold. The Partnership considers its business to include one industry segment, investment in real property. Financial information regarding the Partnership is in the Partnership's consolidated financial statements in Item 8 below. The Partnership's real property investments are subject to competition from similar types of properties in the vicinities in which they are located. Further information regarding competition and market conditions where the Partnership's properties are located is set forth in Item 7 below. The Partnership has no employees. All of the Partnership's business is conducted in the United States. ITEM 2. PROPERTIES The Partnership's principal offices are located at Two World Trade Center, New York, New York 10048. The Partnership has no other offices. As of December 31, 1999, the Partnership owned the following interests in real estate. Generally, the leases pertaining to the properties provide for pass-throughs to the tenants of their pro-rata share of certain operating expenses. In the opinion of the Managing General Partner, all of the properties are adequately covered by insurance.
Date of Initial Net Rentable Type of Property, Completion/ Investment2 Area Ownership of Location and Type Acquisition1 ($000) (000 sq. ft.) Land & improvements Deptford Crossing 1991/1992 $18,291 200 100% through interests Deptford, NJ in general partnerships shopping center and a corporation. One Congress Street3 1990,91/1997 $19,500 office-246 58% general partner- Boston, MA retail-37 ship interest through office building and interests in corporations.4 garage Military Crossing N/A/1994 $300 .6 acres 100% through interests Norfolk, VA in general partnerships land and a corporation. _________________________ 1.Acquisition date is date of foreclosure or in-substance foreclosure. 2.The lower of estimated fair value of property or net carrying value of loan at acquisition date. 3. Property is subject to a mortgage loan. 4.Dean Witter Realty Yield Plus II, L.P., an affiliate, owns the remaining 42% general partnership interest. The total net carrying value of the general partnership interest at the acquisition date was approximately $33.4 million. In February 2000, the Partnership sold the Military Crossing land. Each property, except the Military Crossing land, was built with on-site parking facilities. An affiliate of Realty was the property manager for the Deptford Crossing property in 1999. Further information relating to the Partnership's properties is included in Item 7 and Notes 4, 5, 6, 7 and 8 to the consolidated financial statements in Item 8 below. ITEM 3. LEGAL PROCEEDINGS None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted during the fourth quarter of the fiscal year to a vote of Unit holders. PART II. ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS An established public trading market for the Units does not exist, and it is not anticipated that such a market will develop in the future. Accordingly, information as to the market value of a Unit at any given date is not available. However, the Partnership does allow its limited partners (the "Limited Partners") to transfer their Units, if a suitable buyer can be located. As of March 10, 2000, there were 14,502 holders of limited partnership interests. The Partnership is a limited partnership and, accordingly, does not pay dividends. It does, however, make distributions of cash to its partners. Pursuant to the Partnership Agreement, distributable cash, as defined, is paid 90% to the Limited Partners and 10% to the general partners (the "General Partners"). Pursuant to the Partnership Agreement, $1,239,345 of the General Partner's share of such net cash flow distributable to them through December 31, 1990, was deferred subject to receipt by the Limited Partners of an 8% annual return on their invested capital through that date. During the year ended December 31, 1999, the Partnership paid cash distributions aggregating $0.53 per Unit (including approximately $0.16 per Unit of undistributed proceeds from 1998 property sales paid 100% to the Limited Partners). The total distributions amounted to $5,090,612, with $4,722,284 distributed to the Limited Partners and $368,328 distributed to the General Partners. During the year ended December 31, 1998, the Partnership paid cash distributions aggregating $10.97 per Unit (including approximately $10.58 per Unit from proceeds from the sales of the Michelson and 401 East Ontario properties paid 100% to the Limited Partners). The total distributions amounted to $98,173,009, with $97,777,999 distributed to the Limited Partners and $395,010 distributed to the General Partners. The Partnership does not anticipate making regular distributions to its partners in the future. Generally, future cash distributions will be paid from proceeds received from the sales of the One Congress Street and Deptford Crossing properties and cash reserves. Sale or financing proceeds will be distributed, to the extent available: first, 97% to the Limited Partners and 3% to the General Partners until the Limited Partners receive a return of their invested capital plus an amount sufficient to provide a 10% cumulative annual return thereon; second, 100% to the General Partners until they have received the amount of any net cash flow previously deferred and not distributed; and third, 85% to the Limited Partners and 15% to the General Partners. Taxable income generally will be allocated to the partners in proportion to the distribution of distributable cash or sale or financing proceeds, as the case may be (or 90% to the Limited Partners and 10% to the General Partners if there is no distributable cash or sale or financing proceeds). At a minimum, the General Partners must be allocated at least 1% of the taxable income from a sale or financing. Tax losses, if any, will be allocated 90% to the Limited Partners and 10% to the General Partners. ITEM 6. SELECTED FINANCIAL DATA The following sets forth a summary of selected financial data for the Partnership:
DEAN WITTER REALTY YIELD PLUS, L.P. For the years ended December 31, 1999, 1998, 1997, 1996 and 1995 1999 19981 19972 19963 19954 Total revenues $ 4,679,722 $ 74,796,181 $ 24,706,819 $ 20,071,013 $ 34,399,506 Income (loss) before extra- ordinary item $ 3,972,207 $ 57,364,812 $ 6,322,426 $ (1,785,073) $ 1,343,582 Extraordinary item $ - $ - $ 548,3955 $ - - $ - Net income (loss) $ 3,972,207 $ 57,364,812 $ 6,870,821 $ (1,785,073) $ 1,343,582 per Unit of limited partnership interest: Income (loss) before extra- ordinary item $ 0.40 $ 6.39 $ .69 $ (.18) $ .17 Extraordinary item $ - $ - $ .06 $ - - $ - Net income (loss) $ 0.40 $ 6.39 $ .75 $ (.18) $ .17 Cash distribution paid per Unit of limited partnership interest6 $ 0.537 $ 10.978 $ 1.719 $ 1.2610 $ .60 Total assets at December 31 $33,808,733 $ 35,082,602 $107,962,275 $126,752,827 $141,753,976 Long-term debt due after one year $ - $ - $ 10,566,268 $ - - $ 19,823,736 __________________
1.Total revenues include gains on the sales of the Michelson property ($25.2 million), the 401 East Ontario property ($39.8 million) and the Pine Ridge land ($0.4 million). Net income includes these gains, reduced by the minority interest share of the gain on Michelson ($12.7 million). 2.Total revenues, income before extraordinary item and net income include reserves of $1.6 million of accrued but unpaid interest on the One Congress Street participating mortgage loan, and $5.2 million gain on sale of the Greenway Pointe property. 3.Total revenues and net loss include reserves of $0.7 million of accrued but unpaid interest on the One Congress Street participating mortgage loan, and net loss also includes a $1.0 million impairment loss on principal of the One Congress Street participating mortgage loan. 4.Total revenues and net income include a $3.3 million gain on sale of three shopping centers and net income is net of a $6.9 million loss on impairment of real estate. 5.Represents gain on extinguishment of debt through foreclosure. 6.Distributions paid to Limited Partners for the years ended December 31, 1999 and 1998 included returns of capital of $0.13 and of $7.14 per Unit, respectively, calculated as the excess of cash distributed per Unit over accumulated earnings per Unit not previously distributed. All distributions paid to Limited Partners in 1995 through 1997 represent returns of capital. 7. Includes approximately $0.16 per Unit of proceeds from the 1998 sales of the 401 East Ontario and Pine Ridge properties. 8.Includes approximately $10.58 per Unit of proceeds from the sales of the Michelson and 401 East Ontario properties. 9. Includes approximately $1.19 per Unit of proceeds from sale of the Greenway Pointe property. 10. Includes approximately $0.72 per Unit of proceeds from the December 1995 sale of three shopping centers. The above financial data should be read in conjunction with the consolidated financial statements and the related notes in Item 8. DEAN WITTER REALTY YIELD PLUS, L.P. ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources The Partnership completed a $178,199,380 public offering in 1987. The Partnership has no plans to raise additional capital. The Partnership originally invested in seven loans or land leases. Due to the past weakness in real estate markets, the properties securing the loans did not generate sufficient cash flow to fully service their debt. As a result, the Partnership acquired equity interests in all of the properties in which it originally invested, through foreclosure or transfers of ownership in lieu of foreclosure. No additional investments are planned. The Michelson, 401 East Ontario Street and Pine Ridge properties were sold in April 1998, July 1998 and November 1998, respectively. See Note 5 to the consolidated financial statements. As a result of the property sales, Partnership cash flow from operations decreased during the year ended December 31, 1999 compared to 1998. In the third quarter of 1999, the Partnership had accepted a bid from an unaffiliated third party to purchase the Deptford Crossing property; however, the parties were unable to successfully negotiate a sale agreement. As a result, the Partnership is remarketing the property for sale. Currently, the partnership which owns the One Congress Street property ("GCGA") is discussing the sale of the property with parties it has identified as being interested in acquiring the property. There can be no assurance that either of these properties will be sold. In February 2000, the Partnership sold the Military Crossing land. In 1999, the Partnership received approximately $45,000 of rental income and incurred minimal expenses from holding the land. See Note 4 to the consolidated financial statements. The Partnership will not terminate until the remaining property interests are sold and the litigation with respect to the 401 East Ontario property, described in Note 5 to the consolidated financial statements, is resolved. The retail market in Deptford, New Jersey, the location of Deptford Crossing, is an improving market, with no new construction. During 1999 and at December 31, 1999, occupancy at the property was 84% compared to average occupancy of 79% in 1998 and 81% occupancy at December 31, 1998. Tenants occupying 10% or more of the property's space include T.J. Maxx (16%), Marshalls (13%), Office Max (13%) and Petsmart (13%); their leases expire in 2001, 2002, 2002 and 2009, respectively. The property is leased to eleven other tenants. Leases of smaller tenants covering approximately 10% of the space will expire in 2001. The Partnership also leased 5% of the vacant space at Deptford Crossing to a new tenant, which will occupy its space beginning in the first quarter of 2000. In connection with the new lease, the Partnership has a commitment to fund tenant-related capital expenditures and leasing commissions totaling $677,000. The Managing General Partner has determined that the surface of the parking lot at Deptford Crossing is in need of repair, and, after consulting with an engineer, has determined and planned the necessary repair work. The Managing General Partner has also selected a contractor to perform the repair work, which is expected to begin in the second quarter of 2000. The cost of this work is expected to be approximately $480,000. Currently, the vacancy rate in the downtown Boston office market, the location of One Congress Street, is approximately 7% and rental rates in this market are stable. There is no significant new construction in this market. During the year ended December 31, 1999, occupancy at both the parking garage and the office space at the property remained at 100%. GCGA's lease with the Government Services Administration ("GSA"), which occupies approximately 82% of the office space is scheduled to expire no earlier than August 1, 2003. The lease with the Commonwealth of Massachusetts, which occupies the remaining office space is scheduled to expire in January 2004. The lease for 100% of the parking lot space at the property with Kinney System, Inc. expires in December 2003. The retail space, which is not a significant portion of the overall space, remains substantially vacant. GCGA is negotiating the leasing of all the vacant retail space at the property to a single tenant. If GCGA is successful, it may incur a significant amount of capital expenditures and leasing commissions to lease the space. The Partnership will be responsible for making additional loans to GCGA to fund its 58% share of such expenditures (the amount of which is uncertain at this time). In 1998, the Partnership and Dean Witter Realty Yield Plus II, L.P., an affiliate, (collectively, the "New GP") identified several areas of the parking garage at the One Congress Street property which were in need of repair. In 1998, the New GP had GCGA fund repairs for several of the problems at the garage that the New GP believed required immediate attention, and hired an engineering firm to investigate the overall garage space to determine what additional repairs are required. During the first quarter of 1999, the engineering firm issued its preliminary report to the New GP, and during the second quarter of 1999, a second engineering firm reviewed the first firm's work for reasonable and completeness. The New GP, after consulting with the engineering firms, has determined and planned the necessary repair work, and has selected the contractors who will perform the repair work. The New GP expects that the repair work will begin during the second quarter of 2000, and will be completed by the end of 2000. The cost of this work to GCGA is expected to be between $2 million and $3 million. The Partnership will be responsible for making additional loans to GCGA to fund its 58% share of such fundings (between $1,160,000 and $1,740,000). The Partnership will fund any capital costs required for the Deptford Crossing property and its share of additional GCGA loans from its cash reserves. However, any costs of tenant related capital expenditures which have not been funded by the time of the closing of the sale of a property may instead be deducted from the sale proceeds. During the year ended December 31, 1999, all of the Partnership's remaining property interests generated positive cash flow from operations, and it is anticipated that the Deptford Crossing and One Congress Street properties will continue to do so for the remainder of the period the Partnership owns its interests. As discussed in Note 5 to the consolidated financial statements, the Partnership received $700,000 in May 1999 pursuant to a negotiated settlement relating to the ongoing 401 East Ontario Street property litigation. During the year ended December 31, 1999, the Partnership made cash distributions of cash flow from operations and proceeds from the 1998 sales of properties. See Item 5. During the year ended December 31, 1999, the Partnership's distributions to investors, contributions to GCGA (to fund its share of tenant improvements and leasing commissions at the One Congress Street property) and capital expenditures relating to the Deptford Crossing property exceeded cash flow from operations (including the $700,000 litigation settlement) and distributions from GCGA. This deficiency was funded with Partnership cash reserves. In February 2000, the Partnership added approximately $326,000 of net proceeds from the sale of the Military Crossing land to its cash reserves. The Managing General Partner believes that the Partnership's remaining cash reserves are adequate for its needs in 2000. Generally, future cash distributions will be paid from proceeds received from the sales of the Deptford Crossing and One Congress Street properties and cash reserves. Except as discussed above and in the consolidated financial statements, the Managing General Partner is not aware of any trends or events, commitments or uncertainties that may have a material impact on liquidity. Operations Fluctuations in the Partnership's operating results for the year ended December 31, 1999 compared to 1998 and 1998 compared to 1997 are primarily attributable to the following: In 1998, the gains on sales of real estate resulted from the sales of the Michelson, 401 East Ontario Street and Pine Ridge properties in April, July and November, respectively. In 1997, the gain on sale of real estate resulted from the sale of the Greenway Pointe property in November. Rental revenues, other revenues, property operating expenses, depreciation and amortization expenses, and general and administrative expenses decreased in 1999 compared to 1998 and in 1998 compared to 1997 as a result of property sales. Such revenues and expenses also decreased in 1998 compared to 1997 due to the loss through foreclosure of the Genessee Crossing property in 1997. The 1998 decreases in rental revenue were partially offset by an increase in rental revenue at the 401 East Ontario Street property in the months preceding its sale. This increase resulted from higher occupancy and rental rates at the property in 1998 and the discontinuance of rental concessions and free rent. Equity in earnings of the joint venture which owns the general partnership interest in GCGA increased in 1999 compared to 1998 primarily due to the increase in rental revenues at the One Congress Street property resulting from an increase in office space occupancy from 73% in 1998 to 100% in 1999; the Partnership's 58% share of the increase in revenues was $2,657,000. This increase was partially offset by increases in the property's real estate taxes and depreciation and amortization expenses relating to capital expenditures and leasing commissions incurred in leasing the remaining vacant space; the Partnerships' share of the increases in these costs were $599,000 and $452,0000, respectively. Equity in earnings of the GCGA joint venture was lower in 1997 than 1998 because the Partnership did not begin to recognize its share of earnings from this joint venture until October 27, 1997. In 1999 and 1998, there was no interest income recorded on the Partnership's participating mortgage loan to GCGA because the loan was accounted for as an investment in joint venture. Interest on cash and cash equivalents increased in 1998 compared to 1997 because interest earned on the proceeds from the 1998 property sales (before such proceeds were distributed to Limited Partners) exceeded interest earned on sales proceeds in 1997. In 1999, there was minimal interest earned on proceeds from property sales. The decreases in property operating expenses in 1999 were partially offset by a reduction in the amounts of 401 East Ontario Street litigation settlements received in 1999 ($700,000) compared to 1998 ($1,200,000). See Note 5 to consolidated financial statements. Property operating expenses also decreased in 1998 at the 401 East Ontario Street property due to the absence of expenditures for repairs (such costs totaled $2,750,000 in 1997) and due to the 1998 receipt of the $1.2 million litigation settlement mentioned above. There was no interest expense in 1999 because the debt secured by the 401 East Ontario property was repaid in July 1998. Interest expense decreased in 1998 compared to 1997 due to the repayment of the 401 East Ontario Street debt and the extinguishment through foreclosure of the debt secured by the Genesee Crossing property in 1997. There was no minority interest in the Partnership's net income from the Michelson property in 1999 due to the sale of the property in April 1998. The extraordinary gain in 1997 resulted from the extinguishment of the mortgage note payable secured by the Genesee Crossing property. There were no other individually significant factors which caused changes to revenues or expenses. Inflation Inflation has been consistently low during the periods presented in the financial statements and, as a result, has not had a significant effect on the operations of the Partnership or its properties. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. DEAN WITTER REALTY YIELD PLUS, L.P. INDEX (a) Financial statements Page Independent Auditors' Report Consolidated Balance Sheets at December 31, 1999 and 1998 Consolidated Income Statements for the years ended December 31, 1999, 1998 and 1997 Consolidated Statements of Partners' Capital for the years ended December 31, 1999, 1998 and 1997 Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997 Notes to Consolidated Financial Statements (b) Financial statement schedule Real Estate and Accumulated Depreciation III All schedules other than those indicated above have been omitted because either the required information is not applicable or the information is shown in the consolidated financial statements or notes thereto. Independent Auditors' Report The Partners Dean Witter Realty Yield Plus, L.P.: We have audited the accompanying consolidated balance sheets of Dean Witter Realty Yield Plus, L.P. and consolidated partnerships (the "Partnership") as of December 31, 1999 and 1998, and the related consolidated statements of income, partners' capital and cash flows for each of the three years in the period ended December 31, 1999. Our audits also included financial statement schedule III. These financial statements and the financial statement schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and the financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Dean Witter Realty Yield Plus, L.P. and consolidated partnerships as of December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with generally accepted accounting principles. Also, in our opinion, financial statement schedule III, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Deloitte & Touche LLP /s/Deloitte & Touche LLP New York, New York March 20, 2000 DEAN WITTER REALTY YIELD PLUS, L.P. Consolidated Balance Sheets December 31, 1999 and 1998
1999 1998 ASSETS Real estate: Land $ 1,770,000 $ 2,070,000 Building and improvements 10,728,014 10,580,047 12,498,014 12,650,047 Accumulated depreciation 2,248,131 1,954,876 10,249,883 10,695,171 Real estate held for sale 300,000 - - Investment in joint venture 20,007,478 19,471,311 Cash and cash equivalents 2,796,347 4,555,260 Other assets 455,025 360,860 $ 33,808,733 $ 35,082,602 LIABILITIES AND PARTNERS' CAPITAL Accounts payable and other liabilities $ 226,968 $ 382,432 Partners' capital (deficiency): General partners (7,376,315) (7,405,208) Limited partners ($20 per Unit, 8,909,969 issued and outstanding) 40,958,080 42,105,378 Total partners' capital 33,581,765 34,700,170 $ 33,808,733 $ 35,082,602 See accompanying notes to consolidated financial statements.
DEAN WITTER REALTY YIELD PLUS, L.P. CONSOLIDATED INCOME STATEMENTS Years ended December 31, 1999, 1998 and 1997
1999 1998 1997 Revenues: Rental $ $ $17,559,4 1,954,967 8,003,46 16 2 Gains on sales of real estate - 65,403,7 5,242,166 28 Equity in earnings of joint 2,474,464 462,869 264,862 venture Interest on participating - - 697,153 mortgage loan Interest on cash and cash 205,171 449,572 178,585 equivalents Other 45,120 476,550 764,637 4,679,722 74,796,1 24,706,81 81 9 Expenses: Property operating 220,310 2,492,12 2 11,241,22 8 Depreciation and amortization 309,732 847,026 4,058,531 Interest - 404,509 1,476,954 General and administrative 177,473 468,674 673,852 707,515 4,212,33 17,450,56 1 5 Income before minority interests and extraordinary item 70,583,8 7,256,254 3,972,207 50 Minority interest - 13,219,0 933,828 38 Income before extraordinary item 3,972,207 57,364,8 6,322,426 12 Extraordinary item: Gain on extinguishment of debt - 548,395 through foreclosure - Net income $ $ $ 3,972,2 57,364,8 6,870,821 07 12 Net income allocated to: Limited partners $ $ $ 3,574,986 56,902,0 6,707,955 45 General partners 462,767 162,866 397,221 $ $ $ 3,972,207 57,364,8 6,870,821 12 Per Unit of limited partnership interest: Income before extraordinary $.40 $6.39 $.69 item Extraordinary item - .06 - Net income $.40 $6.39 $.75 See accompanying notes to consolidated financial statements.
DEAN WITTER REALTY YIELD PLUS, L.P. Consolidated Statements of Partners' Capital Years ended December 31, 1999, 1998 and 1997
Limited General Partners Partners Total Partners' capital (deficiency) at January 1, 1997 $91,509,128 $(7,121,032) $84,388,096 Net income 6,707,955 162,866 6,870,821 Cash distributions (15,235,751) (514,799) (15,750,550) Partners' capital (deficiency) at December 31, 1997 82,981,332 (7,472,965) 75,508,367 Net income 56,902,045 462,767 57,364,812 Cash distributions (97,777,999) (395,010) (98,173,009) Partners' capital (deficiency) at December 31, 1998 42,105,378 (7,405,208) 3 4,700,170 Net income 3,574,986 397,221 3,972,207 Cash distributions (4,722,284) (368,328) (5,090,612) Partners' capital (deficiency) at December 31, 1999 $40,958,080 $(7,376,315) $33,581,765 See accompanying notes to consolidated financial statements.
DEAN WITTER REALTY YIELD PLUS, L.P. Consolidated Statements of Cash Flows Years ended December 31, 1999, 1998 and 1997
1999 1998 1997 Cash flows from operating activities: Net income $ $ 3,972,207 57,364,81 $6,870,82 2 1 Adjustments to reconcile net income to net cash provided by operating activities: Equity in earnings of joint (2,474,46 venture 4) (462,869) (264,862) Depreciation and amortization 309,732 847,026 4,058,531 Gains on sales of real estate - (65,403,7 28) (5,242,16 6) Minority interests in earnings of consolidated Partnerships - 13,219,03 933,828 8 Gain on extinguishment of debt - - (548,395) (Increase) decrease in other (110,642) assets 374,575 316,329 Decrease in accounts payable (155,464) (90,608) and other liabilities (2,960,61 5) Net cash provided by 2,978,239 6,033,478 operating activities 1,541,369 Cash flows from investing activities: Proceeds from sales of real estate, net of closing costs - 137,280,7 10,600,35 94 3 Additions to real estate (498,404) (856,266) (147,967) Distributions from joint venture - 3,475,816 2,252,968 Contributions to joint venture (1,540,21 (1,537,51 5) (116,000) 9) Net cash provided by investing 9,628,08 activities 1,790,330 137,495,1 7 43 Cash flows from financing activities: Cash distributions (98,173,0 (15,750,5 (5,090,61 09) 50) 2) Repayments of mortgage notes - (10,566,2 payable 68) (11,136,4 96) Borrowings under mortgage note - - payable 10,566,26 8 Minority interest in distributions from - (31,934,8 (1,884,76 consolidated partnerships 45) 6) Contributions by minority interest to - 171,214 329,445 consolidated partnerships Net cash used in financing (140,502, (17,876,0 activities (5,090,61 908) 99) 2) Decrease in cash and cash (29,526) (2,214,53 equivalents (1,758,91 4) 3) Cash and cash equivalents at 4,584,786 6,799,320 beginning of year 4,555,260 Cash and cash equivalents at end $ $ of year $2,796,34 4,555,260 4,584,786 7 (continued)
DEAN WITTER REALTY YIELD PLUS, L.P. Consolidated Statements of Cash Flows Years ended December 31, 1999, 1998 and 1997 (continued)
1999 1998 1997 Supplemental disclosure of cash flow information: Cash paid for interest $ - $ $ 404,509 1,476,954 Supplemental disclosure of non- cash investing activities: Reclassification of real estate held for sale: $ $ - $ Land 300,000 4,080,416 Building and improvements - - 45,012,80 1 Accumulated depreciation - - (12,196,8 46) Real estate held for sale $ $ - $36,896,3 300,000 71 Acquisition of investment in joint venture resulting from restructuring of participating mortgage loan: Investment in participating $ - $ - $18,995,3 mortgage loan, net 82 Deferred costs, net - - 344,951 Investment in joint venture $ - $ - $19,340,3 33 Supplemental disclosures of non- cash financing activities: Extinguishment of debt and loss of real estate through foreclosure: Balance due on mortgage $ - $ - $8,590,00 note payable 0 Write-off of real estate: Land - - (1,709,53 5) Building - - (6,830,46 5) Accumulated depreciation - - 565,640 - (7,974,36 0) Decrease in other assets - - (67,245) Gain on extinguishment of debt $ - $ - $ due to foreclosure 548,395 See accompanying notes to consolidated financial statements.
DEAN WITTER REALTY YIELD PLUS, L.P. Notes to Consolidated Financial Statements December 31, 1999, 1998 and 1997 1. The Partnership Dean Witter Realty Yield Plus, L.P. (the "Partnership") is a limited partnership organized under the laws of the State of Delaware in 1987 to invest in participating mortgage loans collateralized by income-producing properties. The Managing General Partner of the Partnership is Dean Witter Realty Yield Plus Inc., which is wholly-owned by Dean Witter Realty Inc. ("Realty"). The Partnership issued 8,909,969 units of limited partnership interests (the "Units") for $178,199,380. No additional Units will be sold. The Partnership expects to sell its remaining real estate investments in 2000. Pursuant to the Partnership Agreement, the sale of the Partnership's last such investment will cause the dissolution of the Partnership. Thereafter, the Partnership will wind up its affairs, make a final cash distribution, and terminate. However, the Partnership will not terminate until the litigation with respect to the 401 East Ontario property described in Note 5 is resolved. 2. Summary of Significant Accounting Policies The financial statements include the accounts of the Partnership, and the partnerships which own the Deptford Crossing, Military Crossing, 401 East Ontario Street, Pine Ridge, Michelson, Genessee Crossing and Greenway Point properties on a consolidated basis. Effective October 27, 1997, the Partnership acquired a 58% interest in the corporate joint venture which owns the general partnership interest in GCGA Limited Partnership ("GCGA"), the owner/borrower of the One Congress Street property, and began accounting for this investment using the equity method. See Note 6. The Partnership's records are maintained on the accrual basis of accounting for financial reporting and tax purposes. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Real estate and the investment in joint venture, all of which were acquired in settlement of loans, were recorded at the lower of the carrying value of the original loan or the estimated fair value of the real estate investment acquired at the date of foreclosure or in-substance foreclosure. Costs of improvements to real estate are capitalized and repairs are expensed. Depreciation is recorded on the straight-line method. At least annually, and more often if circumstances dictate, the Partnership evaluates the recoverability of the net carrying value of its real estate and any related assets, including the real estate and related assets owned by the joint venture. As part of this evaluation, the Partnership assesses, among other things, whether there has been a significant decrease in the market value of any of its properties. If events or circumstances indicate that the net carrying value of a property may not be recoverable, the expected future net cash flows from the property are estimated for a period of approximately five years (or a shorter period if the Partnership expects that the property may be disposed of sooner), along with estimated sales proceeds at the end of the period. If the total of these future undiscounted cash flows were less than the carrying amount of the property, the property would be written down to its fair value as determined (in some cases with the assistance of outside real estate consultants) based on discounted cash flows, and a loss on impairment recognized by a charge to earnings. Because the determination of fair value is based upon projections of future economic events such as property occupancy rates, rental rates, operating cost inflation and market capitalization rates which are inherently subjective, the amounts ultimately realized at disposition may differ materially from the net carrying value as of December 31, 1999. The cash flows used to evaluate the recoverability of the assets and to determine fair value are based on good faith estimates and assumptions developed by the Managing General Partner. Unanticipated events and circumstances may occur and some assumptions may not materialize; therefore actual results may vary from the estimates and the variances may be material. The Partnership may provide additional write-downs, which could be material, in subsequent years if real estate markets or local economic conditions change. Cash and cash equivalents consist of cash and highly liquid investments with maturities, when purchased, of three months or less. Other assets include leasing commissions and, prior to October 27, 1997, origination fees in connection with the participating mortgage loan. Leasing commissions are amortized over the applicable lease terms. Origination fees were amortized over the loan term, which approximated the effective yield method. Rental income is accrued on a straight-line basis over the terms of the leases. Accruals in excess of amounts payable by tenants pursuant to their leases (resulting from rent concessions or rents which periodically increase over the term of a lease) are recorded as receivables and included in other assets. Net income per Unit amounts are calculated by dividing net income allocated to Limited Partners, in accordance with the Partnership Agreement, by the weighted average number of Units outstanding. No provision for income taxes has been made in the consolidated financial statements, since the liability for such taxes is that of the partners rather than the Partnership. The accounting policies used for tax reporting purposes differ from those used for financial reporting purposes. For tax purposes, the Partnership's subsidiaries are not consolidated, and properties acquired by the subsidiaries are not treated as real estate owned by the Partnership. Instead, the Partnership recognizes taxable interest income on its original participating mortgage loans. For all subsidiaries owned by the Partnership through interests in partnerships, the Partnership also recognizes its share of the subsidiaries' taxable income (which is net of interest expense on the participating mortgage loans which are still outstanding). In addition, the Partnership's offering costs are treated differently for tax and financial reporting purposes. The tax basis of the Partnership's assets and liabilities is approximately $45.6 million higher than the amounts reported for financial statement purposes at December 31, 1999. The policies used by the subsidiary partnerships to account for property operations for tax reporting purposes differ from those used by the Partnership for financial reporting purposes as follows: (a) depreciation is calculated using accelerated methods, (b) rental income is recognized based on the payment terms in the applicable leases, and (c) write- downs for impairments of real estate are not deductible. 3. Partnership Agreement The Partnership Agreement provides that net cash flow, as defined, will be paid 90% to the Limited Partners and 10% to the General Partners. Pursuant to the Agreement, $1,239,345 of the General Partners' share of such net cash flow distributable to them through December 31, 1990 was deferred, subject to receipt by the Limited Partners of an 8% annual return on their invested capital through that date. Sale or financing proceeds will be distributed, to the extent available: first, 97% to the Limited Partners and 3% to the General Partners until the Limited Partners receive a return of their invested capital plus an amount sufficient to provide a 10% cumulative annual return thereon; second, 100% to the General Partners until they have received the amount of any net cash flow previously deferred and not distributed; and third, 85% to the Limited Partners and 15% to the General Partners. Taxable income generally will be allocated to the partners in proportion to the distribution of distributable cash or sale or financing proceeds, as the case may be (or 90% to the Limited Partners and 10% to the General Partners if there is no distributable cash or sale or financing proceeds). At a minimum, the General Partners must be allocated at least 1% of the taxable income from a sale or financing. Tax losses, if any, are allocated 90% to the Limited Partners and 10% to the General Partners. Distributions paid to Limited Partners in 1999 and 1998 included returns of capital of $0.13 and $7.14 per Unit, respectively, calculated as the excess of cash distributed per Unit over accumulated earnings per Unit not previously distributed. All distributions paid to Limited Partners in 1997 represented returns of capital. 4. Real Estate and Real Estate Held for Sale The locations, years of acquisition through foreclosure or in-substance foreclosure and net carrying values of the Partnership's properties are as follows:
Year of December 31, Property Acquisition 1999 1998 Deptford Crossing, Deptford, NJ 1992 $10,249,883 $10,395,171 Military Crossing (land), Norfolk, VA 1994 - - 300,000 $10,249,883 $10,695,171
The Deptford Crossing property was subject to a first mortgage loan, which was repaid in December 1997 with funds obtained through a revolving credit facility secured by the 401 East Ontario Street property. All amounts due under the revolving credit facility were repaid in July 1998 with a portion of the proceeds from the sale of the 401 East Ontario Street property (see Note 7). On February 14, 2000, the Partnership sold the Military Crossing land, which had a net carrying value of $300,000 at December 31, 1999, for a negotiated sale price of $350,000. The Partnership added approximately $326,000, (the sale proceeds, net of closing costs) to the Partnership's cash reserves upon receipt. The net carrying value of the land was reclassified to real estate held for sale as of December 31, 1999. 5. Disposition of Real Estate 401 East Ontario Street In July 1998, the Partnership sold the 401 East Ontario Street property to Streeterville Development Associates, LLC ("SDA") for a negotiated sale price of $74.5 million. The Partnership used a portion of the sale proceeds to repay the mortgage note payable to which the property was subject (see Note 7). SDA is an unaffiliated party; however, Draper and Kramer Inc., which owns 37.5% of SDA, was the manager of the property while it was owned by the Partnership. The Partnership received sale proceeds, net of the mortgage note repayment, closing costs and other deductions, of approximately $62.7 million. The Partnership distributed 100% to Limited Partners approximately $61.8 million of such proceeds ($6.94 per Unit) on July 31, 1998 and the remaining proceeds ($0.10 per Unit) on October 27, 1999. The Partnership recognized a gain on this sale of approximately $39.8 million, which was allocated 100% to the Limited Partners in accordance with the Partnership Agreement. In 1996, the Partnership discovered that certain of the interior walls of the 401 East Ontario Street building did not meet the City of Chicago's fire code requirements. The Partnership retained the services of nationally recognized consultants to review the building's fire and life safety systems and determine how to fix the problems they identified with those systems. The City of Chicago agreed with the proposed corrections and the Partnership commenced repair work in 1996. The Partnership completed such repairs in 1997. The total cost of these measures was approximately $3.6 million, of which approximately $2.75 million was incurred in 1997. In addition, free rent and rent concessions were offered to the residents in order to maintain occupancy during the period in 1997 when repairs were being performed. The building's insurance carriers were notified of the repairs to the fire and life safety systems. In 1995 and 1996, the Partnership also incurred a total of $5.6 million, net of a $0.1 million insurance settlement, to repair cracking and spalling of the concrete exterior of the building. Reports by three independent engineering firms in 1995 noted that the cracking and spalling were highly unusual for a building of the age of the 401 East Ontario Street property, and attributed the problems to both defective design and construction of the building. The Partnership initiated litigation against all parties it deemed responsible for all of the building's defects. In May 1999, the Partnership received cash of $700,000 and an interest bearing non-recourse promissory note of $45,000 pursuant to a negotiated settlement with the building's testing agency. Due to the uncertainty of realization of the note, it has not been recognized in the financial statements. Any payment on the note will be included in net income upon receipt. In March 1998, the Partnership received $1.2 million pursuant to a settlement with the architect and engineer of the building. In the years the settlements were received, the amounts were offset against property operating expenses. The Partnership is continuing its litigation against the general contractor and others it deems responsible for defects in the building. The Partnership incurred legal fees of approximately $273,000, $222,000 and $425,000 in 1999, 1998 and 1997 respectively, in connection with the litigation. Michelson, Irvine, California In April 1998, DW Michelson Associate ("DMA") sold its 90% general partnership interest in the Company to SC Enterprises ("SCE"), the 10% limited partner of DMA, along with two promissory notes totaling approximately $1.2 million due from SCE, for a negotiated aggregate sale price of $64 million. SCE assigned its right to purchase the interest in the Company to Spieker Properties, L.P., which is not affiliated with the Partnership or SCE. The sale price was received in cash at closing on April 3, 1998. On April 28, 1998, the Partnership distributed approximately $32.4 million ($3.635 per Unit), its share of the proceeds from the sale (net of closing costs), 100% to the Limited Partners. DMA recognized a gain on sale of this property of $25.2 million. The Partnership's share of this gain was approximately $12.6 million; such gain was allocated 100% to the Limited Partners in accordance with the Partnership Agreement. Pine Ridge In November 1998, the Partnership sold the Pine Ridge unimproved land parcel to an unaffiliated purchaser for a negotiated sale price of $550,000. The proceeds from the sale, net of closing costs, of approximately $515,000 were distributed 100% to Limited Partners ($0.06 per Unit) on October 27,1999. The Partnership recognized a gain on this sale of approximately $372,000, which was allocated 100% to the Limited Partners in accordance with the Partnership Agreement. Genessee Crossing The Partnership's 9.375% mortgage note payable secured by the Genessee Crossing shopping center matured in May 1997. The Partnership determined that it could not refinance the loan without making an additional equity investment in the property, and determined that in light of its estimate of the property's market value such an additional investment would not be in the Partnership's best interest. As a result, the property was foreclosed upon in August 1997, and in March 1998, the lender took final possession of the property. Since the amount of the mortgage note payable ($8,590,000) exceeded the net book value of the property and related assets (approximately $8,040,000), the Partnership recognized an extraordinary gain on the extinguishment of debt of approximately $550,000 in 1997. Greenway Pointe, Columbia, Maryland In November 1997, the Partnership sold the Greenway Pointe property to an unaffiliated party for a negotiated sale price of $11,050,000. The proceeds from the sale, net of closing costs, were approximately $10.6 million, and were distributed 100% to the Limited Partners in December 1997. The Partnership recognized a gain on this sale of approximately $5.2 million, which was allocated 100% to Limited Partners in accordance with the Partnership Agreement. 6. Investment in Joint Venture One Congress Street, Boston, Massachusetts The Partnership and Yield Plus II (collectively the "Lender") made a $59.2 million participating second mortgage loan on the One Congress Street building (the "Loan") to GCGA. The Loan is due in 2001. Base interest was originally payable at 8% and the first $250,000 of net revenues in any calendar year from the property was payable as additional interest. The Lender also owned a 58% interest in adjusted net revenue and capital proceeds generated by the property. The property is subject to a first mortgage loan. In October 1996, GCGA defaulted on the Loan by failing to pay timely its debt service. Thereafter, the Lender accelerated the Loan and attempted to take possession of the property. On October 15, 1996, GCGA filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. On October 27, 1997, the Lender entered into a settlement agreement with GCGA (the "Agreement"). As part of the Agreement, a new corporate joint venture, which is jointly owned by the Partnership (58%) and Yield Plus II (42%) became the sole general partner of GCGA (the "New General Partner"), with an aggregate 19.81% ownership interest in the property. The Partnership and Yield Plus II have agreed to make all decisions concerning the property jointly. The Lender has retained an affiliate of GCGA`s original general partner as property manager. The Agreement also provides the following: (a) as a result of their interests in the New General Partner, the Partnership and Yield Plus II are required to make additional loans, if needed, to fund future capital expenditures and leasing commissions at the property (the "New Loans") in proportion to their ownership of the New General Partner. Any New Loans will bear interest at 12%, payable monthly from available cash flow generated by the property after payment of debt service on the first mortgage loan and certain operating escrows; (b) the interest rate on the principal of the Loan and past due interest thereon (aggregating approximately $12.3 million at the date of the agreement) has been increased to 10%, payable monthly from available cash flow generated by the property after payment of debt service on the New Loans; (c) any future unpaid debt service will accrue interest at 10%; and (d) the Partnership's and Yield Plus II's interest in adjusted net revenue and capital proceeds generated by the property was increased to 80%. The Agreement effectively changed the Lender from a participating lender to GCGA into the general partner in a partnership which owns the One Congress Street property. The Partnership, through the New General Partner, owns an 11.5% partnership interest in GCGA and, accordingly, at October 27, 1997, the Partnership recorded its investment at an amount equal to the net carrying value of its investment in the participating mortgage loan and related assets (which carrying value was less than the estimated fair value of the property at that date). The Partnership began, effective October 27, 1997, to account for its investment on the equity method (and stopped recognizing interest income from its participating mortgage loan). Because the Partnership and Yield Plus II control GCGA and are entitled to receive substantially all the cash flow and other economic benefits from the property, the Partnership and Yield Plus II recognize all of GCGA's profit and losses in proportion to their ownership of the New General Partner. In 1997 (prior to the Agreement), the Partnership reserved accrued but unpaid interest on the Loan of $1,560,000.
Summarized financial information of GCGA is as follows: December 31, 1999 1998 ASSETS Land and building, net $59,243,308 $ 60,698,880 Other 8,331,755 6,394,881 Total assets $67,575,063 $ 67,093,761 LIABILITIES AND PARTNERS' CAPITAL DEFICIENCY First mortgage loan $37,750,000 $ 37,750,000 Second mortgage loan and accrued interest 84,028,030 79,023,308 Other liabilities 3,630,657 3,190,814 Partners' capital deficiency (57,833,624) (52,870,361) Total liabilities and partners' capital deficiency $67,575,063 $ 67,093,761 STATEMENTS OF OPERATIONS Years ended December 31, 1999 1998 1997 Revenues: Rental $16,094,032 $11,513,818 $ 11,498,722 Other 311,709 79,390 238,937 16,405,741 11,593,208 11,737,659 Expenses: Interest on second mortgage loan 8,346,614 8,078,420 8,036,377 Other interest 3,785,371 3,798,362 3,768,876 Property operating and other 6,498,471 5,946,569 5,075,676 Depreciation and amortization 2,738,548 1,960,626 1,940,143 21,369,004 19,783,977 18,821,072 Net loss $(4,963,263) $(8,190,769) $ (7,083,413) GCGA's second mortgage loan consists of the Loan. The accounting policies of GCGA are consistent with those of the Partnership.
7. Mortgage Notes Payable A mortgage note securing the Deptford Crossing property was scheduled to mature in September 1997. Interest on this mortgage note (bearing a rate at the Partnership's election of LIBOR plus 0.375%, the bank's quoted variable rate plus 1.375% or the bank's fixed rate) and principal payments of $15,000 were payable monthly. In December 1997, the Partnership borrowed $10,566,268 under a revolving credit facility to repay the Deptford mortgage note and reimburse the lender for all of its expenses caused by the forbearance by the lender from exercising its rights during the two months the loan was in default. Interest on the revolving credit facility was payable monthly (bearing a rate at the Partnership's election of Prime Rate or LIBOR plus 1.15%).In July 1998, the Partnership paid in full all amounts due under the revolving credit facility using a portion of the sale proceeds from the sale of the 401 East Ontario Street property (see Note 5). 8. Leases Minimum future rentals under noncancellable operating leases at the Deptford Crossing shopping center as of December 31, 1999 are as follows: Year ending December 31, 2000 $1,548,870 2001 1,496,238 2002 490,444 2003 399,278 2004 352,510 Thereafter 1,340,562 Total $5,627,902 The Partnership has determined that all leases relating to the shopping center are operating leases. These leases range in term from two to ten years, and generally provide for fixed minimum rent with expense reimbursement clauses. 9. Related Party Transactions An affiliate of Realty provided property management services for the Deptford Crossing property through December 31, 1999 and for the Michelson, Genessee Crossing and Greenway Pointe properties until they were sold. The Partnership paid the affiliate property management fees (included in property operating expenses) of approximately $63,000, $79,000 and $220,000 for the years ended December 31, 1999, 1998 and 1997, respectively. Realty performs administrative functions, and processes certain investor and tax information on behalf of the Partnership. For the years ended December 31, 1999, 1998 and 1997, Realty was reimbursed approximately $68,000, $275,000 and $391,000, respectively, for these services (included in general and administrative expenses). ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III. ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The Partnership is a limited partnership and has no directors or officers. The directors and executive officers of the Managing General Partner are as follows: Position with the Name Managing General Partner William B. Smith Chairman of the Board of Directors E. Davisson Hardman, Jr. President and Director Ronald T. Carman Secretary and Director Lewis A. Raibley, III Director All of the directors have been elected to serve until the next annual meeting of the Shareholders of the Managing General Partner or until their successors are elected and qualify. Each of the executive officers has been elected to serve until his successor is elected and qualifies. William B. Smith, age 56, has been a Managing Director of Morgan Stanley & Co. Incorporated ("MWD")and Co-head of Morgan Stanley Realty Incorporated since the merger of Morgan Stanley Group Inc. and Dean Witter Discover & Co. in 1997. Prior to the merger, Mr. Smith was Executive Vice President of Dean Witter Reynolds Inc. and Director of its Investment Banking department since January 1987. Mr. Smith joined Dean Witter in 1982 as Co-Director of Dean Witter Realty. E. Davisson Hardman, Jr., age 50, has been a Managing Director of Morgan Stanley Asia, Ltd. since July 1997, and a Managing Director of Dean Witter Realty Inc., which he joined in 1982. Ronald T. Carman, age 48, is a Director and the Secretary of Dean Witter Realty Inc. He has been an Assistant Secretary of Morgan Stanley Dean Witter & Co. ("MWD") and a Managing Director of Morgan Stanley & Co. Inc. since July 1998. Previously, he was a Senior Vice President and Associate General Counsel of Dean Witter Reynolds Inc., which he joined in 1984. Lewis A. Raibley, III, age 38, is a Senior Vice President and Controller in the Individual Asset Management Group of MWD. From July 1997 to May 1998, Mr. Raibley was Senior Vice President and Director in the Internal Reporting Department of MWD; from 1992 to 1997, he served as Senior Vice President and director in the Financial Reporting and Policy Division for MWD. He has been with MWD and its affiliates since 1986. There is no family relationship among any of the foregoing persons. ITEM 11. EXECUTIVE COMPENSATION The General Partners are entitled to receive cash distributions, when and as cash distributions are made to the Limited Partners, and a share of taxable income or tax loss. Descriptions of such distributions and allocations are in Item 5 above. The General Partners received cash distributions totaling $368,328, $395,010, and $514,799, during the years ended December 31, 1999, 1998 and 1997, respectively. The General Partners have deferred distribution of their share of all proceeds from property sales to date. The General Partners and their affiliates were paid certain fees and reimbursed for certain expenses. Information concerning such fees and reimbursements is contained in Note 9 to the consolidated financial statements in Item 8 above. The directors and executive officers of the Partnership's Managing General Partner received no renumeration from the Partnership. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) The following table sets forth certain information regarding each person or group of persons known to the Partnership to be the beneficial owner of more than 5% of the Units. Units Name of Beneficial Owners beneficially owned Number Percent Madison Avenue Investment Partners, LLC ("MAIP"); First Equity Realty, LLC("FER"); The Harmony Group II, LLC ("Harmony"); Ronald M. Dickerman; Bryan E. Gordon (collectively the "Reporting Persons") 454,657 5.10% The information set forth in this Item 12 (a) is based on Amendment No. 1 to a Schedule 13G Information Statement filed for the year ended December 31, 1999 by the Reporting Persons. Such Schedule 13G discloses that each Reporting Person beneficially owns 454,657 Units, MAIP has sole voting and sole dispositive power over 454,657 Units and shared voting and shared dispositive over 454,617 Units and that each of the other Reporting Persons has shared voting and shared dispostive power over 454,657 Units. The address of MAIP, Harmony and Mr. Gordon is P.O. Box 7533, Incline Village, Nevada 89452. The address of FER and Mr. Dickerman is 555 Fifth Avenue, 9th Floor, NY, NY 10017. (b) The executive officers and directors of the Managing General Partner own the following Units as of February 29, 2000: (3) Amount and Nature of (1) (2) of Beneficial Title of Class Ownership Name of Beneficial Owner Ownership Limited Partnership All directors and executive * Interests officers of the Managing General Partner, as a group __________________________ * Own, by virtue of ownership of limited partnership interests in the Associate General Partner, less than 1% of the Units of the Partnership. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS As a result of their being partners of a limited partnership which is the limited partner of the Associate General Partner, certain current and former officers and directors of the Managing General Partner also own indirect general partnership interests in the Partnership. The Partnership Agreement of the Partnership provides that cash distributions and allocations of income and loss to the General Partners shall be distributed or allocated 50% to the Managing General Partner and 50% to the Associate General Partner. The General Partners' share of cash distributions and income or loss is described in Item 5 above. All of the outstanding shares of common stock of the Managing General Partner are owned by Realty, a Delaware corporation which is a wholly-owned subsidiary of Morgan Stanley Dean Witter & Co. The general partner of the Associate General Partner is the Managing General Partner. The limited partner of the Associate General Partner is LSYP 87, L.P., a Delaware limited partnership. Realty and certain current and former officers and directors of the Managing General Partner are partners of LSYP 87, L.P. Additional information with respect to the directors and executive officers and compensation of the Managing General Partner and affiliates is contained in Items 10 and 11 above. The 401 East Ontario Street property was developed by a joint venture between a third party developer and an entity comprised of former and current Realty executives, several of whom are former or current executive officers of the Managing General Partner. In January 1994, the Partnership obtained ownership of the property by deed-in-lieu of foreclosure. The One Congress Street property was developed by a partnership between a Maryland-based developer and an entity comprised of former Realty executives, some of whom were formerly executive officers of the Managing General Partner. This entity withdrew as a partner of the borrower in September 1993, so the borrower partnership was controlled solely by the Maryland-based developer until control of the borrower was transferred to the Partnership and Yield Plus II in 1997. The General Partners and their affiliates were paid certain fees and reimbursed for certain expenses. Information concerning such fees and reimbursements is contained in Note 9 to the Consolidated Financial Statements in Item 8 above. The Partnership believes that the payment of fees and the reimbursement of expenses to the General Partners and their affiliates are on terms as favorable as would be obtained from unrelated third parties. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this Annual Report: 1. Financial Statements (see Index to Financial Statements filed as part of Item 8 of this Annual Report). 2. Financial Statement Schedules (see Index to Financial Statements filed as part of Item 8 of this Annual Report). 3. Exhibits (3)(a) Amended and Restated Agreement of Limited Partnership dated as of April 29, 1987 set forth in Exhibit A to the Prospectus included in Registration Statement Number 33-11648 is incorporated herein by reference. (3)(b) Certificate of Limited Partnership dated as of April 29, 1987 incorporated by reference in Registration Statement Number 33-11648 is incorporated herein by reference. (4)(a) Amended and Restated Agreement of Limited Partnership dated as of April 29, 1987 set forth in Exhibit A to the Prospectus included in Registration Statement Number 33-11648 is incorporated herein by reference. (4)(b)Certificate of Limited Partnership dated as of April 29, 1987 incorporated by reference in Registration Statement Number 33-11648 is incorporated herein by reference. (10)(a) Partnership Agreement for DW Michelson Associates dated March 14, 1988. Incorporated by reference to Exhibit 10(a) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. (10)(b) First Mortgage Promissory Note, dated April 26, 1989, between the Government Center Garage Realty Trust (Maker) and Dean Witter Realty Yield Plus, L.P. (Holder) was filed as Exhibit to Amendment No. 2 to Current Report on Form 8-K on April 26, 1989 and is incorporated herein by reference. (10)(c) Construction Loan Agreement, dated April 26, 1989, between Government Center Garage Realty Trust, as Borrower and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., as Lender was filed as Exhibit to Amendment No. 2 to Current Report on Form 8-K on April 26, 1989 and is incorporated herein by reference. (10)(d)Intercreditor Agreement among Dean Witter Realty Yield Plus, L.P., Dean Witter Realty Yield Plus II, L.P., and Realty Management Services Inc. dated as of April 26, 1989 was filed as Exhibit to Amendment No. 2 to Current Report on Form 8-K on April 26, 1989 and is incorporated herein by reference. (10)(e)First Amendment to Construction Loan Agreement dated October 12, 1989 between Government Center Garage Realty Trust, as Borrower and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., as Lender. Incorporated by reference to Exhibit 10(e) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. (10)(f)Amended and Restated Construction Loan/Office Loan Promissory Note dated October 12, 1989 between Government Center Garage Realty Trust (Maker) and Dean Witter Realty Yield Plus, L.P. (Holder). Incorporated by reference to Exhibit 10(f) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. (10)(g)Second Amendment to Construction Loan Agreement dated June 22, 1990 between Government Center Garage Realty Trust, as Borrower and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., as Lender. Incorporated by reference to Exhibit 10(g) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. (10)(h)First Amendment to Amended and Restated Construction Loan/Office Loan Promissory Note dated June 22, 1990 between Government Center Garage Realty Trust (Maker) and Dean Witter Realty Yield Plus, L.P. (Holder). Incorporated by reference to Exhibit 10(h) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. (10)(i)Supplemental Loan Agreement dated September 20, 1993 between Government Center Garage Realty Trust, as Borrower and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., as Lender. Incorporated by reference to Exhibit 10(i) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. (10)(j)Second Amendment to Notes dated September 20, 1993 between Government Center Garage Realty Trust (Maker) and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., (Holders). Incorporated by reference to Exhibit 10(j) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. (10)(k)Supplement and Amendment to Construction Loan Agreement dated October 27, 1997 between Government Center Garage Realty Trust (Borrower) and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P.(Lenders) was filed as an Exhibit to Form 8- K on October 27, 1997 and is incorporated herein by reference. (10)(l)Third Amendment to Notes dated October 27, 1997 between Government Center Garage Realty Trust (Maker) and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P. (Holder) was filed as an Exhibit to Form 8-K on October 27, 1997 and is incorporated herein by reference. (10)(m)Purchase and Sale Agreement dated as of December 26, 1997 among DW Michelson Associates as Seller, Michelson Company Limited Partnership as Acquired Partnership and SC Enterprises as Purchaser, First Amendment to Purchase and Sale Agreement dated as of February 3, 1998 and Assignment and Assumption Agreement dated as of April 3, 1998 were collectively filed as an Exhibit to Form 8-k on April 3, 1998 and is incorporated herein by reference. (10)(n)Purchase and Sale Agreement among DW Lakeshore Associates, L.P., a Delaware Limited Partnership, as Seller and Streeterville Development Associates, LLC, an Illinois Limited Liability Company, as Purchaser dated July 17, 1997 was filed as an Exhibit to Form 8-k on July 17, 1998 and is incorporated herein by reference. (21) Subsidiaries: Deptford Crossing Associates, a New Jersey limited partnership. DW Lakeshore Associates, an Illinois limited partnership. DW Columbia Gateway Associates, a Maryland limited partnership. DW Michelson Associates, a California limited partnership. DW Community Centers Limited Partnership, a Delaware limited partnership. DW Maplewood Inc. (27) Financial Data Schedule (d) Financial Statement Schedules 1. Financial Statements of GCGA Limited Partnership, owner of an office building/parking garage located in Boston, Massachusetts. SCHEDULE III DEAN WITTER REALTY YIELD PLUS, L.P. Real Estate and Accmulated Depreciation December 31, 1999
Initial Cost to Partnership (A) Building and Description Encumbrances Land Improvements Total Shopping Center, Deptford, NJ - $ 6,250,094 $12,041,180 $18,291,274 Land, Military Crossing, Norfolk, VA - 300,000 - 300,000 - $ 6,550,094 $12,041,180 $18,591,274 Cost Loss on Reclassification Capitalized Impairment to Real Estate Subsequent to of Land and Held for Description Acquisition Real Estate Sale Shopping Center, Deptford, NJ $1,138,199 $(6,931,459) - Land, Military Crossing, Norfolk, VA - - (300,000) $1,138,199 $(6,931,459) $ (300,000) SCHEDULE III (continued) Gross Amount at which Carried at End of Period (B) Buildings and Depreciation Description Land Improvements Total (C) Shopping Center, Deptford, NJ $1,770,000 $10,728,014 $12,498,014 $2,248,131 Land, Military Crossing, Norfolk, VA - - - - $1,770,000 $10,728,014 $12,498,014 $2,248,131 Life on which Depreciation Date of in Latest Income Description Construction Date Acquired Statements is Computed Shopping Center, Deptford, NJ 1991 December 1992 40 years Land, Military Crossing, Norfolk, VA N/A April 1994 -
Notes: (A)The basis in the properties at acquisition for financial reporting purposes is the lower of net carrying value of the original loan or estimated fair market value of the property. Losses on foreclosure of real estate and real estate impairment losses do not reduce the basis for federal income tax purposes. (B)Reconciliation of real estate owned:
1999 1998 1997 Balance at beginning of period $12,650,047 $ 50,340,229 $115,682,356 Additions during period: Additions 147,967 498,404 856,266 Foreclosure of real estate - - (8,540,000) Sale of real estate - (38,188,586) (8,565,176) Reclassification to real estate held for sale (300,000) - (49,093,217) Balance at end of period $12,498,014 $ 12,650,047 $ 50,340,229 1999 1998 1997 (C)Reconciliation of accumulated depreciation: Balance at beginning of year $ 1,954,876 $ 5,847,422 $ 18,386,846 Depreciation expense 293,255 748,020 3,673,145 Foreclosure of real estate - - (565,640) Sale of real estate - (4,640,566) (3,450,083) Reclassification of real estate held for sale - - (12,196,846) Balance at end of period $ 2,248,131 $ 1,954,876 $ 5,847,422
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DEAN WITTER REALTY YIELD PLUS, L.P. By: Dean Witter Realty Yield Plus Inc. Managing General Partner By: /S/ E. Davisson Hardman, Jr. Date: March 30, 2000 E. Davisson Hardman, Jr. President By: /S/ Charles M. Charrow Date: March 30, 2000 Charles M. Charrow Controller (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. DEAN WITTER REALTY YIELD PLUS INC. Managing General Partner /S/ William B. Smith Date: March 30, 2000 William B. Smith Chairman of the Board of Directors /S/E. Davisson Hardman, Jr. Date: March 30, 2000 E. Davisson Hardman, Jr. Director /S/ Lewis A. Raibley, III Date: March 30, 2000 Lewis A. Raibley, III Director /S/ Ronald T. Carman Date: March 30, 2000 Ronald T. Carman Director DEAN WITTER REALTY YIELD PLUS, L.P. Year Ended December 31, 1999 Exhibit Index Exhibit No. Description (3)(a) Amended and Restated Agreement of Limited Partnership dated as of April 29, 1987 set forth in Exhibit A to the Prospectus included in Registration Statement Number 33-11648 is incorporated herein by reference. (3)(b) Certificate of Limited Partnership dated as of April 29, 1987 incorporated by reference in Registration Statement Number 33-11648 is incorporated herein by reference. (4)(a) Amended and Restated Agreement of Limited Partnership dated as of April 29, 1987 set forth in Exhibit A to the Prospectus included in Registration Statement Number 33-11648 is incorporated herein by reference. (4)(b) Certificate of Limited Partnership dated as of April 29, 1987 incorporated by reference in Registration Statement Number 33-11648 is incorporated herein by reference. (10)(a) Partnership Agreement for DW Michelson Associates dated March 14, 1988. Incorporated by reference to Exhibit 10(a) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. (10)(b) First Mortgage Promissory Note, dated April 26, 1989, between the Government Center Garage Realty Trust (Maker) and Dean Witter Realty Yield Plus, L.P. (Holder) was filed as Exhibit to Amendment No. 2 to Current Report on Form 8-K on April 26, 1989 and is incorporated herein by reference. E-1 (10)(c) Construction Loan Agreement, dated April 26, 1989, between Government Center Garage Realty Trust, as Borrower and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., as Lender was filed as Exhibit to Amendment No. 2 to Current Report on Form 8-K on April 26, 1989 and is incorporated herein by reference. (10)(d) Intercreditor Agreement among Dean Witter Realty Yield Plus, L.P., Dean Witter Realty Yield Plus II, L.P., and Realty Management Services Inc. dated as of April 26, 1989 was filed as Exhibit to Amendment No. 2 to Current Report on Form 8-K on April 26, 1989 and is incorporated herein by reference. (10)(e) First Amendment to Construction Loan Agreement dated October 12, 1989 between Government Center Garage Realty Trust, as Borrower and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., as Lender. Incorporated by reference to Exhibit 10(e) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. (10)(f) Amended and Restated Construction Loan/Office Loan Promissory Note dated October 12, 1989 between Government Center Garage Realty Trust (Maker) and Dean Witter Realty Yield Plus, L.P. (Holder). Incorporated by reference to Exhibit 10(f) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. (10)(g) Second Amendment to Construction Loan Agreement dated June 22, 1990 between Government Center Garage Realty Trust, as Borrower and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., as Lender. Incorporated by reference to Exhibit 10(g) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. (10)(h) First Amendment to Amended and Restated Construction Loan/Office Loan Promissory Note dated June 22, 1990 between Government Center Garage Realty Trust (Maker) and Dean Witter Realty Yield Plus, L.P. (Holder). Incorporated by reference to Exhibit 10(h) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. E-2 (10)(i) Supplemental Loan Agreement dated September 20, 1993 between Government Center Garage Realty Trust, as Borrower and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., as Lender. Incorporated by reference to Exhibit 10(i) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. (10)(j) Second Amendment to Notes dated September 20, 1993 between Government Center Garage Realty Trust (Maker) and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P., (Holders). Incorporated by reference to Exhibit 10(j) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. (10)(k) Supplement and Amendment to Construction Loan Agreement dated October 27, 1997 between Government Center Garage Realty Trust (Borrower) and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P. (Lenders) was filed as an Exhibit to Form 8-K on October 27, 1997 and is incorporated herein by reference. (10)(l) Third Amendment to Notes dated October 27, 1997 between Government Center Garage Realty Trust (Maker) and Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II, L.P. (Holder) was filed as an Exhibit to Form 8-K on October 27, 1997 and is incorporated herein by reference. (10)(m) Purchase and Sale Agreement dated as of December 26, 1997 among DW Michelson Associates as Seller, Michelson Company Limited Partnership as Acquired Partnership and SC Enterprises as Purchaser, First Amendment to Purchase and Sale Agreement dated as of February 13, 1998 and Assignment and Assumption Agreement dated as of April 3, 1998 were collectively filed as an Exhibit to Form 8-K on April 3, 1998 and is incorporated herein by reference. (10) (n) Purchase and Sale Agreement among DW Lakeshore Associates, L.P., a Deleware Limited Partnership, as Seller and Streeterville Development Associates, LLC, an Illinois Limited Liability Company, as Purchaser dated July 17, 1997 was filed as an Exhibit to Form 8-K on July 17, 1998 and is incorporated herein by reference. (27) Financial Data Schedule (99) Financial Statements of GCGA Limited Partnership, owner of an office building/parking garage located in Boston, Massachusetts. GCGA LIMITED PARTNERSHIP Financial Statements Independent Auditors' Report Independent Auditors' Report To the Partners of GCGA Limited Partnership We have audited the accompanying balance sheets of GCGA Limited Partnership (the "Partnership") as of December 31, 1999 and 1998 and the related statements of operations, partners' capital deficiency, and cash flows for each of the three years in the period ended December 31, 1999. 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements present fairly, in all material respects, the financial position of GCGA Limited Partnership as of December 31, 1999 and 1998 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999, in conformity with generally accepted accounting principles. Deloitte & Touche, LLP /s/ Deloitte & Touche, LLP New York, New York March 20, 2000 GCGA LIMITED PARTNERSHIP Balance Sheets December 31, 1999 and 1998
1999 1998 Assets Real estate, at cost: Land $ 4,892,336 $ 4,892,336 Building and improvements 74,563,455 73,624,779 79,455,791 78,517,115 Accumulated depreciation (20,212,483) (17,818,235) 59,243,308 60,698,880 Cash 1,054,639 385,172 Escrow deposits 1,015,167 808,617 Accounts receivable 4,917,634 4,761,502 Deferred expenses, net 1,228,081 325,806 Other assets 116,234 113,784 $ 67,575,063 $ 67,093,761 Liabilities and Partners' Capital Deficiency Liabilities: First mortgage loan $ 37,750,000 $ 37,750,000 Second mortgage loan and accrued interest 84,028,030 79,023,308 Note payable 2,371,498 2,446,428 Accounts payable and other liabilities 1,259,159 744,386 125,408,687 119,964,122 Partners' capital deficiency (57,833,624) (52,870,361) $ 67,575,063 $ 67,093,761 See accompanying notes to financial statements.
GCGA LIMITED PARTNERSHIP Statements of Operations Years ended December 31, 1999, 1998 and 1997
1999 1998 1997 Revenues: Rental $16,094,032 $11,513,818 $11,498,722 Interest and other 311,709 79,390 238,937 16,405,741 11,593,208 11,737,659 Expenses: Interest 12,131,985 11,876,782 11,805,253 Property operating 6,205,129 4,996,224 4,393,023 Depreciation 2,394,248 1,895,228 1,774,048 Amortization 344,300 65,398 166,095 General and administrative 293,342 950,345 682,653 21,369,004 19,783,977 18,821,072 Net loss $(4,963,263) $(8,190,769) $(7,083,413) See accompanying notes to financial statements.
GCGA LIMITED PARTNERSHIP Statements of Changes in Partners' Capital Deficiency Years ended December 31, 1999, 1998 and 1997
Total Partner's capital deficiency at January 1, 1997 $(37,719,179) Contributions 200,000 Distributions (77,000) Net loss (7,083,413) Partners' capital deficiency at December 31, 1997 (44,679,592) Net loss (8,190,769) Partners' capital deficiency at December 31, 1998 (52,870,361) Net loss (4,963,263) Partners' capital deficiency at December 31, 1999 $(57,833,624) See accompanying notes to financial statements.
GCGA LIMITED PARTNERSHIP Statements of Cash Flows Years ended December 31, 1999, 1998 and 1997
1999 1998 1997 Cash flows from operating activities: Net loss $(4,963,2 $(8,190,7 $(7,083,4 Adjustments to reconcile net loss to 63) 69) 13) net cash (used in) provided by operating activities: Interest accrual on second mortgage loan in excess 2,353,827 4,154,099 6,856,266 of payments Depreciation and amortization 2,738,548 1,960,626 1,940,143 (Increase) decrease in operating assets: Escrow deposits (206,550) (36,239) (188,802) Accounts receivable Deferred expenses (156,132) 213,677 (36,403) Other assets (132,862) Increase (decrease)in accounts (1,246,57 (29,417) payable and 5) 96,406 other liabilities (98,627) (2,450) 222,624 (92,377) 514,773 Net cash (used in) provided by operating activities (967,822) (1,712,43 1,267,370 8) Cash flows from investing activities: Additions to building and - improvements (938,676) (2,672,80 2) Cash flows from financing activities: Borrowings under second mortgage loan - Repayment of note payable 2,650,895 2,720,943 Partner contributions (80,571) Partner distributions (74,930) (67,827) - - 200,000 - - (77,000) Net cash provided by financing activities 2,575,965 2,653,116 42,429 Increase (decrease) in cash 669,467 (1,732,12 1,309,799 Cash at beginning of year 4) 385,172 807,497 2,117,296 Cash at end of year $ $ $1,054,63 385,172 2,117,296 9 Supplemental disclosure of cash paid during the year $ $ for interest $9,778,15 7,752,794 4,948,987 8 See accompanying notes to financial statements.
GCGA LIMITED PARTNERSHIP Notes to Financial Statements 1. Organization GCGA Limited Partnership (the "Partnership") is a limited partnership organized under the laws of the Commonwealth of Massachusetts. The Partnership is the sole beneficiary of the Government Center Garage Realty Trust (the "Trust") which owns One Congress Street (the "Property"), an 11-story structure containing approximately 283,000 square feet of office and retail space and a 2,200-space parking garage, located in Boston, Massachusetts. Prior to October 27, 1997, the partners of the Partnership were Government Center Garage Associates Limited Partnership ("GCA"), which owned a 1% general partnership interest and a 98% limited partnership interest, and an individual affiliated with the developer of the property who owned a 1% limited partnership interest (the "Affiliate"). In October 1996, the Partnership defaulted on its second mortgage loan by failing to timely pay its debt service. Thereafter, the second mortgage lenders (Dean Witter Yield Plus, L.P. ("Yield Plus") and Dean Witter Yield Plus II, L.P. ("Yield Plus II"), collectively, (the "Lender")) accelerated the loan and attempted to take possession of the property. On October 15, 1996, the Partnership and the Trust filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Maryland (the "Bankruptcy Court"). While in bankruptcy, the Partnership operated as a debtor-in-possession, whereby the Partnership could not engage in transactions outside of the ordinary course of business without approval of the Bankruptcy Court, after notice and hearing. On October 27, 1997, the Partnership entered into a settlement agreement with the Lender (the "Agreement"). As part of the Agreement, two new corporations each of which are jointly owned by Yield Plus (58%) and Yield Plus II (42%), became the sole general partners (the "New General Partners") of the Partnership (with an aggregate 19% ownership interest) and GCA (with an aggregate 1% ownership interest). Yield Plus and Yield Plus II have agreed to make all decisions concerning the Partnership and its property jointly, and retained an affiliate of the Partnership's GCGA LIMITED PARTNERSHIP Notes to Financial Statements 1. Organization (continued) original general partner as property manager. As part of the Agreement, the second mortgage loan was also restructured (see Note 3). Pursuant to the Agreement, GCA's limited partnership interest in the Partnership was reduced to 81% and the Affiliate's 1% interest in the Partnership was eliminated. 2. Summary of Significant Accounting Policies The Partnership's records are maintained on the accrual basis of accounting for financial reporting and tax purposes. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Real estate is recorded at cost less accumulated depreciation. Cost includes land, improvements, direct construction costs, indirect project costs, and carrying costs, including real estate taxes, interest and loan costs incurred during the construction period. Depreciation is recorded on the straight-line method. Repairs are expensed. At least annually, and more often if circumstances dictate, the Partnership evaluates the recoverability of the net carrying value of the Property and any related assets. As part of this evaluation, the Partnership assesses, among other things, whether there has been a significant decrease in the market value of the Property. If events or circumstances indicate that the net carrying value of the Property may not be recoverable, the expected future net cash flows from the Property are estimated for a period of approximately five years (or a shorter period if the Partnership expects that the Property may be disposed of sooner), along with estimated sales proceeds at the end of the period. GCGA LIMITED PARTNERSHIP Notes to Financial Statements 2. Summary of Significant Accounting Policies (continued) If the total of these future undiscounted cash flows were less than the carrying amount of the Property, the Property would be written down to its fair value as determined (in some cases with the assistance of outside real estate consultants) based on discounted cash flows, and a loss on impairment recognized by a charge to earnings. Because the determination of fair value is based upon projections of future economic events such as property occupancy rates, rental rates, operating cost inflation and market capitalization rates which are inherently subjective, the amounts ultimately realized at disposition may differ materially from the net carrying value as of December 31, 1999. The cash flows used to evaluate the recoverability of the assets and to determine fair value are based on good faith estimates and assumptions developed by the New General Partners. Unanticipated events and circumstances may occur and some assumptions may not materialize; therefore actual results may vary from the estimates and the variances may be material. The Partnership may provide additional write- downs, which could be material, in subsequent years if real estate markets or local economic conditions change. Deferred expenses consist of origination fees in connection with the mortgage loans and leasing commissions. Origination fees are amortized over the applicable loan terms. Leasing commissions are amortized over the applicable lease terms. Rental income is accrued on a straight-line basis over the terms of the leases. Accruals in excess of amounts payable by tenants pursuant to their leases (resulting from rent concessions or rents which periodically increase over the term of a lease) are recorded as receivables and included in other assets. No provision for income taxes has been made in the financial statements, since the liability for such taxes is that of the partners rather than the Partnership. GCGA LIMITED PARTNERSHIP Notes to Financial Statements 2. Summary of Significant Accounting Policies (continued) The accounting policies used for tax reporting purposes differ from those used for financial reporting as follows: (a) depreciation is calculated using accelerated methods and (b) rental income is recognized based on the payment terms in the applicable leases. The tax basis of the Partnership's assets and liabilities is approximately $12.2 million lower than the amounts reported for financial statement purposes at December 31, 1999. 3. Mortgage Loans Payable The Trust has a $37,750,000 first mortgage loan payable to a major insurance company. The loan requires monthly payments of interest only, payable at 9.39% and matures November 1, 2001. For each of the three years in the period ended December 31, 1999, the Partnership incurred interest expense of $3,544,725 on this loan. The Trust also has a participating second mortgage loan payable to the Lender which is due in 2001. Prior to October 27, 1997, principal of the loan was $59,200,000, base interest was payable monthly at 8% and the first $250,000 of net revenues in any calendar year from the property was payable as additional interest. The Lender also owned a 58% interest in adjusted net revenues and capital proceeds generated by the property. The second mortgage loan was restructured as follows: (a) any New Loans (the "New Loans") made by the New General Partners will bear interest at 12%, payable monthly from available cash flow generated by the property after payment of debt service on the first mortgage loan and certain operating escrows; GCGA LIMITED PARTNERSHIP Notes to Financial Statements (b) the interest rate on the principal and past due interest on the second mortgage loan (aggregating approximately $12.3 million at October 27, 1997) has been increased to 10%, payable monthly from available cash flow generated by the property after payment of debt service on the New Loans; (c) any future unpaid debt service will accrue interest at 10%; and (d) Yield Plus' and Yield Plus II's interest in adjusted net revenue and capital proceeds generated by the property was increased to 80%. The Partnership incurred interest expense on the second mortgage loan of $8,346,614, $8,078,420, and $8,036,377 in 1999, 1998 and 1997, respectively. 4. Note Payable At the inception of the parking garage lease with Kinney System of Sudbury St., Inc., a wholly owned subsidiary of Kinney System, Inc., the lessee granted a $3,000,000 loan to the Partnership, which is payable in monthly payments of $26,350, which include interest at 10 percent per annum. The lease provides for supplemental rental payments to the Partnership of $26,350 per month to cover loan principal and interest payments. These amounts are included in rental income. The lease also provides that the unpaid principal of the loan may be forgiven if certain conditions described in the note agreement are met. Interest expense incurred on this loan in 1999, 1998, and 1997 were approximately $241,000, $248,000, and $224,000, respectively. The loan will be fully paid by December 2003. GCGA LIMITED PARTNERSHIP Notes to Financial Statements 5. Leases Minimum future rental income under noncancelable operating leases as of December 31, 1999 is as follows: Year ended December 31 Future minimum rentals 2000 $12,470,989 2001 12,710,556 2002 13,013,044 2003 10,190,833 2004 135,156 $48,520,578 The Partnership has determined that all leases relating to its properties are operating leases. Lease terms range from five to twenty one years. 6. Related-Party Transactions The Property is managed by an affiliate of the Partnership. For the years ended December 31, 1999, 1998, and 1997, the affiliate earned management fees of approximately $ 173,000, $105,000, and $124,000, respectively. These amounts are included in property operating expenses. E-3 EX-27 2
5 Registrant is a limited partnership which invests in real estate and real estate joint ventures. In accordance with industry practice, its balance sheet is unclassified. For full information, refer to the accompanying audited financial statements. 12-MOS DEC-31-1999 DEC-31-1999 2,796,347 0 455,025 0 0 0 0 0 33,808,733 0 0 0 0 0 33,581,765 33,808,733 0 4,679,722 0 0 707,515 0 0 3,972,207 0 3,972,207 0 0 0 3,972,207 0.40 0 In addition to cash and receivables, total assets include net investments in real estate of $10,249,883, real estate held for sale of $300,000 and an investment in unconsolidated partnership of $20,007,478. Represents partners' capital. Liabilities include accounts payable and other liabilities of $229,968. Total revenue includes rent of $1,954,967, equity in earnings of unconsolidated partnership of $2,474,464 and interest and other revenue of $250,291. Represents net income per Unit of limited partnership interest.
-----END PRIVACY-ENHANCED MESSAGE-----